We do strange things in this independence debate. My Rangers loving nephew has no interest in politics and never votes. He tends to sigh heavily when his uncle rants about the need for Scotland to govern itself. He’d rather talk about just about anything else. But he told me that he’d vote yes, since he believed what I was saying, and it got me to shut up and talk about something else. Of late he’s taken to calling me Sheldon, because the lead character in The Big Bang Theory also has an obession with trains. I don’t think it’s meant as a compliment.
However there was one condition before his yes vote was secured. He’ll only vote if I promise to stop slagging off his favourite team. So for the past few months not a single smart arsed remark about the travails of a certain blue team has passed my lips. It’s not been easy either, because they’re such a lovely target for sarcastic remarks. I’m not sure if this arrangement falls under the law banning electoral bribery, but a yes vote is a yes vote.
That only leaves the GERS, as in Government Expenditure and Revenue Scotland. I have to tread carefully in making analogies here, for reasons set out in the previous paragraph, but if you believe the UK media the GERS have been relegated to Division 3 and it’s a nail in the coffin for Scottish independence.
Anyway, Scottish capital expenditure has risen, increasing Scotland’s deficit. The Scottish Government has been investing in infrastructure and building Scotland’s economy. Undoing the damage caused by decades of Westminster misrule is expensive, and the Scottish Government has only limited levers at its control. But it has been using these limited levers to invest in roads, schools, and Scottish Water. This is a good reason to increase expenditure, and will pay off in the longer term.
But the headlines focus on the fall in oil and gas revenues, they’ve been volatile again, and as a consequence the Scottish deficit is larger than that of the UK. The fall has been largely due to two reasons, the temporary closure of the Elgin field after a leak, and a massive increase in investment. Despite this however, Scotland’s finances are still pretty similar to the rest of the UK’s. And as we know, what with oil and gas being volatile, the figures will show a marked improvement next year or the year after once the current investments in the industry start to pay off.
Despite the fall in recent revenues, the figures also show that the Scottish economy is strong. Although there has been a large, and largely predictable, drop in oil and gas income, Scotland’s economic statistics do not lag behind those of the rest of the UK by a significant amount. Even with these terrible figures carefully prepared by the UK Treasury in a totally unbiased way, the Scottish economy out-performs that of everywhere else in the UK with the exception of the London and the South East – and these regions only do so well as a considerable amount of revenues are deemed to originate there as that’s where many companies have their head offices and make their tax returns.
With independence, the portion of these revenues derived from economic activity in Scotland would count towards Scotland’s income. With independence, Scotland would not be spending billions on UK national projects like the London sewer upgrade, HS2, or Trident renewal. The GERS figures represent the worst case scenario for an independent Scottish economy. But even on these figures, Scotland is doing just fine.
Scotland had an annual deficit of 5.9% in the past financial year, a whole 0.1% greater than the UK’s deficit of 5.8%. That doesn’t sound very scary at all, no matter the best efforts of Danny Alexander, who’s taken to imagining that he’s character in Nightmare on Elm Street. Sadly for Danny, an annual deficit of 0.1% greater than the UK’s doesn’t really cut it as far as disemboweling goes. And even less so when the figures for the past five years are taken into account. Although we’ve had an utterly catastrophic decline in oil and gas revenues that conclusively prove that we’d be worse off than Rwanda, at least if you listen to Danny, the average Scottish deficit over the past five years is 4.3%, the UK’s is 5.9%. Scotland is doing better than the economy that Danny is managing. Oops.
This is not a nail in the coffin of anything, except possibly Danny Alexander’s rapidly diminishing credibility. The figures drop, they rise again. That’s what economic volatility means. Yet the baseline is that Scotland remains in a considerably stronger financial position than the rest of the UK. If Scotland had an oil fund to smooth its finances this year’s drop in oil and gas revenues would scarcely merit a small paragraph on page 8 of the Scotsman. Mind you the chances of survival of the Scotsman newspaper in an independent Scotland are on a par with the chances of Ian Davidson continuing to enjoy a political career, but you get the drift.
But we don’t have an oil fund, and we are in the middle of an independence campaign, so naturally the figures have been seized on by the Unionists who gleefully point out that they prove we’re too poor and vulnerable to make like Denmark. We knew oil revenues were volatile, now we know they spin as well.