Possibly the most common reason that people give for opposing Scottish independence is the belief that Scotland can’t afford it. There is a deeply engrained view amongst sections of the Scottish population that this country is an economic basket case which is only kept financially afloat thanks to a massive injection of cash from the British government. Which if true would mean that Scotland is the only thing in the world that Conservatives throw buckets of money at out of sheer altruism. Because the defining characteristic of Conservative governments is their eagerness to fund lavish lifestyles for the poor, said no one ever.
My mammy, who has been a supporter of independence since John Lennon was fresh-faced, has always claimed that if Scotland really was such an economic drain on the UK, we’d have been independent long before the rest of the Beatles went into a huff about Yoko Ono’s backing vocals.
The myth of Scotland’s poverty is reinforced ever year with the publication of the government’s GERS figures. Standing for Government Expenditure and Revenue Scotland, the GERS figures are presented as the authoritative statistics on Scotland’s financial position within the UK. Every year the figures claim to show that Scotland receives a subsidy from Westminster, and that without the UK we’d be a financial basket case which would be forced to make swingeing cuts to public services in order to balance the books.
Not everyone accepts that the GERS figures give an accurate assessment of the state of Scotland’s finances, and most especially not the finances of an independent Scotland. Aware that the Conservatives have destroyed anything that might pass for a positive case for the union, pretty much all that opponents of independence have left is the claim that Scotland is subsidised by the UK, so they have come up with a phrase, “GERS deniers”. This is what they call those of us who dare to dispute their claims that an independent Scotland would be an economic basket case.
GERS denier is a nice wee soundbite which attempts to equate people who view the GERS figures with suspicion with people who deny the reality of climate change. But as ever, our anti-independence friends are not comparing like with like. Climate change is based upon multiple scientific works and studies. There is abundant data from many different and independent sources. The GERS figures are a single data set, and moreover they’re a single data set which relies very heavily on figures produced by a body which it is scarcely conspiracy theoristish to suspect may not be entirely neutral in the Scottish debate – the UK Treasury. The difference between denying climate change and denying GERS is simple. One is science, the other is politics. Only a fool is sceptical about a proven scientific reality. Only a fool isn’t sceptical about a political claim.
The GERS figures were instituted in the early 1990s by the then Scottish Secretary of State, the Conservative Iain Lang, as a means of providing the Tory government with ammunition to use against those campaigning for a Scottish parliament. According to a leaked memo, Lang wanted GERS as a tool to “undermine” the opposition. The figures were designed to show Scotland’s deficit, which could then be spun as a fiscal transfer from England to Scotland. This is as good a place as any to explain the difference between debt and deficit. Debt is the total amount owed, the deficit is the shortfall between revenues raised and expenditure spent.
The purpose of the GERS figures was political from the very beginning. That’s the opposite of science. Science seeks data and then develops a theory to account for that data. GERS starts off with the theory of an English subsidy to Scotland and then seeks data to account for that theory. It’s anti-science. It’s politics.
Unionists want us to accept GERS uncritically and without any rigorous examination of the methodology used to produce the figures which are presented in the newspaper headlines. They’re the only figures which exist, we keep getting told. And this would be true. However that’s all the more reason to examine the way in which those figures are produced and the data collected with a critical and sceptical eye. It is scientifically illiterate to accept without criticism a single data set, all the more so when that data set is the only data which exists and it’s data which relies on estimates made by people who can reasonably be suspected of having a vested interest in a particular outcome.
It’s a bit like saying, “Well we don’t actually know how life developed on Earth, but we do have the account in this old book I found in the Barras which claims that the world sprang into being from an egg laid by the primordial gecko, so let’s go with that. My book looks pretty holy. Now give me one tenth of your income. My holy book tells us to tithe too.” And then you call evolutionary scientists primordial gecko deniers and claim that they’re a cult.
The claim is frequently made by GERS fundamentalists that the figures are Scottish government figures. But that’s not exactly true. The Scottish government has a legal obligation to produce the GERS figures, but the statisticians of the Scottish government have no means of knowing how much is spent on non-devolved matters in Scotland or is (allegedly) spent on Scotland’s behalf outwith Scotland. The statisticians of the Scottish government know nothing about say, how much of defence expenditure, or the expenditure of the Foreign and Commonwealth Office is allocated to Scotland. For those figures they rely entirely upon information supplied to them by the UK Treasury.
A proper economist has had the temerity to look beyond the annual round of headlines predicting economic ruin for an independent Scotland and to examine the figures with a sceptical eye. He has found them seriously wanting.
According to the economist Richard Murphy, with the exception of local government income there are no reliable figures at all for Scottish revenues, and figures for Scottish expenditure are seriously deficient. He points out that it is normal for economic figures to rely on certain estimates, but it’s not normal for 25 out of 26 sets of income figures in a set of accounts to be based on estimates and consumer surveys. He says, “Estimates may be a part of financial life but this is ridiculous.” The former SNP MP George Kerevan, who was a lecturer in economics before entering politics, likewise believes that the GERS figures underestimate Scottish revenues.
The important point is that it would be perfectly possible for the UK Treasury to provide the Scottish Government with more accurate and rigorous statistics. It would be perfectly feasible for them to change the ways in which they collect data and measure expenditures and revenues in order to produce a more robust set of figures. But they won’t do so. And the reason that they won’t is because the existing GERS figures are ideally suited to the political task required of them. That task is to misinform Scotland about its true financial strengths and undermine confidence in Scotland’s ability to go its own way.
Opponents of independence want the GERS figures to do something that not even Iain Lang wanted them to do. They want to use the GERS figures in order to make claims about the financial position of an independent Scotland. GERS tells us, in theory, about the financial situation of Scotland within the UK, but independence means we do things differently. That’s the entire point of independence.
In the most recent GERS figures, revenues from the North Sea oil industry were a paltry few million, but Norway continued to extract billions from its oil sector even though it had been hit by the same decline in oil prices. The difference is due to different tax regimes and regulatory regimes. Unionists assume that Scotland would continue to indulge the oil corporations in the same way as the UK Treasury. That assumption is made across the board by the GERS fundamentalists, their vision of an independent Scotland is one which spends and raises revenues exactly the same way the UK does just now. That’s an obvious nonsense.
According to the financial services company Deloitte, “GERS data is produced for Scotland as part of the UK – it does not model scenarios for an independent Scotland in which the Scottish Government would be enabled to make its own fiscal choices.” And that’s the whole point of independence, to do things differently. To do things better for the people of Scotland.
The GERS fundamentalists make some even more outlandish assumptions. Literally outlandish. There are essentially two parts to Scottish expenditure as recorded in the GERS figures. There is spending in Scotland, and then there is spending for Scotland. There’s an important difference between the two. Spending in Scotland consists of government money which goes directly to Scotland, which is spent within Scotland, and which consequently generates tax and other revenues within Scotland.
Spending for Scotland is money which the UK government spends on behalf of Scotland, much of which is not necessarily spent within Scotland itself. So for example Scotland is allocated a notional percentage of the UK’s entire defence budget, even though the bulk of this money is actually spent elsewhere in the UK. The rationale behind this is that defence spending benefits the UK as a whole. Scotland is also allocated a percentage of projects which are deemed to be UK national. The economist Richard Murphy estimates that the total amount of government money spent which is spent outside Scotland but which is allocated as spending for Scotland could be as much as £10 billion annually. This accounts for a considerable proportion of the notional deficit which Scotland is constantly being told it has.
So for example, according to the GERS figures the UK spends some £3.3 billion on defence which it allocates to Scotland. It is universally agreed that the amount spent within Scotland on defence does not approach this figure, most estimates place defence expenditure within Scotland at around £1.7 billion, a figure which includes spending on Faslane. Much of the remainder is spent in the south of England where the UK has concentrated the MoD offices and its military bases. No independent country in the world spends over half of its defence expenditure in someone else’s country, especially not a small country like Scotland which has no pretensions to Empire 2.0.
Money which a government spends generates income and revenues. It does so in two ways. Firstly there is the direct tax generated by the spending, for example the income tax which government employees must pay on their salaries. Secondly, and perhaps more importantly, there is the ripple effect of revenues generated by economic activity which is created by that spending. Those government employees need services, they spend in shops, they buy or rent homes and support households, they run cars. The tasks they perform as part of their jobs require support services, supplies, and utilities, all of which generate economic activity and consequently revenues for the government.
None of the economic activity which is created by UK government expenditure for Scotland but which is spent outside Scotland produces any revenues which are accredited to Scotland in the GERS figures. This artificially decreases Scottish revenues, while increasing Scottish expenditure, giving a false impression that Scotland is dependent on a supposed “subsidy” from the British state.
This is a major reason why the GERS figures cannot be used as a guide to the finances of Scotland as an independent country. As an independent state, Scotland will not be footing part of the bill for an army base in Aldershot or a government office in Whitehall. Government spending in an independent Scotland will be both for Scotland and in Scotland, there will not be the huge disparity between spending in Scotland and for Scotland which we experience as a part of the UK. Monies which are currently supposedly spent on Scotland’s behalf outwith Scotland will instead be spent inside Scotland, and will generate the knock on effects of increased economic activity and higher government revenues within Scotland.
Another large contributor to the GERS deficit is Scotland’s contribution to interest payments on the UK’s eye-watering national debt. A large whack of the deficit which we’re always being told Scotland has consists of the share of interest payments on the UK national debt which is allocated to Scotland. Essentially what happens is that the UK borrows money on the international markets, spends it outside Scotland on stuff Scotland neither wants nor needs while telling us that this represents a fiscal transfer to Scotland. And then we get sent the bill.
We don’t know what the national debt of an independent Scotland would be. What we do know is that there is no financial institution anywhere in the world which possesses a piece of paper saying “IOU squillions of quid, xx Scotland”. The debt is legally the responsibility of the UK government, and during the first independence referendum the UK Treasury issued a statement to reassure the markets making it clear that it would continue to be legally responsible for that debt. If the rUK wants to be the continuator state to the existing UK, then they likewise continue with the debt.
That doesn’t mean that Scotland will start life as an independent nation debt free, although Ireland did exactly that. What it means is that when Scotland becomes independent it will only take on such debt as pertains to the share of the joint UK assets that it receives, and that will be subject to negotiation between Scotland and the rUK after a Yes vote in a referendum. No assets, no debt. It’s that simple. There are certain UK assets that Scotland has no interest in, such as our share of the energy and other resources of the Falkland Islands. Not taking our share of those assets reduces any debt we might need to take on.
There are now signs that the law of unintended consequences has started to have an effect. The GERS figures were always designed for Scottish consumption but the flip side of telling Scotland that it’s poor is telling England that it subsidises us. This has created a deep well of resentment against Scotland amongst large segments of the population south of the border. People in England have come to believe, incorrectly, that Scotland only enjoys free prescriptions and free university tuition because English taxpayers foot the bill. Many of them would be happy to see Scotland become independent, because they anticipate that it would generate public spending in England. They’re in for a big disappointment, but this belief is what lies behind the finding that two thirds of Conservative party members would prefer to see Scotland become independent than make any concessions on Brexit. The reliance of successive British governments on a skewed set of statistics aimed at convincing Scotland that it’s too poor has only weakened the integrity of UK, not strengthened it.
The reality is that GERS tells us next to nothing about the financial situation of an independent Scotland. But even if we were to take the GERS figures at face value, they still add up to something that smells pretty fishy. According to the GERS figures, Scotland has a deficit of £14.8 billion a year. The equivalent figures for Wales and Northern Ireland allocate deficits of £14.7 billion and £9.16 billion respectively. Yet the entire annual deficit for the whole of the UK is £67 billion. The GER figures would have us believe that Scotland, Wales and Northern Ireland, with a combined 16% of the UK population between them, are responsible for a whopping 58% of the entire UK annual deficit. That figure alone ought to raise suspicions that the methodology of GERS is suspect and invite a critical examination with a sceptical eye. But Unionists don’t want us to do that. They want us to accept Scotland’s supposed £14.8 billion deficit as if it were holy writ.
So let’s do just that. Let’s accept for the purposes of the argument that Scotland does indeed have a deficit that’s considerably larger than that of Greece. Yet Greece doesn’t have Scotland’s resources. Greece isn’t a net exporter of energy. Greece doesn’t have oil, gas, a massive renewable energy potential, the hundreds of years worth of coal that Scotland has agreed to leave in the ground. Scotland is so rich in energy that we can afford to have a national conversation about fracking and whether or not we want it. We don’t need the energy from fracking ourselves. We can afford to leave it in the ground. Most countries don’t have that luxury. Energy is the motor of any economy, and Scotland possesses it in abundance.
Unlike Greece Scotland has fertile soil and no shortage of water. We have enormous fish stocks. We are more or less self sufficient in food, what we import we make up for in exports. We have a tourism industry worth £11 billion annually, a whisky industry worth almost £4 billion. We have a computer games industry, four of the top 100 universities in the world, and a highly educated English speaking population. We have advantages we just take for granted, like the fact that what passes for a national disaster in Scotland is the national football team, we are spared the earthquakes, volcanic eruptions or tsunamis that strike less fortunate countries – like Greece. Those are disasters that mean entire towns and cities have to be rebuilt. Nothing like that happens in Scotland. This is a lucky country.
But it doesn’t end there. We are in a geopolitically stable and quiet part of the globe. No one wants to invade us, no one has territorial claims on us, and we have no territorial claims on anyone else. Not even Berwick. We are that rare beast, a country that no one hates except David Starkey, and since pretty much everyone hates David Starkey that’s fair enough. Unlike Greece we have government institutions which actually function. Ordinary people pay tax, unlike Greece where tax evasion is a national sport. And we have impeccable democratic credentials, to the extent that we were able to hold a national debate on independence and the only casualty of the independence movement was Jim Murphy’s egg stained shirt.
Let’s face it. If you wanted to list the ingredients for a peaceful, prosperous, stable, democratic country, you’d list what Scotland has. And yet, according to the GERS fundamentalists, Scotland is an economic basket case which is worse off than Greece. That’s not an argument for remaining under the rule of those whose economic mismanagement has produced this lamentable situation, it’s an argument for running away from the clowns who have created this mess as fast as our hairy little Caledonian legs can carry us.
The truth that the GERS fundamentalists refuse to accept is that either the GERS figures do not represent an accurate picture of the financial position of an independent Scotland, or that their beloved Westminster has been criminally negligent in its economic management of this country. They can’t have it both ways.
The clowns of Westminster show no sign that they are aware of the damage they’ve done and are now intent on taking us into the financial catastrophe of Brexit where things are only going to get even worse.
The question facing Scotland is how do we get out of the Brexit mess we are currently in. Do we trust in the selfish arrogant Brextremist fools who caused the mess in the first place and who are bent on continuing the damage and making it worse, or do we trust in our own skills, our own talents, and our own abilities. Do we think it will be easier to repair the damage in an isolationist Brexit Britain, or in an independent Scotland with full access to the European single market and the trade deals that enables? Do we trust those who don’t care about Scotland, or do we trust those who do? That ought to be an easy question to answer, except if you’re a GERS fundamentalist.
The plan for this article and several others dealing with key points in the independence debate is to collate them and publish them in book form when we have a date for the independence vote. Some of these articles have already been published on this blog and others have yet to be written. The idea is that when we know when Scotland will be voting, I will do a crowd-funder specifically for the purpose of raising money to get the book printed, and then it can be distributed to Yes groups and campaigners and given away for free.
There’s already a Wee Blue Book, let’s have a Wee Ginger Book too. This isn’t meant as competition for the Wee Blue Book – which is a fantastic initiative with proven success – but rather it is to be complementary to it. Different writing styles and different books can appeal to different readerships and different demographics. The more information we can get out there, the more people we can persuade to Yes. If you have any suggestions for topics for articles to include in this book, let me know and I will write something up – if I haven’t done so already.
My new book has just been published by Vagabond Voices. Containing the best articles from The National from 2016 to date. Weighing in at over 350 pages, this is the biggest and best anthology of Wee Gingerisms yet. This collection of pieces covers the increasingly demented Brexit years, and the continuing presence and strength of Scotland’s independence movement.
You can order the book directly from the publisher. Ordering directly means that postage is free. You can order here –
https://www.vagabondvoices.co.uk/rants/barking-up-the-right-tree-2019
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