Jim O’Neill achieves what many have seemingly been unable to do this week – looking at the economic assessment released by the Scottish Government and acknowledging the reality of what it says.

Spoiler alert for Me Bungo Pony. This is an SNPBad post.

The Government Expenditure and Revenue Scotland document for the year to April 2019 shows yet another whopping deficit of £12.6bn. Admittedly this is slightly lower than the previous year but is still a mind-blowing amount. This is 7% of Scotland’s GDP, substantially more than the UK deficit of 1.1% of GDP, and is a clear picture of the state of Scotland’s dire economic position if we ever were to become independent.

It would require swingeing cuts in government spending, a picture already confirmed by the SNP’s own Growth Commission which predicted another 30 years of austerity for an independent Scotland. But even today government is accused of underfunding Police Scotland, who require to cut 750 officers just to make ends meet, and the NHS Scotland which is substantially short of nurses and GPs.

The only way to square that circle is to borrow more, but the government would have few ways of funding that borrowing. Without a central bank, but insisting on a new currency, the government would have no way to fund the protection of the Groat (or whatever else a new currency may be called), nor to devalue it, nor to fund quantitative easing, nor to print money for its magic money tree. Similarly, it would have no way of servicing Scotland’s portion of the UK national debt, which is spiralling out of control due to PM Johnson’s spending pledges.

So it would have to rely on taxation. But just soaking the rich will not come near to solving this problem. Scotland is already the highest taxed part of the UK but with little extra in social benefits to show for it, unlike the Nordic countries. And anyway, while past tax takes have been positive and rightly begin to throw the burden back on to those who can afford it (the needs of the many – where have I heard that before) the Scottish Parliament’s own information team, SPICe, are predicting a lower tax take in the current year due to the downturn in the Scots economy.

So where does that leave us? It is clear that the best performing parts of the UK are supporting the higher needs of Scotland, a basic premis of the Barnett Formula, created by Labour’s former Chief Secretary to the Treasury. Take away the union and that support disappears. Scotland would be on its own with little or no means to fund a spiralling deficit. Remember that this deficit just adds to the substantial debts of previous years, and we have not taken on board all the benefit responsibilities made available to us. The SNP government has asked the evil Westminster parliament to keep them for a few years yet!

This will undoubtedly be a central plank of any independence referendum campaign. The SNP tell us that if they had control of the central levers of the economy, they would do much better. Unfortunately I have yet to see a single proposal from Mr Mackay’s team as to what they would do with such levers and how that would improve the finances of our country. Again, this must be explored in any referendum campaign. Vague promises will not hack it. It is time for detail.

And further, if Brexit happens on Halloween, all these attempts will take place as a supplicant country seeking the enfolding arms of the EU and the European Central Bank with decisions on how to manage our deficit taken out of our hands, just as in Greece, Spain and Portugal. The ECB is not known for its gentle dealings with deficit ridden supplicants. All that is, of course, for another day, but the SNP must come clean on the impacts of the deficit and their plans to lower it, and they must be honest with the Scottish people about the economic impacts of independence. Braveheart and the Outlaw King will no longer work with an increasingly sophisticated electorate. My hope is that any referendum rejects independence by an even wider result than 10 points, a result that will really end the speculation for a generation, or even a lifetime!

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59 thoughts on “GERS unspun

  1. Hi Jim. You’re in good form but, you’ll be astonished to hear, I’m not convinced. I’ll take your article point by point if I may.

    (1) “The Government Expenditure and Revenue Scotland document for the year to April 2019 …. is a clear picture of the state of Scotland’s dire economic position if we ever were to become independent”.

    No it isn’t. Its a snapshot of the situation under the current constitutional arrangement. It is NOT the situation an independent Scotland would face. As agreed by leading economists including the Governor of the Bank of England Mark Carney.

    (2) “It would require swingeing cuts in government spending”.

    No it wouldn’t. The increase in revenue of about £3bn and 12% drop in the “deficit” was achieved without austerity. As were the successful policies of our European neighbours who managed to come out of the 2008 crash more rapidly without the punishing austerity meted out by the Westminster Parliament unopposed by Labour.

    (3) ” ….a picture already confirmed by the SNP’s own Growth Commission which predicted another 30 years of austerity for an independent Scotland”.

    Who is spinning now? The Growth Commission “confirmed” no such thing and you know it.

    (4) “The only way to square that circle is to borrow more”.

    No it isn’t.

    (5) “Similarly, it would have no way of servicing Scotland’s portion of the UK national debt, which is spiralling out of control due to PM Johnson’s spending pledges”.

    We can at least agree that the UK’s debt is utterly incredible and the Tory Govt is “promising” to make it worse …. though Johnson is probably just lying again to get short term popular support. However, an independent Scotland would not need to “service Scotland’s portion of the UK National debt” as it would not be Scotland’s debt to service. The UK insists it will NOT be a Successor state but a Continuing state and as such will be responsible for the whole of the debt. Its debtors will insist on it. Therefore, an independent Scotland would have a bill of £0 for that debt. I know the Growth Commission spoke about “Solidarity Payments” to show good will or some such nonsense but the very wording shows it would be voluntary NOT mandatory. No other newly independent state has had to shoulder the debts of its former “master”, why should Scotland be different?

    (6) “Scotland is already the highest taxed part of the UK but with little extra in social benefits to show for it”.

    No it isn’t. It is the lowest taxed part of the UK by some margin. Most taxpayers pay less or much the same as their English counterparts in Income Tax. But all pay much less in Council Tax. Very few people in Scotland pay more tax than the rest of the UK but many pay less. I’m sorry to see you giving credence to a Tory lie. As for benefits, you may decry them as being “in crisis” but public services in Scotland are almost universally superior to the rest of the UK. I wish you would finally acknowledge that.

    (7) “It is clear that the best performing parts of the UK are supporting the higher needs of Scotland”.

    No they are not. Of the 12 UK “Regions” (sic) Scotland is the 4th best performing. By your logic, we are then subsidising all the “Regions” (sic) below us. Like NW England whose “deficit” is over £20bn, Wales whose deficit is nearly £14bn and N.Ireland whose deficit is nearly £10bn (with a fraction of Scotland’s popln).

    (8) “Unfortunately I have yet to see a single proposal from Mr Mackay’s team as to what they would do with such levers and how that would improve the finances of our country”.

    I refer you back to the answer I gave where I informed you of the “increase in revenue of about £3bn and 12% drop in the “deficit”.

    The bottom line with the “mythical” GERS “deficit” is that, on independence, it could be wiped out in a day without a hint of austerity. Not having to service the UK’s mind-melting debt and pay for “national” projects like HS2, Cross-Rail and Trident would knock over £6bn off the “deficit” in an instant. Taxing the North Sea at realistic levels would take care of the rest. Current NS revenues are artificially low for mystifying reasons. Between 2015-17, Norway took in nearly £30bn of revenue from the NS while the incompetent UK actually lost £23m. While Norway took nearly £5bn from Shell alone the UK actually “gave” Shell about £180m to take the stuff out of the ground and sell it for a vast profit. Its nuts and should be a scandal in the UK as a whole, not just Scotland. English taxpayers should be demanding to know why their NHS is falling to pieces while a vast resource is being given away for what appears to be political reasons.

    Anyway, that’s enough for now. Keep well Jim.

    1. You’re doing well Bungo. You won’t be surprised too that I don’t agree with your comments. The Financial Commission looked forward to 30 more years of austerity under independence. Further, I really do wish that Mr McKay would advise us what he would do different if he controlled the economic levers, other than cancelling Trident, a position that both I and the Scottish Labour Party agree with

      1. The Scottish branch office may support cancelling Trident, but the head office in London do not. So Scottish Labour’s position is irrelevant while Scotland remains a “region” of the UK.

        1. We continue to try to convince the national Party of the wisdom of our position

  2. Excellent article Jim. Unfortunately we live in a post truth world where true believers will not encounter this negative talk. I feel that until they experience the swingeing cuts at first hand that indy would bring they will deny even their own Govt state of the nation figures.

    1. Point out anything “post truth” in what I have said.

      Also, explain to me how my country’s poor economic state (If we accept GERS at the shallow, face value you appear to) is an argument FOR the Union? As I’ve asked before, and never got an answer, if the Union is so good for Scotland, why are we not looking smugly at our small European neighbours wondering what good independence is when we are outpacing them in the Union, instead of looking enviously at their wealth while we languish as relative paupers in said Union?

      Furthermore, the “austerity on steroids” unionists keep scaremongering about is simply Scotland’s public spending being reduced to the English level so we already know what it would look like. Can you guarantee we will never be reduced to the English level if we remain in the Union? I doubt you can. After all, if you keep telling people their neighbours are living high on the hog at their expense you can’t act all surprised when they decide stop funding the party.

      Basically, just as the claim that only a No vote would secure EU membership for Scots proved to be false, the claim that only continuing to be a “region” of the UK will secure Scottish public services is also false.

      1. Ahhh …. as ever, no answer to these questions. For unionists, it’s easier to just accept Scotland’s seemingly poor performance under the Union as the norm (with English “charity” seen as the infinite remedy to it) than question why it should be so. They especially don’t want Scots comparing it to the success of our small, independent European neighbours. They might start questioning the worth of the Union themselves if they did and that would never do.

        It’s strange that Scotland should be seen as doing so “badly” for many decades now. Especially as it;

        1. Has a trade surplus which compares well with the UK’s massive trade deficit (The largest per head of population in the World).
        2. Produces more food than it needs.
        3. Has more fresh water in Loch Ness alone than every lake, river and stream in England and Wales combined.
        4. Produces more energy than it needs with the potential to produce massive amounts more from clean, green sources (that potential is currently hamstrung by Westminster policy).
        5. Is the lowest taxed “region” (sic) of the UK.
        6. Has some of the best Universities in the World.
        7. Is one of Europe’s major financial centres.
        8. Has massive amounts of oil reserves (currently incompetently …. or politically …. mismanaged by Westminster).
        9. etc, etc.

        One has to wonder what it is that has been holding Scotland back for all these decades. What do all our small, “independent” neighbours have, that Scotland doesn’t, that has allowed them to prosper as Scotland hasn’t (if we take GERS at face value)? Hmmmm ….

        1. It’s genuinely impressive that you can acknowledge both Scotland’s higher public spending per head and lower taxes per head, and then continue to deny the reality of the deficit which literally makes that possible.

          1. I acknowledge Scots pay less per head in tax than other UK subjects and I appreciate your own acknowledgement of that. If only other unionists would see it your way and stop perpetrating the Tory lie of being the highest taxed “region” (sic) of the UK.

            And I don’t deny the “deficit” as you call it. GERS are GERS and, as I’ve said, they do not illustrate the starting position of a newly independent Scotland. No unbiased financial expert says they do.

            I’ve illustrated how that “deficit” could be massively reduced, if not wiped out, on day one of independence and listed some of the many positive reasons there are for an optimistic view of an independent Scotland’s future. I can see no reasons for optimism if we remain in a Union with an isolated, imploding, increasingly xenophobic country that sees us as “subsidy junkies” and a drain on their financial resources. Westminster may not want to fund our mythical party for much longer. Especially if unionists keep rubbing it in both England and Scotland’s noses.

  3. Whatever happens guys we are heading I think for catastrophe if its a hard no deal Brexit
    Derek MacKay has warned it could hit Scottish Tax revenues by 2pt 5 Billion a year .
    The Scottish Government a no deal Brexit could reduce Scottish GDP by 7 per cent
    David Phillips associate director of the Institute for Fiscal studies said an Indy Scotland would have to have a plan to be presented to Brussels showing how Scotland would bring its deficit down to 3 per cent .
    He said that is required under the EU Excessive Deficit Procedure .
    He thinks this would mean difficult decisions on tax and spending .
    Thursdays National has a great analysis . Once you look past the headlines .
    Also remember Derek Mackay has stated in the past a no deal Brexit will mean an emergency Scottish Budget .
    Phillip Hammond said the same when he was chancellor .Of the UK
    We did not vote for any of this Brexit frightens me it should frighten all of us .
    I hope the people who compiled Gers are better at counting than the people who compiled the immigration figures .
    Would any one like to hazard a guess as to how many are here .
    And I welcome everybody .
    For me any Brexit is a disaster .

  4. PS as a Rangers supporter I am never in a spin haha But The football bosses are correct with the closure .

  5. I understand a new Scottish currency would be called the Shoulder and it’s sub denomination the Chip.

    You’d get 100 chips to the shoulder.

    1. Given the basis of the English nationalist resurgence in relation to Brexit, we’re in “pot/kettle” territory here.

      1. Correct Bungo
        Take our country back great slogan
        From what I saw at the G7 Boris gave it to Trump .

    2. Chuffed with that wee effort? Did yer mates encourage you? You, of course, realise they are now sneering behind your back at you for making such a ***** of yourself!

        1. Not sure what happened my reply was supposed to be to the appropriately named, if misspelt, Brian Damage.

  6. You misunderstand the purpose of GERS, Jim. It was designed specifically to make the Scottish economy look like a basket case, the underlying purpose being to spike Labour’s devolution plans, which I supported at the time. That purpose was explained in a memo to the cabinet, in 1992, from the Secretary for Scotland in a State, Ian Laing. For younger readers, ( not you Jim, or me) a memo was what we leaked before we had emails. That’ s why, of the 26 figures given in GERS, 25 are guesstimates. It’s why we use treasury figures, a treasury that, according to its chief secretary at the time of the Indyref, saw its job as preventing a yes vote. Even if it were in any way accurate, like any set of books, it would be a snapshot of the economy at a given time in a given set of circumstances. Those circumstances include a U.K. economy bent out of shape to accommodate the City of London, and a Scottish economy in the maw of Whitehall/Westminster.
    Finally, Jim, hope you’re fit and healthy. Remember, in order to earn more in pension than in salary, your target, assuming Trump, Putin or some other nutter doesn’t end the world first, is to live to c 132. Terms and conditions apply.

  7. Actually no. It is prepared by Derek McKay’s department and signed off by him. In the past SNP Ministers have challenged these figures. No longer. Even the SNP Deputy (an English usage In Scotland it is Depute) Leader has said that independence would create substantial Austerity and at least £6bn cuts. And this was last weekend

    1. Actually NO, your being misleading again, the actual data used in producting the GER’s is provided by the UK Treasury to the Scottish government.

      Try again :

      1. Only some of it. The majority is collected by the Scottish Government. And it’s GERS.

          1. About a third. And all of it, including that third, is classed as National Statistics which means it’s been assessed by the Office for Statistics Regulation as fully compliant with the Code of Practice for Statistics.

    2. More accurately, the data is processed by Scottish based civil servants, but using treasury figures. The signing of is, I think, a political decision to pre empt (preempt?) an argument over the figures becoming the story. Apologies, I should have been more precise. That aside, I’m pleased that you accept the rest of my post

      1. Oh come on. Are you deliberately misunderstanding Duncan’s point. Two-thirds of the GERS is produced by the Scottish Government and the Treasury adds the non-devolved spend allocated to Scotland. The Scottish Government then signs these off. In the past it has disputed the figures used by the Treasury but it does that no longer.

        1. As what’s the point? To dispute them would just embroil the Scottish govt in weeks of pointless, misleading debate for no good reason. They have learned that if you just basically ignore them, and dismiss them as being no basis for the finances of an independent Scotland, the whole unionist glee hoo-hah (as they celebrate their country’s apparent economic neuturing under their union) deflates rapidly.

          While unionists look forward to their annual GERS festival, it is not a good look for them in the long run.

  8. Just read this in the Times
    A no deal Brexit will put 38 thousand jobs at risk in Glasgow and Aberdeen think schools will not be able to provide nutritious meals
    And Gordon Brown yesterday told Jeremy Corbyn and other opposition leaders to stop wasting time on Self indulgent plans for a national unity Government .
    And instead convince the EU to extend Brexit beyond October 31

  9. Does anyone actually believe Scotland is responsible for 60% of the past years UK debt.

    And sorry Jim but between your article and the GER’s figures, a whole new fantasy world beckons to be explored.

    G.O.S. — “Game of Sell”

      1. Unfortunately for you Duncan, I read a lot more about this subject than what suits you. Now here is a little quote from Richard Murphy (Tax Research LLP) he appears to be quite the expert on Tax.

        “The GERS data is ludicrous: Scotland does not generate 60% of the UKs fiscal deficit”

        You should try reading his article, but I doubt you will as it does not suit your need to down Scotland at every opportunity.

        1. That’s precisely the debunked desperate nationalist nonsense I was referring to. Read the Fraser of Allandar blog. It explains very clearly why Richard Murphy’s argument is misleading and why the figures in GERS are entirely consistent with what we know about the UK economy as a whole.

          Or don’t, I guess, and keep choosing to believe only what suits you.

          1. https://www.taxresearch.org.uk/Blog/richard-murphy/

            “Richard Murphy (61) is a chartered accountant and a political economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”. He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics. He is a member of the Progressive Economy Forum. 

            Richard was a co-founder of the Tax Justice Network and Green New Deal, as well as the Fair Tax Mark.

            According to International Tax Review Richard was the 7th most influential person in global tax in 2013. In 2016 Richard was in the same journal’s Global Top 50 in tax, one of only two people to have been so for the whole five years it had published such a list. In 2017 he was ninth on the same list”.

            Seems like he knows his stuff.

          2. “Or don’t, I guess, and keep choosing to believe only what suits you”.

            I don’t think any one side of the debate has the monopoly on that.

  10. More Brexit
    The Times the Archbishop of Canterbury the most reverend Justin Welby has been told to stay out of the Brexit debate by Ian Duncan Smith .
    BBC Red Button Monday night Boris wants to pack the Lords with pro Brexit business Leaders and activists .
    Corbyn conducting stop Brexit talks I have thought for some time that relations between UK Labour and SNP MPS is a lot closer than we know.
    I think Trump has bailed out Boris that’s why he was all smiles at the G7.
    I don’t trust any of them

  11. Ch4 news today Tuesdays meeting in Corbyns office
    The emphasis is moving away from a no confidence vote to delaying the leave date next week

  12. Well Boris just trumped everyone.
    Parliament suspended All those high paid so called political Journalists who were in France .
    How come they did not see it coming .
    STV News Ruth is going to stand down as leader although they say it might be for family reasons she is now a parent .
    To all Conservative and Unionist MPS from Scotland none of you represent constituencies that voted leave .
    So I say none of you should be voting for Brexit .
    And you should certainly not be backing a shut down of Parliament .
    If you do and Nicola plays her cards right that Unionist part will disappear .Along with you .
    Tory MSPS same to you back this and your party will disappear as well .
    You can start by backing the motion before Holyrood to oppose a no deal Brexit if you don’t you will be out the door as well.
    And Lawyers are all over this

  13. Well Ruth did what I asked and resigned
    On Scotland tonight Wednesday Scottish Sun reporter said he picked up rumours a week ago .
    Ruths office no comment at the time
    Thursdays Times CH4 News Ruth was talked out of resigning a month ago .
    Times if Boris loses a no confidence vote he wont resign he will call a general election for after Brexit day .
    Times says months of planning and wargaming went into the plan to shut parliament early .
    They decided to act when they got word of the meeting in Corbyns office .
    And when Corbyn got wind of the visit to the Queen it was to late .
    Boris is running rounds round them .
    I signed the online petition to stop the shutdown of Parliament .

  14. Hello all – I find the GERS debate confusing – every year – but the argument always breaks down into two factions: those in favour of independence who site the problems with GERS, and those in favour of retaining the union who site its veracity and highlight the flaws in the pro-independence arguments. So, I am not going to get bogged down in a repeat of that (I am on the pro-indy side) but I would like to point out that it states on the Fraser of Allandar blog:

    “It is always important to remember that GERS takes the current structure of UK Government reserved taxation and spending as given. If the very purpose of independence is to take different choices about the type of economy and society that we live in, then a set of accounts based upon the current constitutional settlement and policy priorities will tell us little about the long-term finances of an independent Scotland.”

    The Institute of Fiscal Studies mirrors this view on Scotland too.

    1. Do not disagree with that Wynn, but I would also want to note the legacy costs that Scotland would be required to pay to rUK, just like the legacy costs the EU is requiring of the UK if Brexit goes ahead. They would have to be factored in to a starting balance

      1. What “legacy costs”? The legacy costs the UK, as an independent member state of the EU, is required to pay relate to projects the sovereign UK govt agreed to part fund before the Brexit lunacy took hold South of the Border. What projects have the Scottish govt (which has no sovereignty) agreed to part fund within the UK but outwith Scotland (which is not an “independent member state of any union)?

      2. And what “legacy costs” would that be Jim ? I remember the treasury took full responsibility for all UK debt back around 2013/2014.

        So what costs ???

  15. Saturday CH4 News Javid angry that his media advisor sacked without his knowledge .Chose not to resign .
    Rebel Tory MPS told vote against the Government and you are deselected .
    Hammond that’s hypocritical as there are a number of serial rebellers in the present Government .
    Ch 4 news just apologized for asking where was Jeremy during protests .That he called answer he joined a protest in Glasgow So I will ask where was Nicola

  16. When I saw reports on Friday news Govan road blocked I thought the stop the coup protest had gone a day early .
    I could not believe it when I saw an Irish unity march had been confronted by Loyalists in Glasgow.
    Hundreds involved police in riot gear mounted police dog units helicopters smoke bombs
    Stv news and BBC news local residents afraid in their own homes .Cant understand why it was allowed 1 resident said police were opposed .
    I hope nothing happens at the old firm game .
    But what a terrible advert for Scotland we need to look at this football was not involved this was something else .

  17. Jeremy and Richard were at the stop the coup demonstration in Glasgow where was Nicola

    1. She was busy being FM of Scotland. She does not have the luxury of being an opposition leader with time on their hands. The implied idea that she is somehow distancing herself from anti-Tory protests is laughable given her words and actions since the EU referendum …. and her entire political career for that matter.

      1. Where was Blackford then. Oh running his little croft. Lol. And I also noticed the LibDems were missing too

        1. So I guess Labour are the only party who oppose Brexit then? Or do they support it? Or are they agnostic on it? Not even the Labour party knows what it’s stance on Brexit is so let’s have less of the playground stuff and concentrate on trying to get Scotland out of this bourach of another country’s making.

        2. Doubt it Jim, he was on TV a lot last night and again this morning.

          Have you seen the latest Times poll? Not good reading for Richard I fear.

  18. Rangers prepared to spend 7 million on a player .
    Some day we will have to deal with crazy transfer fees like that

    1. They are prepared to add £7m to their already massive debt as they are not in profit. Sevco Rangers are almost certain to go the way of their predecessors unless they drastically cut their wage bill and start using loan players and free transfers. The way this new club has been financially exploited and mismanaged by those entrusted with its huge initial “start-up” fund is scandalous. Paying out £millions to players, staff and board members while playing against the likes of Albion Rovers and East Stirlingshire was sheer suicidal hubris. Not that I would be sorry to see them fold.

      1. Thankyou for your comment Bungo I agree Rangers buy for 7 million
        Celtic sell for 25 million in England ridiculous fees .
        In England its funded by tv money and sooner or later it will all crash .
        Maybe sooner than we think .

  19. As I write this we might have an election there are good reasons for Labour to vote for or against worse abstain .
    SNP have said they are thinking about what to do as well . I think they will vote for .
    I don’t normally watch debates but last night I did .
    What a disgrace Westminster is .
    I thought all the opposition parties Labour SNP and the others rose to the occasion .
    The Tories were a disgrace constant barracking .
    Then Rees Mogg gave Toffs a bad name lounging on the Government front bench looking absolutely bored .
    And people were talking of that today .
    The PM calling people names .
    Then today at PMQS more name calling Corbyn Frit Chicken Surrender documents swearing although quoting a Labour MP and calling the SNP separatists .
    Also 21 Tories lose the whip .
    Including Phillip Hammond Ken Clark and Sir Christopher Soames Churchills grandson .
    One of the other rebels said he joined the Conservative and Unionist party not the English National party

  20. I have noticed before that Boris is using the Trump play book .He is using his position to bully name call and today Thursday used Police trainees as a backdrop for a speech .
    One had to sit down he saw it and carried on .Disgraceful .
    He should be called to account to say why he did not stop.
    And we should be told who authorized this stunt .

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