Scotland is wealthy but GERS makes it look poor. Time for a rethink

The National

2 days ago

It's all predictable. Performative. Boring. And utterly, utterly bogus.
Self-evidently, Scotland is a wealthy country with a sophisticated economy and well-educated workforce. If Scotland can't be independent on the grounds of economics, then someone has clearly forgotten to tell all the other independent countries without a fraction of our advantages or per capita wealth that they can't be independent either – and that they surely must come to their senses immediately.
READ MORE: SNP must not act as bystanders in run-up to next year's election
But then, any meaningful debate about the economics of independence has never been about whether we could, but rather about whether we should. Which is why it suits Unionists to ignore the political and economic imbalances of the UK to try to keep the independence debate mired in the narrowness of a GERS publication which, in its present form, is of no real use to anyone interested in a meaningful, good-faith discussion about the Scottish economy.
For despite the no doubt best efforts of the civil servants involved in producing it, all GERS really offers is a distorted view in the rear-view mirror, based on the difference between two very large numbers, each of which rely to a very large extent on estimates and assumptions rather than cold, hard outturn figures.
If you were foolish enough to try to use GERS as a proxy for independence, then there are some big problems with that. Since it allocates large amounts of reserved UK expenditure to Scotland, it immediately carries with it the assumption that an independent Scottish Government would wish to continue with certain spending lines – like expenditure on nuclear weapons, for instance. Clearly, not even the most rabidly pro-Trident Scottish Unionist could seriously anticipate that this would ever be the case.
A more serious flaw arises when it comes to spending under the control of the UK Government. GERS allocates a spend 'for' Scotland, as opposed to providing a record of what's actually spent 'in' Scotland. This means that large tracts of the defence budget, or the wages and taxes of tens of thousands of civil servants in London and the South-East of England, all get allocated on a population share to Scotland, on the grounds that this spend takes place for our benefit too.
READ MORE: Scottish city among 'best places in the world' for young people to live
The result is that Scotland is allocated costs of activity supposedly for its benefit, while missing out on higher tax revenues that would exist if such government work were actually located and employed in Scotland.
And all of this is – remember – a snapshot of one year in the past, rather than any kind of dynamic look forwards.
Nevertheless, the vested interest in portraying GERS as showing that a Scotland free of Whitehall's apron strings would immediately have higher taxes, poorer services, a plague of boils and locusts, or perhaps all at the same time (with even worse to come), still persists.
Last year, I mused about why Alex Salmond might have kept GERS in place after he became First Minister. I concluded that since the figures at the time were so advantageous for Scotland relative to the rest of the UK, it must have suited him in that pre-referendum stage to turn those figures right back on those who had always previously tried to deploy them against independence.
Even if so, it's surely now past time to give GERS a decent burial – or at least to turn it into something vaguely useful for the people of Scotland in whose name and at whose expense it is produced each year.
READ MORE: 'Cover up': Labour refuse to release files on secret meeting with Israeli minister
If we are to keep GERS, then we should get rid of the estimates when it comes to tax by devolving complete control of all taxes, and place Revenue Scotland in charge of their collection within Scotland. This would both locate more jobs in Scotland and give us solid real-time outturn figures for revenues.
We should ensure GERS reflects actual expenditure happening in Scotland rather than allocations of UK spending elsewhere. This would help solidify the true extent of the much-trumpeted 'Union dividend.'
We should also provide a breakdown of how UK spending decisions filter through to the Scottish Government's eventual budget. At year end, comparing UK Government boasts of increased funds with the reality of what actually reaches Holyrood would be both illuminating and enlightening for the public.