How Gers swapped shirts, by Iain Macwhirter

3 Jul 08
Nationalists used to dismiss the Government expenditure and revenue Scotland report as unionist propaganda, but these days they are wielding its findings as a weapon in their fight for independence

04 July 2008

Nationalists used to dismiss the Government expenditure and revenue Scotland report as unionist propaganda, but these days they are wielding its findings as a weapon in their fight for independence

There is something about the Government expenditure and revenue Scotland report that always makes me think of football — something to do with 'Gers' being terrace shorthand for 'Rangers'.

And the footie imagery is rather appropriate since the annual argument about the Gers tends to sound a little like rival crowds of football supporters jeering each other. Only this time the teams have changed ends.

In the past, the Scottish National Party used to dismiss the annual Gers figures as an unreliable unionist exercise in statistical manipulation designed to show that Scotland is financially dependent on England. Not this year. Suddenly, the Nats love the Gers not least because the latest figures suggest that, with oil revenue included, the notional Scottish current account deficit of £6.7bn is wiped out and replaced by an £800m surplus. 'Gers backs independence claim!' cried one headline.

'No, it doesn't!' cry the Labour fans on the opposition side of the stadium. You can't base a budget on a fluctuating and declining resource, which only ten years ago was trading at $15 a barrel. Without oil, the deficit would be £10.2bn.

What's more, if you take in capital spending, adding the cost of things such as decommissioning nuclear power stations, Scotland has a with-oil deficit of £2.7bn. 'Red card!' cried Labour and the Liberal Democrats in Holyrood.

Not so fast, said the Scottish Government in its rebuttal to the rebuttal. The UK accounts have relied on oil revenues for the past 30 years, so it is quite legitimate to apportion the 83% share Scotland would receive as a minimum under international law. Also, the Gers figures are a year behind and assume oil is $64 a barrel when it has been an average of $120 this year and is likely to remain over $100 for the foreseeable future.

Finally, if you want to take in capital spending then the Scottish deficit is 2.1% of gross domestic product, which is less than the UK deficit of 2.3%. Scotland's finances are in better shape than the UK's. 'Come on you Gers!'

Labour makes one final challenge: if the figures are so sound, why did the SNP dismiss Gers in the past? Isn't it rather suspicious that the first set of Gers figures since the SNP minority government took over should appear to support the cause of independence? Haven't you just moved the goalposts and browbeaten the civil servants into coming up with the numbers you want? It's a fix.

This is probably the most damaging argument, at least from a public finance point of view. It does look rather as if the Gers figures have been massaged to flatter the new nationalist government.

However, the civil servants who compile Gers are adamant that they acted independently and had no consultation with ministers before their document was published. A review of how the spending figures are calculated had been conducted before the change of government, at the instigation of the Scottish Parliament's finance committee.

The trouble with the Gers figures is that they always had a taint of political expediency about them. They were introduced by the Tory Scottish secretary, Ian Lang, back in 1992 when he was trying to make the case, not against independence but against devolution.

He wanted to show that Scotland received such a good financial deal from the Union with England that it would be economic madness to think of upsetting things by creating a Scottish Parliament. The civil servants crunched the numbers and came up with a large fiscal deficit — or 'Union dividend' as it became known.

Times change. Now the figures are being used to argue the case for independence. Gers is a fascinating lesson in the politics of statistical analysis, or, as others might put it, how you can prove anything with statistics. The point is that neither set of figures is actually wrong, they just look at the question from a different point of view.

Gers was never going to be a very satisfactory statistical exercise because Scotland and England are not separate countries. In a unitary state it is very difficult to come up with sensible figures about how much the different bits raise and spend.

But with a change of government making independence a real political possibility, the figures suddenly take on a new resonance.

The key, of course, is the oil, which inevitably enters the equation if you start thinking of Scotland as an independent nation. But it is also the interpretation placed on the 2.1% notional Scottish budget deficit. This is not now seen as an English subsidy but as a normal tool of national economic management.

So, as we enter extra time in the great constitutional debate, it remains a game of two halves. But at the end of the day, Gers, it seems, has turned from unionist propaganda into an exercise in fiscal separatism.

Iain Macwhirter is political commentator on the Sunday Herald


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