but nothing whatsoever to do with a Glasgow football team.

GERS   (Government Expenditure and Revenue Scotland) bothers me as I’m not sure I’ve yet found an authoritive analysis of what they actually tell us about the state of the Scotland’s economy.  (A thought just occurs, is there an equivalent GERE for England’s economy?  That would make an interesting set of comparisons if such figures exist)

Anyway, this post is about GERS and it’s likely to leave you as confused as I am……..  Comments welcomed!!

So to GERS.  GERS is compiled by statisticians and economists in the Office of the Chief Economic Adviser of the Scottish Government. The Scottish Government’s Chief Statistician takes responsibility for this publication. But, and it’s a might big but,  the key word here is “compiled”.  The source or raw data is supplied to The Scottish Government by  departments of the UK Government.  Such departments being HMRC, ONS and others.

So there’s a first reason why independence supporting people might be suspicious of the GERS accuracy.

Here’s something else interesting from the Scottish Government website
“Historical estimates of Scotland’s public sector finances consistent with GERS published in March 2015 are not available.  This is because detailed UK revenue and expenditure on an ESA10 basis have not been produced by the ONS.  Previous versions of historical estimates are available for user reference below.  Caution should be used when drawing conclusions from these estimates.”

So is this another reason for questioning the reality of the GERS figures?

A common cry on social media is “What about the Whisky Taxes?”  Well sorry to break what might be bad news to some, but the tax on whisky is consumption based.  That is, you and I pay it when we buy the stuff.  Sure the whisky industry is an exporter from Scotland, but the value of that would only show up in Scotland’s balance of payments figures.  Currently they make a much needed contribution to the UK balance of payments figures.  Oh, and most of the whisky is owned by multinationals, eg Diageo.   They could do clever accounting tricks if they desired to.

Below, is a table taken directly from the Scottish Government website.   I’m not looking at any of the individual lines or entries. I’m more interested in the  number of times the word “estimates” shows up.   Is this yet another reason to be cautious before accepting the GERS figures as gospel truth?

Q: What is the GERS estimate of Scottish revenue for HMRC tax categories?

A: The table below provides the GERS revenue estimates for the years 2009-10 to 2013-14, under the categories used by HMRC.  A description of how the HMRC categories match the GERS categories is provided if they are different.

There are a number of differences between the GERS and HMRC estimates, including:

• HMRC receipts are on a cash basis; GERS receipts are on an accruals basis;
• HMRC includes estimates for Customs Duties.  These are collected by HMRC on behalf of the EU.  They are not included in GERS revenue estimates.
• HMRC estimate Scotland’s geographical share of offshore corporation tax and petroleum revenue tax (PRT) separately.  The GERS figures are based on Scotland’s share of total North Sea revenue, with this single estimate share applied to both offshore corporation tax and PRT.  The individual GERS estimates of corporation tax and PRT are therefore less meaningful.

GERS revenues by HMRC category (£m)

	2010-11	2011-12	2012-13	2013-14	2014-15	Notes on presentation on GERS
Total HMRC receipts excluding customs duties (Geographic)	41,638	44,995	41,584	42,061	41,689
Total HMRC receipts excluding customs duties (Population)	35,638	37,254	37,387	38,911	40,323
Income Tax	11,012	11,127	11,022	11,277	11,735
Capital Gains Tax	201	277	321	240	293
NICs	7,968	8,270	8,501	8,730	8,969
VAT	7,306	8,215	8,456	9,141	9,512	Net VAT receipts only, part of VAT
Corporation Tax (Onshore)	2,598	2,424	2,551	2,566	2,920
Corporation Tax (Offshore – Geographic)	5,524	7,031	3,377	2,681	1,489	Part of North Sea revenue (geographical share)
Corporation Tax (Offshore – Population)	575	739	366	295	172	Part of North Sea revenue (population share)
Bank Levy	0	120	110	180	221	Part of other taxes, royalties, and adjustments
Bank payroll tax	124	0	0	0	0	Part of other taxes on income and wealth
Petroleum Revenue Tax (Geographic)	1,173	1,620	1,331	857	55	Part of North Sea revenue (geographical share)
Petroleum Revenue Tax (Population)	122	170	145	93	6	Part of North Sea revenue (population share)
Fuel duties	2,304	2,259	2,240	2,271	2,294
IHT	175	170	175	210	229
Shares	243	236	181	268	252	Part of stamp duties
Stamp Duty Land Tax	334	275	283	389	478	Part of stamp duties
Annual Tax on Enveloped Dwellings	0	0	0	4	5	Part of stamp duties
Tobacco duties	1,058	1,208	1,278	1,242	1,211
Spirits duties	341	369	369	373	373	Part of alcohol duties
Beer duties	281	255	226	222	224	Part of alcohol duties
Wines duties	267	314	322	350	346	Part of alcohol duties
Cider duties	24	30	28	26	19	Part of alcohol duties
Betting & Gaming	98	122	122	173	185
Air Passenger Duty	185	228	243	273	309
Insurance Premium Tax	174	204	202	211	206
Landfill Tax	129	131	139	150	147
Climate Change Levy	61	63	61	117	163
Aggregates Levy	55	48	43	43	54
Swiss Capital Tax	0	0	0	63	0	Part of other taxes on income and wealth
Misc	0	0	0	0	0
Customs Duties	n/a	n/a	n/a	n/a	n/a
Tax Credits Net Payments	2,211	2,238	2,219	2,160	2,096
Child Benefit Net Payments	924	930	921	862	863

What’s in the GERS

Allocations of ‘Scotland’s Share’ of UK wide expenditure.  Contentiousness starts here.  Who decides what is ‘Scotland’s Share’ and on what basis?   What’s ‘in’ and what’s ‘out’?  Ah, that’ll be the UK Government departments who provide the data to the Scottish Government.

What’s not in the GERS

As these are figures which reflect the existing status of Scotland within the UK, and continuing to be so, then they by definition cannot be foreasting or including anything an independent Scotland might do. GERS does not show anything like:

•  an allocation to Scotland of VAT  arising from economic activity in Scotland
• an allocation to Scotland of Corporation Tax from business’s headquarted in Scotland
• Military expenditure, old-age pensions and benefits for a future iScotland (These are set by Westminster, with no input from the devolved administrations and a share of costs is allocated)
• any accounting for anything which could reasonably be interetpreted as an asset

 

Summary

So, congratulations if you’ve made it this far.   We know that GERS are confusing statistical figures with perhaps limited accuracy built usp from a whole heap of assumptions. And yet the MainStream Media loves them and treats them as though they were carbonite solid  bey-your-grannies-house-on-them types of figures.

They are all we’ve got and if they’re showing something negative we need to work away at that. We also need to seriously hassle the Scottish Government to measure and produce better statistics.

Other people’s views on GERS

Wings Over Scotland  :  http://wingsoverscotland.com/the-limitations-of-gers/

John McLaren at Scottish Trends : http://scottishtrends.co.uk/wp-content/uploads/2016/08/Analysis-of-GERS-2016.pdf

Margaret Cuthbert : https://www.commonspace.scot/articles/9162/margaret-cuthbert-what-gers-and-brexit-reports-tell-us-about-scotlands-economy