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Wings Over Poundland


GERS between the lines

Posted on March 06, 2013 by

According to today’s GERS report, in the financial year 2011-2012 Scottish public-sector revenue including a geographical share of North Sea revenue was estimated at £56.9 billion (9.9% of the UK’s total). As in previous years, Scotland’s 8.4% of the UK population is doing more than its share of generating the country’s money.

betweenlinesgers

The total public-sector expenditure of the Scottish government, local government, money spent “on behalf of” Scotland by the Westminster government and on Scotland’s share of UK debt-interest payments (up £400m to £4.1bn) was £64.5bn – equivalent to 9.3% of total UK public-sector expenditure.

Scotland’s estimated net fiscal balance was a deficit of £7.6bn (or 5.0% of Scotland’s GDP). The UK’s equivalent position was a deficit of £121bn (or 7.9% of GDP), meaning that Scotland is in significantly better financial shape than the UK as a whole.

All of these figures are based on the set of numbers in GERS which include Scotland’s geographical share of oil and gas. But a favourite argument of the No campaign is to imply (as the UK government does by also including in GERS two alternative data sets calculated instead on a per-capita share and no share at all) that Scotland would not receive such resources and that they’re in fact a shared asset.

This unusually subtle level of scaremongering is undermined by the UK government’s own arguments with the EU over the very same oil and gas, in which the UK has consistently presented the case that oil and gas are national and not shared assets, thereby accruing to the territory of the country they’re located in.

This fact is addressed on in the now-infamous McCrone report, page seven of which explores the question:

“Can one be certain that the oil is without doubt a Scottish asset or, even if it is, that these substantial revenues and balance of payments advantages would indeed accrue to an independent Scotland? Clearly these questions raise complicated issues in international law which could, if allowed, occupy the legal profession for many years.

Two possible lines of argument may be expected: either that Scotland should pay England some compensation for appropriating the most productive part of the Continental Shelf, or that the whole shelf should be regarded as the common property of the nations of the former United Kingdom with revenue distributed in accordance with some population based formula irrespective of where oil is discovered.

As regards the first of the arguments, the prospective return from oil revenue would at the very least be one of the factors taken into account in determining the financial settlement between the two countries when they become independent. To argue the second would be directly counter to the line that the UK Government has taken with the EEC, that the resources of the Continental Shelf are as much a national asset as are those on land, like coal mines, and that there is therefore no question of the Europeanisation of North Sea oil.

Disputes on these matters might well occasion much bitterness between the two countries, but it is hard to see any conclusion other than to allow Scotland to have that part of the Continental Shelf which would have been hers if she had been independent all along.”

GERS helps to shed some light on why Westminster wants to foster doubts in voters’ minds in this area, by highlighting that Scotland’s geographical share of oil production stood at 96.0% in 2011, while its geographical share of gas production was 52.4% – a total share of UK hydrocarbon production of 78.4%. But in fact the Scottish geographical share of North Sea tax revenue was 94%, due to differences in the relative profitability of oil fields in Scottish waters.

Another quirk of the figures is that as national debt interest is classified as a “non-identifiable expenditure”, Scotland is allocated the debt interest on 8.4% of the whole UK national debt, rather than the smaller proportion actually incurred by spending on or in Scotland – another Union dividend.

To attempt to disguise this level of subsidy from Scotland to England, Wales and Northern Ireland, GERS also records total expenditure per capita for each of the UK’s regions. In 2011-12 this is estimated to have been £12,134 in Scotland, a figure £1,197 higher than the UK average.

(Though the relative difference in public spending per capita between Scotland and the UK has been on a downward trend, falling from 13.6% higher than the UK average in 2007-2008 to just 10.9% this year.)

This figure is frequently used by Unionists to suggest that Scotland is getting more than its fair share out of the Union. But there are number of reasons why public expenditure per capita for Scotland is above the UK average. In some cases, it reflects the vastly lower population density in Scotland relative to the UK, increasing the cost of providing the same level of public service activity, particularly in areas such as education, health and transport.

A further explanation is that the figures don’t compare like with like. For example, unlike south of the border, Scotland hasn’t privatised its water and sewage treatment. This means that those services are included in Scottish public expenditure, whilst in England and Wales they’re operated by the private sector for profit and charge the public directly, taking them off the public-sector books. This alone adds a substantial sum to the Scottish per-capita figure.

Even that, however, is a red herring. When you pay your car insurance, say, you don’t care how many employees the insurance company is sharing the money around. All that matters is that the premiums make the company able to afford its obligations if you have an accident.

The GERS report, despite its own best efforts, provides empirical evidence that Scotland can afford to look after itself – even in an emergency – better than by handing over all its money and entrusting itself to the “charity” of the UK. And that’s why the No campaign is pulling out all the stops today in a desperate and comical attempt to distract people’s attention from it.

5 to “GERS between the lines”

  1. Connor says:

    I was looking forward to the release of the GERS figures, so I’m glad to see that they’ve lived up to expectations. After the Unionists insisted that Scotland’s relatively small deficit was rare and would soon be huge, it became even smaller – and with independence, we can keep it that way. I’m looking forward to the Wings take on the leaked paper disseminated by the No campaign next.

  2. TamD says:

    I followed the link to the BT “expose” and it crashed my computer. From what I read- the post it notes bare no relation to the content of the numbered paragraph to which it refers.

    Desperate stuff indeed.

  3. tartanfever says:

    So when we vote Yes and Westminster tell us that they will be taking 50% of the oil fields for  rUK, can we now use the fact that they credit 94% of oil revenue as Scotland’s to presume that these oil fields are indeed in Scottish waters which an independent Scotland would keep ?

  4. Westie7 says:

    So what will tomorrows FMQ line be to push this out of the limelight
    I see BBC Scotland are already lining up the script for Rosa Klebb, 
    Fake dossiers waving and NHS again!

  5. pmcrek says:

    @tartanfever
    The UK is a signatory of the UNCLOS treaties, all we need to do is send them a copy if they start playing silly buggers.






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