Wednesday, 7 December 2016

Changing The Rules of The Game

The 1.6 million Scots who voted for independence in September 2014, the 17.4 million Brits who voted for Brexit in June this year and the 62.5 million Americans who voted for Trump last month all share something in common: they want to see the rules of the game dramatically changed.

If, like me, you’re unsettled by this, maybe ask yourself how well the current rules of the game have suited you and – perhaps more importantly - what are you doing to make the rules fairer?

If you’re broadly successful and content with life, chances are the rules have suited you pretty well. That doesn’t necessarily mean you’ve had it easy, that you haven’t had to work hard to get to where you are.  But it probably does mean that you have an aversion to the idea of tearing up the rule book. After all, who wants the rules to change just when they’ve sussed out how to play the game?

It's traditionally been easy to remain complacent about the need for change, because those with voices most likely to be heard tend to be those for whom the current system works. Newspaper editors, media personalities, enigmatic politicians, successful business people – most of them are where they are because they've learned how to play the game well. The reason they’re in a position to be heard - and perhaps drive change - is also the reason why many have a vested interest in maintaining the status quo.

But the truth is we have both a moral obligation and a pragmatic incentive to keep changing the rules of the game so they’re fairer for all. The moral imperative has always been there, but maybe these recent votes will serve to shake the more complacent into pragmatic action. Change is coming, the only question really is who will be the architects of that change?

Take today's speech by Scottish Labout leader Kezia Dugdale calling for a new federal "Act of Union". It will be sniffed at by those on one side who fear change and those on the other who reject any proposal that falls short of full independence. But to resist any change is to ignore the 1.6 million people who voted Yes; to insist independence is the only acceptable option is to ignore the 2.0 million who voted No. The rules of the game need to change - personally I think it's encouraging to see Scottish Labour seeking a constructive solution.

Similarly, those who fight tooth and nail against progressive taxation measures and modest steps to improve wealth distribution would do well to compare the “injustice” of paying a bit more tax with the injustices of, to name but a few: tax avoidance, excessive executive pay, exploitative employment contracts, low wages, the educational attainment gap, food poverty, child poverty and urban deprivation.

Look at the evidence of our recent plebiscites: our failure to keep changing the rules of the game for the better has created a large body of people who feel any change must be better than what they’ve currently got.

This has created an opportunity for Machiavellian chancers to grasp for power by appealing to the disenfranchised and malcontented. The likes of the SNP, Farage and Trump offer voters a chance to dramatically change the rules of the game and take a free swing at the liberal elite into the bargain.

To be fair to them, these narrow-minded, populist policy peddling fundamentalists do genuinely want to change the rules of the game. It's just that their objective is to gain more power for themselves with little or no concern for the price paid by others.

If we are currently ruled by a "liberal elite", let's hope that they realise before it's too late that their failure to keep changing the rules of the game for the better opens the door for the "illiberal elite" to replace them.

Tuesday, 22 November 2016

Defacing the Facts: SNP MP Paul Monaghan

[The text of this article appeared in the Daily Record on 23/11/2016]

The problem with political debate in Scotland is not that people aren’t well informed, it’s that the SNP ensure they’re very well misinformed.

It’s not a sophisticated strategy, but it seems to be an effective one. By using Twitter, official party representatives can basically get away with saying whatever they like by avoiding having to deal with pesky journalists who tend to like to check facts before they report them. On social media, complete lies can be read by tens of thousands of people before they’re exposed and debunked, by which time it’s too late. People seeking to give themselves permission to ignore awkward facts have been satisfied and the tweeter’s mission is accomplished.

Take the example of the Scottish Government’s own GERS figures. When these showed Scotland’s economy being a positive contributor to the UK, they were rightly quoted by the SNP as authoritative statistics. Since the figures started showing Scotland effectively receiving cash from the rest of the UK (roughly £1,700 for every man woman and child in Scotland last year1) the figures have instead been cynically and systematically undermined.

The SNP and their social media mouth-pieces have been so successful with their campaign of misinformation that, whenever GERS figures are debated now, the following points have to be endlessly repeated: there’s no missing whisky duty, there’s no missing export income, the figures aren’t affected by corporate head-office locations, London infrastructure costs aren’t allocated to Scotland and the figures are not guesswork compiled by HM Treasury, they’re qualified National Statistics compiled and published by the Scottish Government2.

The problem, of course, is that those who want the comfort of not facing economic reality simply choose not to listen to those who patiently debunk the myths. In a world where many proudly proclaim themselves to be climate change deniers, in Scotland we now have a growing army of GERS deniers.

But this strategy of spreading misinformation through social media isn’t limited to falsely undermining the GERS figures.

Last week many of SNP MP Paul Monaghan’s 15,600 twitter followers were eagerly retweeting this message of his: “Interesting UK Gov reply today on question of proportion of Scottish exports to RUK [rest of the UK] destined for EU. They don't know. My figures suggest 75%.

He went on to make clear that he was referring to exports “passing through rUK on route to EU. The implication is our exports are not attributed to Scotland.”

Now anybody with even a passing understanding of Scotland’s economy or the way our export statistics are calculated will know he’s making an extremely cack-handed attempt to mislead people here.

Export statistics are gathered based on the customer’s location3, so goods exported to the EU through an English port or freight-forwarder will correctly be recorded as EU exports (not rUK exports as Monaghan implies).

It’s also worth pointing out that no competent Scottish business would sell goods to an English customer for that customer to simply sell on to the EU without adding value. Factor in the knowledge that 56% of Scottish exports to the rest of the UK are services not physical goods4 and it’s clear that Monaghan’s 75% figure is complete balderdash5.

Of course it’s obvious why an SNP MP would want to falsely suggest that Scottish export figures to the UK are over-stated and those to the EU under-stated. One of the gaping holes in the SNP’s argument for Brexit as an independence trigger is the fact that Scotland sells more than four times as much to the rest of the UK as we do to the EU3. This means - if Brexit does turn out to mean UK/EU trade barriers exist - Scotland would risk damaging four times as much trade by ending up on the EU rather than the UK side of any such barriers.

So faced with a clear logical flaw in their argument, this SNP MP resorts to the tried and tested strategy of misrepresenting the facts and spreading misunderstanding. Unfortunately for Mr Monaghan, in doing so he exposes an embarrassing level of ignorance for all to see. Apart from showing that he doesn’t understand how export trade statistics work, he also shows he hasn’t even managed to read his own Government’s publication on the topic.

On Twitter he went on to say “the UK Gov told me today just 44% of Scottish manufacturing exports are to the rest of the UK”.

Well yes, they would have told him that by looking at the Scottish Government’s own “Export Statistics 2014” report where that information is found. If Monaghan had bothered to read this himself he would also have known that “just 44%” of Scotland’s manufacturing exports going to rUK is still 1.7 times more than go to the EU4.

You have to wonder: if independence is really such a good idea for Scotland’s economy, why do its supporters so consistently try to mislead us about the facts?


1. for the simplest explanation of this, see The £9bn Fiscal Transfer

2. if anybody still doubts any of these facts, please see this blog post > GERS Deniers

3. see official Scottish Government website here which explains "Export Statistics Scotland (ESS) is based on the Global Connections Survey". I have filled in these forms so I know, but see actual form here and note wording of question 6;

4. These two simple tables provide an audit-trail between the figures in specified tables in the Export Statistics Scotland 2014 publication and the percentages and relative figures used in this blog (highlighted). The minor inconsistency in the tables included in the pdf were not significant enough to send me to the supporting excel tables.

5. When challenged to back-up his assertions Mr Monaghan claimed unspecified "academic research" and blocked me - at the time of writing he has still not offered further support for "his figures" which he ridiculously claims "suggest 75%" for rUK exports "destined for the EU"

Sunday, 20 November 2016

Data Errors in Beyond GERS

I spent this afternoon raking leaves and planting bulbs and all the while GERS and CRA figures were turning round in my head. I was bothered by the fact that base data errors in the "Beyond GERS" report published by Common Weal (see last blog post) were actually harming the case they were trying to make.

My interest has always been in trying to ensure debates around Scotland's future are based on a sound understanding of the data, so - recognising that this helps those trying to use the "Beyond GERS" report to argue for independence - I feel duty-bound to offer the following correction.

In essence the author of "Beyond GERS" has made two mistakes.

The first mistake made is to use 2014/15 data for identifiable spend instead of 2015/16 data - this leads to an understatement of costs of £1.1bn.

The second mistake made is to double-count Scotland's share of the UK's overseas spend - this leads to an overstatement of costs by £2.4bn.

The net effect is therefore a £1.3bn overstatement of Scotland's base costs (before heroically optimistic savings assumptions are applied by the report's author).

The following table offers the simplest audit-trail of this I could manage. The first two columns are actual GERS figures and the fifth column (ho ho) is the middle case as presented by "Beyond GERS". I've broken out the rows needed to explain how GERS and Beyond GERS figures are related - hopefully this is helpful.

To get to these figures I needed to reconcile the GERS figures with the CRA data for the last two years. It's an interesting exercise (if you like this sort of thing) so I share the analysis below
  • The 1st column is Scotland's identifiable spend per CRA
  • The 2nd & 3rd  are UK total overseas and non-identifiable spend by category per CRA
  • The 4th column is a Scotland's simple population share of overseas and non-identifiable spend
  • The 5th column is the difference between the 1st and 4th columns and the last column (which is the figures as shown in GERS)

Basically what this table shows is the "value-added" of the Scottish Government's statisticians in preparing GERS - the 5th column is the adjustments made versus simply using CRA data and taking a population share of overseas1 and non-identifiable1 spend.

So in 2015-16 these adjustments served to reduce Scotland's attributed spending by £1bn. If you read GERS you'll find these adjustments explained - I'm not going to attempt audit-trail them all here (this is my Sunday evening after all).

Of course when the 2015-16 GERS report was published the Scottish Government was relying on estimates of CRA data - so for completeness here's the same table for 2014-15. Again the net affect of the Scottish Government statisticians' adjustments was to reduce Scotland's attributed spending by £1bn.

This blog should be read in conjunction with previous blog: Beyond GERS, Beyond Belief

1. In compiling this audit trail I stumbled across something I confess I haven't been able to explain. In the CRA report, page 13 Table A.1 the figures for total "Outside UK" and "Non-Identifiable Expenditure" differ from the sum of those figures in tables A.5 to A.15 (the figures by spend category do reconcile between tabe A.1 and tables A.5 to A.15).  I'm sure I'm missing something obvious - any help would be gratefully received

Outside UK Spend (2015-16)
Table A.1 = £25,712m
Sum of Tables A.5 to A.15 = £15,230

Non-Identifaible Spend (2015-16)
Table A.1 = £83,482
Sum of Tables A.5 to A.15 = £86,293

Saturday, 19 November 2016

Beyond GERS - Beyond Belief

This front-page splash and supporting article in the Nat Onal caused a great deal of excitement among dogmatic proponents of Scottish independence.

It's no surprise that the article itself was the usual garbled nonsense; the Nat Onal know their readers, so the report was spun as a GERS denier's wet dream
  • They describe it as "a new model aimed at replacing GERS figures" (it isn't, it's an attempt to predict Scotland's possible stand-alone finances, something GERS has never claimed to do)
  • They refer to "modest and conservative" calculations (which we'll see are anything but)
  • They offer this quote from Common Weal Director Robin McAlpine: "With this report we think we’ve reached deficit parity with the rest of the UK without cuts to anything other than defence." (which is - to be kind - a creative summary of the report's conclusions)
But those Nationalists who bother to read the report itself (published on the Common Weal website here) will - if they have any critical faculties intact - find themselves bitterly disappointed. I recommend anybody interested in the debate around Scottish Independence to read the report in full and - noting that it's written by an avowedly pro-independence author - ponder what it tells us.

So what does the report actually say?

Well let's start by applauding the author's intention. Some of us have spent the last few years patiently1 making the following point about GERS
"Nobody is arguing that an independent Scotland wouldn't want to and indeed have to do things differently - but GERS does show us the starting point, the run-rate, the pro-forma accounts on which an independence case needs to be built. Those who champion independence have to make a credible for case for how and why and by how much we'd change the GERS figures by being independent. Just saying "the GERS figures tell us nothing" simply doesn't wash - they tell us what happens if we were to keep taxing and spending at these levels (and why we can't)."  - Chokkablog August 20161
Regular readers of this blog will know that the GERS figures show Scotland received an effective c.£9bn fiscal transfer from the rest of the UK in 2015-16.

The Beyond GERS report validates this analysis by recognising that - just to get to "deficit parity" with the rest of the UK - we would need to find £9bn through some combination of savings to the costs and increases to the tax revenues shown in GERS. The author has - to his credit - accepted this challenge and had a go at addressing it.

As an side: we should also applaud how "Beyond GERS" handles tax revenues:
"the starting point is taken to be the latest figure of £53.748 billion extimated by GERS in 2015-16"
Hallelujah! No nonsense about missing VAT revenues or whisky duty, no confusion about export revenues, no erroneous suggestions that corporate head-office locations affect the figures or that HM Treasury is suppressing our tax figures by withholding data. Props are due to Fraser Whyte and Neil Lovatt for their consistent work rebutting these myths - maybe it does make a difference after all?

Business people are often faced with strategic decisions which are hard to robustly quantify. In those situations a useful approach is to work out "what would you need to believe would happen" for a decision to make sense. "Beyond GERS" offers us just such an analysis.

So - remembering that the Nat Onal calls these "modest and conservative" assumptions - here's what Beyond GERS suggests3 we would need to believe would happen for independence to make economic sense
  • We would save £1.7bn by walking away from 61% of our population share of the UK's debt
  • We would save £3.5bn by persuading the rest of the UK to pick up 38% of our pension bill
  • We could cut our defence spending by £1.0bn (as opposed to the £0.6bn saving assumed in the White Paper)
  • We could raise an additional £3.5bn of tax (equivalent to a 29% increase in our total income tax take)
  •  We could raise £0.7bn of revenue through "government re-organisation"
  • There would be no economic downside due to separation from our largest export market and the need to create our own currency

Anybody who reads that list and thinks "yeah, that seems like a reasonable set of assumptions", do please get in touch - I want to sell you things.

There are lots of issues with the detail of the report as it attempts to justify the above list. If it's not obvious to you why these assumption are at best heroically optimistic, most of the reasons are covered by Neil Lovat's excellent blog post here (which saves me a lot of time).

The base data he uses is all over the place. He uses a mix of 14/15 and 15/16 cost data which means he understates identifiable costs by £1.1bn and the accounting adjustment by £0.7bn - but this is more than balanced by the fact that (presumably because he's misunderstood the data) he's actually over-stated "other non-identifiable" and "overseas costs" by more than £2bn4.

** Addendum: I've taken the time to fully reconcile GERS, CRA and "Beyond GERS" here (it shows that the net effect is that "Beyond GERS" atually overstates Scotland's base costs by £1.3bn) **

But let's finish with the positive: I wouldn't go so far as to say the pace is glacial - it's maybe more akin to the speed of continental drift - but this paper does shows that the debate is gradually moving forward. The author has accepted the existence of the £9bn deficit gap and tried to make some assumptions to close it. In the process he has - perhaps unwittingly - provided a compelling illustration of the scale of the problem supporters of independence face.


1. Well, mostly
2. I really have been very consistent about this - the following from this year alone
"Nobody is arguing that things would remain the same. Those of us who argue for rational debate simply ask for those making the case for independence to actually explain coherently what the different "economic strategy" would actually be and provide a realistic assessment of how (and by how much) it would change the figures compared to those of Scotland being within the UK." - Chokkablog August 2016
"We should be very clear about what this analysis of historical fiscal data can and cannot tell us. The figures only tell us how an independent Scotland’s finances would have looked if we had already been independent but were still raising taxes and incurring public spending (including reserved expenditure) as we have been as an integral part of the UK. We are looking at what in financial accounting terms would be considered pro-forma accounts. The figures do not tell us what the future accounts of an independent Scotland would look like. They do however describe the starting point (the “run-rate”) from where we can start to consider the possible impact and fiscal implications of independence." - Chokkablog March 2016
"All I have been attempting to do is ensure we have clarity around our starting point. Were we to be independent or fiscally autonomous now, what would our pro-forma accounts look like? What is our economy's run-rate? This frames the debate, shows the size of the challenge. If we are all honest about this starting point then maybe we can have an interesting and constructive debate" - Chokkablog June 2016
"This onshore deficit gap matters because it is revealed - it becomes real - as oil revenues decline. This is not to say that were Scotland to be independent this gap would remain; it might narrow, it might widen. It merely gives us an idea of the run-rate relative disadvantage we would be starting with if we sacrificed the benefits of UK-wide pooling and sharing (assuming the days of significant oil revenues are indeed behind us). If you like, it's the head-start we'd be giving to the rest of the UK." - Chokkablog February 2016

3.  The table below shows the audit-trail I've used to understand how the "Beyond GERS" middle case compares to actual GERS figures.

Beyond GERS uses PESA data whereas GERS traditionally uses CRA data - I don't claim to have reconciled them fully but merely observe the following;

  • The 2015-16 GERS figures were (for the first time) produced before the CRA data were published. These data now exist (as detailed in my last blog post here) so I have assumed identified expenditure in GERS = now available CRA data (in reality I expect GERS 2015-16 figures will be restated to reflect these actuals, so this is a source of likely reconciliation error)
  • At first look I don't understand why Beyond GERS has such a big figure for "other non-identifiable". This could possibly be due to PESA/CRA differences, but even netting the grey "opaque" figures off against each other I see £1.3bn of cost in Beyond GERS that I can't explain.
Frankly I don't think it's worth my time to go any further explaining and reconciling somebody else's figure

*** ADDENDUM ***

I couldn't let it lie - I hate being me.

So ... Beyond GERS uses 14/15 cost data from PESA (see page 158) and 15/16 revenue data from GERS - which is simply wrong. The 14/15 identifiable cost data in PESA he uses matches the 14/15 identifiable cost data in CRA (see page 15). The 15/16 cost data in CRA (which he should be using, although to be fair it's only just published) is £1.1bn higher (per my table above).

So he starts off £1.1bn low on costs.

He uses the GERS accounting adjustment for 15/16 and applies it to 14/15 cost data - again this is simply wrong. The accounting adjustment in 14/15 was £4.6bn versus the £3.9bn he uses.

So he's another £0.7bn low on costs there.

I think this is incompetence on the author's part (rather than an active attempt to deceive) because his £2.35bn on "other non-identifiable" looks awfully like a double-count to me (i.e. it's costs that are already attributed to Scotland in the CRA analysis). If not he's suggesting GERS is £2.2bn light on costs! So he seems to have double-counted £2.2bn of costs.

I've tried to be polite and constructive throughout this blog post - so let's just say the report's intentions may be admirable, the analysis less so


Thursday, 17 November 2016

Does Scotland Simply Spend Too Much?

Today saw the release of the latest HM Treasury Country and Regional Analysis (CRA) report which looks at public spending levels across the UK.

From a Scottish perspective the figures suggest a simple and powerful headline message: "Public spending in Scotland ‘£1500 higher than UK average’"

This is of course not news. In a post-indyref world, surely most Scots are aware that Scotland enjoys higher public spending than the average of the rest of the UK?

Regular readers of this blog will know there are nuances aplenty and some caveats needed (which we'll come to) - but the simple maths is easy to follow: £1,500 per person higher spending on 5m people = £7.5bn. That's the lion's share of the current c.£9bn effective fiscal transfer Scotland receives from the rest of the UK - so the transfer is largely explained by the fact that we spend more, not that we generate less.

Those who react to observations about the scale of Scotland's notional* higher deficit (and the resultant fiscal transfer from rUK) with "this just proves we suffer under mismanagement from Westminster" have overlooked this very simple fact: we have a bigger deficit because we enjoy higher levels of public spending. These are levels of public spending that (as I frequently tire of pointing out) would be simply unsustainable without either ongoing fiscal transfers from the rest of the UK or - were we to be independent - new windfall revenues (like another oil boom) or decades of spectacular economic growth.

* notional, because the whole point of being in the UK is that this deficit doesn't actually exist - Scotland's spending doesn't have to be met by Scotland's tax revenues and our population share of the UK debt alone, we get to pool and shares across the UK (if you like, this support for our higher spending now is merely fair reciprocation for sharing "our" oil revenues in the 1980s)

So few people should be surprised to hear that Scotland has relatively high levels of public spending. The absolute size of the difference may, however, cause raised eyebrows among that small cluster of people who are familiar with the Scottish Government's own Government Expenditure and Revenue Scotland (GERS) figures
  • GERS 2015-16 showed Scotland having £1,2141 per head higher Total Managed Expenditure (TME) than the UK average
  • This CRA report shows Scotland having £1,4602 per head higher Identifiable Expenditure
That's a difference of £250 per capita or £1.3bn - so not an insignificant amount.

There are a few factors that can explain the difference ;
  1. The CRA headlines are based on identifiable expenditure only - but given the vast majority of non-identifiable spend is allocated in GERS on a per capita basis, it seems unlikely that this would explain the difference3
  2. Timing: by publishing GERS earlier than in previous years, the Scottish Government had to rely on their own estimates and analysis rather than using the published CRA figures as they were able to in prior years4. We'll probably have to wait to see how the GERS 2015-16 figures are restated in the 2016-17 publication to find out the extent to which this led to inaccuracies.
  3. Methodology: the Scottish Government make various adjustments to the CRA spending data when compiling GERS - for a combination of technical and/or judgement-based reasons5.
I haven't fully reconciled the figures - life's too short - but overall it seems like overall identifiable expenditure matches reasonably well between Scottish Government GERS and the CRA report - with a net difference of only about £90 per capita (with higher spend in the CRA analysis)6. We'll use the detail of this analysis to apply caveats below - read the note if you really want to follow the data trail or just trust me; it's up to you.

The balance of the difference between GERS and CRA (£160 per capita) must be explained somewhere among the world of pain that is "accounting adjustments" - we'll leave those for another day8.

So armed with the above knowledge and caveats, here's what the CRA analysis shows us.

First of all there's the age-old question of whether we compare our spend per capita with UK average (including Scotland) or with the rest of the UK (rUK). Personally I find it easier to think in "vs rUK" terms, on which basis our (CRA analysed) spend is in fact about £1,600 higher.

As an aside: those who think that HM Treasury are always spinning against Scotland might ask themselves: if that's the case, why they don't use "versus rUK" comparisons for their press-releases?

Looking at the breakdown by spend type in the table below it's clear Scotland  spends more than the UK average in all spend categories (as we have aleady observed through the GERS figures in blogs passim).

Figures we can trust: materially consistent between CRA and GERS
The £ figures in these bullet points are how much higher Scottish annual spend per capita is than the rest of the UK, the percentage is that figure vs the rUK per capita spend
  • £331 (+8%) on Social Protection (mainly pensions & benefits) 
  • £195 (+15%) on Education & Training (primary, secondary, tertiary)
  • £149 (+7%) on Health 
  • £131 (+168%) on Enterprise & Economic Development
  • £99 (+105%) on Public & Common services (executive & legislative etc.)
  • £93 (+154%) on Agriculture, Forestry & Fisheries
  • £90 (+82%) on Recreation Culture & Religion (sports & culture)
  • £79 (+19%) on Public Order & Safety (police, fire, law courts, prisons)
Figures to treat with Caution as CRA vs GERS differences are material
  • £68 Transport (road, rail, other) - GERS suggest even higher?
  • £91 Environment Protection (mainly waste management) - GERS suggests not that high, (nuclear related?)
  • £239 on Housing & Community Amenities - but big caveat as GERS suggests a far smaller figure (Housing Association7 accounting treatment related?)
It's pretty straightforward really - even with caveats around methodology and even if we accept the (kinder on Scotland) Scottish Government GERS assumptions - Scotland, as it's governed today, is an expensive country to run.

The extent to which this relative high cost is a structural issue (remote and island communities, demographics that mean a relatively high dependency ratio, areas of chronic deprivation etc.) or are a result of a Scottish Government that's keen to spend the Barnett Formula money on freebies that win votes (no tuition fees, free prescriptions, scrapped tolls etc.) is a debate that will run and run.

This analysis is a timely reminder that there would be one easy way for the SNP to further the cause of Nationalism: they could ask for the fiscal framework to be scrapped so that Scots could get used to the lower public spending we'd need to endure while we waited for the miracle of independence to produce exceptional economic growth ...


1. GERS 2015-16 page 4 table S.4 shows this rounded to £1,200 - precise figure from back-up data tables

2. CRA Report page 14 table A2 - per capita spend figures: UK £10,536 - Scotland £9,076 = £1,460

3. The three largest non-identifiable spend areas are public sector debt interest, defence and international services. Between them these account for more than 80% of non-identifiable expenditure. All of these (and many others) are allocated to Scotland in GERS on a per capita basis (they therefore can't explain any per capita spend difference between Scotland and the UK average)

4. GERS page 25:
"This edition of GERS sees a change in methodology to allow earlier estimates of expenditure to be produced. Whilst expenditure for years prior to 2014-15 continues to be based on the CRA, the 2015-16 estimate is primarily based on data from the Scottish Government accounts system combined with data from HM Treasury‟s Public Expenditure Statistical Analyses"

5. Detailed Expenditure Methodology Paper page 10
"A number of adjustments are then made to this spending estimate.
1. Public sector debt interestIn 2015-16, UK public sector debt interest includes expenditure associated with English Housing Associations. Scotland is allocated none of this expenditure in GERS. This decreases the Scottish share of HM Treasury current expenditure on public sector debt interest.
2. Network RailIn 2015-16, spending by Network Rail has been moved from an accounting adjustment into TES. The shares from GERS 2014-15 will not reflect this spending. Spending associated with Network Rail has therefore been added into Scottish spend estimates. This increases the Scottish share of Department for Transport current and capital spending on transport.
3. Social protection expenditureScottish social protection expenditure by the Department for Work and Pensions and HMRC is estimated directly, rather than apportioning shares of the UK total. Spending by the Department for Work and Pensions is estimated based on data from the tabulation tool and UK spending data. Spending by HMRC is based on HMRC spending data and HMRC geographical award statistics."

7. GERS page 2.
"The ONS reclassified English Housing Associations (HAs) into the public sector on 30 October 2015. In 2015-16, this increased UK public sector revenue by £6.9 billion and UK expenditure by £10.8 billion, resulting in a £3.9 billion increase in the UK net fiscal deficit. A similar impact is seen in earlier years. Scotland is apportioned none of this additional revenue or expenditure in GERS. The ONS have not yet announced a decision on the classification of Scottish Housing Associations."

8. I confess to being flummoxed by the fact that the non-identifiable cost totals in table A.1 are not explained by summing the figures given by spend category - see figures highlighted amber

Saturday, 5 November 2016

The £9bn Fiscal Transfer vs The £15bn GERS Deficit

I've noticed there still seems to be a lot of confusion about the difference between the GERS deficit, the deficit gap between Scotland and the rest of the UK and the effective fiscal transfer that the rest of the UK currently makes to Scotland.

So here's a very simple exhibit which explains the difference between the £15bn1 GERS deficit for 2015-16 and the £9bn2 effective fiscal transfer Scotland receives from the rest of the UK. The effective fiscal transfer is as a result of the fact that we pool and share our deficit (hence debt, hence debt interest in GERS) on a UK-wide per capita basis.

1. £14.8bn
2. £8.7bn

Thursday, 27 October 2016

Crazy Horses

Over the last few weeks the SNP's strategy for overcoming the awkward economic realities that stand between them and independence has become clear. It seems Sturgeon has decided to harness up the nationalist troika to three wildly incompatible horses.

On the right, former MSP turned corporate lobbyist Andrew "Acceptable Face of Capitalism" Wilson.

On the left, current Westminster MP George "Smash the System" Kerevan.

In the middle, a Pantomime Horse to amuse and distract the masses.

Each speaks to different constituencies

1. Andrew "Acceptable Face of Capitalism" Wilson

Andrew has been appointed Chair of the SNP's Growth Commission, tasked with creating a rational plan to "boost economic growth" and "consider the most appropriate monetary policy arrangements to underpin a policy for sustainable growth"

Given that the economic case presented for the 2014 independence referendum is now widely accepted as having been embarrassingly weak, you might think they'd use this opportunity to inject some fresh thinking, garner input from across the political spectrum and seek advice from a broad range of business voices. Then you'd look at the make-up of the commission and think again.

From the world of politics we have two former and five current SNP politicians alongside two leading lights from Yes Scotland1. It's hardly surprising that a serious economic commission doesn't include anybody from the Scottish Socialist Party, but the Greens must surely be miffed that their "unconditional support" for independence hasn't been rewarded with at least a token seat at the table.

Add to that three academics - two of whom at least have nailed their colours pretty firmly to the SNP's mast2 - and you start to get a sense that the Commission's thinking might be a little stale.

To be fair, they do also have two active Scottish businesswomen with real entrepreneurial credibility. They're pretty focused on the domestic Scottish scene and one of them was a proud champion of the discredited SNP front "Business for Scotland" (and holds some pretty "out there" views on hidden oil fields), but we'll let that pass3.

I confess I have some sympathy for Andrew. He is by all accounts a decent and intelligent chap, but his loyalty to the cause requires him to cook up a package of policies and then suggest they'll deliver unfeasibly high rates of growth.

The problem he faces is that one of the few certainties of independence is that Scotland would lose what is currently a £9bn annual fiscal transfer from the rest of the UK. To offset that transfer through growth alone requires Scottish GDP to grow by 17% more than the rest of the UK4. This isn't what would be required to eliminate the deficit, it's just what would be required to get us back to the level of deficit we currently share within the UK.

Coming up with a credible plan to deliver cumulative 17% superior economic growth in anything less than a few generations is some ask, particularly given we start from a position of slower growth5 and would need to overcome the negative impact of separation from our largest export customer (the rest of the UK). 

If all that wasn't hard enough, the Growth Commission is haunted by the ghost of SNP proclamations past. Their own independence White Paper proposed that a growth rate improvement of 0.12% a year would be a reasonable figure for the "bonus of being independent". It was a figure based on some pretty dodgy analysis, but the SNP liked it so much that they cited it five times in the White Paper6.

At plus 0.12% a year, it would take about 130 years to deliver the cumulative 17% superior growth required just to offset the existing fiscal transfer (through economic growth alone).

Andrew has his work cut out.

The Commission will surprise no-one by recommending some form of Sterling currency board and suggesting enormously optimistic growth assumptions based on a strategy of tax-cutting, investment incentives and financial services wooing. Reassuring messages will be whispered in the direction of big businesses and the wealthy - the Greens and Yes supporting enemies of neoliberalism will just close their ears.

2. George "Smash the System" Kerevan

You might ask why George (as a trained economist and member of the House of Commons Treasury Select Committee) isn't on the Growth Commission. The simple answer is that George is a bit too radical in his outlook to be allowed near the SNP's real plans, so he's kept on a loose rein and encouraged to make noises which appease the radical left and keep the anti-capitalists on side.

Regular readers of Chokkablog may recall that George is on record prior to his election as an MP as hoping to achieve the implosion of the UK economy: "after Home Rule, independence will follow as the UK economy implodes [..] I would relish the chance to take Scotland's fight to the enemy camp"

It appears that time at Westminster has done nothing to dampen George's revolutionary ardour. Let's look at some highlights of Citizen Kerevan's outpourings over the last few months:
  • In July - he accepted the need for spending cuts under independence: "a separate Scottish currency pegged to sterling would necessitate fiscal consolidation to assuage the foreign exchange markets. It would certainly be doable, but would require independent Scotland to cut its budget coat to fit its fiscal means." - Cityam
  • In August - he called for a revolution:"Popular, if often incoherent, opposition to this mad, mad system has suddenly boiled over into open revolt. Not enough revolt, in my opinion, but a line has been crossed. [..] The neoliberal order needed dismantling"The National
  • In September - he denied the need for spending cuts, converting instead to the growth cause (while suggesting that the higher public spending we enjoy in Scotland is due to "incompetence of Westminster"): "Growth is the only sure route to closing any temporary budget deficit bequeathed to Scotland by the economic incompetence of Westminster." - The National
  • In October - he abandoned the growth cause and shifted into full-on "smash the system" mode (volunteering the Scots to be used as lab-rats in the process)
“a new political economy using Scotland as a laboratory – an agenda that rejects not simply the neo-liberal variant of capitalism but the entire system itself. [..]  to embed a non-capitalist economic practice [..] Such an outcome will not be stable. There will be social friction and resistance from the prevailing capitalist order
The era of neoliberal tax cuts and low interest rates is over", corporation tax should not be used as “a crude bribe to secure inward investment” there should be greater taxes on wealth, despite “an inevitable response from the business class and rich that such a move will hurt ‘incentives’, discourage inward investment and ‘force’ high net wealth individuals to migrate”  
- the Herald Oct 2016
Of course anybody vaguely paying attention knows that in fact the SNP embrace capitalism and are fans of "neoliberal tax cuts". The only significant tax moves they've suggested recently have been to cut taxes (corporation tax, Air Passenger Duty, VAT on tourism, "use the tax system to improve incentives for investment" etc.)7 and they balked at the idea of raising the top rate of tax to 50p (as Scottish Labour and the LibDems proposed).

So why is George allowed to go so far off-script in a party famous for its message discipline? He's allowed to because he serves a valuable purpose pacifying "useful idiots" like those at Radical Independence and The Common Weal. The SNP would never translate Kerevan's anti-capitalist ramblings into policy - he's just making the right noises to keep the "radical left" on board.

3. The pantomime horse

So with two of their horses so obviously pulling in different directions, the SNP need something to divert the attention of the masses, to stop them asking if either actually makes a coherent and credible economic case.

No problem: the actors inside the costume may change, but the red-nosed, trouser-dropping, reality-denying antics of the SNP's pantomime horse is a real crowd-pleaser. Let's look at who has donned the paper-maché head9;

Isn't it just hilarious? Doesn't this pantomime horse galumphing around the stage make you forget about all the real economic arguments?

It's worth noting that these performances don't just the keep less-than-fully-intellectually-engaged Yes voters amused and well misinformed - they also ensure opponents spend their time and energy debunking myths instead of engaging in substantive and constructive debate; it takes a lot less time to make up nonsense than it does to robustly disprove it.

So there we have it. Three horse pulling in different directions. A smorgasbord of truths, half-truths and downright lies. A menu of clearly incompatible options to suit all political tastes. Whatever you need to hear to make you support independence, you'll be able to find somebody from the Yes camp saying it.

So far Sturgeon has done an impressive job of holding the reins of these three horses and providing at least the illusion of being in control - but is she really driving the carriage or simply hanging on for dear life?



1. Growth Commission Membership - SNP/Yes Scotland members

2 x Former SNP politicians
  • Andrew Wilson (Chairman)
  • Jim Mather
5 x Current SNP politicians
  • Kate Forbes MSP
  • Derek Mackay MSP
  • Shirley-Anne Somerville MSP
  • Roger Mullin MP
  • Cllr. Marie Burns
2 x Former Yes Scotland activists

2. Growth Commission Membership - Academics
3. Growth Commission Membership - Businesswomen

4.  Price of Independence

"£9bn pa represents 13% of total Scottish public spending and is greater than Scotland’s entire education & training budget; it’s 17% of total Scottish onshore revenue and 77% of the total amount Scotland raises in income tax [..] to close the deficit gap with the UK – to be in a situation where becoming independent wouldn’t make Scots immediately worse off – would require Scotland to out-grow the rest of the UK by 17%"

5. Scotland's GDP growth

6. The Scottish Government's own White Paper: Scotland's Future: Your Guide to an Independent Scotland had a go at scaling how much faster an independent Scotland might grow when no longer shackled to the UK. In fact they were so pleased with their analysis that they quoted it five times (pp 23, 43, 88, 375, 619). Here's the wording from page 23;
"Similar countries to Scotland have seen higher levels of economic growth over the past generation. That is because they have the bonus of being independent and are able to make the right choices for their nation and economy. If Scotland had matched the levels of growth of these other independent nations between 1977 and 2007, GDP per head in Scotland would now be 3.8 per cent higher"
I think we can safely assume that the countries and timescale used were selected to make the strongest possible case - after all, why stop at 2007 when more recent data was available? - and just in case you doubt if that is a cumulative 30 year figure, it's clarified on page 619:
"The average rate among small European countries was 2.61%, a gap of 0.12% each year. Over a 30 year period the compounded effect of this gap totals 3.8% of GDP"
7. SNP tax cutting proposals
"giving Scottish businesses a competitive edge by providing a clear timetable for reducing corporation tax by up to three percentage points; and improving international connectivity by cutting Air Passenger Duty by 50 per cent" - White Paper (p.6)
"One option for future governments to support manufacturing and boost innovation will be to use the tax system to improve incentives for investment, for example through more generous depreciation allowances for key growth sectors in Scotland." - White Paper (p.88)
"Tax based incentives that are aimed at encouraging investment in innovation activities can be applied to either expenditure (related to R&D) or income that results from investment in R&D. Following independence this Government will examine how best to develop and target such tax relief to encourage Scotland’s innovative industries" - White Paper (p.102)
 44 SNP MPs call on Treasury to reduce tourism VAT

8. Angus MacNeil MP retweeting a ludicrous meme (just one example of many)

9. This is an incomplete list of course - I've written entire blogs on the falsehoods perpetuated by the likes of Business for Scotland and Wings Over Scotland, the likes of Angus MacNeil and John Mason are serial offenders and there are many journalists I've not mentioned here who have shown themselves to be naively susceptible to an SNP press office briefing

Sunday, 16 October 2016

Salmond Spins Again

Alex Salmond once proudly boasted  of his ability to put “a gloss on statistics or any economic figure” to build a political case. It's an assertion predicated on his belief that ordinary voters just aren't smart enough to spot when they're being misled by him, on the toweringly arrogant assumption that he's simply too smart for us.

His performance on BBC Radio 5 live's Pienaar's Politics this morning is a case in point. When asked to explain away the problem of Scotland's £15bn deficit (per the most recent Scottish Government GERS figures) he referred to a "£30 - 35 billion" saving we could make from central UK spend attributed to Scotland.

This is clearly bunkum of the highest order. The true figure (comparable with the £15bn annual deficit in question and related to the spend categories he cites) is in fact less than £0.5bn. He clearly does have nothing but contempt for the intelligence of listening voters.

Before we unpick his assertion and explain why it's so ludicrous, it's worth taking a quick skip through the rest of his scoffing and chuckling performance. You can listen to it all here [starts at 08:00]

He starts by dancing around the subject of opinion polls, presumably hoping his bluster will disguise the fact that none of the post-Brexit polls have shown majority support for Scottish independence.

It's been pointed out to me that at least one poll here did show a lead for independence immediately following the Brexit vote
*correction ends*

When Pienaar suggests that the demand from Sturgeon that "Scotland somehow retains access to the free open market of Europe, even though that may be lost to rest of the UK [...] seems to be a constitutional, political and practical impossibility" he repeatedly ducks the question.

Instead of explaining how his might be possible, he talks about the downside of the UK's exit from the single market-place by saying "we know that the expectation within Her Majesty's Treasury is that an exit from the single marketplace will cost 20% of trade and investment".

Whilst this is broadly true1, Salmond shows his customary brass-neck to quote these figures when he previously rubbished similar HM Treasury analysis which suggested independence would cost Scotland around £1,400 per person per year2. This is of course classic Salmond: dismiss credible sources if you don't like what they say, quote them as gospel if they support your case. For what it's worth I applaud his volte-face and new-found respect for the Treasury's economic analysis. Surely only a deeply cynical and duplicitous politician would be prepared to then change his position again if and when the Treasury next reveals unhelpful truths about the economic implications of Scottish independence.

At the time he contended instead that independence would in fact give each person in Scotland a £1,000 "bonus of independence". Salmond's dismissal of the Treasury claim and his own party's ludicrous assertion have since been shown to be simply and unequivocally wrong. The truth is that the actual decline in oil revenues has been even worse than HM Treasury predicted, so the "£1,400 worse off" analysis was in fact optimistic. 

He then offers some nonsense around negotiation tactics, asserting that he's "never heard of a negotiation which tries and keeps your objectives a secret" - as if publicly stating your negotiating position is the only option. In fact later in the interview he undermines his own argument by suggesting that Theresa May should put her specific objectives before the House of Commons before entering negotiation because  "how will you win afterwards when you inevitably won't have achieved all of your objectives?" The flaw in this argument is obvious: what's the point in publicising and seeking approval for something you "inevitably" won't achieve?

Pienaar tries to return to the core question, pointing out that for Scotland to remain in the EU market if the UK exits "you'd have to have a hard border between Scotland and England". Salmond doesn't explain how that could be avoided, instead asking "how is the government stating that there's not going to be a hard border between RoI and NI?" I would suggest that that too is a good question, but it's certainly not an answer (particularly when it comes to the customs controls which are required between EEA and EU members).

So far so normal for a political interview: bluster, obfuscation and logical inconsistency. But things get more interesting when the subject switches to the wider question of Scotland's economic performance.

Unfortunately, John Pienaar wasn't well briefed. He starts by wrongly stating that "Scottish output has shrunk, has contracted" since the Brexit vote. Salmond is rightly able to rebut that claim, but - because it's undeniable - concedes the fact that growth in the Scottish economy has slowed both in absolute terms3 and relative to the UK4.

When explaining the relative economic slow-down, Salmon (correctly in my opinion) is very clear on the main cause, suggesting it's "as a result, incidently, of the onshore effects of oil & gas" and referring to "perhaps 30,000 job losses affected by the down-turn in North Sea activity". Nothing to do with evil Westminster then.

It's worth noting that the GDP measure used for the growth statistics Salmond quotes exclude oil & gas extraction5Scotland's GDP (including the Sottish Government's preferred geographic allocation of oil revenue) did decline from £157.5bn to £156.8bn in 2015-166, a 0.5% contraction. 

Whether the relative slow-down is purely due to the knock-on onshore effects of the problems in the oil & gas industry, fears of further uncertainty around a second independence referendum or other factors is a subject for another day.

The fact that Salmond attributes the slow-down to Oil & Gas will come as a terrible shock to the Nationalist's very own self-styled hate-preacher, the "Reverend" Stuart Campbell, (custodian of the risible "Wings Over Scotland") who recently asserted "the lower oil price will actually benefit the Scottish economy overall, with the positive effects driving growth and outweighing the downside of lower corporation tax receipts."

Salmond goes on to note that Scottish unemployment is returning to lower than the UK average and employment is now higher. Given that he and Nicola Sturgeon have consistently argued that devolution doesn't give the Scottish Government "job creating powers", it's surprising that he didn't add that this shows how well Westminster is succeeding in supporting employment growth in Scotland.

Studio guest Kevin Schofield then asks "why if leaving the EU is such a bad thing for Scotland, how come leaving the UK isn't?". Salmond's answer betrays the cognitive dissonance at the heart the SNP's current position:  "I don't accept Scotland becoming independent means needing to put trade barriers between Scotland and England [...] England is Scotland's first export market."

There's a mind-boggling obvious contradiction here: if Scotland needs to leave a post-Brexit UK and join the EU to defend its EU trade, it's because there's a belief that EU/UK trade barriers will exist. To then dismiss the inevitable corollary (that Scotland in the EU would then face trade barriers with England) is just plain daft.

The other studio guest Kate McCann then asks a question about the problem Scotland would face because of its £15bn deficit.

Salmond's tone switches at this point [24:00] and he moves into full-on mansplaining condescension mode: "it's what called the GERS figures, Kate [...] it was a bit longer ago than that, but nonetheless, never mind [...]  I've been looking at this set of figures for 30 years [...] let me give you a quick example which is pretty easy to understand".

He carries on to say: "GERS has us attributed a share of certain central UK expenditures, for example it would have us paying for a share of Trident, of HS2, of Nuclear power stations on the South coast and of renovating the House of Commons and a bill of £6bn ... if you total all that up and divide it by Scotland's share then that'll save you 30 to 35 billion for a start"

You don't need to be an economic mastermind to spot that this number isn't a figure that can honestly be presented in response to a question about Scotland's annual deficit, not least when you observe that our total managed expenditure (devolved and reserved) is just £68.6bn.

So let's unpick those figures.

Full Fact suggests the annual operating costs of Trident are expected to be around £2bn a year. Scotland's population share (as attributed in GERS) of that annual cost would be about £150m a year. This is broadly consistent with Salmond's assertion in 2012 that "Trident is costing Scottish tax payers £163m a year". So the cost figure in that 2015-16 £15bn deficit is less than £0.2bn

The capital cost of replacing Trident is estimated at £30 - 40bn by the MoD. The "overall cost" (included in-service operating costs) is estimated at £167bn by Reuters (according to this Guardian article) and £205bn according to the CND (a figure which includes running costs to 2060). So if we take the largest available figure of £205bn, Scotland's 8.2% population share of that would be £17bn. That's spread over 45 years, so works out at £370m a year.

The SNP's own notoriously optimistic Independence White Paper (page 59) suggested "making different choices from Westminster on nuclear weapons and defence will allow this Scottish Government to save £500 million [a year]" - a figure which assumes more than simply stopping paying for our share of Trident.

So on Trident we can safely say the figure Scotland was allocated in 2015-16 was less than £0.2bn; even looking forwards under the most pessimistic assumptions the figure is less than £0.4bn a year.

HS2 is the single exception in GERS to the general rule that transport spending is allocated on an "in" basis (i.e that we are attributed only spend made in Scotland). As was explained in the GERS methodology for 2013-14 (page 3), Scotland is assigned 2% of total expenditure on HS2, in line with the breakdown of regional economic benefits per the Department of Transport's economic analysis. Total UK expenditure on HS2 in 2015-16 was £360m7, so our 2 % share will have only been about £7m.

His assertion about attributing cost of "Nuclear power stations on the South Coast" is, I must confess, a bit of a mystery to me. I'm aware that in the UK CRA (Country and Regional Analysis), nuclear decommissioning is classified to the region where nuclear facilities are located, but in GERS (per the latest method statement) "nuclear decommissioning and associated expenditure is apportioned on a population basis" which leads to reduction in Scotland's allocated "nuclear-related" spending of £179m (a benefit of pooling and sharing I guess).

** Update on Nuclear **
An informed person who would rather remain anonymous offered me the following insight:

"I suspect he means future contributions via consumer bills to fund the contract for difference for Hinkley. This would only not be paid by Scottish bill payers if we had a separate power system (& in the white paper the SNP asserted a single energy market would inevitably continue between scotland and rest of GB (NI has separate arrangements and is integrated into RoI energy system). They did this because the cost of support for low carbon generation (renewables and new nuclear) is pooled across GB, and generation in Scotland receives around 1/3 of all support on less than 1/10 of billpayers. That gap is likely to grow in future as although new nuclear will be in England and Wales, offshore wind is 50% more expensive again and some of that will be in Scottish waters.

So it is complete bollocks as per most of what he says to suggest because they take a simplistic posturing position to be against Hinkley somehow Scotland would then not pay for support for low carbon power in the future. Either will be part of the single energy system, in which case will contribute as now so no saving (as there is no saving to E&W consumers paying for wind power in Scotland) or if had a separate system then the disparity between number of billpayers and subsidy levels in Scotland then costs to consumers would increase.

And that's before the fact that for part of 1 day in 4 when power is scarce (not enough wind) power flows from England to Scotland to keep system functioning. If we had separate energy system then that would be at a premium price, whereas any extra wind comes when there is an excess of supply and so no real revenue benefit to Scotland in supplying that to England."

** Update Ends **

Finally let's look at that £6bn bill for renovating the House of Commons. I've not dug too deep on this, but from press reports it seems that's a total figure relating to a 32 year period. So an annual bill of £189m, of which Scotland's population share would be £15m pa (and of course was zero in the 2015-16 deficit figure being discussed).

So let's sum all of that up on a worst-case scenario basis
  • £205bn for Trident over 45 years = £4.6bn pa x 8.2% = £0.38bn pa to Scotland
  • £56bn for HS2 over 16 years = £3.5bn pa x 2.0% = £0.07bn pa to Scotland
  • £6bn for House of Commons over 32 years = £0.2bn pa x 8.2% = £0.02bn pa to Scotland
I know Salmond doesn't think that people who listen to his rhetoric are capable of basic maths, but in the context of the £15bn annual deficit he was asked about, the items he listed don't even add up to £0.5bn.

In conclusion: when quoting a figure of "£30 to 35 billion" savings, Salmond is not "putting a gloss" on the figures, he's taking the proverbial.


1. The analysis suggests that if we remain in the EEA (the Norway model, where a customs border exists but no trade tariffs) the effect would be "only" a 10% reduction in trade and Foreign Direct Investment (FDI), whereas a negotiated bilateral agreement would lead to a 15-20% decline.

HM Treasury analysis: the long-term economic impact of EU membership and the alternatives (April 2016)

page 168
page 175

2. Scotland analysis:Fiscal policy and sustainability (May 2014)

page 5

3.  Scotland’s Gross Domestic Product, Quarter 2 2016
page 3

5.  Scotland’s Gross Domestic Product, Quarter 2 2016

It's worth noting (per the methodology guide) that "in practical terms" the figures don't include oil & gas extraction
6. GERS 2015-16

page 17

Wednesday, 12 October 2016

Nationalist Reflections

Following last week’s Conservative Party conference, SNP MP Mhairi Black used her column in the National to suggest that "I am not exaggerating when I say that the policies being brought forward are reminiscent of early 1930s Nazi Germany." She went on to explain that this was because the Tories were "even going as far as to say that businesses must list all foreign workers".

To be clear: the policy proposal that inflamed this reaction was illiberal, divisive and for many of us just plain wrong. But to draw comparisons between your political opponents and Nazi’s is at best immature and at worst downright irresponsible. Remember we’re not talking here about a hastily written and swiftly retracted tweet – it was a considered article in a national newspaper (of sorts).

Let’s get the facts straight first. Did the Tories really go so far as to suggest that businesses must list all foreign workers, or did Ms Black (and many other commentators1) react to a headline without checking the facts?

If you dig a little deeper (as I have done on this blog here) you’ll find that the policy didn’t feature in Amber Rudd’s speech or in any official press releases. It was instead “briefed” to a couple of newspapers. Those papers said the proposal might go as far as asking businesses to publish the proportion of their workforce that was “international”. It looks like a Times headline writer turned that into “Firms Must List Foreign Workers” and unleashed the outrage of shallow-thinking headline-skaters like Ms Black.

The policy proposal is still a terrible idea of course. The clear intention – implied but carefully never voiced by a quotable source – is that companies who employ “too many” foreign workers should be “shamed”. By briefing some journalists about this policy idea, the Tories cynically threw out a piece of raw meat to keep the xenophobes in their party happy. That they tied a rope to it so they could haul it back in (as they now appear to be doing) doesn’t make their actions any less contemptible.

Soon after this story broke, it was sobering to see a YouGov poll showed that 59% of the UK and 50% of Scots actually support the proposal that companies should “report how many foreign workers they employ”.

Rather than adopting Ms Black’s stance of branding half her country-folk as Nazis (and 46% of SNP voters, if the poll is to be believed), we might expect a mature, credible politician to instead have calmly explained why these people should maybe think again.

First of all we should be clear that HMRC already knows about all legally employed foreign workers through their PAYE records, so this isn’t a question about government information, it’s about making employers publicly share that data.

The underlying reasoning seems to be a misguided concern that companies might be favouring hiring “foreigners” over British nationals, but this frankly doesn’t pass a basic common-sense test.

Employers can’t pay foreign nationals less for the same job because it’s illegal to discriminate between workers based on nationality (as it is for race, religion or gender). Immigrants will often have a language barrier to cope with and Non-EU nationals have to pass strict work visa requirements to be lawfully employed here (something which may of course soon stretch to EU nationals as well).

As an employer it’s clearly prudent to hire somebody who faces no uncertainty over their right to remain in the UK - the deck is already stacked very much in favour of the British worker.

Some argue that immigration may be holding down wage levels, but that argument is weakened by the existence of a fast rising National Minimum Wage (we should refuse to adopt the false “Living Wage” branding this government applies to it). But even if you believe this is an issue, it’s one for government to deal with head-on, not via some back-door naming and shaming exercise of employers who are simply hiring the best people for the job at the rate the market determines.

It is to the SNP’s credit that they don’t pander to xenophobes and instead make a clear and welcoming statement to all EU citizens (unless you’re English and want to study here of course, in which case you have to pay).

But you don’t need to believe the SNP share the same racist tendencies as the worst of the English nationalists to argue that something links them. That "something" is a wish to narrow the definition of us, a desire to identify and point the finger of blame at them. The bogeymen may be different, but both strains of nationalism require that they exist to sustain their angry support.

Before grand-standing from what they see as their moral high-ground, the SNP should maybe consider that their continued grievance mongering towards the rest of the UK and "Westminster" is mirrored by those blaming the EU and “foreign workers” for all their ills.

This context might explain Mhairi Black’s poorly chosen and intemperate language. After all, nobody likes to be spooked by their own reflection.


1. Most notably James O'Brien who compared Amber Rudd's speech to an extract from Mein Kampf. I'm generally a fan of O'Brien's, but in this case I think he was guilty of some frankly pretty dodgy "straw-manning". I would suggest to justify an accusation of something as heinous as this he at least needed to be able to quote some actual lines from Rudd's speech. In O'Brien's defence, he's a professional agent provocateur, not an elected member of parliament. And I'm pretty sure he's not a nationalist.