Wednesday, 11 March 2015

Analysis of 2013-14 GERS

This is a quick and dirty blog post; I've written a pithy summary which should be in tomorrow's Daily Record so protocol dictates I should wait until that's published before sharing here.

What I can share quickly is the raw data analysis, graphs and headlines.

There are no surprises for anybody who has followed my previous blogs or simply been paying attention.
  • As expected the Scottish deficit per capita continues to be worse than the rest of the UK to the tune of about £900 per head (or £4.75bn)
  • In only one of the last 5 years has Scotland's deficit been lower than rUK's and then only marginally (£140) - that was of course the year on which the Independence White Paper case was founded
  • Longer term average deficit per capita is higher for Scotland than rUK: by £260 over the last 10 years and by £440 over the last 5 years
  • We already know that 2014-15 will be worse again due to known oil price collapse
  • rUK have consistently reduced their deficit per capita over the last 5 years



Some points worth noting
  1. I show figures versus "rest of UK" (rUK) i.e. UK excluding Scotland as I believe that's less confusing and more insightful than comparing us to the total UK which includes us.  [I still show total UK for comparison purposes in the table at the foot of this post because those figure are so widely quoted]
  2. I think Per Capita comparison are appropriate when looking at our deficit versus rUK  - debt interest is allocated on a per capita basis and during the indyref the default assumption for debt allocation was to base it on population share.  If we are being apportioned debt on a population basis it makes sense to see what our per capita contribution to that debt (as a result of running a deficit) is. [I show % GDP numbers below]
  3. There have been some major restatements (by HMRC and Scottish Government) for prior years (for reasons that are too tedious to document here) - so I have updated the historic figures appropriately
  4. I've extended to a 10 year time series because it helps us understand longer term trends and volatility (and because the GERS data tables make this easier to do now!)

For those who like to see Deficit/GDP figures this trend is show below.


Even using the SNP's preferred deficit/GDP measure Scotland is running a materially higher deficit than rUK in recent years and has been doing over both a 5 year and 10 year average period.

[The headline impact of historical restatements (by Scot Govt and HMRC to match European System of Accounts) seems to have been to (relatively) boost rUK's GDP.  I haven't dug into this further yet]

Stepping back from the rUK comparisons and looking at the absolute figures for revenue generation in Scotland: the total stack is public money spent, up to the black line is from taxes, the balance in red is deficit;


The numbers may be hard to read - but basically increases in revenue raised through employment taxes and VAT have been offset by decline in oil & gas revenue.  Remember we already know next year's figures (to be published in March 2016) will show a further £2bn+ drop in oil & gas revenue.

Looking at where the money was spent: the black line represents what was raised in taxes, anything above that is deficit


What strikes me about this graph is that education spending has decreased in cash terms over a period in which (for example) health and social protection have increased by 10%.  The Capex vs Depreciation figure declined last year suggesting a slowing of the capital investment program. Clearly these are just superficial observations at his stage.

****  

Here are the underlying figures for the deficit graphs for those who like to dispute them




38 comments:

Ron Sturrock said...

HMRC Offshore CT 14/15 revenue payments so far show circa £1bn down.
Also consider possible tax changes in next weeks budget, which may affect the 15/16 revenues.
Was also amused by J Bailie's comment on SNP choice of phrase, I am sure she said "Full Revenue Retention" or FFA by another name?
W. Rennie's summation was good.
J. Swinney accusing opposition of "talking Scotland down" IMO was poor.
Suggest reading Brian Ashcrofts "Scotland economy watch" and the IFS comments out today.

John Thompson said...

I'd heard previously that the GERS figures don't take into account everything, whisky exports for example and the other one I have been told is that because water and sewage are privatised in England then they are 'off the books' and don't appear as Government expenditure.

Is any of that true or is someone pulling my leg?

jason hoffman said...

So why is the Scottish deficit worse per capita than the rest of the uk?

shrewnaldo said...

Kevin - excellent and informative as usual. Apologies if this question is slightly off on a tangent but I figure you are one of the most likely people to know this - are you aware of any resource which breaks down tax revenue against public expenditure within each Scottish region or, even better, council authority? The only data I can find compares Scotland to other members of UK or larger English regions. Thanks in advance.

Ron Sturrock said...

Never seen anything about Scotland sub-national tax revenues. HMRC are now producing a disaggregated revenue report.
Worth a more involved search on the Scotgov, HMRC and ONS websites.

With all these hypotheticals being broadcast, i.e if only we were independent 15 years etc, it is worth being aware of the possibility that we may have been in the Eurozone.

A bit unsure of the SG position re FFA (or FRR?), my impression is that the FM wants is quickly whereas the DFM seems to suggest it being phased in.

Suggestions being bandied about the deficit will iro, £14bn in the next GERS.

jason hoffman said...

Who calculates how much we get in Barnett formula funding? If we have a £12.4b deficit, then we surely have a shortfall in funding from Westminster , so we need more?

and what does the Scottish govt pay more of in terms of public spending than the rest of the uk. For instance is the NHS budget per head higher? Education? Higher education? Would cuts to these make any significant difference to the deficit.

Since the SG is unable to change income tax, corporation tax or vat rates, how much revenue if any can scotland raise.

And how much is Scotlands share of major Run projects like HS2? Did we get extra funding to help with the forth replacement crossing or does that come from our barnett funding?

Maybe life is just more expensive in scotland due to geography and England needs to just accept that and stop whinging about Scots (all of us, pro indy and pro union and everyone else in between) being subsidy junkies.

Oh, and last question, what is Wales geographical share of North Sea oil? Does Scotland get a geographical share of Welsh coal? It's a natural resource too.

jason hoffman said...

A couple more questions....

What do Scots get from living in scotland that the English, Welsh and northern Irish don't that accounts for our higher public spending? do we get better health and education as a result? Should they get more rather than us get less?

And last questions... Were we better off before devolution? how was scotland funded pre-barnett? Was it "fairer"?

Terry Summers said...

Jason,
That is a long list of interesting questions. I would imagine it will take you a while to research them all.
I'm looking forward to seeing the results of your research when it's complete.
Cheers
Terry

Kevin Hague said...

John

GERS do take into account everything (the Scottish Government have had years to ensure they do). Somebody was pulling your leg (or misleading you - as happens a lot)

Kevin Hague said...

Jason

For the reasons outlined very clearly in this post.

Kevin Hague said...

Shrewdnaldo - sorry haven't see the data further broken down by region (beynd my self-imposed remit!)

Kevin Hague said...

Jason

I'm afraid I don't write this blog (or run my life) as a free advice service answering question for people who are too lazy to read GERS or use google.

Cheers

Kevin

Kevin Hague said...

Terry

Quite - thank you

Kevin

Ron Sturrock said...

What a page turner the HM Treasury document "Statement of Funding Policy" (Barnett) is.

The relevance is in GERS, but I suspect not many realise it.

When you see expenditure for UK, don't just subtract the value for Scotland and assume the remainder is England, it isn't.

It's nice to know what the SNP appear to think. Plaid C are after a funding increase, SNP response good luck to you. Some say code for, as long as not at our expense. Neighbourly eh!

James Howitt said...

As Welsh coal is internalised (I.e what is left goes to Aberthaw) and is on borrowed time dispel any thoights of it being of any benefit to Scotland in terms of revenue allocation.

jason hoffman said...

Kevin, I'm not looking for your advice. I was looking for your opinion. You offer opinions on your blog.

Telling me to Google stuff is not helpful.

You might be persuasive with your analysis but as some someone prepared to discuss your views with those who don't agree with your politics, you've let yourself down.

I asked you questions because you are an "expert. if you just want folk to boost your ego, keep blogging as you are. If want to argue your case, you need to go further.

bucksboy said...

"Oh, and last question, what is Wales geographical share of North Sea oil? Does Scotland get a geographical share of Welsh coal? It's a natural resource too."

I grew up in one of the least well off places in the UK, with large offshore gas reserves. My inference therefore is that resources such as these are certainly shared out, with local economies benefiting from the industry connected to mining and so on. I agree, energies are far better employed on other matters than the endless bickering and grievance over coin.

finarne said...

Jason
"Who calculates how much we get in Barnett formula funding? If we have a £12.4b deficit, then we surely have a shortfall in funding from Westminster , so we need more?"

Think about what you've said here, really think about it. You're saying that because the Scottish Government EXPENDITURE is £12.5b higher than the perceived REVENUE then you think there must be something wrong with the Barnett formula and Scotland should get more.

The EXPENDITURE *comes* from Barnett, if Barnett was higher the Scottish government EXPENDITURE would be higher and the deficit would be higher too.

You've got a strange way of articulating your points. Or perhaps I'm reading you wrong and you're arguing that Scotland should NEVER get FFA.

Ron Sturrock said...

If the deficit were allowed to go higher the debt would also increase.
As we all know, the Barnett allocation is based on population (measured against England, not the UK as a whole) and NOT a needs basis, which goes someway in explaining why SG does want a change.
Strange, considering this will in probabilty be irrelevant with FFA.

Anonymous said...

I'm sure the CEA are on tenterhooks waiting for your next epistle.

What is it you want? A job in 'churnalism' showing the Daily Record readers how clever you are?

Unfortunately for numbers wonks there is that pesky 'vision thing' that people like you don't understand and interferes with making more money for the money makers.

There are other ways to do things if you are given the levers to do so.

You are preaching to the Tory converted and will never persuade anyone with any decency that your view of the world is anything other than making more money for greedy people like you.

Jason Hoffman said...

Why does the Union want Scotland?

We have an economy that clearly does not provide enough to allow us to pay our way - we over spent by £12.4bn this year, and it'll be worse next with falling oil revenues;

We are subsidised by England and it's clearly resented by many commentators south of the Border;

We are a nation of fat, smoking alcoholics who have rubbish football, rugby and cricket teams;

We have a political party in Government in Holyrood that no-one in Westminster wants to deal with;

We spend too much on our public services; give our students free tuition but penalise English, Welsh and Northern Irish. Out pensioners get free bus passes and everyone gets free prescriptions. Unlike in England!

We're told that Scotland is an integral part of the Union, but when we try to participate in the democratic process, we're told that we can't have the SNP influencing government if they win the majority of seats in Scotland - there was even talk from the most senior civil servant that FPTP may have to go due to the SNP having undue influence in Westminster.

We've gone from the love bombs sent from Unionists during the referendum begging Scotland to stay to the current brutal media campaign about "Scots" potentially having a say in the make up of a monority Lab or Tory government.

I am confused what Unionists see in Scotland. if we are really that much of a burden; our main political party so disliked and the people thought of with such disdain, why does the Union want to keep Scotland?

Anyone?

I'm not feeling much warmth and empathy coming from the media at the moment. People like Kevin have done analysis of the GERS figures that prove that we need to rely on England for financial support. Senior Labour and Tory politicians clearly do not want to have to deal with a rampant, separatist SNP in Westminster.

So why keep us?

Terry Summers said...

Jason, you are making the fundamental mistake of confusing the SNP with Scotland.
The SNP is a political movement with grudge and grievance at its core, implementing policies aimed at breaking up the United Kingdom, whereas Scotland is a country which has recently had a referendum that clearly indicated that 63% of the electorate rejected the SNP's raison d'etre, independence.
Having failed in their main purpose, the SNP are currently further alienating the UK electorate by making spurious pronouncements about how they will disrupt Westminster and force through policy detrimental to the rUK with less than 9% of the elected members.
As they couldn't convince Scotland to vote for Independence, the are trying to make themselves so unpalatable to the rest of the UK that they would be happy to see Scotland leave the UK under any circumstance.
This is actively working against the democratically expressed 'sovereign will' of the Scottish electorate and detrimental to the future wealth and security of Scotland,(see IFS report).
Have you completed your research yet, when can we see your results?
Cheers
Terry

jason hoffman said...

Terry, and you are being patronising in the extreme.

Why is it when unionists are asked a question about the union they resort to SNP bashing?

I asked why the union wants to keep scotland. You didn't answer that.

Now, all the recent articles I read were not referring to the snp but to Scots (max Hastings "when will Scots see sense" etc etc etc). I know they mean snp voting Scots, but they say Scots.... To English, unionist daily mail readers it's the same thing. Are you Scottish or live in scotland? Then count yourself in the same class of despised person category as me. Unionist or separatist... We're all the same subsidy junkies...

As for disrupting Westminster, if the SNP return 45 to 50 mps, and are the third largest party, then Westminster will have to deal with it. If labour or tories are in minority govt, they will need support to rule. If it's the snp or Ukip or LibDems, each will require some return.

I love how you inflated the majority who did not vote for independence from 55 to 63% who voted no. The abstainers and non-voters were clearly all really no voters. The result was 55-45. Unionists really are desperate.

So, I'll ask again, why does the union want to keep scotland? A basket-case economy, a population intent on returning an SNP majority to Holyrood and a majority os Scottish MPs too. subsidy junkies. Etc etc etc...

jason hoffman said...

Terry, a point I meant to mention in my previous post was about %ages. They can be deployed in lots of ways. Since you mention them, I may as well too.

I've already taken issue with your 63% voted no claim. You were just wrong.

You say that an SNP block that will amount to 9% OF UK mps having the temerity to force Westminsters hand is unfair. No more fair than Labour or conservative parties ruling with only 30% of the MPs.

Or is that you just don't want a democratically elected SNP party to participate in Westminster. How exactly would you propose stopping them dealing with whoever they like, or not.

That suggests to me that you don't believe in democracy.

We were told repeatedly during the referendum that scotland was a keen part of the uk, and that the only way to have our say was through Westminster. So we are. Only what better together didn't say was that we had to vote for a unionist party. I must have missed that bit.

With the SNP polling around 46%, what does that say? We're all deluded, running headlong over the cliff? Why are the unionist parties in danger of wipeout? Why not ponder that question and get back to me. You won't of course, because you don't answer questions - just come back at me with more sneering comments.

I'really hoping that the snp win 100% of Scotlands Westminster seats. Just to see what happens next. Now that is a statistic.

Terry Summers said...

Jason,
You are assigning statements and attitudes to me that I haven't expressed in any of my post here. I understand and recognise his tactic in debate from previous encounters with the committed.
If it makes you feel happier I will express the support for Independence as 37% of the eligible electorate. If you still think I am wrong try subtracting 37 from 100.
The Union didn't have a vote in referendum only the Scottish Electorate.
However many SNP MP's are returned to Westminster, they will be tasked with representing the interests of the whole of their constituents, not a particular party dogma. If they approach Westminster in the manner that Salmond has suggested, to rumble it up & shake it to its foundations, it is my opinion that they will not be representing the 'sovereign will' of the Scottish electorate as expressed in the Referendum. All MP's of whatever party allegiance are equal in rights and responsibilities and are free to pursue whatever policies and party affiliations that they see fit, I fully support this, but I fear that the SNP cohort will be approaching Westminster with the same attitude that UKIP approach the European Parliament.
Have you finished your research yet. I am keen to see your findings!
Cheers
Terry

jason hoffman said...

Still playing with numbers. 45% voted for. 55% against. The rest didn't vote either for or against. It's pointless discussing this with you.

Im still disappointed that nobody on here is prepared to give an opinion or proper response to my questions. Fobbing me off with patronising "go away and do the research, sonny" is a pretty sad indictment of you all.

Now Kevin's suggestion of googling the answer is just silly. If he's based his understanding of economics on Google and Wikipedia, we should be worried. But i think not. It's a shame an "expert" who can claim Kezia Dugdale amongst his twitter admirers cannot engage with someone who has divergent views.

I'm not wasting my time researching my questions because the majority of you here would not be interested in what I find out. Blind, blinkered and beyond reason. Not interested and don't care.

Terry, I presume you've been watching the news interviews with Stewart hosie the past couple of days. I don't see any mention of them pursuing independence. Have they said that? I heard him say that they are going to pursue their social democratic agenda, which will be to promote policies that benefit the entire UK. Of course they will put the interests if scotland first. That's who they represent. I doubt the tories do that, with only one MP here. Labour stand for nothing anymore, Ukip definitely don't represent our interests and the LibDems are going to be irrelevant after the GE.

Terry Summers said...

Jason,
Given your opinion of those that red this blog I am surprised you still bother to post here. For my part I find your comments diverting and entertaining.
As to Stuart Hosie's comments, I prefer to listen to the Organ Grinder not the Monkey, Alex Salmond,has made statements regarding how his MP's will conduct themselves at Westminster which I judge to be a more likely strategy.
I am disappointed that you can't be bothered to research into the very interesting list of questions that you posted earlier.
I suppose that I will have to content myself with your subjective opinions on the merits of the Political parties opposing the SNP.
Cheers
Terry

Kevin Hague said...

Jason

OK. To your questions
1. The whole point is Scotland gets a population share the UK's debt therefore deficit - the £12.5bn doesn't hit Scots unless we have FFA. You have fundmentally misunderstood what is going on.

2. To your "why do we spend more and where" questions I've already covered this but here's the link - look for yourself > Scotland's Economy

3. To an extent life in Scotland is more expensive (see transport spend in link above) which is why we benefit from Union as these costs are shared.

4. Yes "stop whinging" would be a good idea. At the risk of sounding childish its the indyref that started it - you started it. A narrative based on narrow self interest was pushed by the SNP and now it comes back to bite us. Go figure.

5. Welsh coal? Seriously you are again demonstrating a complete failure to "get" what all this is about - if we keep our geographic share of oil (as the SNP desire) then of course the welsh keep 100% of their coal - its the reddest of red herrings I can imagine; last time I checked there wasn't a big chunk of tax income coming from welsh coal production and if there was it would be excluded from GERS anyway as clearly not "our" income

Maybe if you consider how simple the answers above are and how the questions themselves expose the fact that you clearly have not understood what is going on you will understand why the response I initially gave was actually quite polite and appropriate.

I'm bored of moderating the squabbling on this post so will not publish any more comments unless they contribute something usefel

Kevin Hague said...

Jason

To your latest (last) comment;

"blind, blinkered and beyond reason"?

As your comments demonstrate you haven't read this blog - had you done so you'd realise the ridiculousness of that statement.

I spend a ridiculous amount of time engaging with those of divergent views - and for the record my stuff has been RT'd by the likes of Kevin Pringle (SNP Strat comms Director) and Ruth Davidson, Murdo Fraser etc. - surf comments on this blog and you'll find I am as often accused of being a Tory as a Labourite. It's true nobody would mistake me for an SNP cheerleader.

Enough.

Kevin Hague said...

Jason

"I don't see any mention of them pursuing independence"

Might I suggest you read the SNP's Constitution here.

It is their only aim.

Ron Sturrock said...

Jason,
I gave a hint before where to find information regarding "Barnett"
So here it is again, it tells you all you want to know:

HM Treasury "Statement of Funding Policy" published October 2010.

Notes:
To get "assigned budget" you have to pay into the UK Consolidated Fund and receive assigned budgets according to the Barnett formula.
It would be reasonable to assume that Scotland with FFA will not be paying into the Consolidated Fund and as a result will not be entitled to a Barnett assigned budget.

I strongly recomend you read it.

S. Hosie has given a number of interviews over the last few days. One interchange stands out in particular when he was asked if A. Salmond would become the Westminster leader. The reply and the manner in which it was stated was interesting. What i took from this was "NO" he would not be leader, wonder if A. Salmond has been told?

Terry Summers said...

Ron,
It could be an interesting 3 cornered fight to see who leading the SNP in Westminster after the GE. Will it be Robertson, Hosie or Salmond? Or will one of them be a hand puppet for Sturgeon?
Cheers
Terry

jason hoffman said...

Instead of wondering what role Alex salmond is going to play, why has no-one started wondering what will happen to the leaders of conservatives, labour and LibDems after the election. One of Cameron and milliband is sure to be replaced. Clegg is surely gone If the LibDems lose a lot of seats.

Ron Sturrock said...

Jason,
You're the one who mentioned the Stewart Hosie interviews.
You're the one who said Alex Salmond has views on how the SNP should conduct themselves in Westminster.
In making these points you open up the road for others to comment.
As to what happens to leaders of the main parties, one will be PM the other dispensed with, that is what happens. They all know it.
Whoever is leader of the opposition makes not much difference as they can only carp from the sidelines.
Even SNP members prefer D. Cameron.
I believe thee is going to be a new member of the Energy department titled "Minister for the Secret Oilfields" Sh! I did not tell you this, mum's the word.

Jason Hoffman said...

One of the biggest lessons I learned during the referendum was that getting involved in online debates is utterly pointless.

We can each argue with others until we're SNP blue or Red Tory in the face. We can come up with rational and not so rational arguments. We can resort to insults. We can get sucked into endless petty squabbles about what might or might not happen.

And in the end, not one opinion was or will be changed by online arguments and debates.

I am not a member of the SNP. I am not a spokesman or strategist for them. And I am not going to justify them. I can justify why I'll vote for them but not what Alex Salmond will do or say. Yet because I am virtually the only person with Pro-Indy views on this blog currently engaging with the pro-Union view, I am being cast as the justifier of what Alex Salmond may or may not do.

And it’s getting dull.

I started reading the blog because I saw a link to Kevin’s analysis of the Scottish economy and I wanted to read more. And engage – I thought that this is the purpose of blogs such as this.

I am not a member of any political party. I doubt I ever will be. I have voted for Libdems in Westminster for a long time, and did so for the last GE. I won't vote them again after their coalition. Since Holyrood was created I have voted for whoever would beat the Tories in the Constituency seat, and for the Greens or SNP on the List. And I will continue to do so.

My political views were developed by living in a working class coal mining community in Dumfries and Galloway. Seeing the devastation wrought on the people I knew and the terrible effects that the Miners strike and then the closure of the pits had on my community will live with me for the rest of my days.

One of my first political thoughts was that Thatcher and her people did not care about ordinary citizens. I remember drafting a letter to Margaret Thatcher when I was something like 12 or 13 asking why she couldn't be more compromising in her policies - I was clearly a Liberal keen on coalition even then!

I believe passionately that all of us have a right to a decent wage; good education; good health; long and happy and prosperous lives. We all should contribute to our communities and we should all benefit – not equally as that is na├»ve to think that, but with more fairness than we do.

I do not believe that the Conservatives care about ordinary people. The Tories are not a party of unity and togetherness – their austerity messages of us all suffering together were hollow and insulting.

I do not believe that the Labour party believes in Socialism – they are too concerned with capturing Tory voters in “Middle England” to pursue social democracy. Ed Milliband will be the worst PM ever IMO.

The LibDems could have been a force in the middle ground but they sold their principles for power.

Scottish Labour are rudderless and too focused on attacking the SNP than offering anything attractive to voters. Who are they and what do they stand for? I know that they stand against, but for?

The Greens are dreamers with good intentions and may be considered our social consciences. But they will never be a party in government.

UKIP are nothing more than a pressure group with limited aims and even more limited abilities.

And that leaves the SNP. At the moment, for me, they are the only party that are offering something different. They are a catalyst for change.

And we need something different in the UK. Whether it is a change in the way Westminster governs; in more devolution for Scotland, Wales and Northern Ireland; federalism for the UK regions, or even full independence, that is not for me to say. But I am voting for them because they will shake up the current closed shop politics we live under.

I am not going to post again on Kevin’s blog. I will continue to read it, but engaging in comments, no. There's more productive things to do in life.

Peter Lyon said...

Jason, more coal mines were closed under the Labour Administration than under the following Thatcher Administration.

Peter Lyon said...

Jason, While Labour were in power, 272 coal mines were closed. After the Thatcher administration came to power a further 154 coal mines were closed. Labour closed more coal mines and devastated more coal mining communities than did Maggie Thatcher.

Peter Lyon said...

Jason, with regard coal mining in Britain, Labour administrations under Wilson and Callaghan closed 272 coal mines. The Thatcher administration closed 154 coal mines. The community devastation was well underway before Maggie Thatcher arrived on the scene.