Saturday, 7 November 2015

The Power of Persistence


As small drops of rainwater eventually erode the toughest granite, so the persistent drip drip drip of economic rationality eventually penetrates the defences of even the most committed reality avoiders. The truth of this observation was illustrated by a remarkable blog post that appeared on Scottish Nationalist fan-site Wings Over Scotland yesterday.

In a conversion of Damascene proportions, Wings now concedes that - even allowing for the inherent weaknesses in the GERS figures - if a case is to be made for an independent Scotland we'll need to find more tax revenues and/or bigger public spending savings than were ever discussed during the independence referendum. It's a tacit admission that his Wee Blue Book was simply wrong when it claimed
"the No campaign desperately want you to believe that Scotland would be poorer as an independent country, and that it would therefore have to raise taxes and/or cut public spending to protect services. But that simply isn’t true. In fact, it’s not even close ..."

*****

For those who may not know, Wings Over Scotland is run by (fake Reverend) Stuart Campbell who, with scant regard for economic accuracy, bangs the drum for the cause of Scottish Independence. The style is that of a shock-jock aiming a blunderbuss loaded with random snippets from Google at a web page and letting rip. It serves a purpose for the Nationalist cause, feeding those so hungry for grievance that they won't question a source that tells them what they want to hear.

Stu doesn't like me very much. I'm very careful with data and persistent when it comes to pointing out some of the more glaring errors he makes (and refuses to correct) - for example I recently posted these 10 factual inaccuracies he's continually promoted through his Wee Blue Book.  I probably wouldn't bother correcting him if it wasn't for the fact that he's crowd-funded and makes claims to factual accuracy that don't withstand even the most cursory inspection. I happen to think it's poor form to take money from people and use it to publish material that fails to meet basic standards of accuracy.

I had decided I'd written enough on the subject of Wings - if people are still willing to be taken in by his schtick then so be it. But then he put up a post (authored by someone else) which addresses me and my blog directly. Of course it doesn't even attempt to address the errors that I've highlighted and indulges in the most blatant "playing the man not the ball" ad hominem attack you're likely to see. So far so normal for Wings - nothing worth responding to. But as I scanned through the ranting and grievance seeking rhetoric I realised something quite remarkable was happening; the underlying narrative was changing. Of course there's enough spluttering abuse in there for his slower-witted readers to have their thirst for "unionist bashing" sated - but actually if you filter out the noise he's published a post that agrees with what I've been saying all along.  It's a tacit admission that the economic case presented by Yes (and punted by Stu himself) was - to be polite - fatally flawed.

Let's look at the post in question. It's authored by a Lindsay Bruce but is written in the voice of Wings (the author is "we") and reeks of Stu's ad hominem style, so I'll refer to the author as Wings and "he" for simplicity.

Wings doesn't name me directly or link to this blog, and (hilariously) even blurs out my twitter handle and picture. It's almost as if he's scared that if his readers were to be exposed to a rational argument they might start to see through him. Anyway; I'm not so petty so here's his blog post - feel free to read it and return > The Limitations of GERS.

Let me dash though the detail of that post and see if we can decode it.

He refers to me as "amateur Unionist blogger". My blogging is certainly unpaid - I don't rely on crowd-funding to allow myself to do this full-time as Stu does, so I guess he get's the drop on me there: Stu is a "professional Nationalist blogger", I'm the one writing this at 6:30 on a Saturday moring. The flip side of that is course that I'm a professional businessman but we'll let that pass. I'm not a fan of the label "unionist" because, for me, being pro-union is more a result of being economically rational than because I hold a dogmatic view. That said, I've always been clear that I'm intuitively in favour of pooling and sharing between neighbours, so I'll take what he clearly intends as a term of abuse on the chin: I'm an amateur unionist blogger.


I hate myself for being dragged down to his level but if he's trying to trash my reputation I feel I have to respond. I'm an amateur unionist blogger who  - as a result of being a moderately successful strategy consultant, businessman and entrepreneur - understands how to handle imperfect data, manage uncertainty and make a business case. I also understand how to present data clearly, reconcile figures and construct a robust analytical audit-trail. Stu on the other hand is someone who wouldn't know how to construct an audit trail if - well - if the electoral commission asked him to provide one to explain his referendum campaign expenditure.  He illustrates the reference to me with a photo of the Pet Shop Boys. This is because one of my businesses is www.petplanet.co.uk which (alongside www.greenfingers.com) forms a £20m turnover retail group. We're based in Livingston and employ lots of people; he's based in Bath and doesn't.  I have other significant business interests in Scotland but it's irrelevant really - he can call me pet shop boy if it helps him get through the day. Maybe I'm always on his mind?


He parenthetically refers to my "analysis":
In essence, the analysis amounts to dumping all the GERS summary tables into a Microsoft Excel graph, adding the Office of Budget Responsibility (OBR) forecast for oil revenue, and pointing to a resulting £9.1bn gap between Scotland’s public spending and its total revenue.
Oh he's so close to understanding the figures it almost hurts. Let's take this really slowly: the gap between Scotland's public spending and it's total revenue is what is called our deficit. In the most recent GERS figures (2013-14 when oil revenues were still as high as £4bn) that deficit was £12.4bn. What I show is that the amount by which our deficit (excluding oil) exceeds that of the rest of the UK is £9.1bn. The obvious point I'm making is that if you strip out oil (as the market is unfortunately doing for us) that underlying gap is in fact very consistent over the last 15 years. Its the deficit gap which becomes exposed as oil revenues decline.

I lay it out in very careful detail in Full Fiscal Autonomy for Dummies and it is summarised rather neatly (if you read what the axes show) in the graph below. It shows that the deficit gap is explained more by our higher spend per capita (the red line) than our lower onshore tax revenue generated per capita (the green line). I'm genuinely gob-smacked that he still appears unable to follow this really simple analysis.


Now all it took to create this analysis was indeed the simple spreadsheet manipulation of GERS figures and some graphing as he describes. He's right, it really is as simple as that ... which makes it all the more depressing that he still seems unable to follow it.

But in "essence" yes, that was all it took to expose some of the more fantastic Yes camp claims and to highlight the ridiculousness of the economic assertions Stu himself published. Of course if Stu was capable of carrying out such a simple analysis himself maybe he wouldn't have made such a hash of the numbers in his Wee Blue Book - but we'll let that lie.


I could point out that as well as crunching the GERS figures I've also done quite a bit of work understanding the GERS methodology, analysing oil forecasts and oil tax yields, looking at currency options and trading relationships with the rest of the UK and EU negotiations and the potential for economic growth and the costs of independence and  .. well, I'm sure you get the point


He then says
This, he asserts, is in addition to Scotland’s share of the hefty deficit the UK currently runs.
I do assert that, because it’s true. This is typical of Wings' rhetorical style - he doesn't deny the point I make (he can't, it's true) but by saying "he asserts" his skim-readers will think he's somehow shown I'm wrong. I'm not.


I'm really not sure what I can do about Wings and his acolytes' apparent inability to grasp this amazingly simple fact. Let's do the numbers for him for 2013-14 alone. All figures in £m directly from GERS
  1. Scotland's deficit = (12,434)
  2. Scotland's oil tax revenue then was 3,996
  3. So Scotland's "onshore deficit" (i.e. excluding oil) was (16,430)
Notice that figure is not £9.1bn - the last time our deficit was a low as that was in 2011-12 when oil contributed nearly £10bn. You'd think he'd know that. To understand the deficit gap you need to compare this figure on a per capita basis with the rest of the UK
  1. Scotland's onshore deficit per capita = 16,430/5.342 = £3,076 
  2. The onshore defict per capita for the rest of the UK (using same methodology) = £1,451
  3. The onshore deficit gap  in 2013-14 was therefore £1,625 for every man woman and child in Scotland
  4. So gross that up by 5.342 million population = £8.7bn deficit gap in 2013-14
My analysis shows in real terms that figure has averaged £9.1bn over the last 15 years and has unsurprisingly been fairly consistent (the gap between the red and green lines)


Anyway: he continues
His conclusion, shouted loudly and often by every angry Unionist on Twitter, is that the government of an independent Scotland – which tellingly they always assume to be an SNP one – would either have to drastically cut public services or raise taxes to fill this “black hole”.
I'll ignore the emotive language and the incorrect assertion that "they" always assume the government will be an SNP one - the essence of this is true: yes I'm saying that an independent Scotland would either have to drastically cut public services or raise taxes to fill this black hole.

But here's the killer line
It’s an interesting piece of analysis. Or it would be, if it wasn’t total nonsense.
It's unfortunate that he's already demonstrated that, despite apparently recognising how simple the analysis is, he's shown he still doesn't understand it. But no matter - let's give him the benefit of the doubt - he may not have followed it but he might still be able to now go on and show why it's total nonsense.

In fact - after some predictable diversionary manoeuvres -  we'll see he actually goes on to agree with this conclusion. By the end of this post  he's scrambling around for tax increases and cost savings to close the gap - I guess he's hoping his readers will have such short attention spans that they'll have forgotten that he said the need for such actions was "total nonsense".

We have to get past the diversionary manoeuvres first though - I'll try to be brief.

First he suggests the OBR’s oil forecasts are nonsense. As I've pointed out many times the OBR's oil predictions have always been optimistic, but I've also been very clear that if you believe oil will once again deliver £9bn+ pa tax revenue to Scotland then that would indeed change everything. Of course not even Stu is claiming that any more (it would be just mean of me to quote Stu's section on Oil in the Wee Blue Book - suffice to say he was extremely confident that another oil boom was coming). The point here is simple: if you can't make a case for another oil boom then simply saying "OBR bad" doesn't make the obvious issue go away. It's telling that Stu no longer even attempts to argue for a significant upturn in oil revenues.


I've done a fair amount of analysis on this; the key point being that even if the oil price recovers the tax yield from the North Sea is in structural decline. Tax yield is a function of tax rates (already reduced), production volumes (declining) and profitability (declining because of increasing extraction costs as fields mature). Stu doesn't bother with any of this though: his response to an uncertain future is to simply assume it away by dismissing all evidence and analysis.


He then moves on to try and undermine the credibility of GERS:
But it’s GERS that’s the real problem It’s basically the only data source we’ve got in terms of the Scottish Government’s income and expenditure, and that’s why everybody references it.
Remember he's meant to be showing that my analysis is "total nonsense". He starts by accepting GERS is the only data source we've got and that everybody (including the White Paper, the Scottish Government, the SNP and indeed Stu himself) relies on it.  I'm struggling to see why the fact that I have used this data source might somehow make my analysis "total nonsense" - if his problem is with GERS then his problem is with all analysis around Scotland's economy and he must think we are operating in a knowledge vacuum. Of course he doesn't believe that, he's just aimlessly letting rip with his blunderbuss again.

He starts with a simple enough statement about GERS
Which gives Scotland slightly (about 10%) more for provisioning public services than a straight population share would.  
That's correct - I make it 10.7% in the most recent year. "Slightly" might be pushing it though. The figure works out at £1,326 per person in the most recent year and in real terms on average £1,450 over the last 15 years. Gross that up across our 5.3 million population and you get £7.7bn a year. Scotland's total education budget is £7.6bn - we can probably agree that £7.7bn is a lot more than "slightly more".

Then he indulges in a little distraction about Barnett consequentials. Of course what GERS observes is the Scottish Government's assessment of what’s spent on us after the impact of Barnett. Arguing about Barnett in the context of GERS "being the real problem" is an irrelevant distraction. You can have issues with Barnett if you like, but nobody disputes that GERS shows the result of applying Barnett as it stands. Of course were Barnett to be scrapped or fundamentally changed then that would change what is spent on us and that would be reflected in GERS. So at the risk of labouring the point - the effect of Barnett as currently applied (including treatment of Olympics, Commonwealth Games, Hs2, Heathrow etc.) is already reflected in GERS - it results in us getting that 10% higher spending per capita.

The next distraction is a doozy. We're all dealing with the most up-to-date GERS figures (which restate historical years on a like-for-like basis) but his post now extensively quotes the "renowned economists Jim and Margaret Cuthbert" (no, me neither) from 2005 and 2007! All of those quotes are completely irrelevant as the methodology has been continually changed and improved and historical figures restated since then

In 2008 the Cuthberts themselves said: “This GERS follows a major review, which has been carried out by officials after consulting widely with users of GERS, (including economists and statisticians like ourselves). It is also the first GERS that has been produced with an SNP government in power at Holyrood, though it should be stressed that GERS is produced independently by officials with no input from Ministers [..] For example, the Treasury data, which is the basic source for the expenditure figures in GERS, (and which until recently was a black box to all outside the Treasury),  has been vetted thoroughly by statisticians in Scotland, and they have shown themselves willing to override the Treasury’s figures where these are clearly wrong. Specific mistakes have been corrected, including the treatment of Scottish Water, nuclear decommissioning, and the depreciation of public assets, such as roads. [..] In presentational terms, the report is now supported by very much more detail: this not only gives it increased credibility, but also makes it a very much more useful document."

So why include the lengthy quotes dating back to 2005 and 2007? He carries on by quoting the Cuthberts from 2011 (4 years ago is a recent as he gets) – but nothing changes the fact that these are without doubt the best figures available and (after 8 years of SNP ministerial oversight) are if anything likely to favour Scotland's case.


He mentions corporation tax and it's worth an aside. We can all agree that GERS current corporation tax assumptions are necessarily very crude for the simple reason that companies don’t report profit on a Scotland vs rUK basis, so the data simply doesn’t exist. How companies will choose to report profit will depend on a number of factors (not least the tax regimes in place) so of all the GERS assumptions this has to be the least certain estimate.  Unsurprisingly the SNP influenced GERS estimate is relatively generous to Scotland, assuming £0.5bn more corporation tax would fall to an independent Scotland than HMRC assume. The net result of the GERS assumptions is that Scotland is allocated corporation tax that implies we generate almost identical corporation tax per capita as the rest of the UK - in fact it shows only a £29 per person difference!


So he's set out to undermine GERS, but in the process he's done nothing more than confirm its the best source we've got, that any historical gripes have been long since addressed and shown us that his favourite "respected economists" are happy that statisticians in Scotland have been willing to override Treasury figures.  I'm delighted that he chooses not to repeat the assertions (still on his website) that head-office location somehow determine where VAT is allocated in GERS and I'm relieved that he doesn't suggest (as he's done in the past) that there's any missing Whisky Duty. This is progress and I applaud it.

So now he move on to the crux of the matter: how do we interpret the GERS data?
This really is fundamental. GERS relates only to the current devolution settlement. It says absolutely nothing about the economy of an independent Scotland, or indeed anything about what it might look like if and when the Scotland Bill 2015 is eventually enacted
First of all, it's clearly ridiculous to state that it says "absolutely nothing" about the economy of an independent Scotland. It obviously gives us a starting point from where we can hypothesise what an independent Scotland's economy might look like. I'm sure he doesn't really think we know nothing from the GERS figures - it is after all the GERS figures that are used to justify statements like "Scotland would be the 14th richest country in the world" or "We've paid more tax per head of population every year for the past 34 years" or "Scotland's GDP per head is higher than the UK as a whole". It's the GERS figures that the White Paper was based on for goodness sake.

Remember: he's trying to show that my conclusions are "total nonsense".  Let me quote from my own blog on this subject: "I don't mean to understate the alternative choices that we would have under independence. One of the major frustrations of the indyref campaign was that so much bollocks was talked about what our economic starting position really was that we never managed to have a substantive debate about what we might actually do with the power that independence would give us"

So I agree with Stu on on the most important point here: this tells us where we start from if we keep everything as it is today.  Of course we wouldn’t want to do that and indeed (given the size of deficit we’d have as a result) we wouldn’t be able to maintain this profile of tax and spend for long even if we wanted to. This analysis merely gives us the base from which we have to explain what we’d change if we were independent, it allows us to ask the right questions and forces on us the discipline of making the rhetoric tie in with actual scaled figures
  • If we didn’t spend the sums currently allocated to us, what would we actually spend? Would that be more or less and - critically - if less, what difference would that make to people's lives?
  • If we didn’t have the same tax regime what would we change and what impact would that need to have? If we're going to cut taxes, how will we make up the shortfall? If we're going to tax the wealthy more, who will we tax, how much will we tax them and what will we realistically raise as a result?
  • If we're going to grow our tax take through economic growth, how will this be delivered? Might we risk losing economic growth as a result of currency uncertainty and separation from our largest market? Even if we're optimistic, realistically how long would it take us to grow our tax base enough to offset the deficit gap and how would we deal with the funding gap in the meantime?
These are all questions that the White Paper (and the Yes campaign more widely, including Wings) famously never answered. Other than suggesting £0.5bn of mainly defence based cost savings and denying any additional costs of independence there was nothing forthcoming on how our independent costs would differ from our allocated GERS costs. Remember: just because some of these costs are under Westminster control, there is no dispute that they are being spent on Scots and (in the case of welfare and pensions) ending up in Scottish pockets.  The only other tax ideas in the White Paper were lowering corporation tax and Air Passenger Duty. Put simply: the White Paper simply ignored the £9bn onshore deficit gap, in part by making hopelessly optimistic oil revenue forecasts.

But here's where the narrative changes: give Wings his due, he does now start to front up to the reality of what would be required.

But first he has to attack me personally (again). I'm not getting dragged into his game on this, but suffice to say the Twitter exchanges are completely inaccurately portrayed. For the record here's the economics editor of the Sunday Times ...
 .. and here's the founder of MoneyWeek
Unfortunately Merryn receives a bit of the Wings ad hom treatment for being kind enough to support me publicly. Wings is a bully, that's what he does. Funnily enough I have DM's and emails from prominent economists backing my work but apologising that they don't want to say so publicly because they've seen how Wings attacks people. He's a bully because it works. That depresses me. Still - I have more credible people willing to publicly back me than Wings does, I think that's beyond dispute. If I've missed a credible economist saying they rate Stu's analysis I'm sure I'll be shown it.

Anyway, after taking a few swipes at my shins he then returns to the GERS analysis
Nevertheless, almost all countries run a deficit, and even with all the flaws in GERS it seems beyond much doubt that Scotland would too. 
Hold on a minute: "It seems beyond doubt that Scotland would too"? I thought "It says absolutely nothing about the economy of an independent Scotland"? If my analysis is "total nonsense" then so must this "beyond doubt" conclusion be.

But let's focus on the positive: we can agree that it's beyond doubt that an independent Scotland would start off running a deficit. We can I think also agree that he's demonstrated (again) that he hasn't grasped the concept of the deficit gap - what we'd have to close for our economy not to be worse off than we have now by pooling & sharing within the UK.  According to GERS the scale of the gap, the amount worse than the rest of the UK that Scotland's deficit would be, is £9bn. Stu has helped us see (via the Cuthberts' work) that GERS is as likely to be generous to Scotland as not (particularly given the corporation tax assumption).  He hasn't suggested any better figures and he's tacitly accepted that the GERS figures are now fair. If I was asked to put an error bound on the figures I would suggest +/-£0.5bn would be more than adequate - I don't think even in his wildest fantasy Wings is going to suggest that the figures are out by £9bn. So we have a big deficit gap to address - that too is surely "beyond much doubt".

Then something really important happens. Wings is no longer saying we subsidise the UK and that the simple act of separation would make us better off. He's finally allowed the drip drip drip of persistently, accurately presented data to win him round. He starts to talk about the exceptional tax rises and cost cuts that an independent Scotland might be able to undertake. Remember; when he referred to my conclusion saying this was required he said it was "total nonsense" - now he's starting to list ways it might be achieved. Why bother if it's not necessary?

So what does he suggest? I'll warn you now this is not a very exciting list, but what it does show is a tacit acceptance that some way has to be found to fill the deficit gap that we'd be exposed to

He starts with "close tax loopholes" – every political party manifesto ever written include this idea, because politically it's free money. Quite why an independent Scotland should be able to achieve this when successive Westminster governments have failed is never explained. If this is what you want I'm pretty sure it was writ large in the Labour manifesto - it has nothing to do with independence.

He then talks about "expanding the tax base" - this is what’s otherwise called growing the economy. I’ve covered that in some detail (We Need to Talk About Growth), but at it's simplest we’d require 12% growth over and above the rest of the UK to close the gap through growth alone. The White paper provided an illustration suggesting cumulatively 3.8% superior growth over 30 years might be a realistic "independence dividend". There are plenty of arguments (currency, trade) that suggest we may not experience superior growth - but even at that optimistic rate it would take us over 100 years to close the gap. That's a long time during which we'd have to find other ways to fund our exceptional deficit.

He then bungs in a few “tax the rich” ideas – he doesn't attempt to scale them (because the examples given are pretty marginal) but it’s a positive step, it's an admission that we’d have to tax the wealthy more (not an admission you'll have heard during the indyref and certainly not something you'd have found anywhere in the White Paper). In fact, when you look at the numbers closely, the reality is that to make any dent on the £9bn you'd need to tax the middle classes more - but Stu's not got there yet.

So that's it on tax - now for the cost side (which we know is where the real issues lie).

He starts with defence, without actually suggesting a saving figure. Our total allocated defence spend is £3bn and that puts us pretty much bang on the 2.0% of GDP that NATO members are meant to target.  It's not clear how much Stu is suggesting we cut the budget by - there are of course jobs associated with defence, we have fishing waters to protect and if we want to remain in NATO there are commitments we'd have to make. The White Paper suggested £0.5bn was realistic (a figure many have challenged). But I applaud Stu for being bold enough to admit one way we'd be able to close the gap would be to get rid of defence expenditure (and defence jobs). Given our total allocated defence spend is £3bn, it is of course obvious that scrapping all defence expenditure would only close a third of the deficit gap (and I don't think that's what he's suggesting).

He make a quick nod to “fat subsidies” for nuclear - but neglects to specify the annual cost of these to Scotland (it's not big) or to note that over 30% of Scotland's current power generating capacity is nuclear (and I'm pretty sure we wouldn't be a net energy exporter without it).

So he's not really found much.  But I applaud the fact that he is tacitly accepting that those arguing the case for independence need to start finding tax increases or cost cuts (relative to our current GERS figures) if they are to explain how our economy would function without the benefits of UK-wide pooling and sharing.

He moves to a close with a typical Nationalist flourish
But the entire point of independence is for Scotland to make its choices for itself, for us to determine our own priorities (and make our own mistakes) rather than having the consequences of somebody else’s foisted upon us.
This is back to the old debate of what is meant by “somebody else” – I see people in Birmingham, Liverpool or London as no more “somebody else” than people in Aberdeen, Glasgow or Shetland. Of course Stu (famously in Bath) clearly thinks differently. People like Stu appear wedded to the belief that Scots are innately superior decision makers and better, more worthy and dependable politicians. The very idea that "our own" priorities could be those of "us" the United Kingdom is anathema to Stu. No amount of economic logic - however compelling or persistently and patiently explained - will ever change that I fear.

Then he finishes with a paragraph which is in fact completely at odds with the content of the peice
To deem that goal an economic fantasy based solely on the flawed and fundamentally irrelevant content of GERS is, therefore, to miss that point in the most spectacularly short-sighted and wrong-headed way possible.
I presume he's suggesting that I have implied that goal is an "economic fantasy". I certainly haven't. All I've done is repeatedly pointed out that you would need to make changes compared to our current "in Union" GERS accounts that would add up to £9bn pa if the act of separation is not to make us worse off. I simply ask - and will keep asking - where will that £9bn come from?

As for the "flawed and fundamentally irrelevant content of GERS" - well that's just a daft statement. He's shown that GERS is the best data we've got and that the specific complaints he lists are outdated. He himself uses GERS data to conclude we'd need to find more tax money or further cost savings (even if he still hasn't understood the difference between a deficit and the deficit gap between us and the rest of the UK).

I see on Twitter that he's been saying that the Wee Blue Book is his "economic case" and that it only mentions GERS once. Firstly it's not an economic case - it doesn't even pretend to attempt to add up to an economic case. I don't think Stu knows what an economic case is. Secondly, it may only mention GERS directly once but almost every figure in the economics section is derived from GERS, even if he's not bothered to work out where the sources (he's normally quoting out of context) get their data from.

Enough: it's a shame Stu hasn't bothered to correct any of the errors in his Wee Blue Book, it's a shame that his attempt to critique my work has been so lacking in understanding. But let's look on the bright side: he's actually not disputed my analysis (insofar as he's managed to understand it) but has instead gone for the "GERS bad" argument - which is just silly - and the "it will all change anyway" argument - which if he bothered to read what I write he'd know I agree with. I just keep asking the question: what will change versus the "in Union" status quo represented by GERS and where will the £9bn (that we'd need to not be worse off) come from?

He's even shown the first signs of starting to think about what would need to change to close that deficit gap. He's a long way from comprehending the scale of the challenge - but he's making progress and for that I can only applaud him.


*** Addendem ****

My attention has been drawn to this quote from "the Cuthberts" in 2012. It seems there's a reason all Wings quotes from them predate that point - because in 2012 they nailed their colours firmly to the mast: economic data for Scotland was "now clear" by reference to GERS  (when they could find favourable stats to cherry-pick):
This gets no further than the usual Government Expenditure and Revenues Scotland, (GERS) analysis of the balance of government revenues and expenditures attributed to Scotland. It is now clear, as even the Unionists have to concede, that Scotland’s basic fiscal position, including Scotland’s share of North Sea revenues, is considerably better than the corresponding balance for the whole of the UK. As a percentage of GDP, Scotland has had a healthier balance than the UK as a whole on its current budget for each of the past six years. In fact, for three of these six years, Scotland was in surplus on its current budget, while the UK was in deficit throughout.
Funny that.

49 comments:

Dointhebiz 1 said...

Let's imagine for the moment, that ALL GERS figures are/were wrong, they have been systematically presented to look right, but include vague explanations of where or why Scotland is charged for certain things we're seen to be responsible for, but in actual fact we shouldn't be. How accurate would your analysis be?

In other words, IF I presented to you a set of accounts which included 30% [for a figure ]accounted for on "miscellaneous expenditure", would you bother to ask what that 30% was for? Or the mere fact it was presented to you by an "expert" you'd imagine it must be for a good reason, and therefore conclude your analysis based on whatever information you're given?

I really don't think that any reasonable person could argue that the accounts are wrong, but when those accounts are made up from information given, which turns out to be utter hogwash, then it is not the fault of the accountant but the fault of those that provided the information in the first place.

What's at the fault of the accountant, is when they fail to recognise that the original information was flawed and yet continue to defend false information as fact.

In conclusion, would you regard ALL GERS figures [from 1992 until now] as a fair and complete analysis of Scotland's true worth, with nothing hidden or un-accounted for?

neiallan said...

Kevin,

Rational discourse owes you quite a debt taking on Wings. It actually is not enough for pro UK campaigners to abuse Wings as he abuses all that he disagrees with:the arguments must be addressed. That is what you do. It must be exhausting coping with the unbelievable intensity of Stu's followers: how any political system could provide what they want, in an independent Scotland or otherwise, is just unfathomable.

Blakey UK said...

"Lindsay Bruce"? Aye, right.

David GREEN said...

Again, I admire your endless patience in dealing with this idiot from Bath. The surprising feature of his activity is that he appears to be the principal economic policy voice of Scottish independence. Unless I am missing something, Sturgeon, Swinney, Hosie, Wishart, Robertson, et al. are largely silent on the economic future facing an independent Scotland, which, as you and others have repeatedly shown, is grim. The real coup will occur when the senior SNP leadership concur with their own George Kerevan, whom, I understand, considers that Scottish independence in the current climate would be economic suicide.

Anonymous said...

Oh dear! You're a bit of a complete twat who really needs a bit of self validation. Were you breast fed?
WATP!

Anonymous said...

There are of course other prominent economists have come to the same conclusion as yourself Kevin on both the "white paper " and the Wee Blue Book.
This view from an economics professor at Oxford University agreed with your views on both and i'd hope that people would find the source credible enough to be beleived fully too.

http://mainlymacro.blogspot.co.uk/2014/09/scotland-and-snp-fooling-yourselves-and.html

There may well be many other things the SNP have hidden away of course which we don't yet know about...the secret Oil fields already known to them alone (despite all the siesmic data already being available apart from the blocks the UK government has just funded the new siesmics for in the trench near Rockall and recently completed)
Not forgetting potential new Oil finds too (but in deeper water and therefore more costly and less profitable to recover, therefore minimum revenue to be made.
The "known" potential Oilfields on the inner Clyde that despite the facts that hardly anyone can get planning past the Public for Windfarms somehow planning will be easily obtained to site multiple rigs in the Clyde shipping lanes.

Some bright Scot secretly has succeeded in creating Nuclear Fusion and sold the rights to it to Scot Gov ?
Massive generated revenue from tidal power in the Pentland Firth. ?
Perhaps their secret revenue is to come from Fracking and UCG from under the Forth (despite the fact that in the USA £80 billion has been invested and so far has only generated $30 billion in revenues in return funded by loans which will put the Fracking companies out of business as US interest rates rise shortly. (Fracking has been decribed as massive Ponzi scheme in the USA to create short term Jobs to help grow the US out of recession)
The ironic thing is that if Fracking did prove successful in Europe we would be cutting our own throats considering Independence as Sahle deposits in Scotland and pretty small and from what ive red would only last 20 years (IIRC) whereas the Shale deposits in RUK are huge in comparison..why would Scotland wish to miss out on sharing the revenue produced on those ?
There are also the recent onshore Oil finds near Gatwick , potentially 9 billion barrels of Oil and so yet again..why would Scotland want to walk away from those new finds when its own Oil industry is in decline ? http://www.theguardian.com/business/2015/jun/18/oil-gatwick-9bn-barrels-horse-hill

As a middle aged man i've watched for nearly 40 years the Scots Tartan Army travelling abroad for Football and Rugby game full of hope and unbeatable teams only to see year after year, time after time them coming back disappointed losers where somehow they were just again "unlucky" or "cheated" but defeat can never simply be honestly and openly adknowledged that as Scots we were simply outclassed ..that there really were people and teams elsewhere much "Better" than we were ?
Without talking Scotland down...we really sometimes do have an unrealistic understanding of our abilities and of the realities of situations.

Jock Tamsons Bairn said...

I've long lost any confidence in Alex Salmond and the rest of the SNP teams credibility on any financial matter..when ministers of their "supposed wisdom" can design a plan for Scottish Independence based on a completely fictional new Oil boom ,,you have to wonder what on earth they were playing at..this was no more than a reckless gamble on all our futures by selling us the lie of riches when all the proven evidence shows we would in fact be all much poorer for it. The more people realise how they were conned by the SNP the less people will ever Vote on the proven prospect of being made poorer by Independence next time around (if there ever is a next time) Turkeys really would never vote for Christmas if they understood the consequences of doing so. Let us not forget either that Salmond was also the very man tat greatly encouraged Fred Goodwin to pursue his takeover bid for ABN that brought down and nearly banckrupted the RBS during the 2008 financial crisis..Salmonds comment later was "Perhaps thinsg could have been doen differently"..would he have said the same phrase and walked way when he had bankrupted Scotland and Scots too ?
ps ..On the Electricity Generating front, Scotland is only ever likely to be a net Exporter of electricity until Torness and Hunterston close (both Nuclear stations) and then we will be massive importers from RUK as the SNP have already decimated Scottish Generating capacity through its bowing down to Iberdola (owner of Scottishpower) (SNP cannot blame RUK on its carbon policy for this failure as Sturgeon said that the SNP would be trying to make RUK adopt the SNP's own higher Carbon targets..therefore you cannot blame failure on a RUK policy that has lower Carbon Targets than your very own higher ones for lack of new gas PowerStations in Scotland. http://www.scotsman.com/news/brian-wilson-energy-switch-shames-scotland-1-3865703#axzz3qqa13TRU

rocoham said...

Dointhebiz, would you like to clarify just what "information given" to the economic team responsible for GERS was "utter hogwash"? If you could substantiate your (apparent) theory that nothing in GERS can now be believed by pointing to any specific errors they made in their data-gathering, say from 2011 up to the referendum so for the figures on which the case for independence was based, I for one would be grateful, and impressed.

Anonymous said...

Well, at least this time you appear to allow critical comments.
Lets start from the truth, neither side is able to prove anything,
and neither of you are able to predict the future.

You, Kev, using Financial reports, which is NOT Economics, have formed a view, which you express. WoS, et al, challenge the basis of the figures, and the WM Economic policy defined for Scotland.

Its NOT simple, and we are not simpletons.

Independence will mean change, for now you oppose it.
I would only hope, that after the change occurs,
that you will put as much effort into making it work!
As you have trying to stop it.

@Palayo

Anonymous said...

@Dointhebiz

"Let's imagine for the moment, that ALL GERS figures are/were wrong."
Cool - ok, so GERS is overly-optimistic and instead of being £9.1bn behind the UK, we're actually closer to £13bn (as the SNP don't want you to know the truth)?

This is the fatal flaw in using a hypothetical situation to base an argument; it cuts both ways.

Here are some more hypothetical situations which I think are more fantastical than yours:

"Let's imagine for the moment, that the SNP weren't a party hell-bent on independence."

"Let's imagine for the moment, the white paper printed honest, factual information."

"Let's imagine for the moment, the Yes campaign answered questions on the future of Scotland in a truthful manner."

"Let's imagine for the moment, Wings of Scotland ceased being a propaganda site for nationalists"

I want a full paragraph of these situations on my desk by Monday.

Nick B said...

There's no doubt about it. Mr Campbell is genuinely influential. There were many undecideds in the run up to the referendum who switched to Yes after reading the Wee Blue Book. And so many keen Nationalists still read and quote him.

As much as we can see he is a self publicist and has flawed analysis on the big issues, sensible people who want Scotland to return to normality can't just ignore him.

The drip, drip, drip of facts from people like Kevin is necessary. I am very grateful to you, Kevin for sticking your neck out.

theambler said...

The problem with making cuts or tax rises is that they tend to cut economic growth as well. The idea that any independent Scottish government could create economic growth when it has such a massive deficit is ridiculous. A soldier that is laid off in a newly independent Scotland (for that is what is implied by cutting defence spending) is an ex-soldier that doesn't spend money!

DJB said...

Bravo, Kevin!

And bravo to anonymous for this:

"Without talking Scotland down...we really sometimes do have an unrealistic understanding of our abilities and of the realities of situations."

That's the problem our society has in a nutshell: a big chunk of it has been raised to believe that, because of Alexander Graham Bell and John Logie Baird and the rest of them, Scottish people are somehow exceptional. It's total garbage, of course, and ignores completely that all of the great achievements from which they get this idea of superiority were achieved under the auspices of the Union - and usually with the active assistance of England.

I think this is a rather interesting point, because, while these historic achievements fuel Scots Nationalism, they are, paradoxically, all arguments for Union. I mean, even today, Andy Murray would probably be stacking shelves in Tesco or something had it not been for the massive funding that was available for his development as a result of Scotland being covered by the LTA.

Edwin Moore said...

Computer people talk about partioning their hard drive - have never really understood what that's about, but it would be a very useful thing to do in the haunted realm of Scottish cybergab.

The rational section woud consist of people like Kevin and Lallands Peat Worrier arguing interpreation of facts, the other section would consist of the usual suspects choking on froth and toffee apples.

Anonymous said...

I found out only recently that the expression and name "Unionist" when coined did not refer to England and Scotland, but to the Victorian controversy over whether then British Ireland should remain so, or should have home rule. At that time, union between England and Scotland was a given. Gerald Warner, in his splendid and surprisingly readable History of The Conservative Party in Scotland sheds light on this, and much else beside.

The term for determining a view before considering the evidence comes to us from two Latin words: 'pre', before, and 'judicare', to determine. In English, we know it as 'prejuidice'.

rocoham said...

@Palayo, you're using the same flawed logic that Creationists try to deploy in their battles against the science-based theory of evolution, and sounding very like them in the process. Creationists propound that as neither side can *absolutely* prove anything, therefore their theory must be just as valid as any other (and should therefore be taught in schools alongside evolution, etc). Which to anyone with a grain of scientific method or critical thinking in them is just total nonsense, as it is again here. The distinction between the two positions being that whereas science looks for and is happy to discover something that disproves or amends a theory, the Creationists will never change their opinion whatever the evidence against it. Sound familiar?

To be clear, GERS is wholly accountable to the Scottish Government, not Westminster. Its figures were used by the SNP to construct the financial case for independence, and were quoted by them as being completely authoritative. Its methodology is sound, and publicly available. It is as robust a data-set as you will ever find on which to assess the economic prospects of a stand-alone or independent Scotland. To try to dismiss its figures because they don't "prove" anything is to miss the point and purpose of economic modelling and forecasting altogether. The principle of Occam's Razor suggests that rather than Wings' elaborate cock-up and conspiracy theories, the numbers are actually pretty good, and just not giving the picture that some people want to see.

And if its figures are inaccurate - which ones exactly? Frankly, I'd believe the GERS team over Wings any day where numbers are concerned.

Anonymous said...

Anonymous @7 November 2015 at 16:35

"Lets start from the truth, neither side is able to prove anything,
and neither of you are able to predict the future."

What a fantastic idea. In fact, if you have read the content of Kev's blogs you will understand that the first part of your statement is already satisfied by him. The problem is, WoS/Yes/SNP supporters of Independence do NOT want to start from the truth as they know how damning it is to their campaign.

Since you're so eager for the truth, are you happy to accept the fact that as of now, we are net benefactors of being in the UK, to the tune of £9bn? Because this is what it means when you say to 'start from the truth'; to accept the status quo.

Until the above parties accept where we would be from day one, no conversations can be had moving forward.

IF (and it's a big if) Scotland becomes independent in my lifetime, it's not going to be as simple as flipping a switch to allow more money to arrive, or at least balance the books. It's not going to fundamentally change (at least for the positive) our economy. Mr Smith who works at Tesco will still be working there. You'll still be paying taxes. We'll have the same politicians governing us.

What's absurd is to think any of the above would mean a big fat magic wand is waved and we're transformed into a country which no longer has to serve a widely-spread population, by politicians who are now honest and corrupt-free. We don't have millions of higher tax-payers 'waiting in the wings' to come to Scotland once independent.

Scotland as a country will more or less function the same way, purely because of its social and economic make-up. This is why it's so important we agree where we are now instead of making up such nonsense statements such as "we pay more into the UK than we get back".

Until this happens, we only have one choice which is to keep pushing the message of the current fiscal situation of Scotland in the hope that honest discussions over HOW we deal with this deficit we'd be facing can take place.

Independence would mean change. You assuming it automatically means for the better just proves you've not read a single article on this site.

Anonymous said...

"He starts with "close tax loopholes" – every political party manifesto ever written include this idea, because politically it's free money. Quite why an independent Scotland should be able to achieve this when successive Westminster governments have failed is never explained. If this is what you want I'm pretty sure it was writ large in the Labour manifesto - it has nothing to do with independence."

I hope the majority of readers of this blog, wings blog and (there are a few) people who read both and many others, would be far happier and feel that this were a fairer society for the majority if this was addressed.

Why is this getting worse, not better?

http://www.theguardian.com/commentisfree/2015/feb/13/britain-tax-code-17000-pages-long-dog-whistle-very-rich

" The Hong Kong tax code, widely held by tax lawyers to be the most admirably efficient in the world, is 276 pages long. The British tax code, rapidly beginning to look like the most disingenuous in the world, is currently in excess of 17,000 pages. It has more than trebled in size since 1997. "

Kevin Hague said...

dointhebiz: you continue to refuse to understand what the Cuthberts said in 2008: those historical gripes have been fixed - the SNP have had 8 years to tweak the way GERS is compiled and in the process if anything shifted them to be artificially favourable to Scotland (see the corp tax assumption).

I have not taken GERS at face value - I have spent a lot of time understanding the methodology and the strengths and weaknesses inherent. I have run my own sanity checks. I know how to assess the quality of data - I recognise that nevessarily imperfect is not the same as useless.

I've covered these arguments clearly in thsi blog -- I can not be held responsible for your inability to comprehend that GERS has changed beyond all recognistion since 1992 and noew represent a fair (possibly generous) assessment of Scotland's finances.

But if you prefer, you should feel free to not trust the result of 8 years of SNP oversight of Scottish Government figures, to conclude there are costs in there that could be avoided but the SNP were too stupid to spot them and include them as savings in their case for Yes. You can choose to live in a world where you simply ignore data that demonstrates inconvenient truths.

That is your prerogative. You should also consider stopping reading this blog as I have nothing to offer you if you can't accept the validity of Scottish Government data.

Kevin Hague said...

@palayo I always allow critical comments - the only few comments I have ever not published are either spam links to other sites or simple unadulterated abuse (I let a few of those through just so people are aware of the nastiness that's there among the cybernats.

As for your comment ... you seem obsessed by whether or not the label "economics" is applied to this work - personally I couldn't care less what you call it - it's analysis around Scotland's economy using the best data available.

Wings hasn't "drawn a different view" - he's repeatedly demonstrated a failure to understand the most basic fiscal arithmetic and blatantly misrepresented the data. When he's picked up on this he simply resorts to personal abuse.

I don't think most voters are simpletons - that's why I'm confident those who read this blog can tell the difference between then sensible, rational, audit-trailed and complete analysis I provide and the random issue list blunderbuss approach of Wings.

Kevin Hague said...

Thank you Nick B

Kevin Hague said...

Anonymous - I certainly share the view that it would be better for all if tax loopholes were closed. My problem is that independence does nothing to make this more likely and in fact (by creating a separate tax regime and tax competition within the UK) will *increase* the number of possible loopholes not decrease them

Peter said...

A remarkably closely argued case, Kevin, and one for which you deserve huge credit. You have my sympathies (and I am sure, those of many other readers) not only for the "attentions" your conscientious and well-grounded research and argument has attracted, but for the sheer volume of time and effort this must take.

I have to say, having read, weighed up and thought through this entire article in full, I feel I share a little in your labour :D But I am glad I took the time to do this piece justice as a reader. It contains many resounding statements that also ring true. Some compensation for your efforts, I hope, is that this large article effectively tackles more than it sets out specifically to address. With its telling cross-references and external sources, it deals - under one roof, so to speak - with a whole "true faith" way of thinking.

Some detailed feedback:

1) Your reversal of Stuart's "amateur" snipe is eloquent.

2) Your point on "Unionist?" is well taken. Being lured into an atavistic "two tribes in a [perpetual!] once-and-for-all showdown" (as if life were a cybergame), a "with us or against us" way of thinking, and all the "blind faith over awkward facts" implications carried by a binary opposition of one (Evil) "-ism" pitched against another (Good) "-ism" .... these are the sort of universally destructive terms of debate classically beloved of the most narrow-minded of true believers.

Those who have problems with the National Cause discourse such as employed by the SNP - in the light also of dire historical precedents - are typically NOT one, but diverse, have differences, are prepared to see and admit qualifications, etc.

This may seem to make those variously resistant to the typical fallacies of nationalism fair game for those who press and force a narrower wedge. But diversity, open (rather than foreclosed) debate, differences, qualifications and admissions are generally closer to lived realities, and real possibilities as well as real difficulties. And for the most part, wherever possible, human beings are best advised to avoid a coralling into too narrow a camp.

3) You make it clear by implication that Stuart - and others like him - who find the implications of GERS figures awkwardly at odds with what they ardently believe, tend too often to take the line of rubbishing GERS EN BLOC, without reference to any other source of credible economic indicators. It is not a question of this argued counter-case or that: they wish to make people believe in myth and air. An outstanding case in point is the first comment above. "Dointhebiz" (literally) begins "Let's imagine for a moment ...": imagination being the key word, because he makes clear he actually prefers to undermine and deny GERS out of existence.

4) It is indeed striking that you can adduce the positive comments of a number of professional economists - some even taking the notorious "internet risk" of putting their name to such effective support (I know of others who prefer not to risk abuse and vilification) - whereas Stuart and others like him have no economic case.

5) It is indeed remarkable that where he refers to an external authority at all, the Rev prefers to resort to old and superseded sources, models and figures, often before the Crash of 2008-: and even, as you point out, from before the SNP came to government in Scotland at all. That is a rather different world he invokes.

Where he does not invoke pure fantasy, that is.

Anonymous said...

Kevin, thank you very much for the time and effort you put into chokka blog. I appreciate your calm and straightforward analysis and the fact you keep going politely after the (fake) "Rev" continually tries to denigrate you. During the run-up to the referendum, I tried very hard to debate the issues with my friends who were set on voting yes to separation from the rest of the UK. Often, they would just say "You must read Wings over Scotland" as though that was the be all and end all. I read everything I could get my hands on during the run-up to the referendum, I listened to radio, I watched TV and followed bloggers from both sides of the debate. I admit I started as a No voter, and I ended as a No voter, but this was not without considerable thought and weighing up both sides of the argument. I wonder if the Nats who follow their 'Rev' actually believe he is a real minister of the church? Does he call himself that to try to add a level of gravitas to his often misleading or downright inaccurate posts (as you have so clearly demonstrated, and backed up with evidence, time and again in your blogs)? The sad thing is that so few of them will even bother to read your blogs. They will be quick to comment that it's 'sh*te' along with much worse insults, of course! That is their default response to anything that might challenge their single-track, closed thinking. I have closely followed online sites for both sides since the referendum last year. I notice that many of the previously silent 'No' voters are more willing to defend and back up their viewpoint now. We were the silent majority in 2014 - I know many more of us would not remain silent a second time.

Kevin Hague said...

A huge thank you for taking the time to write that

Kevin Hague said...

Thank you - I do believe it's important the silent majority starts to speak up!

Max Bennie said...

Great stuff, as always. It's always better to speak the truth for free than be paid to write crap.

Pete Vapeman said...

Nice work. Very well presented. Always like reading your posts, as they are written with a modicum of authority, yet do not declare to be`anything other than they are.

Unknown said...

Hi Kevin,

A great response. Thanks for putting in the time and the effort.

What's your feelings on the EU? There's a lot of empty outer assertion out there, wrapped up in quite a lot of prejudice IMO.

I'd be interested to hear, as a businessman I'm sure you've weighed up the pros & cons.

Regards,

Dave B

Dointhebiz 1 said...

Kevin, here is what the cuthberts said:

"In Scotland, by contrast, we have got the partial set of accounts provided by GERS. It is as if Ian Lang laid down the tracks in 1992: and although the tram travelling along these tracks after the 2008 GERS review is not as ramshackle and rickety as the original vehicle, it still has to travel along the direction laid down by the tracks. We would argue that the GERS debate will not go anywhere else until a balanced set of accounts is produced for Scotland along Pink Book lines.
Consider, for example, the initial estimate produced in 2010 by Scottish government statisticians, which gave a net outflow of private finance from the Scottish economy of £16.7 billion in 2008-09: (minutes of Scottish Economic Consultants Group Meeting, 18th October 2010.). It should be stressed that this is a very provisional estimate. Nevertheless this figure, with all its caveats, immediately alters one’s perception of the Scottish economy. If, (on the basis of Nickell’s analysis), the UK economy is a large bank – the Scottish economy is a cash cow".

In other words, GERS has been improved [since 2008] but - in NO way - reflect or give a full picture of Scotland's true worth. They are also based on the "status quo", with no indication or figures of how Scotland would perform as an Independent Nation, totally in charge of its own finances.

Few could fault your accounts Kev, but as I said when I first wrote to you, IF the initial information supplied is flawed [through no fault of the Scottish Government or yourself] then we end up with "factual accounts" based on "partial statistics".

Ps. I don't expect an answer, but thanks for your time.

Regards

rocoham said...

One of my gripes about the way independence referendum was handled was that the White Paper, produced by the Scottish Government, answerable (aye, right) to the Scottish people as whole, and dealing with a matter of such enormous and long-term significance to the nation of Scotland and the UK, was so completely partial. There was no attempt to weigh the pros and cons, or give a semblance of objectivity. All figures and facts and sources were selected and glossed to make one case and one case only, that of independence. There was not even a cautionary "your Indie dividend can go down as well as up" sticker on the cover of this shameless prospectus. This approach seems to me have been beyond irresponsible and bordering on the criminal.

Which makes me ask now, if at any time we go through a referendum again is there any mechanism which can oblige the Scottish Government to deliver a less one-sided and more responsible basis for debate and decision? Surely a second referendum cannot use the same out-dated and largely discredited White Paper again, so is there any means by which its next iteration would definitely be made more honest and impartial? (Apart, that is, from a strong suspicion that even the SNP leadership are now scared so witless by the prospect of actual independence or even FFA that next time they themselves might actually want to put a less rosy glow on everything.) Any thoughts?

Anonymous said...


@rooham

The CBI had quite a lot to say about the White Paper, of course Nationalists will say "They would say they wouldn't they" rather than admitting that the majority of all they said was valid http://www.cbi.org.uk/media/2631703/cbi_analysis_-_scottish_government_s_independence_white_paper.pdf

The white paper has of course been found to be lacking ie "'failed to meet civil service standards' http://www.telegraph.co.uk/news/uknews/scottish-independence/11488869/Independence-White-Paper-failed-to-meet-civil-service-standards.html

Some good reading on the "white paper" here http://nupateer.com/foreword/

I liked this version of events for any re-run from Allan Sutherland in the papers yesterday.
------------------------------------

I had this letter in the Scotsman, P&J and Metro today.

Dear Sir,
The SNP have tabled an Amendment enabling the Scottish Government to call a referendum.
I suggest some further amendments. The referendum should be UK-wide, after separation settlement between Scotland and the UK has been negotiated . In this way, unlike last year, there can be no dispute on what we are letting ourselves in for.
This would cover currency, our share of UK National debt (currently £1.3 trillion), border security, movement of labour and trade tariffs, how assets and services such as the Post Office, armed forces, BBC, railways are divided up, and the role of the monarchy.

To initiate the process the Scottish Government would announce in its manifesto the intention to negotiate a separation agreement with the UK Government.

There are three precedents for this: the original and upcoming EU referendums and the Northern Ireland "Good Friday" Agreement (which was actually voted for by the people of the Republic of Ireland too).

A clear result should be that 60% of those voting in the referendum had agreed to the terms of the agreement by voting "yes".

Allan Sutherland
----------------------------------------



rocoham said...

Dointhebiz, the Cuthberts are hardly applying an impartial scrutiny, are they? Basically they are economic cheerleaders for an independent Scotland. The quality and credibility of their analysis (which seems greatly to favour textual critique over seriously crunching any data) suffers as a result: they have decided an outcome and are making (up) an argument to support it. Very like what you seem to be criticising Kevin for doing, in other words.

To take one element you cite "..the outflow of private finance from the Scottish economy of £16.7 billion in 2008-09[...]immediately alters one’s perception of the Scottish economy [as opposed to] the partial set of accounts provided by GERS." Well, this sum might indeed alter a perception of the overall size of Scotland's trading economy, but it does not invalidate GERS one iota because it lies wholly outside the GERS remit of *public* finance - government revenues and expenditure for Scotland. The Cuthberts do not specify how this £16.7 billion does now or could in the future address Scotland's significant public accounts deficit. Nor do they specify whether this "outflow" is gross turnover or taxable profit or what, nor how it is broken down by industry or trends over time, and hence to what degree the number is remotely relevant to a consideration of an independent Scotland's public accounts. It's just waved in the air as though it scored some important point.

They also, by the way, appear to have invented an entirely new definition of "cash cow" (it would be good to hear what they think it means).

For an evaluation of their credibility, this was the Cuthberts in 2012: "It is now clear, as even the Unionists have to concede, that Scotland’s basic fiscal position, including Scotland’s share of North Sea revenues, is considerably better than the corresponding balance for the whole of the UK. As a percentage of GDP, Scotland has had a healthier balance than the UK as a whole on its current budget for each of the past six years. In fact, for three of these six years, Scotland was in surplus on its current budget, while the UK was in deficit throughout." Yes, really. Unprofessionally selective in their methodology, and downright wrong in their conclusions. They are not the analytical rock I would chose to build my dream house upon.

theambler said...

Dointhebiz, Kevin stated his on position on GERS on this blog. If GERS is rubbish, every analysis based on GERS is rubbish. That would of course include:
- his own analyses;
- Wings Over Scotlands claims based on GERS;
- Alex Salmond's claims based on GERS;
- The claims in the White Paper based on GERS;

There is inevitably going to be some flawed data going into GERS, but that is true of any accounts and indeed any complicated human endeavour. No honest person can be surprised by that. You are only now deciding that GERS is a useless source because it isn't showing what you want it to show.

You are quite correct that GERS is not a direct proxy for an independent Scotland's public finances. For example, there would be economic effects as a result of:
- The currency issue;
- The effect of enlarging the civil service;
- Loss of common regulation between Scotland and rUK.

You will note that all of these things are negative for Scotland.

Dointhebiz 1 said...


Rocoham

So you're questioning the credentials of Jim Cuthbert [formerly Scottish Office Chief Statistician] and Margaret Cuthbert [also an economist and statistician who among other things lectured in econometrics at Glasgow University?..As opposed to whom Rocoham?...Kev...Really?
The element which I cite was taken directly from a paper written by the Cuthbert’s, but I imagine that now you've already pigeonholed them as rank amateurs, it would be somewhat pointless to go into any more detail. [And to think, Nationalists are regularly accused of following blindly :-)] Just in case your nose is bothering you in the future [I'm not sure if I'll be allowed] but here's a wee link to some of their [kindergarten] economics:

http://www.cuthbert1.pwp.blueyonder.co.uk/new_page_3.htm

theambler

I didn't say that Kevin’s analysis was "rubbish"? What I did say was that Kevin has based his analysis on "Flawed" information, much in the same way as the White paper, Alex Salmond and Wings. [Agreed]
Your argument, however, equally condemns yourself, in the same way as it condemns my argument, inasmuch as, when you say: "You are only now deciding that GERS is a useless source because it isn't showing what you want it to show". For the very same reason you prefer to accept what is being presented as "de Facto", which as you freely admit: "There is inevitably going to be some flawed data going into GERS". In other words, despite the [admitted]"flaws" you are quite happy to accept a version of partial statistics presented as gospel...This - for me - makes NO sense whatsoever.

You then - further - go on to talk about:

- The currency issue;
- The effect of enlarging the civil service;
- Loss of common regulation between Scotland and rUK.

"You will note that all of these things are negative for Scotland".

And the positives would be?...Can you think of any?... Or are we just a wee "rubbish" Country, that wouldn't save a penny even if we abolished our share of the UK defense, payment to connect to the National grid, paying VAT for the only police force in the UK, paying our share of the National debt/deficit/interest, paying for UK infrastructure [which doesn't benefit Scotland one iota] paying for [the unelected] HoL, Oh! And let's not forget about Scottish goods leaving from English ports/airports, [I'm quite sure we get all our taxes from those], Hmm..50 of our top blue chip companies have their head offices in London [Inc our Banks/building societies/supermarkets] I wonder where their taxes are accounted?...But alas, you're right, "the currency issue" was certainly something that Iceland deeply regret.

Anonymous said...

'for me, being pro-union is more a result of being economically rational than because I hold a dogmatic view. '
You see Kevin, for guys like you it doesn't matter what happens,
it doesn't matter what social principles are ridden roughshod over.
It doesn't matter that the vast majority of the poor and less socially mobile members of the Scottish electorate voted overwhelmingly for 'change'
It doesn't matter that Westminster is an archaic embarrassment.
It doesn't matter that 'Britain' is a morally bankrupt unequal cunthole
It doesn't matter that post yes vote, the energy , interest and nascent development of a new exciting Scotland would have been the most incredible daily experience
It doesn't matter whatever the economic challenges that an Independent Scotland might have faced
Because for guys like you, all that matters is
'I'm alright Jack'
Bob

Anonymous said...

Excellent work Kevin as always, meticulous in detail and analysis, but delivered in a clear and easy to understand manner, that surely even the pseudo-reverend could not fail to grasp (yet continue to petulantly deny of course).

You know you say you do this for free and as an amateur, but I for one would bemore than happy to put my money where my mouth is and contribute through crowd funding to help you tto keep doing this important work, as I am sure so would many thousands of other patriotic Scots.

Just say the word Kevin and we will support.

Dave

Kevin Hague said...

Goodness me dointhebiz you really don't pay attention do you?

Your laundry list of erroneous GERS gripes is textbook - in the name of all that's good and holy please read Stop Getting GERS wrong and stop making such a fool of yourself with these posts.

Read the Cuthberts quote from 2012 in the comment above - they were happy to rely on GERS by then.

VAT is an EU issue and per GERS that VAT will be allocated back to Scotland anyway - so it's *not* a GERS gripe

Abolish our share of defence? Fair enough - what defence budget do you propose? What defence employment implications? I always mention the £0.5bn saving as per White Paper (although that takes us below 2% GDP and questions if compatible with NATO).

The White Paper recognised the need to *retain* a single UK National Grid - you really think you'd want to split it - you think there wouldn't be transnational interconnect charges?

GERS doesn't allocate any cots to us for "infrastructure that doesn't benefit us one iota - how may time does this need to be pointed out to you? - read GERS methodology and it's clearly explained

HoL? Scotland's share is <£10m pa - and most accept we'd need our own revising chamber

Export taxes? Seriously, you're still arguing there's some mystery tax the Scot Gov has missed?

Tax accounting and Head office location - absolutely nothing to do with GERS as I have explained many times - the SG assumption is highly generous (c.£0.5bn more than HMRC), has nothing top do with Head Office location and is what is used in GERS.

You clearly have no concept of what would be required to create a currency.

Please stop posting silly comments it's painful to watch

Kevin Hague said...

Bob

I'm the least "I'm alright Jack" person you could hope to meet.

I'm not going to embarrass you by laying out my credentials on this but please: if you don't know someone don't presume to judge them.



Max Bennie said...

"It doesn't matter that post yes vote, the energy , interest and nascent development of a new exciting Scotland would have been the most incredible daily experience"

Lamb. To. The. Slaughter. That's what you are, Bob.

rocoham said...

Dointhebiz, "So you're questioning the credentials of Jim Cuthbert...?" Of course I'm not, his credentials are a matter of record. What I definitely am questioning are his/their impartiality, methodology and conclusions. Credentials per se don't really make a difference, do they? Plenty of other economists with equal or even more heavyweight credentials appear to have drawn very different conclusions to those of the Cuthberts, ergo some economists must be wrong. And it might even be the Cuthberts. Or are you saying that someone without credentials isn't entitled to express an opinion, and anyone with them must automatically be right or above question?

What matters is the quality of the argument, and on that score I (not an economist I cheerfully admit) find the Cuthberts' unconvincing for the reasons given, reasons which you are most welcome to dispute. To add to them, anyone who singles out the year 08/09 to base a conclusion on, when it is THE massive outlier exception to the generally less favourable economic pattern over the last fifteen years, is struggling to make a convincing case - if I'm permitted to make that observation.

The Cuthberts' argument for including Scotland's balance of payments in the overall economic picture is quite reasonable, for the purpose of perspective. But then let us at least look across a representative spread of years, not only the single most favourable, and draw some more balanced conclusions on average performance figures. We're not simpletons, you know. And let's look at where the bulk of that net outflow goes (rUK, Europe) and what sectors mainly contribute to it (oil, finance), and consider challenging Indie scenarios such as borders, membership and currency. And lastly, let's ask how might any of it create a healthier public finance picture. Because unless that balance of payments picture materially alters the substance of SG revenues and the health of Scotland's public finances as described by GERS, then the size of net outflow adds nothing of any real relevance whatever to the discussion. Perhaps you can explain it to this non-expert.

For the record, I did not pigeon-hole the Cuthberts as amateurs - that would be childish ad hominem stuff - I said they were unprofessionally selective in their use of data. Different thing altogether.

rocoham said...

Many thanks for the links, Anon, fascinating stuff.

Anonymous said...

To Bob @ 08:47 yesterday, in kind.

For you, Bob, it doesn't seem to matter what happens
It doesn't matter that the SNP lied to you
It doesn't matter what the figures actually say
It doesn't matter that proper democratic process has been trampled all over
It doesn't matter that the majority of ALL people in Scotland voted to stay part of the UK
It doesn't matter how many people might lose their jobs
It doesn't matter that the SNP have failed to deliver 100 campaign promises
It doesn't matter that Holyrood is starting to look like a North Korean one-party congress
It doesn't matter that Scotland is bitterly divided
It doesn't matter that rabid ethnic nationalism has encouraged the very worst in people
It doesn't matter if your children's grandchildren are still picking up the tab later
It doesn't matter if joining the EU would take a while and give less autonomy than now
It doesn't matter that a currency union with RUK wouldn't fly
It doesn't matter whether independence is good or bad for Scotland in any way at all
Because what matters to guys like you Bob is
"They will never take our grievance!"

Dointhebiz 1 said...




Hmm...I'm afraid that your 2% comment is disingenuous nonsense Kev, how many of our 28 NATO members spent 2% GDP on defense in 2015? Or - in fact - ever? "Defense expenditure as a % of GDP 2015, UK 2.1%, 22 other members spent between 0.5% [lowest] - 1.9% [highest]

http://www.nato.int/nato_static_fl2014/assets/pdf/pdf_2015_06/20150622_PR_CP_2015_093-v2.pdf

This is a worry for me, when you present something as "fact" which you know it not to be? Are our GERS figures "fact" too then?

"The Cuthbert’s quote from 2012 in the comment above - they were happy to rely on GERS by then".

No they weren't, they did, however, accept that they had been improved, but in no way do they accept that they are perfect, they have stated they will continue to push for a better set of accounts based on the UKs "Pink Paper".

While I fully accept the principle of "the need to *retain* a single UK National Grid", this does not explain the £40ml pa costs for connection, IF, [as they claim] it is about our geography or usage that incurs these costs, perhaps you could explain why these same costs aren't incurred by connection from places like Cornwall? In fact:

"A power station located at Lands’ End would receive the maximum subsidy of £5.80 per KW while Longannet faces charges of £17.15 per KW despite the fact that Cornwall’s entire population is under 500,000 and Lands’ End is 316 miles away from London. In contrast, Longannet is in the central belt of Scotland and is 421 miles away from London".

"GERS doesn't allocate any costs to us for "infrastructure that doesn't benefit us one iota", Indeed, GERS are a Scottish set of accounts based on whatever figures London present us with, albeit 60% block grant and 40% retained by the UK gov to spend on our behalf, it is that 40% retained and spent on our behalf that I question, not GERS [they are what they are, warts n'all]. IF, for example, Westminster decided to deduct our % for HS2 which [like the Olympics] benefit Scotland not "one iota" We have no say in how our money is spent on UK [London] infrastructure.

You see what we're doing here is arguing over the "status quo", you say HoL [£10ml pa] but without pointing out that in an independent Scotland there'd be no HoL and no HoC either, not once have you in any way pointed out the "savings" but instead simply focused on flawed accounts and minimal savings? Why?..."of course Scotland could be a wealthy independent country",...In your own words Kev, but then fail to point out how? You have simply proved that you couldn't actually give a damn and instead choose to point out Scotland's [so called] black hole? What’s the UKs "black hole"? Or do we use a different term for it?

Btw, with regards to VAT and Scotland’s police having to pay it, please refer back to your retweet and scroll down to comments for the correction on his analysis.

So, while Scotland is systematically turned into a wasteland with the erosion of our oil industry [30% tax], steel, renewable subsidy cuts, council cuts, welfare cuts, defense cuts, Longannet closure, VAT charges [Police], UK debt/deficit/interest charges, UK tax admin charges, border agency charges, you continue to defend the Union, as IF it was in Scotland's best interests?

IF [as you say] you're just a lowly blogger with no axe to grind, prove it Kev? Let's have a careful considered/presented analysis of an independent Scotland, then and only then, [you may perhaps lose some of your fan base here] but at least, you'd be all that you present yourself to be, rather than just another bog standard "SNP Baaad" website?...

Credibility dear boy, you can't buy it."Trust is built on credibility, and credibility only comes from acting in others interests before your own".

Andy Thomspon said...

Dointhebiz has a damn cheek to accuse anyone of "SNP Baaaad" - the standard response from anyone whose entire mindset is "UK Baaaaaaaaaaaaaaad". His entire rant reads like a quote-a-thon from Wangs Over Bath. Thank god Scotland is now so politically energised and engaged, eh.

It's not Kevin's job to make the economic case for an independendent Scotland. If you're arguing for it, you damn well make it. Go on, find £8bn or so just to get us to where we are now. Be specific. Let's see your sums. And if you want credibility, factor in some of the downside risks of separation. Good luck, given the SNP could only find about £0.5bn.

In my weaker moments I actually wish it had been Yes last year, because only then would the truth have sunk in.

Max Bennie said...

Dointhebiz, the key difference between Wings Over Somerset and Chokkablog is that the fake Rev seeks to justify a predetermined position, whereas Kevin Hague is only against the SNP and their independence agenda because the facts led him to that position. Which of these sounds more credible to you?

rocoham said...

Dointhebiz, your points would be much credible if the Scottish Government - which after all wanted to put across the best possible economic case for independence - had based its white paper on them, but it didn't. Just didn't. The white paper, not Kevin, allocated 2% for defence, on the basis that Scotland would seek to remain in NATO, and nothing in the SG defence paper suggests that costs could be much less than that anyway. Maybe that was as nonsensical as the white paper. VAT on Police Scotland is a typical red herring - a consequence entirely of the making of the SG, and one they knew about in advance. And examples such as steel - are you promising that an iScotland would subsidise unprofitable industries forever, or are you seriously suggesting they are only unprofitable "because Westminster"? And really, would you cut the tax rate on oil, which I assume you feel is too high? The companies would love you, but have you worked out what it would do to tax revenues (assuming NS oil is ever profitable again)?

If anything bad is by (your) definition solely a consequence of being in the UK, and you will not countenance a single potential downside to cutting yourself adrift from it, then no matter how many words you write your argument is still feeble. There may indeed be current in-UK costs which iScotland would no longer need to fund, but there will also be a significant number of new costs of independence, both capital and revenue, which need to be set out in the balance sheet against any savings. But then, the SNP narrative promises there IS such a thing as a free lunch, and suggesting that a tab might have to be picked up at all, let alone that it might be a big one, doesn't fit into that picture at all, does it?

Anonymous said...

Trying to rationalize why people think differently is an impossible task.

Denigrating them for their opinions on the basis that your argument is the only credible one is a losing strategy.

Rejection is a difficult thing to cope with, Kevin. Just admit it, you cannot accept that no matter how many graphs, insults or downright smears you employ, the people you seek to 'persuade' are moving further away from you.

This latest blog is another in a long list of similar blogs dressed up as presenting 'facts' but really saying that anyone voting for independence or the SNP is not as clever as you.

Professor Tompkins judgement me be in question if this is the level of argument he is relying on.

The SNP government rejected all your offers of 'help' didn't they?

Max Bennie said...

@Anonymous

Doesn't make him wrong though. It would be nice if you could actually find faults in the article and correct them rather than making a cheap dig. Tell Kev what he got wrong and he will correct it.