Sunday, 20 November 2016

Data Errors in Beyond GERS

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

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

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

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

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

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

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


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


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

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

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



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



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

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

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

3 comments:

whytepaper said...

In response to your supplementary note, the difference is attributable to EU contributions broken down as follows:

- GNI Based Contribution £12,569,868
- VAT contributions £2,750,913
- Receipts for collection costs -£771,119
- UK Abatement -£4,068,122
NET £10,481,540

GERS includes EU transations as an entirely separate line, largely because a per capita share would over-state our contributions as we benefit more from EU payouts.

Kevin Hague said...

Thanks Fraser that's extremely helpful - FYI I include the GERS EU transactions data in the same row as "accounting adjustments" in my table above

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