Thursday, 23 March 2017

Joan McAlpine, GERS Denier

On Wednesday (22/03/2017), SNP MSP Joan McAlpine used her column in the Daily Record to attempt to cast doubt on her own Scottish Government’s GERS figures, the official numbers that tell us how Scotland’s economy performs. When oil was booming, McAlpine and her SNP colleagues were quick to quote GERS figures as proof that Scotland was a wealthy country, so this U-turn might seem surprising.

If McAlpine’s column represents an approved party line, it looks an awful lot as if the SNP are trying to avoid an honest debate about the economic challenges an independent Scotland would now face.

It would be like the big tobacco companies who, when faced with solid evidence of the link between smoking and cancer, focused on questioning the science and placing doubt in peoples’ minds. When facts are your enemy, confusion and doubt are your friends.

To be fair, we’ve yet to see the leadership of the SNP suggest that we can’t trust our own government’s figures - but we’ve also yet to see them shut-down those within their own party who, like Joan, seem to be becoming GERS-deniers. Maybe the SNP hierarchy think a bit of doubt and confusion is helpful?

So let’s look at McAlpine’s claims more closely. She incorrectly refers to GERS as “the UK Treasury’s understanding” of Scotland’s economy; she really should know that in fact they represent the Scottish Government’s understanding.  So how can she suggest her own Government’s figures are “absurd”?

She relies entirely on the wild-eyed claims of one Professor Richard Murphy. He’s a chartered accountant and the self-proclaimed architect of “Corbynomics” - but let’s not worry about his CV, let’s worry about whether what he said is true.

Those hoping to foster confusion and doubt would be delighted for people like me to fill column inches explaining why Murphy is wrong. That way they stop us talking about what the figures actually tell us. McAlpine’s advice to people being presented with inconvenient truths was hardly subtle: “throw three words at them: Professor Richard Murphy”. Who needs to deal with facts when you’ve been taught the name of a tame professor who gives you permission to ignore them?

For what its worth, Murphy clearly doesn’t understand the GERS figures. He doesn’t realise that the Scottish Government compile our export data, so it isn’t “the UK Government making this up”. He fails to grasp that it’s the Scottish Government’s Chief Economist who decides on the assumptions behind the GERS figures, so nothing is “what the UK Government decides it should be”. I explain more of his mistakes here, but his biggest error is to claim that the figures can’t be trusted simply because estimates are used.

I asked a couple of exceptionally well qualified economics professors to comment on Murphy’s claims and you can see what they had to say below. Put simply: nearly all economic statistics are estimates, but to be qualified as National Statistics (as GERS are) the figures have to be shown to be trustworthy. End of discussion.
“As in practically any statistical exercise the GERS statistics depend on estimates, there is nothing unusual about that […] that is why mainstream economists, statisticians and commentators will continue to use these statistics."
Professor Ronald MacDonald, Research Professor in Macroeconomics and International Finance at the Adam Smith Business School
“All economic statistics involve sampling and estimates. But when the UK Statistics Authority designate figures as ‘National Statistics’ that’s hugely significant. This is a kite-mark showing they meet international statistical standards. Anybody who says these figures are “easily rigged” or “nonsense data” frankly doesn’t deserve to be taken seriously.”
Professor Angus Armstrong, Director of Macroeconomics at the National Institute of Economic and Social Research
So let’s focus instead on why some Yes supporters now want to deny the economic reality described in GERS - what are they so desperate to distract you from?

Well the figures effectively tell us four things:
  1. Firstly they tell us how much tax revenue the Scottish economy generates from our current economic activity and the taxes we’re all used to paying: income tax, VAT, council tax and the like.
  2. Secondly they tell us how much money is spent to deliver the public services we’re all used to receiving. So that’s things like health, education, pensions, social welfare, policing and so on.
  3. Thirdly they show how much it costs us if we pay our population share of expenses incurred for the benefit of the UK as a whole - mainly defence, debt interest and international affairs.
  4. Finally they show what happens if you take that revenue and subtract those costs. In the most recent year that shows we’d be in the red by £15bn – that’s the infamous £15bn “Scottish deficit”.
Of course that wouldn’t actually be Scotland’s deficit if we were independent, but all credible economists and responsible politicians (and even the SNP) use the GERS figures as the starting point to work out what an independent Scotland’s figures might look like.

So, for example, we could assume we’d spend £0.6bn less than we’re currently allocated of UK-wide costs (like defence) and we could assume we’ll generate £7.9bn a year of oil revenue. That’s what the SNP’s Independence White Paper did last time round. They based our ability to maintain public spending on a reckless gamble about oil revenues. In fact, oil revenues this year will be approximately zero.

If you understand GERS the implication is clear: to survive as an independent country, Scotland would have to make dramatic spending cuts, cuts far more painful than any “Westminster austerity” we’ve seen to date.

Are the SNP prepared to be honest about the price we’d all pay for independence? If they allow high profile MSPs like Joan McAlpine to publicly rubbish their own figures, it’s surely not a good sign.

In the interest of honest and informed debate, let’s hope the SNP leadership condemn those who pretend we don’t know basic facts about our economy and instead face the difficult truths those facts reveal.



71 comments:

Stewart Dredge said...

On Wednesday (22/03/2017), SNP MSP Joan McAlpine used her column in the Daily Record to attempt to cast doubt on her own Scottish Government’s GERS figures, the official numbers that tell us how Scotland’s economy performs.
But you continually tell us, Kevin, that GERS does not, nae cannot, tell us how the Scottish economy is performing.
Tell us how independent Norway is rich but Scotland in the UK is an economic basket case, please.

soccer doc said...

1. “she really should know that in fact they represent the Scottish Government’s understanding” – not a good start Kev, for that is just wrong. Try reading GERS – I assume you do – for the very first line reads “Government Expenditure and Revenue Scotland (GERS) is a National Statistics publication”. So not Scottish Govt, but National Stats, run and funded from guess where?
2. As for exports, there are a couple of problems for you here. First of all according to this helpful document (http://www.gov.scot/Topics/Statistics/Browse/Economy/Exports/ESSFAQ#_How_are_the) the GCS uses 5500 Scottish companies – in other words Kev, to the proliferation of estimates on the revenue methodology side we can add another quite substantial estimate/ projection for the export stats. Secondly you make free use of “The ESS publication measures the destination of goods exported from Scotland regardless of the port from which they leave the UK”. OK that is fair enough, but you rather tend to ignore intermediate goods – goods, or services produced in Scotland which are “exported” to England where they are used to create a product/ service which is then exported abroad. Those goods – or the proportion made in Scotland – will not count. Will they Kevin?
3. The remainder I am sad to say is pretty cold kale. Do Armstrong and McDonald know you are using these quotes in this way? In passing, does the fact that McDonald’s boss (for I remember from your last blog that you are VERY keen on status since we are told Murphy is just a Prof whereas McDonald has been Professors just about everywhere) Anton Muscatelli considers staying in the EU is vital for Higher Ed count for nothing? My own favourite economists joke is that they are all deformed – “well on the one hand, you could do this. Or on the other hand you could do that. But then again on the other hand you could do something else) Geddit? In other words, first find your own tame economist. I was in the trade long enough – indeed I learned it very early – to know that.

soccer doc said...

4. We do at least get to a statement of your position. First that GERS tells us how much govt revenue is raised in Scotland – NO IT DOESN’T – not even the authors of GERS say this. They accept that at best they provide an estimate, nothing more, for the simple fact is that only a relatively small amount of govt revenue is specifically marked “Scotland” – not Income tax (well not yet, though I understand that HMRC are struggling to work out who should pay SRIT), not corporation tax, not NI, not VAT. The data in that form just does not exist and they have to make estimates. They say it themselves! Secondly that we know how much is spent on services we are all using, like Trident I suppose. More than 25 years ago, George Rosie wrote that the Whitehall govt knew every penny spent in Scotland, yet something like 30% of govt spending is non-attributable to any particular region. He showed that much of this was spent in the south east. Thirdly it works on the basis that Scotland meets its population share of expenses for the UK. OK leaving the above aside, under independence would that assumption still hold good? Would an independent Scotland take up its population share of UK debt? I am quite happy to admit that it might, and would even accept there is an argument (though I would take issue with it) that says we should take this much up? But there are plenty of other arguments that say we would take none. Most probably it will be somewhere in between. But despite that uncertainty you and your disciples are quite happy to throw around the demand “how are you going to fill a 15 billion deficit” – ignoring btw that arguing from a single year’s figs is very unwise and that the figure itself is largely based on estimate (govt revenue is after all one side of the equation).
5. Its often said that people like me who believe in independence and voted Yes last time are fighting an old battle. Is this not what you are doing when you refer to figures in the original WP?
6. By the end, you just can’t help yourself can you – the old how are you going to address a 15 billion deficit! No matter the criticism, don’t respond to it, just abuse (see your treatment of Murphy and of McAlpine – in fact the amount of space you devote to ad hominems (or feminams) is a matter of some concern). Abuse is seldom a substitute for debate, and you don’t seem up for debate.
7. Lastly do you think you could stop the use of “GERS denier”. There are lots of ways that we could be described “GERS fools”, “GERS critics” (though I doubt you would use that one), but you use “GERS denier”. This of course produces connotations of “Holocaust Denier” and scumbags like David Irving. You will probably say no such occurred to you ever and I am being far too sensitive. Fine, maybe you never did and maybe I am. In that case, you won’t mind finding another term.

Kevin Hague said...

because we raise less in taxes and spend more on public services - it's not complicated

Kevin Hague said...

1. A Scottish Government complied report which has passed the rigorous scrutiny required to classify as a National Statistics publication - read the last page and you'll see that
2. Her article claimed the UK Gov made up those figures - they are Scot Gov estimates and as I say elsewhere survey based estimates are normal in such stats
3. Of course they know I'm using those quotes, I personally asked them for them

You're desperation to perpetuate GERS denial is fascinating and transparent to anybody reading this - do you think suggesting we don't know anything about our economy will encourage people to vote for independence?

Kevin Hague said...

I'm not wasting my time addressing all these points as they merely show you haven't even been able to read this sort blog let alone my previous blog addressing Murphy's points in detail

The Drunk Druid said...

Quick question for Soccer Doc, if GERs are UK figures why do they come to different conclusions than the official UK gov figures in some areas such as corporation tax. Surely it would be the same figures through out. I'll let your logical faculties play with that one for a while.

Callum said...

I agree with you about the GERS data. The SNPs sudden conversion on the credibility of the data is clearly bogus. But I don't agree that the presence of a deficit means austerity has to be imposed. This connection is not automatic in the way you suggest. An independent Scotland might choose between a number of possible policy options to reduce the long term deficit of which 'cuts' is only one. We could impose taxes on wealth, we could borrow to invest, we could deficit spend - interest rates are still historically low. There are other options which you ignore.

Kevin Hague said...

Callum - working to a tabloid word-limit hence the leap to "cuts inevitable" - but given currency challenge, need for new state credibility and potentially negative affect of large tax rate rises (business, capital and talent flight) I'd argue strongly that dramatic spending cuts would be - in the short to medium term - simply unavoidable

Anonymous said...

On holiday in Norway a few years ago, I was saying to the curator of a local museum that there seemed to be few wind turbines in Norway. She laughed, saying "we don't need them, we have more than enough hydro generation for our power needs. It's also part of the reason we have been able to invest oil revenues into our large oil fund."

Drew said...

While I agree that you are correct to point out the lunancy of highlighting GERS during the good years and dismissing it when it doesn't suit you, Unionists have their own blind spot when it comes to the arguments about the economics of oil and Scottish indepedence.

Most of the debate focuses on tax the revenue from oil production (or lack of it from 2014 onwards).

However, having access to oil and gas reserves in the North Sea is still hugely important for the UK's economy, in terms of the actual purpose of oil itself which is to provide an energy source.

The UK used to be a net exporter of energy however imported oil makes up nearly 40% of our supplies, something that will increase unless nuclear, shale or renewables can meet the demand.

But when you consider how little the UK has invested in alternative fuels for the motor industry, the vast majority of the UK's logistics like lorries, ferries, cars and parts of the rail network still rely on petrol or diesel.

The UK economy is almost totally dependent on oil to keep it moving and vital for transporting goods around the country. See how much economic chaos and even food shortages were caused during the short lived fuel protests in the early years of the Blair Government.

And oil is used in a whole range of manufacturing processes including production of plastic, fertilizers, asphalt, polyurethanes, solvents and to a minor degree electrical generation.

An independent Scotland would mean rUK being even more reliant on imported oil (this time from Scotland) to keep the economy going.

Being reliant on imported fuels poses a risk in terms of your geopolitical strengths and weaknesses (see the strangle hold Russia has over parts of Europe over gas).

So despite the high costs of extracting the remaining reserves of oil in the North Sea, that is a price worth paying for energy security.

Unionists seem almost oblivious to this and need to be open, honest and transparent about the future problems it poses.

Anonymous said...

Socor Doc?

Country and Regional Analysis (as produced by Westminster')

Housing and community amenities 2015-16
£10.198bn UK
£6.726bn England
£2.018bn Scotland
£694m Wales
£760m N Ireland


yet

GERS (as produced by the SNP Government)

Housing and community amenities 2015-16
£10.011bn UK
£1.363bn Scotland
.
.
£655m shortfall difference between CRA and GERS 2015-16?

"Upon asking the Scottish government to explain the difference via a FOI

Thank you for your request dated 6 February 2017 under the Freedom of Information
(Scotland) Act 2002 (FOISA). As set out in previous correspondence, part of your request for
a review of a previous FOI request (reference FOI/17/0024) has been treated as a new
request for information.

Your request

You asked for:

What facts and figures are held by The Scottish Government to prove rest of UK
(excluding Scotland) incurred £8.648bn Housing and community amenities GERS
2015-16 expenditure?

Response to your request

While our aim is to provide information whenever possible, in this instance the Scottish
Government does not have the information you have requested. This is a formal notification
under Section 17(1) of FOISA that the Scottish Government does not hold the information. "

https://www.whatdotheyknow.com/request/380495/response/948019/attach/html/3/FOI%2017%2000487%20response.pdf.html



Nial said...

Soccer Doc, if GERS are as unreliable as you're trying to make out what evidence is there that the situation isn't worse than Kevin has outlined?

If it's as bad as you're trying to make out why haven't the SNP been putting resource into trying to clarify the situation?

Gordon 1977 said...

@Stewart Dredge
You might note that Norway has a significantly smaller population, at least 4 times as much oil as the UK, avoided huge debts from two world wars, never had a large industrial base to decline (with the inevitable bailouts and social spending), never had aggressive trade unionism that killed off commerce, remained outside the EU, and lacks Scotland's dependency culture and health problems linked to appalling diet, smoking and alcohol. Its crime rate is also much lower. Apart from that the countries are just the same.

That is why Norway is richer. However you may also like to note that Norway suffers from extremely high taxes ad living costs (trying ordering a round of drinks inn Oslo) and has perennial hospital waiting lists. So stop being naive by assuming that it is heaven on earth or that Scotland could transform itself overnight into a new Norway.

Grendal said...

"because we raise less in taxes and spend more on public services - it's not complicated"

No, WE don't, that is the point. If we had been in a position to raise and spend over the last 50 years we'd have been in a far better position than we're in now. So why would we choose to continue being run by those who've already under-performed?

Anonymous said...

SNP = More faces than the old town clock

SNP = More excuses than a failed football manager facing relegation.

SNP = Could not run a bath.

SNP = Failing for Scotland

Stephen Wigmore said...

It's not helped by the fact that Murphy is now being referred to as 'Professor Richard Murphy'as though he's some distinguished academic economist.

He was granted a specific weird professorship 'of Practice' (whatever that is) on the basis of his work attacking tax evasion, all very worthy, but he only has an undergrad degree in Economics and Accountancy, no PhD, no published academic work in Economics.

He is frankly no more qualified to talk about national macroeconomics and national statistical data gathering and evaluation as I am or you are, and from his comments seems completely out of his depth.

Alan Jack said...

Don't all the figures also have to be submitted to the EU as well so that they can work out if we have obeyed their annual deficit rules? As for allocating where tax and national insurance actually comes from within the UK Union, even I could do a basic sum which says if 10% of the working population live in Scotland, then 10% of the tax and national insurance collected came from Scotland. But I'm sure HMRC have a better and more accurate method to work that one out. After all they appear to know where everyone lives as evidenced by the letters which were sent out to those of us currently living and working in Scotland to tell us that our tax will be increasing shortly through the addition of that letter "S" which will be appended to our tax codes. Oh and they also send us a nice form at the end of each year which tells us how much we earned and paid to HMRC. So, I think I personally would trust the numbers quoted by "Government" and less so the numbers bandied around by "Parties" especially those of a nationalist nature.

Stephen Wigmore said...

Actually now I think about it Murphy first came to prominence because he came up with a ludicrously inflated figure for the UK Tax Gap, £120 billion instead of the £40 billion HMRC estimates. This was then seized on by anti-tax avoidance campaigners for years, despite almost certainly being rubbish.

In other words attacking reliable National Statistics data to boost a political cause is his MO. Not that surprising he's happily thrown himself into this one.

kailyard rules said...

Kevin Hague. GERS manipulator.

It's easy to indulge in name calling.

GERS are estimates.

In your case they are jestimates. Your blogs are continual evidence of your serious denial that GERS are estimates.

soccer doc said...

FAO Drunk Druid, I suppose you would think that, wouldn't you? But is that a question for me, or the ONS, or the UK govt? Or perhaps its different statos offering different estimates - govt figures are changed as time goes on, as more actual data becomes available - or there are just errors in the data. In any event, I would address that question to Kev who assures us that the estimates are right (or near enough).

Anonymous said...

Soccer Doc/Alasdair

First line from http://www.gov.scot/Topics/Statistics/Browse/Economy/GERS

Government Expenditure and Revenue Scotland

The Government Expenditure and Revenue Scotland (GERS) web area provides information on the annually published GERS report. GERS is compiled by statisticians and economists in the Office of the Chief Economic Adviser of the Scottish Government. The Scottish Government's Chief Statistician takes responsibility for this publication.

Callum said...

Fair enough, Kevin. You might be correct that there would significant international and domestic pressure for that *choice* to be made, but I just feel it's necessary to recognise it as a choice.

Ross said...

I'm not sure the approach taken to rubbish the only figures we have is the correct one even if the premise they're junk (yet to be proved to me) is correct.

I really don't think the implication that Scotland is poorer than Greece is a strong suit either. Many countries spend more than they earn. The 'richness factor' is based on how much they earn, not how much they spend. I'd lend to a high earner in debt more than a low earner in a little bit less debt. Seems the money markets agree.

The Barnett formula takes no account of whether there is a fiscal deficit or not. It's not a transfer based on deficit. It's irrelevant. It's completely stupid to base the block grant on the tribulations of another Secretaries cash fight with the Treasury. Takes no account of the needs. Of course, nobody has the political fight to look under that bonnet.

The Treasury did do us over in the past. I don't doubt they could do it again. You wouldn't really credit it nowadays but that's what happened. Easily done when the fiscal transfer has nothing to do with the economy of the country.

1971thistle said...

Talking of 'tame professors', you forgot to mention that "Angus Armstrong, Director of Macroeconomics at the National Institute of Economic and Social Research", is a Labour party prospective candidate for Edinburgh.

Has more skin in the game than Richard Murphy; would be fair to point this out

Anonymous said...

I Would add as well Norway has got a good few in Government who have brains unlike Nicola's minions who have no control over their own thoughts , as they have to do as Snp says, they pick the Dumbest they can find to make this succeed

Anonymous said...

Economics professor and accountant v political blogger on the value of a set of expenditure and revenue figures as predictor of future prosperity or otherwise of a region for which no specific, identifiable data on expenditure and revenue are available ( except as extrapolation from larger unit).

Mmm.

Who to believe, who to believe?

Anonymous said...

Good stuff as usual Kevin, as some of your correspondence demonstrates, there are elements of the independence campaign who will employ a straightforward denial strategy when it comes to GERS....and as you observe the top table of the SNP are simply ignoring these questions....for now at least. It will be facinating to see what the much anticipated Growth Commission report. Those on denial mode may well have the rug whipped from under them, as the land of milk and honey vision is surely a busted flush, in the light of comments leaked from Andrew Wilson and earlier comments from George Keravan.....and of course the Beyond GERS, publications from Common Weal. Can never be too sure though, there is a school of thought that urges the indy campaign to take a leaf from the Brexit campaign and simply repeat platitudes about 'taking back control' and avoid anything approaching a plan.

Anonymous said...

Dear Mr Soccer Doc. If you are so sure of yourself, then I would welcome your facts on how Scotland would be economically better off under independence. No estimates, just facts, mind.

Anonymous said...

Callum, UK interest rates are historically low that is not to say rates on a new Scottish state would be the same, I would guess they would be considerably higher.

Bill Kenny said...

Kevin I am unfailingly impressed with the patience you display towards those who continually want to kneecap reality in order that it fits their political agenda. They are as good an example as can be found today of the adage " the curious task of economics is to demonstrate to men (and Joan) how little they really know about what they imagine they can design."
Bon continuation.

Anonymous said...

Anonymous at 0845. If you weren't so anxious to play the man rather than the ball, you might just be bothered to study the arguments each is making and make up your own mind which is right. Go on, try it.


And it's "whom".

RabCH

Anonymous said...

At Indy1, the White Paper used GERS figures and optimistic oil revenue projections to bolster the independance case. Now that the oil revenue has almost completely dried up, and GERS can not paint a pretty economic picture anymore, it seems the SNP know they have a tougher fight ahead with Indy2 when it comes to the economy.

As seen by all the blatent lies and misinformation spread on social media and propaganda sites like Wings and Business for Scotland etc during Indy1, it comes as no surprise to me that the SNP will be using the same tactics for Indy2.

Trying to discredit the figures that they publish (and endorsed in the White Paper) just smacks of pure desperation to me.

Pepik said...

Is this really a mystery you've never been able to solve? Norway has about three times as much oil per capita as Scotland.

There. That was really hard wasn't it.

Also try to learn the difference between 'economy' and 'budget'.

Anonymous said...

Keep up your sterling work Kevin and don't let these people who attempt to hound you off the hook. Ignore the made up econo'ics of failed dodgy software salesmen and their followers because you data is solid and your conclusions are based on this solid data.

If only there were more blogs and sites like your to balance the nonesese coming out of some Nationalists. Well done!

Andrew Wilson said...

You've been exposed as a fraud Kevin, you have zero credibility and your opinions mean absolutely nothing. They are the ramblings of a deluded insignificant.

Stewart Dredge said...

Gordon 1977:

Norway and Scotland have similarly sized populations and each has removed (or in Scotland's case had removed for it) similar amounts of oil and gas. their populations are both just over 5 million. The UK's debt mountain, nearly £2trillion relates mostly to its terrible performance after 2008 and has nothing to do with trades unions, EU membership and "dependency culture" (though "dependency" is exactly what unionist seem to advocate these days!). If Norway's citizens have moved-on from poor diet and poverty-related health issues and early death isn't that another excellent argument FOR independence?

As for "suffering" from high taxes, spending on improving your country's services and infrastructure helps a country's economy and leads to even more prosperity and happiness in its population.

On the subject of "happiness" there is a new study out that shows Norway and Denmark right up there at 1 and 2 with broken old Britain tumbling down the rankings and no doubt dragging Scotland with it! Your glum and doom-laden post, Gordon, illustrates these statistics perfectly. While the upbeat and positive Scandinavians clutch their expensive drinks in half-full glasses, the moany old Brits gaze into the dregs of their cheap pints of bitter and winge about bloody trades unions, bloody Jock Nats and the bloody EU. So do the Gers figures tell us anything about the use the phenomenon "happiness denial" and the promotion of fear, gloom and despondency to break a nation's spirit? C'mon, Kevin, Gers are the only figures we've got so it must be in there somewhere!

soccer doc said...

Taking them in order posted
1. Niall, how do I know the situation is not even worse? Well I suppose the logic of my position is that I dont. However some facts about GERS lead me to believe that this is unlikely. We know from a memo sent by Lang while still Secy of State, to his pal Major, when GERS was first published that its entire purpose was political. Secondly, its not me - or those who hold similar views - who have the obligation here, but those like Mr Hague who go about throwing around "what are you going to do about the 15 billion deficit when you are independent" when we know the figures are uncertain (and also that as an independent country GERS tells us very little - see Deloitte). I dont think its for me to find a figure - my point is that the whole thing is very dubious - but for such as Mr Hague and all those who throw around "GERS denier" and "15 billion deficit" like confetti to justify their claim.
2. anonymous at 05.11 - I can stand by the first page and you can stand by the last page for as long as we want, but its not get to get us far, so lets take another tack. The methodology has to be agreed with Nat Stats, so its produced using the process that would be used at Westminster? Yes? Now for the avoidance of doubt I am NOT saying that this makes the outcome doubtful, but it does throw quite a big spanner in the claim that its a Scottish Government producing this stuff - it is, but using a WM process. Likewise where does the raw data come from - the data on which the estimates are based - if not from Whitehall sources - 24 of 26 on the revenue side.
3. anonymous at 11.30. I have been a convinced economic nationalist since the 1970s - and no it had nothing to do with oil. What prompted it was that govt policy at that time was characterised as stop/go. Economy gets demand increased (eg by tax cuts), cost inflation stokes up as there are labour shortages, economy gets deflated (eg by tax increases). The main problem for me was that the labour shortages and cost inflation tended to be in the south east and midlands - more often than not the Scottish economy and labour market was just getting its boots on when the London govt put it into reverse. It was clear to me that Scotland needed different economic policies to those being used by the UK govt and I was not the only one - George Younger said much the same thing in a HoC debate in 1967. I have a good many other reasons now for supporting independence but that was what prompted it. Thus, I think that with a set of economic policies that reflect the needs of the Scottish economy specifically (rather than a wee bit as now) we would do better economically.

Bill Kenny said...

Dear Anonymous or should we call you Joan?? You may have noticed that the original topic of this piece was the withdrawal from objective reality by some Nationalsts when discussing GERS. That you are so obviously angered (or triggered) by this fact is more an issue that you must cope with rather anyone else.
Finally 'make up your own mind which is right.' You may also wish to pause before trying to correct the grammar of others?
Shalom

theambler said...

The SNP have an image of competence in politics, one which is undeniably based on fact. Their senior politicians know how to play to win. The problem is that their politicking is not matched by actual policies. Aside from their disappointing governance of Scotland, the attempt by some in the party to cast doubt over their own statistics is risible. In fact, they resemble the Republican Party in the US. With them, it's all politics, constant attacks on opponents and fighting. They attacked the ACA policy for years, a policy which was a massive step in the right direction for American people. Then, as we saw last night, they couldn't kill the policy when they had the power to do so. They hadn't come up with anything.

The SNP don't want to know the scale of the challenge of independence. They know that the compromises required would put off many voters. My bet (and I accept this might be wrong!) is that their Growth Commission will be drivel.

Anonymous said...

Soccer Doc re point 2.

The description I pasted was not from the document but from the SG website GERS page - I did supply the link - so this is the SG's description of what they identify GERS to be. Your specific comment was 'So not Scottish Govt, but National Stats, run and funded from guess where?' - that is not true. The methology does not have to be agreed with the UK Stats Authority but does have to meet the Code of Practice for Official Statistics and be assessed - here is the link to the UK Statistics Authority assessment of the GERS document produced by the Scottish Government - https://www.statisticsauthority.gov.uk/archive/assessment/assessment/assessment-reports/assessment-report-274---statistics-on-government-expenditure-and-revenue-scotland.pdf.

Bill Kenny said...

Dont really know why my earlier response was rejected? However Mr Anonymous you make my point quite succinctly.
Shalom

Max Bennie said...

Andrew Wilson: "You've been exposed as a fraud Kevin, you have zero credibility and your opinions mean absolutely nothing. They are the ramblings of a deluded insignificant."

Exposed by whom, Andrew? Please tell.

Anonymous said...

Since 2015 my facebook page has been furnished with a cut n paste post about how GERS take no account of Crossrail, HS2 and the rest, it appears most weeks posted by snp supporters. This drivel has of course been debunked many times, not least on these pages, but the supporters of indy mow appear to have moved on to outright denial of statistics and methodology they once passionately promoted...thats gonna be a hard sell going forward, hoisted by their own petard, is a phrase that springs to mind.

This whole debate has always been a rule of thirds. One third will always want 'independence' regardless.....no pain too great to endure....no price too high to pay. Equally, one third will never agree, no pain too great etc in defence of the union. Then there are the final third, the ones who will decide this issue....this third will most likely go with the circumstances that materially improve their prospects and prosperity. This is the reason indy will not happen, and the reason the supporters of indy are so aggressively challenging anyone who in any way suggests iScotland will not be a land flowing with milk and honey, once we shake loose from the nefarious UK who have been draining oor oil, and oor whisky!

The lack of answers over currency, deficit, pensions, Europe, borders is now becoming increasingly embarrassing, and with no game changer on the horizon the stress is beginning to tell on the faces of SNP leadership....Stir in the worsening news from our public services, and the yes2 has run aground before its even launched.

soccer doc said...

Anonymous And I am quoting from page 4. It is a National Stats publication and where is that, who funds it (arms length non governmental - you know like OBR).
So not even agreed - just "dae it this way or you don't get the stamp of approval".
You will almost certainly not agree (personally I think it pushes the point a wee bit far but the point overall being made still stands)
"Imagine a bank robber who rushes out of a bank and then puts a gun to the head of a passing motorist and forces them to drive him away. Saying that the Scottish government is responsible for the GERS figures is a bit like saying the motorist is responsible for the bank robbery. Unionist analyses of GERS want us to focus solely on the actions of the motorist, and not on the actions of the bank robber. That motorist owes a fortune to the bank you know. How are they ever going to repay that huge deficit?"

Anonymous said...

I accept your point about the strategic value of North Sea oil, but like all businesses, oil companies must make profits and so if they are to maintain unprofitable rigs, they will want subsidies to do so and thus be a drain on Scotland's budget, not a contributor. This won't reduce the deficit but increase it.

Anonymous said...

Regardless of your view of the past, the independence debate is about the future. To win my vote, the SNP must put a credible economic case based on demonstrable facts. They haven't ever done that, and their every claim is either a fantasy or a denial of facts. That is why only hardline nationalists would be in favour of independence.

Anonymous said...

Don't kid yourself about the growth commission report. If it is truthful then I suspect that it will be suppressed, a bit like the"National Conversation". The SNP will either only publish favourable bits or traduce the whole thing.

Anonymous said...

soccer doc, your post at 16.42 yesterday with its truly desperate analogy is just a laughable fail. For the nth time, the GERS figures are compiled in Scotland by Scottish civil servants for the Scottish Government. It is solely the fact that they are compiled through a robust and recognised methodology that gives them *the status of* national statistics. They have been Scotland's own figures for years, which is why the SNP set such store by (some of) them in the run-up to 2014. Westminster or rUK cannot and does not coerce the figures or the conclusions, as you seem so determined to suggest. Please, move on, for all our sakes. RabCH

Gordon 1977 said...

@Stewart Dredge
Oh dear, we are tetchy. aren't we? Let's look at your points:

'Norway and Scotland have similarly sized populations' - Norway has 1/2 million less and the population is more concentrated, making it easier to service.

'Each has removed (or in Scotland's case had removed for it) similar amounts of oil and gas' - Norway has greatly larger accessible reserves.

'The UK's debt mountain, nearly £2trillion relates mostly to its terrible performance after 2008' - something to do with bailing out Scottish-owned banks like RBS and Lloyds, as well as paying the Barnett formula as I seem to recall.

'Nothing to do with trades unions, EU membership and "dependency culture" (though "dependency" is exactly what unionist seem to advocate these days!)' - Scotland has been addicted to welfare dependency since the 1950s. Scottish trade unions went far to destroying shipbuilding, car manufacturing and heavy industry. Norway has benefited by having a more flexible approach to commerce and by its fishing not being part of the EU's fishery protection racket.

'If Norway's citizens have moved-on from poor diet and poverty-related health issues and early death isn't that another excellent argument FOR independence' - and what people eat, drink and smoke is the fault of London, how? This is a self-inflicted wound by the Scots.

'As for "suffering" from high taxes, spending on improving your country's services and infrastructure helps a country's economy and leads to even more prosperity and happiness in its population' - only true to a point. Spending as a form of investment can be sensible if used wisely. Spending willy-nilly on welfare is very wasteful and simply pushed up taxes. An independent Scotland (even if GERS is 10-15% inaccurate) will still need to borrow.

'On the subject of "happiness" there is a new study out that shows Norway and Denmark right up there at 1 and 2 with broken old Britain tumbling down the rankings and no doubt dragging Scotland with it' - actually I would see it the other way round, with the UK being dragged down by a bunch of moaning, whinging SNP types, for whom the sun never shines.

'Your glum and doom-laden post, Gordon' - no, just realistic.

'While the upbeat and positive Scandinavians clutch their expensive drinks in half-full glasses, the moany old Brits gaze into the dregs of their cheap pints of bitter and winge about bloody trades unions, bloody Jock Nats and the bloody EU' - now who is being glum and doom-laden? Whining hypocrite.

'So do the Gers figures tell us anything about the use the phenomenon "happiness denial" and the promotion of fear, gloom and despondency to break a nation's spirit' - no of course not, they are statistics, not a rather dubious social science estimate.

Your response is a perfect example of the over-sensitive, chip on the shoulder extremist, who cannot accept criticism, no matter how mild. The bottom line is that there are all kinds of reasons why Scotland cannot be and never would have been like Norway; it is too easy to imagine an independent Scots government blowing all the oil on social handouts and subsidising obsolete industries.

Not a happy person are you? Dredge by name, dredge by nature? I am off to do the garden. Have a nice day.

Anonymous said...

With apologies for the slight off-topic.. Bill Kenny, as I was the author of the "make up your own mind which [of the arguments] is right" comment, you would be doing me a genuine favour by pointing out in what way it is ungrammatical, if that was what you were implying. Namaste. RabCH

Stewart Dredge said...

Gordon 1977, thank you for your kind wishes. I had a lovely day, thank you.

Sheumais said...

Those who blether about Norway and oil funds would do well to acquaint themselves with the fact that Norway needs an oil price of $70 to balance the budget and began withdrawing from the fund last year. Its investment strategy might be described as questionable and the fund is offset by national debt, with long-term problems suggesting Norwegian happiness might be severely challenged in the not too distant future.

Anonymous said...


I see Fraser of Allander have put out a blog on GERS now too, strangely it doesn't agree with Joans take on GERS either

https://fraserofallander.org/2017/03/28/estimating-scotlands-fiscal-position/

Anonymous said...


I see Fraser of Allander have also released some news on GERS , it doesn't back up Joans lies either

https://fraserofallander.org/2017/03/28/estimating-scotlands-fiscal-position/

Jack A said...

Great article, nice length.

Anonymous said...

Kevin, have you seen that the FoAI has taken up your cause?

https://fraserofallander.org/2017/03/28/estimating-scotlands-fiscal-position/#more-1745

Anonymous said...

Scotland has no Central Bank, so therefore no opportunity for financial borrowing.We will have no Scottish currency,no sterling, no Euros nothing. The largest deficit in Europe. Everything is going absolutely swimmingly so far.

Anonymous said...

The very sad decline of Common Weal continues apace:
https://www.commonspace.scot/articles/10672/robin-mcalpine-be-careful-it-isnt-gers-thats-con-its-spin-it-thats-problem#comment-138946

Robin McAlpine appears to have lost his mind.

Anonymous said...

Telegraph deniers!

"Lukas Scholts 30 Mar 2017 7:44PM

@The Answer @Lukas Scholts I'd already read them, so, you're right, no need to thank you.

Murphy is a recognised expert in taxation law, he works with the OECD and all sorts. I am not an expert in taxation, are you?

I guess at the very least we can see that its debatable.

Kevin Hague has been widely discredited."

http://www.telegraph.co.uk/news/2017/03/29/nicola-sturgeon-touch-scots-brexit-poll-shows-support-theresa/

Anonymous said...

FOI request to HM Treasury about the £650 million Housing and community amenities 2015-16 expenditure not included in GERS!

In a nutshell HM Treasury confirms GERS figures have excluded £655 million S103A023 Private Sector Housing expenditure.

https://www.whatdotheyknow.com/request/cra_2016_housing_and_community_a#incoming-959916

Anonymous said...

Kevin, for your next trick, can you sort this out for us?
http://www.scotsman.com/news/politics/spending-on-scottish-pupils-falls-by-over-1bn-in-7-years-1-4409239

Dave R said...


In reply to Anonymous (In a nutshell HM Treasury confirms GERS figures have excluded £655 million S103A023 Private Sector Housing expenditure.

https://www.whatdotheyknow.com/request/cra_2016_housing_and_community_a#incoming-959916


Presumably the clue is in the fact that this is 'private Sector housing expenditure' not government, might explain why it is missing from 'Governmnet Expenditure and Revenue' GER stats? However if it was government paying out to private housing I would presume it would just add to the size of the Scottish deficit since it is spending not income, thus adding another 0.6 billion to the already huge likely deficit that an independent Scotland would have to deal with.

David GREEN said...

Well, you certainly managed to stoke up a response on the Joan McAlpine. As for Stephen Murphy, I have to confess that I hadn't heard of him until he featured in your blog. When I looked him up, I found he had two claims to fame. First, he makes large fiscal claims without supporting methodology. Thus his estimate of the amount of revenue lost to HMRC in uncollected tax is far higher than HMRC themselves estimate. He may be right, but he doesn't explain how he arrives at the figure he does. Most people, including the upper echelons of the Labour Party, seem to have put some water between themselves and Murphy. Maybe he smells.

Second, Murphy is apparently not above libel; that is, the legally indefensible publication or broadcast of words or images that are degrading to a person or injurious to his or her reputation. How do we know? Because he was sued by Lord Ashcroft for an alleged libel and Murphy lost. He libelled Lord Ashcroft, and he apologised unreservedly and publicly to Ashcroft, paid his costs and those of two Belize banks, and made a substantial donation to a charity of Ashcroft's nomination. Ouch! That doesn't sound cheap to me.

But you can see his attraction to the SNP. Unfounded allegations about tax revenues, etc. would be grist to their mill.

Anonymous said...

In reply to Dave R 1 April 2017 at 01:36

GERS allocated the missing £655 million expenditure on Private Sector Housing to UK Housing and Community Amenities expenditure - If it's legitimate for it not to be allocated to Scotland where the expenditure occurred, surly it shouldn't be legitimate to add the £655m to rUK where it didn't occur.

David GREEN said...

I'm afraid I have committed a transposition of names worthy of Warden Spooner. Whenever I said Stephen Murphy, I meant Richard Murphy. My apologies.

Drew said...

When New Labour came into power they cut the standard rate of corporation tax from 33% to 28%.

The Conservatives have reduced this rate further to the current level of 20% with a commitment to cutting it to 17% by 2020.

Using GERS figures for that period 97-2016, can anyone tell me approximately the total apportioned share of tax revenue Scotland has lost out on annually by this reduction and how this impacts on our growing deficit?

It occurred to me one of the ways to reduce our deficit in an independent Scotland would be to increase corporation tax on the standard rate back to pre-1997 levels but perhaps maintain a lower rate for the smaller profit rate.

Appreciate this would cause issues around our competitiveness compared to rUK and attracting inward investment and I also recognise the SNP's policy (at least under Salmond) is also to reduce corporation tax. However in order to balance our books, a return to previous UK tax rates may help us reduce the deficit.

Thanks

Anonymous said...

I have just listened to the interview and I must say I am sick and tired of people like Richard Murphy. Kevin was unable to even speak but I think that we have experienced the nationalist point being the only one. Figures can be made to prove or disprove anything but GERS was the gold standard for independence. Scotland is a shambles and trying to pull the wool over our eyes is disgraceful. We have no answers to the basic questions that the Scottish people actually need. Even saying that the Scottish "Government" doesn't know who the tax payers are is rubbish. They found my husband who doesn't even live in this country. There needs to be an honesty to the debate but that won't happen because the truth isn't fit for purpose.

Anonymous said...

'When New Labour came into power they cut the standard rate of corporation tax from 33% to 28%.'

The justification for this was an increase in tax take overall year on year, not convinced a corp tax increase in current circumstances, as you suggest, would yield the same.

Drew said...

Anonymous

I see where you are coming from however when the UK's standard corporation tax was at 30% and above we generated a number of budget surpluses between 1997-2002 while the economy was still growing.

I believe businesses choose Scotland & the UK because our population is relatively educated and has a diversity of skills and expertise, healthy, with reasonable transport & infrastructure and is generally a stable society more so than because we have favourable tax rates.

Andrew Veitch said...

I am a classic floating voter on the Scottish independence, I’ve changed my mind there times so far and fully reserve my right to change my mind again!

I spent a year working with economists in the Scottish government and external economic consultants looking at the economic structure of the country so I do think I have a reasonable grasp of the situation.

My thoughts are this:

1. Global GDP figures don’t add up. Jokingly some economists have said this shows proof of an alien civilisation as that would be the only reason for a global trade deficit but in reality it just shows that the numbers are quite badly wrong.

2. Sub-state GDP numbers are much worse. This isn’t a Scottish issue, it’s just a fact in every country in the world.

3. One could easily make adjustments to the GERS numbers up or down for an independent Scotland. Looking at backward linkages, Brexit, immigration, currency movements and budget choices I could easily show independence as a better option. If I was paid enough I could offer the reverse as a better option too!

My honest view is with Scottish net immigration below 10,000 as promised by the UK government and with Brexit that independence is probably a better economic option in the long term but that’s an opinion. It’s not proof. Politicians on all sides lie: there’s been some awful lies from the SNP and Kezia Dugdale has been liar in print too and I do think in the interests of balance it would be good to cover some of that in your blog.

It’s absolutely not a fact that an independent Scotland would need to make dramatic spending cuts more painful than Westminster austerity. That’s an opinion which may or may not be true. We just don’t have an ability to know what the future will bring. The way to refute nationalist lies isn’t to offer unionist lies.

But if you do think that an independent Scotland would need cuts more than a Scotland in the UK it would be helpful to explain why. Maybe you could convince me.