Economic facts have become SNP's enemy

This piece originally appeared in the Daily Record on 07/09/2017

The reaction of the SNP and their pro-independence outriders to the latest Government Expenditure and Revenue Scotland (GERS) figures has laid bare the astonishing paucity of their economic arguments.

Unable to answer the obvious problems that the GERS figures highlight for those championing the break-up of the UK, they’ve resorted to trying to discredit their own figures. In case anybody’s forgotten: these are the figures on which they based their case for Independence, figures their own White Paper described as “a useful indication of the relative strength of Scotland’s public finances as part of the UK and a starting point for discussions of Scotland’s fiscal position following independence”. 

Now it seems the SNP want to deny this starting point.

Having once proudly boasted that they had Nobel Laureates championing their cause, the SNP now appear reduced to relying on the increasingly embarrassing contributions of accountant and tax specialist Professor Richard Murphy.

We should be more interested in what Murphy says than who he is, but given his penchant for self-aggrandisement it’s worth noting that he’s the man who was unceremoniously dumped as an advisor to Jeremy Corbyn’s Labour Party. John McDonnell publicly stated that Murphy “leaves a lot to be desired on macroeconomic policy”, to which he responded by suggesting that the Shadow Chancellor – a self-confessed fan of Karl Marx’s Das Kapital - was “all too willing to accept conventional neoliberal thinking”. Let’s be kind and just say that nobody can accuse Murphy of being guilty of conventional thinking.

Politically homeless, Murphy seems to have cast his eyes north and spotted a pro-independence movement bereft of ideas and desperate to find ways to distract from the simple facts shown in GERS.

GERS shows that the UK’s deficit is running at just 2.4% of GDP and, because Scotland voted No in 2014, that relatively healthy fiscal context determines Scotland’s ability to continue to sustain spending on vital public services.

By contrast, following the collapse in North Sea oil revenues, Scotland’s notional stand-alone deficit is 8.3%. The EU’s “excessive deficit” threshold is 3.0%, so even before considering the challenges of creating a currency and weathering the shock of separation from the UK single-market – a market objectively four times more important to Scotland than the EU - it’s clear that an independent Scotland wouldn’t be able to sustain the tax and spend levels described in GERS.

So economic facts have become the SNP’s enemy. Cue Professor Murphy, a man willing to say what desperate people want to hear if it gets him in the limelight. With the gay abandon of somebody unburdened by understanding, he’s set about casting aspersions on the Scottish Government Statisticians who compile the GERS figures and all those who use them.

He’s bumptiously asserted that the figures are “untrustworthy”, “rigged by Westminster”, “literally made up” and “nonsense”. Incredibly he’s even suggested that those using the GERS methodology are “risking the allegation of professional misconduct”. So that includes not only the Scottish Government’s Chief Economic Adviser’s team in St Andrews House and the ONS (who qualify the report as National Statistics), but presumably also those Nobel Laureats who relied on GERS when they sat on the SNP’s Fiscal Commission Working Group. Surely only the most desperate politician would lean on Professor Murphy’s transparently misguided proclamations for support?

Well it turns out there are quite a few desperate nationalist politicians. SNP MP Mhairi Black used a recent newspaper column to cite Professor Murphy as reason to dismiss her own government’s figures. A quick search of Twitter shows his blog rants have been promoted by SNP MSPs and MP’s including Joan McAlpine, Peter Grant, Chris Law, Gordon MacDonald, Christina McElvie and Richard Lyle¹ .

If any of these politicians had bothered to dig past Murphy’s bluster, they’d see that his ill-informed opinions are based on a combination of technical misunderstandings, an inability to grasp the simple concept of materiality and his own failure to get his head around the figures.

There isn’t room here to indulge in the minutiae of Murphy’s technical points².

Suffice to say he’s like somebody looking at a report into the Titanic disaster and complaining there isn’t enough information about the deck-chairs. We might not know precisely how the deck-chairs were arranged, but that’s just not a material issue.

Murphy’s wider argument is basically one of incredulity: he simply refuses to believe the GERS figures can be correct because he doesn’t understand them. He casually advertises his ignorance of how the figures are compiled by admitting to being “continually bemused” because he thinks the numbers are somehow “improbable”.

For those who’ve taken the time to study the GERS figures and the methodology behind them, there’s nothing bemusing or improbable about what they show. Scotland’s per capita deficit is much larger than the rest of the UK’s mainly because of higher spending.

Despite GERS-deniers’ determined attempts to obfuscate and misdirect, Scotland’s higher per capita spending has nothing to do with estimates or allocations. Nobody credibly disputes that we spend over £1,500 per person more on comparable public services in Scotland, a fact fully explained by the known actual figures in the table on this page³.

There isn’t necessarily anything inherently unfair about this either. Scotland has geographic, demographic and socio-economic characteristics which mean greater per capita spend is required to deliver equivalent services.

Whatever the likes of Murphy may claim, there’s nothing bemusing or improbable about the relative scale of Scotland’s deficit.

The pro-independence camp likes to suggest that the GERS figures show Scotland failing under the yoke of Westminster rule. In fact they show UK-wide sharing of resources allowing greater spending on public services in areas with greater economic need; only the most narrow-minded nationalist could see that as a failure.

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1. Twitter promotion of Murphy by SNP MPs and MSPs

2. I've dealt with the latest technical points raised by Murphy here > Another Example of Murphy's Flaw

3. Past experience tells me that some people don't understand display rounding. Just for those people, here's the table displayed to 2 decimal places