Kate Forbes' Grievance, Dissected

At the time of writing, in the 24 hours since being posted this tweet from Scottish Finance Secretary Kate Forbes has received around 4 thousand retweets and likes

Of the c. £30 billion announced by the Chancellor today to support the economy, the Scottish Government will receive only £21m – less than 0.1%.

— Kate Forbes MSP (@KateForbesMSP) July 8, 2020

Those are some big social media numbers for a bold claim - so let us dissect this grievance:

"Of the c.£30 billion announced by the Chancellor today to support the economy"

It's clear she's referring to this announcement by Chancellor Rishi Sunak and a quick browse finds us the (up to) £30bn

"the Scottish Government will receive..."

A cynic might see signs of sophistry here: by referring to what "the Scottish Government will receive" is she hoping casual readers will read that as being all the economic support Scotland will receive? Surely not.

On the off-chance that anybody might have fallen for this rather clumsy rhetorical sleight of hand: for those parts of the scheme that are UK or GB-wide, Scotland will receive money based directly on need (or take-up), it just won't come via the conduit of the Scottish Government.

So by limiting herself to funds "the Scottish Government will receive" she's able to ignore our needs-based share of the:

• £9.4bn Job Retention Bonus
• £2.1bn Kickstart Scheme 
• £1.2bn of various support programmes for those seeking work
• £1.2bn of decarbonisation initiatives
• £0.5bn "Eat Out to Help Out" scheme
• £0.3bn of UK-wide investment in "World Class Laboratories"

The above totals £14.7bn, of which Scotland will of course receive its fair share based on need and/or take-up. If we assume for illustrative purposes that equates to our 8.2% population share, that's £1,200m she's decided to disregard.

But the above are just the UK and GB-wide spending elements of the support package announced - the £30bn also includes £4.1bn of VAT reduction for hospitality, accomodation and attractions which Scotland will benefit from based on our share of consumption in those sectors (the Scottish tourism industry being of particular significance here). Again if we assume this translates into our 8.2% population share (my guess is it will be higher), that's another c.£330m of economic support she's disregarding.

But it doesn't stop there: the £30bn headline number also includes a £3.8bn cut to Stamp Duty Land Tax (SDLT) in England and NI. This is a tax fully devolved to Scotland (as LBTT) and there has been nothing - other than political will and/or courage - to prevent the Scottish government taking similar action. [I'll be honest: how - if at all - this cut would affect the Scottish Block Grant Adjustment is not something I've taken the time to get my head around].

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**** Update 17/07/2020 ****

There will indeed be a Scottish budget increase as a direct result of this SDLT cut - according to the IFS, : "Exactly how much is not yet clear – it will depend on updated forecasts and ultimately outturns for stamp duty revenues in England and Northern Ireland. But initial estimates published by the OBR this week suggest it could amount to around £120 million spread over this year and next."

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So if we add together the elements above, we have identified £22.6bn of the £30bn which is not relevant to the figure that the Scottish Government should receive.

"... only £21m - less than 0.1%"

Where does the £21m come from? The implication is that this is the Barnett consequentials on the £30bn announced, but that's a hard number to calculate (and as we've seen, £30bn is the wrong denominator to use).

We've already shown that £22.6bn of the package announced wouldn't be relevant for the purposes of calculating Barnett Consequentials anyway (because those are sums being spent UK or GB-wide and/or relate to tax cuts, not spending). 

But that still leaves us with c.£7bn of spending committed to England on which we might expect Barnett consequentials to flow to the Scottish Government.

That £7bn is made up of;

• £2.0bn of Green Homes Grant (an English initiative)
• £1.5bn of "accelerating investment" in England's NHS
• £0.8bn of "accelerating investment" in England's Schools
• £0.6bn of other "accelerating investment" in English infrastructure projects
• £0.9bn of English home building / housing fund increase
• £0.3bn of England-only job support
• c.£1.0bn of implied other English infrastructure investment (mainly the Affordable Homes Programme)

Now some of these are described as "accelerating investment" and some are "previously announced" - so it's possible that the Barnett Consequentials relating to them have already been included in previous figures announced.

But Kate Forbes is talking about the amount that will flow to the Scottish Government "of the £30bn announced" and is using the £30bn as the denominator for her grievance-headline grabbing "less than 0.1%" claim - so it would simply be incorrect to exclude any of the Barnett Consequentials from the above in her calculation, whenever they may have been previously announced or discussed.

To be clear: I don't know what the Barnett Consequentials are on the £30bn figure, but I do know the correct denominator for the calculation is certainly not £30bn and I would be amazed if the correct numerator was as low as £21m (the Green Homes Scheme alone would surely generate £160m of Barnett Consequentials?)

In fact as I am writing this post I see "Leading economist: £21m claim by SNP finance chief not true" in which David Phillips of the IFS reaches the same conclusion.

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**** Update 17/07/2020 ****

David Phillips has subsequently posted this "Up to £10 billion of the Chancellor's 'Plan for Jobs' will be funded by underspends on previously planned projects" making this very important correction:

"But the Scottish Government won’t, as I initially presumed, get extra funding as a result of the Green Homes Grant or the full £40 million it would if all of the money for traineeships and so on were new. Instead, apart from the stamp duty money, it will receive £21 million – the figure quoted by the Scottish Finance Minister – as a result of the combination of the ‘Plan for Jobs’ and the reductions in investment spending elsewhere that the Treasury is now expecting."

Revisiting my own text in the light of this, a couple of observations and corrections:

I said above "some of these are described as "accelerating investment" and some are "previously announced" - so it's possible that the Barnett Consequentials relating to them have already been included in previous figures announced" - Whilst I was right, there's no doubt that when writing I was assuming that some rather than effectively all of these figures had already been announced. So mea culpa, I fell into the same trap as the IFS

I did say "To be clear: I don't know what the Barnett Consequentials are on the £30bn figure" - and to be fair I still don't. All we know now is that the Barnett Consequentials on the proportion of the £7bn [i.e. that part of the £30bn that is not being spent UK or GB-wide] which is genuinely new money is £21m (and that there will be an additional c.£120m block grant adjustment over 2 years related to the SDLT cut).

I said above "I would be amazed if the correct numerator was as low as £21m ". Given at this stage we are past the "suggesting that what matters here is what the Scottish Government gets as opposed to what the people of Scotland get"point, we are now debating technicalities. So it's fair to point out that a/ "of the £30bn" the consequentials are indeed greater than £21m - when quoting the £21m we should be saying "of what's new in the £30bn" b/ the £21m excludes the block grant adjustment impact of the SDLT cut, worth c.£120m over 2 years

But I've thought about this and, given the incremental Barnett Consequentials from what was annouced are only £21m, I don't think it's unreasonable that Kate Forbes chose that as her headline "the Scot Gov gets" number. In an ideal world she should have said "the only new money the Scottish Government will receive is ..." and even then should have included c£120m for the likely SDLT block grant adjustment ... but it would be inconsistent of me to hold her to higher standards than HM Treasury, and it's their attempt to pass recycled money off as new that's caused the confusion and provided her with cover.

None of this changes the most important point here, the point Kate Forbes was hoping to distract from (again quoting the IFS):

Of course, Scotland as a nation will receive much more – UK-wide measures like the Job Retention Bonus, Kickstart Scheme and VAT cut could amount to around £1 billion of genuinely new money for Scottish businesses, jobseekers and consumers. And the Scottish Government itself will receive over £700 million as a result of other funding confirmed in the Summer Economic Update – mainly as a result of extra spending on public services in England such as the NHS.

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There is no doubt in my mind that Forbe's tweet was intended to stoke grievance by implying that Scotland is only seeing 0.1% of the £30bn. That in itself is at best pretty disappointing, at worst downright outrageous.

But even if we grant her the semantic benefit of the doubt - if we assume she was expecting her followers to interpret this as an issue of control of spending rather than the absolute amount of support the Scottish economy is receiving - the figures she quotes make no sense. 

The Barnett Consequentials resulting from the figures annouced yesterday will clearly be greater than she claims*, and she divides this wrong figure by the wrong figure anyway to get to her 0.1% claim. This is the sort of behaviour that gives people like me headaches.

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**** Update 17/07/2020 ****

* per the update above: the Barnett Consequential from that part which is new money of the figures annouced will not be greater than she claims. The italicised part above is important, but it's only fair to highlight that her figure is more justifiable than my original wording implies

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It took Kate Forbes a couple of minutes to fire out that tweet, and it will have done its job for her amongst the SNP's grievance-hungry supporters. The moment I saw the tweet I, like so many others, knew instinctively it was nonsense. But it has taken me most of the day to robustly show why - and far fewer people will take the time to understand the complicated truth than accept the simple lie*. Such is the depressing reality of modern politics, I guess.

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**** Update 17/07/2020 ****

* I still have issues with the tweet - the implication that £21m is all Scotland is getting, the fact she uses £30bn as the denominator ("of the £30bn") when most of the £30bn is UK-wide spend anyway and the fact that she ignore the block grant adjustment impact of the SDLT cut - but knowing what we now know about the way the treasury recycled already committed spending to make it look like new spending, I think I was wrong to label the tweet a "simple lie" and offer my apologies to Kate Forbes for doing so 

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As an addendum: I see Andrew Wilson - Chair of the SNP's Sustainable Growth Commission (a commission on which Kate Forbes sat) - has offered his hot take:

Reaction instructive. Kate is making a self evidently truthful point. Once upon a time the other parties and civic Scotland would understand. And back devolution. But partisanship means too many side even with Boris. Hence the polls....... https://t.co/mjmzVLj4Si

— Andrew Wilson (@AndrewWilson) July 8, 2020

Apparently in the world of the SNP fan-club, she is making a "self evidently truthful point" .. and to highlight the reality of the support the Scottish economy is receiving from the UK government is to somehow fail to "back devolution".

I despair.

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For those who care about the workings, the below is the spreadsheet I used to turn the text in the "Plan for Jobs" report into something I could interpret