GERS groundhog day


It’s GERSmas day, when all across the land British nationalists wake up with glee to see just how poor Scotland is this year, and celebrate by exchanging pretty multicoloured graphs while they gloat about the deficit that they believe an independent Scotland would be lumbered with. The insist that their pretty graph based upon denying Scotland the financial freedom of action of an independent state proves that Scotland cannot be an independent state and then use it to continue to justify denying Scotland the ability to act as an independent state.

The annual GERS miseryfest is a textbook example of a self-fulfilling prophecy. The pessimism and negativity of British nationalists reproduces itself by denying Scotland the ability to act, creating a passivity and dependency that they then use to justify their pessimism and negativity. It’s the perfect circle of negative perception. British nationalism in Scotland is not so much a political philosophy as an exercise in masochistic self-flagellation. There are night clubs for that sort of thing you know, we don’t need it in government. British nationalists in Scotland tell us that Scotland can’t be allowed to drive its own economy, because the British Government hasn’t yet finished driving it off a cliff.

The response to them is of course the same as it was last year, and the year before that, and the year before that … How come, if this so-called union is so wonderfully beneficial to Scotland, does every one of our independent neighbours manage to have a higher GDP, better public services, and a more equitable distribution of wealth? How come, if this so-called union has been so great for Scotland, has it reduced this country with its abundant resources, wealth of talent, and skilled and educated populace to penury? How come, if GERS is indeed an accurate reflection of Scotland’s financial position, can British nationalists continue to defend a UK which took a Scotland possessing all the ingredients necessary for a prosperous, stable, well-resourced nation, and turned it into a basket caset? Because if we accept the GERS figures at face value, all that they prove is an economic incompetence on the part of the British state which some might call criminal.

Trying to relate the GERS figures to the economy of an independent Scotland isn’t even like trying to compare apples with oranges, it’s like comparing apples with a photograph of Michael Gove not looking smug. One is a foodstuff, the other is an inedible piece of uselessness that makes you nauseous. Although admittedly a photo of Michael Gove not looking smug would have incredible rarity value. That’s because such a thing doesn’t actually exist in this universe, exactly like the bearing that the GERS figures have on the economic case for Scottish independence.

There is a common misconception that GERS stands for Government Expenditure and Revenue in Scotland. It doesn’t. It stands for Government Expenditure and Revenue: Scotland, without a preposition. That seemingly insignificant point is in fact very important, because the GERS figures are made up of two components. There’s government spending which is spent inside Scotland, and then there is government spending which takes place outwith Scotland but which is assigned to Scotland by the British state.

The published GERS figures don’t make it immediately obvious just how much public spending is carried out by the British government outside Scotland but which is then assigned to Scotland. That is deliberate. However a considerable chunk of the expenditure assigned to Scotland isn’t actually spent in Scotland.

So to use the example that I trotted out last year, and the year before, and the year before, the GERS figures allocate approximately £3.3 billion of UK defence expenditure to Scotland. This is based upon Scotland’s population share of the UK, so the total UK defence expenditure is divided by Scotland’s share of the UK population and the resultant figure is assigned to Scotland as Scottish expenditure. The rationale for this is that defence expenditure benefits the UK as a whole, irrespective of where in the UK it is actually spent. A Royal Navy vessel based in Portsmouth is theoretically defending Scotland too, even if it takes it two days to get the Moray Firth when a Russian navy ship is sighted there.

However it is universally agreed that the amount spent within Scotland on defence does not come close to approaching the figure assigned to Scotland in the GERS figures. Most estimates put defence expenditure within Scotland at around £1.7 billion – which includes the spending on the nukes in Faslane which an independent Scotland would have no interest in continuing. Much of the remainder is spent in the south of England where the UK has concentrated the MoD offices and its military bases. No independent country in the world spends almost half of its defence expenditure in someone else’s country, especially not a small country like Scotland which has no punching above its weight and pretending that it’s still a global player even though its glory days are long gone. The UK is the Norma Desmond of global military power.

The defence expenditure which is allocated to Scotland but spent outside Scotland isn’t dead money. It goes to pay people’s wages. Those employees need housing, they go shopping, they buy things. It is spent on goods and services which support the defence installations. This in turn creates other economic activity in the form of the ancilliary jobs which are supported and the goods and services that these require. All of this economic activity then generates revenues for the government in the form of taxation. But despite this revenue being supported by expenditure which is assigned to Scotland, none of the revenue is credited to Scotland. It is credited to the part of the UK where the notionally Scottish expenditure takes place.

Even that part of the expenditure which does take place within Scotland does not necessarily work in Scotland’s economic interests. The vast defence expenditure lavished on Faslane generates very few jobs compared to the amount of money which is actually spent. Much of that spending in fact ends up going south of the border to specialist companies and suppliers in England, so even though it notionally takes place in Scotland, it doesn’t stay in Scotland for long.

By way of comparison, Ireland spends approximately £900 million annually on its defence expenditure. The UK state spends money on things that Scotland doesn’t want, spends it in ways that don’t benefit Scotland, and spends it outside Scotland. Then it sends Scotland the bill and tells us we’re too poor. That’s how the GERS figures work. It’s how they were meant to work.

This is your annual reminder that the GERS figures were first established in 1992 in the context of the debate on devolution by the Conservative Scottish Secretary of State Ian Lang.  Lang wanted them as a political tool to be used against those who were arguing for greater self-government for Scotland. Almost thirty years later they’re still being used for the same purpose.

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