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Being Economical with the truth

On Twitter, Andrew Neil has been crossing swords with Nationalists about the viability of an independent Scotland. Even an impartial observer would say that Neil is winning every bout and I fully expect him to win all the future ones too. For one simple reason: all the numbers and statistics are on his side. They plainly illustrate an undeniable truth: independence for Scotland is going to make the country like recession-bound Greece ‘but without the sunshine’.
Why does Neil always win? GERS. Nationalists trying to argue the economic benefits of independence using GERS’ figures is like donning a suit of armour and running-up a muddy hill trying to dislodge a machine gun nest. It’s all very heroic, but there’s a clear misunderstanding of the battle being fought, leading to an obvious mismatch, followed by inevitable defeat.
Laying aside inexorable failure, I cannot be the only one that is bored with GERS. Not so much GERS, as the circus that surrounds it, and the assumption, held by elements on both sides, Unionist and Nationalist, that it has anything meaningful to say about the argument for Scottish independence. It baffles me when independence supporters engage with the issue at all.
Though perhaps it’s not quite as baffling as the strange fact that the Scottish Government uses figures gathered by a government that could be considered ‘reticent’ about Scottish sovereignty, rather than compiling their own statistics. GERS’ conclusions can be grouped alongside other self-defeating assumptions such as an independent Scotland continues using the pound, is still bound to UK-made treaties and remains part of a UK trade zone, at a price.
All realities change when Scotland becomes independent. It is questionable whether we Independistas should be arguing on present financial ‘facts’ at all. What if an infrastructure bank commits to a £10 billion – in Scots pounds – building programme? What if we sign an oil futures contract with the EU for £100 billion over five years and then put that money into a massive, locally administered, locally owned, renewables programme? All the figures change overnight.
Currently, Government and Revenue Expenditure Scotland represents a dead-end of data that yearly generates a back and forth where only one side can really triumph due to having the figures on their side. And the data is on the side of the Union because it is designed to be so.
GERS is similar to holding a map upside down of a different landscape to the one you’re traversing and trying to get somewhere. It signifies little about where you are or where you can go.
Why is GERS such a poor guide to reality? It is based on figures taken from the Office of National Statistics (ONS). The ONS compiles those figures based on data gathered by Her Majesty’s Revenues and Customs (HMRC). The HMRC document with the numbers, which few explore, openly admits that the information they have is partial – they don’t know about some data – and some is estimated. We know at that point GERS has credibility issues.
However, even if we ignore these serious misgiving about GERS’ contents, the methodology of how figures are arrived at for Scotland is so blatantly mischievous that it cannot be considered as anything other than deliberately misleading.
To choose a favourite example, let’s look at whisky. It’s fair to say that Scotland, in the main, produces whisky and it generates a lot of tax revenue. What happens to this tax revenue? To answer this question, I’m going to have to simplify the numbers, but it’s not the figures that are important. It’s the method.
Assuming whisky produces £10 billion in tax each year, HMRC take that figure and combine it with the revenue of the entire alcohol production industry in the rest of the UK (in the HMRC document, it’s actually several industries and their tax revenues). For rUK the tax generated by all the brewers, gin producers and wineries might be another £10 billion.
HMRC do not, publicly at least, gather commodities separately so all they claim to know is that through the codes on tax returns, the UK alcohol industry has produced £20 billion in tax receipts. How then does HMRC designate how much revenue Scotland creates? The accountants at HMRC reason as follows:
It would be ‘reasonable’ to assume, all things being equal across a country, Scotland having 10% of the population, then 10% of the people involved in alcohol production would be in Scotland. It would also be reasonable to assume, all being equal, that 10% of the workforce would have 10% of the productive capacity for alcoholic goods and that then it would generate 10% of the tax revenue.
Using this methodology, Scotland’s very respectable £10 billion in tax haul is now a much reduced £2 billion in the official figures, which, let us never forget, are guesstimates anyway.
The same method is applied to sector after sector. Obviously, with rUK possessing a greater population the figures will show rUK providing the greater proportion of funds to the Treasury. Scotland’s revenues are always diminished under such a loaded methodology.
This is before assessment is made about Scottish spending which includes infrastructure in other countries. It is easy to calculate, with a wave of the hand and a series of assumptions based on any scenario you might imagine, a deficit in Scottish accounts when Scotland pays for projects hundreds of miles away.
Assumptions and methodologies combine with political and economic interests to portray Scotland as an economic basket case. Yet, in respect of GERS, we always have to remind ourselves that it is the worst economic reality that can be manipulated coherently, not the reality of the Scottish economy. Far from it.
What is disappointing is no Scottish government body has the wit to phone the 400 odd whisky distilleries in Scotland and ask how much their annual turnover and their tax contribution is. A few phone calls and there would be some hard data that would, doubtless, torpedo GERS.
Over twenty years after devolution, Scotland is still a data desert. At present, GERS is completely irrelevant to any genuine argument about Scottish independence that seeks to marshal credible statistics and facts. Either Nationalists insist that Scot Gov harvests its own data, transparently, or we move the argument from what has been done on to what will be done. And then it’s the forces for Scottish independence’s turn to be creative.
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