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Author Mark Fairlie
The Government Expenditure and Revenue Scotland (GERS) report was published this month by the Scottish Government. The GERS figures are an attempt by the UK Government to show what Scotland spends in taxes and what it raises in taxes in a financial year. This is to demonstrate whether the country has a budget surplus or deficit.
For many people on either side of the Scottish independence argument, these are important figures which prompt a lot of political discussions each year.
In the newly-published report, GERS showed a deficit of 8.3% of the size of the Scottish economy. In other words, Scotland spent £14.5bn in taxes than it raised, equivalent to £1,750 per person in the country.
What do supporters of Scottish independence say about the figures?
Scotland has a large oil sector and between 1998 and 2014, GERS, as a whole, showed that the country ran a budget surplus meaning that, each year, an independent Scotland could either afford to increase public spending on schools, hospitals and so on or reduce its national debt.
In 2013/2014, the oil price more than halved and it has not really recovered since then. The annual surplus shown by GERS has now turned into an annual deficit.
Supporters of independence also claim that GERS figures reflect Scotland’s position as part of the United Kingdom and not as an independent nation.
For example, were Scotland independent, its spending priorities would be different. One example of this is that SNP argues that it would not replace Trident nuclear submarines. Scotland may also choose to focus investment and tax relief on industries it wishes to grow – for example, games productions, agriculture, tourism, and so on.
Also, the UK’s Office of National Statistics has recently produced GERS-like figures for the rest of the UK. These statistics, according to the SNP, show that “Scotland performs ahead of several English regions and in line with the UK average outside of London and south-east England.”
What do those who want Scotland to remain in the UK say about the figures
Supporters of the United Kingdom say that GERS demonstrates the Scotland benefits for a “union dividend” by remaining one of the four constituent countries of the union.
The Conservatives released a statement saying that,
“Today’s figures confirm the facts – Scotland is better off as part of the United Kingdom…These figures also confirm just how wrong the SNP got it during the referendum campaign…These figures confirm that (Scottish) Independence Day – set for March 2016 (in the referendum) – would have been our insolvency day…That is the bullet we dodged by voting No.”
Speaking for Scottish leader, Kezia Dugdale, said
“Voting to stay in the UK and the recent fiscal framework deal means that the Barnett formula is protected…We avoided these massive cuts by voting to remain in the UK and we can avoid the cuts that are actually taking place to schools and other vital public services now by voting Labour.”
The Barnett formula is a funding mechanism used by the UK government which ensures that Scottish people receive, on average, a higher proportion of government expenditure than citizens in England and Wales (but not Northern Ireland).
Will the GERS figures affect when a second independence referendum might be held?
Following the UK referendum to leave the EU in June 2016, the SNP has expressed a strong desire to hold a second referendum, so-called indyref2.
The SNP justifies this as, in their election manifesto of 2015, the vote to leave the EU has caused a “significant and material change in circumstances” since the independence referendum in 2014.
Arguments over the accuracy and efficacy of GERS will continue as they have done for many years with both sides claiming that the publication of these figures supports their case. Political considerations, such as the outcome of the Brexit negotiations, seem currently far more likely to determine if and when indyref2 is held more than GERS.