This is my first blog post for a while. My new job as a special adviser means I have less time and to some extent less freedom to write. So as a starting point in this new era for the blog, I want to emphasise that the views here are my own and do not necessarily reflect the views of the Scottish Government. Sometimes they will overlap, indeed most of the time they will overlap, but nevertheless I hope to bring my own perspective to emerging issues.
And today we have an emerging issue – published this morning the new Government Expenditure and Revenues Scotland (GERS).
I feel a special bond with GERS. It has been around the scene for pretty much as long as I’ve been involved with the SNP and I can remember the early days of GERS publication when it was used by Tory and Labour politicians to take an almighty swing at independence.
Over time, and thanks to the contribution of Margaret and Jim Cuthbert, some of the wrinkles in the methodology have been ironed out. The spending figures are now more accurate than they have ever been and we have to thank Scottish Government officials for sorting out some of the howlers in the Treasury spending database. And most recently, thanks to the work of world-leading oil economist, Alex Kemp, we now have a robust figure for oil and gas revenues that accrue to Scotland.
So, the figures published in GERS today are a world away from the initial efforts. They give a fairer picture of Scotland’s financial position within the UK.
And that brings us to the most striking feature of today’s GERS report. At the deepest point of the global crisis, it shows that Scotland’s finances are in a far more robust state than the UK. Yes, Scotland is running a deficit, along with almost every other nation in Europe (independent, oil-rich Norway being the exception), but that deficit is significantly smaller than the UK.
For five years in a row now, Scotland’s financial position is better than the UK, and a rough calculation for the next couple of GERS reports suggests that not only will Scotland once again be in a stronger position than the UK, there is the real chance that we will have returned to surplus. Even just moving to full financial responsibility (fiscal autonomy) would see Scotland able to enjoy some of the benefits of these surpluses in the years ahead, allowing us to do even more to create and protect jobs and deliver the stronger, more successful nation we all seek. That's why the immediate task of enhancing the current Scotland Bill becomes even more important.
Today's GERS tells us two things. First, that Scotland’s finances are in a healthier position, year on year, than the UK. Yes, we spend more (although our share of UK spending is falling) but we also earn more. We contribute significantly more than our 'population share' to UK coffers.
And second, as part of the UK we are being allocated a share of UK debt that we have not actually been running up. Over these past 5 years, the UK ‘current account’ has been £180.8 billion in the red. Our population share of that UK deficit is £15.2 billion but our actual position, the real numbers taking into account actual spending and tax revenue over these past five years in Scotland, is just £6.7 billion.
Or, to put it another way, if the UK had performed as well as Scotland - that is if the UK had spent to the same level and earned to the same level as Scotland - then their current account deficit would be around £80 billion in the 5 years covered by the report, a full £100 billion less.
Expect some of tomorrow’s papers to be full of some well-worn lines about GERS. Some will claim that it shows Scotland is too poor to be independent. Others will say that somehow we are financially dependent on the UK. But the true picture is very different. On these numbers it is the UK that is in the deep financial hole. Indeed the UK would be in an even worse position if it wasn’t for Scotland. Which makes me wonder, is that what is really meant by the Union dividend? It is a dividend, but not for Scotland.