We must reach beyond the GERS figures to envision a brighter future

Do they actually show the difference between what the Scottish Government earns and spends – or just a notional total so heavily dependent on assumptions, guesswork and UK patterns of expenditure that the data really explains very little?

This year, for example, it looks like Scotland, with 8.2% of the population, managed to generate 60% of the UK’s net fiscal deficit. You don’t have to be a card-carrying Yesser to find that fishy, though doubtless Tory party members will feel it vindicates their recent “jettison the Celts” poll results. Which is fine. The belief that Scotland is a net-drag on their stoatingly buoyant economy could be a politically useful misconception that encourages England’s Tory voters to “let us go”, when the time comes.

Of course, the problem is that Scots are also drinking the poisonously negative Koolade about the underlying strength of our own economy. And it doesn’t boost confidence if independence supporters seem to be dismissing “official” findings out of hand.

So, a few observations.

The Scottish Government has to run a balanced budget, so all the “deficit” shown in GERS relates to the services the UK performs for us and is based on a stack of assumptions and guesses. It is impossible, for example, to calculate how much VAT is actually paid in Scotland. Companies with branches across the whole UK – like M&S, B&Q etc – do one single VAT return covering their whole business and the tax they pay is credited to their HQ location (usually England). Ironically, that’s also true for companies like Diageo, even though the lion’s share of their products is manufactured here. It’s the same story with corporation tax. The real level of tax generated in an independent Scotland will only be easy to calculate when that happy day actually arrives.

READ MORE: GERS figures make the case for an independent Scotland stronger

READ MORE: Fact Check: What the deficit means for Scottish independence and Europe

On the spending side, though, Scotland gets charged for 8.2% of all central British services like defence, foreign affairs, the royals, the functioning of Westminster, servicing of debt, transport, international aid, the Department for Exiting the European Union and trade. So effectively we are paying for 8.2% of the 500,000 civil servants based in London. Obviously, if we were independent, those jobs would be in Scotland, not London, paying tax and contributing to our economy and not the London one. As Scottish currency campaigner Timothy Rideout puts it: “There is a double whammy effect in GERS – we get charged all the costs while the revenues are all credited to England.”

Supporters of GERS maintain these hidden transfers to the English economy are recognised by the clever stats folk, who make adjustments to compensate. Tax research expert Richard Murphy, begs to differ: “To suggest (as the GERS notes suggest) that profits are appropriately allocated to Scotland on a case-by-case basis is just nonsense.” He believes the aim of GERS has always been “to prove that a financial services elite produce most of the value in the UK and that [they], based in the City of London and largely living in the south-east of England, must have priority in all matters, including tax, fiscal policy, regulation and more besides. The rest of the country must behave as supplicants to ask for their mercy and goodwill for the handouts they are offered. GERS suits their purposes very well. But does it suit Scotland’s purposes? No, not at all”. The GERS approach conceals other important hidden transfers.

The longer life expectancy of wealthy people means they draw pensions for a longer period than poorer folk. Thus, a pensioner in Chelsea may live to the ripe old age of 90 and collect 25 years of pension, representing 150% of the National Insurance contributions he or she is likely to have made. Meanwhile the average pensioner in Easterhouse will probably live until 72, collect just seven years of pension (unless Iain Duncan Smith’s shameful proposals rob them of even that) and get back only a half of the NI contributions paid in. So, working Scots on low incomes with relatively short life expectancies are currently helping finance the pensions of longer-living folk elsewhere. That’s the bad news. The good news is that this Scottish pensions “underspend” would create money in the kitty for a better state pension upon independence (including fairness for the WASPI women), albeit for gloomy reasons we’d be working hard to change.

But what does any of this tell us about the kind of economy we can reasonably hope to create in an independent Scotland?

Earlier this week I went down to Leith to the headquarters of Nova Innovation, which has installed the world’s first array of tidal turbines, powering the Shetland grid via a pioneering “plug and play” tidal power station. The two men behind the Scottish-registered company – Simon Forrest and Gary Connor – opted to make small not mega-sized turbines. That makes installation easier and helps remote communities like Unst and Yell where there’s not enough grid connection (thanks to Westminster control over energy policy) and other energy-rich but remote places around the world which face the same dilemma. Nova’s turbines, whose blades are fabricated by a Shetland boat-builder, feed energy into storage using American Tesla batteries and produce baseload tidal energy which – when developed – will replace nuclear, coal and gas to deliver energy at the flick of a switch and balance our plentiful but intermittent supplies of wind and solar power. The Shetland installation is a real gamechanger, and top brass from Japan, Canada, the EU and Indonesia have visited Leith with a view to buying the turbines and control systems, in which 80% of suppliers are other Scottish companies – the highest proportion in the sector.

So far, so brilliant.

But in the real economy, the company faces two massive challenges – Brexit and UK energy policy.

Nova has big European investors and works with dozens of European companies – but those relationships are bound to become more difficult after Brexit. Nova is targeting markets in Canada to mitigate that risk, but the company needs government support as well to grow the relatively youthful sector. That’s not been forthcoming from Westminster which makes marine projects compete with offshore wind (mature and cheaper technology by comparison).

In Canada though, government grants are available without strings attached. Tidal energy can be the cornerstone of Scotland’s future energy system but not if world-beating companies like Nova have so many Westminster-generated obstacles to overcome.

Already the Nova bosses have been invited to relocate to other countries and despite a massive belief in Scotland, those offers may become irresistible if Brexit happens.

Why should the struggle of one company matter? Because if the Nova pioneers are right, tidal energy will do for Scotland what wind power did for Denmark. And if you doubt the scale of the Danish wind industry, consider this.

In 2016, Denmark earned 7.3 billion euros through wind energy related exports – slightly more than the total Britain earned through the arms industry and defence related exports.

That’s the potential of an independent Scotland with EU membership – our chance to create a very different, eco-friendly, stable, collaborative, export-oriented and more successful economy than the “British-lite” version we are saddled with and castigated for in GERS.

Last week, The Guardian’s Simon Jenkins wrote a stonking column backing Scottish independence which concluded that “Scotland has the same population as Denmark, with much the same resources, infrastructure and talent. Once it was richer by far. Today its GDP per person is £33,000 against Denmark’s £52,000. I am sure the slide lies in Scotland’s long economic dependency on the UK.”

Yessers are sure of that too, but to convince swithering No voters, we must get off the back foot, reach beyond the dry, narrative of GERS and paint a vision of the vibrant, sustainable economy that independence alone gives us the chance to build.