Richard Murphy: Why GERS is inherently biased against Scotland

Let’s be clear that GERS – which stands for the Government Expenditure and Revenue Scotland statement – is total nonsense. There is no organisation in Scotland that has in any way got responsibility for the figures that are included in this statement, and that makes their production meaningless.

That is because the GERS statement supposedly records the total income of all governments involved in Scotland, from that in Westminster, to the one in Holyrood, and all Scotland’s local authorities, plus some other agencies as well.

Saying that, in the case of the Westminster government, in particular, just what the income it should record for Scotland is pretty much guesswork. The introduction of separate income tax rules for Scotland has helped improve the quality of the GERS data, but in the case of other major taxes, from VAT to corporation tax, to national insurance to some extent, and also with regard to the many duties charged on tobacco, alcohol, fuel and other items, everything is a matter of educated guesswork, at best. In that case, to suggest that the income figures included in GERS are reliable is something no one should do.

READ MORE: What is the GERS report and how is it calculated?

The expenditure figures are even worse, though. Those from the Scottish Government and authorities might be reliable, but those provided from London can include all sorts of nonsense which really has nothing to do with Scotland at all. They can just dump it on Scotland and there is nothing it can do to object.

Worse than that though, there is absolutely no requirement that the expenditure in question be spent in Scotland. So, Scotland is charged with expenditure but the tax paid by the recipients of that spending is recorded in England. The consequence is that GERS is inherently and always biased against Scotland. I would rarely describe accounting as inherently prejudiced, but GERS most definitely is.

But let’s also note two last important things about that GERS. One is that, as GERS itself says, provides no clue as to what the financial affairs of an independent Scotland might look like.

The second is that, whilst, as I have noted that GERS records income and expenditure that no one organisation is responsible for, there is no doubt at all that only one government can be responsible for any deficit that GERS reveals. Because all the governments in Scotland are legally required to balance their budgets, the only organisation that can be responsible for any deficit GERS shows is the Westminster government. It is, therefore, also for them to justify and manage anything that GERS supposedly (and I stress that word because nothing much about what GERS reports convinces me of anything) reveals.

All that being said, what do today’s GERS figures suggest? As usual, it is suggested that Scotland is running a much bigger deficit per person than is the rest of the UK. This is inevitable, for reasons I have noted above. If you unfairly load GERS with spending that Westminster deems to be for Scotland and give it no credit for the tax paid by those getting the income in question, this is the inevitable consequence.

That said, the figures tell a deeper story. Scottish tax income per person is higher than for the rest of the UK when North Sea revenue is taken into account, as it should be. It is Scotland’s, after all. In Scotland, the figure is supposedly £16,254 of tax paid per person – which may come as news to the person on minimum wage. For the UK as a whole, the figure is £16,194.

(Image: Jeff J Mitchell/Getty Images)

But it is spending where the big difference supposedly arises. Spending in Scotland is supposedly £20,418 per person and in the UK as a whole it is supposedly £18,001. That means the Scottish deficit is supposedly £4164 per person compared to £1807 for the UK as a whole. Supposedly this difference got bigger in the year.

So what does that say? Three things. First, the Tories did nothing to solve inequality between Scotland and the rest of the UK, and that is their responsibility.

Second, the responsibility to tackle this difference now falls to Labour who have to provide the spending and the capital investment to address it. There is no sign they are going to do that.

Third, the consequences of that inequality – most especially seen in higher health and social care costs in Scotland – have also to be addressed.

READ MORE: Scottish Government hail GERS figures showing revenue boost

In other words, the issue we are looking at is the result of decades of neglect from London that has refused to "level-up" as Boris Johnson meaninglessly (in his case) described it.

Scotland generates good income, as is apparent from the tax collected figures. What it does not get is the opportunity to enjoy the benefit of the prosperity it creates because of the lack of investment over time in Scotland by the Westminster government, which is happy to take the money and do nothing to help the people of Scotland in return.

The question is, for how long does this have to go on?