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GERS between the lines

Posted on March 06, 2013 by

According to today’s GERS report, in the financial year 2011-2012 Scottish public-sector revenue including a geographical share of North Sea revenue was estimated at £56.9 billion (9.9% of the UK’s total). As in previous years, Scotland’s 8.4% of the UK population is doing more than its share of generating the country’s money.

betweenlinesgers

The total public-sector expenditure of the Scottish government, local government, money spent “on behalf of” Scotland by the Westminster government and on Scotland’s share of UK debt-interest payments (up £400m to £4.1bn) was £64.5bn – equivalent to 9.3% of total UK public-sector expenditure.

Scotland’s estimated net fiscal balance was a deficit of £7.6bn (or 5.0% of Scotland’s GDP). The UK’s equivalent position was a deficit of £121bn (or 7.9% of GDP), meaning that Scotland is in significantly better financial shape than the UK as a whole.

All of these figures are based on the set of numbers in GERS which include Scotland’s geographical share of oil and gas. But a favourite argument of the No campaign is to imply (as the UK government does by also imposing on GERS two alternative data sets calculated instead on a per-capita share and no share at all) that Scotland would not receive such resources and that they’re in fact a shared asset.

This unusually subtle level of scaremongering is undermined by the UK government’s own arguments with the EU over the very same oil and gas, in which the UK has consistently presented the case that oil and gas are national and not shared assets, thereby accruing to the territory of the country they’re located in.

This fact is addressed on in the now-infamous McCrone report, page seven of which explores the question:

“Can one be certain that the oil is without doubt a Scottish asset or, even if it is, that these substantial revenues and balance of payments advantages would indeed accrue to an independent Scotland? Clearly these questions raise complicated issues in international law which could, if allowed, occupy the legal profession for many years.

Two possible lines of argument may be expected: either that Scotland should pay England some compensation for appropriating the most productive part of the Continental Shelf, or that the whole shelf should be regarded as the common property of the nations of the former United Kingdom with revenue distributed in accordance with some population based formula irrespective of where oil is discovered.

As regards the first of the arguments, the prospective return from oil revenue would at the very least be one of the factors taken into account in determining the financial settlement between the two countries when they become independent. To argue the second would be directly counter to the line that the UK Government has taken with the EEC, that the resources of the Continental Shelf are as much a national asset as are those on land, like coal mines, and that there is therefore no question of the Europeanisation of North Sea oil.

Disputes on these matters might well occasion much bitterness between the two countries, but it is hard to see any conclusion other than to allow Scotland to have that part of the Continental Shelf which would have been hers if she had been independent all along.”

GERS helps to shed some light on why Westminster wants to foster doubts in voters’ minds in this area, by highlighting that Scotland’s geographical share of oil production stood at 96.0% in 2011, while its geographical share of gas production was 52.4% – a total share of UK hydrocarbon production of 78.4%. But in fact the Scottish geographical share of North Sea tax revenue was 94%, due to differences in the relative profitability of oil fields in Scottish waters.

Another quirk of the figures is that as national debt interest is classified as a “non-identifiable expenditure”, Scotland is allocated the debt interest on 8.4% of the whole UK national debt, rather than the smaller proportion actually incurred by spending on or in Scotland – another Union dividend.

To attempt to disguise this level of subsidy from Scotland to England, Wales and Northern Ireland, GERS also records total expenditure per capita for each of the UK’s regions. In 2011-12 this is estimated to have been £12,134 in Scotland, a figure £1,197 higher than the UK average.

(Though the relative difference in public spending per capita between Scotland and the UK has been on a downward trend, falling from 13.6% higher than the UK average in 2007-2008 to just 10.9% this year.)

This figure is frequently used by Unionists to suggest that Scotland is getting more than its fair share out of the Union. But there are number of reasons why public expenditure per capita for Scotland is above the UK average. In some cases, it reflects the vastly lower population density in Scotland relative to the UK, increasing the cost of providing the same level of public service activity, particularly in areas such as education, health and transport.

A further explanation is that the figures don’t compare like with like. For example, unlike south of the border, Scotland hasn’t privatised its water and sewage treatment. This means that those services are included in Scottish public expenditure, whilst in England and Wales they’re operated by the private sector for profit and charge the public directly, taking them off the public-sector books. This alone adds a substantial sum to the Scottish per-capita figure.

Even that, however, is a red herring. When you pay your car insurance, say, you don’t care how many employees the insurance company is sharing the money around. All that matters is that the premiums make the company able to afford its obligations if you have an accident.

The GERS report, despite its own best efforts, provides empirical evidence that Scotland can afford to look after itself – even in an emergency – better than by handing over all its money and entrusting itself to the “charity” of the UK. And that’s why the No campaign is pulling out all the stops today in a desperate and comical attempt to distract people’s attention from it.

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27 to “GERS between the lines”

  1. Connor says:

    I was looking forward to the release of the GERS figures, so I’m glad to see that they’ve lived up to expectations. After the Unionists insisted that Scotland’s relatively small deficit was rare and would soon be huge, it became even smaller – and with independence, we can keep it that way. I’m looking forward to the Wings take on the leaked paper disseminated by the No campaign next.

  2. TamD says:

    I followed the link to the BT “expose” and it crashed my computer. From what I read- the post it notes bare no relation to the content of the numbered paragraph to which it refers.

    Desperate stuff indeed.

  3. tartanfever says:

    So when we vote Yes and Westminster tell us that they will be taking 50% of the oil fields for  rUK, can we now use the fact that they credit 94% of oil revenue as Scotland’s to presume that these oil fields are indeed in Scottish waters which an independent Scotland would keep ?

  4. Westie7 says:

    So what will tomorrows FMQ line be to push this out of the limelight
    I see BBC Scotland are already lining up the script for Rosa Klebb, 
    Fake dossiers waving and NHS again!

  5. pmcrek says:

    @tartanfever
    The UK is a signatory of the UNCLOS treaties, all we need to do is send them a copy if they start playing silly buggers.

  6. Sunshine on Crieff says:

    “But a favourite argument of the No campaign is to imply (as the UK government does by also including in GERS two alternative data sets calculated instead on a per-capita share and no share at all) that Scotland would notreceive such resources and that they’re in fact a shared asset.”
     
    Just a clarification:- the GERS report – Government Expenditure and Revenue Scotland – is published by the Scottish Government, not the UK Government. Note the explanation on the Scottish Government website: “GERS is compiled by statisticians and economists in the Office of the Chief Economic Adviser of the Scottish Government. The Scottish Government’s Chief Statistician takes responsibility for this publication. ”

    I assume the different scenarios – geographical share of oil and gas, population share of oil and gas – are to compare the situation under independence vs an enhanced form of devolution where oil and gas revenues were divided per capita.

  7. Richard Taylor says:

    From http://www.hse.gov.uk:
    “Grampian Police exercise jurisdiction over all installations in Scottish Waters of the North Sea above 55° 50′ North. Scottish Law applies…..”
    This has long been established – by a non-SNP UK government, at least as far back as the early 1980s. The latitude is actually just below that of Berwick-upon-Tweed on land. This means that the UK government has long accepted that the international maritime border between England and Scotland is a straight line due East at 55deg 50′ N until it intersects the maritime border of Norway. More or less a horizontal continuation of the Scotland-England land border. As a former oil economist with RBS Alex Salmond will be well aware of this. 
    As an oil worker, I can tell you there is an empty area of sea around the border, with the Scottish (mostly) oil fields to the North and the English gas fields to the South.
    Any attempt to move the border so that it slants upwards as you follow it East will gain little by way of reward unless you make it really, really, outrageously go North-East from Berwick-upon-Tweed. However, you will start to have a few problems then. 
    You’d have to rebuild a lot of oil infrastructure, including pipelines, a heliport and so on at Berwick rather than its current locations, at Aberdeen and Shetland. Until you did this you might not get a lot of oil back to shore or personnel to the rigs themselves, unless you ask Sikorsky to build some long-range helicopters. Maybe the friendly Scottish Government could let you rent existing facilities?
    Northern England has a shortage of deep-water sea lochs or fjords for rig maintenance – actually, that’s part of the reason why the UK’s nuclear deterrent isn’t stationed on the Humber or the Norfolk Broads.
    Anyone else in the oil business care to comment? No-one ever seems to point out the obvious when it comes to the oil “debate”.

  8. Dal Riata says:

    Did anyone see that double-whammy tonight of Reporting Scotland and the (Scottish) Labour Party party political broadcast (ppb)? Christ on a bike, just incredible!
     
    ‘GERS figures show Scotland will be worse off without the UK and the UK’s oil’ or words to that effect is BBC Scotland’s ‘version’ of the newly released GERS figures! FFS, their bias is now so obvious that it cannot be denied: they may as well just put a running ticker at the bottom of the screen on a permanent loop reading Vote No! Vote No! Vote No!
     
    As for SLabs ppb, to paraphrase,’We are Scottish, not like the SNP’, We care for the Scottish people, not like the SNP’, Blah, blah, blah, ‘not like the SNP’ ad nauseum. Basically, they used their time to blame the SNP for everything and anything rather than tell us the benefits that SLab themselves bring, or will bring to Scotland. It was truly embarrassing. How they are working for the people of Scotland, and all that. Liar liar, pants on fire!
     
    BBC Scotland and the (Scottish) Labour party lying and misinforming to the people of Scotland without shame. Absolutely disgraceful. May they live to face the full wrath of a yet-to-be-fully-informed populace.

  9. Inbhir Anainn says:

    Thumbs up to Scotland’s Finance Secretary John Swinney for giving an admirable response to this aggressive interview.
    http://www.bbc.co.uk/news/uk-scotland-scotland-politics-21682537
     

  10. Scott Minto (Aka Sneekyboy) says:

    @Sunshine on Crieff
     
    You are right and I can only apologise for the error. The sentence in brackets is an editorial alteration due to a misunderstanding of the reports origin, which is probably my fault through bad communication.
     
    “(as the UK government does by also including in GERS two alternative data sets calculated instead on a per-capita share and no share at all)”
     
    This was added post upload in edit by Rev Stu in an effort to aid peoples understanding of the document and article and is an error. Sorry.
     
    The original sentence read:
     
    “But a favourite argument of the No campaign is to imply that Scotland would not receive such resources and that they’re in fact a shared asset.”
     
    This sub editing was also responsible for the insertion of the following:
     
    “To attempt to disguise this level of subsidy from Scotland to England, Wales and Northern Ireland, GERS also records total expenditure per capita for each of the UK’s regions.”
     
    which was originally referring to the fact that a standard attack line for Unionists to use against independence is the expenditure per capita in Scotland as expressed against the per capita funding in England.
     
    The rest of the article is as intended.
     
     

  11. The Man in the Jar says:

    Trailer for Newsnicht. “Tonight secret SNP document bla bla bla” No mention of GERS.
    What else you would expect.
     

  12. Rev. Stuart Campbell says:

    “Just a clarification:- the GERS report – Government Expenditure and Revenue Scotland – is published by the Scottish Government, not the UK Government”

    Yes, but it’s compiled to parameters set by the UK Government. Do you really think the SNP would voluntarily bother calculating Scotland’s finances without oil or with a per capita share?

    GERS predates devolution, never mind the SNP government:

    http://www.scotland.gov.uk/Topics/Statistics/Browse/Economy/GERS/Publications

  13. Marcia says:

    Grumpy Scottish Man blog:
     
    http://grumpyscottishman.wordpress.com/
    What does NO mean to me:-
    a good read.

  14. ben leiper says:

    We need to counter the perception that oil and gas reserves are currently UK “assets”.
     
    Military hardware for example can be described as assets subject to a population based share upon independence. But minerals such as the gold being mined from under the Cairngorms, the shale gas under the Midlands/Central Belt/Lake District, or the Oil and Gas under the Continental Shelf are just Geology.
    These reserves are not “assets” until they are extracted!
    If we correctly refer to these reserves geological features, the notion of a population based share as opposed to geographical is rightly shown to be just silly.
     

  15. Scott says:

    Just wondering, is there any chance that this information could be put into image form?

    Only flaw with Yes Scotland’s images from the GERS report is that they just mention the percentages and not the figures. They also don’t mention the deficit on the same image as the expenditure (which the No campaign has jumped on).

  16. Sunshine on Crieff says:

    @Rev. Stuart Campbell
    “Yes, but it’s compiled to parameters set by the UK Government. Do you really think the SNP would voluntarily bother calculating Scotland’s finances without oil or with a per capita share?”
    Right, I see where you’re coming from. It’s also ‘approved’ by the UK’s ONS.

  17. Macart says:

    @inbhir Anainn
     
    Good link. Mr Swinney in a stand up response. How anyone could attack his approach to finances is beyond me. Took the (super secret) document issue in his stride and in fact used it to underline the SGs sober approach to national finance. Or in other words took what was meant to be a negative situation and turned it into a positive without missing a beat. The opposition wish they had politicians of his calibre.

  18. Eoin says:

    How on earth can you get this information published by the mainstream media?  It’s so important, it seems almost criminal that the public are not being properly informed

  19. megz says:

    http://www.craigmurray.org.uk/archives/2013/03/propaganda-against-scotland/?utm_source=twitterfeed&utm_medium=twitter
    Today the news came out that Scotland contributes a net £3.6 billion a year to the UK government finances. Scotland’s fiscal deficit is an extremely respectable 2.6%, compared to 6% for the UK as a whole, or 6.3% for the rest of the UK excluding Scotland.
    But even that is not the full story. These figures are based on a geographical allocation of oil revenue – but that geographical allocation is based on New Labour’s incredible gerrymandered 1999 England/Scotland maritime border which gives eight major Scottish oil fields to England, including two North of Dundee.
    On a realistic maritime boundary, which an independent Scotland would undoubtedly win from the International Court of Justice, Scotland would actually have a budget surplus of £1.9 billion. Hurray, boys and girls, we are in the black! Remember I was Head of the FCO Maritime Section and I personally was involved in negotiating most of the UK’s maritime boundaries, including with Ireland, France, Denmark and Belgium.)
    http://www.craigmurray.org.uk/archives/2012/01/scotlandengland-maritime-boundaries/
    In 1999 Tony Blair, abetted by the Donald Dewar, redrew the existing English/Scottish maritime boundary to annex 6,000 square miles of Scottish waters to England, including the Argyll field and six other major oilfields. The idea was specifically to disadvantage Scotland’s case for independence.

  20. ron17 says:

    O/T Wright stuff  channel 5 this morning,topic is Syria John Barrowman suggests the assasination of Assad.The caller from Hull says hes against the break up of Britain,so is it ok to take out Alex Salmond.The thing is im not at all surprised at this,we have to be Aware that U KOK will stop at nothing to retain power.

  21. Neil says:

    This is a great article except I don’t agree that Scotland subsidises the rest of the UK, it just requires less borrowing to run Scotland (if you assume all oil is Scotland’s) at the moment because its deficit is a lower % of GDP. No money is moving from Scotland to the UK as everyone is running a deficit. And no-one in Scotland is paying debt interest like the rest of the UK. If we have to borrow to run the UK we have to borrow to service the debt. If the UK, or parts of it, move into surplus then we could see who is subsidising who. Maybe London currently runs a surplus, I don’t know. Anyway, if money were moving from Scotland (or England) to the UK it would likely to be into Wales and Northern Ireland which do need to be subsidised.

  22. Phil Doherty says:

    Are you lot delusional? This author is using the wrong GERS report! The right GERS report is the 2012/13 one which shows the deficit stands at £12 billon and the tax base at £53.1 billion (9.1% of UK total public sector revenue).
    I suggest you go and read the report’s executive summary for yourself instead of relying on this dodgy website for info!
    In 2012-13, total Scottish non-North Sea public sector revenue was estimated at £47.6 billion, (8.2% of total UK non-North Sea revenue). Including a per capita share of North Sea revenue, total Scottish public sector revenue was estimated at £48.1 billion (8.2% of UK total public sector revenue). When an illustrative geographical share of North Sea revenue is included, total Scottish public sector revenue was estimated at £53.1 billion (9.1% of UK total public sector revenue). The deficit is for Scotland is (5.9% of GDP) compared to UK of (5.8% of GDP) or (8.3% of GDP)for Scotland compared to (or 7.3% of GDP) for the UK.

    In 2012-13, total public sector expenditure for the benefit of Scotland by the UK Government, Scottish Government and all other parts of the public sector, plus a per capita share of UK debt interest payments, was £65.2 billion. This is equivalent to 9.3% of total UK public sector expenditure.

    In 2012-13, the estimated current budget balance for the public sector in Scotland was a deficit of £14.2 billion (11.2% of GDP) excluding North Sea revenue, a deficit of £13.6 billion (10.6% of GDP) including a per capita share of North Sea revenue or a deficit of £8.6 billion (5.9% of GDP) including an illustrative geographical share of North Sea revenue.

    In 2012-13, the UK as a whole ran a current budget deficit, including 100 per cent of North Sea revenue, of £91.9 billion (5.8% of GDP).

    In 2012-13, Scotland’s estimated net fiscal balance was a deficit of £17.6 billion (14.0% of GDP) when excluding North Sea revenue, a deficit of £17.1 billion (13.3% of GDP) when including a per capita share of North Sea revenue or a deficit of £12.1 billion (8.3% of GDP) when a geographical share of North Sea revenue is included.

    In 2012-13, the equivalent UK position including 100 per cent of North Sea revenue, referred to in the UK Public Sector Accounts as ‘net borrowing’, was a deficit of £114.8 billion (or 7.3% of GDP).

  23. Rev. Stuart Campbell says:

    “Are you lot delusional? This author is using the wrong GERS report! The right GERS report is the 2012/13 one which shows the deficit stands at £12 billon and the tax base at £53.1 billion (9.1% of UK total public sector revenue).”

    Read the date on the post, you daft twat.

  24. You and My Comb says:

    ah but what our friend phil (and the figures) doesnt say is the devices gideon has used to mask the true mess he is leading us to. the post office pension fund app £25bn has become income to the treasury to be paid out by our childrens, childrens taxes. interest on treasury debt as income!

    I wonder what the UK position is with a gegraphical share of oil

  25. James says:

    Looking forward to the update today Rev!



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