The announcement that the Scottish Government would seek the uncontested legal right to hold a second independence referendum met with an outpouring of rage and ignorance from the massed ranks of the UK media that was in one sense entirely predictable yet still startling in its fury and ferocity.
Most prominent was the assertion, stated as fact by every pundit and broadcaster – including those required by law to be fair and impartial – that a second referendum would be conducted in the environment of a significantly worse economic case.
And that’s a remarkable claim, because the indisputable fact is that nobody has the slightest clue what the economic case for No will be.
Scots will be choosing not between independence and the status quo, as they were in 2014, but between independence and a new UK outside the EU, the economic consequences of which are one of the greatest unknowns in British history.
You cannot evaluate a decision in which you only know, at best, the numbers on one side. Even if you accept that a fall in oil revenues damages Scotland’s prospective independent economy – and it’s not nearly as simple as that – it’s still very possible that that damage could be outweighed by the economic benefits of avoiding Brexit.
But the truth is even worse – nobody knows EITHER half of the equation, because the supposed calculations of an independent Scotland’s finances are grossly unfit for purpose. That’s something we’ve been pointing out for several years, based not on our opinion but on the views of people who analyse economics for a living.
(Rather than, say, in their spare time from running a loss-making dogfood business.)
The assessment of the relevance of GERS from proper economists – of all political viewpoints and professional backgrounds – is now so overwhelmingly uniform that it seemed worth collecting it in one place.
1. JIM AND MARGARET CUTHBERT
Jim Cuthbert was Chief Statistician at the UK government’s Scottish Office. He has an MA in mathematics and economics, an MSc in mathematics and statistics, and a PhD in probability theory. He lectured in statistics at Glasgow University, and worked for the cash limits division of the UK Treasury.
His wife Margaret has a degree in Economics and Statistics, and worked as an economist for ICI before lecturing in econometrics at Glasgow University.
The Cuthberts have spent many years pointing out the methodological flaws in GERS, some of which were deliberately designed into the figures by a hostile UK government.
The couple are perhaps the UK’s foremost and most widely-respected experts on GERS. They are, however, supporters of Scottish independence and their expertise can be – wrongly – dismissed on those grounds by Unionists. So let’s look elsewhere.
2. MERRYN-SOMERSET WEBB
Merryn Somerset-Webb is Editor in chief of MoneyWeek – the UK’s best-selling personal finance magazine – and writes for the Financial Times, Sunday Post and Saga Magazine as well as commentating on finance for radio and TV.
Until last month she also worked as a member of the advisory board of hardcore ultra-Loyalist idiot festival Scotland In Union, although we note that she is no longer credited as such on their website.
Four months before the independence referendum, Somerset-Webb wrote an article for MoneyWeek unequivocally and categorically rubbishing the idea that the economy of an independent Scotland could be accurately measured through the GERS figures.
It noted that “all the numbers everyone uses to make the financial argument are no more than rough guesses” and that readers could “ignore all the financial arguments for a separate Scotland on the basis that no-one knows what they actually are”.
Curiously, the article – which also appeared in the Financial Times entitled “Scotland’s fiscal independence is inevitable” – has vanished without trace from MoneyWeek’s website, replaced by a rather appropriate error message.
(It still appears on the FT’s, over which Somerset-Webb has no editorial control.)
Deloitte Touche Tohmatsu Limited is a multinational professional services firm based in New York. It’s one of the “Big Four” accounting firms and the largest such network in the world by revenue and number of clients, providing audit, tax, consulting, enterprise risk and financial advisory services to more than 244,400 professionals globally.
In 2016, the company earned a record $36.8 billion USD in revenues and was the 6th-largest privately owned organization in the United States. It has the largest number of clients amongst FTSE 250 companies in the UK.
Deloitte’s view on GERS is short and to the point.
Somerset-Webb and Deloitte would both normally be considered as politically firmly on the right, so perhaps we might also seek a figure on the progressive left for balance.
4. PROFESSOR RICHARD J MURPHY
Richard Murphy is Professor of Practice in International Political Economy at City University London, and previously visiting fellow at University of Portsmouth Business School, the Centre for Global Political Economy at the University of Sussex, and at the Tax Research Institute at the University of Nottingham.
He also writes for the Guardian, and has been widely praised by commentators on the left, hailed by the Daily Mirror journalist Kevin Maguire as a “heroic figure” and by Guardian journalist Polly Toynbee as a “tireless campaigner”.
In 2015 many of Murphy’s ideas were taken up as proposed policies by Jeremy Corbyn, who subsequently became leader of the Labour Party. These ideas helped to form the body of policies that was dubbed “Corbynomics”.
This month, Murphy wrote two columns for his blog on the subject of GERS. The first is a masterfully concise piece worth reproducing in its entirety:
In a few short paragraphs Murphy forensically destroyed all four pillars of the Unionist figures for the Scottish economy – GDP, tax revenues, spending and import/exports. The piece brought down a storm of abuse from furious GERS-obsessed amateurs, prompting Murphy to pen a follow-up.
In the second piece he methodically assessed the 26 pieces of data which comprise the GERS stats, noting that:
“As far as I can tell two (local authority income and, maybe, the estimate of Scottish oil revenues) are definitely calculated in Scotland, and the latter is an estimate, not a fact, which is pretty significant in this case.
The remainder which is the vast majority) are figures supplied, as I suggested, by Westminster linked organisations, or ‘London’ as I called it. I think I can happily rest my case with regard to that claim. If anyone suggests this data was made in Scotland they are deluding themselves.”
After several more paragraphs of brutal dismantling, he concluded:
Ouch. That’s pretty comprehensive.
The sources we’ve quoted above cover Unionist and pro-independent voices, the left and right of the political spectrum, and across the full breadth of academia, media, big business and individual expertise. Every one of them reaches the exact same blunt and unambiguous conclusion – GERS is absolutely meaningless as a guide to the finances of an independent Scotland.
We’ve told you that all along, of course. But we suppose you could listen to an angry, brittle egomaniac who flogs Whiskas for a living instead if you really wanted to.
Either way, however, it is plainly unacceptable for lazy journalists and presenters to repeatedly state as an unchallenged empirical fact something which is the exact polar opposite of the view of every known expert in the field.
We wish we had any confidence that it was about to stop happening.