Scottish Government response to GERS and link to Wings comment

Here’s an extract from the Scottish Government’s more positive but restrained response to our notional deficit followed by the link to Wings over Scotland’s comments:

Scotland’s fiscal position improves and tax revenue grows.

The latest Government Expenditure and Revenue Scotland (GERS) figures show Scotland’s fiscal position improved in 2016-17.

Overall, the notional deficit fell by £1.3 billion in 2016-17 to stand at 8.3% of GDP. Onshore revenues increased by £3.3 billion (6.1%) between 2015-16 and 2016-17 – the fastest increase since current records began in 1998-99 – while North Sea revenue also grew.

Speaking while visiting business start-up Aquila Biomedical, based at Edinburgh BioQuarter, First Minister Nicola Sturgeon said:

“Scotland’s economy remains strong. In the last quarter, our economy grew nearly four times faster than the UK and the number of people in employment is at a record high.

“These figures reflect Scotland’s finances under current constitutional arrangements. However, they show that our investment in key industries – such as the life-science sector – is providing a real boost to our onshore economy. By continuing to invest in key sectors, we will ensure Scotland remains a productive and competitive country.

“The lower oil price had an impact on North Sea revenues and the wider economy last year. However, it is encouraging to see an improvement in the overall fiscal balance and that onshore revenues grew at their fastest rate in nearly twenty years.

Why won’t the SNP comment on the UK Government’s failure to tax oil as it would wipe the deficit clean? See:

Why were tens of billions in oil revenues lost by UK government? Would they have made Scotland seem too wealthy in September 2014?

Here’s the Wings link which is well worth reading:

https://wingsoverscotland.com/the-too-wee-factor/

 

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11 thoughts on “Scottish Government response to GERS and link to Wings comment

  1. David Howdle August 23, 2017 / 5:16 pm

    As I understand it Scotland doesn’t, in law, have a deficit. That belongs to the UK and would belong, after independence, to the rUK. Any share of the UK deficit which an independent Scotland agreed to take would be subject to negotiation and would be most unlikely to be £13bn.

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    • johnrobertson834 August 24, 2017 / 7:38 am

      That’s true but it doesn’t stop them MSM using it as a stick?

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  2. William Henderson August 23, 2017 / 5:29 pm

    John,

    A few thoughts on fiscal deficits.

    A fiscal deficit is simply a shortage of money in the public purse. Since there is no obvious shortage of money in the overall economy, the question must be asked ” Why is it the public purse is the location of the money shortage?”

    An answer may lie in the way we as a society handle what are sometimes known as natural monopolies. (eg. Mineral wealth, electricity supply grids, railway lines, telephone networks, roads, water supply, fire services, health services etc.)

    Many countries regard these natural monopolies as being rightfully the property of the state and their economic development is paid for out of the public purse as a long term investment. In the longer term the profits which result directly from that investment contribute to the public purse and reduce the level of public taxation. Private enterprises which benefit from the use of the publicly financed infrastucture are expected to contribute to its maintenance and development through the payment of appropriate taxes. All very staightforward and fair.

    In Britain, under the influence of the so-called neo-conservative principle of economics (otherwise known as greed!) our leaders of society see things differently. A natural monopoly in the possession of the state represents an entity in which there is lots of money washing back and forth and where that is the case there can be constructed means of siphoning off some of that moving cash for private ends. The common name for this is ‘privatisation’.

    Your question about why billions were ‘lost’ by the uk government is easily answered. Referring to the oil business, the lost billions were not really lost – they just found another home. And that home wasn’t in the pockets of the general public or its institutions.

    I’d best stop there or I will go on for far too long. I’ll end with a simple thought. For most of history an income tax was simply a tax on private profits made using publicly financed infrastructure (say by a ship owner whose vessel arrived safely back in port after protection from pirate by the Royal Navy whose income tax helped pay for that navy). The idea that income tax is a levy on the compensation for the labour of individual human beings is a comparatively recent evil.

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  3. johnrobertson834 August 23, 2017 / 7:04 pm

    Fascinating and illuminating, thanks. Why, though do the SNP passively accept all this?

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    • William Henderson August 23, 2017 / 7:25 pm

      The only answer I can think of is that, like most of the rest of the world, they are not seeing the wood for the trees. It’s necessary to keep it simple. Just follow the money!

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      • johnrobertson834 August 23, 2017 / 7:54 pm

        They will have seen the Business for Scotland expose and the Common Space piece by the professor. They know it’s a lie but they won’t fight back. I’m missing something. Bring back Alex?

        Liked by 1 person

  4. Ludo Thierry August 23, 2017 / 7:39 pm

    Hi John – Hi William – Hi all.

    John – watch out for your Blood Pressure (I have to do the same!).

    In defence of the SNP Scottish Govt I feel they have to issue fairly circumspect comments – why? – Because the GERS process comes under the Scottish Govt remit (for historical reasons). The inadequacies of the process are becoming better known – but the various official statisticians producing the figures are doubtless trying to do their best within the utterly inadequate information available (and the process has improved – marginally – over recent years).

    Note Nicola’s careful phrasing in her quote in your article “These figures reflect Scotland’s finances under current constitutional arrangements”. (That is, indeed, what the various statisticians involved – much of the info being estimates (guesswork) from UK Treasury and UK HMRC etc – are trying to capture).

    What the SNP Scottish Govt can say is, therefore, subject to constraint. What the SNP (political party) can say is not subject to the same constraint. What the wider Yes campaign and other interested parties can say is, also, not subject to those same constraints. It is up to all of us to try hard to get the ‘real’ info out to the Scottish general public in as accurate a way as we can. (That is why your blog (and others) are such a vital resource).

    I urge people to pay a visit to Richard Murphy’s site (he has great expertise on taxation matters and how currencies operate). I hope it is OK to add his initial observations here?:

    Richard Murphy, political economist

    On the revenue side the vast majority of estimates are just that i.e. they are extrapolations from UK data that assume Scotland is a mini part of the UK as a whole, and I do not think that a useful basis for assessment. Some changes, e.g. on oil revenues, have taken place, with modest up-ratings in Scottish revenues as a result. Some devolved taxes reflect Scottish source data now: I accept that the latter is an improvement.

    But, and I stress the point: what GERS still shows is the improbable likelihood that Scotland is disproportionately responsible for the UK deficit when it is very clear that many decisions for which Scotland is asked to contribute would not be paid by Scotland as a whole if it had the choice. Trident and much of the defence budget is an obvious example, but there are others on the spending side, where Scottish demography would, for example, suggest that a very different pension system might be appropriate for Scotland when compared to the rest of the UK.

    As for income, Scotland has very limited control over the income attributed to it and the tax system in operation, which heavily biases towards wealth and which is very large business friendly, may well be one it would not choose. In addition, I would hope a Scottish government would pursue the tax gap much more vigorously than HMRC does anywhere, and not least in Scotland, where it intends to withdraw from all local services above a line between Edinburgh and Glasgow, leaving some in the country many hundreds of miles from a tax office, and its scrutiny.

    This leaves all aspects of GERS distorted by a decision making process centred in London which has devolved little real control of much of what happens to Scotland by keeping a tight rein on purse strings and strictly limiting the use of devolved tax powers either by statute or by the way in which powers have been granted. This lack of real interest is reflected in the fact that so little of the critical data in GERS is really collected in Scotland but has to be abstracted from that for the UK as a whole.

    GERS is, then, a statistical anomaly prepared without consideration for what really happens in Scotland and as such provides almost no real indication as to what its potential might be, whilst leaving the Scottish government with no reliable data on which to make economic decisions.

    I found that info helpful – I hope others do to.

    Given the apparent basket case that the BritNat politicos are telling us that our economy is I can’t help but wonder how a major company like Jet2 Holidays is recruiting a further 200 staff in Scotland to support its major operations here. Mentioned in the beeb website Scotland Business page:

    Airline Jet2.com has announced 200 new jobs split between Edinburgh and Glasgow airports.

    Roles being advertised include pilots, cabin crew and ground operation staff, the airline said.

    Jet2.com said it was hosting two recruitment roadshows in Scotland – one in Glasgow on 12 September and another in Edinburgh on 13 September.

    The airline said it intended to continue to expand its operations across the UK this year, with a 13% increase in capacity.

    Steve Heapy, chief executive officer of Jet2.com and Jet2holidays, said: “It has been an exciting year for Jet2.com and Jet2holidays, and we are delighted to be creating so many opportunities to join our award-winning teams at Glasgow and Edinburgh airports”.

    Also curious to note that the (allegedly) basketcase Scottish economy is able to win major overseas orders such as that reported on the beeb Scotland Business page concerning (Falkirk based) coach builders Alexander Dennis Ltd’s order to supply Mexico City with 90 low-emission buses (a £44M order):

    Scottish bus manufacturer Alexander Dennis Ltd will build 90 low-emission double-deckers to run on one of Mexico’s most famous avenues.

    The Enviro500 buses are being made at Alexander Dennis’s sites in Falkirk and Guildford.

    They are expected to begin transporting passengers on the Paseo de la Reforma by the end of the year.

    The manufacturer employs more than 1,000 staff at its base in Camelon, Falkirk.

    Alexander Dennis Ltd chief executive Colin Robertson, said: “As a global double-decker leader with fleets of our vehicles across the world, we see the positive impact these vehicles can have in improving the transport infrastructure, congestion and air quality in the world’s busiest cities.

    The UK Dept of International trade facillitated this contract by providing a Mexican Peso guarantee – You see – the difference between the alternative Scottish media and the msm is that the alternative Scottish media include the joint efforts of Scottish and British Governments in promoting trade when relevant – whereas the msm just blank out the Scottish angle and report things as ‘triumphs’ for Mrs. May and her Westminster Tory crew.

    Onwards and upwards one and all!, Cheers, Ludo

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  5. johnrobertson834 August 23, 2017 / 7:56 pm

    Thanks Ludo for all this. Very useful. But, see my last answer above to William. What am I missing?If the oil revenues had been gathered as they were in every other country, no deficit could have been constructed for Scotland. GERS is pure propaganda just as it was originally planned to be.

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  6. Ludo Thierry August 23, 2017 / 8:20 pm

    Hi John – I entirely agree that GERS was designed by Westmisnter for Westminster purposes. The intention was, without question, to obfuscate issues.

    I suppose the central point is that the GERS process is currently – for all its manifold failings – all that there is.

    Over the years of the SNP Scottish Govt marginal improvements have been imported (smuggled) into the GERS process. Unless or until wholesale changes are introduced (which under current constitutional arrangements can only be sanctioned by Westminster) this process of ‘marginal improvement’ is all we have (together with the growing interest from acknowledged autorities such a s Richard Murphy and many others).

    Bit by bit a slightly clearer picture is managing to be put together – but it is a slow and painful project (if only Scotland had voted YES in 2014 we would be starting to see genuine figures coming through now).

    The very stark figures you (and others) have helped to bring into the public sphere re. the dishonesty in the BritNat tax regime re. Scottish Sector tax streams is an absolutely vital part of the process.

    I guess (with no special knowledge at all) that the SNP Scottish Govt feel it necessary to play out the GERS story at the ‘official’ level – but rely on the wider YES movement to bring into view the gross corruption of the Westminster tax regime in the Scottish Sector – and to ask the really difficult questions.

    Don’t know if I’m making any sense here?

    Thanks, Ludo

    Like

  7. johnrobertson834 August 24, 2017 / 7:39 am

    Always good sense. You may well be right but I just wonder if Eck would have been more combative on GERS?

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    • Clydebuilt August 24, 2017 / 8:41 am

      I’ve noticed some SNP representatives MacKay and Sturgeon, bringing up points made by Wings et al . . But , usually some time after they appear on the net, and too late to be effective. I’ve no answer for this. And can’t see how it does our cause any good.

      Liked by 1 person

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