Nicola Sturgeon and her colleagues plan to hold a referendum on Scotland leaving the UK a little over a year from now. All going to plan, they then intend to start governing a brand new state, with full control over taxes and spending, sometime in 2025. With such weighty obligations on the horizon, you would think the release of new, up-to-date official numbers outlining Scotland’s stand-alone fiscal position would be hotly anticipated by the First Minister and her team.
Apparently not. Instead of blocking out time in her diary this week to showcase the Government Expenditure & Revenue Scotland (Gers) 2021-22 statistics, which came out on Wednesday, and which outline Scotland’s overall tax and spend position, the First Minister chose instead to take part in a discussion show at the Fringe. A look at the new figures gives an indication of why she might be keeping her distance.
The latest numbers show Scotland had a double-digit deficit in 2021-22 of 12.3 per cent of GDP, or £23.7 billion. The overall UK deficit by comparison was 6.1 per cent of GDP. Scottish revenue came in at around £74 billion, spending at around £98 billion. Tax revenue per person in Scotland was around £13,500 and spending per person around £17,800. Spending in Scotland was almost £2,000 per person higher than the UK average.
The large deficit still partly reflects the impact of the pandemic (Scotland’s deficit last year was over 22 per cent of Scottish GDP). But even pre-pandemic, Scotland’s deficit would typically come in at around 8-10 per cent of GDP, which is a big problem for those pushing to make the country fully fiscally autonomous a few years from now.
The SNP’s inconsistency suggests a lack of respect for truth and reality not much better than that of conspiracy theorists
Combine an unsustainable fiscal deficit with a large trade deficit and an emerging market-style currency set-up and you’ve got a one-way ticket to effective insolvency for the new state. Never mind meetings with leaders of the EU in November 2025 to talk accession, the first prime minister of the new Scotland would more likely be on a Zoom call to representatives of the International Monetary Fund (IMF) to request a bailout.
Dealing with the reality of Scotland’s fiscal position is a challenge for the SNP and the broader nationalist campaign. The response from some parts of the movement is to discredit the statistics, either by suggesting they are methodically corrupt or that they are part of a conspiracy by the British state to mislead people on Scotland’s true potential. This is despite the fact Gers is produced by Scottish government statisticians and are accredited as National Statistics.
The SNP hierarchy has been careful not to appear so extreme. Rather than frame the numbers as fraudulent, in recent years they have tended to dismiss Gers as irrelevant because the figures only represent Scotland within the Union. Tellingly, that attitude was not present during the build up to the 2014 referendum, when Nicola Sturgeon and her colleagues promoted Gers without question. At that time the stats happened to show Scotland in a relatively healthy fiscal position compared to the UK thanks to hefty North Sea oil and gas revenues.
This inconsistency from the SNP suggests a lack of respect for truth and reality not much better than what we get from the conspiracy theorists.
This week has seen the spin effort move to a new level. Although there was no press conference or statements from the First Minister, Deputy First Minister and acting finance secretary John Swinney said the following:
‘Today’s figures show that even without North Sea receipts, revenue raised in Scotland covers all devolved expenditure as well as all social security spending – devolved and reserved – including state pension provision in Scotland.’
As shown by These Island’s chairman Kevin Hague, and by the Fraser of Allander Institute in their Gers analysis, this is a highly misleading statement. The aim of course is to imply that full fiscal autonomy in 2025 is nothing to worry about. The message is that Scotland can afford independence, even if we accept the Gers numbers.
It’s nonsense. The calculation only works if we disregard £8 billion of devolved capital expenditure and a long list of other spending that would have to be replicated in an independent Scotland if it were to operate as a functioning state. This includes almost a billion pounds of transport spending, nearly £4 billion for defence, and £1.4 billion for running administrative services such as HMRC. Are Swinney and Sturgeon suggesting they start a new state with no defence spending and a mass cull of Scotland’s civil service?
Gers is revealing then. It shines a light on both the fiscal realities of independence and the willingness of the SNP to tactically engage in post-truth politics.
So much for having an informed debate.
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