Both the Nationalist and Unionist side of the Scottish Independence question are gearing up for a possible second referendum. The Scottish Parliament has voted for it, Nicola Sturgeon has asked for it, and Theresa May has said "now is not the time", but hasn't ruled out blocking one for ever (privately Downing Street is briefing it intends the "bold" position of blocking one until 2021, when the next Scottish Parliament elections are scheduled).
One of the key early skirmishes is the question of what the financial position of Scotland would look like after independence and the "GERS" figures.
What the heck is "GERS"?
Government Expenditure and Revenue Scotland, or GERS (pronounced ‘Jers’) is the set of figures and statistics that describe the state of public finances in Scotland. It is produced by statisticians and economists in the Office of the Chief Economic Adviser of the Scottish Government and signed off by the Scottish Government's Chief Statistician.
Right now, these figures show that the state of Scotland’s public finances are - to put it mildly - not great. This leads us to The GERS Deniers.
The GERS Deniers
A number of Scottish Nationalists pushing for a new Independence referendum are attempting to carry out a concerted campaign to discredit GERS, even going so far as to call it “fake” in the style of a Trumpian dispute. This is mostly being carried out via Twitter/Facebook, though there are a few articles in print/on the web and occasional TV/Radio interviews. The SNP itself has not officially played a part in this yet, although a number of party officials are starting to get in on the act. The SNP’s former leader, Alex Salmond also appears to be at least tacitly encouraging GERS Denial, suggesting this campaign will continue to gather momentum if left unchecked.
Let’s take a look at this campaign and see if has any merit.
Brief History of the GERS Denial Campaign
Whilst GERS has been around since 1992 and was on the end of a number of critiques of politicisation in this period (e.g. here and here), between around 2010 through to the end of 2014 - and all thru the Scottish Independence referendum - GERS was enthusiastically supported by virtually every Scottish nationalist or SNP member. This was both directly - e.g. quoting it - or indirectly, using arguments based on GERS figures. This is because GERS showed that Scotland’s finances were in healthy shape. Here are various SNP politicians and supporters on Twitter:
Unfortunately for the SNP & its supporters, around the middle of 2014, the price of oil fell dramatically:
As Scotland’s finances are highly dependent on oil for tax revenues, this also meant the GERS figures started to go south. And highly correlated with the fall in oil price, these GERS figures then started to be aggressively questioned by its former supporters, particularly from 2015 onwards.
Without covering the entire history, this recently exploded into prominence when The National (a newspaper that supports an independent Scotland) splashed a cover article by accountant and former Jeremy Corbyn supporter Richard Murphy (following up on an article Murphy had posted on his Blog).
Whilst the National had been trying to get traction denying GERS figures for most of 2015-2016, this one seemed to work and was retweeted or cited by at least two SNP Members of the Scottish Parliament (Joan McAlpine, Gil Paterson) and two Westminster MPs (Angus MacNeil and Michelle Thompson):
As you’d expect, this semi official SNP endorsement resulted in a wave of Tweets and articles by Scottish Nationalists referencing GERS being totally useless, fake or untrustworthy. Now, almost any conversation that mentions GERS (or data based on it) at this point will end up in a dispute about the basic trustworthiness of the figures almost instantly.
The latest position in The Great GERS Denial Campaign, as of the end of March 2017, is:
- Alex Salmond obfuscating about Scotland's financial deficit on LBC radio - referring to it as "Tory Propaganda" and claiming a £15bn projected deficit of iScot would be offset by not spending money on the High Speed 2 rail line (which amounts to £7m, or 0.04% of the deficit)
- Richard Murphy continuing to rubbish GERS as it was “created by a Westminster power elite so suit their purpose. It cannot now meet the needs of Scotland”. This conclusion is alongside gems of insight such as “information is power” and “winners write history”, from someone who now opportunistically supports Scottish independence but in 2012 said “whilst I see all the appeal of Scottish independence for the Scottish I do really rather hope they don’t”
- Others are trying to thread the needle of saying GERS "isn’t a con” whilst agreeing with Murphy, who clearly thinks it is a con
The Problem for The GERS Deniers
Others have commented on this denial campaign already (see Blair McDougall, Brian Monteith and Roger White) and the arguments deployed by Richard Murphy specifically (see Neil Lovat, Kevin Hague). In addition, a former senior civil servant who worked in the GERS team for 7 years and is now a Director at one of Scotland’s leading independent economic research organisations also went on the record backing GERS (whilst pointing out where it has some issues). I won’t try and add much to this analysis and recommend you read it all as it covers the nature of making uncertain economic “estimates”, “confidence intervals” and the source of the data underlying the GERS figures. You should also read the 1992-2010 criticism of GERS linked above for the full picture.
Unfortunately for the The GERS Deniers, the best refutation of their campaign is the fact that there is an overwhelming track record of the SNP and independence supporters backing the GERS figures and using them as the basis not only for Scotland’s current financial position, but also projecting its position if independent.
SNP Support for GERS in the Holyrood Scottish Parliament
The SNP’s track record backing GERS speaks for itself. GERS is:
- “Scottish Government figures” (Alex Salmond, former First Minister of Scotland and SNP Leader)
- “Facts” (Alex Salmond, again)
- “The facts” (Linda Fabiani, SNP MSP for East Kilbride)
- “Hard facts” (Aileen McLeod, SNP MSP for South Scotland)
- A “dispassionate analysis” of the “current state of the public finances of Scotland”, “produced by civil servants and statisticians”, and its “composition, formulation and analysis are undertaken entirely without the input” of politicians and “arrived at on a professional basis by officials and civil servants” (John Swinney, Deputy Leader of SNP)
As a result, GERS figures can be used to judge Scotland’s financial “trajectory” (Mike MacKenzie, SNP for Highlands and Islands), “fiscal position” (Willie Coffey, MSP for Kilmarnock and Irvine Valley) and “financial strength” (Linda Fabiani, already cited above), as well as show Scotland’s financial “deficit” or “surplus” and if it is “rich” (or not), and whether all of these would be improved by Scottish independence from the UK (Nicola Sturgeon, SNP First Minister of Scotland).
GERS also “sets out the case for independence” (Jamie Hepburn, SNP MSP Cumbernauld and Kilsyth) and GERS makes “abundantly clear” that Scotland is “more prosperous” than the rest of the UK (rUK) (Kenneth Gibson, SNP MSP Cunningham North). Oh, and the way GERS assigns numbers to Scotland for things like oil revenue, is also “statistically appropriate” and “good practice” (Joan McAlpine, MSP for South Scotland).
Every one of these statements is from debates in the Holyrood Parliament and recorded in the official report.
Now this doesn’t prove that GERS actually is any of those things the SNP say it is, but it does prove the SNP are supporters of GERS when it suits their purposes, and quite enthusiastic ones at that. Indeed, there can be no arguing with the ”hard facts” of GERS.
You may think this could be selective quoting, or out of context? So to remove all doubt: the Scottish Parliament (Holyrood) passed a rare official motion (motion S4M-06016) specifically welcoming the findings of a GERS report. The SNP tabled this motion, and then voted unanimously in favour of it on 21/03/2013. Note that both MSP’s Joan McAlpine and Gil Paterson - now GERS Deniers - voted in favour:
SNP Support for GERS in the Media
The SNP top leadership used GERS many times to support their arguments in the media, often upon the publication of each new GERS report.
For example, on March 12 2014, Alex Salmond claimed that “the GERS stats” show the "strength" of Scotland’s “underlying fiscal position”, they demonstrate that Scotland would become the “14th most prosperous country in the world” if independent and that tax from oil revenues would increase, “as night follows day", by 2016-2017.
- Alex Salmond, March 8 2012: compared Scotland’s deficit favourably to the rUK and the "rest of the G7" largest economies and used GERS figures to claim Scotland would be “heading to much stronger financial position” if independent (video)
- John Swinney, March 6 2013: claimed GERS can be used to “demonstrate” the level of public expenditure and tax revenues as compared to the rUK, and the “solid foundations” this would provide for Scotland if independent (video)
- John Swinney, March 11 2015: claimed that GERS shows that Scotland’s finances have been “stronger than the rUK” for 3 of the last 6 years. Nicola Sturgeon also uses GERS to state that “Scotland’s deficit is reducing”. (video)
- Nicola Sturgeon, March 9 2016: claimed that the “key message” from GERS figures is that “Scotland’s economy is a strong one” that is based on “sound fundamentals” (video)
Logical Arguments & GERS: IndyRef 1
During the first Scottish Independence referendum in 2014, GERS was also the basis for virtually all financial figures used in the official 649 page long White Paper (‘Scotland’s Future’) produced by the Scottish Government / Scottish National Party. This was the definitive prospectus for independence.
GERS was called “authoritative”, and “a starting point for discussions of Scotland’s fiscal position following independence”:
Throughout the White Paper (and particularly in ten detailed pages of Annex C, specifically about ‘Scotland’s Finances’), the SNP were able to use GERS figures to present reasonably positive messages for the state of Scotland as an independent nation compared to the rUK . While these were mostly positive spin of a sort typical of politicians making the best case they could, they were based on GERS and therefore had a reasonably sound basis on arguably the best methodology available.
A few of the key arguments deployed about Scotland in the White Paper - all based on GERS:
- A lower deficit than rUK (Scotland borrows less money to finance its spending)
- Higher productivity than rUK (Scots do more work in the same amount of time)
- Unemployment lower than rUK (More Scots are employed)
- Higher GDP per capita than rUK (each person in Scotland is “richer” on average)
This provides a key logical test for arguments about GERS:
If “good” GERS figures in 2011/12 can be used to demonstrate these positive positions for Scotland, then logically, “bad” GERS figures in 2015/16 must be able to be used to demonstrate negative positions for Scotland. Unless you disavow GERS itself, and therefore the entire previous White Paper’s conclusions, this is inarguable.
A concrete example: when Stuart McMillan (SNP MSP for West Scotland) used GERS to claim that Scotland’s “faster rate [of growth]” versus the rUK was as a result of “the hard work of this SNP Government”, if GERS now shows slower rates of growth than rUK, this surely demonstrates that “this SNP government” is perhaps working less hard? Stuart probably can’t accept this argument even though it is logically consistent though. Why? Almost by definition, the SNP government cannot be said to be responsible for anything bad in Scotland if you are an SNP politician or supporter. The only way out of this predicament is to try and discredit GERS, even if you relied on it yourself in the first place!
The methodology and production of GERS has not significantly changed from 2010 or so. Not even The GERS Deniers claim that it has. Therefore, based on the SNP’s own statements, in 2017 it is still “authoritative”, produced by the “Scottish Government”, and can be relied upon to describe the current state of "public finances in Scotland" with reasonable accuracy. This also makes it the only real baseline or "starting point" with which to start to describe the future public finances of an independent Scotland.
The reason for the campaign to discredit GERS is quite clear: “bad” GERS figures would undermine the case for independence, and the GERS figures are getting worse. Since independence “transcends” all else according to Nicola Sturgeon and many independence supporters, this will almost inevitably lead to an undermining of GERS if it shows bad economic figures for Scotland. Conversely, as soon as GERS shows “good” economic figures in the future, it will be supported again, by the very same people. This is a shell game, not a serious debate.
More seriously, if this undermining is allowed to get any traction, both the independence and unionist side of the debate will be irrevocably poisoned as there won’t be any baseline numbers to at least argue over, leading Nationalists and Unionists to completely talk past each other. Whoever wins “IndyRef2/ScotRef” (assuming it happens), there will be a much more divided country in dispute about the basic financial aspects of that country. That can’t be good for anyone.
The current SNP leadership is allowing this to happen by not stopping any of their MSPs or MPs from participating in the denial campaign, and it is hard to believe that their participation has gone unnoticed.
For Nationalists, this attitude demonstrates contempt for them, as many would still back independence even if it meant some economic problems.
For Unionists, defensively arguing about GERS takes up valuable time and effort from making a positive case for the Union. And that’s where the real debate will be won and lost. 🇬🇧
Bonus: 10 Questions for GERS Deniers
If you find yourself dealing with one of “The GERS Deniers”, I recommend a few questions. Enjoy!
- Why did the entire SNP vote to endorse GERS in Holyrood?
- Why haven’t the SNP retracted their support for GERS since?
- Why was GERS good enough for IndyRef1, but not good enough for IndyRef2?
- Did you ever say anything bad about GERS during IndyRef1? Why not?
- If there is something wrong with GERS, why aren’t the Scottish Government or the SNP doing anything about it?
- Are you happy the Scottish Government is using your tax money to produce misleading or “fake” figures that undermine the economic case for independence?
- Why would the SNP/Scottish Government produce figures that undermine their own economic case for independence?
- If the underlying data used in GERS provided by the Official of National Statistics is wrong, why doesn't Holyrood ask the UK Government or the ONS for better data?
- If you don’t agree with using GERS, what can be used instead?
- If "nothing" can be used, or we "just can't know", what is the basis for any statements about the economic position of Scotland after independence?