Why Wings is wrong five times over on GERS

Wings used to love GERS, it "provides empirical evidence that Scotland can afford to look after itself" or Stu himself quoting with no equivocation "Scotland paid £4.3 billion to the rest of the UK".

This goes alongside the general nationalist movement which used to quote the GERS figures as a matter of fact, if it was in the GERS figures you must know it as fact. 

However some nationalists - including Wings - started to see the writing on the wall with the fall in the oil price, knowing full well that oil was anything but a bonus in Scotland but essential to get close to paying for Scotland's higher public spending. This then started a series of articles knocking GERS based on nothing but fantasy. 

From this attempt to rewrite history we get some wonderful nationalists myths - whisky export duty, VAT is payable on based on head office location, the cost of the Olympics and English only infrastructure projects are in GERS as Scottish expenditure. These have been comprehensively dealt with by Kevin Hague (start here then look here) so I'm not about to repeat them. 

However in an attempt to give his followers and useful idiot crowdfunders some shorthand methods of knocking the very figures he used to state as fact Stu produced his 5 facts about GERS. 

As usual Stu can't even get that right - his 5 facts are actually 4 facts with the last two just the same fact stated in a different way. I guess he didn't think 4 facts sounded comprehensive enough. 

Let's look at each fact in turn. 

FACT 1 

"GERS is a really, really terrible advertisement for the Union.

A quite bizarre starting "fact" for someone arguing that GERS is unreliable to then have the basis of the first "fact" reliance on the numbers! Let's put that aside as it's all part of the muddled up logic you get used to when you debate with ultra nationalists. 

So the basis of this argument is that "if the economy is a mess" then it happened under the UK's watch. But this is a false supposition. Who says the Scottish economy is in a mess? Like "too wee, too poor" this seems to be a nationalist claim rather than a unionist one. 

As I show here Scotland is in a far healthier position in respect of tax revenue (even ignoring oil) than most comparable parts of England, Wales or Northern Ireland. Indeed in respect of tax revenue Scotland is one of the power houses of the UK economy. As Wings says himself, all this has happened under the UK's watch! 

The issue for Scotland though is that due to it's sparse population the costs of providing public services are far higher than the densely populated England (see here). Therefore whilst tax revenue is higher than many areas of England spending is also much higher. It's this difference that causes our higher deficit and requires the fiscal transfer from the UK. The fiscal transfer that GERS shows us. 

FACT 2

"GERS was deliberately designed from the outset by the UK government to make Scotland (and the non-Tory parties) look bad."

This is based on the fact that Ian Lang, then Scottish Secretary, who set up GERS stated that the purpose was to undermine the case for nationalism. Quite true, there is no denying that was one of the intentions. However does that mean GERS can no longer be trusted? Well it can't mean that otherwise why would Stu et al have been happily quoting GERS without equivocation in 2012?

Many of those who criticised GERS, such as Wings favourite "economists" the Cuthberts added to this point and attacked what they perceived as the bias in GERS from the Ian Lang days through to the early part of the SNP administration. 

All fair enough, however when the SNP came to power they comprehensively revised the GERS methodology. much to the Cuthbert's approval:

"Overall, therefore, GERS has been much improved through its recent extensive review."

At this point any nationalist schooled in the Wings train of thought would be screaming that the Cuthberts then go on to critique GERS. But they don't, again if you read it they critique the use of GERS, the debate surrounding it and call for further work to be done on private capital flows, to help an future potential independent Scottish Government work out what room it has for future tax changes. 

This is all perfectly reasonable, however it's not a critique of the GERS methodology or the numbers. 

Indeed in 2012 the Cuthberts explicitly endorsed GERS and used it as a factual statement of Scotland's finances in a letter to the Economist. 

So yes GERS was started by Ian Lang, but since then it has been comprehensively revised by the SNP, to the satisfaction of Wings favourite "economists", the Wings crew themselves and the SNP. 

Indeed in the case of the latter GERS was so authoritative that the White Paper for independence was based on them. If GERS was designed to make Scotland look bad then it was doing a spectacularly bad job of it as far as the SNP, Wings and the Cuthberts were concerned up the point of the independence referendum. 

But then Stu changed his mind and tried to rewrite history.

FACT 3

"The “£15bn black hole” in GERS screamed across every newspaper this week is a fallacy, because the target balance of a government is not zero."

Stu hopes to reposition the GERS argument here by saying that GERS shows the Scottish deficit and all countries have deficits. So what's the problem? It's a useful piece of framing and a good debating trick but you only need the attention span of a ten year old to see what is happening here. 

This isn't an attack on GERS itself - so it's not actually a fact about GERS, but we'll let that slide - it's an attack on the conclusions of GERS. The trouble is that what GERS is showing as a problem for independence is not the fact of the Scottish deficit but the fiscal transfer. I explain the difference between the two here. The argument is not Scotland has a massive deficit and therefore cannot survive, but that GERS shows the significant loss the fiscal transfer from the UK to Scotland (about £9bn a year) on independence. 

Stu just tries to sidestep the issue by pretending that a deficit is something that is perfectly normal, but doesn't want to address the point that GERS shows independence will involve some very tough decisions. I can understand why he'd want to duck that issue unfortunately he just runs straight back into the issue on the next "fact"

FACT 4 

"GERS – by the universal agreement of everyone except Unionist politicians and the Scottish media – has no bearing whatsoever on the finances of an independent Scotland."

A wonderful flourish of absurd logic here. This fact is universally agreed, except by the people who disagree with it! That's like me saying everyone agreed that I'm far better looking that George Clooney as long everyone is classed as my mum. 

So let's ignore the flourish and concentrate on the statement, GERS has no bearing whatsoever on the finances of an independent Scotland. That "fact" is just simply wrong. GERS shows us the starting point for an independent Scotland, I go through this in detail here. It is absolutely the case that the day one tax, borrowing and public spending of an independent Scotland will not be as set out in GERS, it cant be because we would lose the fiscal transfer. But what it does show us is how much we would need to find on independence. 

Finding £9bn in annual income or spending cuts is not is not a trivial amount, it would be a huge challenge for a newly independent Scotland in its first budget. That's what GERS tells us. To say that has no bearing on the finances of an independent Scotland is laughable. But you are probably getting that impression about most of the "facts" that Stu quotes. 

 

FACT 4 again (but Stu calls it 5) 

"GERS is also totally irrelevant in the context of independence for a second crucial reason – the entire point of independence is to NOT keep doing everything in Scotland the same way it’s been done in the UK.

Stu then makes the same point again. An independent Scotland would so things differently. Yes, the point is that due to the loss of the fiscal transfer some things would have to be done differently.  

The trouble is, and Stu seems to forget this, moving tax and spending around does not generate new money. 

The idea that this "fact" somehow argues against GERS is laughable. It's just a very poor debating device to give the impression of addressing the issue that GERS raises whilst doing anything but. 

Again the point behind GERS is very simple. To stand still you need to find £9bn. Show us how you'd do that and then by all means tell us everything else you'd do differently. 

If you can't answer this point then you've just put up 5 (well 4) facts about GERS but singularly failed to address the fundamental issue it raises, and if that's you then as Stu himself says "y'know, that'd make you a bit of an idiot."