The Government Expenditure and Revenue Scotland (GERS) annual report does not raise many laughs.
However, Nicola Sturgeon’s response to the latest figures was worth a wry chuckle. Faced with the undeniable reality of a £13.4 billion deficit, which would frighten even the Greeks, Ms Sturgeon, pictured right, bravely declared the Scottish economy to be “on the right trajectory” – leading, one wonders, to where?
The basis of this claim was that the deficit was down £1.1bn compared to the previous year (though slightly higher than two years ago, so the trajectory is a bit shoogly). All but £34 million of the 2017-18 net reduction came from one source – oil revenues.
Oil prices tend to rise when bad things happen – wars, terrorist attacks, sanctions inflicted by President Trump. How many such phenomena is Ms Sturgeon relying on to maintain “the right trajectory” for Scotland?
The GERS figures show that public expenditure per head of Scotland’s population ran last year at £1,576 more than the UK average and around £1,900 more than for people in England. These figures would be devastating for living standards and public services if ever translated into cuts and tax rises. We have some consensus on that point since the SNP’s own economic masterplan now accepts the validity of GERS as its starting-point. This is in contrast with the years of denigration which the authors of GERS were subjected to.
During the 2014 referendum, for instance, the GERS figures were described by the SNP front organisation, Business for Scotland, as “an accounting trick which hides Scotland’s wealth”. With this pretence abandoned in Andrew Wilson’s report, we should hear no more such nonsense. In that positive spirit, there was something in Nicola Sturgeon’s remarks with which I heartily agreed, if not quite from the same perspective. “The notion that Scotland is somehow subsidised,” she declared, “simply does not stand up to scrutiny.”
This is my own view entirely. Higher levels of public expenditure do not equate to “subsidy” but who ever said that they did? For many years, the fact there was higher public spending in Scotland than in the UK as a whole was non-contentious, on the basis of need not “subsidy”. It was so non-contentious, in fact, that it was codified 40 years ago as the Barnett Formula which ensured the differential would be maintained. Nobody spoke then of “subsidy” and it is entirely due to the re-alignment of Scottish politics along constitutional lines that this terminology was introduced, in order for it to be disputed and denied.
The last thing I would ever expect to hear from Ms Sturgeon or her associates is a word of appreciation for those Scottish politicians who, in the past, established the “needs case” for the differential or worked within government to defend it, even when times for the UK economy as a whole were very tough. Of course, the differential was carried over into the budget for the Scottish Parliament when it was established which means Holyrood has been exceptionally well-funded ever since – not on the basis of “subsidy” but as fair recognition within the UK of our geography, demography and social needs.
The real battleground of Scottish politics should be about how that differential is spent because that is where political priorities are reflected. Yet this crucial aspect of the comparative statistics is hardly ever discussed.
For example, Scotland spends £157 more per head of population on health than the UK as a whole. That does not seem to me a lot – a mere ten per cent of the overall differential. It would be astonishing if we did not spend more on the NHS – the real question is not why it is so much but why it is so little. Now that we have dispensed with the non-debate about the validity of GERS, it is time to blow away the smoke and mirrors to focus on how our needs-based extra money is spent. Would the answers really reflect the distinctive Scottish conditions which were used to justify the differential in the first place? That’s a political debate worth having.