{"id":8928,"date":"2019-08-22T07:13:36","date_gmt":"2019-08-22T07:13:36","guid":{"rendered":"https:\/\/sceptical.scot\/staging\/?p=8928"},"modified":"2026-04-18T19:34:31","modified_gmt":"2026-04-18T19:34:31","slug":"gers-2019","status":"publish","type":"post","link":"https:\/\/sceptical.scot\/staging\/2019\/08\/gers-2019\/","title":{"rendered":"GERS 2019….Days 1 and 2"},"content":{"rendered":"\n

The GERS report shows a net fiscal balance (including a geographical share of North Sea oil) in Scotland of -\u00a312.6bn or \u20137.0% of Scottish GDP for 2018-19. This compares with a UK balance of -\u00a323.5bn or \u20131.1% of UK GDP.<\/strong><\/p>\n\n\n\n

This is an improvement on the figures for 2017-18 when Scotland\u2019s net fiscal balance was -8.1%. This improvement has been driven by a larger increase in revenues per head than expenditure per head, which is also largely reflected at the UK level.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

How\ndoes this link to devolved powers?<\/em><\/h2>\n\n\n\n

Most of the today\u2019s\ncoverage will concentrate on the headline numbers and what this all means for\nthe independence debate.<\/p>\n\n\n\n

However, there are\nalso some interesting implications from the increased devolution of powers to\nthe Scottish Parliament. As we flagged in our blog<\/a> last week, new data from HMRC is the\nlast two years has indicated that the number of higher and additional rate\nincome taxpayers in Scotland is lower than was previously estimated using\nsurvey data.<\/p>\n\n\n\n

This has now been reflected in the most recent years of the GERS figures, leading to a worsening of the income tax revenue figures and in turn the net fiscal balance for 2016-17 and 2017-18 in particular. Interestingly though, this data has not been used to adjust earlier years of the GERS estimates. These revisions also feed through to weakening National Insurance Contributions.<\/p>\n\n\n\n

These revisions have been offset somewhat to upward revisions of VAT data. A new model has been developed by HMRC as part of the proposed assignment of VAT to the Scottish Budget. Although the approach is similar to previous estimates produced for GERS, it is giving slightly higher estimates of Scottish VAT. Some of the issues with this model, including the potential volality of the results, has led to the Scottish Government requesting a delay to the implementation of VAT assignment<\/a>.<\/p>\n\n\n\n

All of these issues\nare discussed in boxes 1.1 and 1.2 of GERS.<\/p>\n\n\n\n

Overall, Scottish\nonshore revenues remain at 7.8% of the UK, similar to last year.<\/p>\n\n\n\n

Final\nthoughts<\/em><\/h2>\n\n\n\n

GERS is an annual\npublication that sparks off a debate about Scotland\u2019s public finances. As we\nsay regularly in our blog<\/a>s: it is a statistical publication\nproduced by the Scottish Government; it contains some elements which are\nestimated but that does not mean it should be discredited; and altering any\nassumption made does not really change the overall picture.<\/p>\n\n\n\n

It is always\nimportant to remember that GERS takes the current structure of UK Government\nreserved taxation and spending as given. If the very purpose of independence is\nto take different choices about the type of economy and society that we live\nin, then a set of accounts based upon the current constitutional settlement and\npolicy priorities will tell us little about the long-term<\/em> finances\nof an independent Scotland.<\/p>\n\n\n\n

But GERS does provide a pretty accurate picture of where Scotland is in 2019. So in doing so, today\u2019s numbers set the starting point for a discussion about the immediate choices and challenges that need to be addressed by those advocating new fiscal arrangements.<\/p>\n\n\n\n

First published by the Fraser of Allander Institute<\/a><\/em><\/p>\n\n\n\n

Some more thoughts<\/h2>\n\n\n\n

Every year when GERS is published,\nthere is a new angle that seems to gain traction and ignite a debate about the\naccuracy of the figures.<\/p>\n\n\n\n

This year\u2019s is a rather misguided\ninterpretation of the notional net fiscal balance produced in GERS.<\/p>\n\n\n\n

These have been variations on:<\/p>\n\n\n\n