THE annual Government Expenditure and Revenue Scotland (GERS) report has long been a key battleground in the debate on Scottish independence.
The statistics published by the Scottish Government estimate the difference between what Scotland raises in taxation and what is spent on public services.
It invariably brings pronouncements from pro-Union supporters and politicians about how they show the “huge benefits” of the UK – claiming Scotland can only afford the levels of public spending because it is in the UK.
But those from the Yes side argue they cannot be taken as a starting point for an independent Scotland or be used to show the direction of Scotland’s finances once it leaves the UK, which would ultimately depend on the policies followed and how debt and assets are divided up.
Economists at Strathclyde University’s Fraser of Allander Institute say that claims on both sides of the argument can often be based in misinterpretations of how the statistics are produced and presented.
For example, they argue it is wrong to dismiss the figures because they partly rely on estimation – which is a common practice in economic statistics.
However in a guide published on the issue, the economists emphasise that GERS reflects the position under the current constitutional settlement - rather than looking at potential scenarios under independence.
“It is a backward-looking estimate of spending and revenues in the previous financial year,” it states.
“This means that if an independent Scotland would bring about structural changes to the economy and society, the figures in GERS say little about the long-term finances of an independent Scotland.”
The post goes on: “The possible financial costs and risks, or savings and opportunities, of implementing a new constitutional framework are, naturally, not considered in GERS.
“Similarly, it does not report on the effects of faster or slower economic growth in an independent Scotland.
“An independent Scotland would also be subject to new macroeconomic risks and opportunities that would have to be managed.
“The role of GERS is not to estimate the impact on Scotland’s public finances of such changes.”
So while GERS cannot really tell us anything about a future independent Scotland, they can be useful as a starting point for discussion about public finances.
One example of this is that it was used by the SNP’s Growth Commission to help draw up its blueprint for the finances of an independent Scotland.
