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Dodgy Data #2: Scotland’s Deficit

Written by on 20th January 2020

On the live show, we have begun highlighting some of the misinformation, spin, fake news and dodgy data about Scotland that plagues the news & social media. Our first example was last week and was about A&E statistics. You can find that here.

This week’s dodgy data was picked up from a tweet by a certain Jim Murphy. Remember him? Briefly, he was leader of the Scottish Labour Party. Last week he tweeted about a presentation he’d given to the Foreign Press Association:

Not surprisingly, he’s not predicting Scottish independence any time soon. What caught my eye was this slide in his presentation:

So first of all, everything in this slide is taken from the Government Expenditure and Revenue Scotland 2019 figures (GERS). He’s not perpetrating false data. (Let’s leave aside for the moment how true/false the GERS figures are as a whole. Famously the tax & political economy expert Richard Murphy (no relation) calls them CRAp = Completely Rubbish Approximation to the truth.)

But Jim Murphy is taking advantage of the phrase “public spending in Scotland” giving the impression that £73.5billion was spent in Scotland; and that we’re living beyond our means by £12.6billion. That’s what caught my eye. Because if you download the actual GERS figures what you discover is this:

Spending 2018-2019£ billions
By ScotGov, Scottish Local Authorities, &
Scottish Public Corporations
By UKGov (on Scotland’s behalf)30.6

Now more than half of that £30 billion spent by Westminster departments is for “Social Protection” as it’s called in GERS, in other words it’s DWP spending for Scottish State Pensions, disability benefits, tax credits, universal credit, etc. All of that spending will have to be borne by ScotGov directly after independence so it’s a fair inclusion in GERS and it’s fair enough to describe it as ‘public spending’.

But what about the rest of the £30billion of UKGov kindly spends on our behalf? Here is the breakdown:

  • Blue = ScotGov, etc direct spending.
  • Purple = UKGov spending on our behalf.
  • I’ve left out the social protection total spend of £24billion because it’s so much bigger than the other kinds of spending that it skews the graph.
GERS2019: Expenditure breakdown

Four UKGov items stand out to my eye:

  • Debt Interest and Defence are both over £3billion.
  • There’s almost £1billion for International Services (ie embassies, etc).
  • And there’s a transport item of £1.3billion.
  • Those four add up to £8.7billion. Let’s take them one by one:

Defence £3.3billion. In Ireland the 2020 defence budget was £1billion. So it seems reasonable to think that we’d save £2billion in defence spending by being independent.

International Services £989million compared to Ireland’s 2020 budget of £821million. So another £160million saved there.

Transport £1.3 billion. Hard to know if this is reasonable or not. It’s in addition to nearly £2.5billion spend on transport directly by ScotGov so it’s tempting to think it pays for English infrastructure projects like London Crossrail and High Speed Rail. Really I don’t know. But Ireland’s budget for 2020 was £2.7billion for Transport and related items. So maybe another £1billion to be saved there.

Debt £3.1billion. This our share of interest payments on the UK Public Sector Debt. I have no idea of what kind of debt might accrue to us after independence. But I’ve had a look at another similar sized nation and economy: Finland’s interest payments are currently the same amount at £3.1billion. Ireland’s are even higher at £5billion.

Then I noticed a few other things in this years’s GERS. We have 8% of the population of the UK. And OK, for Debt, Defence and International Services we’re paying 8% of the UK total. But we’re paying 13% of the total for Public & Common Services and 12% of the total for Transport.

So I’ve done a quick readjustment of GERS like this:

Spending / billionsGERSMY GERS
Defence £3.3 Billion£1 billion
Interest on Debt£3.1 billion£3.1 billion
International Services£989 million£821 million
Transport adjust to 8%£3.8 billion£2.5 billion
Public/Common Services adjust to 8%£1.7 billion£1 billion
Total£12.89 billion£8.4 billion

Look I’m no economist or statistician, but I think these MY GERS figures are reasonable. And I’ve just decreased the alleged “Public Spending in Scotland” total by £4.5 billion. That brings the deficit down by almost a third.

And if I can do these sums, so can Jim Murphy. I dare say he would make different assumptions and no doubt would end up with a different set of numbers. But the point is when GERS figures are unpacked, numerous questions arise about how Scotland’s money is allegedly spent.

The Scottish economy is going to figure crucially in IndyRef2. Those of us on the Yes side of the campaign need to get ourselves acquainted with these sorts of basic questions to raise about GERS. Because there is going to be a lot of media noise about us being bankrupt.

And just for fun, here is Jim Murphy’s famous ‘fundily mundily’ moment in the Scottish Leaders’ Debate in 2015.