GERS is wrong – again!

Taking away some of the bias from the GERS report – why the truth matters!


Extract from the report summary:

I am trained as an auditor. The first thing I do when looking at any data is to make sure that it looks credible. Bluntly, and as ever, the data for 2021 within GERS looks to be wrong on both income (understated) and expenditure (heavily overstated).

But let’s also look at what the auditor also asks, which is does this data first the need of the user? Here the GERS document says:

What Questions Does GERS Address?

GERS addresses three questions about Scotland’s public sector accounts for a given year:

  1. What revenues were raised in Scotland?
  2. How much did the country pay for the public services that were consumed?
  3. To what extent did the revenues raised cover the costs of these public services?

So, are the questions answered is what I have to ask?

With regard to question 1, the answer is we simply do not know: we do not know that Scotland’s taxable income is fairly stated and we have no clue of what proportion of some tax were paid in Scotland. So the data on revenues is likely to be wrong.

With regard to 2, the data is just wrong. That’s not just because the data estimates look wrong but also because of something else that is very important. In 2020/21 about £300 billion of the costs of public services in the UK as a whole were not paid for out of taxes. They were paid for by quantitative easing. There is not a single mention of this in the GERS document. But what that means is that actually total spending out of taxes was not £1,094,000 milli0n as the above data implies. They were actually about £800,000 million, or £800 billion. That QE is never going to be cancelled whatever the Bank of England says. In that case, the question asked is the wrong one: the UK did not pay with taxes for all the spend incurred so why should it be claimed that Scotland must?

And as a result the equation supposedly implicit in the third question is a false one.

The data in GERS is unfit for purpose. It is very likely wrong. And it does not answer any fair question that can be posed about the actions of any government of Scotland.  All we need to do is keep pointing that out in that case.

And keep asking that the Scottish government do better. I remain baffled as to why they do not want to do so.

Link to the report