Thursday, 7 September 2017

Economic facts have become SNP's enemy

This piece originally appeared in the Daily Record on 07/09/2017


The reaction of the SNP and their pro-independence outriders to the latest Government Expenditure and Revenue Scotland (GERS) figures has laid bare the astonishing paucity of their economic arguments.

Unable to answer the obvious problems that the GERS figures highlight for those championing the break-up of the UK, they’ve resorted to trying to discredit their own figures. In case anybody’s forgotten: these are the figures on which they based their case for Independence, figures their own White Paper described as “a useful indication of the relative strength of Scotland’s public finances as part of the UK and a starting point for discussions of Scotland’s fiscal position following independence”. 

Now it seems the SNP want to deny this starting point.

Having once proudly boasted that they had Nobel Laureates championing their cause, the SNP now appear reduced to relying on the increasingly embarrassing contributions of accountant and tax specialist Professor Richard Murphy.

We should be more interested in what Murphy says than who he is, but given his penchant for self-aggrandisement it’s worth noting that he’s the man who was unceremoniously dumped as an advisor to Jeremy Corbyn’s Labour Party. John McDonnell publicly stated that Murphy “leaves a lot to be desired on macroeconomic policy”, to which he responded by suggesting that the Shadow Chancellor – a self-confessed fan of Karl Marx’s Das Kapital - was “all too willing to accept conventional neoliberal thinking”. Let’s be kind and just say that nobody can accuse Murphy of being guilty of conventional thinking.

Politically homeless, Murphy seems to have cast his eyes north and spotted a pro-independence movement bereft of ideas and desperate to find ways to distract from the simple facts shown in GERS.

GERS shows that the UK’s deficit is running at just 2.4% of GDP and, because Scotland voted No in 2014, that relatively healthy fiscal context determines Scotland’s ability to continue to sustain spending on vital public services.

By contrast, following the collapse in North Sea oil revenues, Scotland’s notional stand-alone deficit is 8.3%. The EU’s “excessive deficit” threshold is 3.0%, so even before considering the challenges of creating a currency and weathering the shock of separation from the UK single-market – a market objectively four times more important to Scotland than the EU - it’s clear that an independent Scotland wouldn’t be able to sustain the tax and spend levels described in GERS.

So economic facts have become the SNP’s enemy. Cue Professor Murphy, a man willing to say what desperate people want to hear if it gets him in the limelight. With the gay abandon of somebody unburdened by understanding, he’s set about casting aspersions on the Scottish Government Statisticians who compile the GERS figures and all those who use them.

He’s bumptiously asserted that the figures are “untrustworthy”, “rigged by Westminster”, “literally made up” and “nonsense”. Incredibly he’s even suggested that those using the GERS methodology are “risking the allegation of professional misconduct”. So that includes not only the Scottish Government’s Chief Economic Adviser’s team in St Andrews House and the ONS (who qualify the report as National Statistics), but presumably also those Nobel Laureats who relied on GERS when they sat on the SNP’s Fiscal Commission Working Group. Surely only the most desperate politician would lean on Professor Murphy’s transparently misguided proclamations for support?

Well it turns out there are quite a few desperate nationalist politicians. SNP MP Mhairi Black used a recent newspaper column to cite Professor Murphy as reason to dismiss her own government’s figures. A quick search of Twitter shows his blog rants have been promoted by SNP MSPs and MP’s including Joan McAlpine, Peter Grant, Chris Law, Gordon MacDonald, Christina McElvie and Richard Lyle1 .

If any of these politicians had bothered to dig past Murphy’s bluster, they’d see that his ill-informed opinions are based on a combination of technical misunderstandings, an inability to grasp the simple concept of materiality and his own failure to get his head around the figures.

There isn’t room here to indulge in the minutiae of Murphy’s technical points2.

Suffice to say he’s like somebody looking at a report into the Titanic disaster and complaining there isn’t enough information about the deck-chairs. We might not know precisely how the deck-chairs were arranged, but that’s just not a material issue.

Murphy’s wider argument is basically one of incredulity: he simply refuses to believe the GERS figures can be correct because he doesn’t understand them. He casually advertises his ignorance of how the figures are compiled by admitting to being continually bemused because he thinks the numbers are somehow “improbable”.

For those who’ve taken the time to study the GERS figures and the methodology behind them, there’s nothing bemusing or improbable about what they show. Scotland’s per capita deficit is much larger than the rest of the UK’s mainly because of higher spending.

Despite GERS-deniers’ determined attempts to obfuscate and misdirect, Scotland’s higher per capita spending has nothing to do with estimates or allocations. Nobody credibly disputes that we spend over £1,500 per person more on comparable public services in Scotland, a fact fully explained by the known actual figures in the table on this page3.


There isn’t necessarily anything inherently unfair about this either. Scotland has geographic, demographic and socio-economic characteristics which mean greater per capita spend is required to deliver equivalent services.

Whatever the likes of Murphy may claim, there’s nothing bemusing or improbable about the relative scale of Scotland’s deficit.

The pro-independence camp likes to suggest that the GERS figures show Scotland failing under the yoke of Westminster rule. In fact they show UK-wide sharing of resources allowing greater spending on public services in areas with greater economic need; only the most narrow-minded nationalist could see that as a failure.


************

1. Twitter promotion of Murphy by SNP MPs and MSPs





2. I've dealt with the latest technical points raised by Murphy here > Another Example of Murphy's Flaw

3. Past experience tells me that some people don't understand display rounding. Just for those people, here's the table displayed to 2 decimal places


17 comments:

John Miller said...

As ever, an impressive array of facts and fine analyses.

Unfortunately, this will have no effect on Murphy and his acolytes who have more respect for opinions - their own, of course - than facts and logic. This was why he was co-opted into the Labour executive, where he asserted that a Labour government need not worry about finances as they could just "create money out of thin air". Someone mentioned "Weimar Republic" and "Zimbabwe" and even McDonnellgrew tired of Murphy's arrogance.

So, given the fact that Murphy's opinions will carry the day, expect the next attack to rely on the Magic Money Tree.

Good luck.

Unknown said...

Gers is the foundation of the Scottish government's white paper on independence yet cybernats never flagged up that as a problem.

Graeme said...

Spud's latest response is hilarious both for its attention to moving the deckchairs and for its insistence that he is neutral in the debate. He doesn't realise that there is no debate and that he is clearly in the wrong or even deluded

theambler said...

Plainly, a party unwilling to accept their own inconvenient facts isn't fit to lead Scotland into independence. If GERS was substantially flawed, it would make a nonsense of their own independence White Paper from 2014. It was also mean that the Scottish deficit could be even worse than it is, since we would now have no basis to believe anything about the deficit. These are the implications of GERS denialism.

Anonymous said...

Now that Salmond is talking about EFTA membership instead of the EU, is there any position of the 2014 YES campaign that is still intact?

Drew said...

The GERS figures remind us annually of our failings in Scotland.

Our failure to tackle poverty, addiction (to alcohol, drugs, sugar, processed food, smoking and violence) which reduces our economic output, tax revenues and burdens public services by around £8-9 billion pounds every year, according to the Scottish Government statistics.

Those are some of the key reasons why we need much higher public spending than elsewhere in the UK. Drug-related deaths are the highest in Europe and the prisoner population is also amongst the highest in Europe (costing £30,000 per person per annum for existing prisoners and up to £70,000 for new ones by the time they are dealt with by the police & courts). Our life expectancy is lower than other UK nations.

We've had 20 years since we voted yes to devolution and all of those that have held ministerial office (Labour & the SNP and to a lesser extent the Lib Dems) have failed to make a serious dent in these issues.

Only the Scottish Tories can genuinely be absolved of blame. But they are so policy-light at the moment, time is running out to put forward a credible, costed alternative much before 2021. They seem incapable of finishing a sentence without waffling on about 'no to a second referendum' knowing full well their own party in London will never agree to another referendum anyway.

Both the smoking ban and same-sex marriage were brought in at Westminster level. So apart from free personal care for the elderly, perhaps the time is right to ask, what is the point of Holyrood, if all we are going to be served up is a timid version of what comes out of Westminster?





Anonymous said...

The indy campaign of 2014 now hangs round the necks of the SNP like an anvil. It is quite revealing that the objection to GERS authenticity is so muted among the leadership of the SNP, and is instead left to the Mhairi Black. There is a lot to like about Ms Black, parliament should have space for such a young, refreshing, passionate individual who really tries to argue from first principles against the stuffy structures of established power. IMO she is being used by the SNP to give a veneer of radicalism, a radicalism absent from their programme in government for the last decade. The voters will forgive Mhairi for her limitations in macro economic debates....but it will not be enough to save those across urban scotland who merely stonewall the facts, or the Swinney's and wisharts's of this world who say nothing and point to a flag. The tory mishandling of Brexit is now the only hope for the indy campaign, the snp have seriously shot their bolt.

John Silver said...

3 days and no one has corrected Drew's errors regarding smoking ban & same sex marriage being introduced by Westminster. Both are devolved and Scotland introduced the smoking ban before Westminster and same sex marriage after Westminster.
As for the rest of your post the root causes of all the other problems you list are so complex that it is difficult to pin the blame either on Westminster or Holyrood. That doesn't stop the most ardent advocates of their preferred system pinning all the blame on the other lot.
As to "what is the point of Holyrood?", the recent poll in the Sunday Times seems to indicate that most of us are reasonably satisfied with its performance. On top of free personal care you can add, abolition of the right to buy, land reform (albeit limited), free Uni education, free prescriptions, no bedroom tax, free eye tests and no doubt lots of stuff i have forgotten about. Some will no doubt question whether all of these are good things but they are things we have which we wouldn't have without devolution.

Drew said...

John

Apologies, what I was trying to say was that the smoking ban & same sex marriage were introduced by Westminster anyway, so my point is they are not distinct 'Scottish only' ideas. Had Holyrood not existed we would still benefit from them because Westminster introduced them at a UK level.

The general argument is that Holyrood was supposed to be different or more radical than Westminster. That's not to say it hasn't introduced some good legislation and policies but many of the policies you list benefit largely middle class voters (people on lower incomes didn't have to pay Uni fees or for prescriptions). I want to see poverty and inequality tackled.

The policies & legislation over land reform are encouraging but over a period of 20 years progress is slow.

The biggest, most radical achievement of devolution accross the UK has been the peace process in Northern Ireland (despite the current stalement around Stormont).

Critics of the SNP can't blame constitutional wrangling for a lack of progress because devolution hasn't help improve things drastically in Wales either, in terms of poverty or the economy.

Part of the problem is that Unionists were so terrified that devolution could give the SNP a platform (which it did anyway), prior to the Calmen Commission and the Smith Commission the tax powers were pretty limited.

Now we have more tax powers, the SNP seem too timid to use them.

Anonymous said...

What do you say to the ranting at wings regarding GERS: GERS is absolutely meaningless as a guide to the finances of an independent Scotland

Kevin Hague said...

I say the man's an idiot - to suggest the taxes we currently raise and the money we currently spend are *meaningless* as a starting point from which to discuss what an independent Scotland's finances might look like is self-evidently moronic

Michael Workman said...

Just out of curiousity, do you believe the Wings fella is actually mentally ill, or just a complete dick?

(Not that those are mutually exclusive options, of course)

Anonymous said...

Sorry I missed the link at the end of the wings page where he gets at you Kevin! You are apparently an angry, brittle egomaniac who flogs Whiskas! Coming from him it's rather a compliment!

Kevin Hague said...

I've no interest in what he says - but he's right that one of my businesses which employs 80 people in Scotland does (among other things) sell pet food - if the best he's got is ad hominem attacks based on his inability to read a set of accounts ... well says it all really

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David GREEN said...

Dear Kevin,

There are a couple of things you might care to note or comment upon.

The first is Moody's downgrade of the UK economy to Aa2. The Financial times notes, in passing, that the Scottish Government deficit is more than three times the UK deficit as a whole. I cannot access the article, but I assume this is in percentage terms. As you personally well know, the Scottish Government deficit is eye-watering, and only made possible by huge transfers from rUK. Independence, and an independent currency, would result in a blistering currency attack, and a credit rating of Aa2 would be something that only dreamers would suggest is possible. Which planet are Sturgeon and Salmond on? Answer: the same one as Theresa May, Boris Johnson, etc.

The second is Sturgeon's attitude to Catalonian independence. Apparently, it's OK because it represents self-determination for a people yearning to be free. But I am sure the Orkneys and Shetlands yearn to be free of Mrs Sturgeon. By extension, my family is a "people" yearning to be free. So where does this nonsense end? The complete atomisation of the nation state on the spurious grounds that it contains individuals who yearn to be free? Perhaps you could draw out from the SNP how a group north of Berwick, that is ethnically near identical to those south of Berwick, and who speak the same language, could possibly be said to be a "people" requiring independence. The only difference I have heard reliably reported is that the Scots still occasionally paint themselves with woad.

Drew said...

Interestingly the think tank Reform Scotland has called for a more accurate assessment of Scotland's public finances and has pointed out some data that is missing from GERS

https://reformscotland.com/2017/09/reform-scotland-scotlands-statistics-easy-politicise/

To my knowledge, they aren't partisan, with a cross-section of political figures represented on their Board including ex Labour MSP Tom Harris and Conservative MSP Derek Brownlee.

They don't say GERS isn't a fair reflection however. More that the picture as a whole is more complex than just the binary independence v remaining in the UK arguments.