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GERS figures show why Scotland needs to be independent, Kate Forbes says

Kate Forbes - Image credit: Anna Moffat/Holyrood

GERS figures show why Scotland needs to be independent, Kate Forbes says

The Government Expenditure and Revenue Scotland (GERS) figures show why Scotland needs to be independent, finance secretary Kate Forbes has claimed.

Scotland’s notional deficit rose to 8.6 per cent of GDP in 2019-20, up from 7.4 per cent the previous year, the latest GERS figures show. Excluding North Sea oil revenue, the deficit was 9.4 per cent of GDP.

At a briefing on the newly published figures for 2019-20, Forbes said they showed that the current constitutional settlement is “unsustainable”.

“Based on these figures nobody can or should defend the status quo… Scotland cannot afford not to have the powers of a normal, independent country,” she said.

The UK Government said the figures showed how Scotland benefited from being part of a “strong United Kingdom”.

Estimated public expenditure in Scotland in 2019-20 was £1,633 higher than the UK average, while estimated revenue per person was £308 lower than the UK average.

Non-North Sea revenue in Scotland grew by 1.7 per cent in 2019-20 and income tax receipts grew by 1.5 per cent.

Although Scotland’s estimated overall revenues increased to a record £65.9bn, both the Scottish and UK governments also increased their spending in response to the coronavirus outbreak, which began in the final month of the figures.

The GERS figures are a notional picture of the current state of Scotland’s finances because they include an estimate of the revenue raised from Scotland by UK-wide taxes and an allocation of UK Government spending on reserved matters as well as money raised and spent directly in Scotland by the Scottish Government.

Around 40 per cent of spending and 70 per cent of revenue in the GERS figures relates to areas reserved to the UK Government.

Forbes noted in her briefing that if the Scottish Government had more fiscal powers including the ability to borrow money, it would be able to make different decisions, such as extending the furlough scheme.

“Nobody should be content looking at these figures that this is best it could be,” she said.

Challenged on whether the economic position if Scotland were to become independent was better or worse than in 2014, Forbes said the need for independence was more “acutely visible” than ever before and the figures were a “reason for change”, although it was noted that in 2012, when the figures were more positive, Nicola Sturgeon had also said they were a reason to support indendence.

Commenting on the figures, Forbes said: “The Scottish Government has responded swiftly to the challenges of COVID-19 and has worked hard to protect Scotland’s economy, providing over £2.3 billion of support to businesses.

“The public finances were already facing challenges this year due to the uncertainty caused by Brexit.

“We are now witnessing an unprecedented health and economic crisis.

“Countries across the world, including the UK, have increased borrowing to record levels and, as we emerge from the pandemic, high fiscal deficits will inevitably be one of the consequences.

“That is why the UK Government should prioritise economic stimulus over austerity.

“I will also continue to press for the Scottish Government to be granted additional financial powers to enable us to tailor a response that meets Scotland’s needs.

“Scotland, unlike most other countries around the world, large and small, does not currently have the full financial powers needed to chart a way to sustainable recovery from the economic impact of the pandemic.

“The current situation, with the looming withdrawal of furlough support by the UK Government, means it is now more urgent than ever that we gain those powers.

“Despite the pandemic, and the economic problems that inevitably will arise at the end of the Brexit transition period, we are determined that Scotland should emerge with a stronger, fairer, greener, and more resilient economy.

“We continue to invest to protect and create jobs, support businesses and strengthen communities, but our ability to do that is constrained by our lack of borrowing powers.

“It is important to stress that 40 per cent of spending and 70 per cent of revenue income in GERS, combined with key powers over the economy, are reserved to the UK Government and outside the control of the Scottish Government.

“An independent Scotland would have the power to make different choices, with different economic budgetary results.”

Scottish Secretary Alister Jack said: “The Scottish Government’s own figures show clearly how much Scotland benefits from being part of a strong United Kingdom, with the pooling and sharing of resources that brings.

“People in Scotland, year after year, benefit from levels of public spending substantially above the United Kingdom average, with a Union dividend of £1,941 per person in Scotland.

“That has never been more important than it is right now.

“In the face of a global pandemic, the strength and experience of the UK Treasury is helping people in Scotland and across the rest of the United Kingdom.

“The UK Government is currently supporting more than 930,000 jobs in Scotland – a third of the workforce.

“This is just one part of a huge package of measures to get our economy back on track, on top of an extra £6.5 billion for the Scottish Government to fund public services in Scotland.

“We will continue to back all parts of the UK as we recover from the economic impact of coronavirus.”

Labour warned that the figures showed an independent Scotland would face years of “savage and unrelenting austerity”.

Scottish Labour leader Richard Leonard said: “The coronavirus pandemic is a public health emergency, but it has also plunged the Scottish and UK economies into the biggest freefall for three hundred years.

“The Scottish and UK governments need to co-operate to restart the economy and to retain, guarantee and create jobs, and to remobilise our public services.

“These statistics show that Scotland’s deficit has increased in size even before the impact of the economic ramifications of the pandemic are felt.

“With billions draining from the Scottish economy in the event of separation, Scotland would be thrust into years of savage and unrelenting austerity.

“We cannot let a generation be lost to austerity caused by the pandemic or the creation of a separate Scottish state.”

The Scottish Greens said it was a mistake to keep focusing on the deficit.

Scottish Greens co-leader Patrick Harvie said: “Both sides of the constitutional debate try to seize on the annual GERS figures, but this is an unhelpful fixation on figures that don’t mean very much.

“GERS tells us little about what an independent Scotland’s finances would be like, or even about the finances of the devolved Scottish Government we have today.

“They are also wildly out of date because they do not reflect the impact of the COVID crisis

“In fact, we now face a triple economic crisis of COVID, Brexit and the climate emergency, and it is dangerous to keep a narrow focus on reducing the deficit, especially when this approach has already led to rising child poverty and record levels of hunger and homelessness in the guise of austerity.

“Now more than ever we need to ditch the failed old economics that has forced people into poverty and done such profound damage to our planet.

“Unlike the SNP’s Growth Commission, which would continue this austerity-driven race to the bottom with the rest of the UK, the Scottish Greens believe independence must come with a determination to build a future for all in a new greener Scotland.”

Scottish Liberal Democrat spokesperson Wendy Chamberlain said: “The human cost of the coronavirus has been heart breaking and the financial cost has been eye watering.  

“It has wreaked havoc on economies across the world, stifled productivity and caused unemployment to skyrocket. What we’ve seen in the UK is we’re stronger when we pull together.   

“Protecting people’s jobs and keeping the nation safe has come at an unrivalled cost.

“The broad shoulders of the UK economy and our central bank have helped us do that.  

“It’s the warm jacket of the United Kingdom that has kept, and will continue to keep, public service spending going through the bitter economic chill of this crisis.  

“These numbers from before the crisis really drive home just how economically valuable the partnership across these isles is.”

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