GERS estimates the contribution of public sector revenue raised in Scotland toward the public sector goods and services provided for the benefit of Scotland.
The estimates typically cause significant controversy.
These arguments are not going to go away, but the GERS figures present the most reasonable approximation to help us understand the nature and extent of public spending and revenue in Scotland in the latest financial year.
The GERS report shows a net fiscal balance in Scotland, including a geographical share of North Sea oil, of -£12.6bn or –7 per cent of Scottish GDP for 2018-19. This compares with a UK balance of -£23.5bn or –1.1% of UK GDP.
This is an improvement on the figures for 2017/18. when Scotland’s net fiscal balance was -8.1%. This improvement has been driven by a larger increase in revenues per head than expenditure per head - also reflected at the UK level.
READ MORE: Scottish deficit record six times bigger than UK's last year
Most of the coverage will concentrate on the headline numbers and what they mean for the independence debate.
However, there are also some interesting implications from the increased devolution of powers to Holyrood.
New data from HMRC in the last two years has indicated that the number of higher and additional rate income taxpayers in Scotland is lower than was previously estimated.
This has now been reflected in the most recent years of the GERS figures, leading to a worsening of the income tax revenue figures and in turn the net fiscal balance for 2016/17 and 2017/18 in particular.
Interestingly though this data have not been used to adjust earlier years of the GERS estimates. These revisions also feed through to weakening National Insurance Contributions.
These revisions have been offset somewhat by upward revisions to VAT data. A new model has been developed by HMRC as part of the proposed assignment of VAT to the Scottish Budget. Although the approach is similar to previous estimates produced for GERS, it is giving slightly higher estimates of Scottish VAT.
Some of the issues with this model, including the potential volatility of the results, has led to the Scottish Government requesting a delay to the implementation of VAT assignment.
READ MORE: Nicola Sturgeon slated for GERS no-show despite flurry of Fringe events
Overall, Scottish onshore revenues remain at 7.8% of the UK, similar to last year.
GERS is a statistical publication produced by the Scottish Government.
It contains some elements which are estimated, but that does not mean it should be discredited.
Altering any assumption made does not really change the overall picture.
It is always important to remember that GERS takes the current structure of UK Government reserved taxation and spending as given. If the very purpose of independence is to take different choices about the type of economy and society that we live in, then a set of accounts based upon the current constitutional settlement and policy priorities will tell us little about the long-term finances of an independent Scotland.
But GERS does provide a pretty accurate picture of where Scotland is in 2019 and a starting point for debate about the choices and challenges that need to be addressed by those advocating new fiscal arrangements.
Mairi Spowage is Deputy Director of the Fraser of Allander Institute, University of Strathclyde
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel