The National:

IT is August, so GERS Day is coming. GERS is, of course, the Government Expenditure and Revenue Scotland statement that is, by convention, published by the Scottish Government near the end of August each year. Such is the controversy surrounding this publication that the day of its release now has its own name in the Scottish political lexicon.

For me GERS is special. It was when I realised just how deeply flawed it was as the basis for reporting Scottish government income and spending, let alone as a basis for making decisions about the Scottish economy, that I began to take a real interest in Scottish politics. I would like to say that I have not looked back since. What I can say with certainty is that GERS is no more useful now than it was when I first began to look at it. So, in advance of this year’s publication, and in the hope of informing debate when that happens, let's just look at some of those problems.

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First, GERS claims to "estimate the revenue raised in Scotland and the goods and services provided for the benefit of Scotland". So let’s start with the obvious problem. This is that this is estimated data. It’s not factual: although improvements have been made (eg income tax figures are now much more accurate than they were a few years ago) it is still true that substantial parts of GERS are straightforward guesses. So, the amount of VAT paid in Scotland is not known, and nor is the amount of corporation tax paid known. Nor is the amount of capital gains tax or inheritance tax. I could keep going. My point is simple: this data is not reliable.

Then, secondly, there is the problem the figure for tax raised is that, supposedly, collected in Scotland, whilst the figure for expenditure is that incurred for Scotland. These are not the same, at all. In particular, the expenditure for Scotland includes a great deal of money spent by the UK Government outside Scotland which it deems to be for the benefit of Scotland, but none of the tax paid as a result of that expenditure being incurred is ever credited to Scotland as a result. The consequence is that, inevitably, the figures for the deficit in England are flattered as a result, and those for Scotland are inflated. This is just bad accounting, and as someone who has been a qualified accountant for almost 40 years I think I can spot that by now.

Third is a hidden issue. This relates to the fact that a large amount of income that should, and would, be recorded in Scotland if it was to be an independent country is not recorded in Scotland because it is part of the United Kingdom. Much of this income that is missing from the records in the Scottish economy relates to rents, interest, insurance and other financial services products, representing expenditure by the people of Scotland for their benefit in Scotland but with the income recorded, most often, in London or the southeast of England where the companies to which the payment is made are located, meaning that the tax due is recorded as being paid there.

If Scotland was independent the tax due on all these payments would be settled in Scotland. So, if GERS was to be a proper record of tax due in Scotland then an adjustment should be made for this tax that is recorded in the wrong place, but that adjustment is not made. The result is another massive transfer of tax revenue out of Scotland and into England.

Add these three factors (there are more, but these three will do) together and GERS is a wholly unreliable representation of the tax that should be due in Scotland, let alone the actual expenditure that is incurred in Scotland. So, a deficit is always reported, because that is what the system was designed by the Tories in the 1990s to do and which it still does, despite some refinements since then.

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That leaves one massive question to ask, which is why, when it is so easy to show that this statement is so fundamentally flawed that I had to invent the term CRAP (standing for a Completely Rubbish APproximation) to describe it do the SNP still insist on publishing it? Given that GERS was designed to boost the Unionists cause, why after all their time in office are the SNP still playing the Unionist game? And why haven't they taken the criticism on board and estimated the true tax and spend position for Scotland, as it would be completely entitled to do?

I am baffled as to the SNP’s logic. But this coming GERS Day that is the question to ask, rather than getting obsessed about the numbers, which will be CRAP, whatever anyone wants to claim to the contrary.