ast year Scotland’s public spending deficit decreased to £19.1 billion, partly as a result of higher oil and gas income.
The year before, the gap had been £23.7 billion; however, the current figure is more than it was before the pandemic. The assessment came from the annual Government Expenditure and Revenue Scotland (Gers) report, which examines taxes collected in Scotland and public spending for and on behalf of the nation.
At 9.0 per cent of Scotland’s GDP, the deficit is above the UK’s 5.2 per cent deficit. The Gers research noted that Scotland will receive a “geographical share” of North Sea oil and gas earnings in 2022–2033. Following the implementation of the windfall tax, that sum increased to £9.4 billion from £2.4 billion the previous year.
According to the analysis, the deficit would have been £28.5 billion had North Sea revenue not been taken into account.
What is Gers?
The annual report estimates the difference between what Scotland raises in taxation and other income and what is spent on its public services.
Gers was first released in 1992 under the Conservative administration of John Major. Ministers in the Scotland Office thought the data would support their argument against devolution since it showed how dependent Scotland was on the UK Treasury.
How is Gers calculated?
The Fraser of Allander Institute has made an effort to describe how statisticians from the Scottish government compile Gers.
It noted that although data on the spending side of the equation is not gathered, some UK spending is proportionally distributed to Scotland.
Scottish and local government services, as well as UK social payments and Scottish pensions, make up the overall expenditure. Additionally, it includes expenditures by the UK government in Scotland that are not subject to devolution, such as defence, and it allots a share of the UK’s interest payments to Scotland.
There have been accusations that the data used for revenues must be approximated from UK statistics because it is not gathered for Scotland.
With Scottish income tax, council tax, company rates, Scottish Water profits, landfill tax, land and building transactions tax and local authority user charges and fees included, this has become less of a problem in recent years.
Estimation is required for several other revenues, especially those gathered by HMRC.
Why does it cause controversy?
Since they are now involved in the independence discussion, the interpretation of what the figures imply is a point of contention for both sides.
The statistics were acknowledged by the Growth Commission of the SNP as a possible starting point for the financial situation of an independent Scotland.
Gers has been used by proponents of the union to argue that Scotland’s high level of government spending is only possible because it is a part of the UK.
Who produces the report?
The Scottish Government’s statisticians have produced the data since 1999. But because Gers is a publication of the National Statistics, it is evaluated independently and created without the influence of politics.
The annual publication of national data examines: Public spending for and on behalf of Scotland, again for both devolved and reserved powers; revenues raised in Scotland from both devolved and reserved taxation; and the difference between the two figures, known as the “net fiscal balance” and frequently referred to as the “deficit”.