Sturgeon goes AWOL as GERS report discredits independence

First, a missing person announcement: missing since 20 August, from her home in Bute House, Edinburgh, Nicola Ferguson Sturgeon (49), First Minister of Scotland. The First Minister had been expected to attend the publication on 21 August of the annual GERS report, as she has done every year since 2014 but, despite recent attendances at Edinburgh Festival Fringe events, failed to put in an appearance. In her absence the GERS statement was launched by Scottish finance secretary Derek Mackay.

Early reports suggest Sturgeon has been sighted in Shetland, the most distant location from the GERS unveiling short of Greenland, to which she was unlikely to repair for fear it had already been occupied by Donald Trump. The First Minister allegedly felt it her duty to assist the SNP candidate in a Holyrood by-election on Shetland. But she has visited there twice already, the SNP trailed the Liberal Democrats by 44 per cent at the last election and polling is not until 29 August, making it unclear why Sturgeon felt it necessary to go there again instead of basking in the glory of the GERS report.

Sturgeon’s detractors suggest she might have felt slightly uncomfortable with the statistics revealed in GERS, which are now in the public domain. The annual Government and Expenditure Scotland (GERS) relates solely to public-sector finances. It is therefore not a snapshot of the economy but of what strong free-marketeers would regard as the drag chain on the enterprise economy, Scotland’s voracious public sector.

In political terms, the embarrassment of these figures for Sturgeon and the SNP lies not in the stubborn persistence of a dependency culture north of the Border – Scottish radicals glory in that tradition – but in their exposure of the total unreality of aspirations to Scottish independence. The headline figures are sufficient to provide any Unionist with an unassailable case and, more importantly from the separatist viewpoint, to persuade any EU official within sixty seconds of the non-viability of an independent Scotland as an applicant for European Union membership.

The Scottish deficit fell from £13.8bn to £12.6bn. “Further improvement in Scotland’s public finances,” cheered the BBC. But that £12.6bn represents 7 per cent of GDP; the UK’s deficit is 1.1 per cent of GDP. The £12.6bn equates to more than half the £23.5bn UK deficit, although Scotland has only 8.3 per cent of the UK population. In round figures, total public spending in Scotland was £75.3bn as against revenue of £62.7bn.

Scottish finance secretary Derek Mackay hailed this figure as an achievement, proclaiming this was the first time revenues had exceeded £60bn, reflecting the “strength” of the Scottish economy. That claim cuts to the essence of GERS: it records revenue inflow, mainly via taxation but including such publicly owned utilities as Scottish Water. In blunt terms, the  GERS “revenue” figures are the tax take. While it is true that in times of economic boom large-scale wealth creation will produce significantly increased tax revenues, that does not mean every revenue increase represents growing prosperity.

Is Scotland experiencing an economic boom? Hardly. North Sea oil and gas revenues increased minutely from £1.42bn to £1.43bn, down from a peak of £8bn in 2011-2012. Non-North Sea revenue increased by 5.1 per cent, which sounds promising, but the GERS report records: “This relatively strong growth is driven by increased income tax and VAT revenue, which are both estimated to have increased by over 7%.” UK revenue growth was a more restrained 4.5 per cent.

Much is being made of the fact that Scots pay £307 less per person in taxation than the UK average, but that obviously reflects more modest incomes than across the UK, weighted by the massive income levels in the south-east of England. As the figures in the GERS report show, Scots are facing more rapacious tax demands than their fellow citizens south of the Border.

That did not prevent Ruth Davidson, leader of the Scottish Conservative Party, from tweeting “With a tax take £307 per person lower and expenditure £1661 higher, today’s #GERS figures show Scots are nearly £2000 per year better off for Scotland being part of the United Kingdom.” While it is necessary constantly to remind Scots of the benefits of the Union, it is not good politics to go native by celebrating dependency and giving the SNP a free pass on its taxation policy.

Scottish Secretary Alister Jack, who appears to live several miles closer to the real world than the leader of the Scottish Tories, said in response to the GERS figures: “With Scotland’s deficit now more than six times greater than the UK average, the Scottish Government needs to take action. Scotland remains the highest taxed part of the UK. This is harming our economy and should be a huge concern to us all.”

That is the true picture. The fiscal extortion recorded by GERS does not reflect wealth creation but wealth confiscation. There are many aspiring entrepreneurs in Scotland, many of them already successful; but they have built that success in an unfavourable climate of public-sector hegemony and political hostility, despite Nicola Sturgeon’s occasional forays to talk the talk on the rubber-chicken circuit.

Despite the separatist propagandists’ tired efforts to extrapolate some hope of viability for Scottish independence from GERS, the reality is that an independent Scotland could not possibly survive economically, nor (and this is the chief source of Sturgeon’s embarrassment) would it be eligible for EU membership. Under the Stability and Growth Pact the maximum permitted deficit is 3 per cent of GDP; Scotland’s deficit is more than twice that level, at 7 per cent.

The EU drove a coach and horses through that rule in favour of Greece’s admission; it will not make that mistake again. That does not mean the EU will not attempt to gull Scots into independence with weasel words. In its current revanchist frame of mind, determined to inflict all possible harm on Britain, angry Brussels apparatchiks would welcome a failed state festering on the northern border of les rosbifs, denied EU membership and a liability to the rest of the island. Do not underestimate the spitefulness of the Brexit-slighted Brussels oligarchs.

The old guarantee of Scottish separatism – North Sea oil – will never return to peak revenue. Even in its glory days it was not regarded by economists as a satisfactory staple for a national economy, long before the salutary example of Venezuela. It will have its peaks and troughs, as geopolitical events affect oil prices, but with or without independence Scotland needs to develop its economy in other areas and is already doing so.

But to succeed in that endeavour Scottish wealth creators need to be freed from a rapacious fiscal regime, a socialist, redistributive mindset in government and society, and the endless destabilising influence of constantly threatened plebiscites on independence. In other words, freed from the malign influence of the SNP. There is absolutely no need for Nicola Sturgeon to hasten back from Shetland.