Ian Murray: The deficit deniers do Scotland a disservice

The drastic decline in offshore oil revenues has left a gaping hole in Scotland's public finances
The drastic decline in offshore oil revenues has left a gaping hole in Scotland's public finances
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Yesterday saw the publication of the Scottish Government’s annual accounts, Government Expenditure and Revenue Scotland (or “GERS” for short). The report showed that, although Scotland’s fiscal deficit (the difference between public spending and public revenue in Scotland) has decreased, it still stands at a dizzying £13.3 billion (that’s roughly equivalent to Scotland’s entire annual spend on the NHS).

So, although the slight reduction in Scotland’s deficit is welcome, the figures once again make for awkward reading for the SNP Government. Indeed, so uncomfortable have the GERS numbers been in recent years, that the SNP and their social media acolytes have taken to consciously undermining them.

Ian Murray is the Labour MP for Edinburgh South. Picture: Scott Taylor

Ian Murray is the Labour MP for Edinburgh South. Picture: Scott Taylor

I’ve seen a considerable number of comedy shows at the Fringe in the last couple of weeks, but none so bizarre or audacious as the SNP’s obstinate denial of these official statistics; statistics which (lest we forget) are the responsibility of the Scottish Government’s own chief statistician. Those who use GERS to question the health of Scotland’s public finances are instantly decried as a doom-mongering naysayers, intent on “doing Scotland down”.

It was not always thus. A few years ago, when GERS told a somewhat different story, SNP politicians were lining up to acclaim the figures as evidence of Scotland’s economic strength, and the Scottish Government based their case for independence on the fiscal bounty of ever-increasing oil revenues. Today’s figures have exposed once again the hubris of these carefree assumptions. The precipitous decline in offshore revenues, driven by the global deterioration in oil prices, has left Scotland with a gaping hole in its public finances.

Of course, those that once eulogised GERS now cry foul at talk of fiscal “black holes”, arguing that governments are not like households, and do not need to balance their budgets. True; but a country’s deficit should be sustainable comparative to its national output, and Scotland’s deficit is 8.3 per cent of its Gross Domestic Product (GDP) – the figure used to determine the economic health of the country. To put this in context, the UK’s overall budget deficit is 2.4 per cent of its GDP. That means Scotland’s deficit is a staggering three times the size of the UK’s as a percentage of GDP.

The only reason Scotland is able to sustain this deficit and maintain its relatively high levels of public spending is the pooling and sharing of resources that comes with being part of the UK. Independence would mean austerity on an unprecedented scale: Scotland would have to significantly reduce spending or hike taxes – something it has consistently refused to do.

This brings us to another, equally pertinent question raised by today’s report: what is the Scottish Government doing with the money it is spending? Scotland’s spending on public services is £1437 per head higher than the UK average, so it seems reasonable to expect those services to be superior. But the evidence suggests this is not the case: educational standards are declining, teacher numbers have fallen, NHS targets are not being met, and local services are withering. Yes, we spend more on public services than the rest of the UK, and that is to be applauded. But are we getting our money’s worth? My constituents answer that with a clear No.

The real story of GERS is that Scotland’s finances have been mismanaged by the SNP. They want more powers, but they have squandered or neglected those they already have. What we need is a Labour government that will invest in Scotland’s economy, create new jobs, and enhance tax revenues to support our public services. Scotland can be the prosperous and fair country we all want to see; but first we need to get rid of this complacent and deluded SNP government.

We need a Government that wants to improve Scotland’s economic position – not one that denies it.

Ian Murray is Labour MP for Edinburgh South