The Scottish public finances 2010-11 : surplus or deficit?

The annual publication of the Government Expenditure and Revenues in Scotland Report (known as GERS), which is compiled by professional economists in the Scottish Government, is a highly political event. [...] Arguments over GERS accuracy have generally been between the SNP and the other political parties, rather than between experts. Whilst GERS is based on estimating techniques and the UK’s public expenditure statistics, researchers in the area have accepted that it maps out the broad magnitude of Scotland’s fiscal position (Heald et al, 1998; MacKay and Wood, 1999; Bell and Christie, 2002), and therefore "the kind of fiscal position from which an independent Scotland would start" (Murkens, Jones and Keating, 2002)

Scotland’s fiscal position in the UK : accounting for the growth of the fiscal deficit in the post-devolution period

The publication of the annual Government Expenditure and Revenues in Scotland (GERS) Report by the Scottish Executive is a continuing source of political dispute. This set piece confrontation, however, seldom generates any realistic assessment of its merits, because it results in claim and counter-claim over its validity in colourful language. It is not the “bogus” statistical exercise its critics suggest, although not without problems of interpretation

Assessing the financial impact of the Scotland Bill : problems of Scottish Government accounting

The Scotland Bill contains proposals based on the Calman Report to remedy the major financial weakness of the 1997 devolution settlement – namely its limited tax-raising powers. The new funding model will combine Block Grant with new tax revenues from a Scottish Income Tax, a Scottish Land Transaction Tax and a Scottish Landfill Tax. However, it has been heavily criticised by the Scottish Government for having a "long-term deflationary bias". This is a strong attack on a model intended to maintain stability and promote accountability in devolution finance. The current approach is embedded in the UK fiscal framework, in which the UK Government has responsibility for the planning and control of the public finances, and resource allocation to UK Departments and Devolved Administrations. The Scottish Budget therefore benefits from "an automatic macroeconomic stabilisation level and a public expenditure per capita substantially above the UK average". The UK Budget process provides a high degree of stability. It operates through incremental change, in which the major part of the new budget is the existing baseline, and decisions are made around the margins of this budget base. In the case of the Scottish Budget, incremental adjustments are made through the Barnett Formula which delivers the same per capita increase/decrease as comparable UK programmes, and has delivered "stability and predictability" since devolution

Output measurement in the Scottish budget

The publication of the new spending plans for Scotland (Scottish Executive 2004a) after the debate on Spending Review 2004 was greeted in journalistic and political circles as but the latest exercise in government spin. The Herald's Scottish political correspondent (Gordon, 2004) inferred that the dropping of 138 targets was part of a Machiavellian exercise of control of information to cloud the process of accountability, and as greater transparency and efficiency in public spending was central to the rationale for targets, then clearly if correct, this was a major issue of public concern. The practice of target-setting by the Executive however, requires the reconsideration of targets in each Spending Review and their replacement as appropriate, whether by more relevant measures or to reflect new priorities. In this case, there was no presentational spin

Why the application of resource accounting and budgeting did not distort the 2002 strategic review of water charges in Scotland

The recent paper by J and M Cuthbert continues the arguments they made earlier in the Commentary that errors in the application of Resource Accounting and Budgeting led to water customers being “overcharged”. Moreover, whilst the “implementation of the new control regime was meant to be neutral, the amount of borrowing available to the water industry under the new regime was clearly very restrictive compared to the borrowing limits applied to the industry” (Cuthbert and Cuthbert 2003; 2006)