What are the GERS figures and what do they tell us about Scotland's finances?

Finance Secretary Shona Robison, as well as First Minister John Swinney, have repeatedly emphasised just how tight Scotland’s purse strings are post-pandemic.

These figures could show just how tight they are, and the finance secretary is likely to be grilled on the finer details of the statistics.

But what exactly are GERS, and what can they tell us about Scotland’s economy?

What are GERS?

GERS stands for Government Expenditure and Revenue Scotland.

Published by National Statistics, GERS estimates how much cash is raised in Scotland through taxes and how much Scotland spends on public services.

Ultimately, it looks at whether or not the revenue raised covers the cost of running public services.

These figures have been published since 1992, after Conservative Prime Minister John Major wanted figures to help make the case against devolution and the creation of a Scottish Parliament. 

However since 1999 the figures have been compiled by the Scottish Government.

How are GERS calculated?

The total amount Scotland spends includes Scottish and local government services, along with UK welfare spending and pensions north of the border.

It also includes UK Government spending in non-devolved areas in Scotland, such as defence, and a proportion of the UK’s debt.

The revenue is calculated by adding together how much comes in through Scottish income tax, council tax, business rates, landfill tax, land and buildings transactions tax, profits from Scottish Water, and local authority user charges and fees.

Other revenues are estimated, such as the revenue collected by HMRC - economists from the Fraser of Allander Institute say “estimates are not unusual in economic statistics”.

Why are GERS controversial?

There is an annual battle to interpret the numbers in favour of Scottish independence and unionism.

When the 2014 independence white paper was published, the Scottish Government described GERS as the “authoritative publication on Scotland’s public finances”.

The SNP’s growth commission blueprint for the finances of an independent Scotland also used GERS as a starting point for its calculations. 

However in the past unionists have also used the figures to point to a “union dividend”, showing that Scotland can only afford its high level of public spending because it remains part of the UK.

But economists at the Fraser of Allander Institute say while GERS “presents a useful starting point for a discussion regarding the challenges and opportunities that Scotland would face”, they are not meant to be anything other than showing the current position of Scotland’s finances.

Since 2021 GERS has also shown a huge rise in public spending alongside a cut in tax revenues as a result of the coronavirus pandemic.

This was because more money was spent on things like the furlough scheme and payments to mothballed businesses during lockdown.

Last year’s GERS also reflected the impact of rising inflation, high energy prices coupled with the introduction of a windfall tax on North Sea oil and gas, and significant public spending on cost-of-living support.

The figures from last year show the gap between what was spent and what was raised fell from £23.7 billion to £19bn, largely down to higher oil and gas revenues - this represented nine per cent of Scotland’s GDP, higher than the 5.2 per cent for the UK as a whole.

What can we expect to see this year?

The latest GERS statistics are for the financial year 2023/24.

That means some of the changes introduced by Ms Robison for the 2024/25 budget, such as a new income tax band and freezing council tax, will not impact on tomorrow’s numbers.

However we may see the impacts of the continued windfall tax on North Sea oil and gas, along with the costs of continued cost-of-living payments.

Unlike the Scottish budget, we are unlikely to get any prior notice of what the statistics might show.