GERS 2025 - How to make Scotland pay for Starmer’s wars
The latest Government Expenditure and Revenue Scotland report, GERS, came out this week. Within it lies a fiscal trap that will hit Scotland in future years as the UK ramps up spending on the military.
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It’s that time of year again. Merry GERSmas. The Scottish Government has published its annual report on revenue and expenditure in (and for) Scotland. What was once an almost festive affair in Scottish political circles (something that I likely had some hand in creating after my commentaries on the release went viral in 2015) has faded not quite down to the level of obscurity given to most regular government publications but at least to something a bit closer to it.
The only other annual publication that generates as many headlines and column inches is the annual report of the Scottish Government’s “budget underspend” – another item that I’ve regularly commented on for a decade now (short version: budget underspends are inevitable when a government isn’t monetarily sovereign and lacks borrowing powers and are thus irrelevant unless the money isn’t rolled over to the next budget, which in Scotland they are).
Nevertheless, the annual report still does draw the usual annual headlines that represent and misrepresent the figures as per the bias of those writing for their respective audiences. If the articles don’t change much from year to year it’s because the report itself doesn’t fundamentally change much either. Deficits rise and fall. Some blame the “union dividend”/independence. Some blame the Government of the day. Few blame themselves.
Fewer still get beyond the headline deficit figure in the report to really look at what GERS means for Scotland. But a trap has been laid in GERS that, while not reflected in the figures this week, will be coming in the not too distant future. This report will soon be used to justify why Scotland should cut public services to pay for Keir Starmer’s next war.
A critical aspect to understand about GERS is that not all of the expenditure in it takes place in Scotland or even for the benefit of Scotland. Much of the spending is declared to be “for” Scotland and it charged on the books. Some of this will be for UK Government departments like the Scotland Office’s, well, offices in London as well as management of UK-wide issues where they are administered outwith Scotland.
In my now quite old 2016 policy paper Beyond GERS, I presented evidence that much of this administration could be done cheaper within an independent Scotland – if only because the costs of maintaining an office and staff in London is substantially more expensive than even Edinburgh.
The other aspect of the spending “for” Scotland however comes in issues like defence, where this spending may take place anywhere in the world (such as the British spy planes flying over Gaza for undisclosed reasons but almost certainly not for the benefit of the people of Gaza). Scotland isn’t charged for UK military spending based on anything nuanced like how much is spent in Scotland (such as the UK’s nuclear weapons facilities in Faslane and Coulport) or by any kind of calculation of the benefit to Scotland for Britain’s military actions in Scotland or elsewhere, but simply by a straight population share.
“I’m sure that if we created a GERS-like document for the finances of, say, Denmark – moved large chunks of its government administration to London, over charged them for the privilege and then dumped a bunch of debt and military spending on their books then we’d see people arguing that Denmark can’t afford independence either.”
Britain’s military spending is declared to “benefit” every resident of the UK equally and thus the total spend in GERS is based on Scotland’s population share of the UK – around 8.0% (This figure has been declining as Scotland’s population has been rising more slowly than the UK as a whole – another reason why the UK’s increasingly xenophobic approach to immigration policy and its refusal to devolve policies to Scotland despite proven models on how to do so is a clear weakness of the current model of the Union).
Keir Starmer has supplicated himself to Donald Trump’s foreign polices and has promised to more than double the amount that the UK spends on the military and to increase it from the current 2.2% of GDP to 5% of GDP – a level not seen since almost before my lifetime – while cutting things that would prevent wars such as foreign aid and development.
As I laid out in a recent article in The National and contrary to the propaganda being deployed to justify it, this spending is almost the worst way to spend public money if the justification is to create jobs. The direct impact on GERS lies in a similar direction. If the UK increases military spending to 5% of GDP then this will mean spending an extra £81 billion per year on the military. Scotland’s “share” of this additional £80 billion is £6.5 billion.
An additional £6.4 billion will be added every year to Scotland’s notional “deficit” for spending that will not support jobs in Scotland (most of the spending appears to be earmarked for weapons factories in England), will not improve the Scottish economy (a bomb sitting in a warehouse is not economically useful), will not make us safer (more bombs means countries looking for excuses to drop them, rather than working to avoid having to) and can only ever cause harm if they ever are used.
£6.5 billion is more than Scotland’s entire transport budget and budget for environmental protections combined.
The fiscal trap gets worse. If the bombs are paid for by increasing the UK’s own borrowing deficit then a population share of the interest payments (already more than £8.5 billion per year) will be added to GERS and if the bombs are paid for by cutting public services in England (like health or education) then Scotland will see a population share of the Block Grant cut too.
And while this is happening, you can all but guarantee that pro-union voices will see this as more of the “union dividend” that Scotland “can’t afford” to be without and demand that the deficit is entirely the Scottish Government’s fault, demand that they also cut devolved public services and then complain all the louder when public services are, indeed, cut.
This is the true folly of relying on GERS as an analysis of Scotland’s finances and why the document takes great pains (too often ignored) to state that it cannot be used to speculate upon the finances of an independent Scotland. I’m sure that if we created a GERS-like document for the finances of, say, Denmark – moved large chunks of its government administration to London, over charged them for the privilege and then dumped a bunch of debt and military spending on their books then we’d see people arguing that Denmark can’t afford independence either.
It’s often said that Scottish independence is about making choices. I can think of no more stark a choice in the future than the one that faces us over military spending and how Scotland faces the world. We can choose to follow Starmer, his predecessors, and likely his successors in supplication to the likes of Trump and the push to continue endless wars for the enrichment of those who arm the combatants or we can work towards a world of peace and cooperation – first by setting ourselves up as the example to follow.
