Figures never lie – but they can mean many things

Monday, February 01, 2010

Statistics are like bikinis. What they reveal is suggestive, but what they conceal is vital Aaron Levenstein told us.

What statistics about public spending tell us are also revealing – that Disraeli's comment "There are three kinds of lies: lies, damned lies and statistics" is probably nearer the mark, as yet another row has erupted over Scotland's finances.

First, the Scotland Office published an analysis of government expenditure and revenues in Scotland claiming a "devolution dividend" for Scotland of more than £75bn – pubic spending outstripping tax generation in Scotland by up to 45 per cent.

"You don't need to be an economist to know that Scotland benefits from being part of Britain," Scottish Secretary Jim Murphy trumpeted.

No, no, no challenged Scottish government finance secretary John Swinney: "Scotland recorded a current budget surplus over the three years to 2007-08 of £2.3bn, while the UK ran up a deficit of £24bn over the same period."

Arguments raged about whether or not information – including oil revenues, the fossil fuel levy and water charges – had been included in the Scotland Office's analysis of the Scottish Government's Government Expenditure and Revenue Scotland (GERS).

The Scotland Office claimed that since 1980 "even with all the UK's oil and gas tax receipts" Scotland would have accumulated a £23.5bn deficit and that since the arrival of devolution in 1999 spending by both UK and Scottish governments in Scotland had exceeded tax revenue collected in Scotland by £75.8bn.

But the Scottish Government responded that over the same period the cumulative UK net borrowing was £462.6bn, with Scotland's share, allocated on a per head basis, reaching £38.9bn.

This meant, the Scottish Government said, that the flow of resources was north to south.

"Scotland has two governments spending billions of pounds of public money," Murphy said, "and there is a clear and quantifiable 'devolution dividend'."

The blows were traded as MSPs opened the battle lines for the 2010/11 budget with Swinney claiming that mishandling of UK finances will lead to substantial cuts in Scotland's budget.

He said that despite the first cut in the settlement since devolution, the government was protecting spending on front line services and investing in economic recovery

Swinney went on, however: "Beyond the immediate issue of the budget, there can be no doubt that financial independence for Scotland is the clear and compelling alternative to the mismanagement of our finances by successive UK governments."