Former Unionist dog food seller clashes with Andrew Wilson over GERS figures

Wilson, who wrote the SNP’s Growth Commission report, debated the issue with Kevin Hague from pro-Union think tank These Islands, who used to sell dog food.

The statistics from the Organisation for Economic Co-operation and Development (OECD) found the UK has recorded the worst economic slump of any the world's major economies in the second quarter of 2020.

It revealed that gross domestic product (GDP) plunged by 9.8% across its 37 member countries – its largest ever recorded fall and far worse than the 2.3% drop recorded in the first quarter of 2009, at the height of the financial crisis.

But the UK's eye-watering 20.4% drop in GDP between April and June dwarfed the OECD area contraction, as well as the 10.8% decline recorded for the G7 group of advanced nations.

READ MORE: UK suffers worst recession of any major economy in the world

Wilson said the new statistics don’t “reflect what we do with independence”.

He told BBC Radio Scotland: “I think they tell you a whole heap about how Britain is run today. The key structural problem that the United Kingdom has is that is has one of the, if not the, most unequal performing societies and economies in the developed world. All of our eggs are in the basket of London and the South East. Scotland's about the average for the UK but this has really reflected economic underperformance in public finances.

He went on: “The whole point of independence is trying to make the economy and society more equal, better performing, more productive and better sustainable. It won't happen overnight, it will take effort, but that effort will be worth it. I find it profoundly ironic that arguing for the United Kingdom are about saying things are so bad, we're so unequal, the public finances are so dreadful, that things should stay the same. It doesn't seem to me to be a sensible argument or one that's winning.”

Hague disagreed, saying the UK is not “broken and is unequal”. He said: “Now, it's not too uncomplicated a step to take to understand that if our revenue per head is about the same as the rest of the UK, the only reason our deficit per head can be so much larger is that we have more spending per head.

“The GERS figures show that, and they have consistently done for decades, that Scotland spends something like 12% more per head on public spending than the UK average. I think Andrew would agree with all of that. Where Andrew and I diverge is Andrew says therefore that proves the UK is broken and is unequal and I say, hold on a minute, if the UK shares resources around these islands in such a way that Scotland gets to spend 12% more on public services, I don't think that's a bad thing.

He added: “So to take Andrew's argument to its logical conclusion, if we got rid of the Barnett formula and cut Scottish public spending to about 12-13% then this larger deficit would disappear and, presumably by Andrew's logic, by cutting public spending in Scotland we would be less unequal because Scotland's deficit wouldn't be as bad.”

Wilson pointed out that Brexit has worsened the situation as is has added more than £100 billion to UK national debt.

“I mean every UK region has this problem outside the South East,” he said. “I suppose that is the core issue. Brexit has made the situation much worse.

“Brexit is not a choice we made but Brexit has made the deficit on these numbers worse. Does that mean that the worse the decision making of the UK Government, the less likely it should be that Scotland chooses a different course? Only today the OECD, the organisation of developed and industrialised countries has said that the UK has the worst performing economy this year of all its members - twice as bad as the average, twice as bad as the EU. Locked into that model, locked into bad governance, locked into disorderly Brexit, we have an economic situation that required remedying.”

He said Hague was right in saying Scotland spends more but said that he would not choose to spend money on university tuition fees or nuclear weapons.

Wilson also said that New Zealand and Finland are in a similar situation, adding: “New Zealand and Finland – two of the best governed countries on the planet – have deficits of the order that we’ve seen talked about today. The secret is not cut your way to misery, as the UK has done since the financial crisis, the secret is to get your economy more equal, to get your society more sustainable and to go for productivity, competitiveness and success. Now I think we can tailor policies to get there. Others may disagree.”

Hague and Wilson were also asked about a report by political economist John McLaren who previously was a special adviser to both Donald Dewar and Henry McLeish.

His “index of well-being” urges the UK to create a greener and more sustainable economy.

READ MORE: FACT CHECK: Claim Scotland has slid down global well-being rankings

Hague responded: “I haven’t seen John McLaren’s paper so I can’t really comment on that. Andrew says the wrong thing to do is cost cut your way to misery. I agree with Andrew. When Andrew’s own Growth Commission report that he spent a couple of years writing recommends, and I quote that ‘public spending should be reduced at a rate to reduce public spending at a rate of GDP’. Current public spending at a rate of GDP is currently 46% versus the UK’s 39.8%. Andrew's model in his Growth Commission report is to get that deficit down to management levels by reducing public spending as a per cent of GDP. That is cutting your way to misery. I think that’s a really bad idea.”

Wilson hit back, saying the Growth Commission report didn’t suggest cutting public spending. “We wanted public spending to grow,” he said.

“We rejected austerity but argued if you want to take the deficit down you would have to either grow the economy more – and by the way you can cut public spending as a share of GDP by growing faster as well as maintaining public spending but we can also grow public spending less than cash growth in the economy. “In actual fact, with the reality of Covid facing Europe, most countries in Europe reaching the stability pact deficit criteria, the world has indeed changed.

“John McLaren is correct. I’m looking at a chart right now of countries across the world borrowing next to 1%. Croatia is currently borrowing at 0.9%. it’s remarkable. Countries everywhere have access to cheap borrowing. We need to use that to invest in the sort of economy John McLaren is arguing for. A greener one, a more sustainable one. We don’t have the ability to borrow to that extent in Scotland.

Wilson concluded: “It's one of the many weaknesses of the devolution settlement. Either we tie ourselves to the UK’s definition of Brexit and the OECD’s articulation of failure or we try to build something better. We have what it takes.”