GERS was conceived as a political exercise - Salmond

December 19 2006 (Letters page, Herald)

I MUST be ever-present in Wendy Alexander's thoughts (December 16) these days, having been mentioned by name no fewer than seven times in the same letter! Let me see if I can return the compliment and in so doing cast some light into Labour's "black holes".

Ms Alexander accuses the SNP of traducing civil servants by attacking the basis of the Government Expenditure and Revenue for Scotland (Gers) analysis. Unlike her, I have been a civil servant (ie, a real one, not a special adviser) and know full well the parameters in which they work.

Gers was conceived as a political, not as a statistical, exercise. We know this because the original correspondence from the then Secretary of State, Ian Lang, was leaked some years ago – he wanted it to "undermine the other parties", saying "this initiative could score against all of them".

The civil servants involved have several times tried to pull it back from its more blatant political exploitation by Tory and Labour politicians. The economist in charge, Dr Andrew Goudie, has noted that "Gers tells us nothing about the situation under independence". So why do Ms Alexander and her even less numerate friends misuse it as the basis of their anti-independence attack?

The problems with Gers are twofold and very obvious. It publishes a non-oil headline figure and takes no account of UK borrowing. Thus, it is used by the Tories to talk of subsidies or Labour of black holes. The first is as ludicrous as taking the financial sector out of London finances while the second places the debate in an artificial context. The UK has a budget deficit this year of £34bn, a non-oil deficit of £45bn, and accumulated debt of £500bn.

In Wendy's looking-glass world, this UK black hole should be immediately filled by swingeing tax rises, or does her brand of logic only apply to Scotland? Gers is also two years out of date, and merely by adjusting for this year's oil revenues, which have doubled to more than £10bn, and allowing for the UK deficit, the "subsidy" flows in 2007 from north to south. That is before making any other corrections – for example, the clear counting of English-only departmental expenditure as part of the Scottish total.

Wendy should stop claiming that "oil revenues are falling", since the pre-budget report shows them rising from just more than £10bn to almost £12bn over the next five years. Nor should she pretend that it is running out – Labour's internal policy documents suggest more than 30 years of supply. Of course, there is nothing new about the Labour Party systematically and cynically under-estimating Scotland's oil wealth. The secret papers, recently published from the 1970s, show that this is a long-established Labour tradition.

In these papers was the private economic advice that an independent Scotland would be richer than Switzerland. In public, Labour politicians were comparing our economic prospects to those of Bangladesh.

Ms Alexander doesn't go that far, but she does seem to have great trouble in coping with the notion that Scotland could be a normal independent successful country like our near neighbours, Norway, Ireland and Iceland. All three have lessons to teach us if we are open-minded enough to learn. One of these lessons is to use the strength of Scotland's current budget position to improve our competitive advantage and generate growth and revenue for the long term.They pursue three very different social and taxation models but all three are among the top six economies in the world in terms of wealth per head.They also happen to be three of a handful of western countries running an absolute budget surplus. That has happened because they are economically successful.

I have used up my seven mentions of Ms Alexander so let me close on this note. In a world of dodgy dossiers on Iraq and loans for Lords, the black hole she should really worry about is the one where Labour credibility used to be.

Alex Salmond, MP, 17 Maiden Street, Peterhead.

I NOTICE that Wendy Alexander is now taking a swipe at Norway's tax regime as if that should be a disincentive for Scots to vote for independence.Since all tax systems differ the key to the debate is not tax but quality of life. Ms Alexander should know this and acquaint herself with the UN and other internationally accepted institutions which consistently show Norway, Iceland and Ireland way ahead of us on this measure.

Can she produce a single country in the north-west of Europe whose quality of life has been overtaken by Scotland over the last 50 years?

Would she be even more transparent and volunteer to name the countries that have overtaken Scotland during the same period, and why?

Graeme McCormick, Redhouse Cottage, Arden.