1) You fucking hate them.
2) You'd smile (or laugh/cheer/wank) if they died.
'Skerrat' derives from a chavvy dialect's mispronunciation of the modern word "scrote", which itself is a derivative of "scrotum", which is again slang for the technical term, "ballsack", or even more properly, "bollocks".
Person two: "I'm a scrat?"
Person one: "No, 'Skerrat'. You're such a Skerrat."
Person two: "No idea what you're talking about; I must visit Urban Dictionary to find out what you mean."