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Government Expenditure & Revenue Scotland 2016-17

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Chapter 3: Public Sector Expenditure

Total Public Sector Expenditure: Scotland 2016-17

Introduction

This chapter provides detailed estimates of public sector expenditure for Scotland. Expenditure is shown by type of spend, using a presentation based on the UN's Classification of the Functions of Government (COFOG). Further information is provided in the Glossary in Annex D. Current and capital expenditure are shown separately.

The primary data sources used to estimate Scottish public sector expenditure in GERS are Scottish Government spending reported on the UK Government's public spending system, OSCAR, and HM Treasury's Public Expenditure Statistical Analyses (PESA)[25] and the supporting Country and Regional Analysis (CRA).[26]

Spending by the Scottish Government is provided directly by the Scottish Government Directorate for Financial Management. Scottish Local Government spending in all years is taken from HM Treasury's PESA publication. Spending by other UK government departmental spending is based on PESA for 2016-17 and on the CRA, for earlier years. Further information on the methodology is set out in the expenditure methodology paper available at the link below.

http://www.gov.scot/Topics/Statistics/Browse/Economy/GERS/Methodology.

The EU Transactions line in the tables below shows Scotland's contribution to the EU, less funding received from the EU by the public sector. Funding received primarily consists of common agricultural payments and European regional development funding. The one contribution to the EU which is not included in the EU Transactions line is the traditional own resource contribution. This covers EU customs duties collected by the UK and transferred to the EU. As these are EU duties, neither the revenue nor expenditure is included in the UK Public Sector Finances. However, it is normally included in estimates of the UK's total contribution to the EU budget. As a result, users looking for an estimate of Scotland's estimated contribution to the EU should use the figures reported separately in Box 3.2.

In order to present expenditure figures on a National Accounts basis, the international reporting standards used by governments, a number of accounting adjustments are included in total expenditure. These are primarily symmetric adjustments that also form part of revenue, and therefore have little impact on the net fiscal balance. Further information is set out in Annex A.

Recent Statistical Classification Decisions

On 29 September 2016, the ONS announced that registered social landlords in Scotland, often referred to as housing associations, and their counterparts in the other devolved administrations, have been reclassified from the private sector to the public sector. The English bodies had been classified in the same way in October 2015. This change increases capital expenditure, and this is currently included in the accounting adjustment line. It also increases public sector debt interest in current expenditure, which now includes expenditure on repayments of loans by housing associations.

Public Sector Expenditure

Total public sector expenditure for Scotland in 2016-17 is estimated to be £71.2 billion, an increase of 3.1% from 2015-16, compared to growth of 2.2% for the UK as a whole. This was equivalent to 9.2% of total UK public sector expenditure. This is shown by spending category in Table 3.1.

Table 3.1: Total Expenditure: Scotland 2016-17

Scotland
£ million % of total expenditure
General public services
Public and common services 1,512 2.1%
International services 810 1.1%
Public sector debt interest 3,249 4.6%
Defence 3,053 4.3%
Public order and safety 2,747 3.9%
Economic affairs
Enterprise and economic development 1,041 1.5%
Science and technology 441 0.6%
Employment policies 227 0.3%
Agriculture, forestry and fisheries 1,037 1.5%
Transport 3,163 4.4%
Environment protection 1,208 1.7%
Housing and community amenities 1,685 2.4%
Health 12,657 17.8%
Recreation, culture and religion 1,375 1.9%
Education and training 8,162 11.5%
Social protection 23,782 33.4%
EU transactions -66 -0.1%
Accounting adjustments 5,126 7.2%
Total Expenditure 71,209 100%

Table 3.2 below shows growth in current and capital spend in Scotland by organization in 2016-17, compared to the UK. Although spending increased faster in Scotland than the UK as a whole in 2016-17, spending by the Scottish Government has grown in line with that of other UK Government bodies.

The main difference between Scottish and UK spending is seen in capital spending, particularly that by public corporations and local government. This reflects a number of factors.

Firstly, it reflects an increase in capital expenditure by housing associations (see Table A.8). This is estimated to have increased by £412 million, and accounts for around 40% of the increase in capital spending. This size of increase reflects the fact that capital spending by housing associations was relatively low by historic standards in 2015-16. Overall, Scottish housing associations' capital expenditure in 2016-17 is now £168 million higher than it was in 2014-15.

Secondly, it reflects an increase in Scottish local government capital spending. This increased by £359 million (20.8%) in 2016-17, primarily financed by increased local government borrowing. This accounts for around a third of the increase in the capital spending.

The remainder of the increase in capital spending is largely due to capital spend by Scottish Water, which rose by £160 million, accounting for 15% of the increase in capital spending. Other capital spending by the Scottish Government also increased by £125 million, of which £50 million was associated with the greater use of Scottish Government borrowing powers.

Table 3.2: Expenditure growth: 2015-16 to 2016-17 (£ million)

Scotland
2015-16 2016-17 Growth UK growth
Current expenditure 62,135 63,188 1.7% 1.3%
Scottish Government 23,387 23,922 2.3% 2.3%
Local Government 12,360 12,425 0.5% -0.4%
Public Corporations - - - -
Other UK Government bodies 26,387 26,841 1.7% 1.8%
Capital expenditure 6,913 8,021 16.0% 10.6%
Scottish Government 1,982 2,107 6.3% 6.3%
Local Government 1,727 2,086 20.8% 4.9%
Public Corporations 1,011 1,563 54.7% 20.6%
Other UK Government bodies 2,193 2,264 3.2% 9.5%
Total expenditure 69,048 71,209 3.1% 2.2%
Scottish Government 25,369 26,029 2.6% 2.6%
Local Government 14,087 14,511 3.0% 0.1%
Public Corporations 1,011 1,563 54.7% 20.6%
Other UK Government bodies 28,581 29,105 1.8% 2.4%

Notes:

1. Public corporation line for Scotland shows spending by Scottish public corporations only. UK figure shows spending by all public corporations
2. Scottish public corporations have no current expenditure as this is netted off against their income to provide their gross operating surplus in the revenue calculations. Within the CRA, interest expenditure by public corporations is recorded as spending by HM Treasury.
3. Spend by Other UK Government department for Scotland and the UK are not directly comparable, as spending for the UK as a whole it includes spending on functions which are devolved to the Scottish Government.

Table 3.3 shows the split of total expenditure between current and capital for Scotland. The capital spending share has increased in 2016-17, driven by the factors discussed above. The capital spending share is also relatively high in 2012-13, due to the one‑off transfer of the Royal Mail Pension Plan into the public sector.

Table 3.3: Current and Capital Expenditure (% of Total Expenditure): Scotland

per cent
2012-13 2013-14 2014-15 2015-16 2016-17
Current 87.8% 89.6% 89.6% 90.0% 88.7%
Capital 12.2% 10.4% 10.4% 10.0% 11.3%

Table 3.4 below shows estimates of Scottish and UK public sector expenditure as a share of GDP. This provides an illustration of the relative size of public spending between countries and over time. It is not an estimate of the contribution of public spending to the economy as much of this spending consists of transfers from government to individuals and businesses. Excluding North Sea GDP, public sector spending as a share of GDP has increased for the first time since 2012-13, having previously been on a downward trend. Public sector spending as a share of GDP in the UK has continued to decline. This divergence in part reflects the higher spending growth in Scotland, but primarily reflects weaker GDP growth in Scotland. If Scottish GDP had grown in line with UK GDP, spending as a share of GDP excluding the North Sea would have fallen to 47.2% in 2016-17.

Including a geographical share of North Sea GDP, public spending as a share of GDP has been increasing since 2013-14 in Scotland, reflecting the fall in North Sea GDP over this period.

Table 3.4: Total Managed Expenditure as a Share of GDP

per cent of GDP
2012-13 2013-14 2014-15 2015-16 2016-17
Scottish TME as a Share of GDP:
Excluding North Sea GDP 51.8% 49.0% 47.6% 47.4% 47.5%
Including population share of North Sea GDP 51.0% 48.3% 47.1% 47.0% 47.1%
Including geographical share of North Sea GDP 45.6% 43.4% 43.6% 44.4% 44.7%
UK TME as a share of GDP:
100% of North Sea GDP 43.3% 41.9% 41.0% 40.0% 39.4%

Table 3.5 shows total public sector expenditure per person for Scotland and the UK. Since 2012-13, spending per head in Scotland has been between 10.1% (in 2014-15 ) and 12.2% (in 2016-17) higher than the UK average. Slightly less than one percentage point of this difference is due to water and sewerage services being provided by the public sector in Scotland, and therefore included in Scottish expenditure, whilst in England and Wales they are operated by the private sector and therefore excluded from UK expenditure. Tables 3.6 and 3.7 show current, capital, and total expenditure for Scotland and the UK respectively.

Table 3.5: Total Expenditure Per Person

£ per person
2012-13 2013-14 2014-15 2015-16 2016-17
Scotland 12,807 12,673 12,792 12,832 13,175
UK 11,472 11,468 11,618 11,555 11,739
Difference (Scotland minus UK) 1,334 1,205 1,174 1,277 1,437
Difference between Scottish and UK 11.6% 10.5% 10.1% 11.0% 12.2%

Box 3.1 Social protection spending in Scotland

Social protection spending is the largest single spending line in GERS, and covers a range of different spend types.

The largest spending element within social protection is expenditure on the state pension by the Department for Work and Pensions (DWP). This is followed by DWP's spending on other social security such as disability and incapacity related benefits, income support, jobseekers allowance, and housing benefit. Tax credits and child benefit are part of HMRC spending, which also includes universal credit. Scottish Government social security spend includes the Scottish Welfare Fund, Council Tax Reduction Scheme, and Scottish Government expenditure on Discretionary Housing Payments, all of which are administered by Local Authorities.

Some UK social security expenditure, mostly associated with the state pension, is paid to non-UK residents. Scotland is allocated a population share of this expenditure in GERS.

Social protection spending for Scotland (£ million)

2012-13 2013-14 2014-15 2015-16 2016-17
Social security spending in Scotland
State pension 6,791 7,051 7,324 7,560 7,749
Housing benefit 1,789 1,770 1,776 1,772 1,733
Other DWP social security 5,796 5,622 5,686 5,789 5,804
HMRC child benefit and tax credits and universal credit 3,097 2,960 2,914 2,869 2,938
Scottish Government social security 408 421 415 402 398
Social security spending in Scotland 17,881 17,825 18,115 18,392 18,622
Share of benefit spending outside UK and corporate spend 508 449 559 604 665
Other social protection
Net public sector pensions 874 875 966 951 876
Social care for the elderly 2,249 2,263 2,296 2,300 2,297
Other 924 925 931 1,122 1,321
Total social protection 22,437 22,337 22,867 23,369 23,782

Other social protection spending consists primarily of Local Authority expenditure on social care to families and children.

A more detailed breakdown of social security spending is published by DWP, available at the link below.

https://www.gov.uk/government/collections/benefit-expenditure-tables

Spending by different parts of the Public Sector

Table 3.8 below provides a breakdown of Scottish expenditure by the Scottish Government, Scottish local government and public corporations, and other UK government bodies.

Table 3.6: Total Expenditure: Scotland 2012-13 to 2016-17

£ million
Current Capital Total
2012-13 2013-14 2014-15 2015-16 2016-17 2012-13 2013-14 2014-15 2015-16 2016-17 2012-13 2013-14 2014-15 2015-16 2016-17
General public services
Public and common services 1,138 1,239 1,261 1,265 1,232 169 234 227 250 279 1,308 1,473 1,489 1,515 1,512
International services 598 762 692 697 738 46 52 177 163 72 644 813 868 861 810
Public sector debt interest 3,396 3,331 3,061 3,093 3,249 0 0 0 0 0 3,396 3,331 3,061 3,093 3,249
Defence 2,259 2,290 2,272 2,293 2,294 771 734 765 729 759 3,030 3,024 3,037 3,021 3,053
Public order and safety 2,644 2,410 2,692 2,748 2,666 201 137 122 74 81 2,844 2,547 2,814 2,822 2,747
Economic affairs
Enterprise and economic development 704 816 765 805 807 247 194 186 134 233 952 1,010 951 940 1,041
Science and technology 23 26 51 103 95 298 365 366 388 345 321 391 416 491 441
Employment policies 239 307 280 218 222 7 6 3 2 5 246 314 283 220 227
Agriculture, forestry and fisheries 762 784 727 686 810 156 171 200 138 227 919 956 928 824 1,037
Transport 1,545 1,568 1,340 1,624 1,564 1,437 1,361 1,475 1,444 1,599 2,982 2,929 2,815 3,069 3,163
Environment protection 887 916 940 927 893 299 366 308 311 315 1,186 1,282 1,248 1,237 1,208
Housing and community amenities 75 123 125 160 200 1,436 1,407 1,423 1,406 1,486 1,511 1,529 1,548 1,567 1,685
Health 10,658 10,870 11,146 11,612 12,045 685 637 489 571 613 11,343 11,506 11,635 12,183 12,657
Recreation, culture and religion 1,286 1,202 1,371 1,116 1,076 336 248 190 239 300 1,623 1,450 1,561 1,354 1,375
Education and training 6,866 6,923 6,979 7,107 7,288 656 636 634 732 874 7,522 7,558 7,614 7,839 8,162
Social protection 22,350 22,318 22,833 23,302 23,710 87 19 34 68 72 22,437 22,337 22,867 23,369 23,782
EU Transactions 167 121 237 266 -66 0 0 0 0 0 167 121 237 266 -66
Accounting adjustments 4,179 4,524 4,580 4,113 4,365 1,485 484 536 265 761 5,664 5,008 5,116 4,379 5,126
Total 59,778 60,532 61,353 62,135 63,188 8,316 7,050 7,134 6,913 8,021 68,094 67,581 68,487 69,048 71,209

Table 3.7: Total Expenditure: UK 2012-13 to 2016-17

£ million
Current Capital Total
2012-13 2013-14 2014-15 2015-16 2016-17 2012-13 2013-14 2014-15 2015-16 2016-17 2012-13 2013-14 2014-15 2015-16 2016-17
General public services
Public and common services 9,607 9,359 9,689 9,827 10,059 1,575 1,816 1,761 1,366 3,045 11,182 11,175 11,450 11,193 13,104
International services 7,174 9,167 8,355 8,450 8,941 546 621 2,133 1,979 871 7,720 9,788 10,488 10,429 9,812
Public sector debt interest 40,719 40,086 36,978 37,483 39,375 0 0 0 0 0 40,719 40,086 36,978 37,483 39,375
Defence 27,102 27,571 27,460 27,796 27,800 9,238 8,834 9,238 8,831 9,200 36,340 36,405 36,698 36,627 37,000
Public order and safety 29,896 28,345 29,235 28,928 28,993 1,410 1,258 1,252 1,279 1,128 31,306 29,603 30,487 30,207 30,121
Economic affairs
Enterprise and economic development 4,057 4,495 4,196 4,629 4,245 942 1,178 862 673 1,560 4,999 5,673 5,058 5,302 5,805
Science and technology 272 363 496 875 389 3,054 3,831 3,976 3,944 3,506 3,326 4,194 4,472 4,819 3,895
Employment policies 2,799 3,579 3,125 2,406 2,399 79 77 32 22 60 2,878 3,656 3,157 2,428 2,459
Agriculture, forestry and fisheries 4,977 4,969 4,696 4,075 4,778 307 409 517 395 567 5,284 5,378 5,213 4,470 5,345
Transport 7,675 7,666 6,617 9,765 10,133 12,605 13,196 15,354 18,012 19,483 20,280 20,862 21,971 27,777 29,616
Environment protection 7,376 7,608 7,813 7,959 7,405 3,288 3,575 3,753 3,676 3,854 10,664 11,183 11,566 11,635 11,259
Housing and community amenities 3,221 3,150 3,077 2,977 3,096 6,878 6,832 7,358 7,053 7,471 10,099 9,982 10,435 10,030 10,567
Health 117,944 121,968 127,651 132,663 138,816 6,358 7,421 6,402 5,836 5,524 124,302 129,389 134,053 138,499 144,340
Recreation, culture and religion 10,666 9,573 10,427 9,226 9,287 2,044 1,837 2,022 1,670 2,339 12,710 11,410 12,449 10,896 11,626
Education and training 75,773 76,040 75,604 75,468 77,104 8,219 8,838 9,450 9,319 10,070 83,992 84,878 85,054 84,787 87,174
Social protection 252,999 254,363 261,016 264,663 263,882 450 -393 -111 316 414 253,449 253,970 260,905 264,979 264,296
EU transactions 6,705 7,210 6,225 7,671 4,725 0 0 0 0 0 6,705 7,210 6,225 7,671 4,725
Accounting adjustments 47,508 51,262 53,598 47,457 50,016 18,530 10,451 11,731 7,228 10,076 66,038 61,713 65,329 54,685 60,092
Total 656,470 666,774 676,258 682,318 691,443 75,523 69,781 75,730 71,599 79,168 731,993 736,555 751,988 753,917 770,611

Table 3.8: Total Expenditure: Scottish Government, Local Authorities, Public Corporations, and Other UK Government: Scotland 2012-13 to 2016-17

£ million
Scottish Government, LAs and Public Corporations Other UK Government Total
2012-13 2013-14 2014-15 2015-16 2016-17 2012-13 2013-14 2014-15 2015-16 2016-17 2012-13 2013-14 2014-15 2015-16 2016-17
General public services
Public and common services 859 1,021 1,014 1,048 1,027 448 452 475 467 484 1,308 1,473 1,489 1,515 1,512
International services 0 0 0 0 0 644 813 868 861 810 644 813 868 861 810
Public sector debt interest 0 0 0 0 0 3,396 3,331 3,061 3,093 3,249 3,396 3,331 3,061 3,093 3,249
Defence 3 3 3 4 4 3,027 3,021 3,034 3,017 3,049 3,030 3,024 3,037 3,021 3,053
Public order and safety 2,597 2,307 2,567 2,592 2,515 248 240 247 230 232 2,844 2,547 2,814 2,822 2,747
Economic affairs
Enterprise and econ development 744 782 743 632 712 208 228 208 308 328 952 1,010 951 940 1,041
Science and technology 0 0 0 0 0 321 391 416 491 441 321 391 416 491 441
Employment policies 0 0 0 0 0 246 314 283 220 227 246 314 283 220 227
Agriculture, forestry and fisheries 916 952 922 819 1,021 2 4 5 5 16 919 956 928 824 1,037
Transport 2,804 2,750 2,623 2,318 2,372 178 179 192 751 792 2,982 2,929 2,815 3,069 3,163
Environment protection 943 1,013 950 949 935 242 270 298 288 273 1,186 1,282 1,248 1,237 1,208
Housing and community amenities 1,511 1,529 1,548 1,567 1,685 0 0 0 0 0 1,511 1,529 1,548 1,567 1,685
Health 11,184 11,354 11,483 12,002 12,508 159 152 151 180 149 11,343 11,506 11,635 12,183 12,657
Recreation, culture and religion 1,119 1,066 1,142 999 979 504 384 419 355 397 1,623 1,450 1,561 1,354 1,375
Education and training 7,504 7,541 7,587 7,814 8,156 18 17 27 25 6 7,522 7,558 7,614 7,839 8,162
Social protection 5,513 5,481 5,658 5,731 5,669 16,924 16,857 17,209 17,638 18,114 22,437 22,337 22,867 23,369 23,782
EU transactions 0 0 0 0 0 167 121 237 266 -66 167 121 237 266 -66
Accounting adjustments 4,187 4,156 4,256 3,992 4,520 1,477 851 860 386 606 5,664 5,008 5,116 4,379 5,126
Total 39,885 39,956 40,497 40,467 42,103 28,209 27,625 27,990 28,581 29,105 68,094 67,581 68,487 69,048 71,209

Box 3.2: Scotland's Notional Contributions to the European Union Budget

As a member of the European Union (EU) the UK contributes to the EU budget and receives funding from the EU via a number of programmes.

As discussed at the beginning of this chapter, the EU Transactions lines in the tables above are produced on a National Accounts basis, and exclude traditional own resource contributions to the EU. These are normally included when reporting on the UK's net contribution to EU budgets. The tables in this box show net payments to the EU including these contributions.

Although contributions to the EU are made by the public sector, funding from the EU is received by both public and non-public sector bodies. Both the EU Transactions line in the above tables and the figures in this box report only on transactions with the EU by the public sector, in common with the presentation used by HM Treasury. EU payments to Higher Education Institutions, which are not part of the public sector, are discussed further below.

Funding the EU Budget

There are three key sources of funding for the EU, which come from each member state:

  • Traditional own resource (TOR) - Agriculture duties and customs duties levied on agriculture and non-agriculture products from outside the EU.
  • VAT based own resource - Calculated as a percentage of countries' VAT tax base.
  • Gross National Income (GNI) based own resource - Calculated as a percentage of countries' GNI. This is the EU's single largest source of revenue.

UK Correction (Rebate, or Abatement)

Since 1985, the UK has received a rebate. The UK rebate is broadly equal to 66% of the UK's net contribution (in the previous year). Further detail is available from HM Treasury's European Union Finances 2016 publication.

https://www.gov.uk/government/statistics/european-union-finances-2016

Scotland's contribution to the EU Budget

Scotland does not contribute directly to the EU budget. In this analysis, Scotland is therefore assigned a share of the UK's contribution based on various apportionment methodologies. Scotland's share of the UK's GNI based contribution is estimated using the ratio of Scottish to UK GDP, both including and excluding the North Sea (the non-North Sea share is used in headline GERS estimates). VAT based own resource is assigned to Scotland using Scotland's share of UK VAT receipts, and a population share is used to assign TOR.

Receipts from the EU

Receipts received from the EU are broken down into two categories: public sector receipts and external assistance. Scottish public sector receipts reflect expenditure specifically for Scotland as reported in the Scottish Government's Consolidated Accounts, and include payments under the Common Agricultural Policy, European Structural Funds, and European Regional Development Funding.

The EU's external assistance budget provides aid to states outside the EU. A share of this expenditure is attributed to the UK based on its contribution to the EU budget. This is shown in the other attributed costs line in the tables below. A population share of this expenditure is assigned to Scotland.

UK's Net Contribution to the EU

Two measures are generally used to illustrate the UK's net contribution to the EU:

  • The primary measure is the UK's net contribution to the EU budget - this is calculated as the difference between the UK's gross contribution to the EU budget (less the rebate) and public sector EU receipts.
  • A secondary measure is the UK's net payment to EU institutions - this is equal to the UK's net contribution to the EU Budget less its share of the EU's external assistance aid budget.

The table below sets out the latest UK figures, as contained in Table C.1 of Public Expenditure Statistical Analyses, published July 2017.

UK: Transactions with the institutions of the EU, 2012-13 to 2016-17

£ million
2012-13 2013-14 2014-15 2015-16 2016-17
GNI based contribution 12,303 13,845 14,154 12,570 11,440
UK abatement -3,172 -4,130 -4,811 -4,068 -4,757
VAT-based contribution to the EU 2,398 2,163 2,316 2,751 2,477
Expenditure transfers to the EU 11,529 11,879 11,658 11,253 9,160
Receipts to cover collection costs of TOR -720 -733 -743 -771 -357
TOR 2,891 2,933 3,006 3,085 3,377
Gross contribution to the EU budget 13,699 14,079 13,921 13,567 12,180
Public sector EU receipts -4,022 -3,856 -4,690 -2,811 -4,079
Net contributions to the EU budget 9,678 10,223 9,231 10,756 8,102
less other attributed costs 82 79 - - -
Net payments to EU institutions 9,595 10,143 9,231 10,756 8,102

Source: Public Expenditure Statistical Analyses (July 2017), Table C.1 https://www.gov.uk/government/statistics/public-expenditure-statistical-analyses-2017

Scotland's Net Contribution to the EU

Estimates are provided for Scotland in the table below, showing the GNI contribution assigned using Scotland's share excluding and including the North Sea. As discussed at the beginning of this Chapter, the difference between Scotland's net payments to EU institutions (based on GDP excluding the North Sea) in the table below and the EU Transactions line in Tables 3.6 and 3.8 is Scotland's share of UK TOR.

Scotland: Estimated transactions with the institutions of the EU

2012-13 to 2016-17

£ million
2012-13 2013-14 2014-15 2015-16 2016-17
GNI based contribution (GDP exc North Sea (NS)) 963 1,083 1,107 983 874
GNI based contribution (GDP inc NS) 1,087 1,226 1,212 1,037 932
UK abatement (Population share) -264 -343 -398 -336 -390
VAT-based payments to the EU 201 185 195 232 209
Expenditure transfers to the EU (GDP exc NS) 900 925 904 880 692
Expenditure transfers to the EU (GDP inc NS) 1,024 1,068 1,009 934 751
Receipts to cover collection costs of TOR -60 -61 -61 -64 -29
TOR 241 244 249 254 278
Gross contribution to the EU budget (GDP exc NS) 1,080 1,108 1,091 1,071 941
Gross contribution to the EU budget (GDP inc NS) 1,205 1,250 1,196 1,125 1,000
Public sector EU receipts -666 -737 -606 -551 -729
Net contributions to the EU budget (GDP exc NS) 415 371 485 520 212
Net contributions to the EU budget (GDP inc NS) 539 513 590 574 271
less other attributed costs -7 -7 0 0 0
Net payments to EU institutions (GDP exc NS) 408 365 485 520 212
Net payments to EU institutions (GDP inc NS) 532 507 590 574 271

Note: As set out in the footnotes to the expenditure table, the net payments to EU institutions figure does not have the same definition as EU transactions presented there: as TOR is collected on behalf of the EU, it is not considered a transaction of the UK Government in the official public sector finances. Therefore to get to EU Transactions from the figure above, TOR must be subtracted.

EU Payments to Higher Education Institutions

This box has covered the transactions that the Scottish and UK public sector has with the EU. However, the EU also makes payments to bodies outside the public sector, such as Higher Education Institutions (HEIs), which are considered private sector not-for-profit institutions. The Higher Education Statistics Agency (HESA) produces statistics on these payments. These payments are not included in the tables shown above as they are not transactions with the public sector and are therefore out of the scope of public sector finances.

Payments to HEIs from the EU include:

  • Payments from EU government bodies
  • Payments from EU-based charities through an open competitive process
  • Payments from EU industry, commerce and public corporations
  • Payments from other EU bodies

To illustrate the size of these payments, the table below shows research grants and contracts income from the EU to HEIs for Scotland and the UK for academic years 2011-12 to 2015-16, which is the latest year for which figures are available. This spending is outside the public sector, and therefore has no impact on the figures reported in GERS.

EU Payments to Higher Education Institutions, Academic Year 2011-12 to 2015-16

£ million
2011-12 2012-13 2013-14 2014-15 2015-16
Scotland 74.7 81.4 88.8 94.1 97.4
UK 599.7 690.3 789.2 836.1 836.1

Note: The academic year runs from 1 August to 31 July

These figures have been reproduced with the permission of the Higher Education Statistics Agency (HESA). More details on these statistics can be found on the HESA website (www.hesa.ac.uk).

Box 3.3: Private Finance Initiative and Non-Profit Distributing Financing support for Public Private Partnerships (PPPs)

This box gives an introduction to Public Private Partnerships (PPPs) and the funding models that have been used in Scotland. It also breaks down unitary charge payments by scheme type, by type of procuring authority and by the sector of the project. This analysis uses sources of publicly available data, all brought together into an accompanying spreadsheet. The spreadsheet is available from the GERS website: http://www.gov.scot/Topics/Statistics/Browse/Economy/GERS/RelatedAreas

Introduction to PFI, PPPs, and NPD

Public Private Partnerships (PPPs) are long-term contracts for services that include the provision of associated facilities or properties. Under the contract, the private sector is generally responsible for various roles, including designing and constructing a building or facility, and maintaining and servicing it throughout the contract term. The public sector retains accountability for the main public services. The private sector is responsible for financing the project up front and only receives payment from the public sector once construction has been completed and the services have commenced.

The Private Finance Initiative (PFI) used to be the UK's preferred form of PPP. In Scotland, the Non-Profit Distributing (NPD) model has been the Scottish Government's preferred procurement option since 2007. For more information on these schemes, and the data sources used in this box, please see the Scottish Government website: http://www.gov.scot/Topics/Government/Finance/18232/12308

Unitary Charge Payments

Payments for both PFI and NPD projects take the form of a unitary charge which is usually paid annually over the lifetime of the contract. It is worth emphasising that these payments are already fully reflected in the GERS spending figures. In addition, the table below includes Ministry of Defence projects in Scotland which are procured by and entirely funded by the Ministry of Defence. Scotland is assigned a population share of this expenditure in GERS. Unitary charge payments cover repayment of capital, interest payments, and in some cases service charge payments. Figures are shown here for the years 2012-13 to 2016-17 to be consistent with other tables in this report. The underlying spreadsheets on the GERS website have data covering the period back to 1998-99 as well as estimated payments into the 2040s. Additional information about the individual procuring authority (e.g. individual local authority and health board information) and comparisons with the UK are also provided.

Scotland: Unitary charge payments, 2012-13 to 2016-17

£ million
2012-13 2013-14 2014-15 2015-16 2016-17
By scheme type
Private Finance Initiative 924 944 979 995 1,009
Non-Profit Distributing models1 52 55 59 73 117
Total Unitary Charge payments 977 999 1,038 1,069 1,126
By procuring authority
Further Education 2 2 2 10 27
Local Government 478 488 497 507 522
NHS 227 235 242 247 261
Other Scottish Government 105 109 127 136 139
Ministry of Defence 23 22 24 21 25
Scottish Water 142 143 146 146 151
Total Unitary Charge payments 977 999 1,038 1,069 1,126
By sector of project
Energy 4 4 5 5 5
Further Education 2 2 2 10 27
Health 227 235 242 247 261
IT 1 - - - -
Ministry of Defence 23 22 24 21 25
Offices 3 3 3 3 3
Police 4 4 4 4 4
Prisons 45 46 49 49 47
Schools 436 446 454 462 479
Transport 75 78 93 104 107
Waste 157 158 162 163 168
Total Unitary Charge payments 977 999 1,038 1,069 1,126
UK Total Unitary Charge Payments 9,257 9,744 10,206 10,465 10,361
Scotland as % UK 10.5% 10.2% 10.2% 10.2% 10.9%

1 Non-profit distributing models includes projects delivered by the hub model and projects commissioned prior to 2010. Further detail is available at: http://www.gov.scot/Topics/Government/Finance/18232/12308
Source: HM Treasury and Scottish Government figures. See the accompanying spreadsheet for full details of all sources