Publication - Statistics

Government Expenditure & Revenue Scotland 2013-14

Published: 11 Mar 2015
Part of:
Statistics
ISBN:
9781785441820

Government Expenditure and Revenue Scotland (GERS) is a National Statistics publication. It estimates the contribution of revenue raised in Scotland toward the goods and services provided for the benefit of Scotland. The estimates in this publication are consistent with the UK Public Sector Finances published in January 2015.

98 page PDF

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98 page PDF

1.9 MB

Contents
Government Expenditure & Revenue Scotland 2013-14
ANNNEX C: REVISIONS

98 page PDF

1.9 MB

ANNNEX C: REVISIONS

This section presents revisions from the previous GERS 2012-13 publication.

Revisions to Non-North Sea Revenue Estimates from GERS 2012-13

Table C.1 summarises the revisions in this edition of GERS by comparing the estimates contained in this report with last year's publication. Overall, estimated public sector revenue in Scotland for the years 2009-10 to 2012-13 have been revised upward. This reflects upward revisions to UK receipts, primarily due to the incorporation of ESA10 changes as discussed in Box 3.2. This change was made in the ONS Public Sector Finances in September 2014.

Table C.1: Revisions to Estimates of Total Non-North Sea Public Sector Revenue: 2009-10 to 2012-13

(£ million)

2009-10

2010-11

2011-12

2012-13

Scotland

Estimates published in GERS 2012-13

42,054

44,318

46,315

47,566

Estimates published in GERS 2013-14

43,316

45,523

47,279

48,321

Revision

1,262

1,204

964

755

UK

Estimates published in GERS 2012-13

510,118

547,100

565,597

580,293

Estimates published in GERS 2013-14

527,272

564,109

582,450

595,223

Revision

17,154

17,009

16,853

14,931

Scotland/UK ratio

Estimates published in GERS 2012-13

8.2%

8.1%

8.2%

8.2%

Estimates published in GERS 2013-14

8.2%

8.1%

8.1%

8.1%

Revision (% point)

0.0%

0.0%

-0.1%

-0.1%

Table C.2 illustrates the revisions to individual public sector revenue streams in Scotland and the UK for 2012-13. The revisions to the UK revenue estimates and to the underlying data used to apportion some taxes to Scotland have resulted in revisions to some revenue estimates. The net effect of all of the changes has been to increase the estimate of public sector revenue in Scotland by £755 million and the estimate of UK tax revenue by £14.9 billion.

Table C.2: Revisions to Estimates of Public Sector Revenue: Scotland and UK 2012-13

(£ million)

(%)

Scotland

UK

Scotland

UK

Income tax

-9

704

-0.1%

0.5%

Corporation tax (excluding North Sea)

-72

574

-2.5%

1.7%

Capital gains tax

28

0

9.5%

0.0%

Other taxes on income and wealth

-11

-7

-4.1%

-0.2%

National insurance contributions

-20

0

-0.2%

0.0%

VAT

222

2,393

2.4%

2.1%

Fuel duties

-89

0

-4.0%

0.0%

Stamp duties

-7

0

-1.6%

0.0%

Tobacco duties

155

0

13.7%

0.0%

Alcohol duties

-39

0

-4.0%

0.0%

Betting and gaming and duties

1

0

0.5%

0.0%

Air passenger duty

0

0

0.0%

0.0%

Insurance premium tax

-7

0

-3.1%

0.0%

Landfill tax

-1

0

-0.6%

0.0%

Climate change levy

-1

9

-2.1%

1.4%

Aggregates levy

-1

0

-2.2%

0.0%

Inheritance tax

-29

0

-12.1%

0.0%

Vehicle excise duty

0

0

0.0%

0.0%

Non-domestic rates

-35

-227

-1.8%

-0.9%

Council tax

-77

6

-3.8%

0.0%

Other taxes, royalties and adjustments

124

1,183

11.5%

9.2%

Interest and dividends

-161

-1,984

-25.9%

-26.0%

Gross operating surplus

606

10,096

18.7%

36.6%

Rent and other current transfers

180

2,184

140.5%

154.0%

Total revision

755

14,931

1.6%

2.6%

Revisions to the majority of previously published estimates are relatively small and largely explained by revisions to the UK constraining totals for each revenue stream. For other revenues, changes to methodologies, the latest data, or the UK constraining totals have led to changes to the Scottish estimates. These are discussed below.

Revisions to income tax, VAT, non-domestic rates, council tax, and rent and other current transfers reflect the impact of the ESA10 changes on revenue, as discussed in Box 3.2. These have increased revenue, but also have offsetting impacts on expenditure. Revisions to gross operating surplus also reflect ESA10 changes, but there are some non-ESA10 changes discussed below.

Revisions to onshore corporation tax for the UK reflect changes to the assessment of profits which fall within the UK Continental Shelf Ring Fence. In April 2014, HMRC published revisions to the estimates of offshore corporation tax, reflecting a reduction in the amount of profits which were assessed as occurring within the ring fence. This led to a corresponding increase in the amount of onshore profits, and therefore an increase in onshore corporation tax. For Scotland, this increase in onshore corporation tax has been offset by revisions to ONS Regional Accounts, which have resulted in the estimate of profits being made in Scotland being revised down. This downward revision is in part related to the move to ESA10 for GDP, which as discussed in Chapter 1 has resulted in a smaller increase in profits in Scotland compared to the UK as a whole. This has led to a corresponding reduction in the amount of corporation tax assigned to Scotland.

Revisions to the Scottish estimate of fuel duty result from an updated methodology to apportion the UK estimate. Revenue from petrol and diesel are now apportioned separately.

Revisions to interest and dividends primarily reflect the incorporation of the Bank of England Asset Purchase Facility within estimates of public sector revenue. This is in line with the move to reduce the number of measures of UK public sector finances made by the ONS in September, following a review and consultation on their publication.

Revisions to gross operating surplus are primarily explained by ESA10 changes, as discussed in Box 3.2, which affects estimates of central government gross operating surplus. However, there have also been revisions to the apportionment of public corporations' gross operating surplus. Previously, this was all apportioned using corporation level gross trading surpluses, which excludes artistic originals. In this year's edition, public corporations' gross operating surplus associated with artistic originals is separated out and apportioned separately. This revenue is associated with BBC and Channel 4, and so Scotland is apportioned a population share. The remainder of gross operating surplus is apportioned as usual. This has reduced Scotland's estimated share of gross operating surpluses in the years to 2012‑13.

Revisions to other taxes, royalties, and adjustments primarily reflect revisions to the UK estimates of revenue from renewable energy obligation certificates. These are imputed revenues, with offsetting expenditures, representing the cost to companies which are required to purchase certificates to meet the renewable energy obligation requirements.

Revisions to North Sea Revenue Estimates from GERS 2012-13

Table C.3 summarises the revisions to North Sea revenues in this edition of GERS by comparing the estimates contained in this report with last year's publication.

Estimates of North Sea revenues in the UK for the years 2009-10 and 2010-11 are unchanged, whilst the figures for 2011-12 and 2012-13 been revised down as a result of downward revisions to North Sea corporation tax. This reflects a new method used by the HMRC to identify which parts of corporation tax receipts relate to operations within the UK Continental Shelf Ring Fence. Previously, HMRC waited until group payments had been distributed between companies and revised previous years data to reflect this. The new method means that this split is now estimated sooner, and should reduce future revisions. This change has reduced the estimate of company profits falling within the ring fence, resulting in a fall in North Sea corporation tax receipts in 2011-12 and 2012-13, and an increase in onshore corporation tax receipts at the UK level.[39]

Table C.3: Revisions to UK North Sea Revenue: 2009-10 to 2012-13

(£ million)

2009-10

2010-11

2011-12

2012-13

Licence fees

Estimates published in GERS 2012-13

67

70

67

69

Estimates published in GERS 2013-14

67

70

67

69

Revision

0

0

0

0

North Sea Corporation Tax

Estimates published in GERS 2012-13

4,998

6,864

9,218

4,793

Estimates published in GERS 2013-14

4,998

6,864

8,840

4,393

Revision

0

0

-378

-400

Petroleum Revenue Tax

Estimates published in GERS 2012-13

923

1,458

2,032

1,737

Estimates published in GERS 2013-14

923

1,458

2,032

1,737

Revision

0

0

0

0

Emissions Trading Scheme

Estimates published in GERS 2012-13

3

14

19

33

Estimates published in GERS 2013-14

3

14

19

15

Revision

0

0

0

-19

Total revisions

0

0

-378

-419

Table C.4 below summarises the revisions to the estimate of Scotland's illustrative geographical share of the North Sea tax revenues since the previous publication.

Table C.4: Revisions to geographical share of North Sea Revenue: 2009-10 to 2012-13

(£ million)

2009-10

2010-11

2011-12

2012-13

Estimates published in GERS 2012-13

94.8%

88.7%

88.2%

84.2%

Estimates published in GERS 2013-14

94.8%

88.7%

88.2%

84.2%

Difference (% point)

0.0%

0.1%

0.0%

0.1%

A discussion of revisions to all taxes between 2009-10 and 2012-13 is provided in the GERS 2013-14 Revenue Methodology note available on the GERS website.

Revisions to Expenditure Estimates from GERS 2012-13

Table C.5 sets out the changes in estimates of public expenditure in Scotland and the UK between this report and GERS 2012-13. These revisions reflect changes in the underlying CRA data, revisions to the GERS methodology and revisions to the data sources used to apportion non identifiable expenditure to Scotland. Revisions to public expenditure that can be traced to changes in the CRA database are specified separately.

Total public sector expenditure has been revised up for both Scotland and the UK in all years. This primarily reflects the changes associated with ESA10 discussed in Box 5.1, which increase both expenditure and revenue by a similar amount. Scotland's share of UK expenditure is unchanged in the years 2009-10 to 2011-12.

Expenditure in 2012-13 has been revised up for both Scotland and the UK by more than in other years. This reflects the incorporation of the Royal Mail Pension Plan into the expenditure estimates. This is in line with the move to reduce the number of measures of UK public sector finances made by the ONS in September, following a review and consultation on their publication. Under ESA10, the Royal Mail Pension Plan increases UK spending by £9.5 billion, and a population share is assigned to Scotland, increasing spending by around £800 million.

Table C.5: Revisions to Estimates of Total Managed Expenditure: 2009-10 to 2012-13

(£ million)

2009-10

2010-11

2011-12

2012-13

Scotland

Estimates published in GERS 2012-13

62,087

64,095

64,869

65,205

Estimates published in GERS 2013-14

63,533

65,112

65,768

67,848

Revision

1,446

1,017

899

2,643

Of which revisions to TES made in CRA 2014

216

215

129

655

UK

Estimates published in GERS 2012-13

673,402

694,705

694,315

701,681

Estimates published in GERS 2013-14

686,295

706,520

706,190

720,836

Revision

12,893

11,815

11,875

19,155

Of which revisions to TES made in CRA 2014

1,719

2,012

1,795

-1,721

Scotland/UK Ratio

Estimates published in GERS 2012-13

9.2%

9.2%

9.3%

9.3%

Estimates published in GERS 2013-14

9.3%

9.2%

9.3%

9.4%

Revision (% point)

0.0%

0.0%

0.0%

0.1%

In 2012-13, Scotland's expenditure in the CRA has been revised up by £655 million, whilst UK expenditure has been revised down, resulting in an increase in Scotland's share of UK spending. This reflects an upward revision of over £600 million to estimates of spending by Scottish Local Authorities made by HM Treasury in the 2014 CRA publication. This revision was caused by estimates of spending being replaced by outturn figures from Scottish Government Local Government Finance statistics, published in February 2014, thereby providing a more accurate figure.

This is a relatively large revision to estimates of Scottish spending. The Scottish Government and HM Treasury have worked together to ensure that the estimates in the 2014 CRA publication are consistent with the latest provisional local authority spending figures for Scotland, to ensure that future revisions are minimized.

Table C.6 shows a breakdown of the revisions by spending line for 2012-13. The downward revision to public sector debt interest represents the incorporation of the Bank of England Asset Purchase Facility within the expenditure estimates.

In general, Scottish revisions are in line with UK revisions. The exceptions are public and common services, public order and safety, and transport. These categories are revised up for Scotland, reflecting the revision to Scottish Local Authority spending in 2012-13 discussed above.

Table C.6: Revisions to Estimates of Public Sector Expenditure: Scotland and UK 2012-13

(£ million)

(%)

Scotland

UK

Scotland

UK

General public services

Public and common services

130

-363

9.4%

-3.1%

International services

-5

-59

-0.7%

-0.7%

Public sector debt interest

-883

-10,582

-22.0%

-21.9%

Defence

1

-10

0.0%

0.0%

Public order and safety

321

-164

12.7%

-0.5%

Economic affairs

Enterprise and economic development

-94

-431

-9.0%

-8.1%

Science and technology

32

1

12.9%

0.0%

Employment policies

47

518

21.2%

20.2%

Agriculture, forestry and fisheries

3

-45

0.3%

-0.8%

Transport

291

-567

10.5%

-2.9%

Environment protection

1

-540

0.1%

-4.8%

Housing and community amenities

-17

-595

-1.0%

-5.6%

Health

6

-1

0.1%

0.0%

Recreation, culture and religion

84

-49

5.4%

-0.4%

Education and training

23

-166

0.3%

-0.2%

Social protection

-173

-1,730

-0.8%

-0.7%

Accounting adjustments

2,872

33,940

111.3%

108.1%

Total revision

2,643

19,155

4.1%

2.7%

Revisions to Estimates of Capital Consumption from GERS 2012-13

Table C.7 sets out the changes to estimates of capital consumption in Scotland and the UK between this report and GERS 2012-13. Capital consumption, which represents the capital stock consumed to provide services within the year, is included alongside current expenditure when calculating the current budget balance. It does not affect the estimate of the net fiscal balance.

As general government capital consumption forms part of gross operating surplus within public sector revenue, revisions to general government capital consumption do not affect the current budget balance. However, as public corporations are market bodies which have their own operating surplus from their market activities, which is not related to their capital consumption, revisions to public corporation capital consumption do affect the current budget balance.

As discussed in Boxes 3.2 and 5.1, under ESA10, capital consumption across the UK is higher. Scotland's share of capital consumption has also been revised up due to upward revisions to public corporation data. As Scotland has a relatively high share of public corporation capital consumption, this revision has a larger impact on Scotland's current budget balance than for the UK as a whole

Unlike for public corporations' expenditure and operating surplus, detailed capital consumption data are not available on a public corporation basis from the ONS, as they are not separately identified within their perpetual inventory model. The Scottish Government is investigating the potential to use public corporation data from the Whole of Government Accounts, which may provide a more stable estimate of Scottish public corporation capital consumption.

Table C.7: Revisions to capital consumption: 2009-10 to 2012-13

(£ million)

2009-10

2010-11

2011-12

2012-13

Scotland

Estimates published in GERS 2012-13

1,884

1,945

2,039

2,119

Estimates published in GERS 2013-14

3,789

3,777

3,746

3,818

Revision

1,905

1,832

1,707

1,699

UK

Estimates published in GERS 2012-13

19,999

20,784

21,616

22,510

Estimates published in GERS 2013-14

30,562

31,859

33,198

34,247

Revision

10,563

11,075

11,582

11,737

Scottish Share of UK

(% of UK)

Estimates published in GERS 2012-13

9.4%

9.4%

9.4%

9.4%

Estimates published in GERS 2013-14

12.4%

11.9%

11.3%

11.1%

Revision

3.0%

2.5%

1.9%

1.7%

Revisions to Fiscal Aggregates from GERS 2012-13

Table C.8 shows revisions to the current budget balance from the previous publication of GERS. Scotland's current budget balance has worsened in all years, whilst the UK has improved. For the UK, this reflects the ESA10 changes which reclassify current expenditure to capital expenditure, discussed in Box 5.2. These changes reduce current expenditure, and so the current budget balance improves. For Scotland, there are a number of reasons why the current budget balance does not improve.

Firstly, as discussed above, the increases in public corporation capital consumption have a larger impact in Scotland. In addition, in 2012-13, there are additional impacts of the downward revisions to North Sea revenue and upward revisions to local authority spending. A downward revision to North Sea revenue also occurred in 2011-12.

Secondly, in the years prior to 2012-13, Scotland's share of onshore tax revenue has been revised down. This reflects the downward revisions to the estimates of Scotland's share of onshore corporation tax and gross operating surplus as described above.

Table C.8: Revisions to Estimates of the Current Budget Balance: 2009-10 to 2012‑13

(£ million)

2009-10

2010-11

2011-12

2012-13

Estimates published in GERS 2012-13

Excluding North Sea revenue

-15,235

-15,753

-14,632

-14,180

Including North Sea revenue (population share)

-14,732

-15,049

-13,684

-13,628

Including North Sea revenue (geographical share)

-9,556

-8,299

-4,632

-8,599

UK

-108,900

-100,546

-88,663

-91,930

Estimates published in GERS 2013-14

Excluding North Sea revenue

-16,033

-16,030

-14,732

-14,851

Including North Sea revenue (population share)

-15,530

-15,325

-13,815

-14,334

Including North Sea revenue (geographical share)

-10,351

-8,571

-5,064

-9,616

UK

-103,811

-93,756

-81,921

-83,848

Difference (£ million) (positive shows improvement)

Excluding North Sea revenue

-797

-277

-100

-671

Including North Sea revenue (population share)

-797

-277

-131

-706

Including North Sea revenue (geographical share)

-794

-272

-432

-1,018

UK

5,089

6,790

6,742

8,082

Table C.9 shows revisions to the net fiscal balance from the previous publication of GERS. In most years, the revisions pattern is similar to that for the current budget balance. However, in 2012-13 there has been a downward revision in the net fiscal balance for both Scotland and the UK. This primarily reflects the impact of the inclusion of the Royal Mail Pension Plan transfer, which increases UK capital expenditure by £9.5 billion. Scotland is assigned a population share of this, increasing capital expenditure by approximately £800 million.

Table C.9: Revisions to Estimates of the Net Fiscal Balance: 2009-10 to 2012-13

(£ million)

2009-10

2010-11

2011-12

2012-13

Estimates published in GERS 2012-13

Excluding North Sea revenue

-20,033

-19,777

-18,553

-17,639

Including North Sea revenue (population share)

-19,530

-19,072

-17,605

-17,087

Including North Sea revenue (geographical share)

-14,354

-12,322

-8,554

-12,058

UK

-157,293

-139,199

-117,382

-114,756

Estimates published in GERS 2013-14

Excluding North Sea revenue

-20,217

-19,589

-18,489

-19,527

Including North Sea revenue (population share)

-19,714

-18,885

-17,572

-19,010

Including North Sea revenue (geographical share)

-14,535

-12,130

-8,821

-14,293

UK

-153,032

-134,005

-112,782

-119,399

Difference (£ million) (positive shows improvement)

Excluding North Sea revenue

-184

187

65

-1,888

Including North Sea revenue (population share)

-184

187

33

-1,923

Including North Sea revenue (geographical share)

-181

192

-267

-2,235

UK

4,261

5,194

4,600

-4,643

In addition to revisions to the fiscal aggregates themselves, there are also revisions to the fiscal aggregates expressed as a share of GDP due to changes in GDP estimates. These are shown in Tables C.10 and C.11 for the current budget balance and the net fiscal balance respectively. If there had been no revisions to estimates of the current budget balance or net fiscal balance in cash terms, previous estimates of Scotland's fiscal aggregates excluding the North Sea would generally have improved since the previous publication. This reflects upward revisions to onshore GDP following the move to ESA10, as discussed in Chapter 1. However, the improvement is not as large as seen for the UK. This reflects downward revisions to Scottish GDP since that used in GERS 2012-13 on an ESA95 basis following the update of the Input‑Output benchmark year from 2009 to 2011 in July 2014. These partially offset the upward ESA10 revisions in most years, and almost entirely offset them in 2010-11.

Table C.10: Impact of Revisions to GDP on Estimates of the Current Budget Balance: 2009-10 to 2012-13

2009-10

2010-11

2011-12

2012-13

Estimates published in GERS 2012-13

(% of GDP)

Excluding North Sea revenue

-13.1%

-12.9%

-11.6%

-11.2%

Including North Sea revenue (population share)

-12.5%

-12.1%

-10.7%

-10.6%

Including North Sea revenue (geographical share)

-7.1%

-5.7%

-3.1%

-5.9%

UK

-7.6%

-6.7%

-5.7%

-5.8%

GERS 2012-13 estimate with latest GDP estimates

(% of GDP)

Excluding North Sea revenue

-12.6%

-12.8%

-11.4%

-10.9%

Including North Sea revenue (population share)

-12.0%

-12.0%

-10.5%

-10.4%

Including North Sea revenue (geographical share)

-6.8%

-5.7%

-3.1%

-5.8%

UK

-7.3%

-6.4%

-5.4%

-5.5%

Change (positive denotes improvement)

(% point difference)

Excluding North Sea revenue

0.5%

0.02%

0.2%

0.3%

Including North Sea revenue (population share)

0.5%

0.01%

0.2%

0.3%

Including North Sea revenue (geographical share)

0.3%

0.00%

0.1%

0.1%

UK

0.4%

0.3%

0.3%

0.3%

Table C.11: Impact of Revisions to GDP on Estimates of the Net Fiscal Balance: 2009-10 to 2012-13

2009-10

2010-11

2011-12

2012-13

Estimates published in GERS 2012-13

(% of GDP)

Excluding North Sea revenue

-17.2%

-16.1%

-14.7%

-14.0%

Including North Sea revenue (population share)

-16.5%

-15.3%

-13.7%

-13.3%

Including North Sea revenue (geographical share)

-10.7%

-8.5%

-5.8%

-8.3%

UK

-11.0%

-9.3%

-7.6%

-7.3%

GERS 2012-13 estimate with latest GDP estimates

(% of GDP)

Excluding North Sea revenue

-16.6%

-16.1%

-14.5%

-13.6%

Including North Sea revenue (population share)

-15.9%

-15.3%

-13.5%

-13.0%

Including North Sea revenue (geographical share)

-10.3%

-8.5%

-5.7%

-8.2%

UK

-10.5%

-8.8%

-7.2%

-6.9%

Change (positive denotes improvement)

(% point difference)

Excluding North Sea revenue

0.6%

0.0%

0.2%

0.4%

Including North Sea revenue (population share)

0.6%

0.0%

0.2%

0.3%

Including North Sea revenue (geographical share)

0.4%

0.0%

0.1%

0.1%

UK

0.5%

0.4%

0.4%

0.4%


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