Government Expenditure & Revenue Scotland 2014-15

Chapter 3: Public Sector Expenditure

Total Public Sector Expenditure: Scotland 2014-15

Introduction

This chapter provides detailed estimates of public sector expenditure for Scotland.

The primary data source used to estimate Scottish public sector expenditure is the November 2015 Country and Regional Analysis (CRA) published by HM Treasury.^[15] In addition to this, data provided directly by HM Treasury is used to estimate a Scottish accounting adjustment. This adjustment is required to ensure the estimates of total public spending in GERS measure Total Managed Expenditure, the headline measure of aggregate public spending in the UK Public Sector Finances (see Annex A). For total expenditure and each expenditure component, a detailed breakdown according to current and capital is provided.

Public Sector Expenditure

Total public sector expenditure for Scotland in 2014-15 is estimated to be £68.4 billion. This is shown by spending category in Table 3.1. This was equivalent to 9.3% of comparable total UK public sector expenditure, shown in Table 3.2. Social protection, which includes spending on social security benefits, was the largest Scottish expenditure programme. It is discussed in more detail in Box 3.1.

Table 3.1: Total Expenditure: Scotland 2014-15

	Scotland
	£ million	% of total expenditure
General public services
Public and common services	1,431	2.1%
International services	896	1.3%
Public sector debt interest	2,760	4.0%
Defence	3,019	4.4%
Public order and safety	2,803	4.1%
Economic affairs
Enterprise and economic development	982	1.4%
Science and technology	477	0.7%
Employment policies	299	0.4%
Agriculture, forestry and fisheries	897	1.3%
Transport	2,773	4.1%
Environment protection	1,307	1.9%
Housing and community amenities	1,804	2.6%
Health	11,591	17.0%
Recreation, culture and religion	1,622	2.4%
Education and training	7,691	11.2%
Social protection	22,840	33.4%
Accounting adjustments	5,184	7.6%
Total Expenditure	68,377	100%

Total public sector expenditure for Scotland is estimated to have increased from £65.7 billion in 2010-11 to £68.4 billion in 2014-15, an increase of 4.1% in nominal terms. UK public expenditure grew at the same rate over the period.

Table 3.2: Total Current and Capital Expenditure: Scotland and UK

	(£ million)
	Scotland					UK
	2010-11	2011-12	2012-13	2013-14	2014-15	2010-11	2011-12	2012-13	2013-14	2014-15
Current	58,357	58,802	59,447	60,313	61,237	635,892	643,983	652,535	663,349	670,834
Capital	7,348	7,323	8,299	7,169	7,140	72,099	63,759	69,546	63,157	66,285
Total	65,705	66,125	67,746	67,482	68,377	707,991	707,742	722,081	726,506	737,119

Table 3.3 shows the share of total expenditure between current and capital for Scotland. The capital spending share is generally around 11%, except in 2012-13 when there was a one-off increase in capital spend associated with the transfer of the Royal Mail Pension Plan.

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

	(£ million)
	2010-11	2011-12	2012-13	2013-14	2014-15
Current	88.8%	88.9%	87.8%	89.4%	89.6%
Capital	11.2%	11.1%	12.3%	10.6%	10.4%

The table 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.

Table 3.4: Total Managed Expenditure as a Share of GDP

	(per cent of GDP)
	2010-11	2011-12	2012-13	2013-14	2014-15
Scottish TME as a Share of GDP:
Excluding North Sea GDP	53.1%	51.6%	52.0%	49.9%	48.6%
Including population share of North Sea GDP	52.1%	50.7%	51.2%	49.2%	48.1%
Including geographical share of North Sea GDP	44.7%	43.6%	45.3%	44.0%	44.6%
UK TME as a share of GDP:
100% of North Sea GDP	45.0%	43.4%	43.0%	41.4%	40.3%

Table 3.5 shows estimated total public sector expenditure for Scotland and the UK per person. Since 2010-11, spending per head in Scotland has been between 10.6% and 12.4% 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, rounded to nearest £100)

	2010-11	2011-12	2012-13	2013-14	2014-15
Scotland	12,500	12,500	12,700	12,700	12,800
UK	11,300	11,200	11,300	11,300	11,400
Difference (Scotland minus UK)	1,200	1,300	1,400	1,400	1,400
Relative Expenditure for Scotland (UK = 100)	110.6	111.6	112.4	112.4	112.3

Table 3.6: Total Expenditure: Scotland

	£ million
	Current					Capital					Total
	2010-11	2011-12	2012-13	2013-14	2014-15	2010-11	2011-12	2012-13	2013-14	2014-15	2010-11	2011-12	2012-13	2013-14	2014-15
General public services
Public and common services	1,410	1,289	1,151	1,272	1,254	222	175	142	195	177	1,632	1,465	1,293	1,466	1,431
International services	608	616	617	786	720	62	50	46	52	177	670	666	663	838	896
Public sector debt interest	3,372	3,520	3,146	3,071	2,760	0	0	0	0	0	3,372	3,520	3,146	3,071	2,760
Defence	2,727	2,755	2,547	2,533	2,518	565	479	480	487	501	3,292	3,234	3,027	3,020	3,019
Public order and safety	2,579	2,666	2,652	2,413	2,683	261	216	204	139	120	2,840	2,883	2,857	2,552	2,803
Economic affairs
Enterprise and economic development	456	592	697	804	775	276	250	245	196	207	732	842	942	1,000	982
Science and technology	0	0	0	0	0	334	367	354	415	477	334	367	354	415	477
Employment policies	427	281	244	320	296	9	8	7	7	3	436	289	251	327	299
Agriculture, forestry and fisheries	795	826	770	795	747	152	146	152	168	150	947	972	922	962	897
Transport	1,570	1,456	1,545	1,566	1,337	1,191	1,265	1,428	1,354	1,436	2,760	2,721	2,973	2,920	2,773
Environment protection	950	922	888	909	964	269	234	298	363	343	1,219	1,156	1,186	1,271	1,307
Housing and community amenities	292	215	73	120	191	1,456	1,510	1,548	1,530	1,613	1,748	1,725	1,621	1,649	1,804
Health	10,360	10,599	10,770	10,987	11,271	591	514	569	513	320	10,951	11,113	11,339	11,501	11,591
Recreation, culture and religion	1,192	1,177	1,290	1,203	1,433	277	339	332	243	189	1,469	1,516	1,622	1,446	1,622
Education and training	7,055	6,769	6,991	6,928	7,080	601	688	656	636	610	7,656	7,457	7,647	7,563	7,691
Social protection	20,518	21,244	22,171	22,122	22,805	94	65	87	18	35	20,612	21,309	22,258	22,140	22,840
Accounting adjustments	4,046	3,874	3,896	4,485	4,403	988	1,018	1,749	853	781	5,033	4,891	5,645	5,338	5,184
Total	58,357	58,802	59,447	60,313	61,237	7,348	7,323	8,299	7,169	7,140	65,705	66,125	67,746	67,482	68,377

Table 3.7: Total Expenditure: UK 2010-11 to 2014-15

	£ million
	Current					Capital					Total
	2010-11	2011-12	2012-13	2013-14	2014-15	2010-11	2011-12	2012-13	2013-14	2014-15	2010-11	2011-12	2012-13	2013-14	2014-15
General public services
Public and common services	10,959	10,127	9,752	9,607	10,399	1,658	1,123	1,276	1,389	1,332	12,617	11,250	11,028	10,996	11,731
International services	7,257	7,360	7,407	9,475	8,689	743	593	546	621	2,134	7,999	7,953	7,953	10,096	10,823
Public sector debt interest	40,227	42,065	37,746	36,999	33,328	0	0	0	0	0	40,227	42,065	37,746	36,999	33,328
Defence	32,549	32,950	30,586	30,543	30,430	6,738	5,711	5,767	5,867	6,054	39,287	38,661	36,354	36,410	36,484
Public order and safety	31,015	30,503	29,846	28,284	28,673	2,028	1,556	1,406	1,257	1,235	33,042	32,058	31,252	29,541	29,909
Economic affairs
Enterprise and economic development	2,831	3,280	3,951	4,376	3,907	2,035	1,596	942	1,153	857	4,866	4,876	4,893	5,529	4,764
Science and technology	0	0	0	0	0	3,406	3,563	3,597	4,438	4,940	3,406	3,563	3,597	4,438	4,940
Employment policies	4,603	3,170	2,803	3,584	3,123	94	83	78	76	31	4,697	3,253	2,881	3,660	3,154
Agriculture, forestry and fisheries	5,173	5,544	5,010	5,000	4,697	329	269	306	408	474	5,502	5,813	5,316	5,407	5,171
Transport	8,814	8,254	7,712	7,692	6,866	12,679	11,693	10,938	11,342	13,770	21,492	19,947	18,650	19,034	20,636
Environment protection	7,780	7,834	7,380	7,519	8,030	3,158	2,612	3,205	3,472	3,652	10,938	10,446	10,585	10,992	11,681
Housing and community amenities	3,220	2,722	3,086	2,984	3,053	10,031	7,431	6,877	6,823	7,622	13,251	10,153	9,963	9,807	10,675
Health	114,465	117,005	119,496	123,632	129,556	5,389	4,249	4,782	5,698	4,569	119,854	121,254	124,278	129,330	134,125
Recreation, culture and religion	10,256	9,660	10,691	9,648	10,162	2,719	2,819	2,006	1,770	1,830	12,974	12,479	12,698	11,418	11,992
Education and training	82,371	79,089	80,554	82,245	78,154	9,150	7,798	6,642	7,254	6,251	91,521	86,887	87,196	89,499	84,405
Social protection	229,408	239,635	250,224	251,189	258,012	1,019	596	450	-402	-107	230,427	240,231	250,674	250,787	257,905
Accounting adjustments	44,964	44,786	46,291	50,574	53,756	10,925	12,066	20,727	11,990	11,640	55,890	56,852	67,018	62,563	65,396
Total	635,892	643,983	652,535	663,349	670,834	72,099	63,759	69,546	63,157	66,285	707,991	707,742	722,081	726,506	737,119

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. This is followed by other social security benefits administered by the Department for Work and Pensions (DWP), such as jobseekers allowance and disability related benefits. Note that the measure of benefit spending in the table below does not include spending associated with the Scottish Welfare Fund, Council Tax Reduction Scheme, or elements of tax credits which are currently classed as accounting adjustments rather than social protection expenditure. If these were to be included, total benefit expenditure in Scotland in 2014-15 would be around £18.2 billion.

Some UK benefit 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)

	2010-11	2011-12	2012-13	2013-14	2014-15
Benefit spending in Scotland
State pension	5,976	6,328	6,791	7,051	7,324
Other DWP benefits	5,786	5,749	5,795	5,621	5,659
HMRC child benefit and tax credits	2,744	2,825	2,926	2,831	2,766
Housing benefit	1,661	1,728	1,789	1,770	1,776
Benefit spending in Scotland	16,166	16,630	17,302	17,273	17,526
Share of benefit spending outside UK and corporate spend	490	479	518	458	545
Other social protection
Public sector pensions	452	732	866	881	961
Social care for the elderly	2,067	2,096	2,249	2,263	2,283
Other	1,438	1,372	1,323	1,265	1,525
Total social protection	20,612	21,309	22,258	22,140	22,840

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

A more detailed breakdown of social security spending is available in the detailed spending database available from the GERS website. In addition, DWP publish a high-level breakdown of their benefit spend, available at the link below. When comparing with the figures above, note that housing benefit is identified separately, as in GERS, and the CRA database, it is recorded as Local Government expenditure rather than DWP expenditure. https://www.gov.uk/government/collections/benefit-expenditure-tables

Table 3.8 below provides a breakdown of Scottish expenditure by the Scottish Government, Local Authorities and Public Corporations and Other UK Government departments. The database used to produce the table is available on the GERS website.

Table 3.8: Total Expenditure: Scotland 2010-11 to 2014-15

	Scottish Government, LAs and Public Corporations					Other UK Government					Total
	2010-11	2011-12	2012-13	2013-14	2014-15	2010-11	2011-12	2012-13	2013-14	2014-15	2010-11	2011-12	2012-13	2013-14	2014-15
General public services
Public and common services	1,149	990	856	1,018	952	483	474	437	449	479	1,632	1,465	1,293	1,466	1,431
International services	0	0	0	0	0	670	666	663	838	896	670	666	663	838	896
Public sector debt interest	0	0	0	0	0	3,372	3,520	3,146	3,071	2,760	3,372	3,520	3,146	3,071	2,760
Defence	5	3	3	3	3	3,287	3,230	3,024	3,017	3,016	3,292	3,234	3,027	3,020	3,019
Public order and safety	2,579	2,601	2,597	2,307	2,568	262	282	260	245	235	2,840	2,883	2,857	2,552	2,803
Economic affairs
Enterprise and econ development	758	773	744	784	806	-25	69	197	217	175	732	842	942	1,000	982
Science and technology	6	5	4	3	3	328	362	350	412	474	334	367	354	415	477
Employment policies	0	0	0	0	0	436	289	251	327	299	436	289	251	327	299
Agriculture, forestry and fisheries	924	961	912	948	878	23	11	11	15	18	947	972	922	962	897
Transport	2,603	2,573	2,804	2,750	2,592	157	148	169	170	181	2,760	2,721	2,973	2,920	2,773
Environment protection	990	935	943	1,013	1,016	229	221	242	259	291	1,219	1,156	1,186	1,271	1,307
Housing and community amenities	1,748	1,725	1,621	1,649	1,804	0	0	0	0	0	1,748	1,725	1,621	1,649	1,804
Health	10,789	10,916	11,184	11,354	11,442	162	197	155	147	149	10,951	11,113	11,339	11,501	11,591
Recreation, culture and religion	1,023	1,088	1,119	1,066	1,140	447	428	504	380	482	1,469	1,516	1,622	1,446	1,622
Education and training	7,630	7,434	7,628	7,549	7,663	26	23	19	14	28	7,656	7,457	7,647	7,563	7,691
Social protection	5,052	5,300	5,513	5,481	5,788	15,560	16,008	16,745	16,660	17,053	20,612	21,309	22,258	22,140	22,840
Accounting adjustments	3,532	3,741	3,558	3,729	3,706	1,502	1,151	2,087	1,609	1,478	70,823	71,247	73,384	72,839	73,494
Total	38,787	39,043	39,486	39,653	40,363	26,919	27,081	28,260	27,829	28,014	65,705	66,125	67,746	67,482	68,377

Note: Negative expenditure for Scotland by other UK Government departments associated with Enterprise and Economic Development represents Scotland's population share of the unwinding of the UK Government's financial sector interventions following the global financial crisis.

Recent classification decisions

On 30 October 2015, the ONS announced that private providers of registered social housing in England, which includes many housing associations, have been reclassified from the private sector to the public sector. The ONS implemented this change in the Public Sector Finances on 19 February 2016. As GERS is consistent with the January 2016 Public Sector Finances, the UK figures do not include the effect of the reclassification.

The ONS has also made a number of other classifications that directly affect Scottish public expenditure. The most significant of these affect infrastructure projects being delivered by the Non-Profit Distributing (NPD) programme. Normally, the only expenditure associated with such schemes reported in GERS are the unitary charge payments made by the Scottish Government once the project is completed. However, in July 2015, the ONS decided that the Special Purchase Vehicle set up to deliver the Aberdeen Western Peripheral Route is a public rather than private body. As such, all its expenditure will fall within the public sector expenditure covered by GERS at the time the spending occurs. The bodies set up to deliver the Edinburgh Royal Hospital for Sick Children and the Dumfries and Galloway Royal Infirmary may be treated in the same way. These decisions have not yet been incorporated into the UK Public Sector Finances, as a final decision has not been taken on whether these bodies will be classified to central government or public corporations. The changes have therefore not been incorporated into the main estimates of spending in this edition of GERS. The projects only begin incurring expenditure in 2014‑15, with spending in previous years unaffected. When implemented, the decision will increase Scottish and UK spending in 2014-15 by £109 million.

Box 3.2: Comparisons of Scottish expenditure to other areas of the UK (Experimental Statistics)

The chart below provides experimental estimates of public sector expenditure for each of the UK countries and regions. Full details of the methodology can be found at: http://www.gov.scot/Topics/Statistics/Browse/Economy/GERS/RelatedAreas

We welcome user feedback about this analysis, including comments on the methods used. As normal, please feedback to economic.statistics@gov.scot .

Overall, Scotland is estimated to have the second highest level of spending per person of the UK countries and regions. The charts below show spending per person separately first for capital and then current spend relative to the UK average.

In most countries and regions, capital spending accounts for approximately 10% of total expenditure. There is a large variation in capital spending per person, with London receiving the highest. As shown in the chart, the higher levels of capital spending in London are due, in part, to capital expenditure on public transport, which includes spending on railways, the London Underground, and buses. Spending in Scotland and Northern Ireland is also higher than other parts of the UK due in part to the fact that their water and sewerage services are provided by the public sector, rather than private companies. The fact that these services remain in the public sector in these countries also increases their public sector revenue. Scotland is estimated to have the second highest level of capital expenditure per person of the UK countries and regions, even when spending on Scottish Water is excluded.

The ONS is currently consulting on the production of Public Sector Finance statistics for the Country and Regions of the UK. The consultation is available at: https://www.ons.gov.uk/aboutus/whatwedo/statistics/consultationsandsurveys/allconsultationsandsurveys/consultationoncountryandregionalpublicsectorfinances

Capital spend per person, 2014-15

The chart below shows current expenditure per person. This accounts for around 90% of total expenditure. Scotland is estimated to have the second highest level of current expenditure per person of the UK countries and regions

Current spend per person, 2014-15