Government Expenditure and Revenue Scotland: 2017-2018

Annex A: Supplementary Tables

This section presents supplementary tables on public sector revenue and expenditure in Scotland.

Table A.1 below shows the population figures used in calculating per head estimates in GERS.

Table A.1: Financial Year Population Estimates (thousands)

	2013-14	2014-15	2015-16	2016-17	2017-18
Scotland	5,333	5,354	5,381	5,410	5,425
UK	64,228	64,725	65,245	65,746	66,040
As % of UK total	8.3%	8.3%	8.2%	8.2%	8.2%

Note: Financial year estimates are calculated as the weighted average of the relevant mid-year estimates. I.e., the 2017-18 population is estimated as three-quarters of the 2017 population plus one quarter of the 2018 population.

Table A.2 below shows the relationship between revenue, current expenditure, and the current budget balance, and then the transition from the current budget balance to the net fiscal balance.

Table A.2: Current and Capital Budgets: Scotland

	£ million
	2013-14	2014-15	2015-16	2016-17	2017-18
Current Budget
Current revenue
Excluding North Sea revenue	51,089	52,959	53,942	56,608	58,630
Including North Sea revenue (population share)	51,463	53,099	53,935	56,611	58,728
Including North Sea revenue (geographical share)	54,535	54,336	53,993	56,874	59,957
Current expenditure	60,637	61,524	62,340	62,856	64,633
Capital consumption	4,324	4,527	4,468	4,451	4,629
Balance on current budget (surplus is positive, deficit is negative)
Excluding North Sea revenue	-13,871	-13,092	-12,865	-10,700	-10,633
Including North Sea revenue (population share)	-13,497	-12,952	-12,872	-10,697	-10,535
Including North Sea revenue (geographical share)	-10,426	-11,715	-12,815	-10,433	-9,306
Capital Budget
Capital expenditure	7,130	7,117	7,152	8,498	8,764
Capital consumption	-4,324	-4,527	-4,468	-4,451	-4,629
Net Investment	2,806	2,589	2,684	4,046	4,135
Net Fiscal Balance (surplus is positive, deficit is negative)
Excluding North Sea revenue	-16,677	-15,682	-15,549	-14,746	-14,768
Including North Sea revenue (population share)	-16,304	-15,542	-15,556	-14,743	-14,670
Including North Sea revenue (geographical share)	-13,232	-14,304	-15,499	-14,480	-13,441

GDP

Table A.3 below provides the financial year GDP estimates used in GERS.

Table A.3: Scottish GDP including and excluding North Sea GDP

	£ million
	2013-14	2014-15	2015-16	2016-17	2017-18
Scottish GDP
Excluding North Sea and share of UK extra-regio	140,767	146,785	147,578	151,642	156,481
Including North Sea (population share)	142,722	148,303	149,028	152,994	158,032
Including North Sea (geographical share)	158,800	160,507	160,435	163,745	170,446
UK GDP	1,781,350	1,855,049	1,912,472	1,989,162	2,056,207

Source: Quarterly National Accounts Scotland, https://www.gov.scot/Topics/Statistics/Browse/Economy/QNAS; ONS

Note: Scottish GDP including a geographical share of the North Sea also includes a population share of UK overseas public administration and defence activity. Table E in Quarterly National Accounts Scotland provides a more detailed breakdown.

General Government estimates

The headline GERS figures cover the whole of the public sector. As such, they include revenue and expenditure associated with public corporations such as Scottish Water and the Bank of England. They are on a financial year basis.

When conducting international comparisons, bodies such as the European Commission and the International Monetary Fund ( IMF) present figures on a calendar year basis and covering only general government; i.e., excluding public corporations. In order to help comparisons with such figures, the table below presents the GERS net fiscal balance results on this basis. As revenue and expenditure are primarily estimated on a financial year and public sector basis, the calendar year estimates below are illustrative and have been derived by apportioning the main GERS estimates.

Table A.4: Calendar year general government estimates: Scotland and UK

	£ million
	2013	2014	2015	2016	2017
Net Fiscal Balance
Excluding North Sea revenue	-16,733	-16,491	-15,888	-15,483	-14,448
Including North Sea revenue (per capita share)	-16,327	-16,267	-15,884	-15,513	-14,350
Including North Sea revenue (geographical share)	-13,011	-14,387	-15,732	-15,571	-13,088
UK	-94,034	-99,197	-80,177	-57,998	-36,126
As % of GDP
Excluding North Sea revenue	-12.0%	-11.3%	-10.8%	-10.3%	-9.3%
Including North Sea revenue (per capita share)	-11.6%	-11.0%	-10.7%	-10.2%	-9.2%
Including North Sea revenue (geographical share)	-8.3%	-8.9%	-9.9%	-9.6%	-7.8%
UK	-5.3%	-5.4%	-4.2%	-2.9%	-1.8%

Confidence intervals

A number of the revenues in GERS are based on survey estimates. As such, they have an associated statistical uncertainty. The table below presents the 95% confidence intervals associated with these revenues. Other revenues are based on administrative data, or modelled data for which confidence intervals are not available. Estimates are not presented for these revenues. Expenditure is primarily based on administrative data, and therefore confidence intervals are not presented for expenditure.

Although tobacco duties and alcohol duties are both based on the Living Costs and Food Survey, the confidence interval for alcohol is larger. This is because the methodology for calculating alcohol duties uses more disaggregate survey data to reflect the different levels of duty, and revenue, received from different types of alcohol. This lower level survey data has a correspondingly larger uncertainty.

Note that the confidence intervals relate to the latest year of survey data. As GERS often uses data from previous years to estimate values for the latest year, there will likely be larger uncertainty around the latest year estimates than suggested by the table below.

Table A.5: Confidence intervals around survey based apportionments: Scotland

	£ million
	Central estimate	95% lower bound	95% upper bound	Range	Range (%)
Income tax	12,544	12,331	12,757	+/-213	+/-1.7%
National insurance contributions	10,592	10,412	10,772	+/-180	+/-1.7%
VAT	10,146	9,922	10,369	+/-223	+/-2.2%
Tobacco duties	972	956	989	+/-17	+/-1.7%
Alcohol duties	1,122	1,033	1,212	+/-90	+/-8.0%
Betting and gaming duties	223	220	226	+/-3	+/-1.4%
Insurance premium tax	408	400	416	+/-8	+/-2.0%
Total survey based apportionments	36,007	35,273	36,741	+/-734	+/-2.0%

Amendments to the Country and Regional Analysis database

A number of significant improvements have been made to the HM Treasury Country and Regional Analysis ( CRA) database in recent years to apportion expenditure more accurately to countries and regions of the UK. While many anomalies in previous editions of the CRA have been addressed and are now reflected in both CRA 2017 and this GERS report, a small number of supplementary amendments to the CRA 2017 dataset are made in producing GERS. The aim of these refinements is to ensure that the public sector expenditure figure for Scotland captures as accurately as possible expenditure for the benefit of Scottish residents.

The amendments made to the CRA in producing this edition of GERS are shown in Table A.6. They are discussed in the detailed expenditure methodology paper available at http://www.gov.scot/Topics/Statistics/Browse/Economy/GERS/Methodology.

As the CRA for 2017-18 is not yet published, there are no formal amendments to individual spending lines in 2017-18. The 2016-17 adjustments are in effect carried forward into 2017‑18, adjusted for the spending of the responsible department. Further detail is provided in the expenditure methodology note.

In addition to the amendments to the CRA, there are amendments to the estimates of spending in 2017-18 from those published in PESA. This is to bring the increase in Scottish local government current spending in line with the provisional outturn estimates published in July 2018. ^[22] These adjustments are additional to those that would be carried forward from the CRA.

Table A.6: Amendments to Estimates of Total Public Sector Expenditure on Services from CRA 2017

	£ million
	2013-14	2014-15	2015-16	2016-17	2017-18
Amendments from the CRA
Nuclear-related expenditure	-174	-181	-174	-177	-
London Olympics	-1	-17	0	0	-
Pensions revisions	-18	-19	-19	-19	-
Other minor revisions	-27	-58	-38	-72	-
Amendments from PESA
Local Government spending	-	-	-	-	-294
Total CRA amendments	-220	-276	-231	-268	-
Total PESA amendments	-	-	-	-	-294

Note: Amendments do not include EU Transactions

Expenditure accounting adjustments

Spending in GERS is based on the HM Treasury Total Expenditure on Services ( TES) concept, which accounts for around 90% of total spending. Accounting adjustments are used to move from TES to Total Managed Expenditure ( TME), the primary measure of public spending used in the UK Public Sector Finances. As discussed in Chapter 1, for the majority of these adjustments, accompanying adjustments are included in revenue estimates, and therefore do not affect the net fiscal balance or current budget balance. This is shown in more detail in Table A.10.

In order to present Scottish Government and Scottish local government spending on a TME basis in GERS, it is necessary to allocate different parts of the accounting adjustments to either the Scottish Government or other UK Government bodies. Currently, capital consumption, VAT refunds, the subsidy to the Housing Revenue Account, Local Authority Pensions, and Scottish housing associations are allocated to the Scottish Government or Scottish local government. Other elements are allocated to other UK Government bodies operating in Scotland.

Table A.7 below shows the accounting adjustments applied to UK spending in GERS to move from TES to TME. Table A.8 shows the adjustments for Scotland.

Table A.7: Expenditure Accounting Adjustment: UK

	£ million
	2013-14	2014-15	2015-16	2016-17	2017-18
UK total managed expenditure ( TME)	733,813	750,445	756,767	771,981	789,460
UK total expenditure on services ( TES)	675,873	687,821	701,689	709,651	733,634
UK accounting adjustment	57,940	62,624	55,078	62,330	55,826
of which current expenditure:
Central government capital consumption	17,583	17,944	18,313	18,313	18,501
Local government capital consumption	10,024	10,534	11,038	11,539	12,036
Current VAT refunds	11,554	11,517	11,826	11,956	12,100
Imputed subsidy from Local Authorities to the Housing Revenue Account 1	359	588	650	884	1,081
Imputed flows for Renewable Obligation Certificates 2	2,532	3,064	3,900	4,672	6,072
Local authority pensions	2,100	2,000	2,000	2,200	2,400
Network Rail	357	1,002	0	0	0
British Transport Police Service Agreements	130	133	150	145	145
Current expenditure residual	3,900	3,887	-2,507	-375	-3,221
of which capital expenditure:
Capital VAT refunds	2,092	2,085	2,186	1,779	1,686
Network Rail	2,730	2,261	0	0	0
Housing associations	4,613	7,752	5,486	7,386	6,256
Capital expenditure residual	-34	-143	2,035	3,830	-1,230

¹ The Housing Revenue Account ( HRA) is classified as a public corporation by the ONS, which means that they pay dividends on their profits to local authorities. To ensure that these dividends are non-negative, the ONS imputes a subsidy from local authorities to HRAs to cover any shortfall (offset in public corporation gross operating surplus, which scores on the revenue side of the account).

² Renewable Obligation Certificates are bought and sold by energy companies. The ONS has decided that these flows should be channelled through central government and so impute offsetting amounts of spending and income.

Table A.8: Expenditure Accounting Adjustment: Scotland

	£ million
	2013-14	2014-15	2015-16	2016-17	2017-18
Scottish total managed expenditure ( TME)	67,767	68,640	69,492	71,354	73,398
Scottish total expenditure on services ( TES)	62,767	63,582	64,906	65,893	68,346
Scottish accounting adjustment	5,000	5,058	4,586	5,461	5,052
Percentage of UK accounting adjustment	8.6%	8.1%	8.3%	8.8%	9.0%
Of which current expenditure:
Central government capital consumption	1,503	1,444	1,380	1,413	1,420
Local government capital consumption	1,034	1,113	1,162	1,217	1,269
Current VAT refunds	1,018	1,010	1,058	1,081	1,093
Imputed subsidy from Local Authorities to the Housing Revenue Account 1	28	46	50	68	83
Imputed flows for Renewable Obligation Certificates 2	300	364	463	554	720
Local authority pensions	191	187	186	207	225
Network Rail	18	24	0	0	0
British Transport Police Service Agreements	11	11	13	12	12
Current expenditure residual	324	322	-207	-31	-265
Of which capital expenditure:
Capital VAT refunds	184	183	196	161	152
Network Rail	74	-100	0	0	0
Housing associations	318	468	118	463	443
Capital expenditure residual	-4	-13	167	315	-101

^{1, 2} See notes to Table A.7

The table below shows which parts of the Scottish expenditure accounting adjustments are included as revenues, and where they appear in the revenue tables.

Table A.9: Accounting Adjustments, Revenue and Expenditure: Scotland, 2017-18

	Expenditure AA	Revenue AA	Revenue line
Of which current expenditure:	£ million
Central government capital consumption	1,420	1,420	Gross operating surplus
Local government capital consumption	1,269	1,269	Gross operating surplus
Current VAT refunds	1,093	1,093	VAT
Imputed subsidy from Local Authorities to the Housing Revenue Account	83	-	n/a
Imputed flows for Renewable Obligation Certificates	720	720	Other taxes, royalties, and adjustments
Local authority pensions	225	-	n/a
British Transport Police Service Agreements	12	12	Other taxes, royalties, and adjustments
Current expenditure residual	-265	-	n/a
Of which capital expenditure:
Capital VAT refunds	152	152	VAT
Network Rail	0	-	n/a
Royal Mail Pension Plan	0	-	n/a
Housing associations	443	-	n/a
Capital expenditure residual	-101	-	n/a
Total accounting adjustments	5,052	4,667

Reconciliation to published Scottish Government and Scottish Local Government budgets

There are a number of differences between the figures for spending by Scottish Government and Local Authorities presented in Table 3.8 and figures presented in Scottish Government budgets and Scottish Local Government Finance Statistics. The key differences relate to accounting treatments, particularly of pensions, VAT refunds, and depreciation.

GERS uses National Accounts principles, which show pensions expenditure as the difference between monies paid into the pension fund and monies paid out, and which shows gross expenditure before VAT refunds. Depreciation in GERS is based on the concept of capital consumption, which uses estimates of the value of assets used to provide services in terms of current asset values.

In contrast, budget documents use financial accounting principles, which include a measure of future liabilities of pension funds, and which shows net expenditure after VAT refunds. Depreciation is based on historical asset prices.

A more detailed description of the differences is provided in Box 5.2 of GERS 2013-14.

http://www.gov.scot/Publications/2015/03/1422/8

Table A.10 below shows the reconciliation of published Scottish Government and Scottish Local Government Finance figures to the figures published in the CRA and GERS. This shows figures for 2016-17 rather than 2017-18, as this is the latest year for which published accounts are available for both the Scottish Government and Scottish local government. 2017-18 figures in GERS are based on provisional outturn estimates.

Table A.10: Reconciliation of published budget documents to GERS expenditure Table 3.8

	£ billion
	2016-17
Scottish Government
Published Scottish Government budget 1	37.3
Spending by Audit Scotland and Scottish Parliament	0.1
Public corporation ( PC) capital spending	0.5
Timing differences	-0.3
Total Scottish Government & associated PC expenditure	37.6
Adjustments to align budget to CRA measure of spending
Grants to other public sector bodies (e.g. local government)	-10.5
Pensions	-3.1
Depreciation	-0.8
Financial transactions associated with student loans and public corporations	-0.7
Adjustments to move from spend ‘in’ Scotland to spend ‘for’ Scotland 2	-0.1
Other	-0.2
Final Scottish Government & PC expenditure on services for Scotland	22.5
Scottish Local Government
Published Local Government gross current expenditure 3	12.6
Income excluding grants from Central Government 4	-2.2
Housing benefit	1.7
Published Local Government gross capital expenditure 5	2.8
Income from sales of capital assets 6	-0.2
Final Scottish Local Government & associated PC expenditure on services for Scotland	14.7
Scottish Government, Local Government, & PC expenditure on services for Scotland	37.2
National Accounts adjustments 7
Capital consumption	2.6
VAT refunds	1.2
Other accounting adjustments	0.8
Final Scottish Government, Scottish Local Government & PC TME	41.9

¹ Scottish Government Draft Budget 2018-19 Annex D

² These are adjustments made to Scottish Government spending in HM Treasury’s CRA publication. They primarily relate to spending on museums and pensions, to reflect where spending undertaken by the Scottish Government benefits residents from the rest of the UK.

³ Scottish Local Government Finance Statistics 2016-17, Annex B. Total General Fund (excluding the Housing Revenue Account and trading with the public) employee costs, operating costs, and support services costs after statutory adjustments, less recharges

⁴ As Note 3. Total General Fund (excluding the Housing Revenue Account and trading with the public) income less government grants

⁵ As Note 3. All services total gross capital expenditure (Annex G)

⁶ As Note 3. Total capital receipts from sales of assets (Annex I)

⁷ See Table A.8