Strong growth in income tax and energy sector.
Scotland’s notional deficit has continued to fall at a faster pace than the UK’s, driven by record energy sector revenues and strong growth in the tax take, figures for the 2022-23 financial year show.
Total revenue for Scotland increased by 20.7% (£15 billion) compared with 11.3% for the UK as a whole. This includes a £1.9 billion increase in revenue from Scottish income tax and £6.9 billion increase in North Sea revenue. These increases have partially been offset by a rise in spending on cost of living measures and interest payments on UK Government debt.
To mark publication of the 30th Government Expenditure and Revenue Scotland (GERS) statistics, the Cabinet Secretary for Wellbeing Economy, Fair Work and Energy, Neil Gray, visited the University of Glasgow's Mazumdar-Shaw Advanced Research Centre to learn about the significant economic potential of quantum technology to Scotland’s economy. Recent research has suggested the sector could be worth £1 billion to Scotland by 2030.
Mr Gray said:
“I am pleased that Scotland’s finances are improving at a faster rate than the UK as a whole, with revenue driven by Scotland’s progressive approach to income tax and our vibrant energy sector. While the record revenues from the North Sea show the extent that the UK continues to benefit from Scotland’s natural wealth, these statistics do not reflect the full benefits of the green economy, with hundreds of millions of pounds in revenue not yet captured.
“It is important to remember that GERS reflects the current constitutional position, with 41% of public expenditure and 64% of tax revenue the responsibility of the UK Government. Indeed, a full £1 billion of our deficit is the direct result of the UK Government’s mismanagement of the public finances. An independent Scotland would have the powers to make different choices, with different budgetary results, to best serve Scotland’s interests.
“While we are bound to the UK’s economic model and do not hold all the financial levers needed, we will continue to use all the powers we do have to grow a green wellbeing economy, while making the case that we need independence to enable Scotland to match the economic success of our European neighbours.
“I’m grateful to the University of Glasgow for showing me their world-leading quantum technology research, which could be worth £1 billion to our economy within seven years, highlighting just how bright Scotland’s future could be outside of the UK.”
The net fiscal balance is the difference between total revenue and total public sector expenditure including capital investment. The GERS figures show that in 2022-23 Scotland’s net fiscal balance was a deficit of 9.0% of GDP. This is down from 12.8% in 2021-22 and 23.4% in 2020-21, at the height of the pandemic.
The National Institute for Economic and Social Research estimate that, even before the recent rises in interest rates, the UK Government’s failure to reduce the public finances’ exposure to short term interest rates has cost taxpayers around £11 billion. Scotland’s share of this would be around £1 billion. This illustrates how an independent Scotland could make different choices from the UK.
Scotland’s share of the Electricity Generator Levy, worth around £200 million in 2022-23 and more in future years, is not yet captured. This is because, as a new tax, it is not yet incorporated into the UK Public Sector Finances. Revenue from ScotWind, Scotland’s offshore wind auctions, is also not yet captured, with Crown Estate Scotland’s accounts for 2022-23 not yet published.
The aim of GERS is to enhance public understanding of fiscal issues in Scotland. The primary objective is to estimate a set of public sector accounts for Scotland through detailed analysis of official UK and Scottish Government finance statistics. The report is designed to allow users to understand and analyse Scotland’s fiscal position under different scenarios within the current constitutional framework.
GERS is a National Statistics publication and is produced independently of Scottish Ministers. The publication has been assessed by the UK Statistics Authority in line with the Code of Practice for Statistics. This means the statistics have been found to meet user needs, to be methodologically sound, explained well and produced free of political interference.
A May 2023 paper by Technology Scotland outlined the opportunity for Scotland to have a billion pound quantum sector by 2030 and noted global quantum markets are set to top $62 billion by 2030. The Minister was shown examples of the University of Glasgow’s QUEST project researching into remote healthcare monitoring systems, and its work with superconductors.
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