Information

Government Expenditure and Revenue Scotland 2008-09

This report is the sixteenth in the series of official published estimates of expenditure and revenue balances relating to the public sector in Scotland.


1 INTRODUCTION AND OVERVIEW

Introduction

The aim of GERS is to enhance public understanding of fiscal issues in Scotland. The primary objective is to estimate a detailed set of public sector accounts for Scotland through an in-depth analysis of official UK and Scottish Government finance statistics.

The report estimates public sector expenditure and revenue for Scotland for the years 2004-05 to 2008-09. Particular focus is given to 2008-09, the latest fiscal year for which outturns of expenditure and revenue are available for Scotland. Comparable data for the years 2002-03 and 2003-04 can be found in the previous two GERS publications. The data used are a snapshot of the UK public finance dataset at the time of the March 2010 UK Budget. All figures are in current prices.

Full discussion of the methodologies used to estimate the figures for Scotland are contained in the document and in the detailed appendices on the Scottish Government GERS website 5.

The figures within this report are estimates and should therefore be viewed accordingly. Sensitivity analysis is conducted to highlight how the headline analysis contained within the report can be expected to change in light of variation in the estimates of particular expenditures and revenues. These results are presented in the detailed appendices.

Structure of report

The structure of the report follows that of GERS 2007-08. The outline below provides a brief overview of the chapters contained in the publication.

Chapter 2: Fiscal background

This chapter provides a brief background to the fiscal framework in which the public sector operates in Scotland and the UK.

Chapter 3: Scotland's public sector accounts

This chapter provides a summary of estimated public sector revenue in and expenditure for Scotland between 2004-05 and 2008-09. It contains an estimate of total current and capital expenditure by the public sector for Scotland and an estimate of the revenue raised. It also includes an estimate of the current budget balance (i.e. current revenue less current expenditure less capital consumption) and the overall net fiscal balance (i.e. the current budget balance less net investment). As the figures in this chapter cover the whole of the public sector in Scotland, and use National Accounts definitions, they are not directly reconcilable with departmental budget reports.

Chapter 4: Public sector revenue

Chapter 4 presents a detailed discussion of public sector revenue raised in Scotland and compares the estimated figures for Scotland with those for the UK. As Chapter 5 provides a detailed discussion of North Sea revenue, the focus of this chapter is on all other elements of public sector revenue. While the report covers the fiscal years 2004-05 to 2008-09, special attention is given to 2008-09, the latest fiscal year for which the outturn data of public sector revenue are available for Scotland.

The revenue analysis in GERS is consistent with ONS's Public Sector Finance Statistics.

The majority of public sector revenue raised in the UK is collected centrally by the UK Government and corresponding figures for Scotland have to be estimated. Appendix A and the detailed revenue methodology paper on the GERS website discuss the approach taken to estimate each particular component of public sector revenue.

Chapter 5: North Sea revenue

Chapter 5 discusses the treatment of fiscal revenue from the North Sea. For many years, there has been considerable debate on how the delineation of North Sea output and revenue might be determined. In this chapter, a range of estimates of Scotland's share of North Sea revenue are provided, together with their impact on total public sector revenue in Scotland.

Chapter 6: Public sector expenditure

Chapter 6 presents a detailed discussion of public sector expenditure for Scotland and compares and contrasts the estimated figures for Scotland with those for the UK. While the report covers the fiscal years 2004-05 to 2008-09, special attention is given to 2008-09, the latest fiscal year for which outturns of public sector expenditure are available for Scotland.

The expenditure analysis in GERS is consistent with the approach HM Treasury takes to estimate public sector expenditure in the UK. Total expenditure is divided into current and capital expenditure. Current expenditure includes items such as public sector wages and social security payments. Capital expenditure largely comprises the development of public sector infrastructure, either new construction or significant renovation to existing infrastructure, such as schools and hospitals.

In GERS, expenditure is also divided into three categories: identifiable expenditure; non-identifiable expenditure; and accounting adjustments. Identifiable expenditure is expenditure that can be directly identified as having been spent for the benefit of a country or region within the UK. Non-identifiable expenditure is expenditure that is considered to occur on behalf of the UK as a whole and which cannot be apportioned on an individual country or regional basis. Finally, an accounting adjustment is required to bring the estimate of expenditure in line with current National Accounts conventions.

In the main, expenditure for Scotland is sourced from the PESACRA database. Estimates of identifiable expenditure are taken directly from this database, though a number of important modifications were made before being used in the GERS report. These are highlighted in the chapter. Scotland's share of non-identifiable expenditure, accounting adjustments and UK Government expenditure on activities and services outside the UK, are estimated according to a variety of apportionment methodologies. Appendix B, which is also available on the GERS website, discusses the approach taken to estimate each element of public sector expenditure.

Chapter 7: Conclusion

Chapter 7 provides a short summary of the key results.

Appendix A: Revenue methodology

Appendix A provides a brief summary of the various methodologies that have been applied to estimate public sector revenue in Scotland and summarises the extent and nature of the revisions to the revenue estimates between this edition of GERS and GERS 2007-08.

A more detailed revenue methodology paper is available on the GERS website which provides a full discussion of the estimation techniques applied for each revenue source 6.

Appendix B: Expenditure methodology

Appendix B provides a brief summary of the various methodologies that have been applied to estimate public sector expenditure for Scotland.

Appendix B also highlights where the data contained in GERS differ from that in the underlying PESACRA database. The appendix also discusses the key apportionment methodologies that have been applied to estimate Scotland's share of UK non-identifiable expenditure, identifiable expenditure outside the UK and accounting adjustments.

This appendix is also available on the GERS website 7.

Back to top