1 INTRODUCTION AND OVERVIEW
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 2005-06 to 2009-10. Particular focus is given to 2009-10, the latest fiscal year for which outturns of expenditure and revenue are available for Scotland. The data used are a snapshot of the UK public finance dataset at the time of the ONS Public Finance Statistical Bulletin for April 2011, the most recently available estimates at the time of publication. 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 4.
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 appendices.
UK Statistics Authority - Assessment of GERS
As a National Statistics publication, GERS is subject to periodic assessment against the Code of Practise for National Statistics by the UK Statistics Authority ( UKSA). The UKSA published its first assessment of GERS in March 2011 5.
The UKSA assessment concluded that the statistics are presented impartially and objectively. The UK Statistics Authority confirms that the statistics may continue to be designated as National Statistics. It also made a series of minor recommendations to strengthen GERS's compliance with the National Statistics Code of Practice. As a result of these recommendations, the following changes have been made to GERS 2009-10.
- The tables provided in this edition of GERS can be downloaded from the GERS website as an Excel file 6.
- The analysis of Scotland's Public Sector Accounts in Chapter 3 has been expanded to include more detailed comparisons between Scotland and the UK's overall fiscal positions. These comparisons have been set out in cash values and as a proportion of GDP.
- The Executive Summary has been revised to more clearly illustrate Scotland's overall fiscal position, and how it compares to the UK as a whole.
- The GERS website will be updated over the summer to include electronic copies of the report from 1993-94 onwards.
- Over the course of 2011/12, the Scottish Government will consult users about the presentation of GERS with a view to improving the use made of these statistics and the types of decision they inform.
Structure of Report
The structure of the report follows that of GERS 2008-09. The outline below provides a brief overview of the chapters contained in the publication.
This chapter provides a brief background to the fiscal framework in which the public sector operates in Scotland and the UK.
This chapter provides a summary of estimated public sector revenue in and expenditure for Scotland between 2005-06 and 2009-10. 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, such as the Scottish Government Draft Budget.
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 2005-06 to 2009-10, special attention is given to 2009-10, 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 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 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 2005-06 to 2009-10, special attention is given to 2009-10, 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 provides a short summary of the key results.
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 2008-09.
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 7.
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.
More detailed analysis is also available on the GERS website 8.
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