Government Expenditure and Revenue Scotland 2010-2011

Government Expenditure and Revenue Scotland (GERS) is a National Statistics publication. It estimates the contribution of revenue raised in Scotland toward the goods and services provided for the benefit of Scotland. The estimates in this publication are consistent with the UK Public Sector Finance Statistics published in January 2012.


This annex outlines the methodologies used to estimate public sector expenditure for Scotland and highlights where these methodologies differ from those used in previous editions of GERS.


Figures for UK and Scottish public sector expenditure are taken directly from official UK Government sources.

Total Expenditure on Services (TES) can be separated into two components:

  • Identifiable expenditure: that is expenditure that can be clearly allocated to a country or region in terms of having been spent for the benefit of that country or region; and
  • Non-identifiable expenditure; that is expenditure that cannot be identified as benefiting a particular country or region of the UK but is instead incurred on behalf of the UK as a whole.

Total Expenditure on Services covers most expenditure by the public sector. Adding an accounting adjustment reconciles it with Total Managed Expenditure (TME). In 2010-11, TES accounted for approximately 97 per cent of TME.

UK Expenditure Figures

The primary data source used to estimate Scottish public sector expenditure is the Public Expenditure Statistical Analyses (PESA) database, published by HM Treasury25. Within PESA, tables relating to a Country and Regional Analysis (CRA) are available in which UK Government departments and devolved administrations have allocated expenditure programmes to Scotland, Wales, Northern Ireland and English regions.

For this publication, a timing adjustment to the PESA CRA database has been made in relation to EU transactions in 2009-10 and 2010-11. The adjustment ensures consistency with the latest figures published in HM Treasury's European Union Finances 2011 (December 2011).26 These adjustments lower total UK expenditure by £2 million and £155 million in 2009-10 and 2010-11 respectively.

Methodologies for Apportioning Non-identifiable Expenditure

In GERS, the methodology to apportion non-identifiable expenditure and identifiable expenditure which occurs outside the UK to Scotland varies according to the particular expenditure estimated.

The methodologies used are listed in Table C.1. Each reflects the approach that is thought to capture most appropriately the 'who benefits' principle. None of the methods used to apportion non-identifiable expenditure to Scotland have changed from the previous edition of GERS.

Table C.1: Apportionment Methodologies for Non-Identifiable Expenditure: Scotland 2006-07 to 2010-111, 2

Non-Identifiable Expenditure

Outside the UK

General public services    

Public and common services



International services



Public sector debt interest






Public order and safety



Economic affairs    

Enterprise and econ development3



Science and technology



Employment policies



Agriculture, forestry and fisheries






Environment protection

GVA & Population


Housing and community amenities






Recreation, culture and religion



Education and training



Social protection



EU transactions


GVA, VAT & Population

1: Where there is no UK non-identifiable expenditure this is entered as not applicable (n/a).
2: Identifiable expenditure outside the UK, except EU transactions, is apportioned on a per capita basis.
3: All environment protection expenditure is apportioned on a GVA basis, except UKAEA and BNF expenditure on nuclear decommissioning, which is apportioned on a per capita basis.

Methodology for Estimating the Accounting Adjustment

The public sector expenditure analysis in this report focuses on Total Expenditure on Services (TES). In UK public finance documents, the principal measure of public sector expenditure is Total Managed Expenditure (TME). The main difference between TES and TME is that TES does not include general government capital consumption and does not reverse the deduction of certain VAT refunds in the budget-based expenditure data. It also contains a number of items that are in budgets but not in TME, for example the grant equivalent element of student loans. TME is consistent with ONS National Accounts and the UK Public Sector Finances.

An accounting adjustment is introduced to align TES to TME. The largest component of the UK accounting adjustment is general government capital consumption. This is a measure of the amount of fixed capital resources used up in the process of providing public services.

The estimate of an accounting adjustment for Scotland is calculated using a variety of apportionment methodologies. Firstly, estimates of capital consumption from the ONS regional accounts, together with data from UK local government returns, have been used to estimate capital consumption for Scotland. In 2010-11, capital consumption for Scotland was estimated at £1.4 billion (9.3 per cent of the UK total). This calculation is identical to that underpinning the estimates of general government gross operating surplus on the revenue side. These two elements cancel out when calculating net borrowing.

VAT refunds have been allocated to Scotland using the apportionments derived in the revenue calculations (see Annex B), and therefore cancel out in the calculation of net borrowing. The figures for Scottish student loan subsidies were provided by HM Treasury. The imputed subsidy from local authorities to HRA adopt the same apportionment allocation as in the gross operating surplus calculations on the revenue side, and the imputed flows for Renewable Obligation Certificates adopts the same methodology used in 'other taxes, royalties and adjustments'. These items cancel in the net borrowing calculations. The Scottish share of the Nigerian debt write-off has been allocated on a per capita basis. The current and capital residuals are allocated to Scotland on a per capita basis.

In summary, the accounting adjustment for Scotland was estimated at £2.2 billion in 2010-11, or 9.6 per cent of the total UK Accounting Adjustment.

Amendments to PESA CRA Data

A number of significant improvements have been made to the PESA CRA database in recent years to apportion expenditure more accurately to countries and regions. While many anomalies in previous editions of PESA CRA have been addressed and are now reflected in both PESA CRA 2011 and this GERS report, a small number of supplementary amendments to the PESA CRA 2011 dataset were made in producing GERS. The aim of these refinements was to ensure that the public sector expenditure figure for Scotland captures as accurately as possible expenditure for the benefit of Scotland.

The total amendment made to PESA in producing this edition of GERS is shown in Table C2 below. In the financial year 2010-11, the figure of total expenditure attributed to Scotland in GERS is £440 million lower than the corresponding PESA figure (using default apportionments for non-identifiable expenditure without further consideration). Table C3 sets out in detail the sources of these revisions.

Table C.2: Amendments to Estimates of Total Public Sector Expenditure from PESA 2011: UK and Scotland 2006-07 to 2010-11

(£ million)
2006-07 2007-08 2008-09 2009-10 2010-11
Total Expenditure in Scotland (PESA)27 50,630 53,793 56,861 59,841 62,065
Total Expenditure in Scotland (GERS) 50,407 53,464 56,507 59,427 61,625
Total revision to expenditure in Scotland -223 -329 -354 -415 -440

Table C.3: Amendments to Estimates of Total Public Sector Expenditure from PESA 2011: 2006-07 to 2010-11

(£ million)
2006-07 2007-08 2008-09 2009-10 2010-11
Nuclear-related expenditure -115 -134 -77 -124 -140
Cross-border policing -56 -49 -54 -61 -49
Railways expenditure -10 -81 -119 -104 -98
Olympics -13 -33 -68 -83 -90
Pensions revisions 11 8 3 1 -5
Other minor revisions -41 -40 -39 -44 -59
Total -223 -329 -354 -415 -440

Nuclear Decommissioning and Related Expenditures

In PESA CRA 2011, expenditure on nuclear decommissioning was classified as identifiable to the region where nuclear facilities are located. However, as discussed in previous editions of GERS28, it is believed that this expenditure is best captured as a non-identifiable expenditure. This has been amended and nuclear decommissioning expenditure has been apportioned on a per capita basis. Other associated nuclear expenditure, such as security at nuclear facilities, has also been reapportioned on a per capita basis.

Cross-Border Policing

PESA CRA 2011 assigns a population share of the expenditure associated with the Serious and Organised Crime Agency (SOCA) and the Assets Recovery Agency (ARA). However a transfer from the Scottish Government to these organisations is already included in PESA to pay for the activities these organisations undertake in Scotland. Any further attribution of expenditure to Scotland would therefore double count the expenditure occurred on behalf of Scotland. As a result, the additional population share of expenditure assigned to Scotland in PESA CRA 2011 has been re-allocated to the rest of the UK.

Railways Expenditures

As discussed in previous editions of GERS29, railways expenditure, alongside expenditure on roads, is apportioned to Scotland on an 'in' basis. This means that expenditure 'in' Scotland on railways is apportioned to Scottish public sector expenditure while, where possible, a zero share is allocated to Scotland for all expenditure on rail across the rest of the UK. This required a number of modifications to the underlying PESA data which affected the expenditure by London and Continental Railways, the Channel Tunnel Rail link, and Network Rail.

2012 Olympics

As discussed in previous editions of GERS30, all capital expenditure associated with the Olympics has been assigned to the rest of the UK, primarily London and surrounding area, on the basis that Scotland will not receive a lasting benefit from the infrastructure and regeneration associated with the games. Current expenditure on the Olympics has been assigned across the countries and regions of the UK using the projected regional distribution of the associated increase in tourism expenditure.

Public Sector Pensions

In PESA CRA 2011, expenditure for the Scottish Office Pension Agency, NHS and Teacher pensions was allocated only to Scotland. In contrast, expenditure by comparable pension agencies across the rest of the UK was allocated to the countries and regions of the UK based on the residence of the recipient of the pension. To correct this asymmetry, information from the Scottish Office Pension Agency was used to re-apportion these pension expenditures across the UK according to residence. As some elements of the pension expenditure were negative this change has resulted in a slight increase in expenditure assigned to Scotland in one of the years.

Other Amendments

A number of other minor amendments have been made to PESA to correct asymmetries in the regional attribution of expenditures related to consumer protection, civil aviation, tourism and libraries amongst others. These are discussed further in previous editions of GERS. A new minor amendment has been made in relation to inward investment expenditures in this edition of GERS.

Revisions to Expenditure Estimates from GERS 2009-10

Tables C.4 and C.5 set out the changes in estimates of public expenditure in Scotland and the UK between this report and GERS 2009-10. These revisions reflect changes in the underlying PESA CRA data, revisions to the GERS methodology and revisions to the data sources used to apportion non identifiable expenditure to Scotland. Revisions to public expenditure that can be traced to changes in the PESA CRA database are specified separately.

Revisions to Total Expenditure

Table C.4 displays the difference between the estimates of total expenditure in GERS 2009-10 and those contained in Chapter 5 of this publication.

Total public sector expenditure for Scotland in 2009-10 has been revised up by £257 million (0.4 per cent of total expenditure). For the UK as a whole, total expenditure has been revised up by £3.9 billion in 2009-10 (0.6 per cent of total expenditure). Almost all of this revision reflects changes made in the estimates of total UK public sector expenditure reported in PESA 2011 which have a corresponding impact on the estimates for the UK in this edition of GERS.

Table C.4: Revisions to Estimates of Total Expenditure: Scotland 2006-07 to 2009-10

(£ million)
2006-07 2007-08 2008-09 2009-10
GERS 2009-10 50,274 53,299 56,342 59,170
GERS 2010-11 50,407 53,464 56,507 59,427
Revision 133 165 165 257
Of which revisions made in PESA 2011 141 163 143 255
GERS 2009-10 522,853 555,619 602,102 639,238
GERS 2010-11 523,120 555,283 603,431 643,153
Revision 267 -336 1,329 3,915
Of which revisions made in PESA 2011 266 -336 1,329 3,917
Scotland/UK Ratio        
GERS 2009-10 9.6% 9.6% 9.4% 9.3%
GERS 2010-11 9.6% 9.6% 9.4% 9.2%
Revision (% point) 0.0% 0.0% 0.0% 0.0%

All other revisions are net changes between GERS 2009-10 and GERS 2010-11.

Total Revision to Expenditure (including accounting adjustment)

The overall change in Total Managed Expenditure (TME) between GERS 2009-10 and GERS 2010-11 is highlighted below. The revision is equal to the sum of revisions to Total Expenditure on Services (TES) and the accounting adjustment. For all years, the absolute revisions to TME are less than 0.3 per cent.

Table C.5: Revisions to Estimates of Total Managed Expenditure: Scotland 2006-07 to 2009-10

(£ million)
2006-07 2007-08 2008-09 2009-10
Total Expenditure on Services        
GERS 2009-10 50,274 53,299 56,342 59,170
GERS 2010-11 50,407 53,464 56,507 59,427
Accounting Adjustment        
GERS 2009-10 2,418 2,503 2,571 2,916
GERS 2010-11 2,403 2,506 2,358 2,598
Total Managed Expenditure        
GERS 2009-10 52,692 55,803 58,913 62,086
GERS 2010-11 52,810 55,969 58,866 62,025
Revision to Total Managed Expenditure 118 166 -47 -61


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