Publication - Statistics

Government Expenditure & Revenue Scotland 2012-13

Published: 12 Mar 2014
Part of:
Statistics
ISBN:
9781784123383

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 Finances published in February 2014.

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102 page PDF

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Contents
Government Expenditure & Revenue Scotland 2012-13
5 PUBLIC SECTOR EXPENDITURE

102 page PDF

1.3 MB

5 PUBLIC SECTOR EXPENDITURE

Introduction

This chapter provides detailed estimates of public sector expenditure for Scotland. As discussed in Chapter 2, the expenditure estimates presented here exclude the transfer of the Royal Mail Pension Plan to the public sector.

The primary data source used to estimate Scottish public sector expenditure is the November 2013 Country and Regional Analysis (CRA) published by HM Treasury. In addition to this, data provided directly by HM Treasury is used to provide a complete measure of Total Managed Expenditure, the headline measure of aggregate public spending in the UK Public Sector Finances.

This chapter divides public sector expenditure into two categories: identifiable expenditure and non-identifiable expenditure.

Identifiable expenditure is expenditure that can be clearly allocated to Scotland in terms of having been spent for the benefit of Scottish residents and enterprises. Examples of identifiable expenditure include unemployment benefits, local economic development expenditure and most education and health expenditure.

Non-identifiable expenditure is expenditure that cannot be allocated to a particular country of the UK but is instead incurred on behalf of the UK as a whole. The largest elements of non-identifiable expenditure are defence expenditure and public sector debt interest payments.

For total expenditure and each expenditure component, a detailed breakdown according to current and capital is provided.

Each element of expenditure is discussed in detail below. Annex B discusses the relevant apportionment methodologies applied while Annex C provides information on the revisions from previous reports.

Public Sector Expenditure

Estimated total public sector expenditure for Scotland by spending category for 2012-13 is shown in Table 5.1. In 2012-13, total public sector expenditure for Scotland was estimated to be £65.2 billion. This was equivalent to 9.3% of comparable total UK public sector expenditure in 2012-13, shown in Table 5.2. Social protection was the largest Scottish expenditure programme. Together with health expenditure, it accounted for over half of total public sector expenditure for Scotland in 2012-13.

Table 5.1: Total Expenditure: Scotland 2012-13

Scotland
£ million % of total expenditure
General public services
Public and common services 1,381 2.1%
International services 667 1.0%
Public sector debt interest 4,020 6.2%
Defence 3,027 4.6%
Public order and safety 2,529 3.9%
Economic affairs
Enterprise and economic development 1,049 1.6%
Science and technology 249 0.4%
Employment policies 222 0.3%
Agriculture, forestry and fisheries 917 1.4%
Transport 2,779 4.3%
Environment protection 1,210 1.9%
Housing and community amenities 1,628 2.5%
Health 11,284 17.3%
Recreation, culture and religion 1,554 2.4%
Education and training 7,651 11.7%
Social protection 22,458 34.4%
Accounting adjustments 2,581 4.0%
Total Expenditure 65,205 100%

Total public sector expenditure for Scotland is estimated to have increased from £59.4 billion in 2008-09 to £65.2 billion in 2012-13, an increase of 9.7% in nominal terms. Over the same period, equivalent UK public sector expenditure increased from £635.6 billion to £701.7 billion, an increase of 10.4% in nominal terms.

Table 5.2: Total Current and Capital Expenditure Scotland and UK 2008-09 to 2012-13

(£ million)
Scotland UK
2008-09 2009-10 2010-11 2011-12 2012-13 2008-09 2009-10 2010-11 2011-12 2012-13
Current 52,681 55,406 58,127 58,909 59,627 567,933 605,010 635,268 643,980 656,345
Capital 6,760 6,681 5,968 5,960 5,579 67,693 68,392 59,437 50,335 45,336
Total 59,440 62,087 64,095 64,869 65,205 635,626 673,402 694,705 694,315 701,681

Table 5.3 shows the share of total expenditure between current and capital for Scotland. Between 2008-09 and 2009-10, capital expenditure for Scotland fell from approximately 11.4% to 10.8% of total expenditure. This is due in part to the UK Government's financial sector interventions in 2008-09. These are discussed further in Annex B. Capital expenditure fell as a share of total expenditure in the three subsequent years to 9.2% of total expenditure in 2011-12, and 8.6% in 2012-13.

Table 5.3: Current and Capital Expenditure (% of Total Expenditure): Scotland 2008-09 to 2012-13

(per cent)
2008-09 2009-10 2010-11 2011-12 2012-13
Current 88.6% 89.2% 90.7% 90.8% 91.4%
Capital 11.4% 10.8% 9.3% 9.2% 8.6%

Tables 5.4 and 5.5 provide a more detailed breakdown of total public sector expenditure by current and capital split for Scotland and the UK.

Box 5.1 Growth in Scottish and UK Capital Spending

Capital spending in Scotland has historically been higher than a population share of the UK total. In part this reflects the fact that water and sewerage services are within the public sector in Scotland, and these have a high level of associated capital expenditure. However, as shown in the table below, Scotland's share of UK capital spending has increased from being broadly around 10% between 2008-09 and 2010-11 to 12.3% in 2012-13. As both Scotland and the UK have seen falls in capital spending since 2010-11, this reflects the fact that capital spending in Scotland has fallen by less than capital spending in the UK.

UK capital spending declined by 15.3% between 2010-11 and 2011-12 and by a further 9.9% in between 2011-12 and 2012-13. In contrast, capital spending for Scotland remained broadly level in 2011-12 before falling by 6.4% between 2011-12 and 2012-13.

The divergence in Scottish and UK capital spending in 2011-12 was driven by increased spending by Scottish Local Authorities. Spending increased by approximately £350 million, with approximately half of this increase financed via Local Authority borrowing.[27] Capital spending in Scotland during 2012-13 was also supported by the Scottish Government's decision to switch approximately £230 million in spending from current to capital budgets.

Finally, capital spending on Enterprise and Economic Development in Scotland has diverged from the UK, with total Scottish spend remaining largely unchanged from 2010-11 whilst UK spending has fallen by almost £1 billion. This may reflect in part the fact that regional development agencies in England were abolished on the 31st March 2012, whilst funding has continued to be made available to development agencies in Scotland. Further detail on how different types of expenditure have changed is shown in Table 5.9.

Capital expenditure in Scotland and the UK: 2008-09 to 2012-13
(£ million)
2008-09 2009-10 2010-11 2011-12 2012-13
Scotland 6,760 6,681 5,968 5,960 5,579
UK 67,693 68,392 59,437 50,335 45,336
Scotland as % of UK total 10.0% 9.8% 10.0% 11.8% 12.3%

Table 5.4: Total Expenditure: Scotland 2008-09 to 2012-13

(£ million)
Current Capital Total
2008-09 2009-10 2010-11 2011-12 2012-13 2008-09 2009-10 2010-11 2011-12 2012-13 2008-09 2009-10 2010-11 2011-12 2012-13
General public services
Public and common services 1,296 1,499 1,402 1,475 1,199 298 83 207 147 182 1,594 1,582 1,609 1,622 1,381
International services 502 549 606 616 617 37 50 63 50 50 539 599 669 666 667
Public sector debt interest 2,734 2,599 3,846 4,099 4,020 0 0 0 0 0 2,734 2,599 3,846 4,099 4,020
Defence 2,802 2,825 2,931 2,934 2,740 294 342 361 303 287 3,096 3,167 3,292 3,237 3,027
Public order and safety 2,386 2,437 2,559 2,663 2,388 233 257 245 197 141 2,619 2,694 2,804 2,860 2,529
Economic affairs
Enterprise and economic development 593 669 464 604 773 1,123 700 273 249 276 1,716 1,369 737 853 1,049
Science and technology 199 207 204 220 221 34 36 26 43 28 233 243 230 263 249
Employment policies 207 222 291 242 222 3 4 4 3 0 210 226 295 245 222
Agriculture, forestry and fisheries 734 781 796 828 773 100 111 152 149 144 834 892 948 977 917
Transport 1,526 1,509 1,576 1,574 1,518 1,110 1,329 1,071 1,143 1,261 2,636 2,838 2,647 2,717 2,779
Environment protection 853 970 980 979 945 196 193 238 198 265 1,049 1,163 1,218 1,177 1,210
Housing and community amenities 281 261 296 232 187 1,521 1,710 1,324 1,392 1,441 1,802 1,971 1,620 1,624 1,628
Health 9,740 10,140 10,348 10,560 10,736 515 539 590 486 548 10,255 10,679 10,938 11,046 11,284
Recreation, culture and religion 1,116 1,197 1,169 1,231 1,214 276 283 262 324 340 1,392 1,480 1,431 1,555 1,554
Education and training 6,882 7,068 7,054 6,803 7,012 646 661 597 687 639 7,528 7,729 7,651 7,490 7,651
Social protection 18,451 19,963 20,598 21,091 22,361 92 113 94 68 97 18,543 20,076 20,692 21,159 22,458
Accounting adjustments 2,377 2,507 3,002 2,762 2,702 284 273 461 522 -122 2,661 2,781 3,463 3,284 2,581
Total 52,681 55,406 58,127 58,909 59,627 6,760 6,681 5,968 5,960 5,579 59,440 62,087 64,095 64,869 65,205

Table 5.5: Total Expenditure: UK 2008-09 to 2012-13

(£ million)
Current Capital Total
2008-09 2009-10 2010-11 2011-12 2012-13 2008-09 2009-10 2010-11 2011-12 2012-13 2008-09 2009-10 2010-11 2011-12 2012-13
General public services
Public and common services 11,889 11,946 11,288 10,631 10,173 2,116 1,820 1,635 1,114 1,503 14,005 13,766 12,923 11,745 11,676
International services 5,970 6,537 7,235 7,361 7,405 441 596 749 597 607 6,411 7,133 7,984 7,958 8,012
Public sector debt interest 32,497 30,956 45,891 48,984 48,230 0 0 0 0 0 32,497 30,956 45,891 48,984 48,230
Defence 33,317 33,652 34,981 35,056 32,908 3,500 4,059 4,305 3,606 3,457 36,817 37,711 39,286 38,662 36,365
Public order and safety 30,906 31,433 31,014 30,509 30,038 2,746 2,685 2,001 1,525 1,426 33,652 34,118 33,015 32,034 31,464
Economic affairs
Enterprise and economic development 4,209 5,113 2,778 3,246 4,263 12,004 7,111 2,024 1,595 1,040 16,213 12,224 4,802 4,841 5,303
Science and technology 2,619 2,819 2,884 2,957 3,106 586 733 521 606 492 3,205 3,552 3,405 3,563 3,598
Employment policies 2,721 2,986 3,705 2,742 2,560 106 87 43 26 8 2,827 3,073 3,748 2,768 2,568
Agriculture, forestry and fisheries 5,451 5,550 5,152 5,521 4,998 315 273 329 268 343 5,766 5,823 5,481 5,789 5,341
Transport 9,019 9,768 8,831 8,375 7,987 11,958 13,204 12,659 11,667 11,351 20,977 22,972 21,490 20,042 19,338
Environment protection 7,060 8,187 8,146 8,213 7,970 2,170 2,209 2,784 2,251 3,175 9,230 10,396 10,930 10,464 11,145
Housing and community amenities 3,755 4,018 3,070 2,547 3,063 11,497 12,326 9,900 7,314 7,481 15,252 16,344 12,970 9,861 10,544
Health 103,382 110,737 114,436 116,984 119,634 5,366 6,179 5,389 4,264 4,640 108,748 116,916 119,825 121,248 124,274
Recreation, culture and religion 9,986 10,383 10,380 10,158 10,416 2,460 2,796 2,582 2,679 2,363 12,446 13,179 12,962 12,837 12,779
Education and training 74,705 78,551 82,351 79,109 80,395 8,295 9,934 9,149 7,788 7,056 83,000 88,485 91,500 86,897 87,451
Social protection 203,374 222,915 230,277 239,824 251,546 724 1,110 1,068 652 658 204,098 224,025 231,345 240,476 252,204
Accounting adjustments 27,079 29,462 32,847 31,763 31,651 3,411 3,269 4,300 4,381 -262 30,489 32,731 37,147 36,144 31,388
Total 567,933 605,010 635,268 643,980 656,345 67,693 68,392 59,437 50,335 45,336 635,626 673,402 694,705 694,315 701,681

Table 5.6 shows estimated total public sector expenditure for Scotland and the UK on a per capita basis from 2008-09 to 2012-13. The table also highlights the absolute per capita difference between Scotland and the UK, and the relative difference between the two. Total expenditure per capita for Scotland is estimated to have been £12,265 in 2012-13, £1,267 (11.5%) higher than the UK average. Since 2008-09, public spending per head for Scotland has been between 9.8% and 11.6% higher than the UK average.

Table 5.6: Total Expenditure Per Capita: Scotland and UK 2008-09 to 2012-13

2008-09 2009-10 2010-11 2011-12 2012-13
Scotland (£) 11,408 11,852 12,158 12,227 12,265
UK (£) 10,263 10,796 11,046 10,951 10,998
Difference (Scotland minus UK) (£) 1,145 1,056 1,112 1,276 1,267
Relative Expenditure for Scotland (UK = 100) 111.2 109.8 110.1 111.6 111.5

There are a number of reasons why public expenditure per capita for Scotland is above the UK average. In some cases, it reflects the lower population density in Scotland relative to the UK which increases the cost of providing the same level of public service activity, particularly in areas such as education, health and transport.

The scope and remit of the public sector also differs in Scotland compared to the UK. For example, water and sewerage services are a public sector responsibility in Scotland, and are therefore included in Scottish public expenditure, whilst in England they are operated by the private sector.

In other instances, the higher Scottish expenditure often observed reflects greater demand for Scottish-based providers. For example, the strength of Scottish universities has created a net inflow of students from other parts of the UK. Additionally, Scottish university courses are typically longer - the honours degree course takes four years, compared with a typical three year course in England and Wales. Therefore, expenditure on education and training for Scotland will be relatively higher than the rest of the UK. Scottish universities have also been able to attract above average levels of research funding which has contributed to the high level of public expenditure for science and technology in Scotland.[28]

Finally, higher public expenditure also reflects Scotland's greater need for some public services such as in health and housing relative to the rest of the UK.

Box 5.2 - Private Finance Initiative and Non-Profit Distributing Financing

The Private Finance Initiative (PFI) is a method to provide financial support for Public Private Partnerships (PPPs) between the public and private sectors. PFI projects are long-term contracts for services that include the provision of associated facilities or properties. Under the contract, the private sector is generally responsible for various roles including designing and constructing a building or facility and maintaining and servicing it throughout the contract term. The public sector retains accountability for the main public services. The private sector is responsible for financing the project up front and only receives payment from the public sector once construction has been completed and the services have commenced.

There was also another model of revenue finance in operation over this period called Non-Profit Distributing (NPD). The NPD model is 100% debt funded and there is no dividend bearing equity. Payments for both PFI and NPD projects take the form of a unitary charge which is usually paid annually over the lifetime of the contract.

Public sector unitary charges paid on PFI and NPD projects in Scotland between 2008-09 and 2012-13 are included within individual spending lines, such as transport and health, in the main tables in this chapter, depending on the type of project. The table below presents the overall charges paid in Scotland as a whole.

Public Sector Unitary Charge Expenditure in Scotland 2008-09 to 2012-13
(£ million)
2008-09 2009-10 2010-11 2011-12 2012-13
Scottish Public Sector Unitary Charges1 516 592 735 825 909
Other UK Government Departments PFI Unitary Charges for Projects in Scotland 20 23 23 26 26
Total Unitary Charges in Scotland 536 615 758 851 935

Source: Scottish Government and HM Treasury PFI Signed Project List (December 2013).

1. Includes both PFI and NPD figures.

Identifiable and Non-identifiable Expenditure

GERS classifies public sector expenditure for Scotland as either identifiable expenditure or non-identifiable expenditure.

In the vast majority of cases, GERS uses the data on identifiable expenditure contained in the CRA directly. It is a fundamental principle of the CRA that the apportionment of UK expenditure adheres to the 'who benefits' principle whereby spending is allocated to a given region if the benefit of the service derived from the expenditure is thought to accrue to residents and enterprises of that region. As highlighted in the CRA publication, there are limitations in the ability to capture precisely 'who benefits' from a given item of expenditure:

  • There are practical difficulties. For example, schools are not used solely by the residents of a region in which the facility is located and roads serve the needs of more than the geographical area through which they pass. Definitional and border problems become increasingly significant the smaller the geographical unit considered;
  • There are also significant definitional problems associated with assessing 'who benefits'. For example, agricultural support is treated as benefiting the farmers who receive subsidies rather than the broader economy; and
  • There are also issues around collecting accurate country and regional data in a cost efficient way. UK government departments are encouraged but not required to allocate all expenditure on the basis of 'who benefits'. If spending is not significant (less than £20 million on capital or current) and/or relevant data for allocating this to regions are not available, departments may use some statistical proxy instead. For example: using straight per capita shares, or using the regional allocation proportions for related spending. Further, it is not practical or cost effective to collect local government spending data on the basis of 'who benefits'. Instead, local government spending is assumed to benefit the area where the expenditure occurs.

Following a review of all 1,263 segments in CRA 2013, a number of important modifications have been made to a small number of programme expenditures before being used for the GERS report. These changes reflect the fact that in certain circumstances, officials in the Scottish Government believe a more accurate assessment of 'who benefits' is thought possible than is currently presented in the CRA. The principal changes relate to the treatment of expenditure on nuclear decommissioning by the UK Atomic Energy Authority, and the expenditure on the London Olympics.

Annex B contains a detailed list of all amendments to the CRA made in this report. As with all statistical products, developments in the CRA continue and any further refinements to the regional apportionment of public sector expenditure will be reflected in future GERS reports.

In 2012-13 UK identifiable expenditure covered 82.9% of UK total public expenditure. The remaining spending cannot be attributed to individual locations, for example, because it is spent for the benefit of the UK as a whole. A proportion of such UK non-identifiable expenditure is allocated to the public sector for Scotland either on the basis of Scotland's share of the UK population, GVA or a more specific apportionment variable. Information on the methodologies used to apportion each element of expenditure is provided in Annex B.

Table 5.7 illustrates the estimated level of identifiable and non-identifiable expenditure assigned to Scotland for each year between 2008-09 and 2012-13. Identifiable expenditure was estimated to be £55.8 billion in 2012-13. In comparison, non-identifiable expenditure was £9.4 billion in 2012-13, approximately 14.5% of estimated total public sector expenditure for Scotland.

Across most programme categories, the level of non-identifiable expenditure is relatively modest. Debt interest payments and defence are typically the largest elements of non-identifiable expenditure. Collectively, these two elements of expenditure accounted for 74.7% of total non-identifiable expenditure for Scotland in 2012-13.

Table 5.7: Total Expenditure, Identifiable and Non-identifiable: Scotland 2008-09 to 2012-13

(£ million)
Identifiable Non-identifiable Total
2008-09 2009-10 2010-11 2011-12 2012-13 2008-09 2009-10 2010-11 2011-12 2012-13 2008-09 2009-10 2010-11 2011-12 2012-13
General public services
Public and common services 1,145 1,160 1,199 1,241 988 449 422 410 381 392 1,594 1,582 1,609 1,622 1,381
International services 17 15 18 17 14 522 584 651 649 654 539 599 669 666 667
Public sector debt interest 0 0 0 0 0 2,734 2,599 3,846 4,099 4,020 2,734 2,599 3,846 4,099 4,020
Defence 5 5 5 5 4 3,090 3,161 3,287 3,230 3,024 3,096 3,167 3,292 3,237 3,027
Public order and safety 2,444 2,508 2,654 2,721 2,402 176 185 149 140 126 2,619 2,694 2,804 2,860 2,529
Economic affairs
Enterprise and economic development 948 971 856 895 951 768 398 -118 -43 98 1,716 1,369 737 853 1,049
Science and technology 57 58 58 80 80 176 184 171 184 168 233 243 230 263 249
Employment policies 210 226 295 244 222 0 0 0 0 0 210 226 295 245 222
Agriculture, forestry and fisheries 829 880 933 973 917 5 13 15 3 0 834 892 948 977 917
Transport 2,610 2,819 2,629 2,697 2,756 25 20 19 20 23 2,636 2,838 2,647 2,717 2,779
Environment protection 973 1,022 1,046 1,011 1,006 76 140 171 165 203 1,049 1,163 1,218 1,177 1,210
Housing and community amenities 1,802 1,970 1,621 1,624 1,629 0 0 0 0 0 1,802 1,971 1,620 1,624 1,628
Health 10,139 10,552 10,794 10,921 11,178 115 128 144 126 107 10,255 10,679 10,938 11,046 11,284
Recreation, culture and religion 1,080 1,154 1,095 1,224 1,240 312 326 337 331 314 1,392 1,480 1,431 1,555 1,554
Education and training 7,529 7,728 7,652 7,490 7,650 0 0 0 0 0 7,528 7,729 7,651 7,490 7,651
Social protection 18,077 19,518 20,130 20,703 21,969 466 558 564 455 489 18,543 20,076 20,692 21,159 22,458
Accounting adjustments 2,608 2,458 2,845 2,973 2,797 53 324 618 310 -215 2,661 2,781 3,463 3,284 2,581
Total 50,472 53,044 53,829 54,819 55,802 8,968 9,043 10,266 10,050 9,403 59,440 62,087 64,095 64,869 65,205

Analysis of Identifiable Expenditure

This section provides a more detailed analysis of identifiable expenditure for Scotland.

Table 5.8 disaggregates identifiable expenditure for Scotland into expenditure by the Scottish Government and by other UK Government departments for the years 2008-09 to 2012-13.[29] Tables 5.9 and 5.10 provide a similar disaggregation but with an additional split for current and capital expenditure. Finally, Table 5.11 provides an assessment of the contribution of each expenditure programme to overall identifiable expenditure for Scotland and the UK as a whole.

The Scottish Government accounted for over two thirds of total Scottish identifiable public expenditure in each year between 2008-09 to 2012-13 with the majority of such expenditure on health and education. It should be noted that the figures presented for Scottish Government expenditure in GERS do not reconcile directly with Scottish Government budget statements. The identifiable expenditure figures contained in GERS include expenditure by non-ministerial departments, such as the National Records of Scotland (NRS), and by public corporations. Furthermore, the figures presented in GERS are consistent with the National Accounts framework for public sector expenditure and will therefore differ from the Scottish Government budget documents in their treatment of certain cash and non-cash items. There are also important differences in classification of expenditure.

UK Government departments accounted for the remaining Scottish identifiable expenditure. Their spending is dominated by expenditure on social protection - i.e. welfare payments and unemployment benefits. Social protection is the only function where the majority of identifiable expenditure is not undertaken by the Scottish Government and Scottish Local Authorities.

In the five years since 2008-09, UK Government departments have accounted for about a third of total identifiable current expenditure, primarily through expenditure on social protection. In contrast, in most years over the same period these departments were typically responsible for less than 3% of identifiable capital expenditure in Scotland, with expenditure in this area instead being almost solely directed by the Scottish Government.

As Table 5.11 highlights, the pattern of identifiable expenditure for Scotland was broadly similar to that for the UK as a whole, with social protection and health being the dominant expenditure components. It should be noted that some of the differences in the composition of spending between Scotland and the UK will reflect variations in the classification of expenditure between spending categories.

Table 5.8: Total Identifiable Expenditure: Scotland 2008-09 to 2012-13

(£ million)
Scottish Government and Local Authorities Other UK Government Total
2008-09 2009-10 2010-11 2011-12 2012-13 2008-09 2009-10 2010-11 2011-12 2012-13 2008-09 2009-10 2010-11 2011-12 2012-13
General public services
Public and common services 1,080 1,087 1,137 1,193 963 64 73 62 48 25 1,145 1,160 1,199 1,241 988
International services 0 0 0 0 0 17 15 18 17 14 17 15 18 17 14
Public sector debt interest 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Defence 5 5 5 4 4 0 0 0 0 0 5 5 5 5 4
Public order and safety 2,306 2,359 2,561 2,581 2,274 138 150 92 140 128 2,444 2,508 2,654 2,721 2,402
Economic affairs
Enterprise and econ development 787 835 752 782 811 161 136 104 113 139 948 971 856 895 951
Science and technology 12 7 6 5 4 44 51 52 75 76 57 58 58 80 80
Employment policies 0 0 0 0 0 210 226 295 244 222 210 226 295 244 222
Agriculture, forestry and fisheries 818 870 926 965 909 10 10 8 8 8 829 880 933 973 917
Transport 2,599 2,768 2,595 2,665 2,727 11 50 34 32 28 2,610 2,819 2,629 2,697 2,756
Environment protection 927 978 986 956 955 47 45 60 55 51 973 1,022 1,046 1,011 1,006
Housing and community amenities 1,802 1,970 1,621 1,624 1,629 0 0 0 0 0 1,802 1,970 1,621 1,624 1,629
Health 10,130 10,545 10,789 10,916 11,169 9 7 5 5 9 10,139 10,552 10,794 10,921 11,178
Recreation, culture and religion 1,002 1,061 1,019 1,126 1,138 78 94 75 99 101 1,080 1,154 1,095 1,224 1,240
Education and training 7,499 7,702 7,629 7,463 7,625 30 25 23 27 25 7,529 7,728 7,652 7,490 7,650
Social protection 4,457 4,847 5,038 5,083 5,539 13,620 14,671 15,092 15,620 16,430 18,077 19,518 20,130 20,703 21,969
Accounting adjustments 2,608 2,458 2,845 2,973 2,797 0 0 0 0 0 2,608 2,458 2,845 2,973 2,797
Total 36,032 37,491 37,909 38,336 38,546 14,440 15,553 15,920 16,483 17,256 50,472 53,044 53,829 54,819 55,802

Table 5.9: Identifiable Expenditure - Scottish Government and Local Authorities: Scotland 2008-09 to 2012-13

(£ million)
Current Capital
2008-09 2009-10 2010-11 2011-12 2012-13 2008-09 2009-10 2010-11 2011-12 2012-13
General public services
Public and common services 827 1,036 969 1,055 800 254 50 168 138 163
International services 0 0 0 0 0 0 0 0 0 0
Public sector debt interest 0 0 0 0 0 0 0 0 0 0
Defence 5 5 5 4 4 0 0 0 0 0
Public order and safety 2,100 2,140 2,343 2,408 2,151 206 218 218 173 123
Economic affairs
Enterprise and econ development 527 560 511 551 564 260 275 241 231 247
Science and technology 5 7 6 5 4 7 0 0 0 0
Employment policies 0 0 0 0 0 0 0 0 0 0
Agriculture, forestry and fisheries 719 759 774 817 765 100 111 152 148 144
Transport 1,505 1,456 1,539 1,538 1,482 1,094 1,312 1,056 1,127 1,245
Environment protection 841 885 899 875 859 85 93 87 82 95
Housing and community amenities 281 261 296 231 188 1,521 1,709 1,324 1,393 1,441
Health 9,626 10,013 10,213 10,437 10,623 504 532 576 478 546
Recreation, culture and religion 758 814 793 851 834 244 247 226 275 304
Education and training 6,853 7,042 7,032 6,777 6,988 646 661 596 686 638
Social protection 4,395 4,788 4,990 5,040 5,465 62 59 48 43 74
Accounting adjustments 2,439 2,309 2,676 2,791 2,609 169 149 169 182 187
Total 30,880 32,075 33,047 33,381 33,338 5,153 5,416 4,862 4,955 5,208

Table 5.10: Identifiable Expenditure - Other UK Government: Scotland 2008-09 to 2012-13

(£ million)
Current Capital
2008-09 2009-10 2010-11 2011-12 2012-13 2008-09 2009-10 2010-11 2011-12 2012-13
General public services
Public and common services 60 61 57 45 27 4 12 5 3 -2
International services 17 14 17 16 13 0 0 1 1 1
Public sector debt interest 0 0 0 0 0 0 0 0 0 0
Defence 0 0 0 0 0 0 0 0 0 0
Public order and safety 129 136 87 132 124 9 13 5 7 4
Economic affairs
Enterprise and econ development 123 121 88 112 139 38 15 16 1 1
Science and technology 44 49 51 64 73 1 2 1 11 3
Employment policies 207 222 291 242 222 3 4 4 2 1
Agriculture, forestry and fisheries 10 10 8 8 8 0 0 0 0 0
Transport 4 42 27 25 23 8 8 7 7 6
Environment protection 38 39 41 48 41 9 6 20 7 10
Housing and community amenities 0 0 0 0 0 0 0 0 0 0
Health 7 6 5 5 9 1 1 0 0 0
Recreation, culture and religion 57 70 52 70 79 22 24 23 28 23
Education and training 29 25 23 26 24 1 0 1 1 1
Social protection 13,592 14,632 15,058 15,609 16,430 28 39 34 11 -1
Accounting adjustments 0 0 0 0 0 0 0 0 0 0
Total 14,317 15,428 15,805 16,403 17,209 123 125 116 80 47

Table 5.11: Identifiable Expenditure: Scotland and UK 2012-13

Scotland UK
Scottish Government and Local Authorities Other UK Government Total Total
Expenditure
(£ million)
Share of identifiable expenditure Expenditure
(£ million)
Share of identifiable expenditure Expenditure
(£ million)
Share of identifiable expenditure Expenditure
(£ million)
Share of identifiable expenditure
General public services
Public and common services 963 1.7% 25 0.0% 988 1.8% 6,939 1.2%
International services 0 0.0% 14 0.0% 14 0.0% 164 0.0%
Public sector debt interest 0 0.0% 0 0.0% 0 0.0% 0 0.0%
Defence 4 0.0% 0 0.0% 4 0.0% 75 0.0%
Public order and safety 2,274 4.1% 128 0.2% 2,402 4.3% 29,947 5.1%
Economic affairs
Enterprise and econ development 811 1.5% 139 0.2% 951 1.7% 4,097 0.7%
Science and technology 4 0.0% 76 0.1% 80 0.1% 1,582 0.3%
Employment policies 0 0.0% 222 0.4% 222 0.4% 2,568 0.4%
Agriculture, forestry and fisheries 909 1.6% 8 0.0% 917 1.6% 5,340 0.9%
Transport 2,727 4.9% 28 0.1% 2,756 4.9% 18,861 3.2%
Environment protection 955 1.7% 51 0.1% 1,006 1.8% 8,706 1.5%
Housing and community amenities 1,629 2.9% 0 0.0% 1,629 2.9% 10,543 1.8%
Health 11,169 20.0% 9 0.0% 11,178 20.0% 122,995 21.1%
Recreation, culture and religion 1,138 2.0% 101 0.2% 1,240 2.2% 9,015 1.5%
Education and training 7,625 13.7% 25 0.0% 7,650 13.7% 87,448 15.0%
Social protection 5,539 9.9% 16,430 29.4% 21,969 39.4% 246,125 42.3%
Accounting adjustments 2,797 5.0% 0 0.0% 2,797 5.0% 28,023 4.8%
Total 38,546 69.1% 17,256 30.9% 55,802 100% 582,427 100%

Box 5.3 EU Transactions

As a member of the European Union (EU) the UK contributes to the EU budget and receives funding from the EU via a number of programmes. The methodology used in GERS to apportion a share of the UK's EU contributions and receipts to Scotland is set out below.

Contributions to the EU Budget

EU members contribute to the EU budget through three sources:

  • GNI based own resource: Each member state makes a contribution in proportion to their GNI, in 2013 this was approximately 1.13% their GNI.
  • VAT based own resource: Each member state contributes 0.3% of their harmonised VAT base.
  • Traditional Own Resource (TOR): Consists of agriculture duties and customs duties levied on agriculture and non-agriculture products from outside the EU.

Under the current fiscal framework, Scotland does not contribute directly to the EU budget. In GERS, Scotland is therefore assigned a share of the UK's contribution based on various apportionment methodologies. Scotland's share of the UK's GNI based contribution is calculated using the ratio of Scottish to UK onshore GDP. VAT based own resource and TOR are assigned to Scotland using Scotland's share of UK VAT receipts.

Since 1985, the UK has received a rebate broadly equal to 66% of the UK's net contribution in the previous year - where the net contribution is the difference between the UK's share of VAT contributions and its share of expenditure allocated to Member States. A population share of the rebate is assigned to Scotland.

Receipts from the EU Budget

Within GERS, receipts received from the EU are broken down into two categories, public sector receipts and external assistance. Public sector receipts reflect expenditure specifically for Scotland as reported in the Scottish Government's Consolidated Accounts such as payments under the Common Agricultural Policy. They are therefore recorded in GERS as identifiable expenditures for Scotland. The EU's external assistance budget provides aid to states outside the EU. A share of this expenditure is attributed to the UK based on its contribution to the EU budget. This is consistent with the UK Government's accounting approach. GERS classifies this expenditure as non-identifiable and assigns Scotland a population share.

Two measures are generally used to illustrate the UK's net contribution to the EU:

  • The primary measure is the UK's net contribution to the EU budget - this is calculated as the difference between the UK's gross contribution to the EU budget (less the rebate) and public sector EU receipts.
  • A secondary measure is the UK's net payment to EU institutions - this is equal to the UK's net contribution to the EU Budget less its share of the EU's external assistance aid budget.

Estimates of both measures are provided for Scotland in the table below. The table also demonstrates the impact of assigning the UK's GNI based contributions to Scotland using different measures of Scottish GDP.

Scotland's Estimated Notional Net Contributions to the EU
(£ million)
2008-09 2009-10 2010-11 2011-12 2012-13
Total Contributions with:
GNI contribution estimated based on Scottish onshore GDP share 1,104 1,132 1,283 1,284 1,368
GNI contribution estimated based on Scottish GDP including a per capita share of North Sea GDP 1,119 1,146 1,300 1,300 1,384
GNI contribution estimated based on Scottish including a geographical share of North Sea GDP 1,248 1,267 1,450 1,438 1,512
Rebate -471 -354 -225 -294 -264
Total Contribution after rebate with:
GNI contribution estimated based on Scottish onshore GDP share 633 778 1,059 990 1,104
GNI contribution estimated based on Scottish GDP including a per capita share of North Sea GDP 648 792 1,076 1,006 1,119
GNI contribution estimated based on Scottish including a geographical share of North Sea GDP 777 912 1,226 1,144 1,247
Public Sector EU Receipts -622 -619 -724 -800 -687
Net Contribution to the EU Budget
GNI contribution estimated based on Scottish onshore GDP share 11 159 335 190 417
GNI contribution estimated based on Scottish GDP including a per capita share of North Sea GDP 26 173 352 206 432
GNI contribution estimated based on Scottish including a geographical share of North Sea GDP 155 293 502 344 560
Less payments to EU Budget attributed to the EU aid programme 63 78 81 73 74
Net payments to EU institutions with:
GNI contribution estimated based on onshore GDP share -52 81 254 117 343
GNI contribution estimated based on including a per capita share of North Sea GDP -37 95 271 133 358
GNI contribution estimated based on including a geographical share of North Sea GDP 92 215 421 271 486

Analysis of Non-Identifiable Expenditure

This section provides a more detailed analysis of non-identifiable expenditure. There are a number of possible ways in which to allocate a share of UK non-identifiable expenditure to Scotland including Scotland's share of UK GVA or population. The methodologies used to apportion each element of non-identifiable expenditure are discussed in Annex B.

In addition to non-identifiable expenditure, the CRA also includes a small amount of UK Government expenditure which is classified as identifiable but for programmes outside the UK. This includes expenditure on international development programmes. This category is included in GERS within non-identifiable expenditure for both Scotland and the UK. This treatment is consistent with the view that expenditure outside the UK is non-identifiable from the perspective of the UK's constituent countries, as the benefits are shared between them. To make the Scottish non-identifiable expenditure comparable with UK data, this category is therefore included in UK non-identifiable expenditure.

Table 5.12 presents total non-identifiable expenditure for Scotland and the UK between 2008-09 and 2012-13. Tables 5.13 and 5.14 decompose Scottish and UK non-identifiable expenditure into their current and capital components.

Total non-identifiable expenditure for Scotland was estimated to be £9.4 billion in 2012-13, 7.9% of the UK total.

Defence and debt interest payments comprise the largest components. As Tables 5.13 and 5.14 highlight, current expenditure was the major component of non-identifiable expenditure for both Scotland and the UK in 2012-13.

As outlined in Chapter 2 and Box B.1 in Annex B the UK Government's financial sector interventions in 2008-09 are classified as non-identifiable expenditure and are recorded in the Enterprise and Economic Development (EED) expenditure programme lines. The scale of the financial sector interventions, relative to other spending on this category, means that capital non-identifiable expenditure on EED for Scotland is estimated to have fallen from £825 million in 2008-09 to £17 million in 2010-11 before rising to £29 million in 2012-13.

The negative values for current expenditure for EED between 2008-09 and 2011-12 in Table 5.13 are due to the fact that the fees received from the various schemes are recorded as a negative current expenditure (i.e. revenue received), and these fees exceeded the current expenditure on other elements of EED in these years.

Table 5.12: Non-Identifiable Expenditure: Scotland and UK 2008-09 to 2012-13

(£ million)
Scotland UK
2008-09 2009-10 2010-11 2011-12 2012-13 2008-09 2009-10 2010-11 2011-12 2012-13
General public services
Public and common services 449 422 410 381 392 5,366 5,061 4,927 4,581 4,738
International services 522 584 651 649 654 6,205 6,957 7,766 7,757 7,848
Public sector debt interest 2,734 2,599 3,846 4,099 4,020 32,497 30,956 45,891 48,984 48,230
Defence 3,090 3,161 3,287 3,230 3,024 36,736 37,634 39,212 38,601 36,288
Public order and safety 176 185 149 140 126 2,089 2,200 1,774 1,669 1,517
Economic affairs
Enterprise and economic development 768 398 -118 -43 98 9,138 4,750 -1,401 -488 1,204
Science and technology 176 184 171 184 168 2,099 2,201 2,046 2,202 2,017
Employment policies 0 0 0 0 0 1 1 1 1 0
Agriculture, forestry and fisheries 5 13 15 3 0 55 149 178 37 2
Transport 25 20 19 20 23 303 245 247 271 477
Environment protection 76 140 171 165 203 901 1,675 2,043 1,967 2,439
Housing and community amenities 0 0 0 0 0 0 0 0 0 0
Health 115 128 144 126 107 1,367 1,522 1,717 1,500 1,280
Recreation, culture and religion 312 326 337 331 314 3,710 3,885 4,022 3,952 3,765
Education and training 0 0 0 0 0 3 3 4 4 4
Social protection 466 558 564 455 489 5,677 6,788 6,920 5,647 6,079
Accounting adjustments 53 324 618 310 -215 3,121 6,225 10,589 6,672 3,365
Total 8,968 9,043 10,266 10,050 9,403 109,268 110,253 125,936 123,357 119,254

Table 5.13: Non-Identifiable Expenditure: Scotland 2008-09 to 2012-13

(£ million)
Current Capital
2008-09 2009-10 2010-11 2011-12 2012-13 2008-09 2009-10 2010-11 2011-12 2012-13
General public services
Public and common services 409 403 376 375 372 40 19 34 5 20
International services 485 535 589 600 604 37 50 62 49 50
Public sector debt interest 2,734 2,599 3,846 4,099 4,020 0 0 0 0 0
Defence 2,796 2,820 2,926 2,928 2,736 294 341 361 302 288
Public order and safety 158 160 129 123 113 18 25 20 17 14
Economic affairs
Enterprise and economic development -57 -12 -136 -60 69 825 410 17 17 29
Science and technology 150 150 147 152 143 26 34 25 32 25
Employment policies 0 0 0 0 0 0 0 0 0 0
Agriculture, forestry and fisheries 5 13 15 3 0 0 0 0 0 0
Transport 17 12 11 12 13 8 9 8 8 9
Environment protection -26 46 40 55 44 101 94 131 110 159
Housing and community amenities 0 0 0 0 0 0 0 0 0 0
Health 107 122 131 117 104 8 6 13 9 2
Recreation, culture and religion 302 313 324 310 301 10 13 13 21 13
Education and training 0 0 0 0 0 0 0 0 0 0
Social protection 465 543 551 441 466 1 15 13 15 23
Accounting adjustments -62 199 326 -30 94 115 124 291 340 -309
Total 7,484 7,903 9,276 9,125 9,080 1,484 1,140 990 924 324

Table 5.14: Non-Identifiable Expenditure: UK 2008-09 to 2012-13

(£ million)
Current Capital
2008-09 2009-10 2010-11 2011-12 2012-13 2008-09 2009-10 2010-11 2011-12 2012-13
General public services
Public and common services 4,890 4,828 4,516 4,518 4,492 476 233 412 63 246
International services 5,769 6,364 7,025 7,166 7,253 436 593 740 591 595
Public sector debt interest 32,497 30,956 45,891 48,984 48,230 0 0 0 0 0
Defence 33,237 33,576 34,909 34,990 32,834 3,499 4,058 4,303 3,611 3,454
Public order and safety 1,875 1,904 1,534 1,471 1,354 214 297 241 199 163
Economic affairs
Enterprise and economic development -669 -129 -1,607 -691 859 9,807 4,879 206 203 345
Science and technology 1,784 1,792 1,751 1,818 1,716 315 409 296 384 301
Employment policies 1 1 1 1 0 0 0 0 0 0
Agriculture, forestry and fisheries 55 149 178 37 2 0 0 0 0 0
Transport 207 143 150 179 363 96 103 97 92 114
Environment protection -303 550 474 656 527 1,205 1,125 1,570 1,311 1,912
Housing and community amenities 0 0 0 0 0 0 0 0 0 0
Health 1,267 1,449 1,558 1,394 1,251 100 73 159 106 29
Recreation, culture and religion 3,587 3,730 3,866 3,705 3,612 122 156 156 248 153
Education and training 3 3 4 4 4 0 0 0 0 0
Social protection 5,663 6,613 6,764 5,470 5,800 14 175 156 177 280
Accounting adjustments 1,691 4,776 8,340 4,475 5,843 1,430 1,448 2,249 2,197 -2,478
Total 91,554 96,704 115,354 114,175 114,141 17,715 13,549 10,582 9,182 5,113

Box 5.4 - Debt Interest Payments and the Current Primary Balance

The debt interest payment expenditure in the above tables refers to payments to cover interest on outstanding UK Government debt. As there is no separate identification of Scotland's share of UK public sector net debt in UK public financial accounts they do not provide a separate Scottish debt interest expenditure. In GERS, such expenditure is classified as non-identifiable. For each year, a per capita share of UK Government debt interest expenditure is allocated for Scotland. The allocation on a per capita basis is based on the assumption that residents across the UK bear an equal burden of UK Government liabilities.

Debt interest payments can also be viewed as payments related to past UK public sector net borrowing and government expenditure. Current expenditure excluding debt interest payments represents expenditure on public services consumed within the current financial year. The difference between this estimate and estimated current revenue represents the current budget fiscal position for public services provided at a given point in time (the primary current balance). In GERS, an estimate of debt interest payments is then deducted from this balance to obtain the current budget balance which is presented in Chapter 2.

The table below illustrates the current primary balance on public services consumed for Scotland between 2008-09 and 2012-13.

Current Primary Balance: Scotland 2008-09 to 2012-13
(£ million)
2008-09 2009-10 2010-11 2011-12 2012-13
Current revenue
Excluding North Sea revenue 43,772 42,053 44,317 46,313 47,564
Including North Sea revenue (per capita share) 44,820 42,556 45,022 47,261 48,117
Including North Sea revenue (geographical share) 55,350 47,732 51,771 56,313 53,146
Current expenditure including capital consumption 54,467 57,289 60,072 60,948 61,746
Less debt interest payments 2,734 2,599 3,846 4,099 4,020
Current expenditure on services 51,733 54,690 56,226 56,849 57,726
Current Primary balance
Excluding North Sea revenue -7,961 -12,637 -11,909 -10,536 -10,162
Including North Sea revenue (per capita share) -6,913 -12,134 -11,204 -9,587 -9,610
Including North Sea revenue (geographical share) 3,617 -6,958 -4,454 -536 -4,581

The table below presents the estimates of Scottish and UK current primary balances as a share of GDP.

Current Primary Balance: Scotland & UK 2008-09 to 2012-13 (% GDP)
2008-09 2009-10 2010-11 2011-12 2012-13
Scotland - Excluding North Sea revenue -6.7% -10.9% -9.7% -8.4% -8.0%
Scotland - Including North Sea revenue (per capita share) -5.7% -10.3% -9.0% -7.5% -7.5%
Scotland - Including North Sea revenue (geographical share) 2.5% -5.2% -3.1% -0.4% -3.2%
UK -1.3% -5.4% -3.6% -2.6% -2.8%

Contact

Email: Mairi Spowage