Publication - Statistics

Government Expenditure & Revenue Scotland 2013-14

Published: 11 Mar 2015
Part of:
Statistics
ISBN:
9781785441820

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 January 2015.

98 page PDF

1.9 MB

98 page PDF

1.9 MB

Contents
Government Expenditure & Revenue Scotland 2013-14
CHAPTER 5: PUBLIC SECTOR EXPENDITURE

98 page PDF

1.9 MB

CHAPTER 5: PUBLIC SECTOR EXPENDITURE

Total Public Sector Expenditure: Scotland 2013-14

Total Public Sector Expenditure: Scotland 2013-14

Introduction

This chapter provides detailed estimates of public sector expenditure for Scotland.

The primary data source used to estimate Scottish public sector expenditure is the November 2014 Country and Regional Analysis (CRA) published by HM Treasury.[30] 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. 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

Total public sector expenditure for Scotland in 2013-14 is estimated to be £66.4 billion. This is shown by spending category in Table 5.1. This was equivalent to 9.2% of comparable total UK public sector expenditure, 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.

Box 5.1: European System of Accounts (ESA10) changes to expenditure

The move to reporting in line with ESA10 has resulted in some changes to expenditure. In general, these occur within the accounting adjustment, and offset changes made to the revenue side, as discussed in Box 3.2.

The main change to expenditure under ESA10 is the reclassification of spending on research and development and single use military expenditure as capital rather than current spending. This results in an increase in capital expenditure and corresponding reduction in current spending, leaving total expenditure unchanged. As the HM Treasury CRA database is still on an ESA95 basis, this change has been made for GERS by reclassifying all expenditure classed as research and development from current to capital. No adjustment has been made to single use military expenditure due to difficulty in identifying this spending within the CRA database. The CRA database will be updated to be on an ESA10 basis next year.

The other major change is the inclusion of Network Rail, as discussed in Box 3.2. Network Rail expenditure is included within the accounting adjustments. The inclusion of Network Rail increases UK current expenditure by £4.6 billion and UK net investment by £1.6 billion. As discussed in Box 3.2, Scotland's share of Network Rail's expenditure is estimated based on its regulatory financial statements. Network Rail's current expenditure for Scotland is estimated to be approximately £350 million, and net investment approximately £80 million.

Table 5.1: Total Expenditure: Scotland 2013-14

Scotland

£ million

% of total expenditure

General public services

Public and common services

1,620

2.4%

International services

838

1.3%

Public sector debt interest

3,068

4.6%

Defence

3,025

4.6%

Public order and safety

2,557

3.9%

Economic affairs

Enterprise and economic development

1,049

1.6%

Science and technology

333

0.5%

Employment policies

329

0.5%

Agriculture, forestry and fisheries

962

1.4%

Transport

3,049

4.6%

Environment protection

1,277

1.9%

Housing and community amenities

1,619

2.4%

Health

11,465

17.3%

Recreation, culture and religion

1,486

2.2%

Education and training

7,599

11.4%

Social protection

22,323

33.6%

Accounting adjustments

3,785

5.7%

Total Expenditure

66,388

100%

Total public sector expenditure for Scotland is estimated to have increased from £63.5 billion in 2009-10 to £66.4 billion in 2013-14, an increase of 4.5% in nominal terms. Over the same period, equivalent UK public sector expenditure increased by 5.1% in nominal terms. Much of growth of UK spending has occurred in debt interest expenditure, which has increased by 36% over the period as a result of increased borrowing since the beginning of the financial crisis and recession in 2008. As Scotland is apportioned a population share of this expenditure, which is lower than its overall expenditure share, this has contributed to expenditure in Scotland growing relatively more slowly than overall UK spending.

Table 5.2: Total Current and Capital Expenditure Scotland and UK 2009-10 to 2013-14

(£ million)

Scotland

UK

2009-10

2010-11

2011-12

2012-13

2013-14

2009-10

2010-11

2011-12

2012-13

2013-14

Current

55,560

57,776

58,265

59,353

59,653

606,512

634,412

642,131

651,038

660,331

Capital

7,973

7,336

7,503

8,495

6,735

79,783

72,108

64,059

69,798

61,158

Total

63,533

65,112

65,768

67,848

66,388

686,295

706,520

706,190

720,836

721,489

Table 5.3 shows the share of total expenditure between current and capital for Scotland. Capital expenditure for Scotland is higher than in previous estimates as it incorporates definitional changes as a result of ESA10, discussed in Box 5.1. Capital expenditure in 2012-13 is higher due to the inclusion of one-off expenditure associated with the transfer of the Royal Mail Pension Plan.

Table 5.3: Current and Capital Expenditure (% of Total Expenditure): Scotland 2009-10 to 2013-14

(per cent)

2009-10

2010-11

2011-12

2012-13

2013-14

Current

87.5%

88.7%

88.6%

87.5%

89.9%

Capital

12.5%

11.3%

11.4%

12.5%

10.1%

The table below presents the estimates of Scottish and UK total public sector expenditure as a share of GDP. Such statistics provide a useful illustration of the relative size of public spending between countries and over time by controlling for the size of the economy. They should not, however, be viewed as an estimate of the relative contribution of public spending (or the public sector) to the economy as a significant proportion of such spending is on transfers from government to individuals and businesses.

Table 5.4: Total Managed Expenditure as a Share of GDP: 2009-10 to 2013-14

(per cent of GDP)

2009-10

2010-11

2011-12

2012-13

2013-14

Scottish TME as a Share of GDP:

Excluding North Sea GDP

52.6%

53.1%

51.4%

52.3%

49.2%

Including population share of North Sea GDP

51.8%

52.1%

50.5%

51.6%

48.5%

Including geographical share of North Sea GDP

45.4%

44.9%

43.6%

46.1%

43.5%

UK TME as a share of GDP:

Including 100% of North Sea GDP

45.7%

44.8%

43.4%

43.3%

41.6%

Tables 5.5 and 5.6 show current, capital, and total expenditure for Scotland and the UK respectively.

Table 5.5: Total Expenditure: Scotland 2009-10 to 2013-14

(£ million)

Current

Capital

Total

2009-10

2010-11

2011-12

2012-13

2013-14

2009-10

2010-11

2011-12

2012-13

2013-14

2009-10

2010-11

2011-12

2012-13

2013-14

General public services

Public and common services

1,525

1,420

1,492

1,366

1,415

99

221

156

145

205

1,624

1,641

1,648

1,511

1,620

International services

548

608

616

617

787

50

62

50

45

51

598

670

666

662

838

Public sector debt interest

2,278

3,350

3,500

3,137

3,068

0

0

0

0

0

2,278

3,350

3,500

3,137

3,068

Defence

2,715

2,727

2,756

2,547

2,537

449

565

478

481

488

3,164

3,292

3,234

3,028

3,025

Public order and safety

2,441

2,562

2,668

2,654

2,415

257

244

198

196

142

2,698

2,806

2,866

2,850

2,557

Economic affairs

Enterprise and economic development

688

475

610

712

810

698

274

249

243

239

1,386

749

859

955

1,049

Science and technology

0

0

0

0

0

287

274

305

281

333

287

274

305

281

333

Employment policies

332

417

282

261

321

10

9

8

8

8

342

426

290

269

329

Agriculture, forestry and fisheries

781

796

827

770

813

112

152

147

150

149

893

948

974

920

962

Transport

1,509

1,570

1,567

1,671

1,692

1,450

1,182

1,243

1,399

1,357

2,959

2,752

2,810

3,070

3,049

Environment protection

942

949

950

917

949

221

266

228

294

328

1,163

1,215

1,178

1,211

1,277

Housing and community amenities

257

292

228

165

194

1,713

1,328

1,397

1,446

1,425

1,970

1,620

1,625

1,611

1,619

Health

10,131

10,340

10,560

10,737

10,956

539

591

486

553

509

10,670

10,931

11,046

11,290

11,465

Recreation, culture and religion

1,216

1,179

1,209

1,311

1,253

297

274

334

327

233

1,513

1,453

1,543

1,638

1,486

Education and training

7,065

7,053

6,802

7,018

6,988

662

599

687

656

611

7,727

7,652

7,489

7,674

7,599

Social protection

19,894

20,524

21,036

22,201

22,288

111

93

64

84

35

20,005

20,617

21,100

22,285

22,323

Accounting adjustments

3,235

3,510

3,162

3,269

3,165

1,017

1,201

1,475

2,183

621

4,252

4,712

4,636

5,452

3,785

Total

55,560

57,776

58,265

59,353

59,653

7,973

7,336

7,503

8,495

6,735

63,533

65,112

65,768

67,848

66,388

Table 5.6: Total Expenditure: UK 2009-10 to 2013-14

(£ million)

Current

Capital

Total

2009-10

2010-11

2011-12

2012-13

2013-14

2009-10

2010-11

2011-12

2012-13

2013-14

2009-10

2010-11

2011-12

2012-13

2013-14

General public services

Public and common services

11,913

11,110

10,454

10,037

10,296

1,840

1,651

1,121

1,276

1,840

13,753

12,761

11,575

11,313

12,136

International services

6,536

7,257

7,361

7,407

9,474

596

743

591

546

620

7,132

8,000

7,952

7,953

10,094

Public sector debt interest

27,143

39,972

41,829

37,648

36,942

0

0

0

0

0

27,143

39,972

41,829

37,648

36,942

Defence

32,359

32,549

32,952

30,587

30,552

5,354

6,738

5,711

5,768

5,879

37,713

39,287

38,663

36,355

36,431

Public order and safety

31,409

31,005

30,498

29,902

28,642

2,709

2,010

1,537

1,398

1,523

34,118

33,015

32,035

31,300

30,165

Economic affairs

Enterprise and economic development

5,126

2,792

3,256

3,933

4,224

7,110

2,023

1,595

939

1,051

12,236

4,815

4,851

4,872

5,275

Science and technology

0

0

0

0

0

3,552

3,406

3,564

3,599

4,440

3,552

3,406

3,564

3,599

4,440

Employment policies

3,953

4,602

3,171

2,986

3,583

145

94

84

100

76

4,098

4,696

3,255

3,086

3,659

Agriculture, forestry and fisheries

5,550

5,150

5,522

4,990

5,044

273

329

271

306

439

5,823

5,479

5,793

5,296

5,483

Transport

9,767

8,830

8,376

7,861

8,055

13,204

12,659

11,667

10,910

12,320

22,971

21,489

20,043

18,771

20,375

Environment protection

7,850

7,775

7,855

7,403

7,806

2,547

3,154

2,606

3,202

3,709

10,397

10,929

10,461

10,605

11,515

Housing and community amenities

4,014

3,215

2,730

3,173

3,143

12,330

9,904

7,318

6,776

8,592

16,344

13,119

10,048

9,949

11,735

Health

110,736

114,437

116,987

119,490

124,772

6,180

5,389

4,247

4,783

4,710

116,916

119,826

121,234

124,273

129,482

Recreation, culture and religion

10,253

10,244

9,693

10,726

9,343

2,926

2,718

2,818

2,004

2,324

13,179

12,962

12,511

12,730

11,667

Education and training

78,535

82,350

79,100

80,643

84,251

9,948

9,148

7,798

6,642

6,769

88,483

91,498

86,898

87,285

91,020

Social protection

221,948

229,379

239,401

250,046

251,552

1,053

1,017

596

428

-208

223,001

230,396

239,997

250,474

251,344

Accounting adjustments

39,420

43,744

42,949

44,205

42,653

10,018

11,122

12,536

21,123

7,074

49,438

54,867

55,485

65,328

49,727

Total

606,512

634,412

642,131

651,038

660,331

79,783

72,108

64,059

69,798

61,158

686,295

706,520

706,190

720,836

721,489

Table 5.7 shows estimated total public sector expenditure for Scotland and the UK on a per person basis from 2009-10 to 2013-14. The table also highlights the absolute per person difference between Scotland and the UK, and the relative difference between the two. Since 2009-10, public spending per head for Scotland has been between 9.9% and 13.0% higher than the UK average.

Table 5.7: Total Expenditure Per Person: Scotland and UK 2009-10 to 2013-141

2009-10

2010-11

2011-12

2012-13

2013-14

Scotland (£)

12,100

12,400

12,400

12,800

12,500

UK (£)

11,000

11,200

11,100

11,300

11,200

Difference (Scotland minus UK) (£)

1,100

1,100

1,300

1,500

1,200

Relative Expenditure for Scotland (UK = 100)

110.2

109.9

111.3

113.0

110.8

1 Figures rounded to the nearest £100

There are a number of reasons why public expenditure per person 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.

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.

Table 5.8 below provides a breakdown of all expenditure in Scotland by the Scottish Government (including Local Authorities and Scottish Public Corporations) and Other UK Government departments. Unlike in previous editions of GERS, non-identifiable expenditure is also included to provide consistency with the figures in Table 5.4. Information previously provided in Tables 5.8 to 5.14 is available on the GERS website.

Box 5.2 provides a description of how the figures in Table 5.8 reconcile to published Scottish Government budgets and Scottish Local Authority accounts.

Table 5.8: Total Expenditure: Scotland 2009-10 to 2013-14

(£ million)

Scottish Government, LAs, and Public Corporations

Other UK Government

Total

2009-10

2010-11

2011-12

2012-13

2013-14

2009-10

2010-11

2011-12

2012-13

2013-14

2009-10

2010-11

2011-12

2012-13

2013-14

General public services

Public and common services

1,087

1,137

1,193

1,077

1,175

537

505

455

433

445

1,624

1,642

1,648

1,510

1,620

International services

0

0

0

0

0

599

670

665

662

838

599

670

665

662

838

Public sector debt interest

0

0

0

0

0

2,279

3,351

3,501

3,137

3,068

2,279

3,351

3,501

3,137

3,068

Defence

5

5

4

4

6

3,161

3,287

3,230

3,024

3,020

3,166

3,292

3,235

3,028

3,026

Public order and safety

2,359

2,561

2,581

2,589

2,310

340

246

285

262

248

2,699

2,808

2,866

2,851

2,558

Economic affairs

.

.

.

.

.

Enterprise and econ development

835

752

782

759

834

551

-2

79

197

216

1,386

750

861

956

1,051

Science and technology

7

6

5

4

3

280

267

300

277

330

287

273

305

282

333

Employment policies

0

0

0

0

0

341

426

289

270

327

341

426

289

270

327

Agriculture, forestry and fisheries

868

924

962

911

947

25

24

12

9

16

893

947

975

920

963

Transport

2,757

2,583

2,651

2,907

2,874

203

169

158

163

175

2,960

2,752

2,810

3,070

3,049

Environment protection

978

986

956

968

1,008

187

231

221

243

268

1,165

1,217

1,178

1,211

1,277

Housing and community amenities

1,970

1,621

1,624

1,611

1,620

0

0

0

0

0

1,970

1,621

1,624

1,611

1,620

Health

10,545

10,789

10,916

11,184

11,354

125

141

131

108

112

10,670

10,930

11,046

11,292

11,465

Recreation, culture and religion

1,061

1,019

1,126

1,147

1,062

450

433

416

492

424

1,511

1,453

1,542

1,639

1,486

Education and training

7,702

7,629

7,463

7,654

7,580

25

24

25

19

18

7,727

7,652

7,488

7,673

7,597

Social protection

4,865

5,051

5,086

5,555

5,613

15,140

15,567

16,014

16,730

16,711

20,005

20,618

21,100

22,284

22,324

Accounting adjustments

4,034

4,740

5,143

5,108

4,427

219

-28

-507

345

-641

4,252

4,712

4,636

5,453

3,786

Total

39,070

39,804

40,493

41,477

40,813

24,463

25,308

25,274

26,371

25,575

63,533

65,112

65,768

67,848

66,388

 

Box 5.2: Reconciliation of published SG and LG budgets to GERS figures

There are a number of differences between the figures for spending by Scottish Government and Local Authorities presented in Table 5.8 and figures presented in Scottish Government budgets and Scottish Local Government Finance Statistics. These fall into three main categories:

Coverage differences

The GERS expenditure figures are based on HM Treasury's CRA publication. This includes spending associated with Audit Scotland and the Scottish Parliament, which is not included within the Scottish Government budget documents.

Accounting differences

Figures presented in GERS are on a National Accounts basis, whilst figures reported in budgets are on a resource accounting basis. The key differences relate to reporting of pensions and depreciation. On a National Accounts basis, pensions expenditure is reported as the difference between monies paid into the pension fund and monies paid out of the pension fund. On the resource accounts basis, a measure of future liabilities is also included. This is removed in the CRA.

National Accounts also uses a measure of capital consumption rather than depreciation. This represents the amount of services which are provided using existing capital assets. This is because, on a National Accounts basis, expenditure represents all services provided by the public sector. For example, even if the government were not to spend any monies on transport, there would still be transport services provided, as people are able to use the existing road network. The value of these services is represented by capital consumption. An equal and offsetting amount is included in gross operating surplus as a revenue, so the estimate of capital consumption does not affect the overall fiscal position.

In contrast, the depreciation reported in budgets is on a resource accounts basis, and will therefore be based on historical asset prices, rather than current asset values. This is removed as part of the CRA, although a National Accounts measure is not added in. GERS therefore adds in a measure of capital consumption based on data reported in ONS Regional Accounts.

GERS also adds in estimates of VAT refunds claimed by government departments in Scotland. On a National Accounts basis, expenditure is shown including VAT.

Finally, GERS includes implied subsidies relating to student loans by being issued at a lower interest rate, and the cost of rent rebates and subsidies paid to the Housing Revenue Account in Scotland.

Grants and transfers

Grants and transfers within the public sector are excluded from expenditure by government bodies. This avoids double counting of expenditure, as the grant will be used to fund expenditure by another body. Instead, the expenditure by the final body receiving the grant is included.

Other smaller differences between budgets and National Accounts concepts are set out in Annex E of HM Treasury's Public Expenditure and Statistics Analyses publication: https://www.gov.uk/government/statistics/public-expenditure-statistical-analyses-2014

The table below shows the reconciliation of published Scottish Government and Scottish Local Government Finance figures to the figures published in the CRA and GERS. Annex B provides more detail of the accounting adjustments. The reconciliation is shown for 2012‑13, the latest year for which final accounts were available for the compilation of the CRA.

Reconciliation of published budget documents to GERS expenditure Table 5.8 (£bn)

2012-13

Scottish Government

Published Scottish Government budget1

33.8

Spending by Audit Scotland and Scottish Parliament

+0.1

Total Scottish Government expenditure

33.9

Adjustments to align budget to CRA measure of spending

Grants to other public sector bodies (e.g. local government)

-11.2

Pensions

-2.2

Depreciation

-0.6

Other

+0.3

Final Scottish Government expenditure from CRA

20.2

Scottish Local Government

Published Local Government gross current expenditure2

14.1

Income excluding grants from Central Government3

-2.0

Housing benefit

+1.8

Published Local Government gross capital expenditure4

2.5

Income from sales of capital assets4

-0.1

Final Scottish Local Government expenditure from CRA

16.3

Scottish Government and Scottish Local Government from CRA

36.5

National Accounts adjustments5

Capital consumption

+2.3

VAT refunds

+1.2

Student loan and Housing Revenue Account subsidy in Scotland

-0.1

Other accounting adjustments

+1.8

Final Scottish Government and Scottish Local Government TME

41.5

1 Scottish Government Draft Budget 2015-16, Annex G

2 Scottish Local Government Finance Statistics 2012-13, Annex B. Total General Fund (excluding the Housing Revenue Account and trading with the public) employee costs, operating costs, and support services costs.

3 As Note 2. Total General Fund (excluding the Housing Revenue Account and trading with the public) income less government grants

4 As Note 2. All services total gross capital expenditure (Annex H)

5 As Note 2. Total capital receipts from sales of assets (Annex I)

5 See Annex B

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 2009-10 and 2013-14 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.

Table 5.9: Public Sector Unitary Charge Expenditure in Scotland 2009-10 to 2013-14

(£ million)

2009-10

2010-11

2011-12

2012-13

2013-14

Scottish Public Sector Unitary Charges1

707

789

866

902

922

Other UK Government Departments PFI Unitary Charges for Projects in Scotland

23

23

23

23

23

Total Unitary Charges in Scotland

758

848

928

978

999

Source: Scottish Government and HM Treasury Private Finance Initiative projects: 2014 Summary Data (December 2014).

1 Includes both PFI and NPD figures.

Box 5.3: Comparisons of Scottish expenditure to other areas of the UK (Experimental Statistics)

The recent GERS consultation and user requests throughout the year have highlighted an interest in comparing GERS figures to other countries and regions of the UK. The HM Treasury Country and Regional Analysis publication, which forms the basis of the expenditure estimates in GERS, contains expenditure figures for all countries and regions of the UK. However, in their published format these figures are not on a comparable basis to overall UK public sector expenditure figures and therefore GERS figures.

The chart below provides experimental estimates of public sector expenditure for each of the UK countries and regions. Full details of the methodology can be found at: http://www.gov.scot/Topics/Statistics/Browse/Economy/GERS/RelatedAreas

We welcome user feedback about this analysis, including comments on the methods used. As normal, please feedback to economic.statistics@scotland.gsi.gov.uk .

Overall, Scotland has the second highest spending per head of the UK countries and regions. The charts below show spending per head separately first for capital and then current spend relative to the UK average.

In most countries and regions capital spending accounts for approximately 10% of total expenditure. There is a large amount of variation in capital spending per head, with London receiving the highest. As shown in the chart, the higher levels of capital spending in London are due in part to capital expenditure on public transport, which includes spending on railways, the London Underground service, and buses. Spending in Scotland and Northern Ireland is also higher than other parts of the UK due in part to the fact that their water and sewerage services are provided by the public sector, rather than private companies. The fact that these services remain in the public sector in these countries also increases their public sector revenue. Scotland has the second highest level of capital expenditure per head of the UK countries and regions, even when spending on Scottish Water is excluded.

Capital spend per head, 2013-14

Capital spend per head, 2013-14

The chart below shows current expenditure per head. This accounts for around 90% of total expenditure. Spending in Scotland is the second highest of the UK countries and regions.

Current spend per head, 2013-14

Current spend per head, 2013-14


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