Government Expenditure and Revenue Scotland: 2017-2018

Annex B: Revisions

This section presents revisions from the previous GERS 2016-17 publication.

Revisions to Non-North Sea Revenue Estimates from GERS 2016-17

Table B.1 summarises the revisions in this edition of GERS to total non-North Sea revenue. Revisions to Scottish estimates can stem from three sources: revisions to UK totals; revisions to apportionment data; and updated apportionment methodologies. There are no methodology changes in GERS 2017‑18.

There are a number of revisions to UK revenue totals from GERS 2016-17. Some of these do not affect estimates of Scottish revenue. UK interest and dividends has been revised as the ONS has taken on new data for English housing associations, and UK non-domestic rates have been revised following a review of the recording of rates in England.

Other revisions do impact Scottish estimates. UK corporation tax has been revised following updated information provided by HMRC, and income tax has been revised up following stronger receipts.

Table B.1: Revision to Estimates of Total Non-North Sea Revenue

	£ million
	2013-14	2014-15	2015-16	2016-17
Scotland
Estimates published in GERS 2016-17	50,805	52,640	54,446	57,743
Estimates published in GERS 2017-18	51,089	52,959	53,942	56,608
Revision (£m)	285	319	-503	-1,135
Of which: income tax	0	0	-272	-451
Of which: national insurance contributions	0	-8	-301	-328
Of which: value added tax	-8	20	-50	-316
UK
Estimates published in GERS 2016-17	629,982	655,909	681,878	724,312
Estimates published in GERS 2017-18	631,095	658,263	684,393	726,259
Revision (£m)	1,113	2,354	2,515	1,947
Of which: income tax	-4	-3	-6	1,324
Of which: national insurance contributions	0	0	0	74
Of which: value added tax	0	0	201	335
Scotland/ UK ratio
Estimates published in GERS 2016-17	8.1%	8.0%	8.0%	8.0%
Estimates published in GERS 2017-18	8.1%	8.0%	7.9%	7.8%
Revision (% point)	0.0%	0.0%	-0.1%	-0.2%

The majority of changes to Scottish revenue reflect updated apportionment data. These relate to income tax, national insurance contributions, and VAT. The new Scottish Government powers around tax following Scotland Act 2016 has led to new data sources and more timely information becoming available for income tax and VAT. The impact of these on the forecast is discussed in more detail in the GERS revenue methodology note. ^[23]

Table B.2: Revision to Estimates of Public Sector Revenue: Scotland and UK 2016-17

	£ million		%
	Scotland	UK	Scotland	UK
Income tax	-451	1,324	-3.5%	0.8%
National insurance contributions	-328	74	-3.2%	0.1%
Value added tax	-316	335	-3.1%	0.3%
Corporation tax (excluding North Sea)	-165	-1,480	-4.2%	-2.7%
Fuel duties	4	1	0.2%	0.0%
Non-domestic rates	0	145	0.0%	0.5%
Council tax	-7	-164	-0.3%	-0.5%
VAT refunds	21	0	1.7%	0.0%
Capital gains tax	-18	-324	-4.7%	-3.7%
Inheritance tax	7	-11	2.6%	-0.2%
Reserved stamp duties	19	449	6.1%	3.0%
Scottish land & buildings transaction tax	18	18	3.8%	3.8%
Scottish landfill tax	0	0	0.1%	0.1%
Air passenger duty	1	8	0.3%	0.2%
Tobacco duties	-130	0	-11.8%	0.0%
Alcohol duties	37	0	3.6%	0.0%
Insurance premium tax	4	63	1.2%	1.3%
Vehicle excise duties	8	0	1.8%	0.0%
Environmental levies	-2	-23	-0.3%	-0.4%
Other taxes	-4	270	-0.2%	1.4%
Total Non-North Sea taxes	-1,301	685	-2.5%	0.1%
Other Revenue
Interest and dividends	-13	272	-3.4%	4.3%
Gross operating surplus	151	165	3.5%	0.3%
Other receipts	28	825	7.2%	34.4%
Total non-North Sea revenue	-1,135	1,947	-2.0%	0.3%

Revisions to North Sea Revenue Estimates from GERS 2016-17

Table B.3 summarises the revisions to North Sea revenues in this edition of GERS by comparing the estimates contained in this report with last year’s publication. Estimates are largely unrevised, although there is an upward revision in 2016-17.

Table B.3: Revisions to North Sea Revenue: 2013-14 to 2016-17

	£ million
	2013-14	2014-15	2015-16	2016-17
Scotland (illustrative geographical share)
Estimates published in GERS 2016-17	3,448	1,374	56	208
Estimates published in GERS 2017-18	3,446	1,377	50	266
Revision	-2	3	-5	58
UK
Estimates published in GERS 2016-17	4,499	1,691	-80	84
Estimates published in GERS 2017-18	4,499	1,691	-85	36
Revision	0	0	-5	-48

A discussion of revisions to all taxes between 2013-14 and 2016-17 is provided in the GERS 2017-18 Revenue Methodology note available on the GERS website.

Revisions to Expenditure Estimates from GERS 2016-17

Table B.4 sets out the changes in estimates of public expenditure in Scotland and the UK between this report and GERS 2016-17. These reflect revisions to Scottish Government and Scottish local government spending data, revisions to UK spending totals, and revisions to the data sources used to apportion expenditure to Scotland. Revisions to public expenditure that can be traced to changes to the total expenditure on services ( TES) measure are specified separately.

Total public sector expenditure has been revised up for Scotland in all years. This in part reflects a change in the reporting of tax credits to private companies. In three of the last four years the revision is equivalent to an increase of 0.1%, with the revision in 2015-16 an increase of 0.5%.

Table B.4: Revisions to Estimates of Total Managed Expenditure: 2013-14 to 2016-17

	£ million
	2013-14	2014-15	2015-16	2016-17
Scotland
Estimates published in GERS 2016-17	67,581	68,487	69,048	71,209
Estimates published in GERS 2017-18	67,767	68,640	69,492	71,354
Revision	186	154	444	145
Of which revisions to TES	193	211	236	-189
Of which, housing associations ( HAs)	0	0	0	-59
Of which revisions to accounting adjustment (excl HAs)	-8	-58	207	394
UK
Estimates published in GERS 2016-17	736,555	751,988	753,917	770,611
Estimates published in GERS 2017-18	733,813	750,445	756,767	771,981
Revision	-2,742	-1,543	2,850	1,370
Of which revisions to TES	1,030	1,162	2,458	-868
Of which housing associations ( HAs)	-2,108	203	-113	61
Of which revisions to accounting adjustment (excl HAs)	-1,664	-2,908	505	2,177
Scotland/ UK Ratio
Estimates published in GERS 2016-17	9.2%	9.1%	9.2%	9.2%
Estimates published in GERS 2017-18	9.2%	9.1%	9.2%	9.2%
Revision (% point)	0.1%	0.0%	0.0%	0.0%

The table below shows the revisions to spend in 2016-17 by function, and by Scottish Government, Scottish local government, Scottish public corporations, and Other UK government bodies. Overall, Scottish spend in 2016-17 has been revised up by £145 million. This is primarily driven by revised estimates of Scottish housing associations’ capital spending, which increases spend by £118 million. Increases in other UK government department spending, resulting from the incorporation of data from the 2016-17 Country and Regional Analysis publication, are offset by decreases in Scottish Government and Local Government spending, resulting from the move from provisional to final outturn data.

The main increase in other UK government department spending relates to transport, which reflects continuing improvements to estimates of Network Rail spending for Scotland, following its reclassification into the government sector.

Table B.5: Revisions to Estimates of Public Sector Expenditure: Scotland and UK 2016-17

	£ million
	Scotland					UK
	Scottish Government	Local Government	Scottish Public Corporations	Other UK Government Bodies	Total
General public services
Public and common services	-8	-18	0	9	-17	-640
International services	0	0	0	85	85	1,053
Public sector debt interest	0	0	0	56	56	778
Defence	0	0	0	4	4	140
Public order and safety	0	0	0	-17	-17	-60
Economic affairs
Enterprise and economic development	27	92	0	39	158	2,192
Science and technology	3	0	0	-11	-9	593
Employment policies	0	0	0	-9	-9	-60
Agriculture, forestry and fisheries	-77	-19	2	-4	-99	-132
Transport	-5	-21	5	210	189	-1,248
Environment protection	-5	7	0	-6	-4	-216
Housing and community amenities	0	-101	-1	20	-82	-272
Health	0	0	0	8	8	-1,751
Recreation, culture and religion	-1	-3	0	34	29	-20
Education and training	-3	93	0	19	109	-2,269
Social protection	3	-251	0	-417	-665	1,045
EU Transactions	0	0	0	74	74	-2
Accounting adjustments	-29	0	118	245	335	2,238
Total revision	-94	-221	124	338	145	1,370
Of which, HAs	0	0	118	-177	-59	61

Revisions to Estimates of Capital Consumption from GERS 2016-17

Table B.6 sets out the changes to estimates of capital consumption in Scotland and the UK between this report and GERS 2016-17. Capital consumption, which represents the capital stock consumed to provide services within the year, is included alongside current expenditure when calculating the current budget balance. It does not affect the estimate of the net fiscal balance.

Table B.6: Revisions to capital consumption: 2013-14 to 2016-17

	£ million
	2013-14	2014-15	2015-16	2016-17
Scotland
Estimates published in GERS 2016-17	4,066	4,276	4,294	4,331
Estimates published in GERS 2017-18	4,324	4,527	4,468	4,451
Revision	258	251	174	120

In general, capital consumption in all years has been revised up, reflecting the incorporation of the latest ONS Regional Accounts data.

Unlike for public corporations’ expenditure and operating surplus, detailed capital consumption data are not available on a public corporation basis from the ONS, as they are not separately identified within their perpetual inventory model. The Scottish Government is investigating the potential to use public corporation data from the Whole of Government Accounts, which may provide a more stable estimate of Scottish public corporation capital consumption.

Revisions to Fiscal Aggregates from GERS 2016-17

Table B.7 shows revisions to the current budget balance from the previous publication of GERS. The UK current budget balances has improved in all years, whilst the Scottish current budget balance excluding the North Sea has worsened slightly in 2013-14 and 2015‑16, and by larger amounts in 2015-16 and 2016-17. This reflects a number of factors. Firstly, it reflects the fact that much of the improvement in the UK position is due to revised figures for English non-domestic rates, which has not affected the Scottish estimate. Secondly, it reflects the downward revisions to income tax, national insurance contributions, and VAT for Scotland in 2015-16 and 2016-17.

Table B.7: Revisions to Estimates of the Current Budget Balance: 2013-14 to 2016‑17

	£ million
	2013-14	2014-15	2015-16	2016-17
Estimates published in GERS 2016-17
Excluding North Sea revenue	-13,792	-12,989	-11,983	-9,776
Including North Sea revenue (per capita share)	-13,419	-12,849	-11,990	-9,769
Including North Sea revenue (geographical share)	-10,345	-11,615	-11,927	-9,568
UK	-70,094	-57,440	-40,491	-8,053
Estimates published in GERS 2017-18
Excluding North Sea revenue	-13,871	-13,092	-12,865	-10,700
Including North Sea revenue (per capita share)	-13,497	-12,952	-12,872	-10,697
Including North Sea revenue (geographical share)	-10,426	-11,715	-12,815	-10,433
UK	-67,524	-53,877	-38,385	-7,214
Difference (£ million) (positive shows improvement)
Excluding North Sea revenue	-79	-103	-882	-924
Including North Sea revenue (per capita share)	-78	-103	-882	-928
Including North Sea revenue (geographical share)	-81	-100	-888	-865
UK	2,570	3,563	2,106	839

Table B.8 shows revisions to the net fiscal balance from the previous publication of GERS. The revisions pattern is quite similar to that for the current budget balance.

Table B.8: Revisions to Estimates of the Net Fiscal Balance: 2013-14 to 2016-17

	£ million
	2013-14	2014-15	2015-16	2016-17
Estimates published in GERS 2016-17
Excluding North Sea revenue	-16,776	-15,847	-14,602	-13,465
Including North Sea revenue (per capita share)	-16,403	-15,707	-14,609	-13,458
Including North Sea revenue (geographical share)	-13,329	-14,473	-14,546	-13,257
UK	-102,074	-94,388	-72,119	-46,215
Estimates published in GERS 2017-18
Excluding North Sea revenue	-16,677	-15,682	-15,549	-14,746
Including North Sea revenue (per capita share)	-16,304	-15,542	-15,556	-14,743
Including North Sea revenue (geographical share)	-13,232	-14,304	-15,499	-14,480
UK	-98,219	-90,491	-72,459	-45,686
Difference (£ million) (positive shows improvement)
Excluding North Sea revenue	99	165	-947	-1,281
Including North Sea revenue (per capita share)	99	165	-947	-1,285
Including North Sea revenue (geographical share)	97	169	-953	-1,223
UK	3,855	3,897	-340	529

In addition to revisions to the fiscal aggregates in cash terms, there are also changes to the fiscal aggregates expressed as a share of GDP due to revisions to GDP estimates. These are shown in Tables B.9 and B.10 for the current budget balance and the net fiscal balance respectively. If there had been no revisions to estimates of the fiscal aggregates in cash terms, previous estimates would generally have improved by around 0.2 percentage points in 2013-14 and 2014-15, although less in more recent years. This reflects upward revisions to the nominal value of GDP in all years made in the latest Quarterly National Accounts Scotland, following the annual publication of updated Supply and Use Tables for 1998-2015 in July.

The main source of the revisions to GDP is the development of the Balanced Approach to regional GVA by ONS, ^[24] and the new information that these statistics have introduced to the annual Supply and Use tables. In addition, GDP growth since 2015 has also been revised due to changes to the measurement of construction activity in Scotland.

Table B.9: Impact of Revisions to GDP on Estimates of the Current Budget Balance

	2013-14	2014-15	2015-16	2016-17
Estimates published in GERS 2016-17	% of GDP
Excluding North Sea revenue	-10.0%	-9.0%	-8.2%	-6.5%
Including North Sea revenue (population share)	-9.6%	-8.8%	-8.2%	-6.5%
Including North Sea revenue (geographical share)	-6.6%	-7.4%	-7.7%	-6.0%
UK	-4.0%	-3.1%	-2.1%	-0.4%
GERS 2016-17 estimate with latest GDP estimates	% of GDP
Excluding North Sea revenue	-9.8%	-8.8%	-8.1%	-6.4%
Including North Sea revenue (population share)	-9.4%	-8.7%	-8.0%	-6.4%
Including North Sea revenue (geographical share)	-6.5%	-7.2%	-7.4%	-5.8%
UK	-3.9%	-3.1%	-2.1%	-0.4%
Change (positive denotes improvement)	% point difference
Excluding North Sea revenue	0.2%	0.2%	0.1%	0.1%
Including North Sea revenue (population share)	0.2%	0.2%	0.1%	0.1%
Including North Sea revenue (geographical share)	0.1%	0.2%	0.2%	0.2%
UK	0.0%	0.0%	0.0%	0.0%

Table B.10: Impact of Revisions to GDP on Estimates of the Net Fiscal Balance

	2013-14	2014-15	2015-16	2016-17
Estimates published in GERS 2016-17	% of GDP
Excluding North Sea revenue	-12.2%	-11.0%	-10.0%	-9.0%
Including North Sea revenue (population share)	-11.7%	-10.8%	-10.0%	-8.9%
Including North Sea revenue (geographical share)	-8.6%	-9.2%	-9.3%	-8.3%
UK	-5.8%	-5.1%	-3.8%	-2.4%
GERS 2016-17 estimate with latest GDP estimates	% of GDP
Excluding North Sea revenue	-11.9%	-10.8%	-9.9%	-8.9%
Including North Sea revenue (population share)	-11.5%	-10.6%	-9.8%	-8.8%
Including North Sea revenue (geographical share)	-8.4%	-9.0%	-9.1%	-8.1%
UK	-5.7%	-5.1%	-3.8%	-2.3%
Change (positive denotes improvement)	% point difference
Excluding North Sea revenue	0.2%	0.2%	0.1%	0.1%
Including North Sea revenue (population share)	0.2%	0.2%	0.1%	0.1%
Including North Sea revenue (geographical share)	0.2%	0.2%	0.3%	0.2%
UK	0.1%	0.1%	0.1%	0.0%