Information

Government Expenditure and Revenue Scotland 2020-21

Government Expenditure and Revenue Scotland (GERS) is a National Statistics publication. It estimates the revenue raised in Scotland and the goods and services provided for the benefit of Scotland.

This document is part of a collection


3 Public Sector Expenditure

Introduction

This chapter provides detailed estimates of public sector expenditure for Scotland. Expenditure is shown by type of spend, using a presentation based on the UN’s Classification of the Functions of Government (COFOG). Further information is provided in the Glossary in Annex D. Current and capital expenditure are shown separately.

The primary data sources used to estimate Scottish public sector expenditure in GERS are Scottish Government spending reported on the UK Government’s public spending system, OSCAR, and HM Treasury’s Public Expenditure Statistical Analyses (PESA)[17] and the supporting Country and Regional Analysis (CRA).[18]

Spending by the Scottish Government is provided directly by the Scottish Government Directorate for Financial Management. Scottish Local Government spending in all years is taken from HM Treasury’s PESA publication. Spending by other UK government departments spending is based on PESA for 2020-21 and on the CRA for earlier years. Further information on the methodology is set out in the expenditure methodology paper available at the link below.

https://www.gov.scot/collections/economy-statistics/#governmentexpenditureandrevenuescotland(gers)

GERS also includes some transactions between Scotland and the EU. These can be reported in a number of different ways, and are discussed in more detail later in the chapter.

GERS expenditure figures are presented on a National Accounts basis, an international reporting standard used by governments. This requires a number of accounting adjustments to be included in total expenditure. These are primarily symmetric adjustments that also form part of revenue, and therefore have little impact on the net fiscal balance. Further information is set out in Annex A.

Public Sector Expenditure

Total public sector expenditure for Scotland in 2020-21 is estimated to be £99.2 billion, an increase of 21.0% from 2019-20, compared to growth of 23.5% for the UK as a whole. This large increase in spending, the largest increase on record, reflects the impact of the coronavirus pandemic, which has led to large increases in spending, particularly on health, social security, and enterprise and economic development. This final category includes support paid to businesses and workers such as the Coronavirus Job Retention Scheme. Further information on reserved spending in response to the pandemic is set out in Box 3.1. Overall, the increase in spending in Scotland was £17.2 billion, or 8.2% of the increase for the UK, broadly in line with Scotland’s population share. This is shown by spending category in Table 3.1.

Table 3.1: Total Expenditure: Scotland 2020-21
Scotland
£ million % of total expenditure
General public services
Public and common services 2,410 2.4%
International services 924 0.9%
Reserved public sector debt interest 2,347 2.4%
Local government pension fund interest expenditure 1,514 1.5%
Defence 3,637 3.7%
Public order and safety 3,392 3.4%
Economic affairs
Enterprise and economic development 11,219 11.3%
Science and technology 589 0.6%
Employment policies 208 0.2%
Agriculture, forestry and fisheries 881 0.9%
Transport 4,485 4.5%
Environment protection 1,532 1.5%
Housing and community amenities 2,259 2.3%
Health 18,026 18.2%
Recreation, culture and religion 1,571 1.6%
Education and training 9,485 9.6%
Social protection 26,017 26.2%
EU transactions 278 0.3%
Accounting adjustments 8,403 8.5%
Total Expenditure 99,176 100%

Table 3.2 below shows growth in current and capital spend in Scotland by organization in 2020-21, compared to the UK. Spending increased more slowly in Scotland than the UK as a whole in 2020-21. This is primarily due to the fact that there was a higher initial level of spend in Scotland before the pandemic, so the additional spending associated with the pandemic was smaller in percentage terms.

Box 3.1: Additional reserved spending associated with the coronavirus pandemic

The coronavirus pandemic has seen an unprecedented increase in public spending, spread across a range of areas. In the devolved sphere, there has been an increase in health expenditure in response to treating COVID-19 patients and delivering the vaccination programme. There have also been a range of other measures, particularly business support grants paid via local authorities. The Scottish Government spent around £9 billion in 2020-21 in response to the health, economic, and social challenges caused by the coronavirus pandemic.[19] Whilst this is captured in the Scottish Government spending figures in GERS, it is not separately identifiable from non-pandemic related spend.

In the reserved sphere, there have been a number of interventions, the most significant of which have been the Coronavirus Job Retention Scheme, the Self-Employment Income Support Scheme, and changes to the value and eligibility criteria for Universal Credit. These schemes have all aimed to support household incomes and businesses during the pandemic.

  • Coronavirus Job Retention Scheme: commonly referred to as the furlough scheme, this sees employees who are unable to work their usual hours continue to receive at least 80% of their usual earnings, up to £2,500 per month. The amount contributed by businesses has varied over the course of the year, depending on the level of public health restrictions in place.

  • Self-Employment Income Support Scheme: this similarly aims to support self-employment incomes, again up to £2,500, via the payment of grants. The eligibility criteria require self-employed workers to have filed tax returns in 2019-20, and must have had earnings less than £50,000.
  • Welfare spending: This primarily relates to Universal Credit. The standard allowance of Universal Credit and the basic element of Working Tax Credit has been increased by £20 a week during the pandemic. Eligibility criteria were also changed, which allowed self-employed to claim Universal Credit more easily.
  • Health spending: While most elements of the health pandemic have been devolved, parts of the health response, primarily elements of the testing programme and bodies such as the Joint Biosecurity Centre, have been delivered on a UK-wide basis.

The table below summarises the costs for Scotland associated with the schemes above in this edition of GERS. This is not an exhaustive list of reserved coronavirus interventions, and some interventions include, such as the loan guarantee schemes, are not yet included in the UK Public Sector Finances or GERS. As such, this initial estimate of reserved spending will be reviewed in future publications, and is likely to increase as more schemes are included in the UK Public Sector Finances.

Major reserved coronavirus spending for Scotland (2020-21, £ millions)
Scotland UK Scottish share
Coronavirus Job Retention Scheme1, 4,728 58,029 8.1%
Self-employment Income Support Scheme1 1,191 19,716 6.0%
Welfare spending2 1,423 17,142 8.3%
Health Spending3 945 11,593 8.1%
Total 8,287 106,479 7.8%

Sources: 1 HMRC Tax Receipts and National Insurance Contributions for the UK, Scottish Government calculations

2 OBR Economic and Fiscal Outlook March 2021, Scottish Government calculations

3 National Audit Office Coronavirus cost tracker, Scottish Government calculations

Table 3.2: Expenditure growth: 2019-20 to 2020-21 (£ million)
Scotland
2019-20 2020-21 Growth UK growth
Current expenditure 73,175 89,372 22.1% 24.7%
Scottish Government 28,348 36,398 28.4% 28.4%
Local Government 13,373 13,633 1.9% 19.7%
Public Corporations - - - -
Other UK Government bodies 31,454 39,341 25.1% 27.1%
Capital expenditure 8,802 9,804 11.4% 13.4%
Scottish Government 3,031 3,983 31.4% 31.4%
Local Government 2,368 1,964 -17.1% -8.2%
Public Corporations 1,438 1,162 -19.2% 3.3%
Other UK Government bodies 1,966 2,696 37.1% 22.7%
Total expenditure 81,977 99,176 21.0% 23.5%
Scottish Government 31,379 40,381 28.7% 28.7%
Local Government 15,741 15,597 -0.9% 16.5%
Public Corporations 1,438 1,162 -19.2% 3.3%
Other UK Government bodies 33,420 42,037 25.8% 26.7%

Notes:

1. Public corporation line for Scotland shows spending by Scottish public corporations only. UK figure shows spending by all public corporations

2. Public corporations have no current expenditure as this is netted off against their income to provide their gross operating surplus in the revenue calculations. Consistent with the CRA, interest expenditure by public corporations is recorded as spending by HM Treasury.

3. Consistent with the CRA, interest expenditure by public sector pension funds is shown as spending by HM Treasury. This makes Scottish and UK local government spending comparable in this table, but introduces a slight discrepancy between Scottish and Local Government spending above and that shown in Table 3.8.

4. Spend by Other UK Government departments for Scotland and the UK are not directly comparable, as spending for the UK as a whole includes spending on functions which are devolved to the Scottish Government.

Table 3.3 shows the split of total expenditure between current and capital for Scotland. With the increased current expenditure in response to the pandemic, the capital spending share fell in 2020-21 to 9.9%, the lowest level since 2001-02.

Table 3.3: Current and Capital Expenditure (% of Total Expenditure): Scotland
per cent
2016-17 2017-18 2018-19 2019-20 2020-21
Current 88.3% 88.3% 89.0% 89.3% 90.1%
Capital 11.7% 11.7% 11.0% 10.7% 9.9%

Table 3.4 below shows estimates of Scottish and UK public sector expenditure as a share of GDP. This provides an illustration of the relative size of public spending between countries and over time. It is not an estimate of the contribution of public spending to the economy as much of this spending consists of transfers from government to individuals and businesses. Excluding North Sea GDP, public sector spending as a share of GDP has increased to 64.0% in 2020-21, the highest ever level, as public spending increased and GDP fell during the pandemic.

Although overall spending in Scotland grew more slowly than for the UK in 2020-21, spending as a share of GDP increased faster. This reflects weaker nominal GDP growth in Scotland in 2020-21.

Table 3.4: Total Managed Expenditure as a Share of GDP
per cent of GDP
2016-17 2017-18 2018-19 2019-20 2020-21
Scottish TME as a Share of GDP:
Excluding North Sea GDP 49.7% 49.2% 48.3% 49.0% 64.0%
Including population share of North Sea GDP 49.4% 48.7% 47.9% 48.6% 63.7%
Including geographical share of North Sea GDP 47.0% 45.7% 44.4% 45.7% 61.1%
UK TME as a share of GDP:
100% of North Sea GDP 40.4% 40.2% 39.5% 39.8% 52.1%

Table 3.5 shows total public sector expenditure per person for Scotland and the UK. The relative gap between Scottish and UK spending per person fell in 2020-21, with spend per person 11.2% points higher. This fall reflects the fact that spending in response to the coronavirus pandemic has been broadly equally spread across the UK, although the gap increased slightly in cash terms. Slightly less than one percentage point of this difference is due to water and sewerage services being provided by the public sector in Scotland, and therefore included in Scottish expenditure, whilst in England and Wales they are operated by the private sector and therefore excluded from UK expenditure. Tables 3.6 and 3.7 show current, capital, and total expenditure for Scotland and the UK respectively.

Table 3.5: Total Expenditure Per Person
£ per person
2016-17 2017-18 2018-19 2019-20 2020-21
Scotland 13,996 14,282 14,555 15,003 18,144
UK 12,379 12,654 12,846 13,250 16,316
Difference (Scotland minus UK) 1,617 1,628 1,710 1,754 1,828
Difference between Scottish and UK 13.1% 12.9% 13.3% 13.2% 11.2%

Box 3.2 Social protection spending in Scotland

Social protection spending is the largest single spending line in GERS, and covers a range of different spend types.

The largest spending element within social protection is expenditure on the state pension by the Department for Work and Pensions (DWP). This is followed by DWP’s spending on other social security such as universal credit disability and incapacity related benefits, and housing benefit. Tax credits and child benefit are part of HMRC spending. Scottish Government social security spend includes the Scottish Welfare Fund, Council Tax Reduction Scheme, and Scottish Government expenditure on Discretionary Housing Payments, all of which are administered by Local Authorities. From 2018-19, it also includes spending on newly devolved social security, as set out in Chapter 4.

Some UK social security expenditure, mostly associated with the state pension, is paid to non-UK residents. Scotland is allocated a population share of this expenditure in GERS.

Social protection spending for Scotland (£ million)
2016-17 2017-18 2018-19 2019-20 2020-21
Social security spending in Scotland
State pension 8,064 8,243 8,146 8,321 8,517
Housing benefit 1,733 1,671 1,588 1,442 1,380
Universal credit 163 323 787 1,504 3,170
Other DWP social security 5,677 5,750 6,018 5,804 2,593
HMRC child benefit and tax credits 2,761 2,686 2,422 2,382 1,864
Scottish Government social security 418 419 745 826 3,897
Social security spending in Scotland 18,817 19,092 19,706 20,281 21,420
Share of benefit spending outside UK and corporate spend 556 586 376 381 368
Other social protection
Net public sector pensions 895 830 1033 355 221
Social care for the elderly 2,216 2,178 2,290 2,601 2,706
Other 598 596 802 540 1,301
Total social protection 23,082 23,281 24,206 24,158 26,017

Other social protection spending consists primarily of Local Authority expenditure on social care to families and children.

A more detailed breakdown of social security spending is published by DWP, available at the link below.

https://www.gov.uk/government/collections/benefit-expenditure-tables

Spending by different parts of the Public Sector

Table 3.8 below provides a breakdown of Scottish expenditure by the Scottish Government, Scottish local government and public corporations, and other UK government bodies.

Table 3.6: Total Expenditure: Scotland 2016-17 to 2020-21
£ million
Current Capital Total
2016-17 2017-18 2018-19 2019-20 2020-21 2016-17 2017-18 2018-19 2019-20 2020-21 2016-17 2017-18 2018-19 2019-20 2020-21
General public services
Public and common services 1,251 1,298 1,353 1,900 2,027 246 350 265 248 383 1,498 1,648 1,617 2,147 2,410
International services 735 762 744 822 747 158 103 236 144 177 893 865 980 966 924
Public sector interest expenditure 5,147 5,605 5,181 5,162 3,861 0 0 0 0 0 5,147 5,605 5,181 5,162 3,861
Defence 2,296 2,332 2,408 2,562 2,629 762 844 885 886 1,007 3,057 3,176 3,293 3,448 3,637
Public order and safety 2,660 2,716 2,845 3,013 3,174 78 130 140 158 218 2,738 2,845 2,985 3,171 3,392
Economic affairs
Enterprise and economic development 906 959 1,110 1,296 9,061 342 366 500 486 2,157 1,248 1,325 1,610 1,782 11,219
Science and technology 146 181 186 182 204 349 304 333 348 386 494 485 519 529 589
Employment policies 212 228 242 177 202 5 8 4 0 6 217 237 246 177 208
Agriculture, forestry and fisheries 816 790 813 810 788 116 122 112 94 93 932 911 925 904 881
Transport 1,640 1,675 1,703 1,846 2,453 1,748 1,890 1,723 1,879 2,033 3,388 3,565 3,426 3,725 4,485
Environment protection 873 891 905 904 935 336 330 354 524 597 1,209 1,221 1,259 1,428 1,532
Housing and community amenities 112 159 213 137 363 1,476 1,689 2,012 2,184 1,896 1,588 1,848 2,225 2,321 2,259
Health 12,036 12,328 12,596 13,301 17,371 626 475 486 466 656 12,662 12,803 13,082 13,767 18,026
Recreation, culture and religion 1,092 1,062 1,169 1,123 1,378 310 255 235 238 193 1,403 1,317 1,404 1,361 1,571
Education and training 7,299 7,499 7,883 8,388 8,389 972 995 765 870 1,096 8,272 8,494 8,648 9,257 9,485
Social protection 23,012 23,223 24,120 24,047 25,912 71 58 86 111 105 23,082 23,281 24,206 24,158 26,017
EU Transactions 156 207 269 199 278 0 0 0 0 0 156 207 269 199 278
Accounting adjustments 6,472 6,574 6,768 7,308 9,603 1,261 1,119 602 168 -1,199 7,733 7,693 7,370 7,475 8,403
Total 66,860 68,487 70,508 73,175 89,372 8,856 9,038 8,738 8,802 9,804 75,716 77,525 79,246 81,977 99,176
Table 3.7: Total Expenditure: UK 2016-17 to 2020-21
£ million
Current Capital Total
2016-17 2017-18 2018-19 2019-20 2020-21 2016-17 2017-18 2018-19 2019-20 2020-21 2016-17 2017-18 2018-19 2019-20 2020-21
General public services
Public and common services 9,660 10,098 10,220 11,809 13,980 2,827 2,381 2,576 2,657 3,545 12,487 12,479 12,796 14,466 17,524
International services 8,889 9,176 8,998 9,954 9,124 1,918 1,255 2,879 1,759 2,167 10,807 10,431 11,877 11,713 11,291
Public sector interest expenditure 55,185 60,525 55,092 54,664 41,469 0 0 0 0 0 55,185 60,525 55,092 54,664 41,469
Defence 27,881 28,399 29,422 31,358 32,240 9,250 10,271 10,816 10,887 12,317 37,131 38,670 40,238 42,245 44,557
Public order and safety 28,954 29,437 30,438 32,253 35,621 1,117 2,032 1,975 2,272 3,012 30,071 31,469 32,413 34,525 38,633
Economic affairs
Enterprise and economic development 6,585 7,300 9,382 13,894 106,122 1,671 2,687 3,777 3,312 21,164 8,256 9,987 13,159 17,206 127,285
Science and technology 978 1,126 1,011 1,020 1,147 3,510 3,920 5,422 5,787 6,433 4,488 5,046 6,433 6,807 7,580
Employment policies 2,347 2,512 2,632 2,253 2,542 60 105 47 2 76 2,407 2,617 2,679 2,255 2,618
Agriculture, forestry and fisheries 4,770 4,783 5,344 5,405 5,859 433 394 390 398 497 5,203 5,177 5,734 5,803 6,356
Transport 9,868 9,967 11,963 13,030 22,108 18,953 20,365 20,713 21,566 23,026 28,821 30,332 32,676 34,596 45,134
Environment protection 7,264 7,260 7,365 7,909 8,198 3,782 4,529 3,685 3,912 4,381 11,046 11,789 11,050 11,821 12,579
Housing and community amenities 2,943 2,979 3,086 3,257 3,934 7,359 8,377 8,961 10,901 9,933 10,302 11,356 12,047 14,158 13,867
Health 136,978 141,033 145,899 156,509 206,597 5,611 6,304 7,019 7,630 12,839 142,589 147,337 152,918 164,139 219,436
Recreation, culture and religion 9,382 9,306 9,267 9,400 10,133 2,224 2,173 2,119 2,534 2,171 11,606 11,479 11,386 11,934 12,304
Education and training 77,319 77,088 79,051 82,255 86,407 7,586 8,967 8,999 8,365 9,647 84,905 86,055 88,050 90,620 96,054
Social protection 264,975 268,245 274,262 275,349 296,584 451 483 551 468 657 265,426 268,728 274,813 275,817 297,241
EU transactions 4,723 5,360 7,852 5,828 5,808 0 0 0 0 0 4,723 5,360 7,852 5,828 5,808
Accounting adjustments 66,516 67,622 69,855 75,345 99,438 21,889 20,443 13,497 12,028 -4,681 88,406 88,065 83,352 87,373 94,757
Total 725,217 742,216 761,139 791,492 987,310 88,641 94,686 93,426 94,479 107,184 813,858 836,902 854,565 885,971 1,094,494
Table 3.8: Total Expenditure: Scottish Government, Local Authorities, Public Corporations, and Other UK Government: Scotland 2016-17 to 2020-21
£ million
Scottish Government, LAs and Public Corporations Other UK Government Total
2016-17 2017-18 2018-19 2019-20 2020-21 2016-17 2017-18 2018-19 2019-20 2020-21 2016-17 2017-18 2018-19 2019-20 2020-21
General public services
Public and common services 1,002 1,089 1,075 1,523 1,683 496 559 542 624 726 1,498 1,648 1,617 2,147 2,410
International services 0 1 1 1 1 893 864 979 965 923 893 865 980 966 924
Public sector interest expenditure 1,761 1,837 1,940 2,037 1,514 3,386 3,768 3,241 3,125 2,347 5,147 5,605 5,181 5,162 3,861
Defence 4 3 3 3 4 3,053 3,173 3,290 3,445 3,633 3,057 3,176 3,293 3,448 3,637
Public order and safety 2,515 2,626 2,756 2,911 3,020 223 219 228 259 371 2,738 2,845 2,985 3,171 3,392
Economic affairs
Enterprise and econ development 831 851 971 930 1,376 417 475 639 852 9,842 1,248 1,325 1,610 1,782 11,219
Science and technology 3 3 2 2 1 492 482 516 528 589 494 485 519 529 589
Employment policies 0 0 0 0 0 217 237 246 177 208 217 237 246 177 208
Agriculture, forestry and fisheries 922 901 915 875 848 11 11 11 29 33 932 911 925 904 881
Transport 2,397 2,518 2,466 2,765 3,406 990 1,047 960 960 1,079 3,388 3,565 3,426 3,725 4,485
Environment protection 938 925 998 1,158 1,236 271 295 262 270 296 1,209 1,221 1,259 1,428 1,532
Housing and community amenities 1,588 1,848 2,225 2,321 2,259 0 0 0 0 0 1,588 1,848 2,225 2,321 2,259
Health 12,508 12,660 13,002 13,686 16,980 155 143 80 81 1,046 12,662 12,803 13,082 13,767 18,026
Recreation, culture and religion 971 914 999 925 1,113 431 403 406 436 458 1,403 1,317 1,404 1,361 1,571
Education and training 8,247 8,467 8,632 9,236 9,463 25 27 16 22 23 8,272 8,494 8,648 9,257 9,485
Social protection 5,420 5,295 5,815 5,570 8,889 17,662 17,987 18,391 18,588 17,128 23,082 23,281 24,206 24,158 26,017
EU transactions 0 0 0 0 0 156 207 269 199 278 156 207 269 199 278
Accounting adjustments 6,409 6,568 6,543 6,654 6,860 1,325 1,124 827 821 1,543 7,733 7,693 7,370 7,475 8,403
Total 45,514 46,505 48,344 50,595 58,654 30,202 31,020 30,902 31,382 40,523 75,716 77,525 79,246 81,977 99,176

Scotland’s Notional Contributions to the European Union Budget

While a member of the European Union (EU), the UK contributed to the EU budget and receives funding from the EU via a number of programmes. Although the UK left the EU on 31 January 2020, it continued to make payments to, and receive funding from, the EU in 2020-21 under transitional arrangements.

Scotland does not contribute directly to the EU budget. In GERS, Scotland is assigned an estimated share of the UK contribution. In contrast, Scotland receives funding directly from the EU, through the Common Agricultural Policy, European Structural Funds, and European Regional Development Funding. Actual amounts are used for these items.

The EU Transactions lines in the tables above are produced on a National Accounts basis, and exclude traditional own resource payments. These are payments collected by the UK on behalf of the EU, and therefore are excluded from the UK Public Sector Finances. However, they are normally included when reporting on the UK’s net contribution to EU budgets. Table 3.9 shows net payments to the EU including these contributions.

Although contributions to the EU are made by the public sector, funding from the EU is received by both public and non-public sector bodies. The EU Transactions line in the GERS tables report only on transactions with the EU by the public sector. EU payments to Higher Education Institutions, which are not part of the public sector, are discussed in Box 3.2.

Funding the EU Budget

There are three key sources of funding for the EU, which come from each member state:[20]

  • Traditional own resource (TOR) - Agriculture duties and customs duties levied on agriculture and non-agriculture products from outside the EU
  • VAT based own resource – Calculated as a percentage of countries’ VAT tax base.

  • Gross National Income (GNI) based own resource – Calculated as a percentage of countries’ GNI. This is the EU’s single largest source of revenue.

Since 1985, the UK has received a rebate on its contribution, broadly equal to 66% of its net contribution in the previous year. Scotland is apportioned a population share of the rebate.

Net Contribution to the EU

The UK’s net contribution to the EU is calculated as the difference between the UK’s gross contribution to the EU budget (less the rebate) and public sector EU receipts.

The table below sets out these transactions for Scotland and the UK.

Table 3.9: Transactions with the institutions of the EU, 2016-17 to 2020-21 (£ million)
Scotland UK
2016-17 2017-18 2018-19 2019-20 2020-21 2016-17 2017-18 2018-19 2019-20 2020-21
GNI based contribution 927 945 1,173 1,045 875 11,440 11,761 14,599 13,003 10,892
UK abatement -392 -374 -397 -339 -279 -4,757 -4,547 -4,846 -4,149 -3,429
VAT-based contribution to the EU 204 244 257 220 187 2,477 2,974 3,138 2,696 2,246
Expenditure transfers to the EU 739 816 1,034 926 783 9,160 10,188 12,892 11,549 9,709
Receipts to cover collection costs of TOR -29 -57 -54 -54 -39 -357 -698 -664 -663 -482
TOR 277 280 270 271 196 3,366 3,413 3,304 3,320 2,410
Gross contribution to the EU budget 987 1,039 1,250 1,143 941 12,169 12,903 15,531 14,206 11,636
Public sector EU receipts -554 -552 -711 -673 -467 -4,081 -4,130 -4,375 -5,059 -3,419
Net contributions to the EU budget 433 487 539 471 474 8,088 8,773 11,156 9,147 8,218
EU transactions (net contributions to EU institutions less TOR) 156 207 269 199 277 4,722 5,360 7,852 5,827 5,808

Box 3.3: EU Payments to Higher Education Institutions

The figures above covered the transactions that the Scottish and UK public sector have with the EU. However, the EU also makes payments to bodies outside the public sector, such as Higher Education Institutions (HEIs), which are considered private sector not-for-profit institutions. The Higher Education Statistics Agency produces statistics on these payments. These payments are not included in the tables shown above as they are not transactions with the public sector and are therefore out of the scope of public sector finances.

Payments to HEIs from the EU include:

  • Payments from EU government bodies
  • Payments from EU-based charities through an open competitive process
  • Payments from EU industry, commerce and public corporations
  • Payments from other EU bodies

To illustrate the size of these payments, the table below shows research grants and contracts income from the EU to HEIs for Scotland and the UK for academic years 2015-16 to 2019-20, which is the latest year for which figures are available. This spending is outside the public sector, and therefore has no impact on the figures reported in GERS.

EU Payments to Higher Education Institutions, Academic Year 2015-16 to 2019-20
£ million
2015-16 2016-17 2017-18 2018-19 2019-20
Scotland 97.4 104.8 116.3 111.1 104.5
UK 840.6 877.2 924.6 993.7 881.6

Note: The HEI financial reporting period runs from 1 August to 31 July

Box 3.4: Private Finance Initiative and Non-Profit Distributing Financing support for Public Private Partnerships (PPPs)

This box gives an introduction to Public Private Partnerships (PPPs) and the funding models that have been used in Scotland. It also breaks down unitary charge payments by scheme type, by type of procuring authority and by the sector of the project. This analysis uses sources of publicly available data, all brought together into an accompanying spreadsheet. The spreadsheet is available from the GERS website.

Introduction to PFI, PPPs, and NPD

Public Private Partnerships (PPPs) 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.

The Private Finance Initiative (PFI) used to be the UK’s preferred form of PPP. In Scotland, the Non-Profit Distributing (NPD) model has been the Scottish Government’s preferred procurement option since 2007. For more information on these schemes, and the data sources used in this box, please see the Scottish Government website:

http://www.gov.scot/Topics/Government/Finance/18232/12308

Unitary Charge Payments

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. It is worth emphasising that these payments are already fully reflected in the GERS spending figures. In addition, the table below includes Ministry of Defence projects in Scotland which are procured by and entirely funded by the Ministry of Defence. Scotland is assigned a population share of this expenditure in GERS. Unitary charge payments cover repayment of capital, interest payments, and in some cases service charge payments. Figures are shown here for the years 2015-16 to 2019-20 to be consistent with other tables in this report. The underlying spreadsheets on the GERS website have data covering the period back to 1998-99 as well as estimated payments into the 2040s. Additional information about the individual procuring authority (e.g. individual local authority and health board information) and comparisons with the UK are also provided.

Scotland: Unitary charge payments, 2016-17 to 2020-21
£ million
2016-17 2017-18 2018-19 2019-20 2020-21
By scheme type
Private Finance Initiative 998 1,013 1,027 1,046 1,060
Non-Profit Distributing models1 107 189 262 330 353
Total Unitary Charge payments 1,106 1,202 1,289 1,376 1,413
By procuring authority
Further Education 27 35 35 35 35
Local Government 514 548 585 606 640
NHS 258 273 298 327 340
Other Scottish Government 133 169 191 224 213
Ministry of Defence 25 26 26 24 22
Scottish Water 148 151 155 160 162
Total Unitary Charge payments 1,106 1,202 1,289 1,376 1,413
By sector of project
Energy 5 5 - - -
Further Education 27 35 35 35 35
Health 258 273 298 327 340
IT - - - - -
Ministry of Defence 25 26 26 24 22
Offices 3 3 3 3 3
Police 4 4 5 5 5
Prisons 47 47 48 50 52
Schools 469 502 545 565 599
Transport 102 138 158 190 177
Waste 165 169 172 178 180
Total Unitary Charge payments 1,106 1,202 1,289 1,376 1,413
UK Total Unitary Charge Payments 10,528 10,773 10,158 10,212 10,045
Scotland as % UK 10.5% 11.2% 12.7% 13.5% 14.1%

1 Non-profit distributing models includes projects delivered by the hub model and projects commissioned prior to 2010. Further detail is available at: http://www.gov.scot/Topics/Government/Finance/18232/12308

Source: HM Treasury and Scottish Government figures. See the accompanying spreadsheet for full details of all sources

Contact

Email: Economic.Statistics@gov.scot

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