Government Expenditure and Revenue Scotland 2022-23

Annex A: Supplementary Tables

This section presents supplementary tables on public sector revenue and expenditure in Scotland.

Table A.1 below shows the population figures used in calculating per head estimates in GERS.

Table A.1: Financial Year Population Estimates (thousands)

	2020-21	2021-22	2022-23
Scotland	5,469	5,480	5,480
UK	67,056	66,980	66,980
As % of UK total	8.2%	8.2%	8.2%

Note: Financial year estimates are calculated as the weighted average of the relevant mid-year estimates. i.e., the 2020-21 population is estimated as three-quarters of the 2020 population plus one quarter of the 2021 population.

Figures for 2022-23 have been rolled forward from 2021-22. Figures for all years will be updated after the results of the Scottish Census and updated Mid-Year Estimates are published.

Table A.2 below shows the relationship between revenue, current expenditure, and the current budget balance, and then the transition from the current budget balance to the net fiscal balance.

Table A.2: Current and Capital Budgets: Scotland

	£ million
	2020-21	2021-22	2022-23
Current Budget
Revenue
Excl. North Sea revenue	61,670	70,035	78,110
Population share North Sea revenue	61,713	70,253	78,975
Geographical share North Sea revenue	62,423	72,481	87,496
Current expenditure	89,232	86,813	95,129
Capital consumption	5,641	5,443	5,944
Balance on current budget (surplus is positive, deficit is negative)
Excluding North Sea revenue	-33,203	-22,220	-22,963
Population share North Sea revenue	-33,160	-22,002	-22,099
Geographical share North Sea revenue	-32,451	-19,774	-13,577
Capital Budget
Capital expenditure	11,043	10,567	11,506
Capital consumption	-5,641	-5,443	-5,944
Net Investment	5,402	5,124	5,562
Net Fiscal Balance (surplus is positive, deficit is negative)
Excluding North Sea revenue	-38,605	-27,345	-28,525
Population share North Sea revenue	-38,562	-27,127	-27,661
Geographical share North Sea revenue	-37,853	-24,899	-19,139

GDP

Table A.3 below provides the financial year GDP estimates used in GERS.

Table A.3: Scottish GDP including and excluding North Sea GDP

	£ million
	2020-21	2021-22	2022-23
Scottish GDP
Excl. North Sea	152,283	174,345	189,588
Population share North Sea	153,250	176,363	191,905
Geographical share North Sea revenue	161,911	194,371	212,910
UK GDP	2,085,204	2,337,907	2,531,870

Source: Quarterly National Accounts Scotland, Economy statistics - gov.scot (www.gov.scot); ONS

Note: Scottish GDP including a geographical share of the North Sea also includes a population share of UK overseas public administration and defence activity. Table E in Quarterly National Accounts Scotland provides a more detailed breakdown.

General Government estimates

The headline GERS figures cover the whole of the public sector. As such, they include revenue and expenditure associated with public corporations such as Scottish Water and the Bank of England. They are on a financial year basis.

When conducting international comparisons, bodies such as the European Commission and the International Monetary Fund (IMF) present figures on a calendar year basis and covering only general government; i.e., excluding public corporations. In order to help comparisons with such figures, the table below presents the GERS net fiscal balance results on this basis. As revenue and expenditure are primarily estimated on a financial year and public sector basis, the calendar year estimates below are illustrative and have been derived by apportioning the main GERS estimates.

Table A.4: Calendar year general government estimates: Scotland and UK

	£ million
	2020	2021	2022
Net Fiscal Balance
Excluding North Sea revenue	-35,323	-32,087	-27,764
Population share North Sea revenue	-35,313	-31,952	-27,268
Geographical share North Sea revenue	-34,910	-30,456	-22,435
UK	-276,607	-180,965	-116,354
	As % of GDP
Excluding North Sea revenue	-23.0%	-19.0%	-14.8%
Population share North Sea revenue	-22.8%	-18.8%	-14.4%
Geographical share North Sea revenue	-21.3%	-16.4%	-10.6%
UK	-13.1%	-8.0%	-4.7%

Confidence intervals

A number of the revenues in GERS are based on survey estimates. As such, they have an associated statistical uncertainty. The table below presents the 95% confidence intervals associated with these revenues. Other revenues are based on administrative data, or modelled data for which confidence intervals are not available. Estimates are not presented for these revenues. Expenditure is primarily based on administrative data, and therefore confidence intervals are not presented for expenditure.

Although tobacco duties and alcohol duties are both based on the Living Costs and Food Survey, the confidence interval for alcohol is larger. This is because the methodology for calculating alcohol duties uses more disaggregate survey data to reflect the different levels of duty, and revenue, received from different types of alcohol. This lower level survey data has a correspondingly larger uncertainty.

Note that the confidence intervals relate to the latest year of survey data. As GERS often uses data from previous years to estimate values for the latest year, there will likely be larger uncertainty around the latest year estimates than suggested by the table below.

Table A.5: Confidence intervals around survey based apportionments: Scotland

	£ million
	Central estimate	95% lower bound	95% upper bound	Range	Range (%)
National insurance contributions	13,345	13,119	13,572	+/-227	+/-1.7%
VAT1	13,253	12,617	13,889	+/-636	+/-4.8%
Tobacco duties	1,073	1,054	1,091	+/-18	+/-1.7%
Alcohol duties	1,214	1,117	1,311	+/-97	+/-8.0%
Betting and gaming duties	223	220	226	+/-3	+/-1.4%
Insurance premium tax	528	518	539	+/-11	+/-2.0%
Total survey based apportionments	29,637	28,645	30,629	+/-992	+/-3.3%

¹ The estimate of VAT uncertainty is a Scottish Government estimate, based on data published as part of the Scottish VAT Assignment experimental statistics publication^[29]

Amendments to the Country and Regional Analysis database

A number of significant improvements have been made to the HM Treasury Country and Regional Analysis (CRA) database in recent years to apportion expenditure more accurately to countries and regions of the UK. For the first time, CRA 2017-18 included a detailed line by line description of the methodology used to apportion spending. While many concerns in previous editions of the CRA have been addressed and are now reflected in both CRA 2021-22 and this GERS report, a small number of supplementary amendments to the CRA 2021-22 dataset are made in producing GERS. The aim of these refinements is to ensure that the public sector expenditure figure for Scotland captures as accurately as possible expenditure for the benefit of Scottish residents.

The amendments made to the CRA in producing this edition of GERS are shown in Table A.6. They are discussed in the detailed expenditure methodology paper available at: Economy statistics - gov.scot (www.gov.scot)

As the CRA for 2022-23 is not yet published, there are no formal amendments to individual spending lines in 2022-23. The 2021-22 adjustments are in effect carried forward into 2022-23, adjusted for the spending of the responsible department. Further detail is provided in the expenditure methodology note.

Table A.6: Amendments to Estimates of Total Public Sector Expenditure on Services from CRA 2022

	£ million
	2019-20	2020-21	2021-22
Amendments from the CRA
High Speed 2	-72	-80	-119
Nuclear-related expenditure	-38	-9	-22
Other minor revisions	-6	0	4
Total CRA amendments	-110	-82	-130

Note: Amendments do not include EU Transactions

Differences between GERS and PESA in 2022-23

As set out in Chapter 3, Scottish Government spending in GERS is based on data from the Scottish Government’s Directorate for Financial Management. Normally this spending is consistent with the Scottish Government spending in PESA, however, in this edition of GERS there is a difference relating to transport spending, following the transfer of ScotRail into public ownership on 1 April 2022.

Currently, spending by ScotRail’s holding company, Scottish Rail Holding Ltd, includes £600 million of spending on rolling stock leases, in line with IFRS16. This spending is currently not included within the Total Expenditure on Services framework in PESA, and the ONS makes its own adjustments for IFRS16 in calculating overall Total Managed Expenditure. We will discuss with HM Treasury how this spend should be recorded for the next Country and Regional Analysis publication. In the interim, we have decided to continue to include this spending in GERS, which ensures that transport spend is consistent between 2021-22 and 2022-23. This means that Scottish Government spending in GERS is £600 million higher than in PESA for 2022-23.

Expenditure accounting adjustments

Spending in GERS is based on the HM Treasury Total Expenditure on Services (TES) concept, which accounts for around 90% of total spending. Accounting adjustments are used to move from TES to Total Managed Expenditure (TME), the primary measure of public spending used in the UK Public Sector Finances. As discussed in Chapter 1, for the majority of these adjustments, accompanying adjustments are included in revenue estimates, and therefore do not affect the net fiscal balance or current budget balance. This is shown in more detail in Table A.10.

The capital accounting adjustment for the UK in 2022-23 has a relatively large negative residual. This primarily relates to adjustments to spending data made by ONS to remove expenditure associated with leases under IFRS16, where different data sources are used in the Public Sector Finances.

Note that the capital consumption figures in Table A.8 do not match the capital consumption figures in Table A.2. This is because the overall capital consumption figures in Table A.2 include capital consumption of public corporations, which are not included in accounting adjustments. Scotland continues to be apportioned a population share of this residual. We will keep these adjustments under review for future publications.

Table A.7: Expenditure Accounting Adjustment: UK

	£ million
	2020-21	2021-22	2022-23
UK total managed expenditure (TME)	1,106,729	1,041,465	1,154,930
UK total expenditure on services (TES)	1,011,380	954,100	1,068,007
UK accounting adjustment	95,349	87,365	86,923
of which current expenditure:
Central government capital consumption	31,022	31,946	35,296
Local government capital consumption	15,821	16,365	17,870
Current VAT refunds	18,236	20,588	22,307
Imputed subsidy from Local Authorities to the Housing Revenue Account1	1,930	3,000	3,497
Imputed flows for Renewable Obligation Certificates 2	6,296	6,296	6,756
British Transport Police Service Agreements	145	145	145
Current expenditure residual	9,099	-689	4,572
of which capital expenditure:
Capital VAT refunds	2,459	2,573	2,788
Housing associations	165	165	165
Student loans	10,815	9,714	9,714
Capital expenditure residual	-639	-2,738	-16,187

¹ The Housing Revenue Account (HRA) is classified as a public corporation by the ONS, which means that they pay dividends on their profits to local authorities. To ensure that these dividends are non-negative, the ONS imputes a subsidy from local authorities to HRAs to cover any shortfall (offset in public corporation gross operating surplus, which scores on the revenue side of the account).

² Renewable Obligation Certificates are bought and sold by energy companies. The ONS has decided that these flows should be channelled through central government and so impute offsetting amounts of spending and income.

Table A.8: Expenditure Accounting Adjustment: Scotland

	£ million
	2020-21	2021-22	2022-23
Scottish total managed expenditure (TME)	100,275	97,380	106,635
Scottish total expenditure on services (TES)	91,994	89,612	98,793
Scottish accounting adjustment	8,282	7,768	7,843
Percentage of UK accounting adjustment	8.7%	8.9%	9.0%
of which current expenditure:
Central government capital consumption	2,961	3,050	3,369
Local government capital consumption	1,624	1,680	1,834
Current VAT refunds	1,629	1,913	2,072
Imputed subsidy from Local Authorities to the Housing Revenue Account1	142	220	257
Imputed flows for Renewable Obligation Certificates 2	747	747	802
British Transport Police Service Agreements	12	12	12
Current expenditure residual	738	-56	374
of which capital expenditure:
Capital VAT refunds	220	239	259
Housing associations	0	0	0
Student loans	262	188	188
Capital expenditure residual	-52	-224	-1,324

¹ The Housing Revenue Account (HRA) is classified as a public corporation by the ONS, which means that they pay dividends on their profits to local authorities. To ensure that these dividends are non-negative, the ONS imputes a subsidy from local authorities to HRAs to cover any shortfall (offset in public corporation gross operating surplus, which scores on the revenue side of the account).

² Renewable Obligation Certificates are bought and sold by energy companies. The ONS has decided that these flows should be channelled through central government and so impute offsetting amounts of spending and income.

The table below shows which parts of the Scottish expenditure accounting adjustments are included as revenues, and where they appear in the revenue tables.

Table A.9: Accounting Adjustments, Revenue and Expenditure: Scotland, 2022-23

	Expenditure AA	Revenue AA	Revenue line
Of which current expenditure:	£ million
Central government capital consumption	3,369	3,369	Gross operating surplus
Local government capital consumption	1,834	1,834	Gross operating surplus
Current VAT refunds	2,072	2,072	VAT refunds
Imputed subsidy from Local Authorities to the Housing Revenue Account	257	-	n/a
Imputed flows for Renewable Obligation Certificates	802	802	Environmental levies
British Transport Police Service Agreements	12	12	Other taxes, royalties, and adjustments
Current expenditure residual	374	-	n/a
Of which capital expenditure:
Capital VAT refunds	259	259	VAT refunds
Housing associations	0	-	n/a
Student loans	188	-	n/a
Capital expenditure residual	-1,324	-	n/a
Total accounting adjustments	7,843	8,347

Reconciliation to published Scottish Government and Scottish Local Government budgets

There are a number of differences between the figures for spending by Scottish Government and Local Authorities presented in Table 3.8 and figures presented in Scottish Government budgets and Scottish Local Government Finance Statistics. The key differences relate to accounting treatments, particularly of pensions, VAT refunds, and depreciation.

GERS uses National Accounts principles, which show actual pensions expenditure, and which shows gross expenditure before VAT refunds. Depreciation in GERS is based on the concept of capital consumption, which uses estimates of the value of assets used to provide services in terms of current asset values.

In contrast, budget documents use financial accounting principles, which include a measure of future liabilities of pension funds, and which shows net expenditure after VAT refunds. Depreciation is based on historical asset prices.

A more detailed description of the differences is provided in Box 5.2 of GERS 2013‑14.

Chapter 5: Public Sector Expenditure - Government Expenditure & Revenue Scotland 2013-14 - gov.scot (www.gov.scot)

Table A.10 below shows the reconciliation of published Scottish Government and Scottish Local Government Finance figures to the figures published in the CRA and GERS. This shows figures for 2021-22 rather than 2022-23, as this is the latest year for which published accounts are available for both the Scottish Government and Scottish local government. 2022-23 figures in GERS are based on provisional outturn estimates.

Table A.10: Reconciliation of published budget documents to GERS expenditure Table 3.8 (2021-22, £ billion)

Scottish Government and public corporations
Published Scottish Government outturn1	55.6
Adjustments to align budget to CRA measure of spending
Grants to other public sector bodies (e.g. local government)	-14.2
Pensions	-5.7
Depreciation	-0.6
Financial transactions associated with student loans, public corporations, and borrowing	-0.3
Adjustments to move from spend ‘in’ Scotland to spend ‘for’ Scotland2	-0.1
Other	0.6
Final Scottish Government expenditure on services for Scotland	35.3
Scottish Local Government
Published Local Government gross current expenditure3	18.1
Income excluding grants from Central Government4	-5.5
Housing benefit	1.3
Published Local Government gross capital expenditure5	3.3
Income from sales of capital assets6	0.0
Final Scottish Local Government expenditure on services for Scotland	17.2
Scottish Government, PC & Local Government expenditure on services for Scotland	52.5
National Accounts adjustments7
Capital consumption	4.7
VAT refunds	1.9
Local Government pension fund interest expenditure	1.7
Other accounting adjustments	0.9
Final Scottish Government, PC, and Scottish Local Government TME	61.8

¹ Scottish Government 2021-22 Final Outturn Report

² These are adjustments made to Scottish Government spending in HM Treasury’s CRA publication. They primarily relate to spending on museums and pensions, to reflect where spending undertaken by the Scottish Government benefits residents from the rest of the UK.

³ Scottish Local Government Finance Statistics 2021-22, LA Level -3. Revenue Expenditure and Income by Service and Type. Total General Fund (excluding the Housing Revenue Account and trading with the public) employee costs, operating costs, and support services costs after statutory adjustments, less interauthority recharges (adjustments for LFR purposes).

⁴ As Note 3. Total General Fund (excluding the Housing Revenue Account and trading with the public) income less government grants

⁵ Scottish Local Government Finance Statistics 2021-22, publication tables Capital Expenditure (chart 3.1) and Financing (chart 3.5). All services total gross capital expenditure.

⁶ As Note 5. Total capital fund and capital receipts.

⁷ See Table A.8