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Publication - Statistics

Government Expenditure and Revenue Scotland (GERS) 2019-2020

Published: 26 Aug 2020
From:
Cabinet Secretary for Finance
Directorate:
Chief Economist Directorate
Part of:
Economy, Public sector
ISBN:
9781839609947

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.

Contents
Government Expenditure and Revenue Scotland (GERS) 2019-2020
Chapter 3: Public Sector Expenditure

Chapter 3: Public Sector Expenditure

Total Public Sector Expenditure: Scotland 2019-20
A chart shorting total public sector expenditure by function for Scotland in 2019-20

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)[21] and the supporting Country and Regional Analysis (CRA).[22]

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 2019-20 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.

As discussed in the preface, there are a number of changes to the expenditure in this year’s publication, reflecting changes in the UK Public Sector Finances. Some of these are primarily presentational, and do not affect the net fiscal balance, such as the change to capital consumption. The main revision to expenditure that impacts on the net fiscal balance is the change to student loans, which is discussed in Box 3.1.

Public Sector Expenditure

Total public sector expenditure for Scotland in 2019-20 is estimated to be £81.0 billion, an increase of 3.1% from 2018-19, compared to growth of 3.5% for the UK as a whole. Scotland’s public sector expenditure in 2019-20 was equivalent to 9.2% of total UK public sector expenditure. This is shown by spending category in Table 3.1.

Table 3.1: Total Expenditure: Scotland 2019-20
Scotland
£ million % of total expenditure
General public services
Public and common services 1,809 2.2%
International services 966 1.2%
Public sector debt interest 4,533 5.6%
Defence 3,451 4.3%
Public order and safety 3,153 3.9%
Economic affairs
Enterprise and economic development 1,795 2.2%
Science and technology 754 0.9%
Employment policies 209 0.3%
Agriculture, forestry and fisheries 864 1.1%
Transport 3,970 4.9%
Environment protection 1,358 1.7%
Housing and community amenities 2,443 3.0%
Health 13,765 17.0%
Recreation, culture and religion 1,323 1.6%
Education and training 9,201 11.4%
Social protection 24,275 30.0%
EU transactions 210 0.3%
Accounting adjustments 6,936 8.6%
Total Expenditure 81,015 100%

Table 3.2 below shows growth in current and capital spend in Scotland by organization in 2019-20, compared to the UK. Spending increased more slowly in Scotland than the UK as a whole in 2019-20. This is primarily due to spending on student loans increasing faster in the rest of the UK.

Box 3.1: Changes to the reporting of student loans

Student loans have been used in the UK since 1990, to help some students meet their living costs. In 1998, when tuition fees were introduced for UK universities, student loans were extended to cover these additional costs. At this point, the repayment of loans was also changed to be linked to income, referred to as an income-contingent repayment.

In Scotland, tuition fees were ended for Scottish students in 2001. At the time, they were replaced by a one-off charge at the time of graduation. This was later abolished in 2008.

Student loans are income-contingent, meaning that they are only repaid when the borrower’s earnings exceed a certain threshold, and are written-off, normally after 30 years, regardless of whether they have been repaid. This means that many students will not repay their loans in full.

Under the previous treatment, student loans were recorded as conventional loans. This means that interest is earned on the loan while it is outstanding, and if the loan is not repaid by the expiration date, a charge is recorded in the government accounts at that point. A number of concerns had been raised over this approach, including by the Office for Budget Responsibility, as it meant that:

  • The public sector finances showed revenue associated with accrued interest on the loans, even when no payments were being made due to the income criteria not being met; and
  • Due to the long length life of the loans, the government would likely face a large expenditure charge in future years when loans issued from 1998 onwards began to be written off.

In response to these concerns, the ONS undertook a review of different approaches for recording the loans, including considering approaches used internationally. The result of the review recommended that loans be recorded by recording part of the loan as a grant, which represents the amount of loan not expected to be repaid, with the remainder still recorded as a conventional loan. The grant element is recorded as capital spending in the year that the loan is issued.

The impact of this change on spending is shown in the table below for Scotland and the UK. As Scottish students do not face tuition fees, the value of loans issued is lower in Scotland, and as such the level of spending is also lower. This spending is currently captured through the expenditure accounting adjustments.

Capital expenditure associated with revised student loans recording (£ million)
2015-16 2016-17 2017-18 2018-19 2019-20
Scotland 165 198 311 285 324
UK 6,483 7,477 9,893 12,411 14,144
Scotland as share of UK (%) 2.5% 2.6% 3.1% 2.3% 2.3%

The capital expenditure on student loans is the main impact on the net fiscal balance. However, there is also an impact on revenue, as less interest will be earned on the loans. More detail on the changes is available at:

https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/articles/newtreatmentofstudentloansinthepublicsectorfinancesandnationalaccounts/2018-12-17

Table 3.2: Expenditure growth: 2018-19 to 2019-20 (£ million)
Scotland UK growth
2018-19 2019-20 Growth
Current expenditure 69,626 71,540 2.7% 3.4%
Scottish Government 27,255 28,020 2.8% 2.8%
Local Government 12,571 13,266 5.5% 0.9%
Public Corporations - - - -
Other UK Government bodies 29,800 30,254 1.5% 4.1%
Capital expenditure 8,972 9,475 5.6% 4.3%
Scottish Government 2,688 3,007 11.9% 11.9%
Local Government 2,142 2,350 9.7% 11.4%
Public Corporations 1,573 1,504 -4.4% 4.1%
Other UK Government bodies 2,569 2,614 1.8% 2.1%
Total expenditure 78,598 81,015 3.1% 3.5%
Scottish Government 29,943 31,027 3.6% 3.6%
Local Government 14,713 15,616 6.1% 2.1%
Public Corporations 1,573 1,504 -4.4% 4.1%
Other UK Government bodies 32,369 32,868 1.5% 3.9%

Notes:

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

2. Scottish 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. 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. The capital spending share increased in 2016-17. This reflects both increased local authority capital spending and increased Scottish Government capital spending in part due to the use of new capital borrowing powers. It has since remained at this higher level.

Table 3.3: Current and Capital Expenditure (% of Total Expenditure): Scotland
per cent
2015-16 2016-17 2017-18 2018-19 2019-20
Current 89.9% 88.3% 88.2% 88.6% 88.3%
Capital 10.1% 11.7% 11.8% 11.4% 11.7%

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 by 0.7 percentage points in Scotland in 2019-20. This represents a change from the trend of falling public expenditure since 2015-16, and more generally since 2009-10, and reflects the increased spending announced by the UK Government in Spending Round 2019.

Although overall spending in Scotland grew more slowly than for the UK in 2019-20, spending as a share of GDP increased faster. This reflects weaker GDP growth in Scotland in 2019-20.

Table 3.4: Total Managed Expenditure as a Share of GDP
per cent of GDP
2015-16 2016-17 2017-18 2018-19 2019-20
Scottish TME as a Share of GDP:
Excluding North Sea GDP 49.3% 49.0% 48.4% 47.5% 48.2%
Including population share of North Sea GDP 49.0% 48.8% 48.1% 47.2% 47.9%
Including geographical share of North Sea GDP 46.9% 47.0% 46.1% 44.4% 46.1%
UK TME as a share of GDP:
100% of North Sea GDP 41.0% 40.2% 40.0% 39.3% 39.8%

Table 3.5 shows total public sector expenditure per person for Scotland and the UK. The gap between Scottish and UK spending per person has increased since 2015-16. In part, this will reflect the new Scottish Government capital borrowing powers which began in 2015-16, and the decision by the Scottish Government to use its new devolved tax powers to on average increase the amount of funding available for public services. 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
2015-16 2016-17 2017-18 2018-19 2019-20
Scotland 13,493 13,864 14,153 14,436 14,829
UK 12,162 12,360 12,626 12,802 13,196
Difference (Scotland minus UK) 1,331 1,504 1,527 1,634 1,633
Difference between Scottish and UK 10.9% 12.2% 12.1% 12.8% 12.4%

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 disability and incapacity related benefits, income support, jobseekers allowance, and housing benefit. Tax credits and child benefit are part of HMRC spending, which also includes universal credit. 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, including the Carer’s Allowance, Carer’s Allowance Supplement, and Best Start Grant. This means it is higher than the figures presented in Table 4.5.

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)
2015-16 2016-17 2017-18 2018-19 2019-20
Social security spending in Scotland
State pension 7,870 8,064 8,243 8,146 8,318
Housing benefit 1,772 1,733 1,671 1,588 1,442
Other DWP social security 5,806 5,841 6,073 6,364 7,012
HMRC child benefit and tax credits and universal credit 2,876 2,761 2,686 2,422 2,382
Scottish Government social security 426 418 419 663 823
Social security spending in Scotland 18,750 18,817 19,092 19,183 19,977
Share of benefit spending outside UK and corporate spend 549 556 586 376 381
Other social protection
Net public sector pensions 991 896 830 1,033 402
Social care for the elderly 2,292 2,216 2,178 2,196 2,319
Other 721 598 596 1,412 1,197
Total social protection 23,302 23,082 23,281 24,201 24,275

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 2015-16 to 2019-20
£ million
Current Capital Total
2015-16 2016-17 2017-18 2018-19 2019-20 2015-16 2016-17 2017-18 2018-19 2019-20 2015-16 2016-17 2017-18 2018-19 2019-20
General public services
Public and common services 1,295 1,250 1,297 1,347 1,446 256 246 350 263 363 1,551 1,496 1,646 1,611 1,809
International services 682 735 762 744 822 164 158 101 235 143 845 893 862 979 966
Public sector debt interest 4,439 4,663 5,110 4,643 4,533 0 0 0 0 0 4,439 4,663 5,110 4,643 4,533
Defence 2,294 2,296 2,332 2,408 2,564 729 762 844 885 887 3,023 3,057 3,176 3,293 3,451
Public order and safety 2,746 2,660 2,716 2,844 3,004 73 78 130 140 149 2,818 2,738 2,845 2,984 3,153
Economic affairs
Enterprise and economic development 910 906 959 1,112 1,324 140 342 366 500 471 1,051 1,249 1,326 1,612 1,795
Science and technology 101 146 181 186 189 377 349 383 533 565 478 494 564 720 754
Employment policies 217 214 230 246 209 2 5 9 4 0 219 219 239 250 209
Agriculture, forestry and fisheries 692 816 790 811 738 120 116 122 112 126 812 932 911 923 864
Transport 1,650 1,646 1,667 1,719 1,780 1,511 1,765 1,925 1,786 2,190 3,162 3,411 3,592 3,505 3,970
Environment protection 932 873 891 905 929 311 330 322 352 429 1,244 1,203 1,213 1,257 1,358
Housing and community amenities 160 112 159 213 227 1,410 1,476 1,689 2,029 2,216 1,570 1,588 1,848 2,242 2,443
Health 11,585 12,036 12,328 12,596 13,300 569 626 499 494 465 12,154 12,662 12,827 13,089 13,765
Recreation, culture and religion 1,140 1,092 1,061 1,169 1,123 263 310 258 236 201 1,404 1,403 1,320 1,405 1,323
Education and training 7,106 7,299 7,499 7,883 8,362 732 972 995 765 839 7,837 8,272 8,494 8,648 9,201
Social protection 23,234 23,012 23,223 24,115 24,170 68 71 58 86 105 23,302 23,082 23,281 24,201 24,275
EU Transactions 315 156 207 270 210 0 0 0 0 0 315 156 207 270 210
Accounting adjustments 5,771 6,338 6,363 6,414 6,610 609 1,146 999 554 326 6,379 7,484 7,362 6,968 6,936
Total 65,270 66,250 67,774 69,626 71,540 7,333 8,752 9,050 8,972 9,475 72,603 75,001 76,823 78,598 81,015
Table 3.7: Total Expenditure: UK 2015-16 to 2019-20
£ million
Current Capital Total
2015-16 2016-17 2017-18 2018-19 2019-20 2015-16 2016-17 2017-18 2018-19 2019-20 2015-16 2016-17 2017-18 2018-19 2019-20
General public services
Public and common services 9,778 9,656 10,092 10,204 11,341 1,433 2,827 2,381 2,576 3,140 11,211 12,483 12,473 12,780 14,481
International services 8,260 8,923 9,261 9,083 10,040 1,984 1,918 1,226 2,866 1,749 10,244 10,841 10,487 11,949 11,789
Public sector debt interest 53,788 56,642 62,206 56,728 55,382 0 0 0 0 0 53,788 56,642 62,206 56,728 55,382
Defence 27,796 27,881 28,399 29,422 31,336 8,831 9,250 10,271 10,816 10,835 36,627 37,131 38,670 40,238 42,171
Public order and safety 28,928 28,954 29,437 30,438 32,209 1,279 1,116 2,030 1,972 2,246 30,207 30,070 31,467 32,410 34,455
Economic affairs
Enterprise and economic development 6,733 6,589 7,306 9,398 12,593 733 1,678 2,688 3,777 3,123 7,466 8,267 9,994 13,175 15,717
Science and technology 875 978 1,126 1,011 1,020 3,868 3,510 3,920 5,422 5,786 4,743 4,488 5,046 6,433 6,806
Employment policies 2,379 2,347 2,512 2,632 2,251 22 60 105 47 2 2,401 2,407 2,617 2,679 2,253
Agriculture, forestry and fisheries 4,090 4,769 4,774 5,320 5,354 381 434 403 414 514 4,471 5,203 5,177 5,734 5,868
Transport 9,765 9,868 9,967 11,963 13,407 18,143 18,953 20,464 20,741 21,295 27,908 28,821 30,431 32,704 34,701
Environment protection 7,937 7,264 7,260 7,365 7,793 3,676 3,782 4,529 3,685 3,860 11,613 11,046 11,789 11,050 11,653
Housing and community amenities 2,988 2,943 2,979 3,086 3,286 6,847 7,359 8,377 8,961 11,179 9,835 10,302 11,356 12,047 14,465
Health 132,663 136,978 141,033 145,899 156,501 5,836 5,611 6,304 7,019 7,629 138,499 142,589 147,337 152,918 164,130
Recreation, culture and religion 9,326 9,382 9,306 9,267 9,144 2,041 2,224 2,173 2,120 2,417 11,367 11,606 11,479 11,387 11,561
Education and training 75,595 77,319 77,088 79,051 83,800 9,319 7,586 8,967 8,999 8,596 84,914 84,905 86,055 88,050 92,395
Social protection 264,585 264,975 268,245 274,261 274,876 317 451 483 551 470 264,902 265,426 268,728 274,812 275,346
EU transactions 7,671 4,723 5,360 7,874 6,132 0 0 0 0 0 7,671 4,723 5,360 7,874 6,132
Accounting adjustments 59,951 65,148 65,386 65,720 67,957 15,677 20,534 18,995 13,009 14,171 75,628 85,682 84,380 78,729 82,128
Total 713,108 725,339 741,737 758,722 784,420 80,387 87,292 93,316 92,975 97,011 793,495 812,631 835,053 851,697 881,431
Table 3.8: Total Expenditure: Scottish Government, Local Authorities, Public Corporations, and Other UK Government: Scotland 2015-16 to 2019-20
£ million
Scottish Government, LAs and Public Corporations Other UK Government Total
2015-16 2016-17 2017-18 2018-19 2019-20 2015-16 2016-17 2017-18 2018-19 2019-20 2015-16 2016-17 2017-18 2018-19 2019-20
General public services
Public and common services 1,048 1,002 1,089 1,075 1,203 503 495 557 535 606 1,551 1,496 1,646 1,611 1,809
International services 0 0 1 1 1 845 893 861 978 965 845 893 862 979 966
Public sector debt interest 0 0 0 0 0 4,439 4,663 5,110 4,643 4,533 4,439 4,663 5,110 4,643 4,533
Defence 4 4 3 3 3 3,019 3,053 3,173 3,290 3,448 3,023 3,057 3,176 3,293 3,451
Public order and safety 2,592 2,515 2,626 2,756 2,912 226 223 219 228 241 2,818 2,738 2,845 2,984 3,153
Economic affairs
Enterprise and econ development 632 831 851 971 960 419 417 475 640 835 1,051 1,249 1,326 1,612 1,795
Science and technology 2 3 3 2 2 476 492 562 717 753 478 494 564 720 754
Employment policies 0 0 0 0 0 219 219 239 250 209 219 219 239 250 209
Agriculture, forestry and fisheries 804 922 901 915 856 8 11 11 8 8 812 932 911 923 864
Transport 2,359 2,397 2,518 2,466 2,753 803 1,014 1,074 1,038 1,217 3,162 3,411 3,592 3,505 3,970
Environment protection 949 938 925 998 1,078 295 265 288 259 280 1,244 1,203 1,213 1,257 1,358
Housing and community amenities 1,570 1,588 1,848 2,242 2,443 0 0 0 0 0 1,570 1,588 1,848 2,242 2,443
Health 12,002 12,508 12,660 13,002 13,680 152 155 167 87 85 12,154 12,662 12,827 13,089 13,765
Recreation, culture and religion 997 971 914 999 887 407 431 406 406 436 1,404 1,403 1,320 1,405 1,323
Education and training 7,814 8,247 8,467 8,632 9,184 23 25 27 16 16 7,837 8,272 8,494 8,648 9,201
Social protection 5,734 5,420 5,295 5,815 5,887 17,568 17,662 17,987 18,386 18,388 23,302 23,082 23,281 24,201 24,275
EU transactions 0 0 0 0 0 315 156 207 270 210 315 156 207 270 210
Accounting adjustments 5,694 6,266 6,422 6,351 6,299 685 1,218 940 616 637 6,379 7,484 7,362 6,968 6,936
Total 42,201 43,611 44,521 46,229 48,147 30,402 31,390 32,302 32,369 32,868 72,603 75,001 76,823 78,598 81,015

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 continues to make payments to, and receive funding from, the EU 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:[23]

  • 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, 2015-16 to 2019-20 (£ million)
Scotland UK
2015-16 2016-17 2017-18 2018-19 2019-20 2015-16 2016-17 2017-18 2018-19 2019-20
GNI based contribution 1,039 927 945 1,174 1,045 12,570 11,440 11,761 14,599 13,003
UK abatement -336 -392 -374 -397 -339 -4,068 -4,757 -4,547 -4,846 -4,149
VAT-based contribution to the EU 227 204 244 257 225 2,751 2,477 2,974 3,138 2,696
Expenditure transfers to the EU 930 739 816 1,034 931 11,253 9,160 10,188 12,892 11,549
Receipts to cover collection costs of TOR -64 -29 -57 -54 -54 -771 -357 -698 -664 -663
TOR 254 277 280 270 272 3,085 3,366 3,413 3,304 3,320
Gross contribution to the EU budget 1,121 987 1,039 1,250 1,148 13,567 12,169 12,903 15,531 14,206
Public sector EU receipts -551 -554 -552 -710 -666 -2,811 -4,081 -4,130 -4,360 -4,754
Net contributions to the EU budget 570 433 487 540 482 10,756 8,088 8,773 11,171 9,452
EU transactions (net contributions to EU institutions less TOR) 315 156 207 270 210 7,671 4,722 5,360 7,867 6,132

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 2014-15 to 2018-19, 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 2014-15 to 2018-19
£ million
2014-15 2015-16 2016-17 2017-18 2018-19
Scotland 94.1 97.4 104.8 116.3 111.1
UK 836.1 840.6 877.2 924.4 990.8

Note: The academic year 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, 2015-16 to 2019-20
£ million
2015-16 2016-17 2017-18 2018-19 2019-20
By scheme type
Private Finance Initiative 995 998 1,013 1,027 1,046
Non-Profit Distributing models1 72 107 189 271 333
Total Unitary Charge payments 1,067 1,106 1,202 1,298 1,379
By procuring authority
Further Education 9 27 35 35 35
Local Government 507 514 548 586 606
NHS 247 258 273 303 328
Other Scottish Government 136 133 169 194 226
Ministry of Defence 21 25 26 26 24
Scottish Water 146 148 151 155 160
Total Unitary Charge payments 1,067 1,106 1,202 1,298 1,379
By sector of project
Energy 5 5 5 - -
Further Education 9 27 35 35 35
Health 247 258 273 303 328
IT - - - - -
Ministry of Defence 21 25 26 26 24
Offices 3 3 3 3 3
Police 4 4 4 5 5
Prisons 49 47 47 48 50
Schools 462 469 502 546 565
Transport 104 102 138 161 192
Waste 163 165 169 172 178
Total Unitary Charge payments 1,067 1,106 1,202 1,298 1,379
UK Total Unitary Charge Payments 10,502 10,471 10,715 10,099 10,152
Scotland as % UK 10.2% 10.6% 11.2% 12.9% 13.6%

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