Government Expenditure and Revenue Scotland (GERS) 2019-2020

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)

	2015-16	2016-17	2017-18	2018-19	2019-20
Scotland	5,381	5,410	5,428	5,444	5,463
UK	65,245	65,746	66,139	66,526	66,797
As % of UK total	8.2%	8.2%	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 2019-20 population is estimated as three-quarters of the 2019 population plus one quarter of the 2020 population.

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
	2015-16	2016-17	2017-18	2018-19	2019-20
Current Budget
Current revenue
Excluding North Sea revenue	56,530	59,372	61,432	64,076	65,155
Including North Sea revenue (population share)	56,523	59,375	61,538	64,174	65,208
Including North Sea revenue (geographical share)	56,213	59,529	62,573	65,442	65,878
Current expenditure	65,270	66,250	67,774	69,626	71,540
Capital consumption	5,343	5,431	5,408	5,970	6,266
Balance on current budget
(surplus is positive, deficit is negative)
Excluding North Sea revenue	-14,083	-12,308	-11,749	-11,520	-12,651
Including North Sea revenue (population share)	-14,090	-12,306	-11,643	-11,422	-12,598
Including North Sea revenue (geographical share)	-14,400	-12,151	-10,609	-10,154	-11,927
Capital Budget
Capital expenditure	7,333	8,752	9,050	8,972	9,475
Capital consumption	-5,343	-5,431	-5,408	-5,970	-6,266
Net Investment	1,990	3,321	3,642	3,001	3,209
Net Fiscal Balance (surplus is positive, deficit is negative)
Excluding North Sea revenue	-16,073	-15,629	-15,391	-14,521	-15,860
Including North Sea revenue (population share)	-16,080	-15,626	-15,285	-14,424	-15,807
Including North Sea revenue (geographical share)	-16,390	-15,472	-14,251	-13,155	-15,136

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
	2015-16	2016-17	2017-18	2018-19	2019-20
Scottish GDP
Excluding North Sea and share of UK extra-regio	147,176	153,012	158,687	165,302	168,171
Including North Sea (population share)	148,070	153,810	159,595	166,618	169,085
Including North Sea (geographical share)	154,654	159,719	166,476	177,047	175,921
UK GDP	1,934,600	2,019,484	2,085,654	2,166,842	2,216,479

Source: Quarterly National Accounts Scotland, https://www.gov.scot/collections/economy-statistics/; 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
	2015	2016	2017	2018	2019
Net Fiscal Balance
Excluding North Sea revenue	-16,481	-16,422	-15,489	-15,858	-16,071
Including North Sea revenue (per capita share)	-16,477	-16,451	-15,393	-15,765	-15,990
Including North Sea revenue (geographical share)	-15,753	-16,966	-14,369	-14,620	-15,052
UK	-88,010	-66,804	-50,787	-48,544	-49,420
As % of GDP
Excluding North Sea revenue	-11.2%	-10.9%	-9.8%	-9.7%	-9.6%
Including North Sea revenue (per capita share)	-11.2%	-10.8%	-9.7%	-9.5%	-9.5%
Including North Sea revenue (geographical share)	-10.2%	-10.7%	-8.7%	-8.3%	-8.5%
UK	-4.6%	-3.4%	-2.5%	-2.3%	-2.2%

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	11,460	11,265	11,655	+/-195	+/-1.7%
VAT1	11,015	10,773	11,257	+/-242	+/-2.2%
Tobacco duties	1,240	1,218	1,261	+/-21	+/-1.7%
Alcohol duties	1,149	1,057	1,241	+/-92	+/-8%
Betting and gaming duties	223	220	226	+/-3	+/-1.4%
Insurance premium tax	419	411	428	+/-8	+/-2%
Total survey based apportionments	25,505	24,944	26,067	+/-562	+/-2.2%

1 The estimate of VAT uncertainty is a Scottish Government estimate, based on the Living Costs and Food Survey. It is not a measure of the uncertainty associated with the VAT assignment model. Estimates of this are due to be published later in 2020.

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 anomalies in previous editions of the CRA have been addressed and are now reflected in both CRA 2018‑19 and this GERS report, a small number of supplementary amendments to the CRA 2018-19 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 https://www.gov.scot/collections/economy-statistics/#governmentexpenditureandrevenuescotland(gers)

As the CRA for 2019-20 is not yet published, there are no formal amendments to individual spending lines in 2019-20. The 2018-19 adjustments are in effect carried forward into 2019‑20, adjusted for the spending of the responsible department. Further detail is provided in the expenditure methodology note.

An adjustment is also made to Scottish local government spending published in PESA. PESA reflects an increase in capital spending consistent with the headline figures set out in the provisional capital expenditure outturn published by the Scottish Local Government and Communities Directorate. However, some of this increase is associated with a number of sale and leaseback transactions in one local authority. Following the approach set out in section 6.2 of the Manual on Government Deficit and Debt 2019, these transactions are excluded from capital expenditure figures in GERS. Following discussions with HM Treasury we understand that this expenditure will be removed in future updates to the quarterly Public Spending Statistics publication.

Table A.6: Amendments to Estimates of Total Public Sector Expenditure on Services from CRA 2018

	£ million
	2015-16	2016-17	2017-18	2018-19	2019-20
Amendments from the CRA
Nuclear-related expenditure	-50	-60	-57	-53	0
London Olympics	0	0	0	0	0
Pensions revisions	-19	-19	-20	-21	0
Other minor revisions	-33	-67	-53	-80	0
Amendments from PESA
Local Government spending	-	-	-	-	-503
Total CRA amendments	-102	-146	-131	-154
Total PESA amendments	-	-	-	-	-503

Note: Amendments do not include EU Transactions

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.

In order to present Scottish Government and Scottish local government spending on a TME basis in GERS, it is necessary to allocate different parts of the accounting adjustments to either the Scottish Government or other UK Government bodies. Currently, capital consumption, VAT refunds, the subsidy to the Housing Revenue Account, Local Authority Pensions, and Scottish housing associations are allocated to the Scottish Government or Scottish local government. Other elements are allocated to other UK Government bodies operating in Scotland.

Table A.7 below shows the accounting adjustments applied to UK spending in GERS to move from TES to TME. Table A.8 shows the adjustments for Scotland.

Table A.7: Expenditure Accounting Adjustment: UK

	£ million
	2015-16	2016-17	2017-18	2018-19	2019-20
UK total managed expenditure (TME)	793,495	812,631	835,053	851,697	881,431
UK total expenditure on services (TES)	717,867	726,949	750,673	772,968	799,304
UK accounting adjustment	75,628	85,682	84,380	78,729	82,128
of which current expenditure:
Central government capital consumption	26,726	27,596	28,240	28,414	28,741
Local government capital consumption	11,570	12,016	12,354	12,659	13,013
Current VAT refunds	14,959	15,189	15,187	16,990	17,558
Imputed subsidy from Local Authorities to the Housing Revenue Account1	645	827	1,124	1,319	2,114
Imputed flows for Renewable Obligation Certificates 2	3,900	4,672	5,424	6,124	6,116
Local authority pensions	400	200	100	100	100
British Transport Police Service Agreements	150	145	145	145	145
Current expenditure residual	1,602	4,504	2,811	-31	-2,110
of which capital expenditure:
Capital VAT refunds	2,765	2,259	2,085	1,221	1,262
Housing associations	5,486	7,386	6,330	832	165
Student loans	6,483	7,477	9,893	12,411	14,144
Capital expenditure residual	943	3,411	687	-1,456	-1,400

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
	2015-16	2016-17	2017-18	2018-19	2019-20
Scottish total managed expenditure (TME)	72,603	75,001	76,823	78,598	81,015
Scottish total expenditure on services (TES)	66,224	67,518	69,461	71,630	74,079
Scottish accounting adjustment	6,379	7,484	7,362	6,968	6,936
Percentage of UK accounting adjustment	8.4%	8.7%	8.7%	8.9%	8.4%
Of which current expenditure:
Central government capital consumption	2,556	2,709	2,736	2,708	2,745
Local government capital consumption	1,175	1,234	1,268	1,299	1,336
Current VAT refunds	1,346	1,378	1,381	1,563	1,611
Imputed subsidy from Local Authorities to the Housing Revenue Account1	49	62	84	98	157
Imputed flows for Renewable Obligation Certificates2	463	554	644	727	726
Local authority pensions	37	19	9	9	9
British Transport Police Service Agreements	13	12	9	12	12
Current expenditure residual	132	371	232	-2	14
Of which capital expenditure:
Capital VAT refunds	249	205	190	112	116
Housing associations	118	463	443	276	0
Student loans	165	198	311	285	324
Capital expenditure residual	77	280	56	-119	-115

^{1, 2} See notes to Table A.7

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, 2019-20

	Expenditure AA	Revenue AA	Revenue line
Of which current expenditure:	£ million
Central government capital consumption	2,745	2,745	Gross operating surplus
Local government capital consumption	1,336	1,336	Gross operating surplus
Current VAT refunds	1,611	1,611	VAT
Imputed subsidy from Local Authorities to the Housing Revenue Account	157	-	n/a
Imputed flows for Renewable Obligation Certificates	726	726	Other taxes, royalties, and adjustments
Local authority pensions	9	-	n/a
British Transport Police Service Agreements	12	12	Other taxes, royalties, and adjustments
Current expenditure residual	14	-	n/a
Of which capital expenditure:
Capital VAT refunds	116	116	VAT
Housing associations	0	-	n/a
Student loans	324	-	n/a
Capital expenditure residual	-115	-	n/a
Total accounting adjustments	6,936	6,545

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.

http://www.gov.scot/Publications/2015/03/1422/8

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 2018-19 rather than 2019-20, as this is the latest year for which published accounts are available for both the Scottish Government and Scottish local government. 2019-20 figures in GERS are based on provisional outturn estimates.

Table A.10: Reconciliation of published budget documents to GERS expenditure Table 3.8

	£ billion
	2018-19
Scottish Government
Published Scottish Government budget1	42.9
Spending by Audit Scotland and Scottish Parliament	0.1
Public corporation (PC) capital spending	0.6
Timing differences	-1.7
Total Scottish Government & associated PC expenditure	41.8
Adjustments to align budget to CRA measure of spending
Grants to other public sector bodies (e.g. local government)	-10.6
Pensions	-4.2
Depreciation	-0.9
Financial transactions associated with student loans and public corporations	-1.0
Adjustments to move from spend ‘in’ Scotland to spend ‘for’ Scotland2	-0.1
Other	-0.5
Final Scottish Government & PC expenditure on services for Scotland	24.4
Scottish Local Government
Published Local Government gross current expenditure3	13.3
Income excluding grants from Central Government4	-2.4
Housing benefit	1.6
Published Local Government gross capital expenditure5	3.0
Income from sales of capital assets6	-0.1
Final Scottish Local Government & associated PC expenditure on services for Scotland	15.5
Scottish Government, Local Government, & PC expenditure on services for Scotland	39.9
National Accounts adjustments7
Capital consumption	4.0
VAT refunds	1.7
Other accounting adjustments	0.7
Final Scottish Government, Scottish Local Government & PC TME	46.2

1 Scottish Government Budget 2020-21 Annex D

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 2018-19, Annex B. Total General Fund (excluding the Housing Revenue Account and trading with the public) employee costs, operating costs, and support services costs, less inter-authority 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 2018-19, Annex G. All services total gross capital expenditure

6 Scottish Local Government Finance Statistics 2018-19, Annex I. Total capital receipts used from asset sales/disposals

7 See Table A.8