Government Expenditure and Revenue Scotland (GERS) 2019-2020

B Revisions

This section presents revisions from the previous GERS 2018-19 publication.

Revisions to Non-North Sea Revenue Estimates from GERS 2018-19

Table B.1 summarises the revisions in this edition of GERS to total non-North Sea revenue. Revisions to Scottish estimates can stem from three sources: revisions to UK totals; revisions to apportionment data; and updated apportionment methodologies. The main methodology change in GERS 2019-20 relates to gross operating surplus.

There are a number of revisions to UK revenue totals from GERS 2018-19. The main revisions relate to the new estimates of capital consumption and the change to report public sector pensions on a gross basis. The changes to capital consumption relate to a review of asset lives within the ONS Perpetual Inventory Model, and increase gross operating surplus. There are offsetting increases in expenditure, leaving the net fiscal balance unchanged. The changed reporting of public sector pensions, reporting these on a gross basis, increases interest income from funded pension schemes (primarily those in the local government sector). There is a similar increase in interest expenditure, although overall the change is not neutral for the net fiscal balance. These revisions are shown in the table below. The other main change to UK revenue relates to corporation tax. This reflects the correction of an error to UK corporation tax made by HMRC in September 2019. Previously, some corporation tax credits had been included twice within corporation tax receipts, which are measured on a gross basis. Correcting this has reduced corporation tax in all years since 2007-08. Further detail on all these revisions is available from the UK Public Sector Finances published in September 2019.^[25]

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

	£ million
	2015-16	2016-17	2017-18	2018-19
Scotland
Estimates published in GERS 2018-19	53,805	56,245	58,327	61,278
Estimates published in GERS 2019-20	56,530	59,372	61,432	64,076
Revision (£m)	2,726	3,127	3,105	2,798
Of which: capital consumption	1,005	1,075	1,032	1,611
Of which: public sector pensions	1,360	1,454	1,559	1,647
UK
Estimates published in GERS 2018-19	685,012	727,040	751,776	785,257
Estimates published in GERS 2019-20	712,413	756,587	777,267	809,859
Revision (£m)	27,401	29,547	25,491	24,602
Of which: capital consumption	7,195	7,739	7,925	8,451
Of which: public sector pensions	14,678	15,632	16,699	17,652
Scotland/UK ratio
Estimates published in GERS 2018-19	7.9%	7.7%	7.8%	7.8%
Estimates published in GERS 2019-20	7.9%	7.8%	7.9%	7.9%
Revision (% point)	0.1%	0.1%	0.1%	0.1%

The main revisions to Scottish revenue reflect these UK revisions. In addition to the UK methodological updates, there have also been revisions that result from update to apportionment data. These relate to corporation tax, where updated estimates are available from the ONS’s Country and Regional Public Sector Finances, and VAT, where updated data are available from the VAT Assignment estimates produced by HMRC.

Table B.2: Revision to Estimates of Public Sector Revenue: Scotland and UK 2018-19

	£ million		%
	Scotland	UK	Scotland	UK
Income tax	16	269	0.1%	0.1%
National insurance contributions	-36	-446	-0.3%	-0.3%
Value added tax	-20	595	-0.2%	0.4%
Corporation tax (excluding North Sea)	-582	-2,454	-14.3%	-4.2%
Fuel duties	55	0	2.3%	0.0%
Non-domestic rates	0	598	0.0%	1.9%
Council tax	-1	354	0.0%	1.0%
VAT refunds	34	-55	2.1%	-0.3%
Capital gains tax	-2	-45	-0.5%	-0.5%
Inheritance tax	-39	-10	-13.4%	-0.2%
Reserved stamp duties	-12	3	-3.9%	0.0%
Scottish Land & Buildings transaction tax	-2	-2	-0.4%	-0.4%
Scottish landfill tax	6	6	4.2%	4.2%
Air passenger duty	-48	11	-14.1%	0.3%
Tobacco duties	67	0	6.1%	0.0%
Alcohol duties	-4	-31	-0.3%	-0.3%
Insurance premium tax	8	18	1.9%	0.3%
Vehicle excise duties	14	-51	2.6%	-0.8%
Environmental levies	-8	-112	-1.0%	-1.7%
Other taxes	-73	-252	-3.9%	-1.1%
Total Non-North Sea taxes	-626	-1,604	-1.1%	-0.2%
Other Revenue
Interest and dividends	1,661	15,613	467.7%	182.6%
Gross operating surplus	1,746	10,406	39.6%	24.6%
Other receipts	16	187	3.8%	5.5%
Total non-North Sea revenue	2,798	24,602	4.6%	3.1%

A time series of revisions is available in the accompanying spreadsheets online.

Revisions to North Sea Revenue Estimates from GERS 2018-19

Table B.3 summarises the revisions to North Sea revenues in this edition of GERS by comparing the estimates contained in this report with last year’s publication. Estimates are have been revised down in all years. This reflects updated assessment of refunds of Petroleum Revenue Tax paid to fields in Scottish waters. Estimates of North Sea corporation tax receipts are largely unrevised.

Table B.3: Revisions to North Sea Revenue: 2015-16 to 2018-19

	£ million
	2015-16	2016-17	2017-18	2018-19
Scotland (illustrative geographical share)
Estimates published in GERS 2018-19	50	266	1,426	1,430
Estimates published in GERS 2019-20	-318	157	1,141	1,366
Revision	-368	-109	-285	-64
UK
Estimates published in GERS 2018-19	-85	36	1,297	1,237
Estimates published in GERS 2019-20	-85	36	1,297	1,195
Revision	0	0	0	-42

Revisions to Expenditure Estimates from GERS 2018-19

Table B.4 sets out the changes in estimates of public expenditure in Scotland and the UK between this report and GERS 2018-19. These reflect revisions to Scottish Government and Scottish local government spending data, revisions to UK spending totals, and revisions to the data sources used to apportion expenditure to Scotland. Revisions to public expenditure that can be traced to changes to the total expenditure on services (TES) measure are specified separately.

The main revisions to spending relate to revisions to UK spending totals. These relate to the revised treatment of student loans, the changed estimates of capital consumption, and the move to report public sector pensions on a gross basis. These changes are discussed in Box 3.1 and the Preface. The change to the reporting of public sector pensions means that some spending by funded pension scheme is recorded in TES as part of debt interest payments. The revisions to Scottish spending are broadly in line with those for the UK, apart from student loans, which as discussed in Box 3.1 sees lower spending in Scotland. Scotland’s share of total public sector expenditure is unchanged in most years, and slightly lower in 2018-19.

Table B.4: Revisions to Estimates of Total Managed Expenditure: 2015-16 to 2018-19

	£ million
	2015-16	2016-17	2017-18	2018-19
Scotland
Estimates published in GERS 2018-19	69,339	71,432	73,518	75,338
Estimates published in GERS 2019-20	72,603	75,001	76,823	78,598
Revision	3,264	3,570	3,305	3,260
Of which revisions to TES	1,285	1,348	1,338	1,376
Of which revisions to capital consumption	1,005	1,075	1,032	1,611
Of which revisions to student loans	165	198	311	285
Of which revisions to TES to TME accounting adjustment (excl CC and SL)	1,587	1,716	542	83
UK
Estimates published in GERS 2018-19	756,767	771,954	794,869	810,027
Estimates published in GERS 2019-20	793,495	812,631	835,053	851,697
Revision	36,728	40,677	40,184	41,670
Of which revisions to TES	15,713	16,425	17,322	16,736
Of which revisions to capital consumption	7,195	7,739	7,925	8,451
Of which revisions to student loans	2,219	3,847	5,434	6,483
Of which revisions to TES to TME accounting adjustment (excl CC and SL)	158	16,096	8,966	9,182
Scotland/UK Ratio
Estimates published in GERS 2018-19	9.2%	9.3%	9.2%	9.3%
Estimates published in GERS 2019-20	9.1%	9.2%	9.2%	9.2%
Revision (% point)	0.0%	0.0%	0.0%	-0.1%

The table below shows the revisions to spend in 2018-19 by function, and by Scottish Government, Scottish local government, Scottish public corporations, and Other UK government bodies. Overall, Scottish spend in 2018-19 has been revised up by £3.3 billion. This is primarily reflects the changes to capital consumption (shown in the accounting adjustments) and reporting of pensions (shown in debt interest payments) discussed above.

Table B.5: Revisions to Estimates of Public Sector Expenditure: Scotland and UK 2018-19

	£ million
	Scotland					UK
	Scottish Government	Local Government	Scottish Public Corporations	Other UK Government Bodies	Total
General public services
Public and common services	0	-86	0	-12	-98	-412
International services	0	0	0	-10	-10	-79
Public sector debt interest	0	0	0	1,481	1,481	18,230
Defence	0	0	0	-12	-12	-3
Public order and safety	0	0	0	-12	-12	33
Economic affairs
Enterprise and economic development	-2	-45	0	24	-23	533
Science and technology	0	0	0	4	4	1
Employment policies	0	0	0	10	10	0
Agriculture, forestry and fisheries	51	-20	2	-4	28	-11
Transport	-60	-5	46	-265	-283	81
Environment protection	0	21	0	2	23	-129
Housing and community amenities	0	22	-1	0	21	-410
Health	0	0	0	-22	-21	-24
Recreation, culture and religion	0	54	0	13	66	222
Education and training	0	172	0	-12	160	-1,374
Social protection	1	-290	0	364	75	78
EU Transactions	0	0	0	-34	-34	0
Accounting adjustments	1,534	0	118	232	1,884	24,934
Total revision	1,524	-177	165	1,748	3,260	41,670

Revisions to Estimates of Capital Consumption

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

Table B.6: Revisions to capital consumption: 2015-16 to 2018-19

	£ million
	2015-16	2016-17	2017-18	2018-19
Scotland
Estimates published in GERS 2018-19	4,338	4,356	4,376	4,359
Estimates published in GERS 2019-20	5,343	5,431	5,408	5,970
Revision	1,005	1,075	1,032	1,611

In general, capital consumption in all years has been revised up in all years, reflecting the new methodology discussed above.

Unlike for public corporations’ expenditure and operating surplus, detailed capital consumption data are not available on a public corporation basis from the ONS, as they are not separately identified within its perpetual inventory model.

Revisions to Fiscal Aggregates

Table B.7 shows revisions to the current budget balance from the previous publication of GERS. The UK and Scottish current budget deficits have increased in all years. This reflects the increases to capital consumption discussed above.

Table B.7: Revisions to Estimates of the Current Budget Balance: 2015-16 to 2018‑19

	£ million
	2015-16	2016-17	2017-18	2018-19
Estimates published in GERS 2018-19
Excluding North Sea revenue	-12,677	-11,030	-10,744	-9,376
Including North Sea revenue (per capita share)	-12,684	-11,027	-10,638	-9,275
Including North Sea revenue (geographical share)	-12,627	-10,764	-9,318	-7,947
UK	-37,766	-6,416	861	18,121
Estimates published in GERS 2019-20
Excluding North Sea revenue	-14,083	-12,308	-11,749	-11,520
Including North Sea revenue (per capita share)	-14,090	-12,306	-11,643	-11,422
Including North Sea revenue (geographical share)	-14,400	-12,151	-10,609	-10,154
UK	-48,053	-17,237	-12,153	3,519
Difference (£ million) (positive shows improvement)
Excluding North Sea revenue	-1,406	-1,278	-1,005	-2,144
Including North Sea revenue (per capita share)	-1,406	-1,279	-1,005	-2,147
Including North Sea revenue (geographical share)	-1,773	-1,387	-1,291	-2,207
UK	-10,287	-10,821	-13,014	-14,602

Table B.8 shows revisions to the net fiscal balance from the previous publication of GERS. In general, these are much smaller than the revisions to the current budget balance for Scotland, reflecting that the majority of changes are net fiscal balance neutral, and that the revisions to student loans have a smaller impact in Scotland. Revisions are larger for the UK, primarily due to the larger impact of student loans on UK spending.

Table B.8: Revisions to Estimates of the Net Fiscal Balance: 2015-16 to 2018-19

	£ million
	2015-16	2016-17	2017-18	2018-19
Estimates published in GERS 2018-19
Excluding North Sea revenue	-15,535	-15,187	-15,192	-14,060
Including North Sea revenue (per capita share)	-15,542	-15,184	-15,085	-13,958
Including North Sea revenue (geographical share)	-15,484	-14,921	-13,766	-12,630
UK	-71,840	-44,878	-41,796	-23,533
Estimates published in GERS 2019-20
Excluding North Sea revenue	-16,073	-15,629	-15,391	-14,521
Including North Sea revenue (per capita share)	-16,080	-15,626	-15,285	-14,424
Including North Sea revenue (geographical share)	-16,390	-15,472	-14,250	-13,155
UK	-81,167	-56,008	-56,489	-40,643
Difference (£ million) (positive shows improvement)
Excluding North Sea revenue	-538	-442	-199	-461
Including North Sea revenue (per capita share)	-538	-442	-200	-466
Including North Sea revenue (geographical share)	-906	-551	-484	-525
UK	-9,327	-11,130	-14,693	-17,110

In addition to revisions to the fiscal aggregates in cash terms, there are also changes to the fiscal aggregates expressed as a share of GDP due to revisions to GDP estimates. These are shown in Tables B.9 and B.10 for the current budget balance and the net fiscal balance respectively. If there had been no revisions to estimates of the fiscal aggregates in cash terms, previous estimates of the balances as a share of GDP would generally have been unchanged, apart from those including the geographical share of the North Sea. This reflects the downward revision to the nominal value of North Sea GDP made in the Quarterly National Accounts Scotland for 2019Q3. This was a routine annual update to bring the value of GVA for the offshore oil and gas industry in line with the latest UK national accounts.

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

	2015-16	2016-17	2017-18	2018-19
Estimates published in GERS 2018-19	% of GDP
Excluding North Sea revenue	-8.6%	-7.2%	-6.8%	-5.7%
Including North Sea revenue (population share)	-8.5%	-7.2%	-6.7%	-5.6%
Including North Sea revenue (geographical share)	-7.9%	-6.6%	-5.5%	-4.4%
UK	-2.0%	-0.4%	0.0%	0.8%
GERS 2018-19 estimate with latest GDP estimates	% of GDP
Excluding North Sea revenue	-8.6%	-7.2%	-6.8%	-5.7%
Including North Sea revenue (population share)	-8.6%	-7.2%	-6.7%	-5.6%
Including North Sea revenue (geographical share)	-8.2%	-6.7%	-5.6%	-4.5%
UK	-2.0%	-0.3%	0.0%	0.8%
Change (positive denotes improvement)	% point difference
Excluding North Sea revenue	0.0%	0.0%	0.0%	0.0%
Including North Sea revenue (population share)	0.0%	0.0%	0.0%	0.0%
Including North Sea revenue (geographical share)	-0.2%	-0.1%	-0.1%	-0.1%
UK	0.0%	0.0%	0.0%	0.0%

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

	2015-16	2016-17	2017-18	2018-19
Estimates published in GERS 2018-19	% of GDP
Excluding North Sea revenue	-10.6%	-9.9%	-9.6%	-8.5%
Including North Sea revenue (population share)	-10.5%	-9.9%	-9.5%	-8.4%
Including North Sea revenue (geographical share)	-10.0%	-9.3%	-8.3%	-7.1%
UK	-3.7%	-2.2%	-2.0%	-1.1%
GERS 2018-19 estimate with latest GDP estimates	% of GDP
Excluding North Sea revenue	-10.7%	-10.5%	-9.7%	-9.3%
Including North Sea revenue (population share)	-10.5%	-10.5%	-9.6%	-9.2%
Including North Sea revenue (geographical share)	-8.9%	-9.7%	-8.9%	-7.9%
UK	-4.9%	-3.8%	-2.3%	-1.9%
Change (positive denotes improvement)	% point difference
Excluding North Sea revenue	0.0%	0.0%	0.0%	0.0%
Including North Sea revenue (population share)	-0.1%	0.0%	0.0%	0.0%
Including North Sea revenue (geographical share)	-0.3%	-0.2%	-0.2%	-0.2%
UK	0.1%	0.1%	0.0%	0.0%