Government Expenditure & Revenue Scotland (GERS) 2021-22

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

This document is part of a collection


Chapter 3 Public Sector Expenditure

Total Public Sector Expenditure: Scotland 2021-22
A breakdown of areas of public sector expenditure by spending category

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 2021-22 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.

Economy statistics - gov.scot (www.gov.scot)

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 2021-22 is estimated to be £97.5 billion, a decrease of 1.0% from 2020-21. This fall in spending, the first time spending has fallen in cash terms since 2013-14, reflects the beginning of the scaling back of the response to the coronavirus pandemic, which 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.

Table 3.1 shows a breakdown of spending by category.

Table 3.1: Total Expenditure: Scotland 2021-22
Scotland
£ million % of total expenditure
General public services
Public and common services 3,218 3.3%
International services 664 0.7%
Reserved public sector debt interest 4,527 4.6%
Local government pension fund interest expenditure 2,335 2.4%
Defence 3,958 4.1%
Public order and safety 3,731 3.8%
Economic affairs
Enterprise and economic development 3,369 3.5%
Science and technology 776 0.8%
Employment policies 315 0.3%
Agriculture, forestry and fisheries 861 0.9%
Transport 4,480 4.6%
Environment protection 1,537 1.6%
Housing and community amenities 2,624 2.7%
Health 18,488 19.0%
Recreation, culture and religion 1,509 1.5%
Education and training 9,632 9.9%
Social protection 26,076 26.7%
EU transactions -156 -0.2%
Accounting adjustments 9,557 9.8%
Total Expenditure 97,502 100%

Table 3.2 below shows growth in current and capital spend in Scotland by organization in 2021-22, compared to the UK. Spending fell more slowly in Scotland than the UK as a whole in 2021-22. This is primarily due to increased capital spending in Scotland offsetting falls in current spending. The increases in capital spending are driven by increases by local authorities, including ring-fenced local authority spending on housing which is reported as public corporation spending in GERS (the 'Housing Revenue Account').

Box 3.1: 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 £8.8 billion in 2020-21 and £5.7 billion in 2021-22 response to the health, economic, and social challenges caused by the coronavirus pandemic.[23] Whilst this is captured in the Scottish Government spending figures in GERS, it is not separately identifiable from non-pandemic related spend.

The table below summarises some of the key Scottish Government spend in response to coronavirus. This spending has been primarily delivered via grants to local authorities, which means that it cannot be directly reported using the categories of spend used in GERS. Further detail is set out at:

Scotland's financial response to Covid-19 | Audit Scotland (audit-scotland.gov.uk)

Scottish Government spending in response to coronavirus (£ million)
2020-21 2021-22
Grants to local councils 4,292 1,500
Health and social care 2,755 2,642
Transport 646 470
Other 1,084 1,122
Total 8,777 5,734

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. Further details are on these schemes was set out in Box 3.1 of last year's edition of GERS.

An additional element of reserved spending is included this year, in the form of coronavirus business loans. The spending here is currently shown only for 2020-21, and represents the value of loans issued in this year which is not expected to be repaid.

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, with smaller schemes such as the Eat Out to Help Out scheme not included.

Major reserved coronavirus spending for Scotland (£ millions)
2020-21 2021-22 Scottish share
Coronavirus Job Retention Scheme1 4,710 860 8.1%
Self-employment Income Support Scheme1 1,195 515 6.1%
Coronavirus business loans2 1,213 5.9%
Welfare spending3 1,349 1,402 6.9%
Health spending4 945 886 7.2%
Total 9,412 3,664 7.2%

Sources:

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

2 HM Treasury Country and Regional Analysis. Includes Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS) and the Bounce Back Loan Scheme (BBLS)

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

4 2020-21: National Audit Office Coronavirus cost tracker, Scottish Government calculations. 2021-22: OSCAR in-year spend data, Scottish Government calculations. UK spending includes some elements which are not reserved, leading to Scottish share being below a population share.

Table 3.2: Expenditure growth: 2020-21 to 2021-22 (£ million)
Scotland
2020-21 2021-22 Growth UK growth
Current expenditure 87,552 85,628 -2.2% -3.9%
Scottish Government 36,396 37,230 2.3% 2.3%
Local Government 16,025 16,315 1.8% -7.6%
Public Corporations - - - -
Other UK Government bodies 35,131 32,083 -8.7% -3.0%
Capital expenditure 10,887 11,874 9.1% -4.9%
Scottish Government 3,822 3,939 3.0% 3.0%
Local Government 1,853 2,492 34.5% 9.2%
Public Corporations 1,135 1,605 41.3% 31.4%
Other UK Government bodies 4,076 3,839 -5.8% -11.6%
Total expenditure 98,439 97,502 -1.0% -4.0%
Scottish Government 40,219 41,169 2.4% 2.4%
Local Government 17,878 18,807 5.2% -6.1%
Public Corporations 1,135 1,605 41.3% 31.4%
Other UK Government bodies 39,207 35,921 -8.4% -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. 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. As noted above, increased capital spending by local authorities has offset falling current expenditure, and leads to an increase in capital spending as a share of overall spending.

Table 3.3: Current and Capital Expenditure (% of Total Expenditure): Scotland
per cent
2017-18 2018-19 2019-20 2020-21 2021-22
Current 88.6% 88.7% 89.0% 88.9% 87.8%
Capital 11.4% 11.3% 11.0% 11.1% 12.2%

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 fallen to 56.1% in 2021-22, although it remains around 5 percentage points higher than before the pandemic.

Although overall spending in Scotland fell more slowly than for the UK in 2021-22, spending as a share of GDP fell faster. This reflects faster nominal GDP growth in Scotland in 2021‑22.

Table 3.4: Total Managed Expenditure as a Share of GDP
per cent of GDP
2017-18 2018-19 2019-20 2020-21 2021-22
Scottish TME as a Share of GDP:
Excluding North Sea GDP 48.9% 48.8% 49.2% 64.8% 56.1%
Including population share of North Sea GDP 48.5% 48.3% 48.8% 64.5% 55.5%
Including geographical share of North Sea GDP 45.6% 44.4% 45.4% 62.3% 50.6%
UK TME as a share of GDP:
100% of North Sea GDP 39.6% 39.0% 39.1% 51.6% 44.6%

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 increased in 2021-22, with spend per person 12.4% points higher. This increase reflects the reduction of spending in response to the coronavirus pandemic, where Scotland broadly received a population increase of UK spending. As this spending comes to an end, the difference between Scottish and UK spending should return to pre-pandemic levels.

As noted previously, water and sewerage services are provided by the public sector in Scotland, but by the private sector in England and Wales, leading to relatively higher spending in Scotland. This explains slightly less than one percentage point of the difference in spend.

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
2017-18 2018-19 2019-20 2020-21 2021-22
Scotland 14,257 14,608 15,000 17,998 17,793
UK 12,647 12,887 13,222 16,468 15,830
Difference (Scotland minus UK) 1,610 1,721 1,778 1,530 1,963
Difference between Scottish and UK 12.7% 13.4% 13.4% 9.3% 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 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)
2017-18 2018-19 2019-20 2020-21 2021-22
Social security spending in Scotland
State pension 7,919 8,154 8,313 8,501 8,715
Housing benefit 1,671 1,588 1,441 1,380 1,286
Universal credit 313 766 1,486 2,909 3,016
Other DWP social security 5,749 5,682 5,476 2,719 3,660
HMRC child benefit and tax credits 2,681 2,380 2,076 1,832 1,540
Scottish Government social security 419 745 830 3,892 4,015
Social security spending in Scotland 18,752 19,316 19,622 21,233 22,231
Share of benefit spending outside 340 352 358 366 372
Share of corporate spend 249 270 234 294 370
Other social protection
Net public sector pensions 735 935 356 242 163
Social care for the elderly 2,178 2,290 2,477 2,611 2,752
Other 1,063 1,060 1,112 1,353 189
Total social protection 23,317 24,221 24,159 26,099 26,076

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.

Benefit expenditure and caseload tables - GOV.UK (www.gov.uk)

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 2017-18 to 2021-22
£ million
Current Capital Total
2017-18 2018-19 2019-20 2020-21 2021-22 2017-18 2018-19 2019-20 2020-21 2021-22 2017-18 2018-19 2019-20 2020-21 2021-22
General public services
Public and common services 1,298 1,354 1,903 1,784 2,821 350 265 238 335 397 1,648 1,619 2,140 2,118 3,218
International services 755 737 815 739 538 103 236 144 177 126 858 973 959 916 664
Public sector interest expenditure 5,458 5,025 4,871 4,301 6,862 0 0 0 0 0 5,458 5,025 4,871 4,301 6,862
Defence 2,332 2,408 2,563 2,622 2,679 844 885 890 1,005 1,280 3,176 3,293 3,454 3,627 3,958
Public order and safety 2,716 2,845 3,011 3,186 3,519 130 140 158 222 212 2,846 2,985 3,168 3,408 3,731
Economic affairs
Enterprise and economic development 815 904 1,077 7,715 3,003 366 500 486 1,650 366 1,181 1,403 1,562 9,365 3,369
Science and technology 181 186 182 188 199 304 332 347 590 576 485 518 529 778 776
Employment policies 228 242 177 191 306 8 4 0 6 9 237 246 177 197 315
Agriculture, forestry and fisheries 794 814 810 805 704 121 112 94 120 157 916 926 904 925 861
Transport 1,665 1,704 1,836 2,644 2,267 1,890 1,723 1,878 1,961 2,213 3,555 3,427 3,714 4,605 4,480
Environment protection 893 906 919 927 988 330 354 524 532 549 1,223 1,260 1,443 1,459 1,537
Housing and community amenities 159 213 137 216 269 1,689 2,012 2,184 1,870 2,354 1,848 2,225 2,321 2,086 2,624
Health 12,328 12,596 13,301 17,428 17,764 475 486 466 621 725 12,803 13,082 13,767 18,049 18,488
Recreation, culture and religion 1,061 1,169 1,115 1,265 1,252 255 235 238 201 257 1,316 1,404 1,353 1,466 1,509
Education and training 7,499 7,883 8,388 8,946 8,589 995 765 870 1,120 1,043 8,494 8,648 9,258 10,066 9,632
Social protection 23,259 24,135 24,048 25,972 25,920 58 86 111 126 156 23,317 24,221 24,159 26,099 26,076
EU Transactions 415 600 473 595 -156 0 0 0 0 0 415 600 473 595 -156
Accounting adjustments 6,695 6,799 7,292 8,029 8,104 917 878 417 351 1,453 7,612 7,677 7,709 8,380 9,557
Total 68,551 70,519 72,915 87,552 85,628 8,836 9,013 9,045 10,887 11,874 77,387 79,532 81,960 98,439 97,502
Table 3.7: Total Expenditure: UK 2017-18 to 2021-22
£ million
Current Capital Total
2017-18 2018-19 2019-20 2020-21 2021-22 2017-18 2018-19 2019-20 2020-21 2021-22 2017-18 2018-19 2019-20 2020-21 2021-22
General public services
Public and common services 10,098 10,220 11,809 15,205 24,455 2,381 2,576 2,657 3,385 3,199 12,479 12,796 14,466 18,590 27,655
International services 9,176 8,998 9,954 9,059 6,537 1,255 2,879 1,759 2,167 1,551 10,431 11,877 11,713 11,226 8,088
Public sector interest expenditure 60,064 54,542 52,933 41,822 72,848 0 0 0 0 0 60,064 54,542 52,933 41,822 72,848
Defence 28,399 29,422 31,358 32,247 32,901 10,271 10,816 10,887 12,335 15,707 38,670 40,238 42,245 44,582 48,608
Public order and safety 29,437 30,438 32,253 35,893 39,394 2,032 1,975 2,272 2,996 2,900 31,469 32,413 34,525 38,889 42,294
Economic affairs
Enterprise and economic development 7,300 9,382 13,894 108,105 35,239 2,687 3,777 3,312 22,172 -1,463 9,987 13,159 17,206 130,277 33,776
Science and technology 1,126 1,011 1,020 1,052 1,128 3,920 5,422 5,787 6,395 6,235 5,046 6,433 6,807 7,447 7,363
Employment policies 2,512 2,632 2,253 2,543 4,099 105 47 2 77 123 2,617 2,679 2,255 2,620 4,222
Agriculture, forestry and fisheries 4,784 5,344 5,405 5,800 5,483 394 390 398 519 926 5,178 5,734 5,803 6,319 6,409
Transport 9,967 11,963 13,030 26,478 19,187 20,365 20,713 21,570 23,323 26,041 30,332 32,676 34,600 49,801 45,228
Environment protection 7,274 7,377 7,909 8,523 8,983 4,529 3,685 3,912 4,435 4,898 11,803 11,062 11,821 12,958 13,881
Housing and community amenities 2,979 3,086 3,257 3,697 3,446 8,377 8,961 10,901 9,884 11,813 11,356 12,047 14,158 13,581 15,260
Health 141,033 145,899 156,509 204,993 207,572 6,304 7,019 7,630 13,576 9,212 147,337 152,918 164,139 218,569 216,784
Recreation, culture and religion 9,306 9,267 9,398 10,806 10,355 2,173 2,119 2,534 2,112 2,443 11,479 11,386 11,932 12,918 12,798
Education and training 77,088 79,051 82,248 86,215 91,009 8,967 8,999 8,365 9,309 9,241 86,055 88,050 90,613 95,524 100,250
Social protection 268,245 274,261 275,347 298,673 297,846 483 551 468 639 840 268,728 274,812 275,815 299,312 298,686
EU transactions 5,360 7,850 5,828 6,999 -1,830 0 0 0 0 0 5,360 7,850 5,828 6,999 -1,830
Accounting adjustments 68,912 70,040 75,301 81,254 82,860 19,146 16,594 11,959 11,611 25,122 88,058 86,634 87,260 92,866 107,982
Total 743,060 760,783 789,706 979,364 941,514 93,389 96,523 94,413 124,935 118,787 836,449 857,306 884,119 1,104,299 1,060,301
Table 3.8a: Total Current Expenditure: Scottish Government, Local Authorities, Public Corporations, and Other UK Government: Scotland 2017-18 to 2021-22
£ million
Scottish Government, LAs and Public Corporations Other UK Government Total
2017-18 2018-19 2019-20 2020-21 2021-22 2017-18 2018-19 2019-20 2020-21 2021-22 2017-18 2018-19 2019-20 2020-21 2021-22
General public services
Public and common services 835 906 1,385 1,176 1,474 463 448 518 607 1,347 1,298 1,354 1,903 1,784 2,821
International services 1 1 1 1 5 754 736 814 738 532 755 737 815 739 538
Public sector interest expenditure 1,731 1,825 1,767 2,293 2,335 3,727 3,200 3,104 2,008 4,527 5,458 5,025 4,871 4,301 6,862
Defence 3 3 3 6 3 2,329 2,405 2,560 2,616 2,676 2,332 2,408 2,563 2,622 2,679
Public order and safety 2,519 2,639 2,784 2,850 3,061 196 205 227 336 457 2,716 2,845 3,011 3,186 3,519
Economic affairs
Enterprise and econ development 495 496 473 791 663 320 408 603 6,924 2,340 815 904 1,077 7,715 3,003
Science and technology 3 0 2 1 1 178 186 180 187 198 181 186 182 188 199
Employment policies 0 0 0 0 0 228 242 177 191 306 228 242 177 191 306
Agriculture, forestry and fisheries 779 805 783 785 685 15 9 27 20 18 794 814 810 805 704
Transport 1,271 1,269 1,394 2,071 1,844 394 435 441 573 423 1,665 1,704 1,836 2,644 2,267
Environment protection 840 854 833 861 881 53 53 85 66 107 893 906 919 927 988
Housing and community amenities 159 213 137 216 269 0 0 0 0 0 159 213 137 216 269
Health 12,252 12,537 13,237 16,519 16,874 76 59 65 909 890 12,328 12,596 13,301 17,428 17,764
Recreation, culture and religion 718 816 752 954 937 344 353 363 310 315 1,061 1,169 1,115 1,265 1,252
Education and training 7,472 7,868 8,366 8,932 8,575 27 15 22 13 14 7,499 7,883 8,388 8,946 8,589
Social protection 5,255 5,742 5,457 8,681 9,190 18,004 18,393 18,591 17,291 16,730 23,259 24,135 24,048 25,972 25,920
EU transactions 0 0 0 0 0 415 600 473 595 -156 415 600 473 595 -156
Accounting adjustments 5,698 5,864 6,162 6,284 6,745 997 936 1,129 1,745 1,359 6,695 6,799 7,292 8,029 8,104
Total 40,031 41,836 43,535 52,421 53,546 28,520 28,683 29,380 35,131 32,083 68,551 70,519 72,915 87,552 85,628
Table 3.8b: Total Capital Expenditure: Scottish Government, Local Authorities, Public Corporations, and Other UK Government: Scotland 2017-18 to 2021-22
£ million
Scottish Government, LAs and Public Corporations Other UK Government Total
2017-18 2018-19 2019-20 2020-21 2021-22 2017-18 2018-19 2019-20 2020-21 2021-22 2017-18 2018-19 2019-20 2020-21 2021-22
General public services
Public and common services 254 169 138 214 312 96 96 100 121 85 350 265 238 335 397
International services 0 0 0 0 0 103 236 144 177 126 103 236 144 177 126
Public sector interest expenditure 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Defence 0 0 0 0 0 844 885 890 1,005 1,280 844 885 890 1,005 1,280
Public order and safety 107 117 128 179 184 23 23 30 42 28 130 140 158 222 212
Economic affairs
Enterprise and econ development 355 476 457 478 520 11 24 29 1,172 -154 366 500 486 1,650 366
Science and technology 0 2 0 0 0 304 330 347 590 576 304 332 347 590 576
Employment policies 0 0 0 0 0 8 4 0 6 9 8 4 0 6 9
Agriculture, forestry and fisheries 122 110 91 119 152 0 2 3 2 5 121 112 94 120 157
Transport 1,247 1,197 1,371 1,337 1,648 643 526 508 624 565 1,890 1,723 1,878 1,961 2,213
Environment protection 85 144 324 313 319 244 210 200 219 230 330 354 524 532 549
Housing and community amenities 1,689 2,012 2,184 1,870 2,354 0 0 0 0 0 1,689 2,012 2,184 1,870 2,354
Health 408 465 450 455 665 68 21 16 166 60 475 486 466 621 725
Recreation, culture and religion 196 183 173 160 216 59 53 65 41 41 255 235 238 201 257
Education and training 995 764 869 1,120 1,043 0 1 0 0 0 995 765 870 1,120 1,043
Social protection 40 73 112 108 144 18 13 -1 18 12 58 86 111 126 156
EU transactions 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Accounting adjustments 793 581 406 457 478 124 297 11 -106 974 917 878 417 351 1,453
Total 6,291 6,294 6,704 6,811 8,035 2,545 2,719 2,341 4,076 3,839 8,836 9,013 9,045 10,887 11,874

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. These transactions largely ended in 2021-22, but as per the Withdrawal Agreement, it continues to makes payments for its outstanding commitments through the EU Financial Settlement. However, these payments are not scored as EU transactions, but instead are classed as spending on public and common services. Scotland is allocated a population share of this spending in GERS, and this is reflected in an increase in Other UK Government current expenditure on public and common services in Table 3.8a above.

Further details on the EU Financial Settlement are available from:

Brexit: the financial settlement - a summary - House of Commons Library (parliament.uk)

Scotland did not contribute directly to the EU budget. In GERS, Scotland is assigned an estimated share of the UK contribution. In contrast, Scotland received 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.

Funding the EU Budget

There are three key sources of funding for the EU, which come from each member state:[24]

  • 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 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, 2017-18 to 2021-22 (£ million)
Scotland UK
2017-18 2018-19 2019-20 2020-21 2021-22 2017-18 2018-19 2019-20 2020-21 2021-22
GNI based contribution 966 1,195 1,064 887 11 11,761 14,599 13,003 12,762 139
UK abatement -374 -397 -339 -279 15 -4,547 -4,846 -4,149 -3,785 181
VAT-based contribution to the EU 244 257 220 183 -0 2,974 3,138 2,696 1,954 -4
Expenditure transfers to the EU 837 1,055 945 791 26 10,188 12,892 11,549 10,930 315
Receipts to cover collection costs of TOR -57 -54 -54 -39 -1 -698 -664 -663 -585 -10
TOR 280 270 271 220 4 3,413 3,304 3,320 2,695 49
EU Financial Settlement (EUFS) net payments -20 665 -249 8,124
Gross contribution to the EU budget 1,060 1,271 1,162 972 29 12,903 15,531 14,206 12,791 8,478
Public sector EU receipts -364 -401 -418 -157 -180 -4,130 -4,378 -5,059 -3,346 -2,136
Net contributions to the EU budget 695 870 744 815 -151 8,773 11,154 9,147 9,445 6,343
EU transactions (net contributions to EU institutions less TOR and EUFS) 415 600 473 595 -155 5,360 7,850 5,827 6,999 -1,830

Box 3.3: 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:

Infrastructure investment - Government finance - gov.scot (www.gov.scot)

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 2021-22 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, 2017-18 to 2021-22
£ million
2017-18 2018-19 2019-20 2020-21 2021-22
By scheme type
Private Finance Initiative 1,013 1,027 1,046 1,060 1,063
Non-Profit Distributing models1 189 262 330 353 360
Total Unitary Charge payments 1,202 1,289 1,376 1,413 1,423
By procuring authority
Further Education 35 35 35 35 36
Local Government 548 585 606 640 641
NHS 273 298 327 340 349
Other Scottish Government 169 191 224 213 214
Ministry of Defence 26 26 24 22 21
Scottish Water 151 155 160 162 162
Total Unitary Charge payments 1,202 1,289 1,376 1,413 1,423
By sector of project
Energy 5 - - - -
Further Education 35 35 35 35 36
Health 273 298 327 340 349
IT - - - - -
Ministry of Defence 26 26 24 22 21
Offices 3 3 3 3 3
Police 4 5 5 5 5
Prisons 47 48 50 52 52
Schools 502 545 565 599 600
Transport 138 158 190 177 178
Waste 169 172 178 180 180
Total Unitary Charge payments 1,202 1,289 1,376 1,413 1,423
UK Total Unitary Charge Payments 10,773 10,158 10,212 10,045 9,896
Scotland as % UK 11.2% 12.7% 13.5% 14.1% 14.4%

1 Non-profit distributing models includes projects delivered by the hub model and projects commissioned prior to 2010. Further detail is available at: Infrastructure investment - Government finance - gov.scot (www.gov.scot)

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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