Government Expenditure and Revenue in Scotland (GERS): 2018 to 2019

Annex A: Supplementary Tables

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

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

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

	2014-15	2015-16	2016-17	2017-18	2018-19
Scotland	5,354	5,381	5,410	5,428	5,438
UK	64,725	65,245	65,746	66,139	66,436
As % of UK total	8.3%	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 2018‑19 population is estimated as three-quarters of the 2018 population plus one quarter of the 2019 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
	2014-15	2015-16	2016-17	2017-18	2018-19
Current Budget
Current revenue
Excluding North Sea revenue	53,034	53,805	56,245	58,327	61,278
Including North Sea revenue (population share)	53,174	53,798	56,248	58,433	61,380
Including North Sea revenue (geographical share)	54,411	53,855	56,511	59,752	62,708
Current expenditure	61,301	62,143	62,919	64,694	66,296
Capital consumption	4,388	4,338	4,356	4,376	4,359
Balance on current budget
(surplus is positive, deficit is negative)
Excluding North Sea revenue	-12,655	-12,677	-11,030	-10,744	-9,376
Including North Sea revenue (population share)	-12,515	-12,684	-11,027	-10,638	-9,275
Including North Sea revenue (geographical share)	-11,278	-12,627	-10,764	-9,318	-7,947
Capital Budget
Capital expenditure	7,102	7,196	8,513	8,824	9,042
Capital consumption	-4,388	-4,338	-4,356	-4,376	-4,359
Net Investment	2,714	2,858	4,157	4,448	4,683
Net Fiscal Balance (surplus is positive, deficit is negative)
Excluding North Sea revenue	-15,369	-15,535	-15,187	-15,192	-14,060
Including North Sea revenue (population share)	-15,229	-15,542	-15,184	-15,085	-13,958
Including North Sea revenue (geographical share)	-13,992	-15,484	-14,921	-13,766	-12,630

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
	2014-15	2015-16	2016-17	2017-18	2018-19
Scottish GDP
Excluding North Sea and share of UK extra-regio	146,222	147,446	152,702	158,282	164,639
Including North Sea (population share)	147,742	148,806	153,898	159,688	166,418
Including North Sea (geographical share)	159,963	159,432	163,281	170,866	180,829
UK GDP	1,855,049	1,912,472	1,989,398	2,067,387	2,135,752

Source: Quarterly National Accounts Scotland, https://www.gov.scot/Topics/Statistics/Browse/Economy/QNAS; 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
	2014-15	2015-16	2016-17	2017-18	2018-19
Net Fiscal Balance
Excluding North Sea revenue	-16,069	-15,874	-15,788	-15,167	-14,829
Including North Sea revenue (per capita share)	-15,846	-15,870	-15,818	-15,069	-14,730
Including North Sea revenue (geographical share)	-13,966	-15,718	-15,875	-13,807	-13,413
UK	-98,577	-79,556	-56,967	-37,568	-32,217
	As % of GDP
Excluding North Sea revenue	-11.0%	-10.8%	-10.4%	-9.7%	-9.1%
Including North Sea revenue (per capita share)	-10.7%	-10.7%	-10.4%	-9.5%	-8.9%
Including North Sea revenue (geographical share)	-8.7%	-9.9%	-9.8%	-8.2%	-7.5%
UK	-5.3%	-4.2%	-2.9%	-1.8%	-1.5%

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	10,949	10,763	11,135	+/-186	+/-1.7%
VAT1	11,153	10,908	11,399	+/-245	+/-2.2%
Tobacco duties	1,102	1,083	1,121	+/-19	+/-1.7%
Alcohol duties	1,179	1,084	1,273	+/-94	+/-8%
Betting and gaming duties	223	220	226	+/-3	+/-1.4%
Insurance premium tax	405	397	413	+/-8	+/-2%
Total survey based apportionments	25,011	24,455	25,567	+/-556	+/-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 2019.

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 2018 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 and this GERS report, a small number of supplementary amendments to the CRA 2018 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 http://www.gov.scot/Topics/Statistics/Browse/Economy/GERS/Methodology.

As the CRA for 2018-19 is not yet published, there are no formal amendments to individual spending lines in 2018-19. The 2017-18 adjustments are in effect carried forward into 2018‑19, adjusted for the spending of the responsible department. Further detail is provided in the expenditure methodology note.

Previous editions of GERS have included amendments to the estimates of local government spending those published in PESA. No adjustments are required in this year's publication.

Table A.6: Amendments to Estimates of Total Public Sector Expenditure on Services from CRA 2017

	£ million
	2014-15	2015-16	2016-17	2017-18	2018-19
Amendments from the CRA
Nuclear-related expenditure	-54	-50	-59	-57	-
London Olympics	-17	0	0	0	-
Pensions revisions	-19	-19	-19	-20	-
Other minor revisions	-49	-33	-68	-67	-
Amendments from PESA
Local Government spending	-	-	-	-	-
Total CRA amendments	-139	-102	-146	-144	-
Total PESA amendments	-	-	-		-

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
	2014-15	2015-16	2016-17	2017-18	2018-19
UK total managed expenditure (TME)	750,445	756,767	771,954	794,869	810,027
UK total expenditure on services (TES)	688,390	702,154	710,524	733,350	756,232
UK accounting adjustment	62,055	54,613	61,430	61,519	53,795
of which current expenditure:
Central government capital consumption	17,944	18,313	18,313	18,501	18,558
Local government capital consumption	10,534	11,038	11,539	12,036	12,525
Current VAT refunds	11,517	11,826	11,956	15,159	17,041
Imputed subsidy from Local Authorities to the Housing Revenue Account1	588	650	880	1,183	1,520
Imputed flows for Renewable Obligation Certificates 2	3,064	3,900	4,672	5,424	6,124
Local authority pensions	200	400	200	100	100
Network Rail	1,002	0	0	0	0
British Transport Police Service Agreements	133	150	145	145	145
Current expenditure residual	5,298	-1,104	1,238	-519	-4,195
of which capital expenditure:
Capital VAT refunds	2,085	2,186	1,779	2,081	1,225
Network Rail	2,261	0	0	0	0
Housing associations	7,752	5,486	7,386	6,330	832
Capital expenditure residual	-322	1,768	3,322	1,078	-81

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
	2014-15	2015-16	2016-17	2017-18	2018-19
Scottish total managed expenditure (TME)	68,403	69,339	71,432	73,518	75,338
Scottish total expenditure on services (TES)	63,552	64,939	66,169	68,123	70,254
Scottish accounting adjustment	4,851	4,400	5,262	5,395	5,084
Percentage of UK accounting adjustment	7.8%	8.1%	8.6%	8.8%	9.5%
Of which current expenditure:
Central government capital consumption	1,364	1,314	1,383	1,394	1,401
Local government capital consumption	1,054	1,099	1,152	1,207	1,255
Current VAT refunds	1,010	1,058	1,077	1,366	1,532
Imputed subsidy from Local Authorities to the Housing Revenue Account1	46	50	67	90	116
Imputed flows for Renewable Obligation Certificates2	364	463	554	644	727
Local authority pensions	18	37	19	9	9
Network Rail	24	0	0	0	0
British Transport Police Service Agreements	11	13	12	9	9
Current expenditure residual	438	-91	102	-43	-345
Of which capital expenditure:
Capital VAT refunds	183	196	160	187	110
Network Rail	-100	0	0	0	0
Housing associations	468	118	463	443	276
Capital expenditure residual	-28	145	273	89	-7

^{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, 2018-19

	Expenditure AA	Revenue AA	Revenue line
Of which current expenditure:	£ million
Central government capital consumption	1,401	1,401	Gross operating surplus
Local government capital consumption	1,255	1,255	Gross operating surplus
Current VAT refunds	1,532	1,532	VAT
Imputed subsidy from Local Authorities to the Housing Revenue Account	116	-	n/a
Imputed flows for Renewable Obligation Certificates	727	727	Other taxes, royalties, and adjustments
Local authority pensions	9	-	n/a
British Transport Police Service Agreements	9	9	Other taxes, royalties, and adjustments
Current expenditure residual	-345	-	n/a
Of which capital expenditure:
Capital VAT refunds	110	110	VAT
Network Rail	0	-	n/a
Royal Mail Pension Plan	0	-	n/a
Housing associations	276	-	n/a
Capital expenditure residual	-7	-	n/a
Total accounting adjustments	5,084	5,034

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 pensions expenditure as the difference between monies paid into the pension fund and monies paid out, 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 2017-18 rather than 2018-19, as this is the latest year for which published accounts are available for both the Scottish Government and Scottish local government. 2018-19 figures in GERS are based on provisional outturn estimates.

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

	£ billion
	2017-18
Scottish Government
Published Scottish Government budget1	39.2
Spending by Audit Scotland and Scottish Parliament	0.1
Public corporation (PC) capital spending	0.5
Timing differences	-0.3
Total Scottish Government & associated PC expenditure	39.5
Adjustments to align budget to CRA measure of spending
Grants to other public sector bodies (e.g. local government)	-10.5
Pensions	-4.4
Depreciation	-0.7
Financial transactions associated with student loans and public corporations	-1.1
Adjustments to move from spend 'in' Scotland to spend 'for' Scotland2	-0.1
Other	0.3
Final Scottish Government & PC expenditure on services for Scotland	23.0
Scottish Local Government
Published Local Government gross current expenditure3	12.9
Income excluding grants from Central Government4	-2.3
Housing benefit	1.7
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	15.1
Scottish Government, Local Government, & PC expenditure on services for Scotland	38.1
National Accounts adjustments7
Capital consumption	2.6
VAT refunds	0.1
Other accounting adjustments	2.0
Final Scottish Government, Scottish Local Government & PC TME	42.8

¹ Scottish Government Budget 2019-20 Annex E

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 2017-18, 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 2017-18, Annex G. All services total gross capital expenditure

⁶ Scottish Local Government Finance Statistics 2017-18, Annex I. Total capital receipts used from asset sales/disposals

⁷ See Table A.8