of 93
Current View
GOVERNMENT
EXPENDITURE & REVENUE
SCOTLAND 2011-2012
MARCH 2013
GOVERNMENT
EXPENDITURE & REVENUE
SCOTLAND 2011-2012
MARCH 2013
The Scottish Government, Edinburgh 2013
© Crown copyright 2013
You may re-use this information (excluding logos
and images
) free of charge in any for
mat or medium, under the terms of the Open Government Licence. To view this licence,
visit
http://www.nationalarchives.gov.uk/doc/open-government-licence/
or e-mail:
psi@nationalarchives.gsi.gov.uk
.
Where we have identified any third party copyright information you will need to
obtain permission from the copyright holders concerned.
This document is also available from our website at
www.scotland.gov.uk
.
ISBN: 978-1-78256-417-1
The Scottish Government
St Andrew’s House
Edinburgh
EH1 3DG
Produced for the Scottish Government by APS
Group
Scotland
DPPAS13832 (03/13)
Published by the Scottish Government, March 2013
Further copies of this publication can be obtained from:
Office of the Chief Economic Adviser
Scottish
Government
St Andrew’s House
Regent Road
Edinburgh
EH1 3DG
The text pages of this document are printed on recycled paper and are 100% recyclable.
Government Expenditure and Revenue Scotland 2011-12 1
CONTENTS
 
Executive Summary 5
 
Preface
7
 
Chapter 1
 
Introduction and Overview 11
 
Chapter 2
 
Scotland’s Public Sector Accounts 13
 
Chapter 3
 
Public Sector Revenue 25
 
Chapter 4
 
North Sea Revenue 33
 
Chapter 5
 
Public Sector Expenditure 39
 
Chapter 6
 
Conclusion 63
 
Annex A
 
Revenue Methodology 65
 
Annex B
 
Expenditure Methedology 73
 
Annex C
  
List of Abbreviations 83
 
Annex D
 
Glossary 85
 
2 Government Expenditure and Revenue Scotland 2011-12
LIST OF TABLES
Executive Summary
E.1: Total Current Revenue: Scotland 2007-08 to 2011-12 5
E.2: Public Sector Total Expenditure: Scotland 2007-08 to 2011-12 5
E.3: Current Budget Balance: Scotland and UK 2007-08 to 2011-12 6
E.4: Net Fiscal Balance: Scotland and UK 2007-08 to 2011-12 6
Scotland's Public Sector Accounts
2.1: Current and Capital Budgets: Scotland 2007-08 to 2011-12 15
2.2a: Current and Capital Budgets (Excluding North Sea Revenue) % GDP 16
2.2b: Current and Capital Budgets (Per Capita Share North Sea Revenue) % GDP 16
2.2c: Current and Capital Budgets (Geographical Share North Sea Revenue) % GDP 17
2.3: Summary of Current Revenue: Scotland 2007-08 to 2011-12 21
2.4: Total Expenditure: Scotland and UK 2007-08 to 2011-12 22
2.5: Summary of Public Sector Expenditure: Scotland 2007-08 to 2011-12 22
Public Sector Revenue
3.1: Current Revenue: Scotland 2011-12 26
3.2: Non-North Sea Current Revenue: Scotland as Share of UK 2007-08 to 2011-12 28
3.3: Current Revenue: Scotland and UK 2007-08 to 2011-12 30
3.4: Existing Devolved Taxes Revenue: Scotland 2007-08 to 2011-12 31
3.5: Stamp Duty Land Tax Revenue: Scotland and UK 2007-08 to 2011-12 31
3.6: Landfill Tax Revenue: Scotland and UK 2007-08 to 2011-12 32
3.7: Scottish Rate of Income Tax Liabilities: Scotland 2007-08 to 2011-12 32
3.8: Devolved Taxes Revenue: Scotland 2007-08 to 2011-12 32
North Sea Revenue
4.1: Total North Sea Revenue: UK 1980-81 to 2011-12 34
4.2: Composition of North Sea Revenue: UK 2007-08 to 2011-12 34
4.3: Per Capita Share of North Sea Revenue: Scotland 2007-08 to 2011-12 35
4.4: Geographical Share of North Sea Revenue: Scotland 2007-08 to 2011-12 37
4.5: Current Revenue (Per Capita Share of North Sea Revenue): Scotland 2011-12 37
4.6: Current Revenue (Geographical Share of North Sea Revenue): Scotland 2011-12 37
List of tables
Government Expenditure and Revenue Scotland 2011-12 3
Public Sector Expenditure
5.1: Total Expenditure: Scotland 2011-12 41
5.2: Total Current and Capital Expenditure Scotland and UK 2007-08 to 2011-12 41
5.3: Current and Capital Expenditure (% of Total): Scotland 2007-08 to 2011-12 42
5.4: Total Expenditure: Scotland 2007-08 to 2011-12 43
5.5: Total Expenditure: UK 2007-08 to 2011-12 44
5.6: Total Expenditure Per Capita: Scotland and UK 2007-08 to 2011-12 45
5.7: Total Expenditure, Identifiable and Non-identifiable: Scotland 2007-08 to 2011-12 48
5.8: Total Identifiable Expenditure: Scotland 2007-08 to 2011-12 50
5.9: Identifiable Expenditure - Scottish Government and LAs: 2007-08 to 2011-12 51
5.10: Identifiable Expenditure - Other UK Government: Scotland 2007-08 to 2011-12 52
5.11: Identifiable Expenditure: Scotland and UK 2011-12 53
5.12: Non-Identifiable Expenditure: Scotland and UK 2007-08 to 2011-12 57
5.13: Non-Identifiable Expenditure: Scotland 2007-08 to 2011-12 58
5.14: Non-Identifiable Expenditure: UK 2007-08 to 2011-12 59
Revenue Methodology
A.1: Apportionment Methodologies and Sources for Public Sector Revenue in Scotland 67
A.2: Revisions to Estimates of Total Non-North Sea Public Sector Revenue 69
A.3: Revisions to Estimates of Public Sector Revenue: Scotland and UK 2010-11 70
Expenditure Methodology
B.1: Apportionment Methodologies for Non-Identifiable Expenditure: 2007-08 to 2011-12 74
B.2: Total Accounting Adjustment: Scotland and UK 2007-08 to 2011-12 76
B.3: Public Sector Finances Accounting Adjustment: UK 2007-08 to
2011-12 77
B.4: Public Sector Finances Accounting Adjustment: Scotland 2007-08 to 2011-12 78
B.5: Summary of Amendments to Public Sector Expenditure from PESA 2012 79
B.6: Amendments to Public Sector Expenditure from PESA 2012 79
B.7: Revisions to Estimates of Total Expenditure: Scotland 2007-08 to 2010-11 81
B.8: Revisions to Estimates of TME: Scotland 2007-08 to 2010-11 82
List of Tables
4 Government Expenditure and Revenue Scotland 2011-12
Government Expenditure and Revenue Scotland 2011-12 5
EXECUTIVE SUMMARY
Government Expenditure and Revenue Scotland (GERS) is a National Statistics
publication. It estimates the contribution of revenue raised in Scotland toward the goods
and services provided for the benefit of Scotland. The estimates in this publication are
consistent with the UK Public Sector Finances published in February 2013.
Three estimates of Scotland’s public sector accounts are presented in GERS,
(i) excluding North Sea revenue, (ii) including a per capita share of North Sea revenue
and (iii) including an illustrative geographical share of North Sea revenue.
Scottish Public Sector Revenue
Table E.1: Total Current Revenue: Scotland 2007-08 to 2011-12
(£ million)
2007-08 2008-09 2009-10 2010-11 2011-12
Excluding North Sea revenue
44,815 43,502 41,664 44,287 46,297
Including North Sea revenue (per capita share)
45,444 44,591 42,209 45,024 47,239
Including North Sea revenue (geographical share)
51,927 55,254 47,573 52,330 56,871
(% of Total UK Revenue)
Excluding North Sea revenue
8.3% 8.4% 8.2% 8.2% 8.2%
Including North Sea revenue (per capita share)
8.3% 8.4% 8.2% 8.2% 8.2%
Including North Sea revenue (geographical share)
9.5% 10.4% 9.3% 9.5% 9.9%
In 2011-12, total Scottish non-North Sea public sector revenue was estimated at
£46.3 billion, (8.2% of total UK non-North Sea revenue). Including a per capita share of
North Sea revenue, total Scottish public sector revenue was estimated at £47.2 billion
(8.2% of UK total public sector revenue). When an illustrative geographical share of
North Sea revenue is included, total Scottish public sector revenue was estimated at
£56.9 billion (9.9% of UK total public sector revenue).
Public Sector Expenditure for Scotland
Table E.2: Public Sector Total Managed Expenditure: Scotland 2007-08 to 2011-12
2007-08 2008-09 2009-10 2010-11 2011-12
Total Public Sector Expenditure for Scotland (£ millions)
55,925 58,953 62,049 64,030 64,457
Total Public Sector Expenditure for Scotland (% of UK Total)
9.6% 9.3% 9.2% 9.2% 9.3%
In 2011-12, total public sector expenditure for Scotland, including a per capita share of
UK debt interest payments, was £64.5 billion, 9.3% of UK public sector expenditure.
Scotland’s Overall Fiscal Position
GERS provides two measures of Scotland’s fiscal position, the current budget balance
and the net fiscal balance. The current budget balance shows the difference between
current revenue and current expenditure. It measures the degree to which taxpayers
meet the cost of paying for public services
and a contribution to debt interest payments.
The net fiscal balance measures the difference between total public sector expenditure
(including capital expenditure) and public sector revenue. It therefore includes public
sector capital investment, such as the construction of roads, hospitals, and schools,
which yields benefits not just to current taxpayers but also to future taxpayers.
Executive Summary
6 Government Expenditure and Revenue Scotland 2011-12
Current Budget Balance
Table E.3: Current Budget Balance: Scotland and UK 2007-08 to 2011-12
(£ million)
2007-08 2008-09 2009-10 2010-11 2011-12
Scotland
- Excluding North Sea revenue
-7,565 -10,718 -15,558 -15,726 -13,972
Scotland
- Including North Sea rev
enue (per capita share)
-6,936 -9,630 -15,013 -14,989 -13,030
Scotland
- Including North Sea rev
enue (geographical share)
-453 1,034 -9,649 -7,684 -3,398
UK
-7,630 -51,290 -110,328 -102,504 -92,297
(% of GDP)
Scotland
- Excluding North Sea revenue
-6.6% -9.3% -13.8% -13.1% -11.2%
Scotland
- Including North Sea rev
enue (per capita share)
-5.9% -8.1% -13.0% -12.3% -10.2%
Scotland
- Including North Sea rev
enue (geographical share)
-0.3% 0.7% -7.2% -5.3% -2.3%
UK
-0.5% -3.6% -7.8% -6.9% -6.0%
In 2011-12, the estimated current budget balance for the public sector in Scotland was a
deficit of £14.0 billion (11.2% of GDP) excluding North Sea revenue, a deficit of
£13.0 billion (10.2% of GDP) including a per capita share of North Sea revenue, or a
deficit of £3.4 billion (2.3% of GDP) including an illustrative geographical share of North
Sea revenue.
In 2011-12, the UK as a whole ran a current budget deficit, including 100% of North Sea
revenue, of £92.3 billion (6.0% of GDP).
Net Fiscal Balance
Table E.4: Net Fiscal Balance: Scotland and UK 2007-08 to 2011-12
(£ million)
2007-08 2008-09 2009-10 2010-11 2011-12
Scotland
- Excluding North Sea revenue
-11,110 -15,450 -20,385 -19,743 -18,159
Scotland
- Including North Sea rev
enue (per capita share)
-10,480 -14,362 -19,839 -19,006 -17,217
Scotland
- Including North Sea rev
enue (geographical share)
-3,998 -3,699 -14,475 -11,700 -7,586
UK
-36,719 -97,539 -158,922 -140,967 -120,963
(% of GDP)
Scotland
- Excluding North Sea revenue
-9.7% -13.4% -18.1% -16.5% -14.6%
Scotland
- Including North Sea rev
enue (per capita share)
-9.0% -12.1% -17.2% -15.6% -13.5%
Scotland
- Including North Sea rev
enue (geographical share)
-2.9% -2.6% -10.7% -8.1% -5.0%
UK
-2.6% -6.9% -11.2% -9.5% -7.9%
In 2011-12, Scotland’s estimated net fiscal balance was a deficit of £18.2 billion (14.6%
of GDP) when excluding North Sea revenue, a deficit of £17.2 billion (13.5% of GDP)
when including a per capita share of North Sea revenue, or a deficit of £7.6 billion (5.0%
of GDP) when an illustrative geographical share of North Sea revenue is included.
In 2011-12, the equivalent UK position including 100% of North Sea revenue, referred to
in the UK Public Sector Accounts as ‘net borrowing’, was a deficit of £121.0 billion (or
7.9% of GDP).
Government Expenditure and Revenue Scotland 2011-12 7
PREFACE
This report is the nineteenth in the series of official published estimates of expenditure and
revenue balances of the public sector in Scotland.
The Aims and Objectives
The aim of GERS is to enhance public understanding of fiscal issues in Scotland. The
primary objective is to estimate a set of public
sector accounts for Scotland through detailed
analysis of official UK and Scottish Government finance statistics. GERS estimates the
contribution of revenue raised in Scotland to
ward the goods and services provided for the
benefit of the people of Scotland. The report is designed to allow users to understand and
analyse Scotland’s fiscal position under different scenarios.
GERS captures the entire public sector in Scotland and includes activity by each of the
constituent parts of the public sector: c
entral government, local government and public
corporations. In addition to providing an analysis of aggregate expenditure and revenue, the
report contains a detailed breakdown according to individual expenditure and revenue
components.
National Statistics in GERS
All expenditure and revenue data in GERS are classified as UK National Statistics. National
Statistics are those figures which come within the scope of the principles of the Code of
Practice for Official Statistics. The Code seeks to ensure that National Statistics will be
valued for their relevance, integrity, quality and accessibility. More information about
National Statistics is available on the Office for National Statistics (ONS) website.
1
The Approach
Unlike some countries, the UK fiscal framework does not provide separate detailed
intra-country or inter-regional fiscal accounts. GERS therefore provides an estimated set of
public sector fiscal accounts for Scotland.
In the absence of formal intra-UK fiscal accounts, estimating a set of equivalent accounts for
Scotland raises two key practical issues:
Firstly, there is no formally agreed set of accounting concepts and definitions for
the formulation of UK country or regional fiscal accounts.
Secondly, a number of key elements of underlying data necessary for
constructing public sector country or regional fiscal accounts, while available at
the UK level, are not available at the UK country or regional level.
In light of this, GERS develops a robust fr
amework for measuring public sector revenue
raised in Scotland and expenditure for Scotland. Firstly, public sector balances of
expenditure and revenue are estimated for Scotland on the basis of the national accounting
standards adopted by the UK Government: the European System of Accounts 1995.
Secondly, in the absence of direct Scottish data, GERS estimates expenditure and revenue
using the best available information and most appropriate apportionment methodologies.
1
http://www.ons.gov.uk
Preface
8 Government Expenditure and Revenue Scotland 2011-12
What Questions Does GERS Address?
GERS fundamentally addresses three questions about Scotland’s public sector accounts for
a given year:
1. What tax revenues were raised?
2. How much did the country pay for the full range of public services that were
consumed?
3. To what extent did the revenues rais
ed cover the payments made for these public
services?
The Methodology
The headline estimates of Scottish public sector revenue and expenditure in GERS embrace
two key principles:
1. Public sector revenue is estimated for taxes where a financial burden is
imposed on residents and enterprises in Scotland
2. Public sector expenditure is estimated on the basis of spending incurred for
the benefit of residents and enterprises in Scotland;
Both issues are discussed in detail below.
Revenue
Public sector revenue is estimated for taxes where a financial burden is imposed on
residents and enterprises
in
Scotland.
In GERS the estimation of public sector revenues is based on assessment according to the
‘who pays’ principle. This concerns the identification of the location of the source of public
sector revenue. In GERS, the ‘who pays’ principle is based upon the residential location of
where the revenue is raised.
For a variety of practical and theoretical reasons, estimating revenue for individual countries
and regions of the UK is generally more difficult than estimating expenditure. Revenue is
generally collected on a UK basis, whereas the benefits of expenditure are generally
targeted on a regional basis. Under current UK budgetary accounting procedures,
separately identified revenue figures for each count
ry and region of the UK are not available.
As a result, Scottish public sector revenue is
estimated by considering each revenue stream
separately. Annex A and the more detailed methodology note on the GERS website provide
a detailed discussion of the methodologies and datasets used.
Expenditure
Public sector expenditure is estimated on the basis of spending incurred for the benefit of
residents and enterprises in Scotland.
The estimation of regional public sector expenditure is based on an assessment according to
the ‘who benefits’ principle. That is, a particular public sector expenditure is apportioned to a
region if the benefit of the service or transfer derived from the expenditure is thought to
accrue to residents and enterprises of that region. Assessing the regional dimension of the
‘who benefits’ principle is a complex task. This is especially the case in countries with