Government Expenditure & Revenue Scotland 2014-15

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)

	2010-11	2011-12	2012-13	2013-14	2014-15
Scotland	5,272	5,303	5,317	5,333	5,352
UK	62,891	63,390	63,805	64,228	64,722
As % of UK total	8.4%	8.4%	8.3%	8.3%	8.3%

Note: Financial year estimates are calculated as the weighted average of the relevant mid-year estimates. I.e., the 2014-15 population is estimated as three-quarters of the 2014 population plus one quarter of the 2015 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)
	2010-11	2011-12	2012-13	2013-14	2014-15
Current Budget
Current revenue
Excluding North Sea revenue	45,530	47,246	48,276	50,051	51,639
Including North Sea revenue (population share)	46,234	48,162	48,794	50,446	51,826
Including North Sea revenue (geographical share)	52,996	56,878	53,565	54,050	53,443
Current expenditure	58,357	58,802	59,447	60,313	61,237
Capital consumption	3,770	3,783	3,741	4,070	4,143
Balance on current budget (surplus is positive, deficit is negative)
Excluding North Sea revenue	-16,598	-15,339	-14,911	-14,332	-13,741
Including North Sea revenue (population share)	-15,893	-14,423	-14,393	-13,936	-13,555
Including North Sea revenue (geographical share)	-9,132	-5,707	-9,622	-10,332	-11,937
Capital Budget
Capital expenditure	7,348	7,323	8,299	7,169	7,140
Capital consumption	-3,770	-3,783	-3,741	-4,070	-4,143
Net Investment	3,578	3,540	4,559	3,100	2,996
Net Fiscal Balance (surplus is positive, deficit is negative)
Excluding North Sea revenue	-20,175	-18,879	-19,470	-17,431	-16,738
Including North Sea revenue (population share)	-19,471	-17,963	-18,952	-17,036	-16,551
Including North Sea revenue (geographical share)	-12,710	-9,247	-14,181	-13,432	-14,934

Devolved Revenues

The tables below set out revenue raised in Scotland from taxes devolved to the Scottish Parliament prior to 2014-15.

Table A.3: Existing Devolved Taxes Revenue

	(£ million)
	2010-11	2011-12	2012-13	2013-14	2014-15
Council Tax	1,904	1,917	1,935	1,956	1,996
Non Domestic Rates	1,863	1,954	1,930	1,927	1,915
Total	3,767	3,871	3,865	3,884	3,911

The table below shows the estimated historical revenues from the revenues devolved under the Scotland Act 2012.

Table A.4: Revenue under Scotland Act 2012

	(£ million)
	2010-11	2011-12	2012-13	2013-14	2014-15
Scottish Rate of Income Tax Liabilities (from 2016-17)1	4,427	4,267	4,273	4,288	4,449
Stamp duty land tax (from 2015-16)2	334	275	283	389	478
Landfill tax (from 2015-16)	129	131	139	150	147

Source: HMRC, OBR

Notes: 1. This table shows Scottish Rate of Income Tax liabilities rather than receipts. They are therefore calculated on a different basis to the estimates of total Scottish income tax receipts in Table 1.1.

2. Stamp duty land tax has been replaced with Land and Building Transaction Tax in Scotland from 2015-16.

The table below shows the estimated historical revenues from the taxes proposed for devolution under the Scotland Bill 2015-16, following the recommendations of the Smith Commission.

Table A.5: Revenues devolved under Scotland Bill 2015-16 proposals

	(£ million)
	2010-11	2011-12	2012-13	2013-14	2014-15
Air Passenger Duty (from 2018-19)	185	228	243	273	309
Aggregates Levy (date to be decided)	55	48	43	43	54
Non-savings and non-dividend income tax liabilities (from 2017-18)	10,392	10,584	10,714	10,911	11,196

Note: this table shows Scottish non-savings and non-dividends income tax liabilities rather than receipts. They are therefore calculated on a different basis to the estimates of total Scottish income tax receipts in Table 1.1.

The Scotland Bill 2015-16 proposes to assign the Scottish Government receipts from the first 10p of the standard rate of VAT and the first 2.5p of the reduced rate of VAT in Scotland.

Table A.6 shows the VAT that would be assigned to Scotland under this proposal. Within GERS, VAT is shown gross of VAT refunds to government. This is consistent with the approach taken by the ONS in the UK public sector finances. This figure is higher than the actual amount of VAT received by HMRC, which is VAT net of refunds. Table A.6 shows the estimated VAT which would be assigned to Scotland on both a gross and net basis. VAT assigned to the Scottish Government would likely be reported on a net basis in budget documents.

Table A.6: VAT Assignment: Scotland 2010-11 to 2014-15

	(£ million)
	2010-11	2011-12	2012-13	2013-14	2014-15
Gross VAT (from 2019-20)	4,357	4,779	4,832	5,022	5,173
Net VAT (from 2019-20)	3,757	4,129	4,183	4,409	4,562

Note: Assigned VAT receipts are 50% of total receipts in all years. This is an approximation in 2010-11 when the standard rate was 17.5% until January 2011

Further information on the planned devolution of revenue power to the Scottish Government is available in the fiscal framework agreement between the Scottish and UK Governments, available at the following link: http://www.gov.scot/Publications/2016/02/3623/0

Devolved Social Security Benefits

The table below shows the value of social security benefits which will be devolved to the Scottish Government under the Scotland Bill 2015-16 proposals. It does not include existing devolved benefits such as council tax reduction.

Table A.7: Benefits proposed for devolution under Scotland Bill 2015-16 Proposals, 2014-15 (£ million)

Disability Living Allowance	1,465
Attendance Allowance	485
Carer's Allowance	203
Winter Fuel Payment	184
Personal Independence Payment	164
Industrial Injuries Disablement Benefit	92
Severe Disablement Allowance	77
Cold Weather Payment	7
Funeral Payment	4
Sure Start Maternity Grant	3
Total expenditure on benefits to be devolved	2,684

Source: Social security for Scotland: Benefits being devolved to the Scottish Parliament http://www.gov.scot/Topics/Statistics/Browse/Social-Welfare/SocialSecurityforScotland/SSfSNov2015

Summary of current and proposed devolved powers

The table below shows estimates of devolved receipts and expenditure under the Scotland Act 2012 and the Scotland Bill 2015-16 proposals.

Table A.8: Fiscal powers before and after Scotland Bill 2015-16 Proposals, 2014-15 (£ million)

	Before Scotland Bill 2015-16	After Scotland Bill 2015-16
Non Saving Non Dividend Income Tax Liabilities (devolved from 2016-17)	4,449	11,196
Stamp Duties (Land and Buildings) (devolved from 2015-16)	478	478
Air Passenger Duty (devolved from 2018-19)		309
Landfill Tax (devolved from 2015-16)	147	147
Aggregates Levy (date to be decided)		54
Non-domestic Rates	1,915	1,915
Council Tax	1,996	1,996
Total devolved revenues	8,985	16,095
Devolved revenue as % of non-North Sea Scottish revenue	17%	31%
as % of revenue incl geographical share of North Sea revenue1	17%	30%
Assigned VAT2 (assigned from 2019-20)	0	5,367
Total devolved and assigned revenues	8,985	21,461
Devolved and assigned revenue as % of non-North Sea Scottish revenue	17%	41%
as % of revenue incl geographical share of North Sea revenue1	17%	40%
Devolved expenditure excluding housing benefit3 (HB)	38,587	41,262
Devolved revenue as % of estimated devolved expenditure excl HB	23%	39%
Devolved and Assigned revenue as % of estimated devolved expenditure excl HB	23%	52%
Devolved expenditure including housing benefit3	40,363	43,038
Devolved revenue as % of estimated devolved expenditure incl HB	22%	37%
Devolved and Assigned revenue as % of estimated devolved expenditure incl HB	22%	50%

¹ Figures for the shares of devolved revenue as a share of total revenue including a population share of North Sea revenue are the same as the share when excluding North Sea revenue.

² Assigned VAT is shown on a gross basis, consistent with the National Accounts presentation. If net VAT were to be used, devolved expenditure would also need to be adjusted, as set out in Table A.17. In this case, devolved revenue as a share of estimated devolved expenditure would be 40% excluding housing benefit and 38% including housing benefit. Other Scotland Bill 2015-16 percentages are unchanged.

³ In GERS and the CRA, housing benefit is included in Scottish Local Government spending, as they make the payments to recipients, although it is set centrally and funded by the Department for Work and Pensions. Depending on definitions adopted, it could either be excluded or included in devolved expenditure. GERS presents both approaches.

GDP

Table A.9 below provides the financial year GDP estimates used in GERS.

Table A.9: Scottish GDP including and excluding North Sea GDP: (£m)

	2010-11	2011-12	2012-13	2013-14	2014-15
Scottish GDP
Excluding North Sea revenue	123,775	128,178	130,336	135,293	140,835
Including North Sea revenue (per capita share)	126,104	130,545	132,328	137,214	142,179
Including North Sea revenue (geographical share)	146,872	151,751	149,613	153,472	153,340
UK GDP	1,574,905	1,629,096	1,678,863	1,756,151	1,830,404

Source: Quarterly National Accounts Scotland, http://www.gov.scot/snap; ONS

General Government

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 IMF or the OECD 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 results on this general government and calendar year basis

Table A.10: General government revenue, expenditure, and balance: Scotland and UK

	(£ million)
	2010	2011	2012	2013	2014
Revenue
Excluding North Sea revenue	43,610	45,997	46,756	49,922	50,673
Including North Sea revenue (per capita share)	44,314	46,914	47,274	50,317	50,860
Including North Sea revenue (geographical share)	51,076	55,630	52,045	53,921	52,477
UK	554,506	585,010	592,672	629,569	640,992
Expenditure
Scotland	65,006	65,619	67,813	66,849	68,289
UK	705,346	709,831	731,142	728,043	744,016
Net Fiscal Balance
Excluding North Sea revenue	-21,396	-19,622	-21,057	-16,927	-17,616
Including North Sea revenue (per capita share)	-20,692	-18,705	-50,539	-16,532	-17,429
Including North Sea revenue (geographical share)	-13,930	-9,989	-15,768	-12,928	-15,812
UK	-150,840	-124,821	-138,470	-98,474	-103,024
Excluding North Sea revenue	-17.5%	-15.4%	-16.3%	-12.6%	-12.6%
Including North Sea revenue (per capita share)	-16.4%	-14.3%	-15.5%	-12.0%	-12.3%
Including North Sea revenue (geographical share)	-9.5%	-6.6%	-10.5%	-8.4%	-10.3%
UK	-9.7%	-7.7%	-8.3%	-5.7%	-5.7%

Note: an error was identified in the North Sea revenue figures in Table A.10 on 9 March 2016. This did not affect figures in any other table in the publication.  Estimates of revenue excluding the North Sea were not affected.  Estimates of revenue including a per capita share of North Sea revenue have been reduced by an average of £0.1 billion per year in 2012, 2013 and 2014, and revised upwards by a similar amount in 2010 and 2011.  Estimates of revenue including a geographic share of North Sea revenue have been reduced by an average of £0.9 billion per year in 2012, 2013 and 2014, and revised upward by an average of £0.6 billion in 2010 and 2011.  Revisions to the cash estimate of the net fiscal balance are the same as revisions to revenue.  As a share of GDP, the net fiscal balance including a population share of North Sea revenue is on average unchanged in 2012, 2013 and 2014, and revised to be on average 0.1% of GDP smaller in 2010 and 2011.  Including a geographical share of North Sea revenue, the net fiscal balance has been revised to be on average 0.6% of GDP larger in 2012, 2013 and 2014, and to be on average 0.5% smaller in 2010 and 2011.

Public Sector Unitary Charge Payments

The table below presents figures for expenditure on public sector unitary charges for projects in Scotland. These are payments by the Scottish public sector to private companies for assets delivered through forms of Public Private Partnerships, such as the Private Finance Initiative or the Non-Profit Distributing model.

Table A.11: Public Sector Unitary Charge Expenditure in Scotland

	(£ million)
	2010-11	2011-12	2012-13	2013-14	2014-15
Scottish Public Sector Unitary Charges1	825	905	954	976	1,007
Other UK Government Departments PFI Unitary Charges for Projects in Scotland	23	23	23	23	23
Total Unitary Charges in Scotland	848	928	978	999	1,031

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.

Table A.12: Confidence intervals around survey based apportionments

	Scotland (£ Millions)
	Central estimate	95% lower bound	95% upper bound	Range	Range (%)
Income tax	11,735	11,618	11,852	+/- 117	+/- 1%
National insurance contributions	8,969	8,879	9,059	+/- 90	+/- 1%
VAT	10,734	10,503	10,965	+/- 231	+/- 2.2%
Tobacco duties	1,258	1,237	1,279	+/- 21	+/- 1.7%
Alcohol duties	961	878	1,043	+/- 82	+/- 8.6%
Betting and gaming and duties	185	182	188	+/- 3	+/- 1.4%
Insurance premium tax	206	202	210	+/- 4	+/- 2%
Total survey based apportionments	34,047	33,499	34,595	+/- 548	+/- 1.6%

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. While many anomalies in previous editions of the CRA have been addressed and are now reflected in both CRA 2015 and this GERS report, a small number of supplementary amendments to the CRA 2015 dataset were 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.13. They are discussed in the detailed expenditure methodology paper available at http://www.gov.scot/Topics/Statistics/Browse/Economy/GERS/Methodology.

In 2014-15, UK capital expenditure in the CRA associated with the London Olympics is negative. This is because the capital receipts associated with the sale of the former Olympic Village were greater than new investment, and so net capital expenditure is negative.

In GERS, Scotland is allocated none of the expenditure associated with the London Olympics. As the default approach to London Olympics expenditure would be to apportion Scotland a population share of the negative UK expenditure in 2014-15 recorded in the CRA database, apportioning Scotland a zero share increases Scottish expenditure.

Table A.13: Amendments to Estimates of Total Public Sector Expenditure on Services from CRA 2015

	(£ million)
	2010-11	2011-12	2012-13	2013-14	2014-15
Nuclear-related expenditure	-144	-139	-164	-174	-179
London Olympics	-57	-55	-43	-1	19
Pensions revisions	-16	-17	-17	-18	-19
Other minor revisions	-64	-9	-33	-30	-50
Total	-281	-220	-256	-224	-228

Note: Amendments do not include EU Transactions

Accounting adjustments

Spending in GERS is based on the HM Treasury CRA database.^[16]This provides an estimate of Total Expenditure on Services (TES) for Scotland. Accounting adjustments are used to move from TES, which accounts for around 85% of total spending, to Total Managed Expenditure (TME), the primary measure of public spending used in the UK Public Sector Finances. In GERS, EU transactions are included as part of the accounting adjustments, rather than a separate spending line. The adjustments are shown in the table below.

Table A.14: Total Accounting Adjustment: Scotland and UK 2009-10 to 2014-15

	(£ million)
	2010-11	2011-12	2012-13	2013-14	2014-15
Scotland
TES to TME accounting adjustment	5,118	5,122	5,638	5,357	5,117
EU transactions	-85	-231	7	-19	67
Total Scottish accounting adjustment	5,033	4,891	5,645	5,338	5,184
UK
TES to TME accounting adjustment	52,262	54,818	62,711	57,516	61,673
EU transactions	3,628	2,034	4,307	5,047	3,723
Total UK accounting adjustment	55,890	56,852	67,018	62,563	65,396

In order to present Scottish Government and 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 departments. Currently, capital consumption, VAT refunds, the subsidy to the Housing Revenue Account and Student Loans, and the Local Authority Pensions are allocated to the Scottish Government or Scottish Local Government. Other elements are allocated to other UK Government departments operating in Scotland.

Table A.15: Public Sector Finances Accounting Adjustment: UK

	(£ million)
	2010-11	2011-12	2012-13	2013-14	2014-15
UK total managed expenditure (TME)	707,991	707,742	722,081	726,506	737,119
UK total expenditure on services (TES)	655,729	652,924	659,370	668,990	675,446
UK accounting adjustment	52,262	54,818	62,711	57,516	61,673
of which current expenditure:
Central government capital consumption	15,019	15,815	16,192	16,560	16,819
Local government capital consumption	8,464	8,976	9,497	10,017	10,526
Current VAT refunds	11,095	11,672	11,553	11,597	11,434
VAT receipts paid to the EU	2,267	2,276	2,397	2,339	2,222
Student loans subsidy1	-4,242	-2,215	-3,809	-6,310	-2,151
Imputed subsidy from Local Authorities to the Housing Revenue Account2	1,069	441	387	465	598
Imputed flows for Renewable Obligation Certificates 3	1,283	1,471	1,966	2,532	3,064
Local authority pensions	1,826	1,881	1,966	1,862	1,900
Network Rail	3,701	3,496	3,747	3,638	4,359
Tax credits	5,607	4,674	2,827	2,623	2,676
British Transport Police Service Agreements	201	194	193	202	238
Current expenditure residual	-4,954	-5,929	-4,933	1	-1,651
of which capital expenditure:
Capital VAT refunds	2,064	2,223	2,143	2,097	2,168
Network Rail	-675	-451	-321	2,405	1,081
Royal Mail Pension Plan	0	0	9,460	0	0
Capital expenditure residual	9,536	10,294	9,445	7,488	8,390

¹ TES includes the subsidy implied in student loans being issued at lower than market rate. This is not included in TME - the National Accounts measures the difference between interest received from students and the amount of interest paid by the government on the debt incurred to make the loans.

² 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 impute 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).

³ Renewable Obligation Certificates are bought and sold by energy companies. The ONS have decided that these flows should be channelled through central government and so impute offsetting amounts of spending and income.

⁴ The residual for the UK in 2014-15 includes a timing adjustment. The TES figure used in GERS is consistent with the latest CRA analysis, which is from November 2015. The TME figure in GERS is consistent with the public sector finances statistical bulletin published in January 2016. In addition, the residual includes changes to TES not reflected in TME and to TME not reflected in TES in the years prior to 2013-14.

Table A.16: Public Sector Finances Accounting Adjustment: Scotland

	(£ million)
	2010-11	2011-12	2012-13	2013-14	2014-15
Scottish total managed expenditure (TME)	65,705	66,125	67,746	67,482	68,377
Scottish total expenditure on services (TES)	60,587	61,003	62,108	62,125	63,260
Scottish accounting adjustment	5,118	5,122	5,638	5,357	5,117
Percentage of UK accounting adjustment	9.8%	9.3%	9.0%	9.3%	8.3%
Of which current expenditure:1
Central government capital consumption	1,193	1,272	1,237	1,319	1,273
Local government capital consumption	812	877	943	987	1,038
Current VAT refunds	1,012	1,093	1,095	1,039	1,027
VAT receipts paid to the EU	192	190	201	201	190
Student loans subsidy2	76	85	-124	-8	-50
Imputed subsidy from Local Authorities to the Housing Revenue Account3	84	35	30	36	47
Imputed flows for Renewable Obligation Certificates4	152	175	233	300	364
Local authority pensions	166	171	173	169	176
Network Rail	413	339	287	256	196
Tax credits	428	348	208	188	191
British Transport Police Service Agreements	17	17	17	17	20
Current expenditure residual	-415	-497	-411	0	-137
Of which capital expenditure:
Capital VAT refunds	188	208	203	188	195
Network Rail	0	-50	-30	45	-109
Royal Mail Pension Plan	0	0	788	0	0
Capital expenditure residual	799	860	788	620	696

¹See notes to Table A.15

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.17 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 2013-14 rather than 2014-15, as this is the latest year for which published accounts were available for both the Scottish Government and Scottish Local Government when the CRA was published.

Table A.17: Reconciliation of published budget documents to GERS expenditure Table 3.8 (£ billion)

	2013-14
Scottish Government
Published Scottish Government budget1	34.3
Spending by Audit Scotland and Scottish Parliament	0.1
Total Scottish Government expenditure	34.4
Adjustments to align budget to CRA measure of spending
Grants to other public sector bodies (e.g. local government)	-10.7
Pensions	-2.4
Depreciation	-0.7
Other	-0.9
Final Scottish Government expenditure from CRA	21.6
Scottish Local Government
Published Local Government gross current expenditure2	12.3
Income excluding grants from Central Government3	-1.9
Housing benefit	1.8
Published Local Government gross capital expenditure4	2.5
Income from sales of capital assets4	-0.2
Final Scottish Local Government expenditure from CRA	14.4
Scottish Government and Scottish Local Government from CRA	36.0
National Accounts adjustments5
Capital consumption	2.3
VAT refunds	1.2
Student loan and Housing Revenue Account subsidy in Scotland	0.0
Other accounting adjustments	0.1
Final Scottish Government and Scottish Local Government TME	39.7