Government Expenditure and Revenue Scotland 2016-2017

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)

	2012-13	2013-14	2014-15	2015-16	2016-17
Scotland	5,317	5,333	5,354	5,381	5,405
UK	63,805	64,228	64,725	65,245	65,648
As % of UK total	8.3%	8.3%	8.3%	8.2%	8.2%

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
	2012-13	2013-14	2014-15	2015-16	2016-17
Current Budget
Current revenue
Excluding North Sea revenue	48,912	50,805	52,640	54,446	57,743
Including North Sea revenue (population share)	49,414	51,178	52,780	54,439	57,750
Including North Sea revenue (geographical share)	53,556	54,252	54,014	54,501	57,952
Current expenditure	59,778	60,531	61,352	62,135	63,188
Capital consumption	3,931	4,066	4,276	4,294	4,331
Balance on current budget (surplus is positive, deficit is negative)
Excluding North Sea revenue	-14,796	-13,792	-12,989	-11,983	-9,776
Including North Sea revenue (population share)	-14,295	-13,419	-12,849	-11,990	-9,769
Including North Sea revenue (geographical share)	-10,153	-10,345	-11,615	-11,927	-9,568
Capital Budget
Capital expenditure	8,316	7,049	7,134	6,913	8,021
Capital consumption	-3,931	-4,066	-4,276	-4,294	-4,331
Net Investment	4,385	2,984	2,858	2,619	3,689
Net Fiscal Balance (surplus is positive, deficit is negative)
Excluding North Sea revenue	-19,181	-16,776	-15,847	-14,602	-13,465
Including North Sea revenue (population share)	-18,680	-16,403	-15,707	-14,609	-13,458
Including North Sea revenue (geographical share)	-14,538	-13,329	-14,473	-14,546	-13,257

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
	2012-13	2013-14	2014-15	2015-16	2016-17
Scottish GDP
Excluding North Sea and share of UK extra-regio	131,466	137,889	144,000	145,650	150,025
Including North Sea (population share)	133,388	139,827	145,454	146,824	151,127
Including North Sea (geographical share)	149,303	155,765	157,063	155,632	159,389
UK GDP	1,690,042	1,759,560	1,834,812	1,885,846	1,955,442

Source: Quarterly National Accounts Scotland, http://www.gov.scot/snap; 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 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
	2012	2013	2014	2015	2016
Revenue
Non-North Sea revenue	46,519	49,996	51,010	53,003	55,781
North Sea revenue (per person share)	47,063	50,402	51,233	53,007	55,752
North Sea revenue (geographical share)	51,582	53,726	53,105	53,168	55,658
UK	593,864	631,784	643,872	667,571	703,706
Expenditure
Scotland	67,767	66,506	67,725	68,385	70,340
UK	731,663	728,093	746,436	748,931	760,732
Net Fiscal Balance
Excluding North Sea revenue	-21,248	-16,510	-16,715	-15,382	-14,559
Including North Sea revenue (per capita share)	-20,705	-16,104	-16,491	-15,377	-14,588
Including North Sea revenue (geographical share)	-16,186	-12,780	-14,620	-15,217	-14,682
UK	-137,799	-96,309	-102,564	-81,360	-57,026
As % of GDP
Excluding North Sea revenue	-16.3%	-12.1%	-11.7%	-10.6%	-9.8%
Including North Sea revenue (per capita share)	-15.7%	-11.7%	-11.4%	-10.5%	-9.7%
Including North Sea revenue (geographical share)	-10.9%	-8.3%	-9.2%	-9.8%	-9.3%
UK	-8.2%	-5.5%	-5.6%	-4.3%	-2.9%

Note: As figures above are on a calendar year basis, the North Sea revenue figures differ from those shown in Chapter 2. They are consistent with those shown in Table J of Quarterly National Accounts Scotland 2017Q1 ( http://www.gov.scot/topics/statistics/browse/economy/QNA2017Q1)

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.5: Confidence intervals around survey based apportionments: Scotland

	£ million
	Central estimate	95% lower bound	95% upper bound	Range	Range (%)
Income tax	12,760	12,543	12,976	+/-217	+/-1.7%
National insurance contributions	10,367	10,190	10,543	+/-176	+/-1.7%
VAT	10,193	9,969	10,418	+/-224	+/-2.2%
Tobacco duties	1,100	1,081	1,118	+/-19	+/-1.7%
Alcohol duties	1,038	955	1,121	+/-83	+/-8.0%
Betting and gaming and duties	223	220	226	+/-3	+/-1.4%
Insurance premium tax	330	324	337	+/-7	+/-2.0%
Total survey based apportionments	36,011	35,282	36,740	+/-729	+/-2.0%

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 2016 and this GERS report, a small number of supplementary amendments to the CRA 2016 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.

A new amendment is made to the CRA in GERS 2016-17, relating to Network Rail expenditure. Through discussions with HM Treasury and the Department for Transport, it has been identified that Network Rail spending for Scotland is being underestimated in the CRA for 2015-16, following the incorporation of Network Rail into central government. An upwards adjustment is therefore made to the Scottish figures in GERS, to bring total spend into line with figures reported for Scotland by the Office of Road and Rail. ^[28]

As the CRA for 2016-17 is not yet published, there are no formal amendments to individual spending lines in 2016-17. The 2015-16 adjustments are in effect carried forward into 2016‑17, adjusted for the spending of the responsible department. Further detail is provided in the expenditure methodology note.

In addition to the amendments to the CRA, there are amendments to the estimates of spending in 2016-17 from those published in PESA. This is to bring the increase in Scottish local government capital spending in line with the provisional outturn estimates published in July 2017. ^[29] These adjustments are additional to those that would be carried forward from the CRA.

Table A.6: Amendments to Estimates of Total Public Sector Expenditure on Services from CRA 2016

	£ million
	2012-13	2013-14	2014-15	2015-16	2016-17
Amendments from the CRA
Nuclear-related expenditure	-160	-162	-167	-163	-
London Olympics	-43	-1	-17	0	-
Pensions revisions	-18	-19	-20	-20	-
Network Rail	0	0	0	422	-
Other minor revisions	-41	-48	-81	-56	-
Amendments from PESA
Local Government spending	-	-	-	-	-224
Total CRA amendments	-261	-231	-285	182	-
Total PESA amendments	-	-	-	-	-224

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
	2012-13	2013-14	2014-15	2015-16	2016-17
UK total managed expenditure ( TME)	731,993	736,555	751,988	753,917	770,611
UK total expenditure on services ( TES)	665,955	674,842	686,659	699,232	710,519
UK accounting adjustment	66,038	61,713	65,329	54,685	60,092
of which current expenditure:
Central government capital consumption	17,129	17,583	17,944	18,347	18,687
Local government capital consumption	9,547	10,072	10,585	11,092	11,600
Current VAT refunds	11,514	11,640	11,537	11,862	11,819
Imputed subsidy from Local Authorities to the Housing Revenue Account 1	354	530	484	700	1,165
Imputed flows for Renewable Obligation Certificates 2	1,966	2,532	3,064	3,900	4,672
Local authority pensions	1,911	1,997	1,908	1,953	2,280
Network Rail	581	357	1,002	0	0
British Transport Police Service Agreements	221	279	238	145	145
Current expenditure residual	4,285	6,272	6,835	-542	-352
of which capital expenditure:
Capital VAT refunds	2,145	2,006	2,065	2,150	1,916
Network Rail	965	2,730	2,261	0	0
Royal Mail Pension Plan	9,460	0	0	0	0
Housing associations	6,011	6,721	7,549	5,599	7,325
Capital expenditure residual	-50	-1,006	-144	-521	835

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 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).
2 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.

Table A.8: Expenditure Accounting Adjustment: Scotland

	£ million
	2012-13	2013-14	2014-15	2015-16	2016-17
Scottish total managed expenditure ( TME)	68,094	67,581	68,487	69,048	71,209
Scottish total expenditure on services ( TES)	62,430	62,574	63,372	64,669	66,082
Scottish accounting adjustment	5,664	5,008	5,116	4,379	5,126
Percentage of UK accounting adjustment	8.6%	8.1%	7.8%	8.0%	8.5%
Of which current expenditure:
Central government capital consumption	1,318	1,421	1,337	1,301	1,332
Local government capital consumption	941	992	1,044	1,094	1,144
Current VAT refunds	1,078	1,025	1,011	1,054	1,050
Imputed subsidy from Local Authorities to the Housing Revenue Account 1	28	41	38	55	91
Imputed flows for Renewable Obligation Certificates 2	233	300	364	463	554
Local authority pensions	169	182	177	180	211
Network Rail	36	18	24	0	0
British Transport Police Service Agreements	18	23	20	12	12
Current expenditure residual	357	521	566	-45	-29
Of which capital expenditure:
Capital VAT refunds	201	177	181	191	170
Network Rail	48	74	-100	0	0
Royal Mail Pension Plan	788	0	0	0	0
Housing associations	452	318	468	118	522
Capital expenditure residual	-4	-85	-13	-44	69

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, 2016-17

	Expenditure AA	Revenue AA	Revenue line
Of which current expenditure:	£ million
Central government capital consumption	1,332	1,332	Gross operating surplus
Local government capital consumption	1,144	1,144	Gross operating surplus
Current VAT refunds	1,050	1,050	VAT
Imputed subsidy from Local Authorities to the Housing Revenue Account	91	-	n/a
Imputed flows for Renewable Obligation Certificates	554	554	Other taxes, royalties, and adjustments
Local authority pensions	211	-	n/a
British Transport Police Service Agreements	12	12	Other taxes, royalties, and adjustments
Current expenditure residual	-29	-	n/a
Of which capital expenditure:	0
Capital VAT refunds	170	170	VAT
Network Rail	0	-	n/a
Royal Mail Pension Plan	0	-	n/a
Housing associations	522	-	n/a
Capital expenditure residual	69	-	n/a
Total accounting adjustments	5,126	4,263

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 2015-16 rather than 2016-17, as this is the latest year for which published accounts were available for both the Scottish Government and Scottish local government. 2016-17 figures in GERS are based on provisional outturn estimates.

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

	£ billion
	2015-16
Scottish Government
Published Scottish Government budget 1	36.9
Spending by Audit Scotland and Scottish Parliament	0.1
Public corporation capital spending	0.3
Timing differences	0.0
Total Scottish Government expenditure	37.3
Adjustments to align budget to CRA measure of spending
Grants to other public sector bodies ( e.g. local government)	-10.8
Pensions	-3.1
Depreciation	-0.8
Financial transactions associated with student loans and public corporations	-0.5
Adjustments to move from spend 'in' Scotland to spend 'for' Scotland 2	-0.1
Other	-0.2
Final Scottish Government expenditure on services for Scotland	21.8
Scottish Local Government
Published Local Government gross current expenditure 3	12.7
Income excluding grants from Central Government 4	-2.0
Housing benefit	1.7
Published Local Government gross capital expenditure 5	2.3
Income from sales of capital assets 6	-0.2
Final Scottish Local Government expenditure on services for Scotland	14.6
Scottish Government & Local Government expenditure on services for Scotland	36.5
National Accounts adjustments 7
Capital consumption	2.4
VAT refunds	1.2
Other accounting adjustments	0.4
Final Scottish Government and Scottish Local Government TME	40.5

1 Scottish Government Draft Budget 2016-17 Annex G
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 2015-16, Annex B. Total General Fund (excluding the Housing Revenue Account and trading with the public) employee costs, operating costs, and support services costs after statutory adjustments, less recharges
4 As Note 3. Total General Fund (excluding the Housing Revenue Account and trading with the public) income less government grants
5 As Note 3. All services total gross capital expenditure (Annex G)
6 As Note 3. Total capital receipts from sales of assets (Annex I)
7 See Table A.9