Government Expenditure and Revenue Scotland 2020-21

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)

	2016-17	2017-18	2018-19	2019-20	2020-21
Scotland	5,410	5,428	5,444	5,464	5,466
UK	65,746	66,139	66,526	66,868	67,081
As % of UK total	8.2%	8.2%	8.2%	8.2%	8.1%

Note: Financial year estimates are calculated as the weighted average of the relevant mid-year estimates. I.e., the 2019-20 population is estimated as three-quarters of the 2019 population plus one quarter of the 2020 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
	2016-17	2017-18	2018-19	2019-20	2020-21
Current Budget
Revenue
Excluding North Sea revenue	59,303	61,225	64,158	65,312	62,287
Including North Sea revenue (population share)	59,306	61,331	64,256	65,365	62,321
Including North Sea revenue (geographical share)	59,461	62,367	65,516	66,157	62,837
Current expenditure	66,860	68,487	70,508	73,175	89,372
Capital consumption	5,379	5,334	5,737	6,074	8,607
Balance on current budget (surplus is positive, deficit is negative)
Excluding North Sea revenue	-12,937	-12,596	-12,086	-13,937	-35,693
Including North Sea revenue (population share)	-12,934	-12,490	-11,989	-13,884	-35,659
Including North Sea revenue (geographical share)	-12,778	-11,455	-10,728	-13,092	-35,143
Capital Budget
Capital expenditure	8,856	9,038	8,738	8,802	9,804
Capital consumption	-5,379	-5,334	-5,737	-6,074	-8,607
Net Investment	3,477	3,704	3,001	2,728	1,197
Net Fiscal Balance (surplus is positive, deficit is negative)
Excluding North Sea revenue	-16,413	-16,300	-15,088	-16,665	-36,889
Including North Sea revenue (population share)	-16,410	-16,194	-14,990	-16,612	-36,856
Including North Sea revenue (geographical share)	-16,255	-15,159	-13,729	-15,821	-36,340

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
	2016-17	2017-18	2018-19	2019-20	2020-21
Scottish GDP
Excluding North Sea and share of UK extra-regio	152,384	157,704	164,011	167,185	154,866
Including North Sea (population share)	153,377	159,030	165,609	168,548	155,747
Including North Sea (geographical share)	160,985	169,583	178,574	179,395	162,251
UK GDP	2,016,681	2,082,483	2,163,750	2,223,595	2,098,761

Source: Quarterly National Accounts Scotland, https://www.gov.scot/collections/economy-statistics/; 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
	2016	2017	2018	2019	2020
Net Fiscal Balance
Excluding North Sea revenue	-16,867	-15,978	-16,101	-16,483	-33,353
Including North Sea revenue (per capita share)	-16,896	-15,882	-16,007	-16,401	-33,342
Including North Sea revenue (geographical share)	-17,411	-14,852	-14,893	-15,321	-33,023
UK	-65,829	-50,056	-47,329	-50,925	-258,157
	As % of GDP
Excluding North Sea revenue	-11.2%	-10.2%	-9.9%	-9.9%	-21.4%
Including North Sea revenue (per capita share)	-11.1%	-10.1%	-9.8%	-9.7%	-21.2%
Including North Sea revenue (geographical share)	-11.0%	-8.9%	-8.4%	-8.5%	-20.1%
UK	-3.3%	-2.4%	-2.2%	-2.3%	-12.2%

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	11,476	11,281	11,671	+/-195	+/-1.7%
VAT1	9,635	9,423	9,847	+/-212	+/-2.2%
Tobacco duties	1,333	1,310	1,355	+/-23	+/-1.7%
Alcohol duties	1,231	1,133	1,330	+/-99	+/-8%
Betting and gaming duties	223	220	226	+/-3	+/-1.4%
Insurance premium tax	422	414	431	+/-8	+/-2%
Total survey based apportionments	24,321	23,781	24,860	+/-540	+/-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 2021.

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 2017-18 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 2019-20 and this GERS report, a small number of supplementary amendments to the CRA 2019-20 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 https://www.gov.scot/collections/economy-statistics/#governmentexpenditureandrevenuescotland(gers)

As the CRA for 2020-21 is not yet published, there are no formal amendments to individual spending lines in 2020-21. The 2019-20 adjustments are in effect carried forward into 2020-21, adjusted for the spending of the responsible department. Further detail is provided in the expenditure methodology note.

Table A.6: Amendments to Estimates of Total Public Sector Expenditure on Services from CRA 2020

	£ million
	2016-17	2017-18	2018-19	2019-20
Amendments from the CRA
High Speed 2	-23	-26	-93	-73
Nuclear-related expenditure	-60	-57	-53	-38
Pensions revisions	-19	-20	-21	-22
Other minor revisions	-67	-53	-80	-6
Total CRA amendments	-169	-157	-246	-140

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.

This year, there are a number of accounting adjustments which relate to COVID-19. These include business support grants which are administered by local authorities as agents as central government, and therefore have not been included in local government spending. They also include COVID-19 loan guarantee schemes. Some spending associated with these schemes is included in Total Expenditure on Services, as they are included in departmental spending data. However, the final amount of spending included in the Public Sector Finances will depend on the rate of repayment of the loans. A decision has not yet been made on how much expenditure to include in the Public Sector Finances, and as such the departmental spending data is removed from the final spending figures in GERS.

Table A.7: Expenditure Accounting Adjustment: UK

	£ million
	2016-17	2017-18	2018-19	2019-20	2020-21
UK total managed expenditure (TME)	813,858	836,902	854,565	885,971	1,094,494
UK total expenditure on services (TES)	725,452	748,837	771,213	798,598	999,737
UK accounting adjustment	88,406	88,065	83,352	87,373	94,757
of which current expenditure:
Central government capital consumption	28,113	28,694	29,117	30,009	30,761
Local government capital consumption	12,679	13,243	13,919	14,626	14,994
Current VAT refunds	14,854	15,143	16,016	16,622	17,874
Imputed subsidy from Local Authorities to the Housing Revenue Account1	827	1,124	1,399	2,258	2,069
Imputed flows for Renewable Obligation Certificates 2	4,567	5,424	6,124	6,116	6,296
Local authority pensions	400	200	100	0	0
British Transport Police Service Agreements	145	145	145	145	145
Covid-19 Grants to Local Authorities	0	0	0	0	23,200
Current expenditure residual	4,931	3,650	3,036	5,570	4,099
of which capital expenditure:
Capital VAT refunds	2,594	2,129	2,198	2,257	2,317
Housing associations	7,386	6,330	832	165	165
Student loans	7,477	9,893	12,411	14,144	14,144
Covid-19 Loan schemes	0	0	0	0	-18,900
Capital expenditure residual	4,433	2,090	-1,945	-4,538	-2,407

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
	2016-17	2017-18	2018-19	2019-20	2020-21
Scottish total managed expenditure (TME)	75,716	77,525	79,246	81,977	99,176
Scottish total expenditure on services (TES)	67,983	69,832	71,875	74,502	90,773
Scottish accounting adjustment	7,733	7,693	7,370	7,475	8,403
Percentage of UK accounting adjustment	8.7%	8.7%	8.8%	8.6%	8.9%
Of which current expenditure:
Central government capital consumption	2,760	2,780	2,775	2,866	2,936
Local government capital consumption	1,302	1,359	1,429	1,501	1,539
Current VAT refunds	1,351	1,379	1,465	1,579	1,688
Imputed subsidy from Local Authorities to the Housing Revenue Account1	62	84	104	168	154
Imputed flows for Renewable Obligation Certificates2	542	644	727	726	747
Local authority pensions	37	19	9	0	0
British Transport Police Service Agreements	12	9	12	12	12
Covid-19 Grants to Local Authorities	0	0	0	0	2,192
Current expenditure residual	406	301	248	456	335
Of which capital expenditure:
Capital VAT refunds	236	194	201	214	219
Housing associations	463	443	276	0	0
Student loans	198	311	285	324	324
Covid-19 Loan schemes	0	0	0	0	-1,546
Capital expenditure residual	364	171	-159	-371	-197

^{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, 2020-21

	Expenditure AA	Revenue AA	Revenue line
Of which current expenditure:	£ million
Central government capital consumption	2,936	2,936	Gross operating surplus
Local government capital consumption	1,539	1,539	Gross operating surplus
Current VAT refunds	1,688	1,688	VAT refunds
Imputed subsidy from Local Authorities to the Housing Revenue Account	154	-	n/a
Imputed flows for Renewable Obligation Certificates	747	747	Environmental levies
Local authority pensions	0	-	n/a
British Transport Police Service Agreements	12	12	Other taxes, royalties, and adjustments
Covid-19 Grants to Local Authorities	2,192	-	n/a
Current expenditure residual	335	-	n/a
Of which capital expenditure:
Capital VAT refunds	219	219	VAT refunds
Housing associations	0	-	n/a
Student loans	324	-	n/a
Covid-19 Loan schemes	-1,546	-	n/a
Capital expenditure residual	-197	-	n/a
Total accounting adjustments	8,403	7,140

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 actual pensions expenditure, 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 2019-20 rather than 2020-21, as this is the latest year for which published accounts are available for both the Scottish Government and Scottish local government. 2020-21 figures in GERS are based on provisional outturn estimates.

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

	£ billion
	2019-20
Scottish Government
Published Scottish Government budget1	42.9
Spending by Audit Scotland and Scottish Parliament	0.1
Public corporation (PC) capital spending	0.6
Timing differences	0.9
Total Scottish Government & associated PC expenditure	44.5
Adjustments to align budget to CRA measure of spending
Grants to other public sector bodies (e.g. local government)	-11.6
Pensions	-4.7
Depreciation	-0.9
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	-0.8
Final Scottish Government & PC expenditure on services for Scotland	25.3
Scottish Local Government
Published Local Government gross current expenditure3	16.8
Income excluding grants from Central Government4	-5.2
Housing benefit	1.6
Published Local Government gross capital expenditure5	3.8
Income from sales of capital assets6	-0.1
Final Scottish Local Government & associated PC expenditure on services for Scotland	16.9
Scottish Government, Local Government, & PC expenditure on services for Scotland	42.2
National Accounts adjustments7
Capital consumption	4.4
VAT refunds	1.8
Local Government pension fund interest expenditure	1.5
Other accounting adjustments	0.7
Final Scottish Government, Scottish Local Government & PC TME	50.6

¹ Scottish Government Budget 2020-21 Annex D

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 2019-20, Table 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 2019-20, Table H. All services total gross capital expenditure

⁶ Scottish Local Government Finance Statistics 2019-20, Table J. Total capital receipts used from asset sales/disposals

⁷ See Table A.8