Government Expenditure and Revenue Scotland 2020-21

B Revisions

This section presents revisions from the previous GERS 2019-20 publication.

Revisions to Non-North Sea Revenue Estimates from GERS 2019-20

Table B.1 summarises the revisions in this edition of GERS to total non-North Sea revenue. Revisions to Scottish estimates can stem from three sources: revisions to UK totals; revisions to apportionment data; and updated apportionment methodologies. The main methodology change in GERS 2020-21 relates to the treatment of public sector interest expenditure, where interest expenditure associated with Scottish Local Government pension funds is separated out. All this expenditure is treated as Scottish, rather than apportioning Scotland a population share.

There are a number of revisions to UK revenue totals from GERS 2019-20. However these are relatively small, and overall UK revenue for 2019-20 has been revised by 0.1%. The main revisions relate to income tax and corporation tax, where revenue has been revised down as the impact of the pandemic on these revenues at the end of 2019-20. This is offset by upward revisions to the ‘other taxes’ category, reflecting increased receipts associated with the Emissions Trading Scheme.

Further detail on all these revisions is available from the UK Public Sector Finances.^[25]

Table B.1: Revision to Estimates of Total Non-North Sea Revenue

	£ million
	2016-17	2017-18	2018-19	2019-20
Scotland
Estimates published in GERS 2019-20	59,372	61,432	64,076	65,155
Estimates published in GERS 2020-21	59,303	61,225	64,158	65,312
Revision (£m)	-69	-207	82	158
UK
Estimates published in GERS 2019-20	756,587	777,267	809,859	825,396
Estimates published in GERS 2020-21	759,814	781,950	815,193	828,358
Revision (£m)	3,227	4,683	5,334	2,962
Scotland/UK ratio
Estimates published in GERS 2019-20	7.8%	7.9%	7.9%	7.9%
Estimates published in GERS 2020-21	7.8%	7.8%	7.9%	7.9%
Revision (% point)	0.0%	-0.1%	0.0%	0.0%

Scottish revisions broadly reflect these UK revisions, the main difference relating to income tax, where the latest outturn data has resulted in an upward revision to Scottish revenue. As a result of the pandemic, there was a delay in publishing the latest Scottish Income Tax Statistics in 2020, which meant that a forecast was used for GERS. This year, HMRC has again published the latest outturn statistics in July, meaning that revisions in future years should be smaller.

Table B.2: Revision to Estimates of Public Sector Revenue: Scotland and UK 2019-20

	£ million		%
	Scotland	UK	Scotland	UK
Income tax	51	-1,900	0.4%	-1.0%
National insurance contributions	42	463	0.4%	0.3%
Value added tax	-59	33	-0.5%	0.0%
Corporation tax (excluding North Sea)	-81	-1,284	-2.5%	-2.5%
Fuel duties	-144	0	-6.0%	0.0%
Non-domestic rates	0	-398	0.0%	-1.2%
Council tax	-31	-229	-1.2%	-0.6%
VAT refunds	67	59	3.9%	0.3%
Capital gains tax	15	-152	3.5%	-1.5%
Inheritance tax	0	-3	-0.1%	-0.1%
Reserved stamp duties	12	101	4.2%	0.6%
Scottish Land & Buildings transaction tax	0	0	-0.1%	-0.1%
Scottish landfill tax	0	0	-0.2%	-0.2%
Air passenger duty	0	270	0.0%	8.0%
Tobacco duties	77	1	6.2%	0.0%
Alcohol duties	-15	-181	-1.3%	-1.5%
Insurance premium tax	10	87	2.3%	1.4%
Vehicle excise duties	-24	0	-4.2%	0.0%
Environmental levies	-2	-33	-0.3%	-0.5%
Other taxes	234	3,363	11.3%	13.9%
Total Non-North Sea taxes	151	196	0.3%	0.0%
Other Revenue
Interest and dividends	49	578	2.3%	2.2%
Gross operating surplus	42	3,076	0.7%	5.7%
Other receipts	-84	-888	-16.1%	-20.2%
Total non-North Sea revenue	158	2,962	0.2%	0.4%

A time series of revisions is available in the accompanying spreadsheets online.

Revisions to North Sea Revenue Estimates from GERS 2019-20

Table B.3 summarises the revisions to North Sea revenues in this edition of GERS by comparing the estimates contained in this report with last year’s publication. Revenue has been revised up in 2019-20, reflecting updated assessment of corporation tax paid by fields in Scottish waters. Estimates for previous years are largely unrevised.

Table B.3: Revisions to North Sea Revenue: 2016-17 to 2019-20

	£ million
	2016-17	2017-18	2018-19	2019-20
Scotland (illustrative geographical share)
Estimates published in GERS 2019-20	157	1,141	1,366	724
Estimates published in GERS 2020-21	159	1,142	1,358	844
Revision	1	1	-8	120
UK
Estimates published in GERS 2019-20	36	1,297	1,195	650
Estimates published in GERS 2020-21	36	1,297	1,196	643
Revision	0	0	1	-7

Revisions to Expenditure Estimates from GERS 2019-20

Table B.4 sets out the changes in estimates of public expenditure in Scotland and the UK between this report and GERS 2019-20. These reflect revisions to Scottish Government and Scottish local government spending data, revisions to UK spending totals, and revisions to the data sources used to apportion expenditure to Scotland. Revisions to public expenditure that can be traced to changes to the total expenditure on services (TES) measure are specified separately.

The main revisions to spending relate to the methodological change to public sector interest expenditure. There have also been revisions to estimates of spending associated with student loans, as the methodology for bringing this spending into the public sector has been revised from the initial estimates included last year. The revisions to Scottish spending are broadly in line with those for the UK, apart from public sector interest expenditure, where the methodology change sees higher spending in Scotland. Scotland’s share of total public sector expenditure is in general slightly higher in most years as a result of this change.

Table B.4: Revisions to Estimates of Total Managed Expenditure: 2016-17 to 2019-20

	£ million
	2016-17	2017-18	2018-19	2019-20
Scotland
Estimates published in GERS 2019-20	75,001	76,823	78,598	81,015
Estimates published in GERS 2020-21	75,716	77,525	79,246	81,977
Revision	715	702	648	962
Of which revisions to public sector interest expenditure	-52	-74	-233	-192
Of which revisions to student loans	198	311	285	324
UK
Estimates published in GERS 2019-20	812,631	835,053	851,697	881,431
Estimates published in GERS 2020-21	813,858	836,902	854,565	885,971
Revision	1,227	1,849	2,868	4,540
Of which revisions to student loans	7,477	9,893	12,411	14,144
Scotland/UK Ratio
Estimates published in GERS 2019-20	9.2%	9.2%	9.2%	9.2%
Estimates published in GERS 2020-21	9.3%	9.3%	9.3%	9.3%
Revision (% point)	0.1%	0.1%	0.0%	0.1%

The table below shows the revisions to spend in 2019-20 by function, and by Scottish Government, Scottish local government, Scottish public corporations, and Other UK government bodies. Overall, Scottish spend in 2019-20 has been revised up by £962 million, primarily due to the change to public sector interest expenditure.

Table B.5: Revisions to Estimates of Public Sector Expenditure: Scotland and UK 2019-20

	£ million
	Scotland					UK
	Scottish Government	Local Government	Scottish Public Corporations	Other UK Government Bodies	Total
General public services
Public and common services	2	318	0	18	338	-15
International services	0	0	0	0	0	-76
Public sector interest expenditure	0	0	0	629	629	-718
Defence	0	0	0	-3	-3	74
Public order and safety	-1	0	0	19	17	70
Economic affairs
Enterprise and economic development	-11	-19	0	17	-13	1,489
Science and technology	0	0	0	-225	-225	1
Employment policies	0	0	0	-33	-33	2
Agriculture, forestry and fisheries	52	-34	1	22	40	-65
Transport	-72	91	-8	-256	-245	-105
Environment protection	0	80	0	-10	70	168
Housing and community amenities	0	-62	-60	0	-122	-307
Health	7	0	0	-5	2	9
Recreation, culture and religion	3	35	0	0	38	373
Education and training	0	51	0	5	57	-1,775
Social protection	17	-335	0	200	-117	472
EU Transactions	0	0	0	-11	-11	-304
Accounting adjustments	237	0	118	185	540	5,246
Total revision	234	125	51	552	962	4,540

Revisions to Estimates of Capital Consumption

Table B.6 sets out the changes to estimates of capital consumption in Scotland and the UK between this report and the previous publication of GERS. Capital consumption, which represents the capital stock consumed to provide services within the year, is included alongside current expenditure when calculating the current budget balance. It does not affect the estimate of the net fiscal balance.

Table B.6: Revisions to capital consumption: 2016-17 to 2019-20

	£ million
	2016-17	2017-18	2018-19	2019-20
Scotland
Estimates published in GERS 2019-20	5,431	5,408	5,970	6,266
Estimates published in GERS 2020-21	5,379	5,334	5,737	6,074
Revision	-52	-74	-233	-192

In general, capital consumption in all years has been revised down in all years, reflecting updated data from the ONS.

Unlike for public corporations’ expenditure and operating surplus, detailed capital consumption data are not available on a public corporation basis from the ONS, as they are not separately identified within its perpetual inventory model.

Revisions to Fiscal Aggregates

Table B.7 shows revisions to the current budget balance from the previous publication of GERS. The Scottish current budget deficit has increased in all years. This reflects the revisions to public sector interest expenditure discussed above.

Table B.7: Revisions to Estimates of the Current Budget Balance: 2016-17 to 2019-20

	£ million
	2016-17	2017-18	2018-19	2019-20
Estimates published in GERS 2019-20
Excluding North Sea revenue	-12,308	-11,749	-11,520	-12,651
Including North Sea revenue (per capita share)	-12,306	-11,643	-11,422	-12,598
Including North Sea revenue (geographical share)	-12,151	-10,609	-10,154	-11,927
UK	-17,237	-12,153	3,519	-7,788
Estimates published in GERS 2020-21
Excluding North Sea revenue	-12,937	-12,596	-12,086	-13,937
Including North Sea revenue (per capita share)	-12,934	-12,490	-11,989	-13,884
Including North Sea revenue (geographical share)	-12,778	-11,455	-10,728	-13,092
UK	-14,096	-8,349	5,406	-13,813
Difference (£ million) (positive shows improvement)
Excluding North Sea revenue	-629	-847	-566	-1,286
Including North Sea revenue (per capita share)	-628	-847	-567	-1,286
Including North Sea revenue (geographical share)	-627	-846	-574	-1,165
UK	3,141	3,804	1,887	-6,025

Table B.8 shows revisions to the net fiscal balance from the previous publication of GERS. In general, these are similar to the revisions to the current budget balance for Scotland

Table B.8: Revisions to Estimates of the Net Fiscal Balance: 2016-17 to 2019-20

	£ million
	2016-17	2017-18	2018-19	2019-20
Estimates published in GERS 2019-20
Excluding North Sea revenue	-15,629	-15,391	-14,521	-15,860
Including North Sea revenue (per capita share)	-15,626	-15,285	-14,424	-15,807
Including North Sea revenue (geographical share)	-15,472	-14,250	-13,155	-15,136
UK	-56,008	-56,489	-40,643	-55,385
Estimates published in GERS 2020-21
Excluding North Sea revenue	-16,413	-16,300	-15,088	-16,665
Including North Sea revenue (per capita share)	-16,410	-16,194	-14,990	-16,612
Including North Sea revenue (geographical share)	-16,255	-15,159	-13,729	-15,821
UK	-54,008	-53,655	-38,176	-56,970
Difference (£ million) (positive shows improvement)
Excluding North Sea revenue	-784	-909	-567	-805
Including North Sea revenue (per capita share)	-784	-909	-566	-805
Including North Sea revenue (geographical share)	-783	-909	-574	-685
UK	2,000	2,834	2,467	-1,585

In addition to revisions to the fiscal aggregates in cash terms, there are also changes to the fiscal aggregates expressed as a share of GDP due to revisions to GDP estimates. These are shown in Tables B.9 and B.10 for the current budget balance and the net fiscal balance respectively. These revisions reflect the downward revision to the nominal value of North Sea GDP made in the Quarterly National Accounts Scotland for 2020Q3. This was a routine annual update to bring the value of GVA for the offshore oil and gas industry in line with the latest UK national accounts.

Table B.9: Impact of Revisions to GDP on Estimates of the Current Budget Balance

	2016-17	2017-18	2018-19	2019-20
Estimates published in GERS 2019-20	% of GDP
Excluding North Sea revenue	-7.7%	-6.4%	-5.7%	-6.8%
Including North Sea revenue (population share)	-8.0%	-7.3%	-6.9%	-7.5%
Including North Sea revenue (geographical share)	-0.9%	-0.6%	0.1%	-0.4%
UK	0.0%	0.0%	0.0%	0.0%
GERS 2019-20 estimate with latest GDP estimates	% of GDP
Excluding North Sea revenue	-8.1%	-7.5%	-7.0%	-7.6%
Including North Sea revenue (population share)	-8.0%	-7.3%	-6.9%	-7.5%
Including North Sea revenue (geographical share)	-7.5%	-6.3%	-5.7%	-6.6%
UK	-0.9%	-0.6%	0.2%	-0.4%
Change (positive denotes improvement)	% point difference
Excluding North Sea revenue	-0.4%	-1.0%	-1.3%	-0.8%
Including North Sea revenue (population share)	0.0%	0.0%	0.0%	0.0%
Including North Sea revenue (geographical share)	-6.7%	-5.6%	-5.8%	-6.3%
UK	-0.9%	-0.6%	0.2%	-0.4%

Table B.10: Impact of Revisions to GDP on Estimates of the Net Fiscal Balance

	2016-17	2017-18	2018-19	2019-20
Estimates published in GERS 2019-20	% of GDP
Excluding North Sea revenue	-9.7%	-8.6%	-7.4%	-8.6%
Including North Sea revenue (population share)	-10.2%	-9.6%	-8.7%	-9.3%
Including North Sea revenue (geographical share)	-2.8%	-2.7%	-1.9%	-2.5%
UK	0.0%	0.0%	0.0%	0.0%
GERS 2019-20 estimate with latest GDP estimates	% of GDP
Excluding North Sea revenue	-10.3%	-9.8%	-8.9%	-9.5%
Including North Sea revenue (population share)	-10.2%	-9.6%	-8.7%	-9.4%
Including North Sea revenue (geographical share)	-9.6%	-8.4%	-7.4%	-8.4%
UK	-2.8%	-2.7%	-1.9%	-2.5%
Change (positive denotes improvement)	% point difference
Excluding North Sea revenue	-0.5%	-1.2%	-1.4%	-0.9%
Including North Sea revenue (population share)	0.0%	0.0%	-0.1%	0.0%
Including North Sea revenue (geographical share)	-6.8%	-5.7%	-5.5%	-5.9%
UK	-2.8%	-2.7%	-1.9%	-2.5%