Government Expenditure and Revenue Scotland (GERS) 2023-24

Chapter 3: Public Sector Expenditure

Introduction

This chapter provides detailed estimates of public sector expenditure for Scotland. Expenditure is shown by type of spend, using a presentation based on the UN’s Classification of the Functions of Government (COFOG). Further information is provided in the Glossary in Annex D. Current and capital expenditure are shown separately.

The primary data sources used to estimate Scottish public sector expenditure in GERS are Scottish Government spending reported on the UK Government’s public spending system, OSCAR, and HM Treasury’s Public Expenditure Statistical Analyses (PESA)^[22] and the supporting Country and Regional Analysis (CRA).^[23]

Spending by the Scottish Government is provided directly by the Scottish Government Directorate for Financial Management. Scottish Local Government spending in all years is taken from HM Treasury’s PESA publication. Spending by other UK government departments spending is based on PESA for 2023-24 and on the CRA for earlier years. Further information on the methodology is set out in the expenditure methodology paper available at the link below.

Economy statistics - gov.scot (www.gov.scot)

GERS continues to show some ongoing transactions between Scotland and the EU, although these have greatly reduced in size since the UK left the EU. These can be reported in a number of different ways, and are discussed in more detail later in the chapter.

GERS expenditure figures are presented on a National Accounts basis, an international reporting standard used by governments to ensure international comparability. This requires a number of accounting adjustments to be included in total expenditure. These are primarily symmetric adjustments that also form part of revenue, and therefore have little impact on the net fiscal balance. Further information is set out in Annex A.

Public Sector Expenditure

Total public sector expenditure for Scotland in 2023-24 is estimated to be £111.2 billion, with social protection the largest element of spend, accounting for slightly around 30% of total spend. Further information on social protection spending is provided in Box 3.1.

Spend has increased by 6.0% from 2022-23. There has been a notable fall in spending on Enterprise and Economic Development, which reflects the ending of some Cost of Living support schemes. Spending on reserved public sector debt interest has also fallen, as inflation has fallen back from the record highs recorded during 2022-23. These falls are offset by increases in health spending and social security.

Table 3.1 shows a breakdown of spending by category.

Table 3.1: Total Expenditure: Scotland 2023-24

	Scotland
	£ million	% of total expenditure
General public services
Public and common services	3,342	3.0%
International services	851	0.8%
Reserved public sector debt interest	8,352	7.5%
Local government pension fund interest expenditure	2,078	1.9%
Defence	4,642	4.2%
Public order and safety	4,067	3.7%
Economic affairs
Enterprise and economic development	2,521	2.3%
Science and technology	742	0.7%
Employment policies	366	0.3%
Agriculture, forestry and fisheries	839	0.8%
Transport	4,121	3.7%
Environment protection	1,550	1.4%
Housing and community amenities	2,915	2.6%
Health	19,015	17.1%
Recreation, culture and religion	1,514	1.4%
Education and training	10,662	9.6%
Social protection	32,954	29.6%
EU transactions	-4	0.0%
Accounting adjustments	10,701	9.6%
Total Expenditure	111,230	100%

Table 3.2 shows the split of total expenditure between current and capital for Scotland.

Table 3.2: Current and Capital Expenditure (% of Total Expenditure): Scotland

	per cent
	2021-22	2022-23	2023-24
Current	88.6%	89.8%	88.9%
Capital	11.4%	10.3%	11.1%

Table 3.3 below shows estimates of Scottish and UK public sector expenditure as a share of GDP. This provides an illustration of the relative size of public spending between countries and over time. It is not an estimate of the contribution of public spending to the economy as much of this spending consists of transfers from government to individuals and businesses. Excluding North Sea GDP, public sector spending as a share of GDP has remained broadly unchanged at around 55% in 2023-24, although it remains around 5 percentage points higher than before the pandemic.

Table 3.3: Total Expenditure as a Share of GDP (Per cent of GDP)

	2021-22	2022-23	2023-24
Scottish expenditure as a Share of GDP:
Excl. North Sea GDP	55.7%	54.8%	55.3%
Incl. population share of North Sea GDP	55.0%	54.2%	54.9%
Incl. geographical share of North Sea GDP	50.1%	48.9%	51.0%
UK expenditure as a share of GDP:
100% of North Sea GDP	44.3%	45.3%	44.7%

Table 3.4 shows total public sector expenditure per person for Scotland and the UK. The relative gap between Scottish and UK spending per person increased in 2023-24, with spend per person 13.4% points higher. This reflects stronger public spending growth in Scotland.

As noted previously, water and sewerage services are provided by the public sector in Scotland, but by the private sector in England and Wales, leading to relatively higher spending in Scotland. This explains slightly less than one percentage point of the difference in spend.

Tables 3.5 and 3.6 show current, capital, and total expenditure for Scotland and the UK respectively.

Table 3.4: Total Expenditure Per Person

	£ per person
	2021-22	2022-23	2023-24
Scotland	17,711	19,257	20,418
UK	15,591	17,121	18,001
Difference (Scotland minus UK)	2,120	2,136	2,417
Difference between Scottish and UK (%)	13.6%	12.5%	13.4%

Box 3.1 Social protection spending in Scotland

Social protection spending is the largest single spending line in GERS, and covers a range of different spend types.

The largest spending element within social protection is expenditure on the state pension by the Department for Work and Pensions (DWP). This is followed by DWP’s spending on other social security such as universal credit disability and incapacity related benefits, and housing benefit. Tax credits and child benefit are part of HMRC spending. Scottish Government social security spend includes the Scottish Welfare Fund, Council Tax Reduction Scheme, and Scottish Government expenditure on Discretionary Housing Payments, all of which are administered by Local Authorities. From 2018-19, it also includes spending on newly devolved social security, as set out in Chapter 4.

Some UK social security expenditure, mostly associated with the state pension, is paid to non-UK residents. Scotland is allocated a population share of this expenditure in GERS.

Social protection spending for Scotland (£ million)

	2021-22	2022-23	2023-24
Social security spending in Scotland
State pension	8,782	9,286	10,556
Housing benefit	1,216	1,183	1,183
Universal credit	3,074	3,187	4,212
Other DWP social security	2,506	2,642	3,184
HMRC child benefit and tax credits	1,524	1,458	1,438
Scottish Government social security	4,146	4,640	5,846
Social security spending in Scotland	21,247	22,396	26,418
Share of benefit spending outside UK	379	392	392
Share of corporate spend	109	120	128
Other social protection
Net public sector pensions	198	66	432
Social care for the elderly	2,766	3,248	2,914
Other	1,639	2,252	2,670
Total social protection	26,339	28,474	32,954

Other social protection spending consists primarily of Local Authority expenditure on social care to families and children.

A more detailed breakdown of social security spending is published by DWP, available at the link below.

Benefit expenditure and caseload tables - GOV.UK (www.gov.uk)

Spending by different parts of the Public Sector

Table 3.7 below provides a breakdown of Scottish expenditure by the Scottish Government, Scottish local government and public corporations, and other UK government bodies.

Table 3.5: Total Expenditure: Scotland 2021-22 to 2023-24 (£ million)

	Current			Capital			Total
	2021-22	2022-23	2023-24	2021-22	2022-23	2023-24	2021-22	2022-23	2023-24
General public services
Public and common services	2,757	2,850	2,820	360	632	522	3,117	3,482	3,342
International services	561	553	608	128	142	243	689	695	851
Public sector interest expenditure	6,738	11,118	10,430	0	0	0	6,738	11,118	10,430
Defence	2,689	2,737	3,028	1,285	1,802	1,614	3,974	4,539	4,642
Public order and safety	3,342	3,702	3,827	232	261	240	3,574	3,963	4,067
Economic affairs
Enterprise and economic development	2,726	4,833	1,788	399	843	733	3,125	5,676	2,521
Science and technology	28	36	36	574	532	705	602	568	742
Employment policies	318	280	347	10	6	19	328	286	366
Agriculture, forestry and fisheries	696	699	682	142	150	158	838	849	839
Transport	2,419	2,258	2,231	2,188	2,416	1,890	4,607	4,674	4,121
Environment protection	985	944	1,027	486	503	523	1,471	1,448	1,550
Housing and community amenities	159	171	302	2,301	2,517	2,614	2,460	2,688	2,915
Health	18,371	16,003	18,118	727	885	897	19,098	16,888	19,015
Recreation, culture and religion	1,288	1,275	1,182	270	151	332	1,558	1,427	1,514
Education and training	9,225	9,796	9,516	1,069	1,053	1,146	10,294	10,849	10,662
Social protection	26,159	28,308	32,827	179	166	127	26,339	28,474	32,954
EU Transactions	-148	-35	-4	0	0	0	-148	-35	-4
Accounting adjustments	7,574	8,629	10,158	674	-1,310	543	8,248	7,318	10,701
Total	85,888	94,157	98,924	11,023	10,749	12,306	96,911	104,907	111,230

Table 3.6: Total Expenditure: UK 2021-22 to 2023-24 (£ million)

	Current			Capital			Total
	2021-22	2022-23	2023-24	2021-22	2022-23	2023-24	2021-22	2022-23	2023-24
General public services
Public and common services	24,570	24,370	22,732	3,542	2,870	3,669	28,112	27,240	26,401
International services	6,797	6,743	7,427	1,560	1,740	2,966	8,357	8,483	10,393
Public sector interest expenditure	75,077	129,856	121,075	0	0	0	75,077	129,856	121,075
Defence	32,959	33,512	37,023	15,707	22,020	19,728	48,666	55,532	56,751
Public order and safety	36,733	40,744	44,056	3,036	3,482	3,690	39,769	44,226	47,746
Economic affairs
Enterprise and economic development	37,210	57,816	21,815	-899	5,453	2,674	36,311	63,269	24,489
Science and technology	354	382	395	6,223	6,904	9,215	6,577	7,286	9,610
Employment policies	4,098	3,745	4,595	124	75	243	4,222	3,820	4,838
Agriculture, forestry and fisheries	5,261	5,231	5,490	760	1,021	1,234	6,021	6,252	6,723
Transport	19,067	16,668	17,310	25,612	27,961	28,839	44,679	44,629	46,149
Environment protection	9,040	9,002	9,504	4,722	5,288	5,829	13,762	14,290	15,333
Housing and community amenities	3,474	3,936	4,266	11,745	13,406	15,624	15,219	17,342	19,891
Health	206,624	201,346	208,836	9,613	11,336	12,135	216,237	212,682	220,971
Recreation, culture and religion	10,468	11,525	9,660	2,294	3,005	3,303	12,762	14,530	12,963
Education and training	90,927	97,209	99,300	9,200	10,127	12,177	100,127	107,336	111,477
Social protection	299,169	321,145	360,053	861	768	851	300,030	321,913	360,904
EU Transactions	-2,035	-2,484	-276	0	0	0	-2,035	-2,484	-276
Accounting adjustments	77,797	90,263	107,500	15,547	-9,133	13,835	93,344	81,130	121,335
Total	937,590	1,051,010	1,080,762	109,647	106,323	136,011	1,047,237	1,157,333	1,216,773

Table 3.7: Total Expenditure: Devolved and reserved expenditure, Scotland 2021-22 to 2023-24 (£ million)

	Devolved expenditure			Reserved expenditure			Total
	2021-22	2022-23	2023-24	2021-22	2022-23	2023-24	2021-22	2022-23	2023-24
General public services
Public and common services	1,610	2,002	2,023	1,507	1,481	1,320	3,117	3,482	3,342
International services	5	1	1	683	694	850	689	695	851
Public sector interest expenditure	1,933	2,016	2,078	4,805	9,102	8,352	6,738	11,118	10,430
Defence	3	3	4	3,971	4,536	4,638	3,974	4,539	4,642
Public order and safety	3,249	3,490	3,519	325	473	549	3,574	3,963	4,067
Economic affairs
Enterprise and economic development	1,146	1,179	1,181	1,979	4,496	1,340	3,125	5,676	2,521
Science and technology	1	3	2	601	566	739	602	568	742
Employment policies	0	0	0	328	286	366	328	286	366
Agriculture, forestry and fisheries	825	836	827	13	12	13	838	849	839
Transport	3,455	3,568	2,883	1,152	1,106	1,239	4,607	4,674	4,121
Environment protection	1,138	1,151	1,219	332	297	331	1,471	1,448	1,550
Housing and community amenities	2,457	2,683	2,906	4	5	10	2,460	2,688	2,915
Health	17,538	16,597	18,044	1,559	291	971	19,098	16,888	19,015
Recreation, culture and religion	1,176	918	1,119	381	508	396	1,558	1,427	1,514
Education and training	10,282	10,834	10,646	12	15	16	10,294	10,849	10,662
Social protection	9,070	10,335	11,685	17,269	18,140	21,269	26,339	28,474	32,954
EU Transactions	0	0	0	-148	-35	-4	-148	-35	-4
Accounting adjustments	7,341	8,062	8,764	908	-743	1,938	8,248	7,318	10,701
Total	61,229	63,678	66,900	35,682	41,229	44,330	96,911	104,907	111,230

Table 3.7a: Total Current Expenditure: Devolved and reserved expenditure, Scotland (£ million)

	Devolved expenditure			Reserved expenditure			Total
	2021-22	2022-23	2023-24	2021-22	2022-23	2023-24	2021-22	2022-23	2023-24
General public services
Public and common services	1,380	1,480	1,628	1,377	1,370	1,192	2,757	2,850	2,820
International services	5	1	1	556	552	607	561	553	608
Public sector interest expenditure	1,933	2,016	2,078	4,805	9,102	8,352	6,738	11,118	10,430
Defence	3	3	4	2,686	2,734	3,024	2,689	2,737	3,028
Public order and safety	3,063	3,283	3,334	279	419	493	3,342	3,702	3,827
Economic affairs
Enterprise and economic development	607	612	559	2,119	4,220	1,229	2,726	4,833	1,788
Science and technology	1	3	2	26	34	34	28	36	36
Employment policies	0	0	0	318	280	347	318	280	347
Agriculture, forestry and fisheries	683	687	669	12	12	13	696	699	682
Transport	1,890	1,733	1,672	529	525	559	2,419	2,258	2,231
Environment protection	864	885	968	121	60	59	985	944	1,027
Housing and community amenities	157	167	296	3	4	6	159	171	302
Health	16,774	15,720	17,158	1,597	283	960	18,371	16,003	18,118
Recreation, culture and religion	944	867	877	344	408	305	1,288	1,275	1,182
Education and training	9,213	9,781	9,501	13	15	16	9,225	9,796	9,516
Social protection	8,919	10,185	11,566	17,240	18,124	21,261	26,159	28,308	32,827
EU transactions	0	0	0	-148	-35	-4	-148	-35	-4
Accounting adjustments	6,904	7,603	8,266	670	1,026	1,892	7,574	8,629	10,158
Total	53,341	55,025	58,580	32,547	39,132	40,344	85,888	94,157	98,924

Table 3.7b: Total Capital Expenditure: Devolved and reserved expenditure, Scotland (£ million)

	Devolved expenditure			Reserved expenditure			Total
	2021-22	2022-23	2023-24	2021-22	2022-23	2023-24	2021-22	2022-23	2023-24
General public services
Public and common services	230	522	395	130	111	128	360	632	522
International services	0	0	0	128	142	243	128	142	243
Public sector interest expenditure	0	0	0	0	0	0	0	0	0
Defence	0	0	0	1,285	1,802	1,614	1,285	1,802	1,614
Public order and safety	186	207	185	46	54	56	232	261	240
Economic affairs	0	0	0	0	0	0	0	0	0
Enterprise and economic development	539	567	622	-140	276	111	399	843	733
Science and technology	0	0	0	574	532	705	574	532	705
Employment policies	0	0	0	10	6	19	10	6	19
Agriculture, forestry and fisheries	142	150	158	0	0	0	142	150	158
Transport	1,565	1,835	1,211	623	581	679	2,188	2,416	1,890
Environment protection	274	267	251	212	237	272	486	503	523
Housing and community amenities	2,300	2,515	2,609	1	1	4	2,301	2,517	2,614
Health	764	877	886	-37	8	11	727	885	897
Recreation, culture and religion	232	51	242	37	100	91	270	151	332
Education and training	1,069	1,053	1,145	0	0	0	1,069	1,053	1,146
Social protection	150	150	119	29	16	8	179	166	127
EU transactions	0	0	0	0	0	0	0	0	0
Accounting adjustments	436	459	498	238	-1,769	45	674	-1,310	543
Total	7,888	8,652	8,320	3,135	2,097	3,986	11,023	10,749	12,306

Scotland’s Notional Contributions to the European Union Budget

While a member of the European Union (EU), the UK contributed to the EU budget and received funding from the EU via a number of programmes. Although the UK left the EU on 31 January 2020, it continued to make payments to, and receive funding from, the EU in 2020-21 under transitional arrangements. These transactions largely ended in 2021-22.

Details of how the ongoing EU Transactions are calculated are provided in GERS 2022-23

Government Expenditure and Revenue Scotland 2022-23 - gov.scot (www.gov.scot)

Private Finance Initiative and Non-Profit Distributing Financing support for Public Private Partnerships (PPPs)

Public Private Partnerships (PPPs) are long-term contracts for services that include the provision of associated facilities or properties. Under the contract, the private sector is generally responsible for various roles, including designing and constructing a building or facility, and maintaining and servicing it throughout the contract term. The public sector retains accountability for the main public services. The private sector is responsible for financing the project up front and only receives payment from the public sector once construction has been completed and the services have commenced. These payments are reflected in the GERS expenditure figures, but typically broader payments associated with these schemes, such as the upfront capital investment, is not included, although it will be reflected in the total unitary charge payments over the lifetime of the scheme.

Previous GERS publications have provided a breakdown of payments related to PPPs in Scotland.

Supporting documents - Government Expenditure & Revenue Scotland (GERS) 2021-22 - gov.scot (www.gov.scot)