Government Expenditure and Revenue Scotland (GERS) 2023-24

B Revisions

This section presents revisions from the previous GERS 2022-23 publication.

Revisions to Non-North Sea Revenue Estimates from GERS 2022-23

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. Revisions to UK totals for previous years will be larger than usual due to the uncertainty around measuring the public finances during the coronavirus pandemic.

There are a number of revisions to UK revenue totals from GERS 2022-23, with overall UK non-North Sea revenue for 2022-24 revised by 0.6%. The main revisions relate to income tax, corporation tax, and gross operating surplus.

Further detail on all these revisions is available from the UK Public Sector Finances.^[29]

Scottish revisions broadly reflect these UK revisions. The main differences relates to VAT, capital gains tax, and reserved stamp duties. For VAT and capital gains tax, these reflect updates to the apportionment data from HMRC. VAT has been revised upward reflecting revisions to the Scottish VAT Assignment estimates related to domestic tourism and the partially exempt sector. Capital gains tax has been revised downward reflecting the latest estimate for capital gains tax being lower than the value for previous years, which had been carried forward in last year’s provisional estimate. For reserved stamp duties, this reflects a change in methodology, with the stamp duty on shares methodology now aligned to that used by the ONS in the Country and Regional Public Sector Finances publication. Further details are available in the methodology note.

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

Revisions to North Sea Revenue Estimates from GERS 2022-23

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 down in 2022-23, reflecting both a downward revision to the UK total but also a downward revision to the Scottish share. This reflects both a fall in Scotland’s share of North Sea corporation tax, to 80%, but also an increase in the share of Scotland’s share of PRT refunds, to 79%.

Revisions to Expenditure Estimates from GERS 2022-23

Table B.4 sets out the changes in estimates of public expenditure in Scotland and the UK between this report and GERS 2022-23. 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 Other UK Government health and social protection spending. Internal estimates of spending in these areas have been replaced by estimates from HM Treasury’s CRA publication. The downward revision to health reflects the reduction of reserved spending related to the pandemic, which fell more sharply than previously estimated. The fall in social protection spending reflects the fact that the CRA has lower estimates of the Cost of Living support for Scotland than were included in GERS last year, having estimated this with different data and methodologies.

The table below shows the revisions to spend in 2022-23 by function, and by Scottish Government, Scottish local government, Scottish public corporations, and Other UK government bodies. Overall, Scottish spend in 2022-23 has been revised down by £1.7 billion, primarily due to revisions to Other UK Government spending.

Notes: SG: Scottish Government. LG: Local Government. PC: Public Corporations. UKG: UK Government.

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. Note that these figures do not match the figures for capital consumption shown in Table A.8, as the table below includes capital consumption associated with public corporations, which is not included in accounting adjustments.

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.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

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. In general, estimates of the fiscal aggregate have improved as a share of GDP for Scotland when including the North Sea, but remained the same when the North Sea is excluded. These revisions reflect the upward revision to the nominal value of offshore GDP. This reflects routine annual update to bring the value of GVA in line with the latest UK regional accounts.