Government Expenditure and Revenue in Scotland (GERS): 2018 to 2019

Annex B: Revisions

This section presents revisions from the previous GERS 2017-18 publication.

Revisions to Non-North Sea Revenue Estimates from GERS 2017-18

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 changes in GERS 2018-19 relate to income tax and VAT.

There are a number of revisions to UK revenue totals from GERS 2017-18. The main revisions relate to VAT refunds and national insurance contributions. Revisions to VAT refunds follow a review by ONS, HMRC, and HM Treasury. This has increased the value of VAT refunds, which are recorded as both a revenue and an expenditure, and so does not impact on the next fiscal balance. Revisions to national insurance contributions reflect updated data from HMRC. Environmental levies have also been revised, and again these are an imputed revenue also recorded as expenditure, and so do not impact on the overall fiscal balance.

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

	£ million
	2014-15	2015-16	2016-17	2017-18
Scotland
Estimates published in GERS 2017-18	52,959	53,942	56,608	58,630
Estimates published in GERS 2018-19	53,034	53,805	56,245	58,327
Revision (£m)	75	-138	-363	-303
Of which: income tax	0	-250	-472	-579
Of which: national insurance contributions	0	-16	4	-132
Of which: value added tax	124	128	59	262
UK
Estimates published in GERS 2017-18	658,263	684,393	726,259	748,911
Estimates published in GERS 2018-19	658,884	685,012	727,040	751,776
Revision (£m)	621	619	781	2,865
Of which: income tax	0	0	0	-107
Of which: national insurance contributions	0	0	230	-1,502
Of which: value added tax	0	0	0	411
Scotland/UK ratio
Estimates published in GERS 2017-18	8.0%	7.9%	7.8%	7.8%
Estimates published in GERS 2018-19	8.0%	7.9%	7.7%	7.8%
Revision (% point)	0.0%	0.0%	-0.1%	-0.1%

The main revisions to Scottish revenue reflect the revised methodologies to income tax and VAT, discussed in Chapter 1. Income tax revenue has been revised down following the incorporation of the Scottish Income Tax outturn data published by HMRC. This is partly offset by upward revisions to estimates of VAT, as a result of the work on VAT assignment. The impact of these is discussed in more detail in the GERS revenue methodology note.^[27]

In addition to the methodological updates, there have also been revisions that result from update to apportionment data. These relate to Air Passenger Duty, where updated estimates have been produced by the Scottish Fiscal Commission, and updated spending data from the Living Costs and Food Survey, which affects estimates of revenue from tobacco duty and insurance premium tax.

Table B.2: Revision to Estimates of Public Sector Revenue: Scotland and UK 2017-18

	£ million		%
	Scotland	UK	Scotland	UK
Income tax	-579	-107	-4.6%	-0.1%
National insurance contributions	-132	-1,502	-1.2%	-1.1%
Value added tax	262	411	2.6%	0.3%
Corporation tax (excluding North Sea)	-47	-681	-1.2%	-1.2%
Fuel duties	0	0	0.0%	0.0%
Non-domestic rates	-12	112	-0.4%	0.4%
Council tax	-4	-41	-0.2%	-0.1%
VAT refunds	308	3,454	24.7%	25.1%
Capital gains tax	-3	-86	-1.0%	-1.1%
Inheritance tax	-30	-10	-9.6%	-0.2%
Reserved stamp duties	-21	643	-6.5%	3.9%
Scottish Land & Buildings transaction tax	11	11	2.1%	2.1%
Scottish landfill tax	-1	-1	-0.7%	-0.7%
Air passenger duty	38	0	13.7%	0.0%
Tobacco duties	77	0	7.9%	0.0%
Alcohol duties	0	-1	0.0%	0.0%
Insurance premium tax	-27	-45	-6.6%	-0.8%
Vehicle excise duties	0	0	0.0%	0.0%
Environmental levies	-76	-642	-10.2%	-9.9%
Other taxes	39	590	2.2%	2.8%
Total Non-North Sea taxes	-198	2,105	-0.4%	0.3%
Other Revenue
Interest and dividends	-4	22	-1.3%	0.3%
Gross operating surplus	-172	-58	-3.7%	-0.1%
Other receipts	72	796	19.3%	28.7%
Total non-North Sea revenue	-303	2,865	-0.5%	0.4%

Revisions to North Sea Revenue Estimates from GERS 2017-18

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. Estimates are largely unrevised, although there is an upward revision in 2017-18.

Table B.3: Revisions to North Sea Revenue: 2014-15 to 2017-18

	£ million
	2014-15	2015-16	2016-17	2017-18
Scotland (illustrative geographical share)
Estimates published in GERS 2017-18	1,377	50	266	1,327
Estimates published in GERS 2018-19	1,377	50	266	1,426
Revision	0	0	0	99
UK
Estimates published in GERS 2017-18	1,691	-85	36	1,192
Estimates published in GERS 2018-19	1,691	-85	36	1,297
Revision	0	0	0	105

A discussion of revisions to all taxes between 2014-15 and 2017-18 is provided in the GERS 2018-19 Revenue Methodology note available on the GERS website.

Revisions to Expenditure Estimates from GERS 2017-18

Table B.4 sets out the changes in estimates of public expenditure in Scotland and the UK between this report and GERS 2017-18. 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.

Scotland's share of total public sector expenditure is unchanged in all years. The majority of revisions reflect changes to accounting adjustments.

Table B.4: Revisions to Estimates of Total Managed Expenditure: 2014-15 to 2017-18

	£ million
	2014-15	2015-16	2016-17	2017-18
Scotland
Estimates published in GERS 2017-18	68,640	69,492	71,354	73,398
Estimates published in GERS 2018-19	68,403	69,339	71,432	73,518
Revision	-237	-152	78	120
Of which revisions to TES	-31	34	276	-223
Of which revisions to accounting adjustment (excl HAs)	-207	-186	-198	343
UK
Estimates published in GERS 2017-18	750,445	756,767	771,981	789,460
Estimates published in GERS 2018-19	750,445	756,767	771,954	794,869
Revision	0	0	-27	5,409
Of which revisions to TES	569	465	873	-283
Of which revisions to accounting adjustment (excl HAs)	-569	-465	-900	5,618
Scotland/UK Ratio
Estimates published in GERS 2017-18	9.1%	9.2%	9.2%	9.3%
Estimates published in GERS 2018-19	9.1%	9.2%	9.3%	9.2%
Revision (% point)	0.0%	0.0%	0.0%	0.0%

The table below shows the revisions to spend in 2017-18 by function, and by Scottish Government, Scottish local government, Scottish public corporations, and Other UK government bodies. Overall, Scottish spend in 2017-18 has been revised up by £120 million. This is primarily reflects relatively small changes across all spending lines as part of the move from provisional to final outturn.

Table B.5: Revisions to Estimates of Public Sector Expenditure: Scotland and UK 2017-18

	£ million
	Scotland					UK
	Scottish Government	Local Government	Scottish Public Corporations	Other UK Government Bodies	Total
General public services
Public and common services	0	72	0	36	108	-622
International services	0	0	0	-14	-14	-155
Public sector debt interest	0	0	0	22	22	372
Defence	0	0	0	-5	-5	17
Public order and safety	8	0	0	4	12	-97
Economic affairs
Enterprise and economic development	22	-26	0	39	35	1,561
Science and technology	0	0	0	90	90	-29
Employment policies	0	0	0	0	0	4
Agriculture, forestry and fisheries	-19	9	3	0	-7	-79
Transport	-40	-23	28	-158	-194	-826
Environment protection	0	-32	0	5	-28	348
Housing and community amenities	0	32	-1	-18	-63	-722
Health	-17	0	0	15	-2	1,525
Recreation, culture and religion	-39	3	0	-14	-49	-311
Education and training	-2	98	0	8	104	-1,759
Social protection	-8	-54	0	-230	-292	488
EU Transactions	0	0	0	62	62	0
Accounting adjustments	-108	0	118	332	343	5,692
Total revision	-204	79	147	173	120	5,409

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: 2014-15 to 2017-18

	£ million
	2014-15	2015-16	2016-17	2017-18
Scotland
Estimates published in GERS 2017-18	4,527	4,468	4,451	4,629
Estimates published in GERS 2018-19	4,388	4,338	4,356	4,376
Revision	-139	-130	-95	-253

In general, capital consumption in all years has been revised down in all years, reflecting the incorporation of the latest ONS Regional Accounts data. Revisions in 2017-18 are larger, as there are also revisions in this year from taking on updated public corporation data.

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 UK current budget balances has improved in all years other than 2017-18, whilst the Scottish current budget balance excluding the North Sea has worsened in both 2016-17 and 2017-18. The different movement in the Scottish and UK figures in 2016-17 primarily reflects the revisions to estimates of Scottish income tax in this year.

Table B.7: Revisions to Estimates of the Current Budget Balance: 2014-15 to 2017‑18

	£ million
	2014-15	2015-16	2016-17	2017-18
Estimates published in GERS 2017-18
Excluding North Sea revenue	-13,092	-12,865	-10,700	-10,633
Including North Sea revenue (per capita share)	-12,952	-12,872	-10,697	-10,535
Including North Sea revenue (geographical share)	-11,715	-12,815	-10,433	-9,306
UK	-53,877	-38,385	-7,214	1,256
Estimates published in GERS 2018-19
Excluding North Sea revenue	-12,655	-12,677	-11,030	-10,744
Including North Sea revenue (per capita share)	-12,515	-12,684	-11,027	-10,638
Including North Sea revenue (geographical share)	-11,278	-12,627	-10,764	-9,318
UK	-53,256	-37,766	-6,416	861
Difference (£ million) (positive shows improvement)
Excluding North Sea revenue	437	188	-330	-111
Including North Sea revenue (per capita share)	437	188	-330	-103
Including North Sea revenue (geographical share)	437	188	-331	-12
UK	621	619	798	-395

Table B.8 shows revisions to the net fiscal balance from the previous publication of GERS. The revisions pattern is quite similar to that for the current budget balance.

Table B.8: Revisions to Estimates of the Net Fiscal Balance: 2014-15 to 2017-18

	£ million
	2014-15	2015-16	2016-17	2017-18
Estimates published in GERS 2017-18
Excluding North Sea revenue	-15,682	-15,549	-14,746	-14,768
Including North Sea revenue (per capita share)	-15,542	-15,556	-14,743	-14,670
Including North Sea revenue (geographical share)	-14,304	-15,499	-14,480	-13,441
UK	-90,491	-72,459	-45,686	-39,357
Estimates published in GERS 2018-19
Excluding North Sea revenue	-15,369	-15,535	-15,187	-15,192
Including North Sea revenue (per capita share)	-15,229	-15,542	-15,184	-15,085
Including North Sea revenue (geographical share)	-13,992	-15,484	-14,921	-13,766
UK	-89,870	-71,840	-44,878	-41,796
Difference (£ million) (positive shows improvement)
Excluding North Sea revenue	313	14	-441	-424
Including North Sea revenue (per capita share)	313	14	-441	-415
Including North Sea revenue (geographical share)	312	15	-441	-325
UK	621	619	808	-2,439

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. If there had been no revisions to estimates of the fiscal aggregates in cash terms, previous estimates of the balances as a share of GDP would generally have been unchanged. This reflects the fact that revisions to the nominal value of GDP have been relatively small.

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

	2014-15	2015-16	2016-17	2017-18
Estimates published in GERS 2017-18	% of GDP
Excluding North Sea revenue	-8.9%	-8.7%	-7.1%	-6.8%
Including North Sea revenue (population share)	-8.7%	-8.6%	-7.0%	-6.7%
Including North Sea revenue (geographical share)	-7.3%	-8.0%	-6.4%	-5.5%
UK	-2.9%	-2.0%	-0.4%	0.0%
GERS 2017-18 estimate with latest GDP estimates	% of GDP
Excluding North Sea revenue	-9.0%	-8.7%	-7.0%	-6.7%
Including North Sea revenue (population share)	-8.8%	-8.7%	-7.0%	-6.6%
Including North Sea revenue (geographical share)	-7.3%	-8.0%	-6.4%	-5.4%
UK	-2.9%	-2.0%	-0.4%	0.1%
Change (positive denotes improvement)	% point difference
Excluding North Sea revenue	0.0%	0.0%	0.1%	0.1%
Including North Sea revenue (population share)	0.0%	0.0%	0.0%	0.1%
Including North Sea revenue (geographical share)	0.0%	0.0%	0.0%	0.0%
UK	0.0%	0.0%	0.0%	0.0%

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

	2014-15	2015-16	2016-17	2017-18
Estimates published in GERS 2017-18	% of GDP
Excluding North Sea revenue	-10.7%	-10.5%	-9.7%	-9.5%
Including North Sea revenue (population share)	-10.5%	-10.4%	-9.6%	-9.3%
Including North Sea revenue (geographical share)	-8.9%	-9.7%	-8.9%	-7.9%
UK	-4.9%	-3.8%	-2.3%	-1.9%
GERS 2017-18 estimate with latest GDP estimates	% of GDP
Excluding North Sea revenue	-10.7%	-10.5%	-9.7%	-9.3%
Including North Sea revenue (population share)	-10.5%	-10.5%	-9.6%	-9.2%
Including North Sea revenue (geographical share)	-8.9%	-9.7%	-8.9%	-7.9%
UK	-4.9%	-3.8%	-2.3%	-1.9%
Change (positive denotes improvement)	% point difference
Excluding North Sea revenue	0.0%	0.0%	0.1%	0.1%
Including North Sea revenue (population share)	0.0%	0.0%	0.1%	0.1%
Including North Sea revenue (geographical share)	0.0%	-0.1%	0.0%	0.0%
UK	0.0%	0.0%	0.0%	0.0%