Government Expenditure & Revenue Scotland 2015-16

Annex 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)
	2011-12	2012-13	2013-14	2014-15	2015-16
Scotland	5,303	5,317	5,333	5,354	5,375
UK	63,390	63,805	64,228	64,725	65,226
As % of UK total	8.4%	8.3%	8.3%	8.3%	8.2%

Note: Financial year estimates are calculated as the weighted average of the relevant mid-year estimates. I.e., the 2015-16 population is estimated as three-quarters of the 2015 population plus one quarter of the 2016 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
	2011-12	2012-13	2013-14	2014-15	2015-16
Current Budget
Current revenue
Excluding North Sea revenue	47,328	48,192	50,054	51,765	53,689
Including North Sea revenue (population share)	48,245	48,712	50,449	51,951	53,695
Including North Sea revenue (geographical share)	56,961	53,498	54,053	53,567	53,748
Current expenditure	58,734	59,560	60,213	60,961	61,958
Capital consumption	3,780	3,641	3,856	4,137	4,418
Balance on current budget
(surplus is positive, deficit is negative)
Excluding North Sea revenue	-15,186	-15,008	-14,015	-13,333	-12,688
Including North Sea revenue (population share)	-14,269	-14,489	-13,619	-13,147	-12,681
Including North Sea revenue (geographical share)	-5,553	-9,703	-10,015	-11,531	-12,628
Capital Budget
Capital expenditure	7,024	7,935	6,822	6,917	6,623
Capital consumption	-3,780	-3,641	-3,856	-4,137	-4,418
Net Investment	3,244	4,294	2,966	2,780	2,205
Net Fiscal Balance (surplus is positive, deficit is negative)
Excluding North Sea revenue	-18,430	-19,303	-16,981	-16,114	-14,892
Including North Sea revenue (population share)	-17,513	-18,783	-16,586	-15,927	-14,886
Including North Sea revenue (geographical share)	-8,797	-13,997	-12,982	-14,311	-14,833

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
	2011-12	2012-13	2013-14	2014-15	2015-16
Scottish GDP
Excluding North Sea and share of UK extra-regio	130,031	133,565	140,055	144,809	147,072
Including North Sea (population share)	132,443	135,584	142,062	146,259	148,258
Including North Sea (geographical share)	153,285	152,309	158,291	157,502	156,784
UK GDP	1,634,025	1,690,042	1,759,560	1,836,159	1,879,653

Source: Quarterly National Accounts Scotland, http://www.gov.scot/snap; 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 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 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.

The figures below are consistent with the figures that ONS publish in Table M1 of their bulletin: EU Government deficit and debt as reported to the European Commission, as published on 15 July 2016 available at the link below:
https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicspending/bulletins/ukgovernmentdebtanddeficitforeurostatmaast/jantomar2016

Table A.4: Calendar year general government estimates: Scotland and UK
	£ million
	2011	2012	2013	2014	2015
Revenue
Non-North Sea revenue	46,038	46,877	50,071	50,791	52,807
North Sea revenue (per person share)	848	670	437	265	40
North Sea revenue (geographical share)	8,999	6,864	4,497	2,566	386
UK	585,347	593,156	629,936	641,319	666,166
Expenditure
Scotland	65,234	67,517	66,297	67,638	67,880
UK	709,235	731,540	728,317	743,147	745,407
Net Fiscal Balance
Excluding North Sea revenue	-19,196	-20,640	-16,225	-16,847	-15,073
Including North Sea revenue (per capita share)	-18,347	-19,970	-15,788	-16,582	-15,034
Including North Sea revenue (geographical share)	-10,197	-13,777	-11,729	-14,281	-14,688
UK	-123,888	-138,384	-98,381	-101,828	-79,274
	% of GDP
Excluding North Sea revenue	-14.8%	-15.6%	-11.7%	-11.7%	-10.3%
Including North Sea revenue (per capita share)	-13.9%	-14.9%	-11.2%	-11.4%	-10.2%
Including North Sea revenue (geographical share)	-6.6%	-9.1%	-7.5%	-9.0%	-9.4%
UK	-7.6%	-8.3%	-5.7%	-5.6%	-4.2%

Note: As figures above are on a calendar year basis, the North Sea revenue figures differ from those shown in Chapter 2. They are consistent with those shown in Table J of Quarterly National Accounts Scotland 2016Q1
( http://www.gov.scot/topics/statistics/browse/economy/QNA2016Q1 )

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.

Table A.5: Confidence intervals around survey based apportionments: Scotland
	£ million
	Central estimate	95% lower bound	95% upper bound	Range	Range (%)
Income tax	12,151	12,029	12,272	+/-122	+/-1.0%
National insurance contributions	9,323	9,230	9,416	+/-93	+/-1.0%
VAT	11,228	10,981	11,475	+/-247	+/-2.2%
Tobacco duties	1,189	1,169	1,209	+/-20	+/-1.7%
Alcohol duties	996	916	1,076	+/-80	+/-8.0%
Betting and gaming and duties	225	222	228	+/-3	+/-1.4%
Insurance premium tax	258	253	263	+/-5	+/-2.0%
Total survey based apportionments	35,370	34,800	35,940	+/-570	+/-1.6%

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. While many anomalies in previous editions of the CRA have been addressed and are now reflected in both CRA 2015 and this GERS report, a small number of supplementary amendments to the CRA 2015 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 http://www.gov.scot/Topics/Statistics/Browse/Economy/GERS/Methodology.

In 2014-15, UK capital expenditure in the CRA associated with the London Olympics is negative. This is because the capital receipts associated with the sale of the former Olympic Village were greater than new investment, and so net capital expenditure is negative.

In GERS, Scotland is allocated none of the capital expenditure associated with the London Olympics. As the default approach to London Olympics expenditure would be to apportion Scotland a population share of the negative UK expenditure in 2014-15 recorded in the CRA database, apportioning Scotland a zero share increases Scottish expenditure.

Table A.6: Amendments to Estimates of Total Public Sector Expenditure on Services from CRA 2015
	£ million
	2011-12	2012-13	2013-14	2014-15	2015-16
Nuclear-related expenditure	-139	-164	-174	-179	-
London Olympics	-55	-43	-1	19	-
Pensions revisions	-17	-17	-18	-19	-
Other minor revisions	-9	-33	-30	-50	-
Total	-220	-256	-224	-228	-

Note: Amendments do not include EU Transactions

As the CRA for 2015-16 is not yet published, there are no formal amendments to individual spending lines. The 2014-15 adjustments are in effect carried forward into 2015-16, adjusted for the spending of the responsible department. Further detail is provided in the expenditure methodology note.

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.9.

In order to present Scottish Government and Local Government spending on a TME basis in GERS, it is necessary to allocate different parts of the accounting adjustments to either the Scottish Government or other UK Government departments. Currently, capital consumption (excluding that associated with Network Rail), VAT refunds, the subsidy to the Housing Revenue Account, and Local Authority Pensions are allocated to the Scottish Government or Scottish Local Government. Other elements are allocated to other UK Government departments operating in Scotland.

Table A.7 below shows the accounting adjustments applied to UK spending in GERS to move from TES to TME. Table A.8 shows the adjustments for Scotland. As discussed in Chapter 3, the ONS has reclassified the Special Purpose Vehicle set up to deliver the Aberdeen Western Peripheral Route ( AWPR) to be part of the public sector. Decisions on the bodies set up to deliver the Edinburgh Royal Hospital for Sick Children and the Dumfries and Galloway Royal Infirmary are expected later this year. These are all projects being delivered by the Scottish Government non-profit distributing ( NPD) model.

Since the ONS decision on the AWPR, the Scottish Government has begun recording spending for all three projects on the UK Government's accounting system. As such, expenditure associated with all three projects is included in the TES measure used by HM Treasury in their Public Expenditure Statistical Analyses publication. However, ONS have not yet incorporated any expenditure associated with the projects into their estimate of TME in the UK Public Sector Finances. For the AWPR, the ONS is waiting for a final decision as to whether the expenditure will be counted as government expenditure or public corporation spending. For the health projects, no ONS decision has been made on their classification, and as such the Scottish Government has pre-empted the ONS by reporting them within its spending.

As the ONS do not currently include the AWPR or health projects expenditure in the Public Sector Finances, the expenditure is not included in total expenditure for either Scotland or the UK in GERS, and is removed as part of the TES to TME accounting adjustments. As all the expenditure is associated with the Scottish Government, this has a relatively greater impact on Scottish expenditure.

As discussed in Chapter 3, Network Rail expenditure from 2015-16 is now included within the transport spending line, and as such accounting adjustments are no longer required.

Table A.7: Expenditure Accounting Adjustment: UK
	£ million
	2011-12	2012-13	2013-14	2014-15	2015-16
UK total managed expenditure ( TME)	715,105	730,822	735,913	746,611	753,027
UK total expenditure on services ( TES)	661,279	664,033	673,090	684,284	698,268
UK accounting adjustment	53,826	66,789	62,823	62,327	54,759
of which current expenditure:
Central government capital consumption	16,671	17,129	17,583	17,952	18,414
Local government capital consumption	9,030	9,547	10,072	10,570	11,045
Current VAT refunds	11,663	11,522	11,557	11,434	11,790
Imputed subsidy from Local Authorities to the Housing Revenue Account 1	441	354	530	776	476
Imputed flows for Renewable Obligation Certificates 2	1,471	1,966	2,532	3,064	3,900
Local authority pensions	1,881	1,966	1,862	1,900	1,900
Network Rail	2,640	2,810	2,615	2,402	0
British Transport Police Service Agreements	264	221	279	238	145
Current expenditure residual	-881	1,793	3,853	3,002	-3,554
of which capital expenditure:	.	.	.	.	.
Capital VAT refunds	2,222	2,137	2,089	2,168	2,236
Network Rail	-451	-321	2,405	-501	0
Royal Mail Pension Plan	0	9,460	0	0	0
English Housing Associations	7,001	6,097	6,950	7,100	7,900
Crossrail	517	1,205	1,123	1,082	829
Scottish NPD projects	0	0	0	-128	-364
Capital expenditure residual	1,358	903	-627	1,268	42

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 impute 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 have 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
	2011-12	2012-13	2013-14	2014-15	2015-16
Scottish total managed expenditure ( TME)	65,758	67,495	67,035	67,879	68,581
Scottish total expenditure on services ( TES)	61,574	62,293	62,399	63,297	64,727
Scottish accounting adjustment	4,184	5,202	4,636	4,582	3,854
Percentage of UK accounting adjustment	7.8%	7.8%	7.4%	7.4%	7.0%
Of which current expenditure:
Central government capital consumption	1,374	1,349	1,441	1,394	1,467
Local government capital consumption	882	948	992	1,043	1,089
Current VAT refunds	1,092	1,092	1,035	1,027	1,062
Imputed subsidy from Local Authorities to the Housing Revenue Account 1	35	28	41	61	37
Imputed flows for Renewable Obligation Certificates 2	175	233	300	364	463
Local authority pensions	171	173	169	176	176
Network Rail	237	175	135	60	0
British Transport Police Service Agreements	23	19	24	20	12
Current expenditure residual	-74	149	320	249	-293
Of which capital expenditure:
Capital VAT refunds	208	202	187	195	201
Network Rail	-50	-30	45	19	0
Royal Mail Pension Plan	0	788	0	0	0
English Housing Associations	0	0	0	0	0
Crossrail	0	0	0	0	0
Scottish NPD projects	0	0	0	-128	-364
Capital expenditure residual	112	76	-53	104	3

^{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, 2015-16
	Expenditure AA	Revenue AA	Revenue line
Of which current expenditure:
Central government capital consumption	1,467	1,467	Gross operating surplus
Local government capital consumption	1,089	1,089	Gross operating surplus
Current VAT refunds	1,062	1,062	VAT
Imputed subsidy from Local Authorities to the Housing Revenue Account	37	-	n/a
Imputed flows for Renewable Obligation Certificates	463	463	Other taxes, royalties, and adjustments
Local authority pensions	176	-	n/a
British Transport Police Service Agreements	12	12	Other taxes, royalties, and adjustments
Current expenditure residual	-293	-	n/a
Of which capital expenditure:	0
Capital VAT refunds	201	201	VAT
Network Rail	0	-	n/a
Royal Mail Pension Plan	0	-	n/a
English Housing Associations	0	-	n/a
Crossrail	0	-	n/a
Scottish NPD projects	-364	-	n/a
Capital expenditure residual	3	-	n/a
Total accounting adjustments	3,854	4,295

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 pensions expenditure as the difference between monies paid into the pension fund and monies paid out, 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 2014-15.
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 2014-15 rather than 2015-16, as this is the latest year for which published accounts were available for both the Scottish Government and Scottish Local Government. 2015-16 figures in GERS are based on provisional outturn estimates.

Table A.10: Reconciliation of published budget documents to GERS expenditure Table 3.8
	£ billion
	2014-15
Scottish Government
Published Scottish Government budget 1	36.4
Spending by Audit Scotland and Scottish Parliament	0.1
Public corporation capital spending	0.5
Timing differences	0.1
Total Scottish Government and public corporation ( PC) expenditure	37.1
Adjustments to align budget to CRA measure of spending
Grants to other public sector bodies (e.g. local government)	-10.1
Pensions	-3.4
Depreciation	-0.8
Financial transactions associated with student loans and public corporations	-0.4
Adjustments to move from spend 'in' Scotland to spend 'for' Scotland 2	-0.1
Other	0.2
Final Scottish Government and PC expenditure on services for Scotland	22.0
Scottish Local Government
Published Local Government gross current expenditure 3	12.5
Income excluding grants from Central Government 4	-2.0
Housing benefit	1.8
Published Local Government gross capital expenditure 5	2.2
Income from sales of capital assets 6	-0.1
Final Scottish Local Government expenditure on services for Scotland	14.4
Scottish Government, PC, & Local Government expenditure on services for Scotland	36.4
National Accounts adjustments 7
Capital consumption	2.3
VAT refunds	1.2
Other accounting adjustments	0.0
Final Scottish Government, PC, & Scottish Local Government TME	40.0

¹ Scottish Government Draft Budget 2016-17 Annex G
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 2014-15, Annex B. Total General Fund (excluding the Housing Revenue Account and trading with the public) employee costs, operating costs, and support services costs, less recharges
⁴ As Note 2. Total General Fund (excluding the Housing Revenue Account and trading with the public) income less government grants
⁵ As Note 2. All services total gross capital expenditure (Annex H)
⁶ As Note 2. Total capital receipts from sales of assets (Annex I)
⁷ See Table A.8