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Government Expenditure and Revenue in Scotland 2001-2002
Section 3: Identifiable Expenditure
Definition
Identifiable expenditure is defined as expenditure that has been incurred to the benefit of the population of a particular country/region (the "who benefits" principle).
Alternatively, expenditure could be allocated to the country where it is incurred. In the latter case, the location of the beneficiaries of the service is not explicitly taken into account. In practice, the allocation under the two approaches is similar for most kinds of spending.
By convention, all Scottish Executive spending is regarded as being for the benefit of Scotland. In practice some expenditure, classed as "identifiable", will inevitably be to the benefit of people residing outside of Scotland. For example, health facilities are not used solely by the residents of the region where they are located, and roads serve the needs of people beyond the area where they are built.
The data in this section are taken from the Corrigendum to Chapter 8 of the Treasury's Public Expenditure Statistical Analyses 2003, (PESA 2003 5), which is compiled on a "who benefits" basis.
Figures from this edition of PESA are not directly comparable with those published in previous editions. In addition, the country data in Chapter 8 were collected in the autumn of 2002 and are therefore not entirely consistent with more recent figures in other chapters of PESA 2003. 6
Identifiable Expenditure in the UK
Table 3.1 shows identifiable expenditure in the UK and its constituent countries. Scotland received 10.3 per cent of UK total identifiable expenditure in 2001-02, which translates into the largest per head expenditure after Northern Ireland. Scotland's identifiable expenditure on services per head is about 20 per cent higher than in the UK on average.
Data of total identifiable expenditure for all UK countries over the period from 1997-98 to 2001-02 can be found in Section 9.
Identifiable Expenditure by Programme
Table 3.2 shows identifiable expenditure allocated across the main spending programmes in Scotland and the UK.
"Social Protection" is by far the biggest expenditure programme and, together with "Health and personal social services", accounts for about 55 per cent of total Scottish identifiable expenditure. The other major spending programme is "Education". As is to be expected, a similar pattern applies at the UK level.
Table 3.3 shows Scottish identifiable expenditure on services per head in 2001-02 by value and relative to the UK, broken down by programme. Total Scottish identifiable expenditure per head amounted to 6,246 in 2001-02 which is about 1,000 higher than in the UK as a whole.
The larger expenditure per head is reflected in the programme relatives, notably in "Housing", "Agriculture, fisheries, food and forestry", "Other environmental services", and "Trade, industry, energy and employment".
Within the UK, the levels of public expenditure vary from one constituent part to another, reflecting the needs rather than the wealth or tax capacity of an area.
There are many reasons for the differences in expenditure priorities in Scotland. In some cases, higher expenditure per head reflects the greater importance that particular activities have in the economic life of the country. Here in Scotland, "Agriculture, fisheries, food and forestry" is a case in point. Scotland is also the most sparsely populated area in the UK, and lower population density raises programme costs, for example, in primary and secondary education.
Differences also occur because of variations in the distribution of activities between the public and private sectors. For example, water and sewerage services are a public sector responsibility in Scotland, and are included in the Scottish public expenditure totals.
In health expenditure, Scotland's needs are greater for a number of reasons, including high death rates from circulatory diseases and cancer. Higher costs also accrue in education. There is traditionally a net inflow of students from the rest of the UK to Scotland and Scottish University courses take longer to complete. The honours degree course takes four years, compared with a typical three-year course in England and Wales. Lastly, there is a higher proportion of housing stock in the public sector.
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