EXECUTIVE SUMMARY

• This report provides an analysis of the public finances in Scotland. Attention is focused on 1996-97, the latest year for which outturns of government expenditure and revenue are available for Scotland.
• In 1996-97, total general government expenditure (excluding privatisation proceeds) for Scotland is estimated at £31.8 billion, or 10.1 per cent of the UK total. For reference, Scotland's population share in 1996 was 8.7 per cent and its Gross Domestic Product (GDP) share was 8.6 per cent.
• "Identifiable" government expenditure in Scotland (that is, spending specifically incurred on behalf of the residents of Scotland) was £24.7 billion, or 10.4 per cent of the corresponding UK total. "Non-identifiable" expenditure (defined as Scotland's share of public spending that is either incurred on behalf of the UK as a whole or cannot be allocated to individual countries) was estimated at £3.1 billion, or 8.7 per cent of the UK amount. "Other" expenditure (including central government debt interest) was £4.0 billion, or 9.7 per cent of the UK total.
• In 1996-97, general government receipts (excluding North Sea revenues) in Scotland are estimated at £24.7 billion, equivalent to 8.7 per cent of total UK receipts, excluding oil revenues.
• The General Government Borrowing Requirement (GGBR) attributable to Scotland is the estimate of the extent to which general government expenditure for Scotland exceeds general government receipts in Scotland. This is estimated to have been £7.1 billion in 1996-97 (excluding North Sea revenues and privatisation proceeds), equivalent to 11¹/₄ per cent of Scottish GDP (excluding oil). In the same year, the equivalent UK ratio was 4¹/₄ per cent. These 1996-97 outturns are lower than in the four previous years.
• Calculations are shown on the effect of allocating different levels of North Sea revenues to Scotland. Thus, for example, in the event of all North Sea oil revenue and output being attributed to Scotland, and after including privatisation proceeds, the 1996-97 General Government Borrowing Requirement would be £3.2 billion, or 4 per cent of "Scottish" GDP. The equivalent UK ratio was 3¹/₄ per cent.
• The central estimate of £7.1 billion borrowing requirement in 1996-97 compares with a revised figure of £7.7 billion for 1995-96. The latter was 12¹/₂ per cent of Scottish GDP (excluding oil). The new 1995-96 estimate is above that previously published (£7.4 billion) and reflects the use of more up-to-date information; for example, the new figures for identifiable expenditure, and revised figures on GDP from the Office for National Statistics.
• The calculations required to derive a GGBR for Scotland are subject to imprecision due to the need to estimate a number of elements of both expenditure and revenue. The GGBR estimates presented in this report should therefore be regarded as indicative rather than precise.