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| Government Expenditure and Revenue in Scotland |
SECTION 5: OTHER EXPENDITURE |
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DEFINITION |
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| This category is made-up of a collection of expenditure classes which do not fall naturally within the programmes included in the identified and non-identified categories. Specifically, it includes local authority and central government debt interest, and a number of adjustments required to bring the expenditure total into line with National Accounts. The adjustments include an imputed charge for non-trading capital consumption (ie depreciation), VAT refunds within central and local government, and pension increase payments. | |||
| Throughout this analysis, GGE has been defined to exclude privatisation proceeds. This convention is continued in this section. However, the section includes a brief discussion of privatisation proceeds and provides an estimate for Scotland in 1996-97. | |||
SCOTTISH AND UK OTHER EXPENDITURE |
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| Most items that make-up the other expenditure category have been allocated to Scotland on the basis of its GDP share. There are two exceptions: local authority debt interest and the charge for capital consumption. These have been estimated by the Scottish Office's Local Government Finance Division and by the Office for National Statistics, respectively. | |||
| The composition of other expenditure for the UK and Scotland is shown in Table 7. | |||
| Table 7. Other expenditure categories, 1996-97 | |||
UK |
Scottish estimate |
Estimated % |
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| Local authority debt interest (other than to central government) | 0.5 |
0.2 |
33.1 |
| Central government debt interest | 26.6 |
2.3 |
8.6 |
| National accounts adjustments (1) | 14.3 |
1.5 |
10.7 |
| Total other expenditure | 41.4 |
4.0 |
9.7 |
| Notes: 1. Includes estimate of capital consumption. | |||
| 2. Based on unrounded data. | |||
| Sources: Scottish Office, HM Treasury, Office for National Statistics. | |||
| Debt interest | |||
| For the purposes of this exercise, local authority gross debt interest payments have been taken directly from Scottish Office estimates of interest payments by Scottish local authorities to bodies other than the Public Works Loan Board18. Central government gross debt interest has been allocated simply on the basis of Scotland's share of UK GDP (excluding the Continental Shelf)19. On this basis, central government's debt interest for Scotland was £2.3 billion in 1996-97. | |||
| National Accounts adjustments | |||
| The major component of this category is capital consumption (or, more accurately, the imputed charge for capital consumption, ICCC). This applies to the non-trading capital consumption of central and local government and measures the amount of fixed capital resources used-up in the process of production: in other words, depreciation. The figure is calculated from Regional Accounts estimates produced by the Office for National Statistics and the Treasury's Public Expenditure Statistical Analyses20. | |||
| In 1996-97, ICCC in Scotland is estimated at £0.6 billion. This is considerably higher than if it had been allocated according to Scotland's GDP share. The higher share is for two reasons. First, Scotland has a relatively large local authority housing stock compared with the rest of the UK. Second, the supply of water is a public sector responsibility in Scotland, whereas in England and Wales it is provided by the private sector and is excluded from their ICCC figures. | |||
| Items other than ICCC were allocated in accordance with Scotland's GDP share (excluding the Continental Shelf). Including ICCC, the National Accounts adjustments are estimated at £1.5 billion in 1996-97. | |||
PRIVATISATION PROCEEDS |
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| As noted in Section 2, GGE is shown before taking account of privatisation proceeds, which are treated in the National Accounts as negative expenditure. In 1996-97, these amounted to £4.4 billion in the UK. Scotland's share is estimated at £0.4 billion. | |||
| To derive the Scottish estimate, Scotland's share of UK GDP (excluding Continental Shelf) has been used. This approach is based on the view that privatisation proceeds can be seen in much the same way as the National Debt: the asset/liability has been acquired by the UK as a whole, so the most appropriate division is on the basis of its GDP share21. | |||
SUMMARY |
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| It is estimated that, in 1996-97, other expenditure in the UK amounted to £41.4 billion, or 13.1 per cent of total UK GGE (excluding privatisation proceeds). Scotland's share is estimated to be £4.0 billion, or 9.7 per cent of UK other expenditure. The share is higher than Scotland's share of UK GDP or population because of higher local authority debt interest and higher capital consumption charges. | |||
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