APPENDIX A:
1996-97 GENERAL GOVERNMENT EXPENDITURE: METHODOLOGY FOR
PRODUCING SCOTTISH ESTIMATES
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INTRODUCTION
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| General
Government Expenditure (GGE) for Scotland was derived by
combining the Treasury analysis of identifiable GGE with
estimates of an appropriate Scottish share of those
elements of GGE which the Treasury analysis does not
allocate to specific countries within the UK. |
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IDENTIFIABLE
GENERAL GOVERNMENT EXPENDITURE
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| The Treasury
provides an analysis of General Government Expenditure
which identifies, where possible, the country within the
UK to which the expenditure is attributed. A summary by
programme and country was published by the Treasury in Public
Expenditure Statistical Analyses, 1998-99 in April
1998. Identifiable expenditure covers programmes such as
roads, schools, social security and law and order. Using
the April 1998 data, around three quarters of UK General
Government Expenditure was identifiable. |
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NON-IDENTIFIABLE
PROGRAMME EXPENDITURE
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| This is
mainly expenditure on defence and overseas services where
the entire population of the UK benefits, regardless of
where the expenditure takes place. For the purpose of
this exercise, Scotland's share of the benefit of these
two main items and, therefore, the cost of these
services, was allocated according to the share of UK
population. |
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| The Treasury
supplied the Scottish Office with a more detailed
analysis of non-identifiable expenditure than that
published in Public Expenditure Statistical Analyses,
1998-99. For 1996-97, virtually all of
non-identifiable expenditure was incurred for the benefit
of the UK or Great Britain. Unlike in previous years, the
5 year run of data provided by the Treasury included just
a very small amount of non-identifiable expenditure which
could be allocated to England and Wales but not to
England or Wales individually. Scotland's share of that
part of non-identifiable expenditure which was allocated
to UK (or GB), but which could not be allocated at a more
disaggregated geographic level, was determined by
Scotland's share of UK (or GB) GDP, excluding the
Continental Shelf. |
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PRIVATISATION
PROCEEDS
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| Privatisation
proceeds are treated in the National Accounts as negative
expenditure. The Scottish share of privatisation proceeds
was allocated on the basis of the Scottish share of UK
GDP (excluding Continental Shelf). It might be argued
that the Scottish share should be based on the Scottish
share of the value of assets being sold into the private
sector. However, this presents both practical and
conceptual problems. |
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| In practical
terms, there is no ready source of information about the
geographic distribution of the assets of UK industries
being privatised. This information is likely to be
commercially confidential to the companies involved. Even
where the geographical allocation of assets can be
readily identified - e.g. the England and Wales water
companies or the Scottish bus and electricity companies -
the sale of shares is generally staggered and the
Treasury analyses of privatisation income does not
separate out these components readily. |
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| Conceptually,
privatisation proceeds can be seen in much the same way
as the National Debt, nationalised industries or the
revenue from North Sea oil, in that the asset/liability
has been acquired by the United Kingdom as a whole.
Proceeds are divided by GDP share (which in 1996-97
differed from the population share by less than 0.1
percentage points). |
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LOCAL AUTHORITY
DEBT INTEREST
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| Local
Authority gross debt interest for Scotland covers
interest payments by Scottish Local Authorities,
excluding interest payments to the Public Works Loan
Board. The estimates are by The Scottish Office, based on
information from Institute for Public Finance surveys. |
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CENTRAL
GOVERNMENT DEBT INTEREST
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| The Scottish
share has been allocated on the basis of the share of UK
GDP (excluding Continental Shelf). |
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NATIONAL ACCOUNTS
ADJUSTMENTS
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| These are
adjustments necessary to bring GGE in line with the
concepts of the National Accounts. The National Accounts
adjustment figures used in Government Expenditure and
Revenue in Scotland (GERS) are based on figures in
the Treasury's Public Expenditure Statistical Analyses
(PESA). There are minor differences in the headline
figures, for two reasons. Firstly, in PESA, expenditure
from National Lottery funds is deducted, to be
re-introduced elsewhere in the calculation of GGE.
Secondly, in GERS, the item covering allowances for
shortfall is deducted from other adjustments, whereas it
is recorded as a separate item in PESA. The treatment of
the two main items are as follows. |
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| Imputed
charge for capital consumption |
| A Scottish
proportion was calculated from the UK Regional Accounts
estimates produced by the Office for National Statistics,
and applied to the UK amount in Public Expenditure
Statistical Analyses 1998-99. This offsets the same
amount in the "other revenue" calculations. |
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| Other
adjustments |
| These cover
a range of items such as VAT refunds within Central and
Local Government and payments out of certain pension
schemes. For this exercise, the Scottish share has been
allocated on the basis of UK GDP (excluding Continental
Shelf). |
