Government Expenditure and Revenue in Scotland

Government Expenditure and Revenue in Scotland

APPENDIX D: GOVERNMENT EXPENDITURE AND REVENUE: THE LAST FIVE YEARS

REVISIONS TO THE 1995-96 ESTIMATE

It was noted in Section 3 above that the data on government expenditure in Scotland in 1996-97 presented in this report are not strictly comparable with the 1995-96 figures given in the November 1997 publication. This is because the latest data are based on the figures for identifiable and non-identifiable expenditure given in Public Expenditure Statistical Analyses, as published by the Treasury in April 1998, whereas the 1995-96 statistics were derived from the March 1997 edition of the same publication. The allocation of identifiable public expenditure between the countries of the UK is not necessarily consistent from one publication to another due to classification changes. In particular, the boundary between "identifiable" and "non-identifiable" expenditure changes over time as better records allow a greater proportion of expenditure to be allocated to the identifiable category, hence improving estimation of total GGE at the country level.

However, each edition of the Treasury publication does provide a consistent five-year run of identifiable public expenditure figures for each of the four countries of the UK. These figures are directly comparable and can be used to generate estimates of total General Government Expenditure by country, including Scotland. When combined with estimates of total revenue, the calculation of the Scottish "fiscal deficit" for earlier years can be updated.

This methodology has been employed to update the 1995-96 figures provided in the November 1997 Government Expenditure and Revenue in Scotland, 1995-96 publication. The results are shown in Table 17, which confirms the original estimate of the Scottish General Government Borrowing Requirement (GGBR) to have been robust. The GGBR estimate (excluding privatisation proceeds and oil revenues) in 1995-96 has been revised up by £0.3 billion to £7.7 billion. It remains at 12¹/₂ per cent of non-oil GDP. The revision has resulted mostly from changes on the expenditure side of the fiscal equation, and, in particular, identifiable expenditure.

1992-93 TO 1996 - 97
Tables 18 and 19 provide a detailed breakdown of GGE (excluding privatisation proceeds) and GGR (excluding North Sea revenues) for Scotland over the period from 1992-93 to 1996-97.

Table 20 outlines the latest series of estimates of the GGBR and the principal components for Scotland over the 5-year period. It shows that, in recent years, the Scottish GGBR (excluding privatisation proceeds and oil revenues) has mirrored the changes which have taken place in the UK fiscal stance, albeit with the deficit being a higher proportion of GDP. The Scottish deficit rose as a result of the economic recession in the early 1990s. The rise was particularly marked in 1992-93, principally due to a strong rise in GGE. The deficit reached a peak of 15³/₄ per cent of GDP in 1993-94. Since then, rising taxation yields and restraints on public expenditure have led to successive reductions in the Scottish GGBR in 1994-95, 1995-96, and again in 1996-97, with the deficit standing at an estimated 11¹/₄ per cent of GDP in that year. The reduction has been proportionately greater at the UK level. Hence, Scotland's share of the UK GGBR has risen over the period.

Table 17. Scottish general government expenditure and revenue in 1995-96: original and revised estimates

	Latest Estimates ⁽¹⁾£ billion			Estimates in November 1997 ⁽²⁾£ billion			Difference £ billion
Identifiable expenditure	24.0			23.7			+0.3
Non-identifiable expenditure	3.4			3.3			+0.1
Other expenditure	3.9			3.9			0.0
Total GGE ⁽³⁾	31.3			30.9			+0.4

General Government Receipts ⁽⁴⁾	23.6			23.5			+0.1

GGBR ⁽⁵⁾	7.7			7.4			+0.3

GGBR as a % of GDP ⁽⁶⁾	12¹/₂			12¹/₂

Notes: 1. Based on Public Expenditure Statistical Analyses 1998-99 and latest revenue series.
2. As published in Government Expenditure and Revenue in Scotland 1995-96.
3. GGE excluding privatisation proceeds.
4. GGR excluding North Sea oil revenues.
5. GGBR excluding both privatisation proceeds and North Sea revenues.
6. Non-oil GDP at current market prices.

Table 18. General government expenditure components for Scotland⁽¹⁾ 1992-93 to 1996-97

		1992-93	1993-94		1994-95	1995-96		1996-97
Identifiable expenditure
£ billion⁽²⁾		20.8	22.1		23.3	24.0		24.7
% share of UK		10.4	10.4		10.6	10.5		10.4

Non-identifiable expenditure
£ billion⁽²⁾		3.6	3.6		3.4	3.4		3.1
% share of UK		8.8	8.8		8.8	8.8		8.7

Other expenditure
£ billion⁽²⁾		3.0	3.0		3.5	3.9		4.0
% share of UK		10.7	10.0		9.8	9.8		9.7

Total GGE
£ billion⁽²⁾		27.4	28.6		30.2	31.3		31.8
% share of UK		10.2	10.1		10.2	10.2		10.1

Notes: 1. Figures show components of GGE excluding privatisation proceeds.
2. Figures on a current price basis.

Table 19. General government receipt components for Scotland⁽¹⁾ 1992-93 to 1996-97

		1992-93	1993-94		1994-95	1995-96		1996-97
Income tax
£ billion⁽²⁾		4.5	4.6		5.0	5.4		5.5
% of UK		7.9	7.9		8.0	7.9		8.0

Social security contributions
£ billion⁽²⁾		3.4	3.5		3.8	4.0		4.2
% of UK		9.0	9.0		8.9	9.0		9.0

Value added tax
£ billion⁽²⁾		3.1	3.4		3.7	3.8		4.0
% of UK		8.4	8.7		8.9	8.7		8.6

Local authority revenues
£ billion⁽²⁾		2.0	2.0		2.1	2.3		2.2
% of UK		9.0	9.1		9.5	9.7		9.0

All other revenues
£ billion⁽²⁾		6.7	6.6		7.4	8.3		8.7
% of UK		9.7	9.3		9.2	9.3		9.1
Total GGR
£ billion⁽²⁾		19.6	20.1		22.0	23.6		24.7
% of UK		8.8	8.8		8.8	8.8		8.7

Notes: 1. Figures exclude North Sea revenues.
2. Figures on a current price basis.

Table 20. Scottish GGBR estimates 1992-93 to 1996-97

		1992-93	1993-94		1994-95	1995-96		1996-97

Total GGE,⁽¹⁾£ billion ⁽⁴⁾		27.4	28.6		30.2	31.3		31.8
GGR,⁽²⁾ £ billion ⁽⁴⁾		19.6	20.1		22.0	23.6		24.7
GGBR,⁽³⁾ £ billion ⁽⁴⁾		7.8	8.6		8.2	7.7		7.1
GGBR as a % of GDP ⁽⁵⁾		14³/₄	15³/₄		14¹/₄	12¹/₂		11¹/₄
UK GGBR,⁽³⁾ £ billion⁽⁴⁾		46.9	53.1		45.5	39.6		31.7
Scottish GGBR as a % of UK		16.5	16.1		18.1	19.5		22.5

Notes: 1. GGE excluding privatisation proceeds.
2. GGR excluding North Sea oil revenues.
3. GGBR excluding both privatisation proceeds and North Sea revenues.
4. Figures on a current price basis.
5. Non-oil GDP at current market prices.

APPENDIX D: GOVERNMENT EXPENDITURE AND REVENUE: THE LAST FIVE YEARS

REVISIONS TO THE 1995-96 ESTIMATE

1992-93 TO 1996 - 97