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Scottish Economic Statistics 2002

chapter five: Government Sector

Public Sector Receipts

The amount of money raised from taxes and other sources in Scotland is estimated in the annual Government Expenditure and Revenue in Scotland (GERS) exercise. Most UK taxes are collected centrally, and so information on the source region is unavailable. There are several difficulties that arise in allocating a share to Scotland, and these are outlined in the GERS publication. It is estimated, however, that Scotland contributed £29.8 billion in the financial year 1999/2000, which amounted to 8.3 per cent of the total UK revenue (excluding North Sea). This is the same as Scotland's proportion of UK GDP in 1999.

Chart 5.1 illustrates the estimated proportions of the total revenue originating from various sources. It can be seen from table 5.1 that compared with the UK as a whole, Scotland pays more local taxes relative to its population, but contributes less to income tax revenue. The Scottish Unitary Authorities collected a total of £2.7 billion in Council Tax and non-domestic rates in 1999/2000.

Chart 5.1: Estimated Government revenue from Scotland, by source 1999/00

Government Expenditure

The GERS analysis also provides estimates of Government expenditure in Scotland. Some expenditure can be directly attributed to Scotland, and is termed as identifiable. Information on this is published in Public Expenditure Statistical Analyses by HM Treasury. Chart 5.2 shows the distribution of identifiable expenditure among various services in Scotland.

Chart 5.2: Identifiable Total Managed Expenditure in Scotland, by programme 1999/00

Other expenditure is made at the UK level, and cannot be assigned to a particular geographical region. Defence is the main example of this 'non-identifiable' expenditure. Allocation of Scotland's share of non-identifiable expenditure can be done in different ways. For most items Scotland's proportion of UK GDP is used, although for some, including defence, Scotland's share of the UK population is taken (based on a 'who benefits' principle). Table 5.3 gives the estimates of identifiable and non-identifiable expenditure on different services.

Total managed expenditure in Scotland in 1999/00 amounted to an estimated £30.2 billion, which was 10 per cent of the UK total. The largest category of spending was Social Security, which accounted for over £9.5 billion or over 9 per cent of total UK Social Security spending (the Scottish share of the UK population in 1999 was 8.6 percent). More information on Social Security recipients was given in chapter 3 of this publication. The second most expensive item was health and personal social services, which cost £6.5 billion. This category is described in more detail below.

Spending on Health and Personal Social Services in Scotland

Most public expenditure on health services is allocated through Scotland's 15 Health Boards to Acute and Primary Care, which are responsible for providing hospital and community health services. Total Managed Expenditure (TME) on Health includes this expenditure and also the capital expenditure and interest and dividends of the trusts.
TME is defined as being the sum of the Departmental Expenditure Limit (DEL), which in the case of health is about 97 percent of expenditure, and Annually Managed Expenditure (AME), which incorporates expenditure that cannot be included in three year plans. TME on health in Scotland in the financial year 1999/00 was approximately £5.2 billion. Of this, 91 percent was on the purchase of healthcare, the breakdown of which into various services is illustrated in chart 5.3. The remaining expenditure was on the Common Services Agency, capital expenditure, the Scottish Ambulance Service, headquarters purchasing and administration and other expenditure. More detailed information on health service expenditure can be found on the ISD website³².

Chart 5.3: Revenue expenditure on healthcare in Scotland, 1999/00

The remainder of expenditure on this category is on Social Work, which in 1999/00 amounted to £1.2 billion. This is funded by the Scottish Local Authorities, as seen in table 5.4. The total includes criminal justice social work expenditure, children and non-specific social work expenditure as well as community care. Community care cost £769 million, 64 percent of the total Social Work budget. More information on community care expenditure is available in the Scottish Executive publication Scottish Community Care Statistics 2000.

Source: GERS, Scottish Executive
1. The figures for the individual items in the table are on a cash basis; an accruals adjustment is included in all other revenues. Includes estimates of all taxes and duties not specified above, plus accounting adjustments and other receipts.
2. Excluding North Sea revenues.

Source: Scottish Executive, Local Government Finance Statistics
1. Excludes water and sewerage. Revenue figures are on an accruals basis; capital on a cash basis.
2. Including transfer payments.
3. Excluding contributions to transport undertakings. Including reserve fund contributions in respect of trading services.
4. All inter account and inter authority transfers are deducted from expenditure
5. This is the Distributable Amount as per the Local Government Finance (Scotland) Order 1999
6. Re-determined as per Local Government Finance (Scotland) Order 2000.
7. Council tax rebate paid by DWP.
8. As defined in Appendix B of the Report to the Local Government Finance (Scotland) Order 1999 and as returned by local authorities.
9. Excludes capital expenditure which is financed from revenue.

Source: GERS, Scottish Executive
1. Excluding public sector debt interest and accounting and other adjustments which are not allocated to countries.
2. Includes net payment to the European Communities.

Source: As reported to Scottish Executive by Local Authorities
1. Revenue Expenditure covers the cost of maintaining local services and includes costs such as employees salaries and service operating costs.
2. Excluding general fund contributions to housing, trading services, interest on revenue balances and loan charges. Includes revenue contributions to capital.
3. The 1996/97 figure differs significantly from later years due to a change in recording practise of a grant in aid of expenditure on rail passenger services.
4. Includes district courts, consumer protection, non-road lighting, homelessness, registration of vital events, collection of council tax and non-domestic rates, 'administration of council tax and housing benefits, corporate management and other services

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