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Section 1: Introduction
This report is the thirteenth in the series of official published estimates of Government's expenditure and revenue flows in Scotland. 1
The report covers the 2004-05 fiscal year. This is the latest period for which the Government expenditure and revenue series are available for Scotland.
Structure of Report
The structure of this report is similar to that adopted in the previous publications. The emphasis is on providing data for 2004-05, using methodology that is in line with UK treatment. Some of the detailed descriptive background contained in the previous reports is not repeated here; instead, the appropriate cross-references are made to earlier GERS and other publications.
Section 2: Fiscal Background
This section provides some fiscal background and discusses issues concerning definitions, and the availability and sources of data for calculating expenditure for Scotland. The section also outlines the framework of the UK public finances.
Section 3: Expenditure
This section discusses and provides estimates of the different expenditure categories. The Public Expenditure Statistical Analysis ( PESA) publication provides expenditure on services by UK region. Total expenditure on services is split up into "identifiable" and "non-identifiable" expenditure.
"Identifiable" expenditure in Scotland is expenditure that can be readily identified as being undertaken in providing services for the benefit of the population of Scotland. "Non-identifiable" expenditure is generally expenditure that is incurred on behalf of the UK and is not allocated to a specific region in PESA. The principal item is defence expenditure, which accounts for about two-fifths of total non-identifiable expenditure in the UK (including spending outside of the UK).
A number of adjustments are required to relate service expenditure as reported in PESA to National Accounts measures of aggregate public expenditure (known as Total Managed Expenditure).
Section 4: Revenue
The revenue side of the public accounts is presented in this section. For public receipts, the available information relating to Scotland is less well-founded. Many taxes are collected centrally and their distribution by region is often unavailable. In addition, for some components of revenue, there are theoretical and practical difficulties in determining an appropriate share to allocate to Scotland. As a result, it is emphasised that there is no uniquely correct way to undertake the exercise. The methodology adopted in this report is described fully.
Section 5: Scotland's Fiscal Position (Net Borrowing)
With estimates of both expenditure for Scotland and receipts for Scotland, this section derives an estimate of net borrowing for Scotland in 2004-05 including a sensitivity analysis regarding the impact of oil revenues.
Section 6: The Fiscal Position from 2000-2001 to 2004-05
This section summarises the Scottish fiscal position for the five years up to 2004-05. The five-year series for Scottish net borrowing is presented at current prices, as a percentage of GDP, and as a share of the UK net borrowing. In addition, revisions to last year's figures are discussed.
Section 7: Longer-term Developments
This section presents an overview of the fiscal positions of the UK and Scotland between 1980-81 and 2004-05.
Appendices
Appendices A and B present detailed accounts of the derivation of the Scottish estimates of expenditure and receipts respectively. Appendix B also provides a full list of the receipts estimates for Scotland in 2004-05.
Appendix C lists abbreviations used in the text.
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