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Section 6: The Fiscal Position from 2000-2001 to 2004-05

2000-2001 to 2004-05 Estimates

Each edition of the PESA publication provides 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 expenditure by country, including Scotland. When combined with estimates of total revenue, the calculation of the Scottish fiscal position for earlier years can be updated from those published in previous editions of GERS.

UK and Scottish Identifiable Expenditure on Services

Table 6.1 shows that identifiable expenditure on services in Scotland has been rising steadily since 2000-2001 and reached £38.6 billion in 2004-05.

Scotland's share of identifiable UK expenditure, however, has changed little over the five-year period (Table 6.2), although a slight fall can be seen in the latest year. Across all countries, there have been small changes in the relative distribution of spending.

Table 6.1 Identifiable expenditure on services by country, 2000-2001 to 2004-05

Source: Public Expenditure Statistical Analyses 2006, Table 7.1.

Table 6.2 Identifiable expenditure on services as a percentage of UK total ¹

Source: Public Expenditure Statistical Analyses 2006, Table 7.1.
Note: 1 Excludes identifiable expenditure outside the UK.

Tables 6.3 and 6.4 show that identifiable expenditure per head in 2004-05 for Northern Ireland, Scotland and Wales remained significantly above the UK average. In that fiscal year, identifiable expenditure per head was £7,597 in Scotland compared to £6,563 in the UK as a whole. However, identifiable expenditure per head across the four countries converged to a degree in 2004-05, with Scotland's spending per head falling from 19.1% above the UK average in 2003-04 to 15.8% above the UK average. This convergence occurred because expenditure elsewhere in the UK, particularly in England, grew faster than in Scotland.

Table 6.3 Identifiable expenditure on services by country, accruals, £ per head

Source: Public Expenditure Statistical Analyses 2006, Table 7.2.

Table 6.4 Identifiable expenditure on services per head, relative to UK ( UK = 100)

Source: Public Expenditure Statistical Analyses 2006, Table 7.2.

Service Spending by Programme

Table 6.5 provides the detail on identifiable spending over the five-year period.

Table 6.5 Scottish identifiable expenditure on services by programme

Table 6.6 gives the sum of identifiable and non-identifiable expenditure by programme from 2000-2001 to 2004-05.

Table 6.6 Scottish total expenditure on services by programme

Since non-identifiable expenditure has changed relatively little over the five-year period, the growth rate of Total Expenditure on Services is lower than the growth rate of identifiable expenditure, both at the Scottish and the UK level.

Aggregate Expenditure

Table 6.7 provides the summary of the main spending aggregates from 2000-2001 to 2004-05.

Table 6.7 Main Expenditure Components for Scotland, 2000-2001 to 2004-05

Receipts

Table 6.8 gives details on the major revenue components over the five-year period.

Table 6.8 Receipts Components for Scotland, 2000-2001 to 2004-05

Fiscal Position

Table 6.9 outlines the latest series of estimates of net borrowing (excluding oil revenues) for Scotland over the five-year period. It shows that, in recent years, the Scottish deficit (excluding oil revenues) has tended to mirror the changes that have taken place in the UK fiscal stance, albeit with the balance being a higher proportion of GDP. Scottish net borrowing increased from 2000-2001 to 2003-04. However, in 2004-05 the ratio for Scotland fell to 12.0 per cent.

Table 6.9 Net Borrowing Estimate for Scotland, 2000-2001 to 2004-05

Notes: 1 Excludes North Sea revenues. - 2 Excludes Extra-regio GDP.

Revisions to the 2003-04 Estimate

Table 6.10 shows revisions made to the estimate of key fiscal aggregates for Scotland for 2003-04. The estimates were first published in GERS 2003-04.

Table 6.10 GERS Estimate and Revision for 2003-04 (£ million)

As Table 6.10 shows, the overall revisions for 2003-04 are relatively minor with an increase of £34 million to the net borrowing estimate. On the revenue side, the downward revisions for Income Tax (£77m) and Corporation tax (£315m) were offset by upward revisions to Social Security contributions (£179m) and Other Revenues (£225m). The overall revision to total revenue (which includes other categories) was small relative to the total. On the expenditure side, there were a number of minor revisions, notably changes to the way that environment protection spend and housing and community amenities were reported in PESA.

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