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Section 6: The Fiscal Position from 1999-2000 to 2003-04

1999-2000 to 2003-04 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 1999-2000 and reached £37.2 billion in 2003-04. This represents an average annual increase of 8.0 per cent which is slightly lower than in the UK as a whole (8.2 per cent).

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

Table 6.1 Identifiable expenditure on services by country, 1999-2000 to 2003-04

Source: Public Expenditure Statistical Analyses 2005, Table 8.1.

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

Source: Public Expenditure Statistical Analyses 2005, Table 8.1.
Note: 1 Excludes identifiable expenditure outside the UK.

Tables 6.3 and 6.4 show that identifiable expenditure per head in 2003-04 remained significantly above the UK average in Northern Ireland, Scotland and Wales. In that fiscal year, identifiable expenditure per head was £7,346 in Scotland, and around 19 per cent higher than the UK average.

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

Source: Public Expenditure Statistical Analyses 2005, Table 8.2.

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

Source: Public Expenditure Statistical Analyses 2005, Table 8.2.

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

Source: Public Expenditure Statistical Analyses 2005, Tables 8.5 to 8.9, 8.12, 8.13.

Table 6.6 gives the sum of identifiable and non-identifiable expenditure by programme from 1999-2000 to 2003-04.

Table 6.6 Scottish total expenditure on services by programme

Source: Public Expenditure Statistical Analyses 2005, Tables 8.5 to 8.9; own calculations.

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 (annual rates of 7.2 and 7.3 per cent respectively).

Aggregate Expenditure

Table 6.7 provides the summary of the main spending aggregates from 1999-2000 to
2003-04.

Table 6.7 Main Expenditure Components for Scotland, 1999-2000 to 2003-04

Total Managed Expenditure grew at an average annual rate of 7.4 per cent (both for Scotland and the UK). The Scottish share of aggregate expenditure over the five-year period remained relatively constant at 9.9 to 10.0 per cent.

Receipts

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

Table 6.8 Receipts Components for Scotland, 1999-2000 to 2003-04

Notes: 1 Excludes North Sea revenues.

At an average annual rate of 3.6 per cent, receipts grew more slowly for Scotland than for the UK as a whole (4.0 per cent).

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 has risen from 1999-2000 to 2003-04; the most recent ratios stood at 12.9 per cent and 3.7 per cent for Scotland and the UK, respectively. The Scottish ratio has maintained a positive differential in the order of 7.5 to 9.2 percentage points over the five-year period.

Table 6.9 Net Borrowing Estimate for Scotland, 1999-2000 to 2003-04

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

Revisions to the 2002-03 Estimate

Table 6.10 shows revisions made to the estimate of key fiscal aggregates for Scotland for 2002-03. The estimates were first published in GERS 2002-03.

The net borrowing estimate (excluding oil revenues, and based on unrounded figures) for 2002-03 has been revised upwards by around £380 million to £9.6 billion (from 11.3 per cent to 11.6 per cent of GDP). In particular, spending on health and social protection has been revised upwards. The increase in total expenditure by £566 million has been partially offset by the increase in the revenue estimate by £190 million, leading to an overall revision of net borrowing by £380 million.

Table 6.10 GERS Estimate and Revision for 2002-03 (£ million)

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