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Chapter Six: Public 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 often unavailable. In these cases proxies are used in order to estimate the amounts of taxes collected from Scotland, although there are several practical and theoretical difficulties that arise in doing this. It is estimated, however, that Scotland contributed £34.0 billion in the financial year 2003/04, which amounted to 8.2 per cent of the total UK revenue (excluding North Sea).
Chart 6.1 illustrates the proportions of the estimated total revenue originating from various sources. It can be seen from table 6.1 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 Local Authorities collected a total of £3.2 billion in Council Tax and non-domestic rates in 2003/04.
Chart 6.1: Estimated Government revenue from Scotland, by source 2003/04
Source: Government Expenditure and Revenue in Scotland 2003-2004, Scottish Executive
Government Expenditure
Expenditure which HM Treasury can directly attribute to individual regions of the UK is termed as identifiable. Information on this is published in the Public Expenditure Statistical Analyses ( PESA). Scotland tends to have relatively higher expenditure per head than other parts of the UK, and had a total expenditure per head in 2004/05 of £7,597 compared with a UK average of £6,563 per head. Chart 6.2 shows total expenditure per head for the regions of the UK. It can be seen that only Northern Ireland had higher expenditure than Scotland.
Chart 6.2: Identifiable expenditure per head, UK regions 2004/05
Source: HM Treasury, Public Expenditure Statistical Analyses 2006
Chart 6.3 shows the distribution of identifiable expenditure per head among various services in Scotland, compared with UK identifiable expenditure on those services in 2004/05. Expenditure per head was highest on social protection, at £3,007. This was the fourth highest of the 12 UK regions, and compares with a UK average of £2,702 per head.
Chart 6.3: Identifiable expenditure per head on Services, Scotland and UK 2004/05
Source: HM Treasury, Public Expenditure Statistical Analyses 2006
Other expenditure is made at the UK level, and cannot be assigned directly 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. GERS estimates the Scottish share of this UK-wide expenditure. For some items Scotland's proportion of UKGDP is used, and for others, including defence which is the largest item, Scotland's share of the UK population is taken (based on a 'who benefits' principle). Table 6.4 gives the estimates of identifiable and non-identifiable expenditure on different services in 2003/04.
Total expenditure on services ( TES) in Scotland estimates include both identifiable expenditure and the estimates of non-identifiable expenditure. In 2003/04 this amounted to an estimated £45.25 billion, which was 10 per cent of the UK total. The largest category of spending was social protection, which accounted for £14.7 billion or 32.5 per cent of total spending.
Public Sector Employment in Scotland publication
In previous editions of Scottish Economic Statistics, an estimate of public sector employment was published using available administrative data. However, these statistics were not always available on a consistent and timely basis. In July 2005, a new quarterly series of Public Sector Employment in Scotland 1 was published. This provides more comprehensive estimates than were previously available, which are consistent with the UK series published quarterly by the Office for National Statistics ( ONS). The series is published in the months of March, June, September and December with data relating to the previous quarter. A full quarterly series back to 1999 Q1 is available. The latest publication available can be found at: www.scotland.gov.uk/Publications/2006/09/12102423/0 .
The series is based on the National Accounts definition of public sector, more information on which can be found at: http://www.statistics.gov.uk/CCI/SearchRes.asp?term=ma23 . This definition does not include those employed as GPs or Dentists, as they are defined as self-employed and are in the private sector. It also excludes employment in Higher Education, which is in the Non-Profit Organisations Serving Households sector.
The data in the series are taken from Departmental returns (including the Armed Forces), a Survey of Local Government in Scotland and surveys of Public Corporations and Non-Departmental Public Bodies carried out by ONS and the Scottish Executive. Further details of Local Government Employment Statistics in Scotland can be found at www.scotland.gov.uk/jointstaffingwatch.
Public Sector Employment in Scotland is a relatively new publication and is not yet classed as National Statistics.
Public/Private Sector
Estimates of the split between those employed in the public and private sector have in the past been sourced from the Labour Force Survey ( LFS). However, ONS, who carry out the survey, acknowledge that the LFS tends to overestimate numbers working in the public sector. The quarterly public sector estimates mean a more accurate split between public and private sector employment can now be produced. Private sector employment is now calculated as total employment taken from the Labour Force Survey (not seasonally adjusted) minus the estimate for public sector employment. For 2006 Q2, 23.8 per cent of employees were employed in the public sector and 76.2 per cent in the private sector.
Between 1999 Q2 and 2006 Q2, total employment in Scotland increased by 175,000. The public sector accounts for 33.3 per cent of this increase and the private sector accounts for 66.7 per cent. Chart 6.4 below shows that employment in both the public and private sectors in Scotland has been increasing gradually since 1999.
Chart 6.4: Changes in Public and Private Sector Employment since 1999
Source: Public Sector Employment in Scotland Series (Not National Statistics); Labour Force Survey
Components of Public Sector employment
Table 6.6 provides a breakdown of the public sector employment estimate for 2006 Q2 into the component parts. This data is for Full Time Equivalents ( FTE) which provides a better indicator of total labour input than a simple headcount. Trends in the headcount of public sector employment are examined in Article A2. Local Government, which employs teachers, police, social work and fire services employs 262,000 people and accounts for 53.1 per cent of public sector employment. The National Health Service ( NHS) is the next largest public sector employer, employing 126,000 and accounting for just over a quarter of the public sector. The Civil Service accounts for 10.0%, and Non-Departmental Public Bodies and Public Corporations account for 7.9% of public sector employment. Armed forces accounts for 2.7 per cent of the public sector. Chart 6.5 illustrates how public sector employment is split in Scotland.
Chart 6.5: Split of Public Sector in Scotland, 2006 Q2
Source: Public Sector Employment in Scotland Series (Not National Statistics)
Note: Based on Full-Time Equivalents ( FTEs)
Public Sector Gross Value Added
Scottish GVA is derived on an industry basis and not on a sectoral basis, so a 'public sector' estimate is not produced. The Office for National Statistics produce industry values of GVA, which are shown in table 1.2. The total for the public administration and defence, education, health & social work industries in 2002 was £16,223 million. However, although the majority of output from these industries is from the public sector there is also private and non-profit sector output included within the total. Likewise, some amount of public sector activity will be accounted for in other industries, for example transport and other services. It is generally assumed that the Public Sector accounts for around 20% of GVA, but this figure is approximate and an official estimate is not currently available.
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