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GERS report on Scottish finances to be published Gers figures: Scottish economy deficit cut to £13.3bn
(about 11 hours later)
The Scottish government is set to reveal the latest picture on the state of Scotland's public finances. Scotland's public spending deficit has been cut to £13.3bn over the past year, according to official Scottish government statistics.
The GERS figures estimate how much people in Scotland pay in taxes and how much they receive in spending, from all levels of government. The Government Expenditure and Revenue Scotland (Gers) report said the figure represented an 8.3% share of Scotland's GDP - triple the UK figure of 2.4%.
The Government Expenditure and Revenue Scotland (GERS) report is produced by independent civil servant statisticians but the methodology has been contested. Last year's Gers figures had put the Scottish budget deficit at £14.8bn, which has now been revised to £14.5bn.
The figures for 2015/16 suggested a public spending deficit of £14.8bn. The UK as a whole has a budget deficit of £46.2bn.
This was attributed to plummeting oil revenues. The figures estimated that Scottish public sector revenue was £58bn - the equivalent of 8% of total UK revenue.
The figures for 2016/7 will be published on Wednesday but the last set of statistics, published a year ago, estimated public sector revenue in 2015/16 at £53.7bn - the equivalent of £10,000 per person, and about £400 per person lower than for the UK as a whole. Oil and gas
'Provide useful insight' Of this, only £208m was revenue from the North Sea oil and gas industry - an increase from the £56m recorded in 2015/16 but far lower than it had been before the oil price crash, with revenues standing at nearly £8bn in 2011/12.
Meanwhile, total government spending of benefit to people in Scotland was estimated at £68.6bn - at about £12,800 per person this was £1,200 per person greater than the UK average. However, non-North Sea revenue increased by 6.1%, from £54.5bn in 2015/16 to £57.8bn.
Experts at the economic research think tank The Fraser of Allander Institute claimed the 2016/17 GERS figures would "provide a pretty accurate picture of where Scotland is". Including an illustrative geographical share of North Sea revenue, Scotland's public sector revenue is equivalent to £10,722 per person, £312 less than the UK average.
It added: "And it will provide a useful insight into where our money is spent each year, who spends it and where it comes from. Excluding North Sea revenue, it is £10,684 per person - £349 less than the UK average.
"In doing so, it sets a useful starting point for a discussion about the immediate choices and challenges that need to be addressed by those advocating new fiscal arrangements." The Gers report put total expenditure by the Scottish government, UK government and other public bodies in Scotland at £71.2bn - 9.2% of total UK public sector expenditure.
Critics have previously complained that there is very little data from central sources such as HMRC which is specifically about Scotland's income. This was equivalent to £13,175 per person, which was £1,437 per person greater than the UK average.
Economist Richard Murphy said in March that most of the income figures "are estimates extrapolated from data for the UK as a whole and some consumer surveys". Analysis by Philip Sim, BBC Scotland political reporter
The Gers figures are generally the excuse for an almighty political bunfight, as battle lines are drawn over how the data are interpreted.
Maybe this year we can all just get along though, because it seems like there might be good news for everyone in these figures. Scotland's notional deficit is down. The UK's notional deficit is down. The graphs which provide relief from the dense tables of figures in the report have their lines moving in a positive direction.
For those hoping this might spell a peaceful final fortnight of parliamentary recess, well, dream on. The figures will be doubly contested this year given the two constitutional lenses they can be viewed through.
First, there is that of Scottish independence. Scottish ministers are already underlining that this is just the position "under current constitutional arrangements", stressing that no conclusions about the finances of an independent Scotland should be drawn from them.
Unionists, meanwhile, will be quick to play up gaps between UK-wide and Scottish-specific figures - and to note that the 2014 White Paper had projected a rather smaller deficit for 2017, the first year of independence had Yes won the vote.
And then, there's Brexit. How does it factor in to all of this? Leavers will contend that they show the economic apocalypse warned of by George Osborne et al in the heat of the 2016 referendum campaign has come to naught.
Remainers will point out, again, that this is the picture "under current constitutional arrangements"; the UK has not yet left the EU and the storm is yet to break, casting a threatening shadow over all this economic progress.
Responding to the figures, First Minister Nicola Sturgeon insisted that Scotland's economy remained strong, with growth nearly four times faster than the UK in the last quarter and the number of people in employment at a record high.
She added: "These figures reflect Scotland's finances under current constitutional arrangements.
"However, they show that our investment in key industries, such as the life-science sector, is providing a real boost to our onshore economy. By continuing to invest in key sectors, we will ensure Scotland remains a productive and competitive country."
'Cause for concern'
The first minister said it was "encouraging" to see an improvement in the overall fiscal balance and that onshore revenues grew at their fastest rate in nearly twenty years.
But she repeated her warnings that the country's long-term economic success was being threatened by Brexit.
The UK government's Scottish secretary, David Mundell, said the Scottish government figures were a "cause for concern" and showed there was still much to be done to improve Scotland's economy.
He added: "They also highlight the value of pooling and sharing resources around the UK. Being part of a strong UK has protected our living standards, and that's one reason the people of Scotland clearly rejected Nicola Sturgeon's plan for a second independence referendum at the election.
"Scotland's deficit is falling at a slower rate than the UK as a whole and economic growth is lagging behind. It is vital we grow the economy and we want to work with the Scottish government to achieve that."
Why are the GERS figures contested?Why are the GERS figures contested?
GERS were first published in 1992 under the then UK Prime Minister John Major. Gers were first published in 1992 under the then UK Prime Minister John Major.
Conservative ministers in the Scottish Office thought it would help inform the debate on devolution, or at least it would help them make their case against a Scottish Parliament.Conservative ministers in the Scottish Office thought it would help inform the debate on devolution, or at least it would help them make their case against a Scottish Parliament.
Oil prices were low at the time and they thought the numbers would show how much more Scotland gained from the Treasury than it sent south in tax revenues.Oil prices were low at the time and they thought the numbers would show how much more Scotland gained from the Treasury than it sent south in tax revenues.
Even though the figures have been compiled by the Scottish government since devolution in 1999, there is still an annual battle to interpret the numbers.Even though the figures have been compiled by the Scottish government since devolution in 1999, there is still an annual battle to interpret the numbers.
The profitability of offshore oil and gas makes a big difference to Scottish public finances, with North Sea oil revenues falling from about £11bn in 2011-12 to virtually zero in the last set of figures.The profitability of offshore oil and gas makes a big difference to Scottish public finances, with North Sea oil revenues falling from about £11bn in 2011-12 to virtually zero in the last set of figures.
Even though oil production has been growing recently, the government is raising very little (if anything) in revenues.Even though oil production has been growing recently, the government is raising very little (if anything) in revenues.
Does GERS tell us what an independent Scotland would look like? Does Gers tell us what an independent Scotland would look like?
No. The GERS figures are not meant to be anything other than a way of showing the current position under the present arrangements. No. The Gers figures are not meant to be anything other than a way of showing the current position under the present arrangements.
When last year's figures were published, BBC Scotland's political editor Brian Taylor asked: "What does today's report say about independence?When last year's figures were published, BBC Scotland's political editor Brian Taylor asked: "What does today's report say about independence?
"Everything, says Scottish Secretary David Mundell. Nothing, says First Minister Nicola Sturgeon. Not much at all, suggest Scottish government officials, who note - as they have in the past - that it is an arithmetical analysis 'under different scenarios within the current constitutional framework'.""Everything, says Scottish Secretary David Mundell. Nothing, says First Minister Nicola Sturgeon. Not much at all, suggest Scottish government officials, who note - as they have in the past - that it is an arithmetical analysis 'under different scenarios within the current constitutional framework'."
BBC Scotland's economics editor Douglas Fraser wrote: "One way of looking at them is to measure how big Scotland's deficit would be, if the country were to have been both independent and if its public finances were performing exactly as they did within the UK.BBC Scotland's economics editor Douglas Fraser wrote: "One way of looking at them is to measure how big Scotland's deficit would be, if the country were to have been both independent and if its public finances were performing exactly as they did within the UK.
"It would probably perform rather differently if Holyrood pulled the tax, spending and borrowing levers in different ways to the Treasury in London."It would probably perform rather differently if Holyrood pulled the tax, spending and borrowing levers in different ways to the Treasury in London.
"It could have pulled those levers in a smarter way, or left a bigger deficit."It could have pulled those levers in a smarter way, or left a bigger deficit.
"Everything around this is contested. But what can be said is that this helps illustrate the health or weakness of Scottish public finances.""Everything around this is contested. But what can be said is that this helps illustrate the health or weakness of Scottish public finances."
Is GERS based on real data? Is Gers based on real data?
The University of Strathclyde's Fraser of Allander Institute has tried to explain how GERS is compiled.The University of Strathclyde's Fraser of Allander Institute has tried to explain how GERS is compiled.
It points out that data on the spending side of the equation is not estimated but some UK spending is allocated to Scotland on a proportional basis.It points out that data on the spending side of the equation is not estimated but some UK spending is allocated to Scotland on a proportional basis.
The total spend is made up of about £40.5bn spent on Scottish and local government services, £17.8bn of UK welfare spending and pensions in Scotland, and about £10bn in UK government (non-devolved) spend in Scotland. The total spend in last year's figures was made up of about £40.5bn spent on Scottish and local government services, £17.8bn of UK welfare spending and pensions in Scotland, and about £10bn in UK government (non-devolved) spend in Scotland.
This is spending on matters such as defence and debt interest, which is apportioned to Scotland.This is spending on matters such as defence and debt interest, which is apportioned to Scotland.
For revenues, there have been complaints that the data used is not collected for Scotland and has to be estimated from UK figures.For revenues, there have been complaints that the data used is not collected for Scotland and has to be estimated from UK figures.
In recent years, this has been less the case with the council tax, business rates, the profits made by Scottish Water, landfill tax, land and building transactions tax and local authority user charges and fees included.In recent years, this has been less the case with the council tax, business rates, the profits made by Scottish Water, landfill tax, land and building transactions tax and local authority user charges and fees included.
One big difficulty has been identifying Scottish income taxpayers, but the introduction of a separate Scottish tax code should make this more accurate in future.One big difficulty has been identifying Scottish income taxpayers, but the introduction of a separate Scottish tax code should make this more accurate in future.
There are other revenues - particularly those collected by HMRC - where estimation is needed.There are other revenues - particularly those collected by HMRC - where estimation is needed.
The Fraser of Allander Institute says "estimates are not unusual in economic statistics".The Fraser of Allander Institute says "estimates are not unusual in economic statistics".
How does Scotland compare to the rest of the UK?How does Scotland compare to the rest of the UK?
One of the problems with the figures is that there are no other official regional breakdowns to compare to Scotland's, so the comparison has to be made to the UK as a whole.One of the problems with the figures is that there are no other official regional breakdowns to compare to Scotland's, so the comparison has to be made to the UK as a whole.
In the last set of figures, Scotland's tax take was about £400 per person less than the UK figure. In the latest set of figures, Scotland's tax take was about £312 per person less than the UK figure.
However, only London, the South East of England and the East of England are estimated to raise more per head than Scotland, according to the ONS. However, only London, the South East of England and the East of England are thought to raise more per head than Scotland, according to previous estimates by the ONS.
Spending for Scotland is higher than for the UK - a difference of about £1,200 per head in 2015-16. Spending for Scotland is higher than for the UK - a difference of about £1,400 per head in 2016/17.
It has long been the case that Scotland has received more to deliver services such as health, education and economic development because of the geographical challenges it faces in these areas.It has long been the case that Scotland has received more to deliver services such as health, education and economic development because of the geographical challenges it faces in these areas.
Scotland also has a slightly higher number of people entitled to benefits associated with issues such as long-term ill health.Scotland also has a slightly higher number of people entitled to benefits associated with issues such as long-term ill health.