Gers figures: Public spending deficit grows in Scotland as North Sea revenue falls

The gap between the amount of revenue raised in Scotland and the amount spent on public services has risen, Scottish Government estimates show.

The net fiscal balance showed a deficit of £22.7bn in 2023-24 – or 10.4 per cent of GDP.

That’s an increase from £19.1bn the year before, but lower than the £23.7bn gap in 2021-22.

By comparison, the deficit for the UK as a whole is 4.5 per cent of GDP.

Scottish Finance Secretary Shona Robison said the deficit was a “reflection of UK Government choices”.

But the UK Government’s Scotland Office said the figures proved the “collective economic strength” of the UK.

The Government Expenditure and Revenue Scotland statistics show the increase in the deficit has been driven by falling North Sea revenue, which offset growth in income tax and onshore corporation tax.

Meanwhile spending has increased in the last year, driven by extra cash in health and social protection.

Total public sector expenditure by both governments and other parts of the public sector was £111.2bn – an increase of six per cent on the previous year.

Total public sector revenue was £88.5bn. Of this, £4bn was generated by North Sea industries – down from £7.9bn in 2022-23, due to falls in energy prices and production.

But non-North Sea revenue increased by £5.7bn.

Robison said: “I welcome the fact that Scotland’s revenues grew last year, with those generated onshore growing faster than in the rest of the UK, thanks in part to our progressive approach to tax and the revenue from renewable energy.

“As the report makes clear, the notional deficit is not a reflection on the finances or policies of the Scottish Government – it is a reflection of UK Government choices.

“It is also important to emphasise that these figures reflect Scotland status as part of the UK.

“As figures from the Office for National Statistics show, the UK economic model is driven by London and the South East of England. The UK Government retains control of 40 per cent of expenditure and over 70 per cent of revenues in Scotland. Indeed, a significant portion of the spending allocated to Scotland relates to servicing UK Government debt, which is paid at a higher rate than our European neighbours.”

But Scotland Office minister Kirsty McNeill said the figures show Scots benefit from more spending per head than the UK average.

She said: “These figures underline the collective economic strength of the United Kingdom. By pooling and sharing resources across the UK, Scots benefit by £2,417 more per head in public spending than the UK average. That means more money for schools and hospitals, if the Scottish Parliament chooses to invest in those areas.

 “Ensuring economic stability and then delivering economic growth are two of the driving missions of the UK Government. We have reset relationships with partners across the UK, and want to work closely with the Scottish Government to produce better results for people in Scotland.”