Scotland’s deficit falls to £23.7bn amid a reduction in public spending

The difference between total revenue and public sector expenditure in Scotland fell to £23.7bn in 2021/22, new figures show.

The Government Expenditure and Revenue Scotland (GERS) statistics show the deficit stood at 12.3 per cent of GDP – down by more than 10 per cent on the previous year.

The Scottish Government said the figures showed the public finances were recovering well from the pandemic, with Scotland’s deficit falling faster than the rest of the UK.

But the Tories said Scotland had benefited from its highest-ever “Union dividend”, the equivalent of £2,184 per person.

In 2021/22, revenue rose £73.8 bn, up a record £11.1bn from the previous year, while public spending fell by £0.9bn to £97.5 bn.

Deputy First Minister John Swinney said: “Today’s figures show Scotland’s fiscal position is recovering faster than the UK’s, with a huge fall in the annual deficit thanks to the largest increase in revenues on record.

“This is before the full impact of the rise in oil prices that we’ve seen more recently, which is likely to see Scotland’s deficit fall faster than the UK’s again next year, with oil and gas revenue set to grow to £13 billion this year.

“The figures also highlight how the UK’s response to the cost crisis is being built on Scotland’s natural resources, not least with its windfall tax on the North Sea.

“But even without North Sea receipts, the record revenue generated was sufficient to cover all day-to-day devolved spending as well as all social security spending in Scotland, including the state pension.”

Swinney said the figures also showed the “economic harm” caused by Brexit, which had increased borrowing and left the UK with one of the biggest deficits in Europe.

But Scottish Conservative Shadow Cabinet Secretary for Finance and Economy, Liz Smith said Scotland was continuing to benefit from being part of the UK.

She said: “Every single person in Scotland is £2,184 better off because we are part of the United Kingdom.

“The strength and stability of the Union helped us to weather the pandemic, saving thousands of jobs, livelihoods and businesses that would otherwise have been lost – but we are not out of the woods.

“As we head into a global cost-of-living crisis, it is more important than ever that both of Scotland’s governments are 100 per cent focused on our recovery.

“Scotland is £12billion better off as part of the United Kingdom. Instead of using time and resources to divide us, SNP should take these figures as a wake-up call and start working with the UK Government to deliver for the real priorities of Scotland.”

Commenting on the publication of the figures, the UK Government said Scotland benefited from at least an additional £3.7bn in reserved spending in 2021/22, down from £9.4bn the previous year. Public expenditure per person in Scotland was £1,963 higher than the UK average. 

Scottish Secretary Alister Jack said:  “Today’s Scottish Government figures show how people and their families benefit massively from being part of a strong, resilient UK.

“Scotland's deficit - the shortfall between taxes raised here, including oil, and public spending - stands at £23.7bn. But as part of the UK, we can rely on the Treasury to step up to support us in plugging the gap.

“At a time of unprecedented challenges, sharing resources around the UK has never been more important.”