Scots revenue rises to £74bn as ‘deficit’ falls to £24bn

Scotland’s public sector revenue has been estimated at £73.8 billion for 2021-22 — up a record £11.1 billion from the previous year.

Scottish public spending fell by £900 million to £97.5 billion, according to statistics from Scotland’s Chief Statistician.

Scotland’s notional deficit fell by 10.3%, according to the Government Expenditure and Revenue Scotland (GERS) 2021-22 statistics.

The notional Net Fiscal Balance 2021-22 — the difference between total revenue and total public sector expenditure including capital investment — was a deficit of 12.3% of GDP at £23.7 billion.

GERS attempts to explain Scotland’s current fiscal position under the country’s current constitutional arrangements in the UK, with 74% of revenue and 37% of spending reserved to the UK Government.

“Scotland’s net fiscal balance has improved rapidly since last year, reflecting the economic recovery from the COVID-19 pandemic and the phasing out of pandemic health restrictions and support schemes, according to statistics announced today by Scotland’s Chief Statistician,” said the Scottish Government.

“The improvement was further aided by a recovery in North Sea revenue after energy prices increased from the lows seen during the pandemic.”

Scotland’s “illustrative geographical share” of North Sea revenue was £3.5 billion in 2021-22, up from £0.8 billion in 2020-21, as energy prices recovered from the falls during the pandemic.

Scotland’s non-North Sea revenue increased £8.4 billion in 2021-22, an increase of 13.6%, as VAT, non-domestic rates, fuel duties, and income tax and national insurance contributions grew strongly.

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 …

“In the first full financial year since Brexit, the GERS figures show the economic harm of leaving the EU is driving up borrowing in the UK and contributing to the UK deficit being one of the largest in Europe.

“Even in the midst of an energy crisis, the UK as a whole is benefiting from Scotland’s natural wealth – which is why Scotland can expect its deficit to fall further in the future.”