Scotland's Finances: Key Facts and Figures

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Scotland’s Finances Key facts and figures Competent, financially prudent Scottish Government Our financial system in 2016-17

THIS PART OF THE GUIDE SETS OUT KEY INFORMATION ABOUT HOW THE SYSTEM STANDS IN 2016-17. THE NEXT PART SETS OUT HOW IT WILL CHANGE IN 2017-18 AND BEYOND. DEVOLVED FINANCES SCOTTISH BUDGET l The Scottish Government is accountable to the Scottish Parliament and the people of Scotland for its use of public money. IN 2016-17 IS l Scottish Ministers decide spending plans that have to be approved by Holyrood. l Since 2009-10, the Scottish Government has produced its accounts on the basis of international accounting standards. £37 BILLION BARNETT FORMULA l The Scottish Government has l For financial year 2015-16, to set and deliver a balanced the Scottish Government, its budget each year. Executive Agencies and the Crown Office and Procurator l The Scottish Government Fiscal Service made 98.4% of accounts for 2015-16 were given all payments within 10 days. a clean bill of health by Audit WESTMINSTER DECIDES HOW MUCH IT WILL SPEND IN Scotland. This was the 11th l Where taxes are raised in ENGLAND ON PUBLIC SERVICES HOLYROOD IS AUTOMATICALLY consecutive year they received Scotland, the block grant ALLOCATED A POPULATION SHARE OF CHANGES IN SPENDING an unqualified opinion. is reduced. ON PUBLIC SERVICES DEVOLVED TO SCOTLAND.

MONEY IN THE MONEY OUT TAXES IN 2016-17 PLANNED TO BE RAISED IN SCOTLAND: BLOCK GRANT, SCOTTISH SPENDING ON PRIORITIES EU FUNDS, CONSOLIDATED INCLUDING SCHOOLS, HOSPITALS, SCOTTISH RATE NON-DOMESTIC SCOTTISH RATE FUND POLICE, HOUSING, FARMING, OF INCOME TAX, FISHING, INFRASTRUCTURE OF INCOME TAX RATES INCOME LAND AND BUILDINGS AND THE ECONOMY TRANSACTION TAX, DELIVERED BY SCOTTISH SCOTTISH LANDFILL TAX, GOVERNMENT, EXECUTIVE NON-DOMESTIC RATES, AGENCIES, NHS, CROWN OFFICE, LAND AND BUILDINGS BORROWING LOCAL COUNCILS, THIRD SCOTTISH SECTOR AND OTHER BODIES TRANSACTION TAX LANDFILL TAX The Scottish tax landscape 2016-17

FUEL OIL & GAS INCOME NATIONAL CORPORATION DUTY RECEIPTS TAX INSURANCE TAX % BUSINESS RATES (COLLECTED SCOTTISH RATE BY LOCAL AUTHORITIES AND OF INCOME TAX REDISTRIBUTED BY SG) £ COUNCIL TAX

UK BLOCK UK GRANT BLOCK GRANT GRG*

GOVERNMENT

SCOTTISH NDRI‡ GOVERNMENT GCG† LOCAL GOVERNMENT AIR VAT TAX ON INHERITANCE CAPITAL PASSENGER ALCOHOL, TAX GAINS TAX DUTY CIGARETTES LAND AND SCOTTISH £ BUILDINGS LANDFILL TAX TRANSACTION TAX * GENERAL REVENUE GRANT

‡ NON-DOMESTIC RATES INCOME (BUSINESS ILLUSTRATIVE CHART BASED ON DEVOLVED POWERS IN 2016-17 RATES) † GENERAL CAPITAL GRANT What is planned to be spent in 2016 -17

PORTFOLIO EXPENDITURE FROM DRAFT BUDGET 2016-17 (SOME PERCENTAGES ROUNDED)* RURAL ECONOMY AND CONNECTIVITY £2.7bn ADMINISTRATION £193m 0.5% £ ECONOMY, JOBS AND FAIR WORK CROWN OFFICE AND £369m 0.7% 6.8% 7.3% PROCURATOR FISCAL SERVICE £113m 0.3% 8.1% JUSTICE £2.5bn EDUCATION AND SKILLS £3bn COMMUNITIES, SOCIAL SECURITY 9.5% AND EQUALITIES £11bn 29.7% FINANCE AND THE CONSTITUTION (INCLUDING TEACHERS’, NHS, POLICE CULTURE, TOURISM AND FIRE PENSIONS) AND EXTERNAL AFFAIRS £3.5bn £293m 0.8%

ENVIRONMENT, HEALTH AND SPORT CLIMATE CHANGE £13.1bn AND LAND REFORM 35.1% £182m 0.5%

TOTAL PORTFOLIO EXPENDITURE IN 2016-17 THE LOCAL GOVERNMENT SETTLEMENT * AS PUBLISHED IN SCOTLAND’S SPENDING PLANS AND FROM DRAFT BUDGET 2016-17 TO SUPPORT 32 COUNCILS ADDS UP TO MORE THAN DRAFT BUDGET 2016-17 (PUBLISHED IN DEC 2015), £10 BILLION ADJUSTED TO REFLECT PORTFOLIO CHANGES IN MAY 2016 £37bn The shape of fiscal responsibility in 2017-18 and beyond

l The terms of the agreement are designed to ensure no detriment to the Scottish budget. If tax policy and economic performance in Scotland remains the same as in the rest of the UK, then the Scottish budget will be no better

THE FISCAL FRAMEWORK or worse off than it would have been under the Barnett Formula. IS AN AGREEMENT MADE IN FEBRUARY 2016 BETWEEN l The Fiscal Framework requires forecasting of information by a body THE SCOTTISH AND UK GOVERNMENTS SETTING OUT THE independent of Government. From April 2017 the Scottish Fiscal Commission will assume statutory powers as an independent body to produce relevant RULES BY WHICH SCOTLAND’S fiscal forecasts. NEW FINANCIAL AND SOCIAL l From 2017-18 income tax in Scotland will be raised and spent by SECURITY POWERS ARE the Scottish Government, estimated to be in excess of £11bn. TRANSITIONED AND MANAGED.

TIMELINE OF CHANGE

1p 2p 1999 2015 2016 2017 2018 2019 SCOTTISH PARLIAMENT CAN INCREASE OR REDUCE INCOME TAX SCOTTISH PARLIAMENT BY 3P IN THE POUND CONTROLS FULLY DEVOLVED SCOTTISH PARLIAMENT SCOTTISH PARLIAMENT SCOTTISH PARLIAMENT TAXES, LAND AND BUILDINGS GAINS PARTIAL POWERS GAINS FURTHER POWERS HAS POWERS OVER TRANSACTIONS TAX AND TO SET THE SCOTTISH RATE TO SET INCOME TAX RATES REPLACEMENT FOR AIR ASSIGNMENT OF NON-DOMESTIC RATES LANDFILL TAX OF INCOME TAX AND BANDS PASSENGER DUTY VAT RECEIPTS

BASIC l The capital borrowing cap has been increased from £2.2 billion to £3 billion. FROM APRIL 2017 From 2016-17 annual borrowing will be limited to £450m (15% of the cap). THE SCOTTISH PARLIAMENT WILL 20%RATE l The UK Government has retained power to set the VAT rate but from CONTROL THE MANAGEMENT OF THE SCOTTISH RATE OF INCOME TAX April 2019 broadly half of the estimated money received from VAT on THE CROWN ESTATE IN SCOTLAND FOR 2016 -17 SET SO SCOTTISH purchases made in Scotland will be passed to the Scottish Government WITH REVENUES TO BE USED TO TAXPAYERS ARE ON SAME RATES OF instead of HM Treasury. DEVELOP ISLAND AND LOCAL COMMUNITIES. TAX AS REST OF UK l When taxes are raised or assigned in Scotland the block grant is reduced. How our funding system is changing

WHERE THE % £11,210m SCOTTISH BLOCK GRANT GOVERNMENT BUDGET COMES FROM % BLOCK GRANT

AIR PASSENGER DUTY SCOTTISH RATE OF INCOME TAX / INCOME TAX BLOCK GRANT SCOTTISH LANDFILL TAX LAND AND BUILDINGS TRANSACTION TAX NON DOMESTIC % RATES VAT

BLOCK GRANT

TABLE PROVIDES ILLUSTRATIVE SHARE OF BUDGET IN YEARS BASED ON ESTIMATES FROM 2016-17 FIGURES. SCOTLAND SCOTLAND SCOTLAND ACTUAL PERCENTAGES IN GIVEN YEARS WILL VARY. ACT 1998 ACT 2012 ACT 2016 IN ADDITION LOCAL AUTHORITIES SET AND RAISE COUNCIL TAX TO FUND LOCAL SERVICES, ESTIMATES ONCE ALL FISCAL POWERS BUT THIS IS OUTWITH THE SCOTTISH BUDGET. HAVE BEEN DEVOLVED BY 2019-20 How our system is changing

THE VALUE OF SOCIAL SECURITY BENEFITS TO BE DEVOLVED FROM 2019-20 ESTIMATES BASED ON 2015-16 FIGURES. AT THE POINT THAT DEVOLUTION TAKES PLACE, NUMBERS WILL REFLECT CHANGES IN PUBLIC SPENDING AT UK LEVEL IN THE INTERVENING YEARS. £2.8bn 15.3% DISABILITY LIVING ATTENDANCE SURE START ALLOWANCE ALLOWANCE MATERNITY GRANT £1,400m £487m £3m SEVERE DISABILITY CARER’S WINTER ALLOWANCE ALLOWANCE FUEL PAYMENT £51m £222m £181m

PERSONAL DISCRETIONARY COLD INDEPENDENCE HOUSING WEATHER PAYMENT PAYMENT PAYMENT £318m £49m £3m (£13m FROM DWP TOPPED UP BY £35m FROM INDUSTRIAL INJURIES SCOTTISH GOVERNMENT) FUNERAL DISABLEMENT PAYMENT BENEFIT £4m 84.7% £87m

ONCE POWERS ARE DEVOLVED CONTROL OVER 84.7% OF THE NUMBER OF PEOPLE RECEIVING BENEFITS IN SCOTLAND FOR: THE SCOTTISH PARLIAMENT UK SOCIAL SECURITY SPEND WILL CONTROL 15.3% OF THE IN SCOTLAND, INCLUDING DISABILITY LIVING UK SOCIAL SECURITY BUDGET UNIVERSAL CREDIT, WILL REMAIN ALLOWANCE SPENT IN SCOTLAND RESERVED TO UK GOVERNMENT FIGURES AS AT MAY 2016 293,000 ATTENDANCE ALLOWANCE l The Scottish Government will be responsible for employment FIGURES AS AT MAY 2016 127,000 support from April 2017. Ministers have awarded initial contracts for the transitional service. Work First Scotland will DISCRETIONARY offer employment support to disabled people, while Skills HOUSING PAYMENT Development Scotland will provide support for those with a FOR FINANCIAL YEAR 2015-16 116,000 long-term health condition through Work Able. There will be one fully devolved employment service from April 2018. © Crown copyright 2016

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Published by The Scottish Government, December 2016

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