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Scotland’s revenue hit by oil slump

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Nicola Sturgeon
Nicola Sturgeon

Scotland’s First Minister Nicola Sturgeon has today claimed that the foundations of Scotland’s economy remain strong despite new official figures revealing the impact of the global slump in oil prices on the nation’s revenues.

That was despite the publication of the the Government Expenditure and Revenue Scotland (GERS) bulletin for 2014-15 showing the impact of the decline in North Sea revenue, with Scotland recording a net fiscal deficit equivalent to 9.7 per cent of GDP in 2014-15.

The amount spent per head was £1,400 per person higher than the UK figure and Ms Sturgeon stressed that the latest data showed onshore revenue has grown by more than £6 billion over the last five years as the GERS data revealed Scotland’s estimated onshore revenue grew by 3.2 per cent in 2014-15 to £51.6 billion, with overall growth of £6.1 billion from £45.5 billion in 2010-11.

Including North Sea revenue, tax receipts per person have also remained broadly in line with the UK as a whole but did dip below the UK , at approximately £10,000 per person, the Scottish Government said.

Excluding public sector investment, the current budget balance is equivalent to 7.8 per cent of GDP.

The first minister said: “The annual GERS publication shows our onshore economy is doing well, with estimated onshore revenue growing by 3.2 per cent and tax receipts broadly comparable to the rest of the UK.

“Taken in the context of the wider economic environment, which has been impacted by muted global demand, falling oil prices and more difficult conditions for manufacturers, the economy has remained resilient with record levels of employment, positive economic growth and growing exports.

“This shows the foundations of Scotland’s economy are strong and that we have a strong base to build our future progress upon.

“These GERS figures show our strategic priority of investing in economic growth – with spending per head on economic development in Scotland more than twice the UK average.

“However – despite the fact the onshore economy accounts for more than 90 per cent of Scotland’s output – Scotland is clearly not immune to the problems being felt by the oil industry internationally.

“Although it is important to bear in mind that these are figures from just one year, and while we are doing what we can to mitigate these problems, this needs immediate action from the UK Government.”

John Swinney
John Swinney

Deputy First Minister John Swinney urged the UK Government to cut tax in order to make the North Sea more competitive globally: “In next week’s UK Budget, I urge the Chancellor to take bold steps. Immediate action is needed to support the industry and make the North Sea more internationally competitive – primarily by a substantial reduction in the headline rate of tax.

“I am also urging the Chancellor to remove fiscal barriers for exploration and enhanced oil recovery, to implement fiscal reforms to improve access to decommissioning tax relief and encourage late life asset transfers, and urgently consider additional non-fiscal support – such as government loan guarantees – to sustain investment in the sector.

“The North Sea needs urgent help from the UK Government, both for the sake of the industry and the wider economy.”

The publication of Government Expenditure and Revenue Scotland (GERS) 2014-15, which estimates expenditure and revenue balances relating to the Public Sector in Scotland, was announced today by Scotland’s Chief Statistician:

Total Public Sector Revenue 2014-15

  • Scottish onshore revenue was estimated as £51.6 billion (8.0 per cent of UK onshore revenue). This represents £9,600 per person, £400 less than the UK average;

  • Including an illustrative geographic share of North Sea revenue, total public sector revenue is estimated at £53.4 billion (8.2 per cent of UK public sector revenue). This represents £10,000 per person, slightly below the UK average, although not notable when rounded to the nearest £100.

    • Total Public Sector Expenditure 2014-15

    • Total expenditure for the benefit of Scotland by the Scottish Government, UK Government, and all other parts of the public sector was £68.4 billion. This is equivalent to 9.3 per cent of total UK public sector expenditure, and £12,800 per person, which is £1,400 per person greater than the UK average.

      • Current Budget Balance 2014-15

      This is the difference between current revenue and current expenditure (i.e. excluding capital investment). The current budget balance:

      • Excluding North Sea revenue, was a deficit of £13.7 billion (9.8 per cent of GDP).

      • Including an illustrative geographic share of North Sea revenue, was a deficit of £11.9 billion (7.8 per cent of GDP).

      • For the UK, was a deficit of £59.8 billion (3.3 per cent of GDP)

        • Net Fiscal Balance 2014-15

        This is the difference between current revenue and total public sector expenditure including capital investment. The net fiscal balance:

        • Excluding North Sea revenue, was a deficit of £16.7 billion (11.9 per cent of GDP).

        • Including an illustrative geographic share of North Sea revenue, was a deficit of £14.9 billion (9.7 per cent of GDP).

        • For the UK, was a deficit of £89 billion (4.9 per cent of GDP).

          • The figures released today were produced in accordance with professional standards set out in the Code of Practice for Official Statistics.

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