The UK’s public spending works fairly for Scotland and allows the whole country to pool and share its resources.
- How is public spending and revenue distributed to Scotland?
- How are funding decisions split between the UK and Scottish governments?
- What powers do the Scottish Government and Scottish Parliament have over public spending and tax?
Tax revenue generated in Scotland amounts to about £66 billion, including North Sea oil revenue, but it benefits from about £81 billion in public spending. That means Scotland benefits from an additional £15 billion public spending than it puts in.
This is possible because the UK pools and shares resources across the entire country. This system of sharing resources means Scotland is well-placed to tackle the problems of the future, such as an ageing society, but also gives the Scottish Parliament the freedom to make many financial decisions for itself.
Scotland has two governments that are both responsible for different things. For example, foreign policy and international relations are reserved to the UK Government, but health and social services are devolved to the Scottish Government.
When the UK Government increases funding for an area which is devolved, the Scottish Government receives extra funding too. For example, if the NHS in England gets a funding boost, the Scottish Government will also receive extra cash.
In 2020 the UK Government guaranteed £8.6 billion of additional funding to help the Scottish Government to respond to coronavirus. In February 2021 the UK Government announced a further £1.1 billion was being made available for the Scottish Government to spend in the financial year 2020-2021 or carry forward to the financial year 2021-2022.
The Spending Review 2020 confirmed an additional £2.4 billion for the Scottish Government through the Barnett formula for 2021, including £1.3 billion in relation to Covid-19. This takes the total of UK Government Barnett-based funding to the Scottish Government in 2021-22 to over £38 billion. This equates to around £129 per head for every £100 per head the UK Government spends in England on matters devolved in Scotland. This reflects the higher costs of delivering public services in Scotland.
The Scottish Parliament retains power over many financial decisions, including setting the rate of income tax, and how much is spent on important public services like health and education.
When the UK Government increases funding in a devolved area, the decision on how the additional funding is spent in Scotland is made by the Scottish Government.
The Scottish Parliament Information Centre contains more information about Scotland’s economy and finance.
The Scottish Government publishes an annual report on Scotland’s finances called ‘Government Expenditure and Revenue Scotland‘.
Find out about public sector revenue and expenditure across the UK.