House of Commons Library

Country and regional public sector finances

Published Wednesday, August 29, 2018

This briefing looks at estimates of public spending and revenues in UK countries and regions.

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The ONS has, for the second time, estimated how much the UK public sector spends for the benefit of each UK country and region and how much tax and other revenues are raised from each.

The difference between spending and revenue is the area’s net fiscal balance. In this Library briefing:

  • A negative net fiscal balance indicates that public sector spending in the region is greater than revenues raised in the area. The region has a net fiscal deficit.
  • A positive net fiscal balance indicates that revenues raised in the area exceed public sector spending in the region. The region has a net fiscal surplus.

Net fiscal balance

In 2016/17, London, South East and East of England all had net fiscal surpluses. In these regions the revenues raised were greater than the public spending received. All other countries and regions had a net fiscal deficit with each receiving more public spending than was raised in revenues.

Net fiscal balance, £ per person, 2016/17

In 17 of the past 18 years London and South East have been in surplus. East of England had a surplus in 12 of the 18 years, while East Midlands and South West had surpluses in two years. All other countries and regions had a deficit in all 18 years.

Spending

In 2016/17, spending per person was highest in Northern Ireland, Scotland and London. Spending per person was lowest in East of England, South East and East Midlands.

Public sector spending, £ per person, 2016/17

In all UK countries and regions social protection – which covers social security benefits, including the state pension, as well as personal tax credits and adult social care – is the most significant area of public spending, followed by health and education. The three categories cover around 65% of public spending in the UK.

Revenues

London, South East and East of England raised the most revenue per person in 2016/17. London and South East raised the most in absolute terms. These two regions raised around 36% of UK revenues in 2016/17.

Wales, North East and Northern Ireland raised the least revenue per person in 2016/17.

Revenues, £ per person, 2016/17

Income tax, VAT and National Insurance contributions (NICs) are the three most significant revenue raisers in each country and region.

The data and how it is calculated

The data are classified as experimental statistics. The label of ‘experimental statistics’ doesn’t mean that the statisics are of low quality, but it does signify that they are novel and still being developed.

The ONS mainly allocates spending and revenues to regions using assumptions, rather than administrative data. This is because revenues are generally not collected on a regional basis – they are largely collected centrally by HMRC – and, similarly spending is generally planned to benefit a category of people or businesses irrespective of location. The data should be treated as statistical estimates only.

Commons Briefing papers CBP-8027

Author: Matthew Keep

Topics: Public expenditure, Taxation

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