Are only 3 out of 12 regions net contributors to the UK Treasury?

CLAIM: Only 3 out of 12 regions are net contributors to the UK Treasury.

CONCLUSION: ACCURATE. Data from the ONS showed that only three regions of the UK — London, the southeast and the east of England — ran a fiscal surplus in the 2017-18 financial year, the latest year for which figures are available.

The Alliance Party launched its Westminster Manifesto 2019 on November 25th, 2019. In a section entitled “Modernising and Re-balancing Our Economy”, the party stated the following:

“Northern Ireland has lost out as the result of a deeply unbalanced economy within the UK. There is a heavy focus around the south-east of England and those sectors which predominate there. For example, only 3/12 UK regions are net contributors to UK Treasury.”

Where does this come from?

The Office for National Statistics (ONS) in their most recent (2018) annual publication “Country and regional public sector finances” stated:

“London, the South East and the East of England all had net fiscal surpluses in the financial year ending (FYE) 2018, with all other countries and regions of the UK having net fiscal deficits.”

They elaborate on this in the context of Northern Ireland:

“Northern Ireland and Scotland incurred the highest expenditure per head, in FYE 2018, at £14,195 and £13,682 respectively, with the lowest expenditure per head attributed to the East of England and the East Midlands at £10,970 and £11,146 per head respectively.”

The chart below shows the total net fiscal balance for each region. (ONS calculates two figures, one allocates North Sea oil and gas revenues based on the population of each region; the other allocates according to where the oilfields that give rise to the revenue are situated.)

Source: ONS: “Country and regional public sector finances”; a positive net fiscal balance indicates a deficit while a negative net fiscal balance indicates a surplus.

What does it mean?

The ONS define “net fiscal balance” as:

“the gap between total spending (current expenditure plus net capital expenditure) and revenue raised (current receipts), which at the UK level is equivalent to public sector net borrowing”

In short, this is the sum by which it can be established how much a region is costing the Treasury, compared with what they contribute.

When a region costs the Treasury more than it contributes, it is described in terms of a “negative fiscal balance figure”, or as the ONS state:

“A negative net fiscal balance figure represents a surplus, meaning that a country or region is receiving in revenue more than is being spent for the benefit of residents or enterprises in that country or region.”

In other words, if a region is receiving more from UK Treasury, in terms of revenue to a region’s residents and businesses, than revenue that the region gives to UK Treasury (e.g. via taxes), then that region is said to have a “positive net fiscal balance”. Conversely, a “negative net fiscal balance” means that a region gives more revenue to UK Treasury than the revenue that the region receives from UK Treasury.

Summary

The Alliance Party stated in their Westminster Manifesto 2019 that “only 3/12 UK regions are net contributors to UK Treasury”. Data from the ONS corroborates this; only London, the southeast, and the east of England are net contributors to the UK Treasury. The claim by the Alliance Party is accurate.

Image: Photo by rawpixelimages used by license Dreamstime.com


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