1. Estimating current price GVA and GDP for Scotland Sandy Stewart OCEA

2. Overview of presentation Experimental Statistics – Work in Progress Building on exercise for GERS 06-07 UK Starting Point – NA definitions Regional Accounts – Gross Value Added Calculation of Gross Domestic Product Taxes less Subsidies on Products Treatment of Extra Regio Further Considerations

3. UK starting point UK quarterly National Accounts UK GVA, GDP, Taxes on Products and Subsidies on Products – Not Seasonally Adjusted – figures as “raw” as possible. Frozen snapshot at 2007 Q2 – consistent with Blue Book 2007 Detailed breakdown of taxes and subsidies on products

4. Scottish starting point Regional Accounts GVA Problem – Regional Accounts (and National Accounts) not balanced since 2004 – treatment of statistical discrepancy Use raw (unsmoothed) estimates of GVA in preference to headline (smoothed) GVA Accuracy of GVA (I) – too much emphasis on compensation of employees.

5. Gross Domestic Product Gross Value Added at basic prices plus Taxes on products Less Subsidies on products equals Gross Domestic Product at market prices

6. Taxes on Products VAT (59%) – apportion by household consumption, EFS, ONS Fuel duties (15%) – apportioned by proportion of road traffic fuel consumption, BERR Tobacco duties (8%) - apportion by household consumption, EFS, ONS Stamp duties (5%) – land and property stamp duty: HMRC ; stocks and shares, FRS,DWP Others – various – see paper

7. Subsidies on Products Central government subsidies apportioned by Regional Accounts GVA – housing, transport, coal, electricity, recreation and economic affairs by total GVA; agriculture, construction and health by sectoral GVA Local government subsidies – use figures supplied by SG for National Accounts More work required – especially on Agriculture – note reclassification from subsidies on products to subsidies on production in 2005-06.

9. Extra Regio Two components – Continental Shelf activity (95%), and Public Administration and Defence (5%). Two methods of apportionment –CS and PAD by population –CS by geography and PAD by population Research by Kemp and Stephen (see GERS 2006-07) No taxes or subsidies on products in Extra Regio

12. Considerations Consider build-up of annual figures from quarterly data Consumption-based or production-based apportionment Use of raw, not headline or SA, figures Quality of income-based GVA (Regional Accounts) Future corrections, balances and re- classifications – large revisions.