Pooling and Sharing

How implied fiscal transfers flow between UK regions — and whether each region's position is driven by revenue or spending differences.

Based on ONS Country and Regional Public Sector Finances data · 2024-25

2024-25

Regional Finances: 2024-25Per head differences to UK average in real 2024-25 terms

£/head vs UK avg

Higher Revenue

Lower Revenue

The map shows each region's net fiscal position. But what drives these transfers? The next two exhibits decompose the balance into its revenue and spending components. Regions coloured coral raise less per head in tax revenue than the UK average; regions in blue raise more.

Revenue Performance: 2024-25Revenue per head difference to UK average in real 2024-25 terms

London and the South East are the only regions that consistently generate per-capita revenue above the UK average. London's revenue advantage (nearly £10,000/head in 2024-25) dwarfs every other region. The "levelling up" challenge is starkly visible here: the regions with the largest revenue shortfalls — the North East, Northern Ireland, Wales — are those most in need of economic development. Revenue performance is overwhelmingly driven by economic output and wages, not by policy choices.

Spending Performance: 2024-25Spending per head difference to UK average in real 2024-25 terms

The spending picture is fundamentally different from revenue. Scotland stands out: it generates revenue at or slightly above the UK average (with geographic oil and gas) yet receives spending well above average — nearly £2,500/head more than the UK mean in 2024-25. Northern Ireland also receives significantly higher spending per head. By contrast, most English regions cluster much more tightly around the average on spending than on revenue.

Fiscal Transfers: 2024-25Net fiscal transfer per head difference to UK average in real 2024-25 terms

When revenue and spending differences are combined, the resulting fiscal transfer tells each region's full story. Wales, Northern Ireland, and the North East receive the largest per-capita transfers, but for fundamentally different reasons than Scotland. Their transfers are dominated by the revenue component — weak economic performance — whereas Scotland's transfer is driven almost entirely by higher spending.

Transfer Components: 2024-25Revenue and spending components of fiscal transfer per head in real 2024-25 terms

The decomposition chart above makes the structural drivers visible. One important caveat: Scotland's position is highly sensitive to how North Sea oil and gas revenue is allocated. This analysis uses the geographic share — consistent with the original chokkablog analysis and with GERS. Switching to a population share would reduce Scotland's per-head revenue significantly, moving it below the UK average and substantially increasing its implied fiscal transfer.

Conclusion

The UK operates as a fiscal union: tax revenue is pooled centrally, and public spending is allocated across regions according to need and policy. This means some regions are net contributors — they raise more than they receive back in spending — while others are net recipients. Understanding why a region is a net recipient matters. A region that receives large transfers primarily because of weak revenue (low economic output, low wages, limited oil & gas) faces fundamentally different policy challenges than one that receives transfers because of high spending per head (legacy infrastructure, demographic factors, policy decisions). Scotland is a particularly interesting case: its fiscal transfer is dominated by the spending component, not the revenue component — a pattern that contrasts sharply with Wales, the North East, and Northern Ireland, where weak revenue is the primary driver.

How does it work?

Data Table

Selected Year Data: 2024-25

How do these figures compare to GERS?

The Scottish Government's annual Government Expenditure and Revenue Scotland (GERS) publication uses the same underlying CRA expenditure data from HM Treasury for approximately 90% of public spending. The two sources produce broadly consistent results at the deficit-per-head level across the most recent years:

Metric (2024-25)	ONS CRA	GERS
Revenue/head (incl geo NS)	£16,456	£16,471
Spend/head	£21,117	£21,192
Deficit/head	£4,661	£4,721
UK deficit/head	£2,191	£2,143

Metric (2023-24)	ONS CRA	GERS
Revenue/head (incl geo NS)	£16,210	£16,360
Spend/head	£20,241	£20,251
Deficit/head	£4,031	£3,891
UK deficit/head	£1,964	£1,913

Metric (2022-23)	ONS CRA	GERS
Revenue/head (incl geo NS)	£16,076	£15,975
Spend/head	£19,600	£19,459
Deficit/head	£3,524	£3,484
UK deficit/head	£1,877	£1,875

The small differences arise from:

Revenue classification: GERS nets some items off against spending that ONS treats as revenue, slightly increasing GERS revenue figures
Spending adjustments: GERS makes small supplementary amendments to CRA spending lines (mainly museums and pensions) to better reflect Scotland's benefit
Vintage and revisions: ONS CRA and GERS publications use slightly different vintages of the underlying Public Sector Finances data, leading to small revisions year to year
Population estimates: Marginal differences in mid-year population figures used as denominators

At the deficit-per-head level the difference is within ~£150/head across all three years — immaterial for the analytical conclusions drawn here. The ONS CRA figures are used throughout this analysis because they provide data for all 12 UK regions on a fully comparable basis.