Tag: growth

Scottish revenue increases by £15 billion

Strong growth in income tax and energy sector

Scotland’s notional deficit has continued to fall at a faster pace than the UK’s, driven by record energy sector revenues and strong growth in the tax take, figures for the 2022-23 financial year show.

Total revenue for Scotland increased by 20.7% (£15 billion) compared with 11.3% for the UK as a whole. This includes a £1.9 billion increase in revenue from Scottish income tax and £6.9 billion increase in North Sea revenue. These increases have partially been offset by a rise in spending on cost of living measures and interest payments on UK Government debt.

To mark publication of the 30th Government Expenditure and Revenue Scotland (GERS) statistics, the Cabinet Secretary for Wellbeing Economy, Fair Work and Energy, Neil Gray, visited the University of Glasgow’s Mazumdar-Shaw Advanced Research Centre to learn about the significant economic potential of quantum technology to Scotland’s economy. Recent research has suggested the sector could be worth £1 billion to Scotland by 2030.

Mr Gray said: “I am pleased that Scotland’s finances are improving at a faster rate than the UK as a whole, with revenue driven by Scotland’s progressive approach to income tax and our vibrant energy sector.

“While the record revenues from the North Sea show the extent that the UK continues to benefit from Scotland’s natural wealth, these statistics do not reflect the full benefits of the green economy, with hundreds of millions of pounds in revenue not yet captured.

“It is important to remember that GERS reflects the current constitutional position, with 41% of public expenditure and 64% of tax revenue the responsibility of the UK Government. Indeed, a full £1 billion of our deficit is the direct result of the UK Government’s mismanagement of the public finances.

“An independent Scotland would have the powers to make different choices, with different budgetary results, to best serve Scotland’s interests.

“While we are bound to the UK’s economic model and do not hold all the financial levers needed, we will continue to use all the powers we do have to grow a green wellbeing economy, while making the case that we need independence to enable Scotland to match the economic success of our European neighbours.

“I’m grateful to the University of Glasgow for showing me their world-leading quantum technology research, which could be worth £1 billion to our economy within seven years, highlighting just how bright Scotland’s future could be outside of the UK.”

Government Expenditure and Revenue Scotland 2022-23

Government Expenditure & Revenue Scotland figures ‘show Scotland benefits from being part of a strong United Kingdom with a sharing and pooling of resources’

The Scottish Government has published their annual Government Expenditure & Revenue Scotland report, which shows the difference between total revenue and total public sector spending in Scotland.

The figures for 2022-2023 showed that people in Scotland are continuing to benefit from levels of public spending substantially above the United Kingdom average.

And even in a year of exceptional North Sea Revenues, Scotland’s deficit is still more than £19 billion, demonstrating how the country continues to benefit from being part of a strong United Kingdom, with the vital pooling and sharing of resources that the Union brings.

Commenting on the figures, Scottish Secretary Alister Jack said: “The Scottish Government’s own figures show yet again how people in Scotland benefit hugely from being part of a strong United Kingdom.

“Scotland’s deficit is more than £19billion – even in a year of exceptional North Sea Revenues. Without oil and gas, that figure soars to more than £28billion.

“People in Scotland benefit to the tune of £1,521 per person thanks to higher levels of public spending.

“As we face cost of living pressures and unprecedented global challenges it is clear Scotland is better off as part of a strong United Kingdom.”

GERS 2023 – Uptick in oil revenues narrows the gap between Scottish and UK Deficit

Fraser of Allander Institute’s MAIRI SPOWAGE, JOAO SOUSA and CIARA CRUMMEY unpick the latest statistics:

This morning sees the publication of Government Expenditure and Revenue Scotland 2022-23.

These statistics set out three main things:

  • The revenues raised from Scotland, from both devolved and reserved taxation;
  • Public expenditure for and on behalf of Scotland, again for both devolved and reserved expenditure;
  • The difference between these two figures, which is called in the publication the “net fiscal balance” – but as you may well hear colloquially referred to as the “deficit”.

These statistics form the backdrop to a key battleground in the constitutional debate, particularly when it is focussed on the fiscal sustainability of an independent Scotland and what different choices Scotland could make in terms of taxation and spending.

So what do the latest statistics show?

The latest figures show that the net fiscal balance for 2022-23 was -£19.1 bn, which represents -9.0% of GDP. This is a fall from the 2021-22 figure of -12.8% of GDP and is down significantly from 2020-21 which was inflated hugely by COVID-related spending.

The comparable UK figure for 2022-23 is -5.2% of GDP. The UK figure is unchanged from 2021-22. The reason for the differential trend for Scotland and the UK as a whole has been driven by North Sea revenue, which contributed £9.4 billion to Scottish revenue in 2022-23.

Chart 1: Scottish and UK net fiscal balance, 1998-99 to 2022-23

Source: Scottish Government

In this year of record North Sea revenue (at least in cash terms), the difference between the Scottish and UK deficit is driven by the expenditure side of the net fiscal balance equation.

Chart 2: Spending and revenue per head, Scotland-UK, 1998-99 to 2022-23

Source: Scottish Government

On revenues, including the North Sea, Scotland raised £696 more per head than the UK, whilst on expenditure, Scotland spent £2,217 more per head than the UK average.

So what do these statistics really tell us?

These statistics reflect the situation of Scotland as part of the current constitutional situation. That is, Scotland as a devolved government as part of the UK. The majority of spending that is carried out to deliver services for the people of Scotland are provided by devolved government (either Scottish Government or Local Government).

To a certain extent therefore, the higher per head spending levels are driven by the way that the funding for devolved services is calculated through the Barnett formula.  Add on top of that the higher than population share of reserved social security expenditure, and we have identified the two main reasons for higher public expenditure in Scotland.

Let’s go over some of the main points that may come up today when folks are analysing these statistics.

Scotland isn’t unusual in the UK in running a negative net fiscal balance

This is absolutely right. ONS produce figures for all regions and nations of the UK, and these have shown consistently (in normal years, so excluding COVID times) that outside of London and surrounding areas, most parts of the UK are estimated to raise less revenue than is spent on their behalf.

In 2021, we discussed the differences between parts of the UK in an episode of BBC Radio 4’s More or Less programme.

The Scottish Government doesn’t have a deficit as it has to run a balanced budget

This statement isn’t quite true (the SG now has limited capital borrowing powers and resource borrowing powers to cover forecast error). The Scottish Government’s Budget is funded through the Barnett determined Block Grant, with some adjustments to reflect the devolution of taxes and social security responsibilities (most significantly, income tax).

The SG do not have the flexibility to borrow for discretionary resource spending.

However, to focus on this around the publication of GERS somewhat misses the point of the publication. It looks at money spent on services for the benefit of Scotland, whoever spends it, and compares that to taxes raised, whoever collects them. As touched on above, the Barnett-determined block grant funds services at a higher level per head in Scotland than in England in aggregate.

What does this tell us about independence?

Setting aside the noise that will no doubt accompany GERS today, there are essentially two key issues, that need to be considered together.

GERS takes the current constitutional settlement as given. If the very purpose of independence is to take different choices about the type of economy and society that we live in, then it is possible that these a set of accounts based upon the world today could look different, over the long term, in an independent Scotland.

That said, GERS does provide an accurate picture of where Scotland is in 2023. In doing so it sets the starting point for a discussion about the immediate choices, opportunities and challenges that need to be addressed by those advocating new fiscal arrangements. And here the challenge is stark, with a likely deficit far in excess of the UK as a whole, other comparable countries or that which is deemed to be sustainable in the long-term. It is not enough to say ‘everything will be fine’ or ‘look at this country, they can run a sensible fiscal balance so why can’t Scotland?’. Concrete proposals and ideas are needed.

And please guys… dodge the myths!

We have produced a detailed guide to GERS which goes through the background of the publication and all of the main issues around its production, including some of the odd theories that emerge around it. A few years ago, we also produced a podcast which you can enjoy at your leisure.

In summary though, to go through the main claims usually made about GERS:

  1. GERS is an accredited National Statistics produced by statisticians in the Scottish Government (so is not produced by the UK Government) and is a serious attempt to understand the key fiscal facts under the current constitutional arrangement
  2. Some people look to discredit the veracity of GERS because it relies – in part – on estimation. Estimation is a part of all economic statistics and is not a reason to dismiss the figures as “made up”.
  3. Will the numbers change if you make different reasonable assumptions about the bits of GERS that are estimated? In short, not to any great extent.
  4. If you have any more questions about how revenues and spending are compiled in GERS, the SG publish a very helpful FAQs page, including dealing with issues around company headquarters and the whisky industry.

Look out for more analysis

It’ll be interesting to see the coverage of these statistics today and the talking points that are generated given where we are in the constitutional debate.

If you have any questions about GERS for us, then why not get in touch? Submit them to fraser@strath.ac.uk and we’ll try to cover them in our weekly update later this week!

Shona Robison: A fair economy supporting Scotland’s people

Deputy First Minister outlines priorities for sustainable growth

Fair work and more efficient public services will be at the heart of Scotland’s economy, Deputy First Minister Shona Robison pledged today.

Plans to deliver real benefits to the people of Scotland through a strong, green economy, underpinned by the most progressive tax system in the UK, are outlined in the Scottish Government’s Portfolio Prospectus which pledges firm actions to be achieved by 2026.

These include:

  • creating the UK’s most progressive tax system to deliver public services, tackle poverty and grow the wellbeing economy
  • increasing the number of workers earning at least the real living wage, while narrowing the gender pay gap
  • making Scotland a leading European start-up nation, in which more businesses are created and grow to scale
  • growing international exports while diversifying into new markets
  • laying foundations to produce 5 Gigawatts (GW) of hydrogen production by 2030, as part of a Scottish hydrogen supply chain
  • implementing a New Deal for Local Government, including a fiscal framework, to tackle collective challenges and improve outcomes

The Deputy First Minister was joined by Wellbeing Economy Secretary Neil Gray on a visit to Dear Green Coffee Roasters in Glasgow – a company based on fair work principles and sustainability which embodies the vision for a wellbeing economy.

Ms Robison said: “The Scottish Government’s Policy Prospectus lays out the practical measures we will take to transform the economy, deepen our relationship with business and maximise the value of our public spending.

“Developing a wellbeing economy is not just good social practice, it makes sound economic sense. By focusing on strong public services, we can help disabled people, the long-term sick and those with caring responsibilities to get back into work. While paying a fair wage, and reducing the gender pay gap, can produce a committed workforce which in turn will help increase productivity and improve staff retention.

“We will work in partnership with local government to update the way it is financed and improve collaboration. Underpinning this will be stable, sustainable public finances delivering people-focused public services and supporting Scotland’s net-zero goals.

“Our resources will be focused where they can have the maximum impact, such as laying the foundations of a hydrogen supply chain and supporting internationally competitive green technologies, health and life sciences and advanced manufacturing.”

The Scottish Government’s Policy Prospectus is based on three missions: equality, opportunity and community.

Business confidence dips for Scottish firms in January

Bank of Scotland Business Barometer for January 2023 shows: 

  • Business confidence in Scotland fell five points during January to 10% 
  • As National Apprenticeship Week approaches 27% of businesses in Scotland say investing in training and development presents the biggest opportunity for growth in the next six months 
  • Overall UK business confidence reaches six-month high at 22% with twice as many businesses optimistic about the economy than in December   

Business confidence in Scotland fell five points during January to 10%, according to the latest Business Barometer from Bank of Scotland Commercial Banking. 

Companies in Scotland reported lower confidence in their own business prospects month-on-month, down 17 points at 8%.  When taken alongside their optimism in the economy, up six points to 12%, this gives a headline confidence reading of 10%.  

Scottish businesses identified their top target areas for growth in the next six months as evolving their product and service offer (42%), investing in sustainability (29%) and investing in their teams (27%).  
 
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide. 
 
A net balance of 14% of businesses in the region expect to increase staff levels over the next year. This is up from December when a net balance of 11% of businesses reported plans to make new hires.  

Overall UK business confidence climbed in January, with firms reporting their highest confidence levels since July last year.  

Business confidence increased by five points to 22% and the net balance of businesses feeling optimistic about the economy doubled on December’s reading to 16%. 

Ahead of National Apprenticeship Week (6-12th February) 30% of businesses across the UK reported that they are looking at opportunities to grow by investing in staff development and training. A net balance of 17% of firms reported plans to create new jobs in the next twelve months. 

Chris Lawrie, area director for Scotland for Bank of Scotland Commercial Banking, said: “Ongoing pressures from wider economic challenges are clearly continuing to impact Scottish businesses, but confidence remains in positive territory and firms’ resilience shines on.  

“Over the next few months as concerns such as rising costs continue, it is important firms keep a close eye on cash flow. Having reserves ready for when challenges hit makes managing turbulent periods easier. We’ll remain by the side of Scottish firms to help them successfully navigate the months and years ahead.”    

For the second month in a row, confidence in the manufacturing and service sectors increased, with manufacturing rising to 28% (up 15 points) and services up to 25% (up seven points). 

Business confidence in construction was down two points to 27%, while retail confidence fell for the second month in a row to 7% (from 13%), the lowest level since February 2021. 

Paul Gordon, Managing Director for Relationship Management, Lloyds Bank Business & Commercial Banking, said: “After a challenging 2022, it’s heartening to see confidence rising for the second consecutive month.

“This is the first back to back increase since September 2021. There is no doubt that the business environment remains challenging and uncertainty still remains, but this improvement in optimism is very welcome as we start 2023.  

“With pay expectations tempering, trade expectations set to improve, and a clearer way forward on energy price support, this may give businesses a bit more certainty and the confidence they need to inspire investment and promote growth.” 

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence continues to improve following the December boost. Firms are clearly more optimistic about the wider economy and this is driving the increase, helped by precursory signs that wage and other cost pressures may be easing. 

“It is still a tough environment for businesses, with high energy bills remaining a concern during the winter months, but there are grounds for optimism for 2023 if inflation starts to trend lower.” 

Chancellor to use ‘Brexit freedoms’ to tackle poor productivity

  • Chancellor Jeremy Hunt will set out a long-term plan for prosperity made possible by Brexit.
  • Hunt will make the case against “declinism”, with the UK growing faster than France, Japan and Italy since 2010.
  • He will also confirm post-Brexit reforms to unlock £100bn of private investment this decade will be implemented in the coming months.

Chancellor of the Exchequer Jeremy Hunt will today set out his approach to tackle poor productivity and boost growth, using the new freedoms won by Brexit as a catalyst.

Following the Prime Minister New Year address outlining his five priorities which include growing the economy, halving inflation and getting debt down – the Chancellor will speak about how this will be accomplished.

Delivering the speech at Bloomberg’s European headquarters in London, Mr Hunt will caution against an attitude of “declinism” about Britain and set out the case for optimism as the UK aims to play a leading role in Europe and across the world in the industries of tomorrow. Since 2010 the UK economy has grown faster than France, Italy and Japan, and since the EU referendum the UK economy has grown at around the same rate as Germany.

The Chancellor will also confirm that post-Brexit reforms to Solvency II will be implemented in the coming months, which could unlock £100 billion of additional investment into the UK’s most productive assets this decade – such as clean energy and UK infrastructure.

Chancellor Jeremy Hunt is expected to say: “Our plan for the years that follow is long term prosperity based on British genius and British hard work.

“[And] world-beating enterprises to make Britain the world’s next Silicon Valley.”

The Chancellor will also caution against declinism, with the UK aiming to play a leading global role:

“Declinism about Britain was wrong in the past – and it is wrong today.

“Some of the gloom is based on statistics that do not reflect the whole picture.

“Like every G7 country, our growth was slower in the years after the financial crisis than the years before it. But since 2010, the UK has grown faster than France, Japan and Italy. Since the Brexit referendum, we have grown at about the same rate as Germany.

“If we look further ahead, the case for declinism becomes weaker still. The UK is poised to play a leading role in Europe and across the world in the growth sectors which will define this century.”

The Chancellor will focus on key growth industries, including Digital Technology, Green Industries, Life Sciences, Advanced Manufacturing and Creative Industries – areas where Britain has a competitive advantage to build on further.

Mr Hunt will also set out some of the challenges the UK faces, including poor productivity, and set out a plan to long-term prosperity, using the UK’s new-found Brexit freedoms to support growth and entrepreneurship.

In the Autumn Statement, the Chancellor set out the government’s strategy for boosting growth by investing in our people, in the infrastructure that connects our country, by creating the right environment for business investment, and by supporting our world-leading financial services companies and innovators.

To further support investment across our economy, the Chancellor also announced a decision to proceed with reforms to Solvency II – an EU Directive that governs the amount of funds British insurers are required to hold in reserve. The Association of British Insurers suggest the Chancellor’s reforms are expected to unlock up to £100 billion of private investment this decade into UK infrastructure and clean energy, such as nuclear power.

And in December, the Chancellor went further and announced the Edinburgh Reforms – a package of reforms to drive growth and competitiveness in the UK’s financial services sector, while retaining our commitment to high international standards. This included the publication of our ambitious plan for repealing and reforming EU law for financial services.

The Chancellor is also expected to say: “Confidence in the future starts with honesty about the present, and we should not shy away from the biggest challenge we face which is our poor productivity. Our plan for long term prosperity tackles that challenge head on.

“It is a plan necessitated, energised and made possible by Brexit which will succeed if it becomes a catalyst for the bold choices we need to take.

“Our plan for growth is a plan built on the freedoms which Brexit provides. It is a plan to raise productivity. It is a plan to use the proceeds of growth to support our public services at home, to support businesses in the new low carbon economy and to support democracy abroad. It is the right course for our country and the role in the world to which we aspire.”

With a UK tech sector worth one trillion dollars the Chancellor will call on other businesses to consider the UK as a place for investment by tech entrepreneurs, life science innovators and energy companies.

The UK is an attractive location for tech investment; the recently announced digital markets regime aims to open the UK’s digital markets up to greater competition and spur increased innovation across the sector. The regime is an alternative to the EU’s Digital Markets Act – the UK’s proposals are widely regarded as more proportionate, targeted and flexible than the EU’s.

This month PwC surveyed more than 4,400 top chief executives in 35 countries and found that the UK has risen the joint third most important country to invest, behind only the US and China and equal with Germany.

The Edinburgh Reforms: Chancellor to announce package of financial reforms during visit today

  • Chancellor to announce reforms to drive growth and secure the UK’s position as world leading financial services hub in Edinburgh today.
  • Ringfencing rules are set to be updated to release banks without major investment activities from the regime, regulators will be given a new remit to deliver growth and a widespread review will repeal hundreds of pages of EU law.
  • The Government will continue to deliver reforms across the economy to drive economic growth during challenging times.

Chancellor, Jeremy Hunt, will announce a package of over 30 regulatory reforms to secure the UK’s place as the world’s foremost financial centre during a visit to Edinburgh today,

The “Edinburgh Reforms” will build on the unparalleled strength of the UK’s financial services sector, taking advantage of the opportunities provided by the UK’s exit from the European Union to tailor regulations to suit the country’s needs.

Today the Treasury will publish its plan to rigorously review, repeal and replace hundreds of pages of EU regulation ranging from disclosure for financial products to prudential rules for banks, creating a tailor-made UK regulatory framework based on international best practice that balances burden on business with protection for the consumer.

Rules that hold back growth will be reviewed, with overbearing EU rules which put companies off listing in the UK being overhauled, among dozens of regulations within scope of the Financial Services and Markets Bill.

The Government will also announce changes to ringfencing rules which currently require major banks to separate their retail and investment arms, and retail banks have to comply even if they don’t have an investment arm, a time consuming regulatory exercise.

Reforms will cut red tape and boost banking competition in response to the Skeoch review by freeing retail focused banks from ringfencing rules while maintaining protections for consumers. The UK’s world leading regulatory regime has evolved over the past decade and will continue to protect consumers and safeguard financial stability.

Chancellor of the Exchequer, Jeremy Hunt said: “This country’s financial services sector is the powerhouse of the British economy, driving innovation, growth and prosperity across the country.

“Leaving the EU gives us a golden opportunity to reshape our regulatory regime and unleash the full potential of our formidable financial services sector.

“Today we are delivering an agile, proportionate and home-grown regulatory regime which will unlock investment across our economy to deliver jobs and opportunity for the British people.”

This builds on the reforms to Solvency II announced in the Autumn Statement which will unlock over £100 billion for productive investment from UK insurers over the next decade, such as clean energy infrastructure.

The Chancellor is also expected to issue new mandates to the Financial Conduct Authority and the Prudential Regulation Authority setting out how they will help deliver growth and promote the international competitiveness of the UK.

The financial services sector is vital for Britain’s economic strength, contributing £216 billion a year to the UK economy. This includes £76 billion in tax, enough to fund the entire police force and state school system, while employing over 2.3 million people – with 1.4 million outside London and 163,000 people in Scotland.

While in Edinburgh today, the Chancellor will meet with top financial services CEOs to discuss these reforms and how the sector can further drive investment and growth in the UK.

As confirmed in the Autumn Statement, the government will look to announce changes to EU regulations in four other growth industries by the end of next year, including digital technology, life sciences, green industries and advanced manufacturing.

Financial services reforms ‘set to boost Scotland’s economy’

  • Economic Secretary, Andrew Griffith MP, hailed the crucial role Scotland plays in maintaining the UK’s position as a world leader in financial services as part of a speech given in Edinburgh today.
  • He also visited Scottish Widows following insurance industry reforms which could unlock over £100 billion of investment in UK infrastructure and green projects, including in Scotland.

Economic Secretary Andrew Griffith was in Edinburgh today, where he hailed the success of Scotland’s financial services sector and the strength of the Union.

Speaking at TheCityUK’s Annual Conference, the minister praised the energy and vitality of Edinburgh, the second biggest financial hub in the UK, with one seventh of Edinburgh’s workers – 50,000 people – employed by the sector.

Mr Griffith then visited life insurance and pensions firm, Scottish Widows, following reforms to regulation (Solvency II), which could unlock over £100 billion of investment in the UK over the next ten years, boosting infrastructure, green growth and Scottish jobs.

Economic Secretary to the Treasury, Andrew Griffith said: ““Scotland’s economy makes a crucial contribution to maintaining the UK’s position as a leading global hub for financial services – with Edinburgh and Glasgow the two largest clusters outside of the City of London.

“Our reforms to Solvency II have the potential to unlock over £100 billion of investment into the UK economy, including in Scotland – in things like infrastructure and sustainable energy.

“We are committed to maintaining the UK’s place as one of the most open and dynamic markets in the world – and will set out further plans for ambitious reform, in the coming weeks.”

Craig Thornton, Chief Investment Officer, Scottish Widows: “By working together the insurance industry, Government and the Prudential Regulation Authority will now be able to unlock a significant investment boost for the UK economy, while continuing to help people secure their financial futures.

“Scottish Widows has already invested around £3bn in social housing projects across the UK, however we will be able to invest billions more in projects which are vital to the growth of the economy and the transition to net zero.

“We’re looking forward to moving on to the next stage of the reform process at pace, which includes working with Government to accelerate the vital work of identifying suitable investment opportunities in the UK which will benefit from the recently announced changes.”

Solvency II is a set of regulations dictating how much financial reserves insurers have to hold against the risks included in their policies. It also dictates how they are required to report these risks to regulators.

The rules were implemented in 2016, and were a compromise between EU member states. Leaving the EU has enabled us to reform these rules to suit the unique features of the UK insurance market.

At the Autumn Statement, the Chancellor announced steps to reform the legislation that would unlock over £100 billion of investment in UK infrastructure, and drive down prices of life insurance products for consumers.

These included:

  • A 65% reduction in the risk margin for life insurers, and 30% reduction for general insurers. This will help free up capital on insurers balance sheets.
  • A significant increase in flexibility of the matching adjustment – freeing up money for long-term assets such as infrastructure.
  • A meaningful reduction in the current reporting and administrative burden on firms, such as doubling the thresholds at which the regime applies.

These steps act as a first course of the Government’s ambitious agenda to seize on our Brexit freedoms and reform our world leading financial services sector, so that it works in the interest of British people and consumers.

They also build on the measures within the Financial Services and Markets Bill – which grants the UK the power to repeal and replace hundreds of pieces of burdensome EU laws; protects access to cash for communities in Scotland; and compensate the victims of APP fraud.

Royal Bank of Scotland Jobs report shows permanent placements increase in September, but growth “mild”

  • Fresh uplift in permanent staff appointments, but growth only mild
  • Temp billings rise at quicker pace
  • Pay pressures ease, but remain historically sharp

Scotland’s labour market saw an improvement in overall hiring activity in September, according to the latest Royal Bank of Scotland Report on Jobs survey, with recruiters reporting a fresh rise in permanent placements and stronger temp billings growth.

The seasonally adjusted Permanent Placements Index rose back above the neutral 50.0 mark, rising from 47.3 in August to 52.7 in September, to signal a mild uplift in permanent staff appointments, while temp billings increased at a strong and accelerated rate. 

At the same time, sustained growth of vacancies, combined with another deterioration in candidate availability, led to further upwards pressure on pay. Notably, both starting salaries and temp wages increased at historically sharp rates, despite easing since August.

Permanent placements return to growth

Adjusted for seasonal variation, the Permanent Placements Index rose back above the neutral level of 50.0 in September to signal a fresh rise in permanent staff appointments across Scotland. Panellists attributed the upturn to strong demand for staff and increased hiring activity amongst clients in some sectors. That said, the pace of increase was only mild.

September data pointed to sustained growth of temp billings across Scotland, extending the current sequence of upturn that began two years ago. The rate of expansion ticked up from August’s seven-month low and was solid overall.

The pace of increase in temp billings in Scotland was broadly in line with the trend seen for the UK as a whole.

Further marked drop in permanent candidate availability

The supply of permanent staff across Scotland continued to decrease in September, stretching the current sequence of contraction to 20 months. Skills shortages and high demand for staff reportedly drove the latest fall. Notably, the rate of decline quickened slightly on the month and was marked overall.

Scotland recorded a much sharper fall in permanent staff supply than that seen on average across the UK, with the pace of decline slowing slightly on the month at the national level.

Adjusted for seasonal variation, the Temporary Candidate Availability Index remained below the neutral 50.0 mark in September, signalling a nineteenth straight monthly deterioration in the supply of temp staff across Scotland and one that was rapid overall. Panellists cited strong demand for short-term workers and a reluctance among candidates to move roles. Although it remained much sharper than that seen at the national level, the pace of contraction was the slowest for six months.

Rate of starting salary inflation eases to 15-month low

September data signalled a sustained uplift in salaries awarded to permanent new joiners in Scotland, amid reports that strong demand for staff led to upwards pressure on pay. Though historically sharp, the rate of salary inflation was the slowest for 15 months, and weaker than that recorded for the UK as a whole.

A twenty-second monthly increase in hourly rates for short-term staff in Scotland was recorded in September. According to survey respondents, skills shortages were the primary cause of the latest rise. The rate of temp wage inflation softened to a four-month low, but was nonetheless sharp and outpaced the UK-wide average.

Permanent vacancies rise at slower rate

As has been the case in each month since February 2021, demand for permanent staff in Scotland increased in September. The rate of expansion was the softest seen for a year-and-a-half, albeit sharp by historical standards.

IT & Computing recorded the fastest rise in permanent vacancies, followed by Nursing/Medical/Care, while Hotel & Catering saw the slowest.

Temporary vacancies across Scotland continued to rise in September, extending the current sequence of growth to two years.  The rate of increase was the slowest since February 2021, but still sharp overall.

Across the monitored sectors, demand for temp staff was strongest in IT & Computing, followed by Accounts & Financial.

Sebastian Burnside, Chief Economist at Royal Bank of Scotland, commented: “Permanent staff appointments across Scotland rose during September following a moderate fall in August, amid reports of improved hiring activity at clients in some sectors and strong demand for workers.

“The rate of growth was only mild, but nonetheless outpaced the UK-wide average. Temp billings also increased, with growth ticking up since August to a solid pace.

“The imbalance between staff demand and supply continued to place upwards pressure on pay in September.

“The latest survey showed that both permanent and temporary staff availability continued to decline sharply, which drove further increases in temp pay and starting salaries at rates seldom seen in the history of the survey.”

Scotland’s house price growth continues to 9.1% Walker Fraser Steele’s latest House Price Index

Walker Fraser Steele’s latest House Price Index

  • 11 Local Authorities in July experiencing record average prices
  • Argyll and Bute has highest annual growth rate at 18.1%
  • Semi-detached properties have highest price growth over the year
  • Average Scottish house price now £224,035, up 0.8% on June, 9.1 annually

Table 1. Average House Prices in Scotland for the period July 2021 – July 2022

Scott Jack, Regional Development Director at Walker Fraser Steele, comments: “The average price paid for a house in Scotland in July 2022 is £224,035, establishing yet another record price for the country – the thirteenth occasion that this has happened in the last thirteen months.

This price is some £18,600 higher than that seen in July 2021, indicating that prices have risen by 9.1% on an annual basis. This annual rate has slowed from the 10.6% growth seen in June, but that month was assisted by a near £3,000 fall in prices which occurred twelve months earlier in June 2021, meaning that the base point for measuring June’s growth rate started from a particularly low level. On a monthly basis, prices in July increased by some £1,725, or 0.8%, which was close to £500 higher than the increase seen in June – continuing the bi-monthly oscillation in prices in 2022 that can be seen in Table 1 above.

Figure 1. The average house price in Scotland over the period July 2020 to July 2022

While prices continue to increase, there is some evidence that the number of housing sales in Scotland is beginning to slow – although a number of surveyors in Scotland believe this to be a regular feature of June and July’s housing market, coinciding as it does with the school holidays, when families are likely to be distracted by matters other than buying a property. It is therefore difficult to draw conclusions from the observed shortfall of sales in June, and to a lesser extent July.

Looking at Table 2 below, which illustrates the change in prices by property type, there is a far smaller difference between the property types in July 2022 than there had been in March 2022.

March 2022 shows a ‘pandemic-led’ increase in prices with detached properties having the highest growth in prices, and flats the lowest. However, in July this position has changed, with semi-detached properties seeing the largest increase in prices while detached properties are second lowest.

The change in growth rates of the different property types highlighted in Table 2 may suggest that the importance of ‘lifestyle-changes’ in the decisions involved in buying a property have shifted over the last few months, as the pandemic becomes less of an influence on peoples’ lives. Or alternatively it may just reflect a change in the mix of those who have purchased properties during the school holidays. We will have to wait and see what happens when the schools return this autumn, and families contemplate their next move.

Transactions analysis

Figure 2 below shows the monthly transaction count for purchases during the period January 2015 to July 2022, based on RoS (Registers of Scotland) figures for the Date of Entry. (July 2022 totals are based on RoS Application dates.)

It can be seen that the June 2022 total is the second lowest transaction count of the eight years shown in Figure 2, with only the June 2020 total being lower. (June 2020 was only three months after the start of the pandemic). Although the July 2022 total shows a small increase in transactions compared to June 2022, the current figure for the month remains an estimate, so at this stage not too much weight should be given to the predicted rise in sales.

RICS (Royal Institution of Chartered Surveyors), in its July 2022 Residential Market Survey, is pointing to an easing in sales market activity, with metrics on demand and sales remaining in modestly negative territory over the month. RICS add that for the time being at least – underpinned by the low levels of supply available for purchase – prices continue to rise across all parts of the UK.

Figure 2. The number of sales per month recorded by RoS based on entry date (RoS applications date for July 2022), for the period 2015 – 2022

Scotland transactions of £750k or higher

Table 3. The number of transactions by month in Scotland greater than or equal to £750k, January 2015 – July 2022

Table 3 shows the number of transactions per month in Scotland which are equal to or greater than £750k. The threshold of £750k has been selected as it is the breakpoint at which the highest rate of LBTT becomes payable.

Table 3 shows that there were 81 sales in excess of £750k during July 2022, and we anticipate that this number will increase as further sales for the month are processed by the Registers of Scotland. It is however doubtful that the July 2022 total will exceed the July 2021 total of 120 sales, which again suggests a slight cooling in the high-value sales market, consistent with the RICS Residential Market Survey quoted earlier. However, the total for July 2022 of 81 high-value sales still exceeds all the prior years’ July totals, except for 2021, indicating that the “lifestyle changes” associated with the pandemic – “working from home” and the “race for space” – are still features of the current housing market, even if their prominence is beginning to wane. This, as discussed on page 7, has resulted in strong competition for the properties that meet these requirements, with substantial price rises still being experienced at the top-end of the market.

A similar picture can be discerned from looking at the totals for the eight years covered by Table 3 above. It is clear that after seven months, the 2022 total already exceeds each full year from 2015 to 2018, with 2019 highly likely to be surpassed next month, and 2020 following suit shortly thereafter. It can also be seen that the sum of the first seven months of 2021 amounts to 590 sales, meaning that 2022 is not too far behind the previous year’s total at the same point in the year.

The five authorities with the largest number of the 578 high-value sales that have been recorded to date in 2022 are: Edinburgh (294); Glasgow City (37); Fife (32); East Lothian (28); and finally East Renfrewshire (20). From these figures can be seen that in 2022, Edinburgh accounts for just over half of this sector of the housing market

Local Authority Analysis

Table 4. Average House Prices in Scotland, by local authority area, comparing July 2021, June and July 2022

Table 4 above shows the average house price and percentage change (over the last month and year) by Local Authority Area for July 2021, as well as for June and July 2022, calculated on a seasonal- and mix-adjusted basis. The ranking in Table 4 is based on the local authority area’s average house price for July 2022. Local Authority areas shaded in blue experienced record average house prices in July 2022.

Annual change

The average house price in Scotland increased by some £18,600 – or 9.1% – over the last twelve months, to the end of July. This is a near £2,800 decrease over the £21,400 growth in prices seen in the twelve months to the end of June 2022 – but we were advising last month that prices in June 2021, i.e., one year earlier, had fallen by £3,000 from May 2021, so the base point for measuring annual changes in value was starting from a low level.

In July 2022, 31 of the 32 local authority areas in Scotland saw their average prices rise over the levels seen twelve months earlier – the sole exception being Inverclyde, where prices fell by -1.0. Inverclyde currently has the lowest average property value of the 32 local authority areas in Scotland, despite it having experienced a 7.4% increase in average prices in the month – discussed in more detail below.

The area with the highest annual increase in average house prices in July 2022 was Argyll and Bute, where values have risen by 18.1% over the year. This is the fourth month in succession that Argyll and Bute has recorded the highest annual change in prices, having been assisted in this process by a number of high-value sales achieving prices above their guide levels.

This occurred again in July, with the sale of a four-bedroom shipping magnate’s villa overlooking the Clyde, having an asking price of £650,000 but selling for £850,000. This is a classic example of how homes in attractive locations – this time in Helensburgh – can attract competitive bids, resulting in a significantly higher price for the property under offer.

In Table 4, it is noticeable that the top eight local authorities by value have all seen their average prices increase in the month, suggesting that the desire to move to larger properties in these areas has continued in Scotland over the summer months, despite the school holidays.

On a weight-adjusted basis, which employs both the change in prices and the number of transactions involved, there are five local authority areas in July that accounted for 44% of the £18,600 increase in Scotland’s average house price over the year. The five areas in descending order of influence are: – Edinburgh (13%), Glasgow (12%); South Lanarkshire (9%); Perth and Kinross (5%) and Highland (5%).

Monthly change

In July 2022, Scotland’s average house price in the month rose by some £1,730, or 0.8%, continuing the pattern of minor upward oscillations in property values on a monthly basis. The average price in Scotland now stands at £224,035, which sets a record level for the nation for the thirteenth month in succession.

In July 2022, 20 of the 32 Local Authority areas in Scotland experienced rising prices in the month, two more than in June. The largest increase in average prices in July, of 9.0%, was seen in Na h-Eileanan Siar, but we frequently make the point that the Islands have few sales in a month – in July there were just 12 in the Western Isles – which tends to result in large movements in average prices.

On the mainland, the highest increase in prices was in Inverclyde, up 7.4% in the month. Average prices in Inverclyde were assisted in the month by the purchase of an upmarket flat, in Greenock, being a lower conversion of a traditional 1870 Victorian blonde sandstone property, with 5 bedrooms, which sold for £370k – the second highest priced flat sold in Inverclyde in the calendar year.

At the other end of the scale the lowest increase in average prices in July, on the mainland, was Dundee City, at -3.7%. A number of new homes had been purchased in the Broughty Ferry area of Dundee earlier in the year – but the number sold diminished in July, resulting in the fall in average prices in the area.

Peak Prices

Each month, in Table 4 above, we highlight in light blue the local authority areas which have reached a new record in their average house prices. In July, there are 11 such authorities, two less than in June. We can also add that Scotland itself has set a record average price in July 2022 – the seventh of this calendar year.

Heat Map

The heat map below shows the rate of house price growth for the 12 months ending July 2022. As reported above, 31 of the 32 local authority areas in Scotland have seen a rise in their average property values over the last year, the one exception being Inverclyde. The highest increase over the twelve months to July 2022 was in Argyll and Bute at 18.1%. 16 of the 32 local authority areas had price growth in excess of 10.0% – three less than in June 2022.

Comparisons with Scotland

Figure 3. Scotland house prices, compared with England and Wales, Wales, North East and North West for the period January 2005-July 2022

Figure 4. A comparison of the annual change in house prices in Scotland, England and Wales, Wales, North East and North West for the period January 2005–July 2022

Scotland’s Eight Cities

Figure 5. Average house prices for Scotland’s eight cities from May 2021–July 2022

Figure 6. Average house prices for Scotland’s eight cities July 2022

Circle’s Values

To ensure that children and families are at the centre of all we do, we create opportunities for families to participate in the development of policies, values, and services.

We believe that to properly support families to find their own solutions, it is necessary to give voice to their thoughts, concerns, and aspirations.

We’ve recently involved families in the creation of a new participation strategy for Circle.

This strategy creates a framework that recognises the need to involve families in a meaningful and respectful way in the development of services and policy across the organisation. 

Cubes of Perpetual Light coming to Edinburgh

The Cubes of Perpetual Light will play new music commissions inspired by the themes of sustainability and growth during the Festival of Politics and Edinburgh International Book Festival

Specially designed ‘Cubes of Perpetual Light’ will come together in the Capital this summer to create a striking music installation featuring programmable light and quadraphonic sound.

The unique installation will appear in the iconic surroundings of the Parliament Garden in the Scottish Parliament, open to the public during the Festival of Politics, August 11-13 and Edinburgh International Culture Summit August 26-28.

A second installation will be installed during Edinburgh International Book Festival, 13–29 August.

The installation forms part of Dandelion, a major creative programme demonstrating the power of collective action through an ambitious ‘grow your own’ initiative that aims to reach communities across Scotland this summer.

Commissioned by EventScotland and funded by the Scottish Government,  Dandelion is Scotland’s contribution to UNBOXED: Creativity in the UK.

At the centre of Dandelion, is a meeting of art and science through the creation of hundreds of unique miniature ‘growing cubes’, called the ‘Cubes of Perpetual Light’. The 1m x 1m cubes are designed to foster accelerated plant growing and have been developed to grow hundreds of seedlings under LED light, combining design craft, traditional horticultural expertise and technological innovation.

The Cubes aren’t just miniature growing laboratories however, they’re also the inspiration for new music which people are being invited to experience at festivals and venues across Scotland this summer, now arriving in Edinburgh.

The special installations are each unique, featuring a collection of cubes, with immersive lighting integrated with stunning quadraphonic speaker systems designed to best showcase the new music compositions playing ‘from’ the cubes. This is the only opportunity to hear these unique compositions in their entirety.

For those unable to visit the cube installations in Edinburgh, they will also be visiting Inverness Botanic Gardens, 15–29 August, and on display at V&A Dundee until 30 August. This activity forms part of a summer-long programme of art, music, food and science for everyone to enjoy.

Leading musicians from Scotland and beyond have created 13 new music commissions for the Cubes of Perpetual Light, all inspired by themes of nature and sustainability.

The aim of the commissions, which can only be heard at the installations, is to encourage listeners to think more deeply about how, where and why plants grow. Each new music piece is commissioned by Dandelion with additional support for international work from British Council Scotland.

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The Edinburgh installation includes 13 tracks of new music from artists:

  • amiina & Kathleen MacInnes: A gorgeous collaboration bridging the mighty North Atlantic, from the Outer Hebrides to Iceland. South Uist native Kathleen MacInnes, one of Scotland’s finest Gaelic folk singers comes together with amiina, from Reykjavik – a strings-and-electronica quartet whose packed portfolio includes many collaborations with Sigur Rós. This unique recording for Dandelion features Gaelic lullabies Crodh Chailein, Dhachaidh along with amiina composition blauwber’.
  • Arooj Aftab & Maeve Gilchrist: Arooj Aftab’s music is a breath-taking blend of Sufi mysticism, contemporary classical, jazz, ambient and much more – and this year, she became the first Pakistani woman to win a Grammy. Her stunning new album Vulture Prince features Edinburgh-born harper, composer and producer Maeve Gilchrist, and the pair are teaming up again to create new music for Dandelion.
  • Claire M Singer: Claire M Singer is an acclaimed Scottish composer and performer whose acoustic and electronic music draws inspiration from the dramatic landscapes of her native country. The Director of Organ Reframed, a festival of new music that reimagines the epic sound of the organ, she’s created a new multi-channel work featuring organs recorded in Aberdeenshire, Inverness, Stonehaven and Glasgow.
  • Vedanth Bharadwaj : Vedanth is a vocalist and composer born in Mumbai, India who trained in Classical music around the age of four, under Neyveli Santhanagopalan. He recorded two beautiful songs for Dandelion featuring himself on vocals, banjo and guitar along with Gurupriya Atreya on vocals. ‘Vrukshan Se Mati Le’ is a song written by Surdas (an Indian mystic poet from the 16th century). He writes about how one ought to learn compassion from trees. Trees neither love you more when you water them, nor do they hate you if you cut them down. It provides us shade, while bearing all the heat from the sun on its own head. If you throw a stone at it, it gives you a fruit! Lucky are we, to live in a world among trees. Surdas pleads to us to learn compassion from trees, or at least, from the indigenous people.
  • Craig Armstrong & Steve Jones: Craig Armstrong is a BAFTA, Golden Globe and Grammy-winning Scottish born composer.  Through his orchestral writing, electronic music and wide-ranging artistic collaborations in classical and film music, Craig Armstrong’s distinct compositional voice has received worldwide acclaim. For Dandelion he created ‘Endless (Study 1)’ with guitarist Steve Jones along with School of Scottish Studies field recordings from the 1960s to create a sense of limitless space and time for the listener.
  • Fergus McCreadie: Fergus McCreadie is one of the UK’s most exciting jazz musicians. Combining vital jazz sounds with influences drawn from Scottish traditional music, his brilliant third album Forest Floor came out in April to universal acclaim and has been nominated for the Mercury Music Prize. His specially recorded Dandelion work ‘Life Cycle’ features piano and strings from Seonaid Aitken, Emma Pantel, Sarah Leonard & Juliette Lemoine.
  • Jason Singh: Jason Singh is a remarkable sound artist, beatboxer, producer and performer whose music is inspired by the natural world. Nicknamed “The Human Sampler” by Cerys Matthews, he’s worked with everyone from Sir David Attenborough to Talvin Singh. His composition for Dandelion, Droop, is a lament in response to our climate crisis. It is a collaboration between plant, humans and technology and has been created by converting the electrical signals generated by the Camellia plant into musical notes played through analogue and digital synthesisers.
  • Maya Youssef: Syria’s Maya Youssef is the ‘Queen of the Qanun’, an extraordinary 78-stringed Middle Eastern plucked zither. Her life-affirming music is rooted in the Arabic classical tradition but forges into jazz, Western classical and Latin music – as heard at the BBC Proms, WOMAD and now here on this special work for Dandelion: Back to Earth, Barley Blessing & Eastern Wind featuring Maya with Scottish musicians Innes White, Catriona Price, Craig Baxter, Alice Allen, Ciorstaidh Beaton and Arabic Nay player Moslem Rahal
  • Ravi Bandhu: Hailing from Sri Lanka, this acclaimed drummer, dancer and choreographer has taken his magnificent drum ensemble to stages as far afield as WOMAD in Reading and the Kennedy Center for the Performing Arts in Washington, DC.
  • Trio Da Kali: In a unique African / Scots collaboration Trio Da Kali brings together Hawa Kassé Mady Diabaté, Lassana Diabaté and Mamadou Kouyaté – three of the best new griot musicians from the Mandé culture of Mali – along with award winning Scots vocalist Kim Carnie & piper Ross Ainslie – to bring a fresh creative vibe to ancient traditions. These songs continue with the long-time folk culture of telling old stories from the past that pay tribute to the people who do good things for the community and talk about the importance of living in the present and enjoying what happens now.
  • Brian d’Souza: An award-winning sound artist aka Auntie Flo, DJ, producer and performer from Glasgow via Goa, Brian makes magic from a blend of electronic sounds and influences from around the globe. Winner of the 2019 Scottish Album of the Year Award for Radio Highlife, he recently debuted immersive installation The Soniferous Forest and for Dandelion has composed ’Spring Symphony (Sage, Basil, Mint and Lavender)’ – a biophilic soundscape that harnesses the power of nature through sound. It was created by using a Plant Wave device to pick up electromagnetic activity from the different plants which translated each into MIDI notes. These notes then literally ‘played’ samples of various traditional instruments from the Hebrides – including Clarsarch, Whistle, Flute, Pipes and Fiddle.”I then let the plants play… totally naturally to produce a kind of ‘acoustic ecology”.
  • Manu Delago: There’s no sound in music quite like the hang, a melodic percussion instrument invented only 20 years ago – and there’s no better exponent of it than Manu Delago, who’s performed with the likes of Björk, the Cinematic Orchestra, Ólafur Arnalds, Nitin Sawhney and Anoushka Shankar while making a succession of brilliant solo records.
  • Pàdruig Morrison: Accordionist Pàdruig Morrison was brought up surrounded by the culture, the music and the language of the Gaels. After bedding in the first Cube of Perpetual Light on the remote Hebridean island of Heisgeir, where his grandparents set up a pioneering experiment in sustainable living, Pàdruig is now making new music to help them grow.

This follows Dandelion’s latest project taking the Cubes of Perpetual Light on tour across Scotland throughout the month of August, traveling on specially designed electric cargo bikes.

The tour visits schools, parks, venues and Dandelion Unexpected Gardens where the commissioned music can be heard.

Music Director for Dandelion, Donald Shaw said: “Just as plants can grow from tiny seeds, great music can grow from small ideas that we nourish till they bloom into full art forms. 

“The cubes can demonstrate accelerated growing in a wide range of settings, both the expected and unexpected. Placed in a particular environment they create a micro-world within a world, allowing musicians and listeners to imagine a sonic landscape that surrounds us, providing a space for contemplation and for us to imagine a future where we sow, grow and share differently.”

The Rt Hon Alison Johnstone MSP, Presiding Officer of the Scottish Parliament said: “The Festival of Politics is all about opening the doors of the Scottish Parliament to people across the country with a variety of things on offer – from debate and discussion to exhibitions and music.

“The cubes of perpetual light is an example of how sustainability and art can come together to grab people’s attention and make people stop and think. I hope many people will take the opportunity to join us.”  

Marie Christie, Head of Development, Events Industry at VisitScotland said: “It’s fantastic to see so many incredible artists create new music inspired by Dandelion’s urgent themes of sustainability and our connection to the natural world.

“By fusing new music and new technologies, the cubes create unique ways for audiences to engage and connect with these issues. It’s wonderful to see the cubes travel to Edinburgh to be part of the city’s world-leading festivals, where audiences from Scotland and all over the world can experience them.”

Martin Green, Chief Creative Officer, UNBOXED said: “Dandelion is a brilliant coming together of artists, designers, technologists and scientists to make something special and important about what we eat, how it grows and how everyone can get involved in growing, wherever they live.

“Through the growing cubes, music and many opportunities to participate in growing initiatives, Dandelion is designed to inspire people to create a sustainable future. Dandelion is one of five UNBOXED projects taking place in Scotland this year as part UNBOXED: Creativity in the UK – a year-long celebration of creativity across the four nations.”

Dandelion is a joyous Scotland-wide celebration of sowing, growing and sharing. Commissioned by EventScotland and funded by the Scottish Government it is part of UNBOXED: Creativity in the UK. Dandelion reimagines our relationship with food and the planet and the way we celebrate it together.