Falling North Sea revenue saw Scotland's notional public spending deficit increase by £3.6 billion to £22.7bn, according to the annual Government Expenditure and Revenue Scotland (GERS) report. 

While the public finances were boosted by growth in income tax and onshore corporation tax, cash raised from oil and gas fell considerably, largely due to lower energy prices.

That meant the gap between money raised in Scotland and money spent here was equivalent to 10.4% of GDP, up from 8.4% in 2022/23.

READ MORE: GERS: Scotland's finances explained in 60 seconds

The report shows that revenue was £88.5bn up £1.7b, equivalent to 8.1% of the UK total.

Total expenditure in Scotland by the Scottish Government, the UK Government and all other parts of the public sector was £111.2bn, an increase of £6.3bn.

This hike was due to increases in spending on health and welfare, including the Scottish Child Payment.

This works out at as 9.1% of UK spending.

The report estimates that spending per person in Scotland was £20,418. This is £2,417 higher than the UK figure of £18,001.

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Finance Secretary Shona Robison said the growth in revenue was "thanks in part to our progressive approach to tax and the revenue from renewable energy."

She added: “As the report makes clear, the notional deficit is not a reflection on the finances or policies of the Scottish Government – it is a reflection of UK Government choices.

“It is also important to emphasise that these figures reflect Scotland's status as part of the UK.

"As figures from the Office for National Statistics show, the UK economic model is driven by London and the South East of England.

"The UK Government retains control of 40% of expenditure and over 70% of revenues in Scotland. Indeed, a significant portion of the spending allocated to Scotland relates to servicing UK Government debt, which is paid at a higher rate than our European neighbours."

Ms Robison said if Scotland was independent, she and her colleagues would have the power to make "different choices."

"As it is, we are using all the powers we do have to deliver our priorities of growing the economy, investing in net zero, eradicating child poverty and delivering strong public services.”

UK Government Minister for Scotland Kirsty McNeill said the GERS report underlined the "collective economic strength of the United Kingdom."

She added: “By pooling and sharing resources across the UK, Scots benefit by £2,417 more per head in public spending than the UK average. That means more money for schools and hospitals, if the Scottish Parliament chooses to invest in those areas.

“Ensuring economic stability and then delivering economic growth are two of the driving missions of the UK Government. We have reset relationships with partners across the UK, and want to work closely with the Scottish Government to produce better results for people in Scotland.”

Tory finance spokesperson, Liz Smith, said the figures highlighted some "startling and inconvenient home truths" for the SNP.

“Despite record block grants, the SNP have squandered that funding settlement. Their financial mismanagement and waste has left Scots with higher taxes than anywhere else in the UK and brutal cuts to essential services," she said.

Scottish Labour finance spokesperson Michael Marra said Scots would be right to ask why public services are not better given the extra spending.

“On attainment in our schools and waiting times in our hospitals people deserve so much better. We need to drive waiting times down and attainment up," he said.

“So it is time for SNP to move beyond the division and focus on delivery. That’s the change Scotland needs.”

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Scottish Liberal Democrat economy spokesperson Willie Rennie said:"These figures emphasise the importance of the broad shoulders of the United Kingdom to Scotland.

"Being part of the UK allows Scotland to focus on its own priorities, while benefiting from strong shared financial and defence institutions.

"Rather than whinging and trying to muddy the waters around these figures, the nationalists should get on with using the huge spending powers at their government's disposal to boost the Scottish economy and their time to drive down long wait for Scottish NHS services."

Scottish Greens finance spokesperson Ross Greer said the figures showed that the UK Government was "standing on the coattails of Scotland’s economy, holding back our full potential."

He added: “The UK has suffered from chronically low levels of investment and poor productivity for decades, under both Labour and Tory Westminster governments.

"Their economic policies haven’t worked for any part of the UK outside of London and the South East and they certainly haven’t worked for Scotland. That’s very clear when you compare our economy to neighbours like Denmark, Sweden or Norway."

In his analysis of the report, David Phillips, an Associate Director at the IFS, said lower oil and gas prices in 2023-24 had "led to a worsening in Scotland’s notional fiscal position."

He added: "Like in the rest of the UK, the cost of supporting households and businesses with the cost of energy fell.

"But whereas the benefits of this were roughly in line with the rest of the UK, the fall in North Sea tax revenues that also accompanied the fall in oil and gas prices disproportionately affected Scotland, given the concentration of production off Scotland’s northern and eastern coasts. 

"These different trends illustrate how energy prices have significantly different impacts on the public finances of Scotland, a net energy exporter, and the wider UK which overall is a net energy importer.

"Under current constitutional arrangements, such differences matter little: Scotland’s notional deficit is subsumed within the wider UK’s deficit. It would matter though if Scotland were to become independent, or move towards much greater fiscal autonomy within the UK.”