Managing Scotland’s finances

The 2021-22 Provisional Outturn has been published detailing how the Scottish Government spent £47 billion on funding key public services to mitigate the impacts of the Covid pandemic and help tackle rising cost of living pressures.

The remaining £650 million of available funding has been carried over through the Scotland Reserve and allocated to support key priorities for 2022-23, which include tackling child poverty and striving towards our climate change targets. 

The Finance Secretary has previously made clear to Parliament that unexpected and late consequential funding from the UK Government was being factored into spending plans for 2022-23 and that any plan to carry forward funding requires the Government to use the Scotland Reserve, which will therefore be presented as an underspend.

Throughout 2021-22 the Scottish Government has:

• spent over £5.7 billion in relation to Covid, including over £2.6 billion to support health and wider public health initiatives, and around £1.5 billion in business support and self-isolation grants
• provided over £3.5 billion on Social Security benefits, including £57 million towards the Scottish Child Payment
• committed an additional £4 million of humanitarian aid, as the first part of a contribution to support the Ukraine crisis
• invested a record £1.9 billion to tackle climate change 

Public Finance Minister Tom Arthur said:

“The Scottish Government has had to respond quickly and decisively to significant challenges, in particular the ongoing effects of the pandemic, the cost of living crisis and the tragic illegal war in Ukraine. However, despite these difficult circumstances, our prudent financial management has meant every penny received by the Scottish Government has been channelled to where it was needed the most. 

“We face the same interrelated challenges as other governments across the world but we do so – currently - without the tools and levers other governments have at their disposal. The current fiscal framework is inadequate and leaves an imbalance between the risks to which the Scottish Budget is exposed to and the levers that we have to manage those risks. 

“We have delivered on our priorities, maintained the balance of not breaching our fixed budgetary limits and ensured we have sufficient balances to fund our 2022-23 spending commitments.”

BACKGROUND

Read the statement made to Parliament by Public Finance Minister

Read the Scottish Budget 2022-23

The overall underspend for 2021-22 is £650 million and is split between:

• a £421 million resource underspend. Resource budgets fund the day to day costs of delivering public services

• a £183 million capital underspend. Capital budgets support the delivery of public infrastructure

• a £46 million financial transactions underspend which can only be used for loans or equity investments to bodies outside the public sector

The majority of this carry forward was anticipated and is already included in 2022-23 funding plans, specifically: £324 million anticipated within the initial 2022-23 Budget, and £120 million to support Local Government 2022-23 costs at stage 1 of the Budget Bill process. The remaining balance of £206 million represents just 0.4% of the Scottish Government budget. 

The Finance Secretary informed the Finance and Public Administration Committee on 1^st February that if any carry forward was required, the Scottish Government would have to use the Scotland reserve. Speaking then, Kate Forbes said: “As members may be aware, any plan to carry forward funding requires the Government to use the Scotland reserve, which will therefore be presented as an underspend on this year’s funding when the final outturn is published later this calendar year. I hope that we can all recall our conversation at today’s committee when it comes to scrutinising that position later this year.”