Autumn Budget Revision 2022-23: Supporting Document

Table A – Funding changes as outlined in Table 1.2 split by gross and net

Technical Adjustments

12. The Autumn Budget Revision records net technical changes of £106.5 million. The vast majority of these changes relate to the implementation of International Financial Reporting Standard 16 (‘IFRS 16’) which has seen the accounting treatment for leases significantly altered, with budgets now adjusted to align with that treatment. These changes require additional capital and non-cash budget cover to be applied for existing and new assets acquired under lease arrangements, to allow for their reclassification and subsequent depreciation. There is also be a change to the resource budget position to adjust for the elements of the rental costs that are now capitalised.

13. Further IFRS16 adjustments will be included in the Spring Budget Revision document as work is ongoing to quantify the final impact in some areas. Ring-fenced budget cover is being provided by HM Treasury to allow for this change in accounting treatment and the Scottish Government’s net discretionary funding will not be impacted by these changes. Final IFRS16 budget cover requirements will be provided to Treasury ahead of the UK Supplementary Estimates exercise.

14. Excluding IFRS16 the largest technical changes is a £7.3 million reduction in Social Security Scotland’s non-cash budget following a review of depreciation requirement for the year. There is additional non cash funding for Scottish Fire and Rescue Services (£1 million), and a technical accounting adjustment in respect of a pre-payment for the sleeper service (£5 million).

Transfers

15. There are two specific Whitehall transfers and allocations from HM Treasury recognised at the Spring Budget Revision. The net positive impact on the Scottish Budget is £7.8 million. The Whitehall transfers are a transfer of £6.5 million from Money Advice Service for the devolution of Debt Advice Services and a transfer from the Cabinet Office of £1.3 million for Cyber Security. These amounts have been passed directly to Social Justice and Safe and Secure Scotland respectively.

16. Internal transfers do not affect the Scottish Government’s budget as a whole and net to zero. Internal transfers move budget provision within or between portfolios, often to reflect changes in responsibility between portfolios, changes in payment mechanisms and virement intended to maximise the use of available resources. The significant portfolio transfers are as follows:

• transfer from Health & Social Care to Education & Skills to pay teaching grant for Nursing and Midwifery students in Scotland (£64 million);
• transfer from Education & Skills to Social Justice, Housing & Local Government to fund the Free school meals expansion (£42.0 million);
• transfer from Education & Skills to Social Justice, Housing & Local Government to provide funding for summer programmes and free school meals holiday alternatives (£31.8 million);
• transfer from Education & Skills to Social Justice, Housing & Local Government for Additional Support for Learning in Equalities and Inclusion (£15 million)
• transfer from Social Justice, Housing & Local Government to transfer GAE Ferry funding to Transport Scotland (£13.9 million); and
• transfer from Justice & Veterans to Scottish Courts and Tribunal Service to support the Recovery Renewal and Transformation Fund (£12 million).

Format of Supporting Document

17. The Scottish Government continues to discuss with the Finance and Public Administration Committee and others how it can improve the presentation and usefulness of supporting information.

18. The summary tables on pages 4 to 10 set out the changes sought in the Order at portfolio level, and the effect of the proposed changes on the overall cash authorisations. There is a clear read across from the numbers shown on the face of the Budget Act to those in these tables, and to the revised numbers shown in the Autumn Budget Revision Order itself. Tables 1.5 and 1.6 provide a reconciliation between budgets and the cash authorisations. Tables 1.7 (a) and (b) show the sources of funding that support the changes applied and the movement of available resources. Table 1.8 shows the voted Capital Spending and Net Investment for each portfolio following the ABR adjustments. It should be noted that for the remainder of the document, only spending that scores as capital in the Scottish Government’s or Direct Funded Bodies’ annual accounts is shown as capital.

19. The main body of the document then provides a more detailed analysis of the proposed changes on a portfolio by portfolio basis. For each portfolio and direct-funded body, it shows:

• a summary of the changes proposed for the portfolio;
• how the proposed revised portfolio budget is comprised in terms of operating and capital resources, divided into the main spending aggregates: Expenditure Limit, UK Funded AME (Annually Managed Expenditure) and Other spending to show TME (Total Managed Expenditure) in respect of the Scottish Budget;
• details of the proposed major changes; and
• details of the proposed revised budgets disaggregated to Level 3.

20. The Scottish Government’s spending proposals are in the main presented to Parliament in resource terms. But to meet the requirements of the “Public Finance and Accountability (Scotland) Act 2000”, Budget Bills and Revisions seek authority for the budgets of NDPBs in cash, and NDPB numbers in this supporting document are also given in cash terms. In order to allow comparison with NDPB budgets presented in other Scottish Government publications, the following table compares cash and budgets.