Budget Bill 2017-2018: supporting document

Introduction

1. This booklet provides supporting information for the Parliament and others in support of the "Budget (Scotland) Bill". The Bill was laid before the Parliament by the Scottish Government in January 2017. The booklet itself has no statutory force - it is produced as an aid to understanding the Bill.

2. The purpose of the Bill is to seek Parliamentary approval to the Scottish Government's spending plans for the financial year 2017-18. These plans were set out in Scottish Budget: Draft Budget 2017-18 published in December 2016. The Parliamentary Committees have already scrutinised the draft plans, culminating in the Finance Committee's Report on the Budget Process in January 2017.

3. It should be noted that the Bill does not seek approval of tax rates resulting from the devolved powers to the Scottish Government in the Scotland Act 2016 as these are subject to separate legislation. A breakdown of the sources of funding for the Scottish Administration are provided at table 1.5.

4. There are a few changes between the figures given in Draft Budget 2017-18 and those set out in the rest of this document and the Bill. The major changes largely reflect statutory requirements. These are explained below:

i) While spending proposals are in the main expressed in resource terms the 'Public Finance and Accountability (Scotland) Act 2000' requires authority for the budgets of non-departmental public bodies ( NDPBs) to be given in cash. In order to allow comparison with NDPB budgets presented in other publications - including Draft Budget 2017-18 - table 1.1 compares cash and resource budgets at portfolio level;

ii) The Draft Budget included Judicial Salaries of £30.6 million. The Judicial Salaries in respect of full-time appointed Sheriffs are excluded from the Budget Bill as they do not require Parliamentary approval. Likewise, loan repayments by Scottish Water to the NLF, the PWLB and the EIB of £46.7 million are included within the Draft Budget figures, but excluded from the Budget Bill as they do not require Parliamentary approval. Police loan charges of £5.4 million are included in the Bill as they require Parliamentary approval.

iii) There are a number of directly funded external bodies which require separate parliamentary approval from the portfolio total, and consequently the budgets are detailed separately in the Budget Bill in respect of financial year 2017-18.

iv) To ensure that budgets align with the latest available information, there is an adjustment of £1,115.1 million to the Annually Managed Expenditure ( AME) budget provision for the Teachers and NHS Pension Schemes. This increase to the Draft Budget 2017-18 number, reflects the HM Treasury update to the discount rate applied for post-employment benefits announced in December 2016.

5. It is the aim of the Scottish Government to present a budget to the Scottish Parliament with a clear read across to the Scottish Government's Consolidated Annual Accounts. In order to maintain this clear link, the International Financial Reporting Standards ( IFRS) based budget presented to the Scottish Parliament in the Bill reflects Public Private Partnership and Private Finance Initiative schemes - and any revenue-financed infrastructure investment scheme - on the basis that such schemes are classified as on-balance sheet for IFRS based accounts purposes in accordance with the Government Financial Reporting Manual (the FReM). The budget consequences of the recognition of the change in treatment of PPP/ PFI/ NPD schemes in the Scottish Parliament's budget are therefore reflected in the budget presented to the Scottish Parliament.

6. Table 1.2 shows a full reconciliation between the portfolio budgets shown in the Draft Budget 2017-18, as restructured in Table 1.2, and the portfolio budgets as presented for parliamentary approval.

Table 1.1 - NDPB Cash and Resource Budgets by Portfolio, 2017-18

Portfolio	NDPB Budget (Cash)	NDPB Budget (Non-Cash)	NDPB Budget (Resource)
	£m	£m	£m
Finance and the Constitution	4.7	0.0	4.7
Health and Sport	57.5	1.2	58.7
Education and Skills	1,934.6	34.9	1,969.5
Economy, Jobs and Fair Work	159.9	10.6	170.5
Justice	1,476.2	75.1	1,551.3
Communities, Social Security & Equalities	1.3	0.0	1.3
Environment, Climate Change and Land Reform	98.6	7.4	106.0
Culture, Tourism & External Affairs	177.9	15.0	192.9
Rural Economy and Connectivity	83.8	20.6	104.4
Total	3,994.5	164.8	4,159.3

Table 1.2 Draft Budget restated for Parliamentary Approval

	A	B	C	D	E	F	G	H
	Draft Budget Restated	NDPB Non- cash	Adjusted Budget	Tech Adjust	Other bodies & transfers	LA grants	Minor Rounding	Budget for Approval
	£m	£m	£m	£m	£m	£m	£m	£m
Finance and the Constitution	3,580.9	0.0			-3,414.2			166.7
Health and Sport	13,225.9	-1.2		96.2	-15.3		-0.1	13,305.5
Education and Skills	3,288.9	-34.9				124.5	0.2	3,378.7
Economy, Jobs and Fair Work	384.6	-10.6						374.0
Justice	2,580.3	-75.1	-25.2	-3.1	-105.6	86.5		2,457.8
Communities, Social Security & Equalities	11,082.3	0.0			-7.0	-238.5		10,836.8
Environment, Climate Change and Land Reform	307.0	-7.4		46.7				346.3
Culture, Tourism & External Affairs	324.8	-15.0			-37.3			272.5
Rural Economy and Connectivity	2,866.6	-20.6	0.1	-28.1	-61.3	27.5	0.1	2,784.3
Administration	192.6							192.6
Crown Office and Procurator Fiscal	111.1							111.1
National Records of Scotland					37.3			37.3
Teachers and NHS Pensions			1,115.1		3,406.4			4,521.5
Office of Scottish Charity Regulator					3.0			3.0
Scottish Courts and Tribunals Service					105.6			105.6
Scottish Housing Regulator					4.0			4.0
Scottish Fiscal Commission					1.7			1.7
Revenue Scotland					6.1			6.1
Food Standards Scotland					15.3			15.3
Forestry Commission					61.3			61.3
The Scottish Government	37,945.0	-164.8	1,090.0	111.7	0.0	0.0	0.2	38,982.1
Scottish Parliament and Audit Scotland	103.2		1.0				-0.1	104.1
Total Managed Expenditure	38,048.2	-164.8	1,091.0	111.7	0.0	0.0	0.1	39,086.2

A - As detailed in Table 3.01 of Draft Budget 2017-18.

B - To meet the requirements of the Public Finance Accountability (Scotland) Act 2000 NDPBs are approved on a cash funding basis.

C - In accordance with requirements - police loan charges (£5.4 million) require parliamentary approval. Judicial salaries (£30.6 million) and Scottish Water loan repayments to NLF, PWLB and EIB (£46.7 million) are excluded from parliamentary approval. AME budget adjustments in respect of NHS and Teachers pensions (see paragraph 4.iv).

D - Technical adjustments to budget to reflect accounting requirements in accordance with the Government Financial Reporting Manual (the FReM).

E - Direct funded and other external bodies requiring separate parliamentary approval.

F - Restatement of remaining specific grants under appropriate Cabinet Secretary responsibility.

G - Minor rounding adjustments.

H- Final budget requiring parliamentary approval.

7. Since the introduction of resource accounting and budgeting, there has been a difference between the spending that scores as capital in the Scottish Government's accounts and that which scores as capital within DEL (the Departmental Expenditure Limit).

8. Draft Budget 2017-18 reported capital spending which scores against HM Treasury capital DEL, but as the consolidated accounts are based on the aggregates set in the Budget Bill, this supporting document uses the "accounts definition" of capital. Accordingly, only expenditure that scores as capital in the consolidated or Direct Funded Bodies' annual accounts is shown as capital (see the first column in table 1.3).

Table 1.3 Capital Spending 2017-18

	Direct Capital	NDPB Capital	Financial Transactions	Capital Grants to Local Authorities	Capital Grants to Private Sector	Total
	£m	£m	£m	£m	£m	£m
Accounts Definition
Capital DEL
Finance and the Constitution	2.0	-	-	-	-	2.0
Health and Sport	437.1	-	-	-	30.0	467.1
Education and Skills	569.6	50.9	14.0	-	96.9	731.4
Economy, Jobs and Fair Work	0.7		14.0	56.6	66.4	137.7
Justice	24.4	52.6	-	-	-	77.0
Communities, Social Security & Equalities	-	-	259.5	780.2	418.0	1,457.7
Environment, Climate Change and Land Reform	167.5	5.6	-	-	16.4	189.5
Culture, Tourism & External Affairs	-	17.4	5.0	-	6.3	28.7
Rural Economy and Connectivity	586.3	11.9	10.0	27.5	780.3	1,416.0
Total Programme	1,787.6	138.4	302.5	864.3	1,414.3	4,507.1
Administration	13.1	-	-	-	-	13.1
Crown Office and Procurator Fiscal	3.6	-	-	-	-	3.6
Total Scottish Government (Consolidated)	1,804.3	138.4	302.5	864.3	1,414.3	4,523.8
National Records of Scotland	3.3	-	-	-	-	3.3
Scottish Housing Regulator	-	-	-	-	-	-
Office of the Scottish Charity Regulator	-	-	-	-	-	-
Scottish Courts and Tribunals Service	14.5	-	-	-	-	14.5
Scottish Fiscal Commission	-					-
Revenue Scotland	-	-	-	-	-	-
Food Standards Scotland	-	-	-	-	-	-
Total Scottish Administration	1,822.1	138.4	302.5	864.3	1,414.3	4,541.6
Direct Funded Bodies
Forestry Commission (Scotland)	-	-	-	-	1.6	1.6
Scottish Parliament Corporate Body	1.0	-	-	-	-	1.0
Audit Scotland	0.2	-	-	-	-	0.2
Total Scottish Estimates	1,823.3	138.4	302.5	864.3	1,415.9	4,544.4

1. Approximately £560m of the ELL direct capital scores in AME

2. Approximately £59m of the Health direct capital scores outside DEL ( ODEL).

3. Information on PPP unitary charges is set out in Annex H, Table 5 on page 173 of the Draft Budget 2017-18 which was published on 15 December 2016.

The form of this supporting document

9. The Scottish Government continues to discuss with the Finance Committee and others how it can improve the presentation of supporting information, and which material is found to be most useful.

10. The following summary tables set out the overall resource authorisations sought in the Budget Bill at portfolio level, and the cash equivalents. The numbers shown in these summary tables will in general read directly across to the numbers shown on the face of the Bill. The main body of the document then provides a more detailed analysis of the proposed plans on a portfolio by portfolio basis. For each portfolio and direct funded body, it shows:

• the proposed portfolio budget split in terms of operating and capital resources, divided into the main spending aggregates: DEL (Departmental Expenditure Limit), AME (Annually Managed Expenditure) and spending outside TME (Total Managed Expenditure); and
• details of the proposed budget for each individual Level 2.

11. The Administration budget includes the costs of central services and directly allocated administration costs for the core Scottish Government which are managed by the Directors General ( DG).

Summary Tables

Table 1.4 The Components of the Scottish Budget 2017-18

	Expenditure Within DEL	Expenditure Within AME	Expenditure Outside DEL/ AME	Total Budget
	£m	£m	£m	£m
Scottish Executive - Portfolios
Finance and the Constitution	166.7			166.7
Health and Sport	13,109.3	100.0	96.2	13,305.5
Education and Skills	2,935.7	443.0		3,378.7
Economy, Jobs and Fair Work	374.0			374.0
Justice	2,402.2		55.6	2,457.8
Communities, Social Security & Equalities	8,231.0	2,605.8		10,836.8
Environment, Climate Change and Land Reform	346.3			346.3
Culture, Tourism & External Affairs	272.5			272.5
Rural Economy and Connectivity	2,653.0		131.3	2,784.3
Total Programme	30,490.7	3,148.8	283.1	33,922.6
Administration	192.6			192.6
Crown Office and Procurator Fiscal	111.1			111.1
Total Scottish Government (Consolidated)	30,794.4	3,148.8	283.1	34,226.3
Scottish Housing Regulator	4.0			4.0
National Records of Scotland	37.3			37.3
Office of the Scottish Charity Regulator	3.0			3.0
Scottish Courts and Tribunals Service	105.6			105.6
Scottish Fiscal Commission	1.7			1.7
Revenue Scotland	6.1			6.1
Food Standards Scotland	15.3			15.3
Scottish Teachers' and NHS Pension Schemes		4,521.5		4,521.5
Total Scottish Administration	30,967.4	7,670.3	283.1	38,920.8
Direct Funded Bodies
Forestry Commission (Scotland)	61.3			61.3
Scottish Parliament Corporate Body	96.6	1.0		97.6
Audit Scotland	6.5			6.5
Total Scottish Budget	31,131.8	7,671.3	283.1	39,086.2

Table 1.5 Revised Overall Cash Authorisation (Total Funding Requirement)

	Budget	Adjustments		Cash Authorisation
		Depreciation	Other
	£m	£m	£m	£m
Scottish Administration	38,920.8	-634.8	-4,008.6	34,277.4
Forestry Commission (Scotland)	61.3	-0.1	0.0	61.2
Scottish Parliamentary Corporate Body	97.6	-12.5	0.0	85.1
Audit Scotland	6.5	-0.4	0.0	6.1
Total	39,086.2	-647.8	-4,008.6	34,429.8

Sources of Funding for Scottish Administration:

Cash grant from the Scottish Consolidated Fund	17,164.9
Non Domestic Rate Income	2,605.8
Forecast receipts from Scottish Rate of Income Tax	11,829.0
Forecast receipts from LBTT and Landfill Tax	656.0
Capital borrowing	450.0
National Insurance Contributions	1,724.1
Total Cash Authorisation	34,429.8

Table 1.6 Budget Position for Consolidated Accounts

The Consolidated Accounts of the Scottish Government for 2017-18 will report the annual outturn against the position as analysed over the following expenditure aggregates:

	Expenditure Within DEL	Expenditure Within AME	Expenditure Outside DEL/ AME	Total Budget
	£m	£m	£m	£m
Scottish Government - Portfolios
Finance and the Constitution	166.7	0.0	0.0	166.7
Health and Sport	13,109.3	100.0	96.2	13,305.5
Education and Skills	2,935.7	443.0	0.0	3,378.7
Economy, Jobs and Fair Work	374.0	0.0	0.0	374.0
Justice	2,402.2	0.0	55.6	2,457.8
Communities, Social Security & Equalities	8,231.0	2,605.8	0.0	10,836.8
Environment, Climate Change and Land Reform	346.3	0.0	0.0	346.3
Culture, Tourism & External Affairs	272.5	0.0	0.0	272.5
Rural Economy and Connectivity	2,653.0	0.0	131.3	2,784.3
Administration	192.6	0.0	0.0	192.6
Crown Office & Procurator Fiscal	111.1	0.0	0.0	111.1
Consolidated Accounts	30,794.4	3,148.8	283.1	34,226.3

Table 1.7 Budget Position for Other Bodies Not Included in the Consolidated Accounts

The details of expenditure for the bodies shown in the table below are included in their own individual accounts.

	Expenditure Within DEL	Expenditure Within AME	Expenditure Outside DEL/ AME	Total Budget
	£m	£m	£m	£m
National Records of Scotland	37.3	0.0	0.0	37.3
Office of the Scottish Charity Regulator	3.0	0.0	0.0	3.0
Scottish Housing Regulator	4.0	0.0	0.0	4.0
Scottish Courts and Tribunals Service	105.6	0.0	0.0	105.6
Scottish Fiscal Commission	1.7	0.0	0.0	1.7
Revenue Scotland	6.1	0.0	0.0	6.1
Food Standards Scotland	15.3	0.0	0.0	15.3
Scottish Teachers and NHS Pension Schemes	0.0	4,521.5	0.0	4,521.5
Forestry Commission (Scotland)	61.3	0.0	0.0	61.3
Scottish Parliament Corporate Body	96.6	1.0	0.0	97.6
Audit Scotland	6.5	0.0	0.0	6.5
Total	337.4	4,522.5	0.0	4,859.9