Budget (Scotland) Bill 2018-19: 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 2018. 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 2018-19. These plans were set out in Scottish Budget: Draft Budget 2018-19 published in December 2017. The Parliamentary Committees have already scrutinised the draft plans, culminating in the Finance Committee's Report on the Budget Process in January 2018.

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 2018-19 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 2018-19- table 1.1 compares cash and resource budgets at portfolio level;

ii) The Draft Budget included Judicial Salaries of £33.0 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 2018-19.

iv) To ensure that budgets align with the latest available information, there is an adjustment of -£222.4 million to the UK Funded Annually Managed Expenditure ( AME) budget provision for the Teachers and NHS Pension Schemes. This reduction to the Draft Budget 2018-19 number, reflects the HM Treasury update to the discount rate applied for post-employment benefits announced in December 2017.

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 2018-19, 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, 2018-19

Portfolio	NDPB Budget (Cash)	NDPB Budget (Non-Cash)	NDPB Budget (Resource)
	£m	£m	£m
Health and Sport	52.7	1.3	54.0
Finance and the Constitution	4.5	0.0	4.5
Education and Skills	2,061.9	34.3	2,096.2
Justice	1,528.2	75.3	1,603.5
Economy, Jobs and Fair Work	247.8	8.3	256.1
Communities, Social Security & Equalities	1.4	0.0	1.4
Environment, Climate Change and Land Reform	100.7	6.9	107.6
Rural Economy and Connectivity	86.4	24.6	111.0
Culture, Tourism & External Affairs	169.2	14.9	184.1
Total	4,252.8	165.6	4,418.4

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
Health and Sport	13,599.0	-1.3		88.0	-15.3			13,670.4
Finance and the Constitution	4,795.6				-4,635.8			159.8
Education and Skills	3,412.6	-34.3				326.7		3,705.0
Justice	2,652.9	-75.3	-27.6	1.7	-117.7	86.5		2,520.5
Economy, Jobs and Fair Work	689.8	-8.3						681.5
Communities, Social Security & Equalities	11,515.7				-7.7	-439.6	0.1	11,068.5
Environment, Climate Change and Land Reform	404.9	-6.9	47.1				-0.1	445.0
Rural Economy and Connectivity	2,806.4	-24.6	0.1		-63.7	26.4	0.1	2,744.7
Culture, Tourism & External Affairs	344.3	-14.9			-37.2			292.2
Administration	192.6							192.6
Crown Office and Procurator Fiscal	116.0							116.0
National Records of Scotland					37.2			37.2
Teachers and NHS Pensions			-222.4		4,624.0			4,401.6
Office of Scottish Charity Regulator					3.0			3.0
Scottish Courts and Tribunals Service					117.7			117.7
Scottish Housing Regulator					4.7			4.7
Scottish Fiscal Commission					1.6			1.6
Revenue Scotland					10.2			10.2
Food Standards Scotland					15.3			15.3
Forestry Commission					63.7			63.7
The Scottish Government	40,529.8	-165.6	-202.8	89.7	0.0	0.0	0.1	40,251.2
Scottish Parliament and Audit Scotland	109.6							109.6
Total Managed Expenditure	40,639.4	-165.6	-202.8	89.7	0.0	0.0	0.1	40,360.8

A - As detailed in Table 1.05 of Draft Budget 2018-19.
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 (£33 million) and Scottish Water loan repayments to NLF, PWLB and EIB (£46.7 million) are excluded from parliamentary approval. Additional £0.4m of non cash for ECCLR. 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 the Expenditure Limit.

8. Draft Budget 2018-19 reported capital spending which scores against HM Treasury capital expenditure limit, 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 2018-19

	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 Expenditure Limit
Health and Sport	331.2		10.0		30.0	371.2
Finance and the Constitution	2.4					2.4
Education and Skills	556.6	80.8	40.0	150.0	43.6	871.0
Justice	34.3	55.6				89.9
Economy, Jobs and Fair Work	20.0		180.0	121.9	101.9	423.8
Communities, Social Security & Equalities			256.3	749.2	551.0	1,556.5
Environment, Climate Change and Land Reform	258.9	6.3			21.3	286.5
Rural Economy and Connectivity	370.4	13.3	37.0	26.4	937.1	1,384.2
Culture, Tourism & External Affairs		16.7	4.8		5.3	26.8
Total Programme	1,573.8	172.7	528.1	1,047.5	1,690.2	5,012.3
Administration	13.1					13.1
Crown Office and Procurator Fiscal Service	3.6					3.6
Total Scottish Government (Consolidated)	1,590.5	172.7	528.1	1,047.5	1,690.2	5,029.0
National Records of Scotland	2.9					2.9
Scottish Housing Regulator	0.6
Office of the Scottish Charity Regulator
Scottish Courts and Tribunals Service	22.9					22.9
Scottish Fiscal Commission
Revenue Scotland	4.3
Food Standards Scotland
Total Scottish Administration	1,621.2	172.7	528.1	1,047.5	1,690.2	5,059.7
Direct Funded Bodies
Forestry Commission (Scotland)					1.6	1.6
Scottish Parliament Corporate Body	1.3					1.3
Audit Scotland	0.2					0.2
Total Scottish Estimates	1,622.7	172.7	528.1	1,047.5	1,691.8	5,062.8

1. Approximately £550m of the ELL direct capital scores in UK funded AME
2. Approximately £20m of the Health direct capital scores as Other.

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: Expenditure Limit, UK Funded 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 2018-19

	Expenditure Within Expenditure Limit	Expenditure Within UK Funded AME	Other Expenditure	Total Budget
	£m	£m	£m	£m
Scottish Executive - Portfolios
Health and Sport	13,482.4	100.0	88.0	13,670.4
Finance and the Constitution	159.8			159.8
Education and Skills	3,277.0	428.0		3,705.0
Justice	2,465.4		55.1	2,520.5
Economy, Jobs and Fair Work	681.5			681.5
Communities, Social Security & Equalities	8,432.5	2,636.0		11,068.5
Environment, Climate Change and Land Reform	445.0			445.0
Rural Economy and Connectivity	2,572.3		172.4	2,744.7
Culture, Tourism & External Affairs	292.2			292.2
Total Programme	31,808.1	3,164.0	315.5	35,287.6
Administration	192.6			192.6
Crown Office and Procurator Fiscal	116.0			116.0
Total Scottish Government (Consolidated)	32,116.7	3,164.0	315.5	35,596.2
Scottish Housing Regulator	4.7			4.7
National Records of Scotland	37.2			37.2
Office of the Scottish Charity Regulator	3.0			3.0
Scottish Courts and Tribunals Service	117.7			117.7
Scottish Fiscal Commission	1.6			1.6
Revenue Scotland	10.2			10.2
Food Standards Scotland	15.3			15.3
Scottish Teachers' and NHS Pension Schemes		4,401.6		4,401.6
Total Scottish Administration	32,306.4	7,565.6	315.5	40,187.5
Direct Funded Bodies
Forestry Commission (Scotland)	63.7			63.7
Scottish Parliament Corporate Body	100.4	2.0		102.4
Audit Scotland	7.2			7.2
Total Scottish Budget	32,477.7	7,567.6	315.5	40,360.8

Table 1.5 Revised Overall Cash Authorisation (Total Funding Requirement)

	Budget	Adjustments		Cash Authorisation
		Depreciation	Other
	£m	£m	£m	£m
Scottish Administration	40,187.5	-679.9	-3,776.6	35,731.0
Forestry Commission (Scotland)	63.7	-0.1	0.0	63.6
Scottish Parliamentary Corporate Body	102.4	-12.6	0.0	89.8
Audit Scotland	7.2	-0.4	0.0	6.8
Total	40,360.8	-693.0	-3,776.6	35,891.2

Sources of Funding for Scottish Administration:

Cash grant from the Scottish Consolidated Fund	17,902.9
Non Domestic Rate Income	2,636.0
Forecast receipts from Scottish Rate of Income Tax	12,115.0
Forecast receipts from LBTT and Landfill Tax	694.0
Capital borrowing	450.0
National Insurance Contributions	2,093.3
Total Cash Authorisation	35,891.2

Table 1.6 Budget Position for Consolidated Accounts

The Consolidated Accounts of the Scottish Government for 2018-19 will report the annual outturn against the position as analysed over the following expenditure aggregates:

	Expenditure Within Expenditure Limit	Expenditure Within UK Funded AME	Other Expenditure	Total Budget
	£m	£m	£m	£m
Scottish Government - Portfolios
Health and Sport	13,482.4	100.0	88.0	13,670.4
Finance and the Constitution	159.8	0.0	0.0	159.8
Education and Skills	3,277.0	428.0	0.0	3,705.0
Justice	2,465.4	0.0	55.1	2,520.5
Economy, Jobs and Fair Work	681.5	0.0	0.0	681.5
Communities, Social Security & Equalities	8,432.5	2,636.0	0.0	11,068.5
Environment, Climate Change and Land Reform	445.0	0.0	0.0	445.0
Rural Economy and Connectivity	2,572.3	0.0	172.4	2,744.7
Culture, Tourism & External Affairs	292.2	0.0	0.0	292.2
Administration	192.6	0.0	0.0	192.6
Crown Office & Procurator Fiscal Service	116.0	0.0	0.0	116.0
Consolidated Accounts	32,116.7	3,164.0	315.5	35,596.2

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 Expenditure Limit	Expenditure Within UK Funded AME	Other Expenditure	Total Budget
	£m	£m	£m	£m
National Records of Scotland	37.2	0.0	0.0	37.2
Office of the Scottish Charity Regulator	3.0	0.0	0.0	3.0
Scottish Housing Regulator	4.7	0.0	0.0	4.7
Scottish Courts and Tribunals Service	117.7	0.0	0.0	117.7
Scottish Fiscal Commission	1.6	0.0	0.0	1.6
Revenue Scotland	10.2	0.0	0.0	10.2
Food Standards Scotland	15.3	0.0	0.0	15.3
Scottish Teachers and NHS Pension Schemes	0.0	4,401.6	0.0	4,401.6
Forestry Commission (Scotland)	63.7	0.0	0.0	63.7
Scottish Parliament Corporate Body	100.4	2.0	0.0	102.4
Audit Scotland	7.2	0.0	0.0	7.2
Total	361.0	4,403.6	0.0	4,764.6