Scottish Budget funding and expenditure for 2020-21: FOI release

Information requested

Information regarding how the Scottish Budget is funded and what the total managed expenditure was for 2020-21. If councils in Scotland have borrowing powers and for details of each councils’ current borrowing.

Response

The Scottish Government is funded through a combination of a block grant from the UK Government, taxes raised in Scotland, and limited borrowing powers.

You can find more information about key facts and figures of Scotland’s finances in 2020-21 here:

Scotland's finances 2020 to 2021: key facts and figures

The Scottish Budget 2020-21 was published on 6 Feb 2020 and allocated £49.3 billion of total managed expenditure, as shown in the table below.

Total Managed Expenditure by Portfolio	£ billion
Health and Sport	15.3
Communities and Local Government	12.2
Finance, Economy and Fair Work	6.3
Education and Skills	3.6
Justice	2.8
Transport, Infrastructure and Connectivity	3.4
Environment, Climate Change and Land Reform	0.5
Rural Economy	0.8
Culture, Tourism and External Affairs	0.4
Social Security and Older People	3.8
Government Business and Constitutional Relations	0.0
Administration	-
Crown Office and Procurator Fiscal Service	0.1
Scottish Parliament and Audit Scotland	0.1
Total	49.3

You can view the full details of Budget here: Scottish Budget 2020-2021

The total Scottish Parliament budget for 2020-21 was £107.1 million and this amount is top sliced from the block grant the Scottish Government receives from the UK Government.

In 2020-21, a total of £35.1 billion was assigned to the Scottish Government from HM Treasury and allocated in the Scottish Budget 2020-21. The details of this are shown in Table 1.02 in the Scottish Budget 2020-21.

As you can see from table 1.02 the above figure of £35.1 billion is supplemented by funding for devolved Social Security benefits, replacement EU funding and net tax adjustments. Further block grant funding relating to Covid-19 was announced and allocated in subsequent budget revisions.

After the Scottish Government sets out its Budget at the beginning of the financial year, there are a further two points for revisions during the year - the Autumn and Spring Budget Revisions. In 2020-21, a Summer Budget Revision was also exceptionally introduced on 27 May 2020.

The Summer Budget Revision increased the Scottish Government’s Budget for 2020-21 by £2.8 billion, to £52 billion of total managed expenditure. Full details of the allocations are included in the supporting document which can be viewed at:

Scottish Budget 2020-21: Summer Budget Revision.

It included the allocation of just over £4 billion in funding for the Covid response:-

• This total included a comprehensive £2.3 billion package of support for business, a £620 million boost for health services and £350 million funds for communities.
• The spending was largely funded by a rise in the block grant of more than £3.5 billion resulting from extra UK Government Covid-19 spending, and £112 million of non-Covid related funding received following the UK Budget of March 2020.
• A further £255 million was reprioritised from within existing departmental budgets, including where Covid-19 has had an unavoidable impact on planned spending.

The Autumn Budget Revision increased the Scottish Budget by £2.5 billion, from £52 billion to £54.5 billion. This included Covid-19 and other funding changes, reprioritisation, technical adjustments and Whitehall transfers. The Autumn Budget Revision was published on 24 September and is available at:

Scottish Budget 2020-21: Autumn Budget Revision

This revision allocated a further £2.5 billion to Covid related measures:-

• An additional £1.8 billion in funding was allocated to Health and Social Care. This is on top of the £620 million additional Health funding which was allocated at Summer Budget Revision, meaning over £2.4 billion of financial support has been provided to the NHS to support its ongoing Covid-19 support.
• £222 million of additional resource funding was allocated to support our bus, rail and local transport operators.
• £190 million in additional support was provided for business and the arts.
• £119 million was added to the Education and Skills budget as part of the Education Recovery package and also ensured free school meals were continued over the course of the Summer Holidays.
• The budget revision also allocated capital expenditure for the economic recovery stimulus package announced by the Cabinet Secretary of Finance in June.
• This was funded through a further £2.4 billion of Barnett consequentials from the UK Government, £142 million of reprioritisation of existing expenditure, and £30m of Scotland Reserve drawdowns.

Finally, the Spring Budget Revision allocated changes of £1.9 billion to increase the Scottish Government budget to £56.4 million. This was published on 25 February and details are available at:

Scottish Budget 2020-21: Spring Budget Revision

This revision allocated a further £3.2 billion in Covid-19 and other funding changes:-

• £780 million was allocated to business support bringing total business support to over £3 billion in the financial year.
• A further £494m was allocated to Health and Sport.
• £270m of transport support was provided in this budget revision meaning £850m was provided in 2020-21. to support our rail and bus networks through the pandemic.
• Support for Education and skills reached £450m following the SBR.
• The SBR was funded through £2.6 billion of Barnett consequentials and £745 million of reprioritisation of existing expenditure.

All three of these budget revisions were approved by the Scottish Parliament following a full scrutiny process by the Finance and Constitution Committee. Final expenditure figures were published in the Scottish Government's consolidated accounts in December The Scottish Consolidated Fund Accounts for the year ended 31 March 2021 - gov.scot (www.gov.scot).

A further £1.1 billion of Covid-19 funding was allocated to the Scottish Government in February 2021, but it was too late to be effectively deployed in the 2020-21 financial year.

Turning to Tax revenues, the taxes devolved to the Scottish Government are income tax (excluding savings and dividends), non-domestic rates, land and buildings transaction tax, and landfill tax (Council Tax is administered by Local Authorities and other taxes are currently still administered by the UK Government). The revenue raised from these taxes is part of the funding for the Scottish Budget and is not sent to the UK Government, although income tax continues to be administered by HM Revenue and Customs; indeed no revenue is sent to the UK Government by the Scottish Government.

Around 40 per cent of the Scottish Budget 2020‑21 was funded from revenue raising powers devolved to the Scottish Parliament. The Scottish Government works closely with Revenue Scotland on the policy and legislative development of fully devolved taxes, and with HM Revenue and Customs (HMRC) in exercising its powers in relation to the partially devolved taxes.

With the devolution of new tax powers in 2016, a fiscal framework was agreed between the UK and Scottish Governments that sets the rules for determining the total Scottish Budget. As part of that agreement the UK Government calculates the total block grant for the Scottish Government and then reduces that grant by an amount equivalent to how much tax per head was raised in Scotland under UK Government policy.

After the block grant adjustment, the Scottish Government retains all devolved and assigned Scottish tax and other revenues. In 2020-21, the block grant adjustment for taxes were as below:

Tax	£m
Scottish Income Tax	12,365
Land and Buildings Transaction Tax	641
Scottish Landfill Tax	116
Net Block Grant Adjustment for Devolved Taxes	13,122

Reporting on a wider UK basis (i.e including taxes not devolved to the Scottish Government), the total estimated revenue raised in Scotland for 2020-21 (including North Sea taxes and reserved taxes) was over £62 billion, as can be seen in the Government Expenditure and Revenue Scotland 2020-21 report, found here:

Government Expenditure and Revenue Scotland 2020-21

Revenue: Scotland 2020-21	£ billion
Income tax	13.1
National insurance contributions	11.5
Value added tax	9.6
Corporation tax (excluding North Sea)	3.2
Fuel duties	1.7
Non-domestic rates	1.8
Council tax	2.6
VAT refunds	1.9
Capital gains tax	0.5
Inheritance tax	0.2
Reserved stamp duties	0.3
Scottish land & buildings transaction tax	0.5
Scottish landfill tax	0.1
Air passenger duty	0.3
Tobacco duties	1.3
Alcohol duties	1.2
Insurance premium tax	0.4
Vehicle excise duties	0.5
Environmental levies	0.7
Other taxes	2.2
Total Non-North Sea taxes	53.6
North Sea taxes	9.3
Total Including North Sea	62.8

Finally, in relation to the request for information on borrowing by Local Authorities, all councils in Scotland have a statutory power to borrow for their own capital expenditure. In addition they can borrow to provide a capital grant to a third party or to fund expenditure directly on a third parties assets.

There are no borrowing limits set by the Scottish or UK Government on the amount a Scottish local authority can borrow. Local authorities are however under a statutory duty to determine and keep under review the maximum amount which it can afford to allocate to capital expenditure (The Local Government in Scotland Act 2003).

Audited 2020-21 local government finance data is not yet available but will be published on 22nd March in the Scottish Local Government Finance Statistics (SLGFS) 2020-21 publication at: Local Government Finance Statistics

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