Publication - Corporate report

Consolidated Accounts: year ended 31 March 2023

Published: 16 November 2023
From: Permanent Secretary, +1 more … Chief Financial Officer
Directorate: Financial Management Directorate
Topic: Money and tax, Scottish Budget
ISBN: 9781835213292

Scottish Government Consolidated Accounts for year ended 31 March 2023.

Performance Report

Introduction

About the Scottish Government

The Scottish Government is the devolved government for Scotland and has a range of responsibilities that include: the economy, education, health, justice, rural affairs, housing, environment, equal opportunities, consumer advocacy and advice, transport and taxation.

Some powers are reserved to the UK Government. These include: immigration, the constitution, foreign policy and defence. Further changes to the responsibilities devolved to the Scottish Government and Scottish Parliament have resulted from the Scotland Act 2012 and the Scotland Act 2016.

After a Scottish Parliamentary election, the First Minister is formally nominated by the Scottish Parliament and appointed by His Majesty the King. The First Minister then appoints the Scottish Ministers to make up the Cabinet with the agreement of the Scottish Parliament and the approval of the King. The current First Minister was appointed by His Majesty the King and the Cabinet was approved by the King.

Scottish Cabinet Ministers and their responsibilities

The Cabinet is the main decision-making body of the Scottish Government. It is made up of the First Minister, all Cabinet Secretaries, the Minister for Parliamentary Business and the Permanent Secretary.

The First Minister appoints a Cabinet Secretary for each of the core portfolios described below, as well as additional Ministers to support the work of the Scottish Cabinet, and two Law Officers (Lord Advocate and Solicitor General for Scotland).

Humza Yousaf MSP - First Minister from 29 March 2023 (previously Cabinet Secretary for Health and Social Care)

Nicola Sturgeon MSP - First Minister until 28 March 2023, Head of the Scottish Government: responsible for development, implementation and presentation of Government policy, constitutional affairs, and for promoting and representing Scotland at home and overseas.

The Cabinet Team members serving during 2022-23 are as follows:

Shona Robison MSP - Deputy First Minister and Cabinet Secretary for Finance (from 30 March 2023, previously Cabinet Secretary for Social Justice, Housing and Local Government)

Shirley-Anne Somerville MSP - Cabinet Secretary for Social Justice (from 30 March 2023, previously Cabinet Secretary for Education and Skills)

Michael Matheson MSP - Cabinet Secretary for NHS Recovery, Health and Social Care (from 30 March 2023, previously Cabinet Secretary for Net Zero, Energy and Transport)

Mairi Gougeon MSP - Cabinet Secretary for Rural Affairs, Land Reform and Islands

Angus Robertson MSP - Cabinet Secretary for Constitution, External Affairs and Culture

Jenny Gilruth MSP - Cabinet Secretary for Education and Skills (from 30 March 2023)

Màiri McAllan MSP - Cabinet Secretary for Net Zero and Just Transition (from 30 March 2023)

Neil Gray MSP - Cabinet Secretary for Wellbeing Economy, Fair Work and Energy (from 30 March 2023)

Angela Constance MSP - Cabinet Secretary for Justice and Home Affairs (from 30 March 2023)

John Swinney MSP - Deputy First Minister and Cabinet Secretary for Covid Recovery (until 29 March 2023)

Kate Forbes MSP - Cabinet Secretary for Finance and the Economy (until 28 March 2023)

Keith Brown MSP - Cabinet Secretary for Justice and Veterans (until 29 March 2023)

The Cabinet is supported by the following ministerial team:

Angela Constance MSP - Minister for Drugs Policy (until 29 March 2023)

George Adam MSP - Minister for Cabinet and Parliamentary Business (from 30 March 2023, previously Minister for Parliamentary Business)

Richard Lochhead MSP - Minister for Small Business, Innovation and Trade (from 30 March 2023, previously Minister for Just Transition, Employment and Fair Work)

Ivan McKee MSP - Minister for Business, Trade, Tourism and Enterprise (until 29 March 2023)

Tom Arthur MSP - Minister for Community Wealth and Public Finance (from 30 March 2023, previously Minister for Public Finance, Planning and Community Wealth)

Maree Todd MSP - Minister for Social Care, Mental Wellbeing and Sport (from 30 March 2023, previously Minister for Public Health, Women's Health and Sport)

Kevin Stewart MSP - Minister for Transport (from 30 March 2023, previously Minister for Mental Wellbeing and Social Care

Clare Haughey MSP - Minister for Children and Young People (until 29 March 2023)

Jamie Hepburn MSP - Minister for Independence (from 30 March 2023, previously Minister for Higher Education and Further Education, Youth Employment and Training)

Màiri McAllan MSP - Minister for Environment and Land Reform (until 29 March 2023)

Jenny Gilruth MSP - Minister for Transport (until 29 March 2023)

Ash Regan (formerly Denham) MSP - Minister for Community Safety (until 29 March 2023)

Christina McKelvie MSP - Minister for Culture, Europe and International Development (from 30 March 2023, previously Minister for Equalities and Older People)

Ben Macpherson MSP - Minister for Social Security and Local Government (until 29 March 2023)

Neil Gray MSP - Minister for Culture, Europe and International Development and Minister with special responsibility for Refugees from Ukraine (until 29 March 2023)

Patrick Harvie MSP - Minister for Zero Carbon Buildings, Active Travel and Tenants' Rights

Lorna Slater MSP - Minister for Green Skills, Circular Economy and Biodiversity

Elena Whitham MSP - Minister for Drugs and Alcohol Policy (from 30 March 2023)

Joe FitzPatrick MSP - Minister for Local Government Empowerment and Planning (from 30 March 2023)

Jenni Minto MSP - Minister for Public Health and Women’s Health (from 30 March 2023)

Natalie Don MSP - Minister for Children, Young People and Keeping the Promise (from 30 March 2023)

Graeme Dey MSP - Minister for Higher and Further Education; and Minister for Veterans (from 30 March 2023)

Gillian Martin MSP - Minister for Energy (from 30 March 2023)

Christina McKelvie MSP - Minister for Culture, Europe and International Development (from March 2023)

Emma Roddick MSP - Minister for Equalities, Migration and Refugees (from 30 March 2023)

Paul McLennan MSP - Minister for Housing (from 30 March 2023)

Siobhian Brown MSP - Minister for Victims and Community Safety (from 30 March 2023)

Law Officers during 2022-23

Dorothy Bain KC - Lord Advocate

Ruth Charteris KC - Solicitor General

Full details of the Ministerial Responsibilities can be found on the Scottish Parliament website: Cabinet and Ministers - gov.scot (www.gov.scot) and on the Scottish Government website gov.scot.

The Civil Service and Government Officials

The First Minister leads the Scottish Government, with the support of the Scottish Cabinet and Ministers. The civil service helps the government of the day develop and implement its policies as well as deliver public services. Civil servants are accountable to Ministers, who in turn are accountable to Parliament.

The Permanent Secretary leads the civil service within the Scottish Government and supports the government in developing, implementing and communicating its policies, and is the principal policy adviser to the First Minister and Secretary to the Scottish Cabinet. The Permanent Secretary is also the Principal Accountable Officer with responsibility to ensure that the government's money and resources are used effectively and properly.

The government is structured into a number of directorates and their related public bodies. Directorates and agencies are managed by Directors General (DGs).

Scottish Government Senior Management Team (Corporate Board)

The Scottish Government Senior Management Team is responsible for ensuring that the Scottish Government is organised and managed in the most effective way to support Ministers in the implementation of their policies. Further information on the management structure of the Scottish Government is available on the Scottish Government website at gov.scot.

Permanent Secretary in post during 2022-23 was:

John-Paul Marks - Permanent Secretary

Directors General in 2022-23 were:

Lesley Fraser - DG Corporate

Elinor Mitchell - DG Economy (until 2 May 2022)

Gregor Irwin - DG Economy (from 20 March 2023)

Louise Macdonald OBE - DG Communities (from 20 March 2023, previously DG Economy from 2 May 2022)

Caroline Lamb - DG Health & Social Care

Paul Johnston - DG Communities (until 17 March 2023)

Joe Griffin - DG Education and Justice

Alyson Stafford CBE - DG Scottish Exchequer

Ken Thomson - DG Constitution & External Affairs

Roy Brannen - DG Net Zero

Directors serving as members of the Corporate Board during 2022-23 were:

Nicky Richards - Director of People

Jackie McAllister - Chief Financial Officer

Ruaraidh Macniven - Solicitor to the Scottish Government

Andy Bruce - Director of Communications and Ministerial Support

Non-executive members of the Corporate Board during 2022-23 were:

Annie Gunner Logan (stepped down from the Corporate Board on 6 December 2022)

Ronnie Hinds (until 5 June 2023)

Linda McKay (stepped down from the Corporate Board on 6 December 2022)

Belinda Oldfield (joined the Corporate Board on 21 March 2023)

Jim Robertson (joined the Corporate Board on 21 March 2023)

Jayne Scott (joined the Corporate Board on 21 March 2023)

Other non-executive directors who were invited to attend the Corporate Board:

Nichola Clyde (until 24 June 2022)

Ben McKendrick (until 16 June 2023)

David Martin (joined Corporate Board on 20 June 2023)

Neil Richardson

Fiona Ross

Jenny Stewart

Belinda Oldfield (between 5 September 2022 and 21 March 2023)

Jim Robertson (until 21 March 2023)

Jayne Scott (until 21 March 2023)

Annie Gunner Logan (from 7 December 2022)

Linda McKay (between 7 December 2022 and 31 December 2022)

The Non-Executive Directors provide advice, support and challenge to the Permanent Secretary as Principal Accountable Officer (PAO) and Directors-General as Accountable Officers (AO). They do so in a number of ways, including:

Providing direct support, challenge and guidance to their “paired” Accountable Officer (AO) and senior staff in relation to the delivery of their portfolio-based risk, assurance and internal controls framework;
Participating in a number of corporate boards including the Corporate Board, one or more of the formal sub-Boards and the Assurance meetings of their paired AOs; and
As members of the Scottish Government Audit & Assurance Committee (SGAAC) which is chaired by a Non-Executive Director.

Ronnie Hinds, Non-Executive Director, stepped down from his role as Chair of SGAAC as of June 2022.

Jim Robertson, Non-Executive Director, stepped up from Deputy Chair of SGAAC to Chair from September 2022 and for the remainder of the 2022-23 period covered by the Accounts.

Jayne Scott, Non-Executive Director, then became Deputy Chair of SGAAC from September 2022 and for the remainder of the 2022-23 period covered by the Accounts.

Both Annie Gunner Logan and Linda McKay stepped down from the Corporate Board on 6 December 2022. Linda McKay concluded her term as a Non-Executive Director during the 2022-23 period covered by the Accounts.

Register of Interests

Any member of the Corporate Board who held company directorships and other significant interests during 2022-23 were:

Staff:

Lesley Fraser: Director General Corporate: Shares with RBS.

Alyson Stafford CBE: Director General Scottish Exchequer: Trust Investments with Fidelity via Origen Financial Services.

Nicola Richards: Director of People: Shares held with Hargreaves Lansdown and Fidelity.

Roy Brannen: Director General Net Zero: Fellow of the Institution of Civil Engineers and Institution of Highways & Transportation; Honorary Member of World Road Association; and shares held with Standard Life and Royal Mail.

Gregor Irwin: Shares held with Baillie Gifford, Barclays Wealth, Fidelity, Fundsmith, BlackRock, Brown Advisory Global Leaders, Loomis Sayles US Equity Leaders, and Stewart Investors.

Non-Executive Directors:

Annie Gunner Logan: Chief Executive and Company Secretary at Coalition of Care and Support Providers in Scotland (until 29 April 2022); Board member of NHS Education for Scotland; Member of Advisory Board of IPPR Scotland; Member of Advisory Board of IPPO; and Board member of Crown Office and Procurator Fiscal Service (from 1 February 2022).

Ronnie Hinds: Chair of the Local Government Boundary Commission for Scotland.

Belinda Oldfield: Water Industry Commission for Scotland consultant to the New Zealand Government’s Department of Internal Affairs (from September 2022); Non-Executive Director and Chair of the Risk Committee of Northern Ireland Water; Member of the Audit & Risk Committee of Strathclyde University; Non-Executive Director and Member of the Risk & Assurance Committee of Highlands & Islands Enterprise.

Jim Robertson: Senior Fellow of the International Tax & Investment Center (ITIC); Director of JR Oil & Gas Limited, consultancy company registered in Scotland; Member of the Environmental Tax Sub-Committee, Chair of the Energy Transition workstream (from January 2023) and Extractives Tax Sub-Committee in the United Nations; Member of the Governing Council, the Qualifications Board, the Devolved Taxes Committee and the Equality, Diversity & Inclusion Committee of the Institute of Chartered Accountants of Scotland; Chair of the Advanced Diploma in International Taxation Academic Board, Member of the Climate Change Working Group and the Equality, Diversity & Inclusion Committee of the Chartered Institute of Taxation; Partner at the G100 Global Women Leaders; Member of the Policy Dialogue on Natural Resource Based Taxation of the OECD Development Centre; and Member of the GlobalScot Network of Scottish Enterprise.

Jayne Scott: Partner at Scott Ross Partnership Management Consultants; Chair of the Private Healthcare Information Network; Board member of the Coal Authority; Board member of NHS Counter Fraud Authority; External Audit Committee member of the Information Commissioner’s Office; Chair of the Joint Audit Panel for the Metropolitan Police Service and the Mayor’s Office for Policing and Crime (from April 2023); and Consumer Engagement Group member of the Electricity North West Ltd (until December 2022).

Neil Richardson: Chief Executive of Turning Point Scotland; Board Member of Coalition of Care Providers Scotland and Richar Property Ltd.

Fiona Ross: Chair of CIE Dublin, National Paediatric Hospital Development Board (Ireland), and Natural Capital Ireland; Non-Executive Director of JK Funds Dublin, Evelyn Partners Europe Dublin, NetworkRail, SphereInvest, Northern Ireland Office, and Seamus Heaney Estate; Advisor to Mayor of Bristol.

Jenny Stewart: Chair, Non-Executive Director and Trustee of Dunedin Concert Trusts Ltd; Non-executive Member of the Court and Trustee of University of St Andrews; Member of Institute for Fiscal Studies and Institute of Directors; Fellow of the Royal Society of Arts and Manufacturing.

Nichola Clyde: Director of Business HR of Sky (until June 2022).

Ben McKendrick: Chief Executive and Company Secretary of the Scottish Youth Parliament.

Performance Overview

Financial Performance: Outturn against Budget

These accounts report actual outturn compared to the budget authorised by the Scottish Parliament. The annual budget authorised by the Scottish Parliament is the budget for the wider Scottish Administration and includes the funding of activities which are not within the Scottish Government, and therefore outside the required accounting boundary of these accounts. There are also differences between the HMT required budgeting rules, which drive in-year financial reporting and the government financial reporting accounting requirements, which the accounts are required to comply with. These accounts therefore compare the actual outturn to the budget, both stated on the same accounting basis. Note 24 sets out the reconciliation and explanation of the budget reflected in the accounts with that shown in the annual budget documents.

Spending plans for financial year 2022-23 were set out in the Scottish Budget 2022-23 published on 9th December 2021. These plans were presented alongside the introduction of the Budget Bill. After consideration by the Scottish Parliament Finance and Constitution Committee and other Committees, the Bill received Royal Assent as the Budget (Scotland) Act 2022 on 23rd March 2022. Parliamentary approval for the in-year revisions to the plans set out in the Budget (Scotland) Act was granted in the Autumn Budget Revision made on 1st November 2022, and the Spring Budget Revision, made on 2nd February 2023.

The budget of £50,276 million reported in these accounts is net of adjustments to reflect those activities not included in the accounting boundary as described below. This is made up of an operating budget of £47,895 million and a capital budget of £2,381 million.

The financial results for the year are reported in the attached accounts, based on the budget at Spring Budget Revision and in compliance with the government financial reporting accounting requirements. They record a Net Resource Outturn of £47,707 million against a budget of £47,895 million, resulting in an underspend of £188 million. The Net Capital Outturn for the year was £2,060 million against a budget of £2,381 million, representing an underspend of £321 million. The total outturn was £49,767 million, resulting in an underspend of £509 million which represents 1% of the total budget. Explanations are provided for the major variances in each of the Portfolio Outturn Statements, on pages 121 to 132.

There was a small number of funding adjustments, totalling £187 million, that reduced Scottish Government HM Treasury Budget limits which were taken forward following the completion of the Spring Budget Revision in the following areas:

A £103 million reduction in funding due to the decision to reduce our borrowing levels as part of managing the year-end budget monitoring position, with final borrowing decisions always taken in the last month of the financial year;
£165 million of negative consequentials that were confirmed as part of UK Government Supplementary Estimates, after the Spring Budget Revision had been finalised;
Negative consequentials were partly offset by the £44 million of unallocated funding held at the Spring Budget Revision. The unallocated funding had been retained to mitigate negative movements at Supplementary Estimates; and
£37 million of additional funding was received from devolved tax receipts and other sources.

The financial results presented in the accounts, therefore show an underspend that is higher than would be the case against the final, post Spring Budget Revision funding position.

The Total Outturn underspend of £509 million does not represent a loss of spending power to the Scottish Government. Under the current devolution settlement, the Scottish Government must manage spending within fixed limits. It is not allowed to overspend its budget and has limited powers to carry forward funding through the Scotland Reserve. As a consequence, the Scottish Government has consistently adopted a position of controlling public expenditure to ensure we live within the budget limits that apply, whilst remaining able to carry forward any fiscal underspends for use in a future year within the current Scotland Reserve Limits.

An underspend of £244 million was set out as part of the provisional outturn announcement made by the Minister for Community Wealth and Public Finance in June 2023, with spend of £46.9 billion against a total fiscal budget of £47.1 billion. The remaining funding of £244 million (which represented just 0.5% of the total budget) has been carried forward within the Scotland Reserve and utilised in full in 2023-24. This underspend varies from that set out within the accounts as a result of the provisional outturn:

being scored against the budget incorporating final funding changes post Spring Budget Revision (£187 million variance).
covering all bodies within the Scottish Government budgeting boundary, which is wider than the areas incorporated within the accounts, as well as being prepared in accordance with HM Treasury Consolidated Budgeting Guidance rather than the Government’s Financial Reporting Manual (FReM) (£78 million).

The figures reported at the time of the Provisional Outturn were indicative and these will be updated and reported to Parliament in a Final Outturn report. As is always the case, the final outturn position is reported after the annual accounts, allowing for adjustments made through the acounts preparation process. Final outturn will be reported to Parliament once all accounts are finalised within the budgetary boundaries.

How the Scottish Budget is funded

There are a number of sources of funding to support the expenditure planned and approved by the Scottish Parliament in the Scottish Budget Act.

The Scottish Consolidated Fund was established by the Scotland Act 1998 and operates in accordance with the Public Finance and Accountability (Scotland) Act 2000. The Scottish Consolidated Fund receives, from the Office of the Secretary of State for Scotland, sums which have been voted by the UK Parliament for the purpose of "grant payable to the Fund". Funding is drawn down by the Scottish Government from the Scottish Consolidated Fund to support the spending plans laid out in the draft budget.

The primary receipts to the Scottish Consolidated Fund are: the Block Grant from HM Treasury; revenue collected by HM Revenue & Customs (HMRC) on behalf of the Scottish Government under the provisions for Scottish Income Tax; Devolved taxes collected by Revenue Scotland which are currently Land and Buildings Transaction Tax (LBTT) and Scottish Landfill Tax (SLfT); and borrowing.

The block grant from the UK Government is allocated to the Secretary of State for Scotland through the approval of the UK Parliament, and forms part of the UK public expenditure control regime. This requires the Scottish Government to plan, monitor and report its spending against the control aggregates set by the UK Parliament and HM Treasury alongside those set by the Scottish Parliament.

The Scotland Act 2016 empowered the Scottish Parliament to set Scottish Income Tax rates and bands. During 2022-23, £13.8 billion in income tax revenues derived from Scottish Income Tax were assigned to the Scottish Administration and paid to the Scottish Consolidated Fund. Identification of Scottish taxpayers and administering the tax are matters for the UK Government and HMRC.

Under devolved powers from the 2012 Scotland Act, devolved taxes in respect of LBTT and SLfT are collected and managed in Scotland by Revenue Scotland. A total of £957 million has been reported in respect of LBTT (£848 million) and SLfT (£109 million), £107 million above the Budget 2022-23 forecast of £850 million. The forecast errors for both taxes arose for a number of different reasons and these are outlined in the Scottish Fiscal Commission’s Forecast Evaluation Report, August 2023. The largest single source of forecast error across the two taxes related to residential LBTT and this was due to underestimation of house price growth in Scotland in 2022-23 which had been forecast to be 2.7 per cent at the time of the forecast in December 2021 but ultimately turned out to be 7.1 per cent. Higher than anticipated house prices therefore accounted for around two-thirds of the entire £106 million total forecast error across both taxes.

Revenue Scotland was established by the Revenue Scotland and Tax Powers Act 2014 to administer and collect both fully devolved taxes. Revenue Scotland is responsible for preparing an account of the devolved taxes (The Devolved Taxes Account). The taxes collected by Revenue Scotland are paid to the Scottish Consolidated Fund. The Devolved Taxes Account and the Scottish Consolidated Fund Account are prepared and published separately and can be accessed online at revenue.scot and gov.scot.

From the 2016 Scotland Act, the Scotland Reserve, effective from 1 April 2017, provides the Scottish Government with a limited tool to manage the smoothing of all types of spending and to assist with the management of tax volatility and determine the timing of expenditure.

As further powers have been devolved to Scotland, and the ability to use the existing fiscal levers to influence the funds available has increased, the impact of accurate tax forecasting has become greater. The Scottish Fiscal Commission was established in June 2014 as a non-statutory body to provide independent scrutiny of Scottish Government forecasts of receipts from taxes devolved to Scotland. By March 2016 the Scotland Act 2016^[1] devolving more fiscal powers to Scotland was passed, and the associated Fiscal Framework^[2] was agreed between the Scottish Government and UK Government. The Fiscal Framework changed the remit of the Scottish Fiscal Commission as reflected in the Scottish Fiscal Commission Act 2016^[3] which received Royal Assent on 14 April 2016.

Further information about the Scottish Budget setting and authorisation process can be found within Scottish Budget 2022 to 2023 ^[4] and in the Government Finance section of the Scottish Government website ^[5], which includes the financial reports and accounts.

The total budget approved by the Scottish Parliament includes activities not included in these accounts. Note 24 to these accounts provides a reconciliation to the total budget.

The fiscal activity of the Scottish Government is described in a suite of accounts information: the Scottish Consolidated Fund account, incorporating additional reporting on the use of borrowing powers and the related Devolved Taxes Account report on the funding available to the Scottish Government in the financial year; the Scottish Government Consolidated Accounts, the annual accounts of the other bodies within the Scottish Administration and of the bodies funded directly from the Scottish Budget together report on the use of resources authorised by the Scottish Parliament for the financial year.

Accounting Boundary

These accounts reflect the consolidated assets and liabilities and the results of all entities within the Scottish Government consolidation accounting boundary as required by and defined in the Government Financial Reporting Manual (FReM). This consists of nine internal Portfolios, supported by Administration, their Executive Agencies (each linked to a specific portfolio), the Crown Office and Procurator Fiscal Service and the NHS Bodies responsible for the planning, promotion, commissioning and the delivery of healthcare. The portfolio analysis in these accounts reflects the portfolios designated by the First Minister from 19 May 2021.

The consolidation boundary includes the following:

Rural Affairs and Islands Portfolio

Constitution, External Affairs and Culture Portfolio

Deputy First Minister and Covid Recovery

Other Consolidated: The Crown Office and Procurator Fiscal Service

Bodies: (Crown Office & Procurator Fiscal Service)

In addition to inclusion within these consolidated accounts, the executive agencies and other bodies detailed above also publish separate accounts providing greater detail about their income and expenditure and assets and liabilities. The accounts can be accessed at the websites noted above.

The Scottish Government is also the sole shareholder of Caledonian Maritime Assets Ltd, David MacBrayne Ltd, Highland and Islands Airports Limited, Scottish Futures Trust, Prestwick Holdco Limited and Ferguson Marine (Port Glasgow) Ltd, and sponsor of a number of executive, advisory and tribunal Non-Departmental Public Bodies. These bodies are regarded as related parties with which the Scottish Government has had various transactions during the year, but do not fall within the Scottish Government consolidation accounting boundary. Further details of Scottish Public Bodies are available on our website ^[6]. The financial statements of NHS Boards include NHS Endowment Funds. These Endowment Funds are Registered Charities with the Office of the Scottish Charity Regulator (OSCR) and they are also required by OSCR to prepare audited financial statements. NHS Endowment Funds are not part of the Scottish Government accounting boundary, and therefore they have not been included in the Scottish Government consolidated accounts.

These accounts report actual outturn compared to the budget authorised by the Scottish Parliament. The Scottish Government also routinely reports to Parliament each year on the final outturn for the Scottish Administration in an additional statement. This brings together the audited information from the bodies within the Scottish Administration to show this against the budget limit authorised by the Scottish Parliament.

Statement of Financial Position

The primary purpose of these accounts is to reflect the use of resources. The Performance Overview section (page 10) sets out the financial performance in terms of the outturn compared to budget authorised by the Scottish Parliament. The Statement of Financial Position reflects the assets held and liabilities arising from the spending plans which support policy choices. Assets are held not for their income generation capability or their inherent value but for their service potential or as a direct consequence of particular policies, for example providing healthcare in hospitals and the provision of funding to students in the form of loans. Similarly, liabilities arise as a consequence of the timing of commitments relating to spending and policy choices.

The Consolidated Statement of Financial Position (page 136) is one of the primary financial statements in the Consolidated Accounts. It summarises what is owned and owed by the Scottish Government. This shows taxpayers' equity – an accounting measurement of the amount invested by taxpayers that has continuing public benefit. It shows how much of this has arisen from the application of revenues (including the Scottish Block Grant) and that which has resulted through changes over time in the value of physical assets.

It is important to note that the consolidated accounts bring together the “balance sheets” of bodies that are significant in their own right. Detailed financial and narrative information on the major items, for example the road network, is available in the accounts and related reports of the relevant body - Transport Scotland; similarly, information about NHS bodies is in the detailed accounts for each body; the Student Awards Agency also provides separate reporting around student loans i.e. the loans are not within SAAS’ accounts but they do provide information about their administration, and the loans themselves are reported within these consolidated accounts.

The Statement of Financial Position includes:

items which are owned, have already been funded from revenues and will provide continuing economic benefit in future periods. These increase taxpayers' equity;
items which are owed and expected to require to be funded from future revenues. These decrease taxpayers' equity;
items owed to the Scottish Government; and
an analysis between amounts that will release or require funding within a year and those which will be carried into future years.

Assets and liabilities

Physical assets are the highest value group of assets in the consolidated accounts with a value of £38,294 million at 31 March 2023 of which £27,147 million (71 per cent) relates specifically to the road network. There were additions of £792 million that resulted from capital investment, offset by disposals and the net effect of depreciation and revaluations.

Most physical assets are valued by professional valuers in line with recognised methodologies. This provides an assessment of the continuing benefit they provide in financial terms. Where these assets have been funded by traditional means through capital then there are no continuing liabilities relating to them (maintenance and repair costs will arise). Those funded through other means (such as Public Finance Initiatives, Non Profit Distributing Projects and Scottish Government borrowed funds) also lead to liabilities representing the amounts that will require to be met from future budgets. Only physical assets that are deemed surplus and 'held for sale' (£8 million) will release resources previously invested for future use.

Financial assets include loans made directly to other organisations and individuals, investment funds used to deliver development programmes and investments in nationalised industries plus fully or part owned companies. These assets are of continuing benefit to the Scottish Government, and have the potential over time to release the resources currently invested for future use, including reinvestment, in accordance with the terms of the loan or other investment made.

Where Scottish Ministers decide to make investments directly through the Scottish Government, Accountable Officers must ensure that appropriate diligence and consideration is carried out before any commitment is made to invest in accordance with the detailed guidance in the Scottish Public Finance Manual ^[7], support specific economic objectives and are in line with the outcomes set out in the National Performance Framework.

Such investments are exceptional in nature and investment is in accordance with Scottish Ministers’ purpose of achieving a commercial outcome; this means that the investment should be able to demonstrate a potential return commensurate with the risk associated with the proposal.

For the purposes of assessing the value of such investment for accounting purposes, IFRS 9 applies an “expected credit loss model”. This is not a write-off of those investments or a prediction of loss but a measure of the risk in the investment which means that the assessment for accounts purposes has to take a prudent view of whether a positive outcome can yet be substantiated.

Burntisland Fabrications Limited (BiFab)

In the 2018-19 financial year, the Scottish Government converted £37.4 million of loans previously advanced to BiFab on a commercial basis to equity in the company. As a result of the conversion of these loans, the Scottish Government now holds a 32.4% equity stake in BiFab. The equity stake in BiFab was valued at nil in the 2019-20 annual accounts.

The delays to the Neart na Gaolthe turbine jacket generator contract award, the decision to award the Seagreen contract to overseas competitors, compounded by the majority shareholder’s continued lack of financial support for the business greatly weakened Bifab’s cashflow and balance sheet. In light of this, the company was placed into administration on 14 December 2020.

Scottish Ministers remain committed to a sustainable future for the sites at Arnish, Burntisland and Methil. In support of this, the Scottish Government provided funding to the Administrators of BiFab to allow a sales process to be conducted and support the pursuit of a financial return to Scottish Government, as a high-ranking creditor, through the administration process. This process resulted in a sale of the business to InfraStrata PLC, trading as Harland & Wolff, in February 2021.

The BiFab administration is ongoing and is due to end on 13 December 2023, however joint administrators, Teneo, advise that a further extension may be necessary due to the ongoing pursuit of a BiFab debtor. The Scottish Government holds a second-ranking security in the Administration of BiFab, and is pursuing a return on its investment, however, the value of the return is not known at this stage. In 2020-21, loan funding of £600,000 was agreed for the administrators of BiFab, Teneo, to pursue a commercial claim against a pre-administration customer. To date Teneo have drawn less than £300,000 of the £600,000 loan facility, and negotiations with the BiFab debtor are ongoing. As a secured creditor, Scottish Government’s primary interest in BiFab itself is now pursuing a return through the administration process.

Ferguson Marine (Port Glasgow) Limited (FPMG)

Ferguson Marine has been in a period of turnaround since late 2019. The past three years have been challenging, exacerbated by the global COVID-19 pandemic, and a complex range of issues have been addressed in that time.

On 16 August 2019, Ferguson Marine shipyard was placed in administration. To remove the threat of closure, the Scottish Government took control of the operations at the yard under a management agreement with the administrators of the business. This intervention by Scottish Ministers ensured continuity of employment for the workforce and continued work on the vessels under construction during the period of administration. On 2 December 2019, following a marketing process by the administrators, the Scottish Government completed a commercial transaction to bring the shipyard into public ownership. The move to bring Ferguson Marine into public ownership demonstrated Scottish Ministers’ commitment to protecting the jobs at the Port Glasgow yard and securing a future for commercial shipbuilding on the Clyde.

The contracts for the completion of vessels 801 and 802 by Ferguson Marine were restructured to implement a contractual relationship which reflected the commitment from Scottish Ministers to fund the completion and delivery of the two ferry vessels. The Scottish Government entered into new contracts with Ferguson Marine in 2021 which replaced the original contracts between CMAL and the shipyard. This reorganisation resulted in the vessels being transferred onto the Scottish Government’s balance sheet as Assets Under Construction in partial repayment of the outstanding voted loans and resulted in a write-off of the residual voted loan balance.

A new CEO was appointed in February 2022. Following the FMPG Board meeting on 22 September 2022, the CEO wrote to the Scottish Government setting out his proposals relating to the increased cost estimates and timetable for delivering both vessels, with an update provided to the Net Zero, Energy and Transport Committee. This update indicated that the cost to complete 801 (MV Glen Sannox) was £97.5 million and for 802 (MV Glen Rosa) it was £105.1 million, with contingencies of £2.7 million and £3.5 million respectively.

This prompted a process of due diligence by the Scottish Government which concluded that whilst the proposed investment in MV Glen Sannox met all necessary Accountable Officer tests, the proposals in respect of MV Glen Rosa, whilst meeting the propriety and regularity tests, did not meet the value for money assessment. As a result, under section 15(8)(a) of the PFA Act, the Portfolio Accountable Officer sought and subsequently obtained written authority to proceed from Cabinet Secretary for Wellbeing Economy, Fair Work and Energy. This written authority acknowledged the concerns over the value for money case, but provided the authority to proceed on the basis of a wider set of considerations around the policy objectives of Scottish Government and the importance of completing vessel 802 to employment, the local community and national resilience.

In his letter to the NZET committee of 29 September 2023, the CEO stated the total forecast cost to complete both vessels as £240 million, excluding post-handover warranty costs. He also reported worst case contingency costs in the range of £5 million to £30 million and forecast handover dates of 31 March 2024 for Glen Sannox and 31 May 2025 for MV Glen Rosa. These forecasts are subject to due diligence by the Scottish Government and have not yet been formally agreed by Scottish Ministers.

Ferguson Marine is included within the Significant Issues section of the Governance Statement; for more details, see page 88.

Lochaber Aluminium Smelter

In December 2016 the Scottish Government entered into a 25-year financial guarantee relating to the hydro plant and aluminium smelter at Lochaber. This involved guaranteeing the power purchase obligations of the smelter if the business does not fulfil its obligations to pay for contracted power. The guaranteed annual amounts vary between £14 million and £32 million over the life of the contract. The Scottish Government receives an annual fee in return for the guarantee. The carrying value of this financial asset in the accounts is zero.

Reinforced Autoclaved Aerated Concrete (RAAC)

Surveys continue to take place at pace with regards reinforced autoclaved aerated concrete (RAAC) within buildings utilising guidance from the Institute of Structural Engineers. A number of instances of RAAC have been identified in the wider public sector, with mitigations in place in accordance with guidance. Further repairs may need to take place in the event that issues are identified. This information is also included as a contingent liability on page 187 of these accounts for Scottish Government owned assets.

Pensions

The Scottish Government consolidated accounts include as expenditure the employers’ contributions payable for the financial year. Staff in the Core Scottish Government, Executive Agencies and Crown and Procurator Fiscal Service are members of the Principal Civil Service Pension Scheme (PCSPS). There is no pension liability in respect of the PCSPS within the Scottish Government consolidated accounts, because it is a UK scheme, administered by the Cabinet Office and it is not possible to identify the “Scottish share” of the underlying assets and liabilities of the scheme. The Cabinet Office produces separate pension scheme accounts, covering all members across the UK.

Staff in the NHS consolidated bodies can choose between the PCSPS and the NHS Superannuation Scheme for Scotland, which is an unfunded statutory public service pension scheme with benefits underwritten by the UK Government. The NHS scheme is administered by the Scottish Public Pensions Agency and annual scheme accounts are produced.

The liabilities to be met over time are not met from investments but paid out each year from the funding of the relevant schemes. The NHS scheme is funded within the Scottish Administration in the Scottish Budget; the PCSPS is dealt with through the UK annual process.

Borrowing

Capital Borrowing

Under Section 32 of the Scotland Act 2012, as amended by Scotland Act 2016 Section 20, additional borrowing powers were conferred on Scottish Ministers with effect from 1 April 2015. Any sums borrowed and repaid under these provisions must do so via the Scottish Consolidated Fund and hence be reflected in those accounts.

The first exercise of the Capital borrowing powers took place in 2017-18 where £450 million (the maximum available) was drawn down to the Scottish Consolidated Fund from the National Loans Fund. This was followed by borrowing of £250 million in 2018-19, £405 million in 2019-20, £200 million in 2020-21, £150 million in 2021-22 and £300 million in 2022-23.

The repayment of borrowing outstanding as at 31 March 2023 is scheduled as follows:

	Principal £m	Interest £m	Total £m
<1 year	78.9	23.9	102.8
1 – 5 years	359.8	88.9	448.7
>5 years	1,104.0	136.9	1,240.9
Total	1,542.7	249.7	1,792.4

An arrangement was agreed with HM Treasury for notional borrowing in 2015-16 and 2016- 17 to meet the budget implications of the classification decision related to the introduction of The European System of National and Regional Accounts (ESA10) which required the capital value of a small number of Non-Profit Distributing projects to be budgeted for in the years of asset construction. This required the notional amounts borrowed to be recorded against the Scottish Government’s borrowing cap in each of these years, however no actual borrowing was undertaken.

Resource Borrowing

The first exercise of the Resource borrowing powers took place in 2020-21 where £207 million was drawn down to the Scottish Consolidated Fund from the National Loans Fund. This was within the final limit for Resource borrowing for the financial year 2020-21 of £300m. £319 million was then drawn down in 2021-22 and £47 million in 2022-23 all within the revised annual limit of £600 million. This limit was expanded following the Scottish Specific Economic shock powers being triggered and will apply until 2023-24. Further detail on the specific, annual and cumulative limits for Resource borrowing are available in the Fiscal Framework Outturn Report for 2022-23.^[8] The changes to the Fiscal Framework agreement announced on 2 August 2023 did not impact 2022-23 borrowing powers.

The repayment of borrowing outstanding as at 31 March 2023 is scheduled as follows:

	Principal £m	Interest £m	Total £m
<1 year	108.1	5.9	114.0
1 – 5 years	367.2	11.1	378.3
>5 years	5.1	0.1	5.2
Total	480.4	17.1	497.5

Payment Policy

The Scottish Government policy requires that all suppliers’ invoices not in dispute are paid within the terms of the relevant contract. The Scottish Government aims to pay 100% of invoices, including disputed invoices once the dispute has been settled, on time in these terms.

The Scottish Government has a 10-day target for paying bills to businesses in Scotland. This aspiration is above and beyond our contractual commitment to pay suppliers within 30 days. Paying supplier bills within ten working days is seen as a key objective, and an important expression of the Scottish Government’s commitment to supporting business.

For financial year 2022-23, the Scottish Government, its Executive Agencies and the Crown Office and Procurator Fiscal Service made 97.3% of all payments within 10 days (2021-22: 97.1%). The specific payment performance of the individual bodies consolidated here are reported separately within their individual accounts. The core Scottish Government made 98.0% of payments within 10 days (2021-22: 97.7%). The NHS bodies in Scotland made 79% of all payments within 10 days (2021-22: 81%).

The payment performance of the Scottish Government, its Executive Agencies and the Crown Office and Procurator Fiscal Service for 2022-23 was 99.3% (restated 2021-22: 99.2%) of all transactions settled within the terms of its contractual 30 day payment policy. The specific payment performance of the individual bodies consolidated here are reported separately within their individual accounts. The core Scottish Government made 99.4% (restated 2021-22: 99.2%) of all payments within the terms of its contractual 30 day payment policy. The NHS bodies in Scotland made 91% (2021-22: 92%) of all payments within the terms of their contractual 30 day payment policy.

The Budget Framework

The Scottish Government set out its spending plans for 2022-23 in December 2021 in The Draft Budget ^[9]. Approval for a detailed budget for 2022-23 was given by the Parliament in March 2022 in the Budget (Scotland) Act 2022. The annual Budget is refined through in-year budget revisions, parliamentary approval for which is given by statutory instrument. There are usually two revisions, Autumn and Spring.

The Scottish Government’s Purpose

The Scottish Government’s purpose is to focus government and public services on creating a more successful country with opportunities for all of Scotland to flourish, through increased wellbeing, and sustainable and inclusive economic growth.

The Programme for Government

Through the Programme for Government ^[10] the plans for the year are set out, including the Bills to be introduced to the Scottish Parliament. On 6 September 2022, the First Minister set out a new Programme for Government for 2022-23 A Stronger & More Resilient Scotland which focused on the immediate priorities to be driven forward in the face of the challenges presented by the Cost Crisis.

Managing risks

The Governance Statement, within the Accountability Report of these accounts provides detailed information on the management of the organisation’s key risks. See page 84 for further details.

In the Service of Scotland – our vision for the Scottish Government

Our organisational vision, ‘In the Service of Scotland’, contains three main elements: our mission, our vision and our values. Our mission, ‘We work together to improve the lives of the people of Scotland’ is the core purpose for everyone in the organisation. Our vision will enable us to support the government of the day and improve the lives of the people of Scotland: ‘We put the people we serve at the heart of everything we do. We use digital thinking and approaches to strengthen our work and provide a better service for everyone. We are driven by our values, always searching for new ways to learn and improve. All in the service of Scotland’.

Our five value principles guide how we act, the decisions we take and how we work together, across all parts of government, to improve the lives of the people of Scotland:

We act with integrity - Our actions reflect the values of the Civil Service.

We are impartial, demonstrate high ethical standards, respect, protect and fulfil human rights and uphold the rule of law.
We speak up for what is right, even when it feels difficult.
We are evidence based, open, transparent and honest.
We build relationships based on trust.

We are inclusive - We have a respectful work environment which includes everyone.

We listen to the voices of everyone and respect uniqueness.
We value equity and create a sense of belonging.
We continually strive to build a more diverse workforce, representative of the communities we serve.

We are collaborative - We work with others to realise Scotland’s full potential.

We work with others to improve our effectiveness and make things happen.
We share connections, ideas and knowledge across boundaries.
We actively listen and respond to the needs of our people, partners, Ministers and colleagues to co-produce a healthier, safer and more prosperous country.

We are innovative - We test different approaches and develop new solutions.

We are flexible with our approach, seeing opportunities and pursuing them.
We embrace ambiguity and uncertainty and have a positive attitude to change.
We are professional and skilled.
We are efficient with the money we spend, accountable for the decisions we make and take balanced risks.

We are kind - We care and show kindness towards people and the natural environment.

We put the wellbeing of the people of Scotland and our colleagues at the centre of what we do.
We are mindful about our impact on future generations.
We treat everyone with empathy, compassion and care.

Scottish Government Performance against Outcomes

National Performance Framework

The National Performance Framework (NPF) is Scotland’s wellbeing framework. It sets out the type of Scotland we want to see and, through the indicators, combines measurement of how well Scotland is doing in economic terms with a broader range of wellbeing measures to determine progress towards our National Outcomes. Through the NPF, the Government aims to create a more successful country, give opportunities to all people living in Scotland, increase people’s wellbeing and create sustainable and inclusive growth.

The NPF is underpinned by three core values:

to treat all our people with kindness, dignity and compassion;
to respect the rule of law; and
to act in an open and transparent way.

National Outcomes

To help achieve its purpose, the NPF sets out and measures progress towards eleven National Outcomes which reflect the values and aspirations of the people of Scotland. The National Outcomes are aligned with the United Nations Sustainable Development Goals. The current National Outcomes are set out in Table 1 below.

The Scottish Government is currently undertaking a review of the National Outcomes, which is a legal requirement under the Community Empowerment Act (2015), to ensure that the NPF reflects what matters most to communities in Scotland. It is scheduled to report to Parliament in 2024.

Table 1: National Performance Framework: National Outcomes

Children and young people - We grow up loved, safe and respected so that we realise our full potential
Communities - We live in communities that are inclusive, empowered, resilient and safe
Culture - We are creative and our vibrant and diverse cultures are expressed and enjoyed widely
Economy - We have a globally competitive, entrepreneurial, inclusive and sustainable economy
Education - We are well educated, skilled and able to contribute to society
Environment - We value, enjoy, protect and enhance our environment
Fair work and business - We have thriving and innovative businesses, with quality jobs and fair work for everyone
Health - We are healthy and active
Human rights - We respect, protect and fulfil human rights and live free from discrimination
International - We are open, connected and make a positive contribution internationally
Poverty - We tackle poverty by sharing opportunities, wealth and power more equally

Performance against the National Outcomes

Progress towards the National Outcomes is measured using National Indicators, which are a range of economic, social and environmental indicators, providing an overall measure of national wellbeing. Performance is assessed as ‘improving’, ‘maintaining’ or ‘worsening’ for each indicator, based on the change between the last two data points. This assessment of performance is made objectively and impartially by senior analysts in the Scottish Government and independently of Scottish Government Ministers.

Table 2 below shows the most recent performance of the 81 National Indicators as of July 2023.^[11] More information can be found on the National Performance framework website.^[12]

As of July 2023:

18 indicators were assessed as improving;
30 indicators were assessed as maintaining; and
13 indicators were assessed as worsening.^[13]

In addition, six indicators were still in development, and it was not possible to report performance for 14 indicators. This is due to changes in data collection methodology during COVID-19 which means that in some cases the current data is not comparable to previous years and thus no performance assessment can be made. We are working with the lead analysts and the Chief Statistician to keep users informed of this on the NPF website and to look ahead to reporting performance again for these indicators as soon as possible. The viability of the six National Indicators that are still in development will be considered as part of the national indicator set development in 2024.

Table 2: National Indicators performance as at July 2023

Children & Young People

Improving: Children's voices

Maintaining:

Child wellbeing and happiness
Children have positive relationships
Child social and physical development
Healthy start

Worsening: Quality of children's services^[14]

Performance data unavailable: Child Material Deprivation

Communities

Improving: Community ownership

Maintaining:

Crime victimisation
Perceptions of local crime rate

Worsening: Social capital

Performance data unavailable:

Access to green and blue space
Loneliness
Places to interact

Culture

Maintaining:

Growth in the arts, culture and creative economy
People working in arts, culture and creative industries

Performance data unavailable:

Participation in a cultural activity
Attendance at cultural events or places of culture

Economy

Improving:

Entrepreneurial activity
Economic growth
Income Inequality
Access to superfast broadband
International exporting

Maintaining:

Spend on research and development
Carbon footprint
Productivity
Natural Capital

Worsening: Greenhouse gas emissions

Education

Improving:

Skill profile of the population
Skill shortage vacancies
Skills under-utilisation

Maintaining: Young people's participation

Worsening: Workplace learning

Performance data unavailable:

Educational attainment^[15]
Engagement in extra- curricular activities
Confidence of children and young people
Resilience of children and young people

Environment

Improving:

Sustainability of fish stocks
Energy from renewable sources

Maintaining:

Biodiversity
State of historic sites
Clean seas (Marine Environment)

Worsening:

Waste generated
Condition of protected nature sites

Performance data unavailable: Visits to the outdoors

Fair work & Business

Improving:

Gender balance in organisations
Innovative businesses

Maintaining:

Pay gap
Employees on the living wage
Economic participation
Contractually secure work

Worsening:

Employee voice
High growth businesses
The number of businesses

Health

Improving:

Physical activity
Journeys by active travel

Maintaining:

Healthy life expectancy
Healthy weight
Health risk behaviours
Work related ill health

Worsening:

Mental wellbeing
Premature mortality
Quality of healthcare experience

Human Rights

Maintaining: Access to justice

Performance data unavailable:

Influence over local decisions
Quality of public services
Public services treat people with dignity and respect

International

Improving:

Scotland's reputation
Scotland's population

Maintaining: A positive experience for people coming to Scotland

Performance data unavailable:

Contribution of development support to other nations
International networks
Trust in public organisations

Poverty

Maintaining:

Persistent poverty
Relative poverty after housing costs
Cost of living
Unmanageable debt

Worsening: Wealth inequality

Performance data unavailable:

Food insecurity
Satisfaction with housing

Scottish Government performance against strategic priorities

Over the course of 2022-23, the Scottish Government has continued to develop its approach to performance reporting, building on our response to COVID-19; multiple seasonal events and major delivery programmes like COP26; and our ongoing support for Ukraine. In doing so, we are continuing to develop a more strategic, co-ordinated and focused approach to delivering outcomes. This drives improvement to the rhythm and discipline of our governance and assurance arrangements and provides a line of sight to our performance for Ministers.

From October 2022, our central performance reporting^[16] has taken the form of a monthly performance dashboard, which brings together ‘hot topics’ and issues, as well as outcomes, delivery confidence, delivery plans, milestones and risks for the government’s key priorities. This new approach provides a monthly stocktake and ensures focus on the key priorities and a more strategic view of progress. Since March 2022, we have also monitored and reported on performance relating to commitments in the Bute House Agreement on a quarterly basis, and in the Programme for Government on a six-monthly basis.

The key areas of focus for monthly performance reporting in 2022-23 are aligned to the Scottish Government’s strategic priorities as set out in the 2022 Resource Spending Review and the Programme for Government 2022-23^[17]:

reducing child poverty;
addressing the climate crisis;
building a strong and resilient economy;
helping our public services recover strongly from the pandemic; and
providing help to those struggling with the increased cost of living.

In April 2023, the First Minister published a Policy Prospectus^[18], setting out how the Government will deliver for Scotland over the next three years. The Prospectus sets out three missions:

Equality: Tackling poverty and protecting people from harm
Opportunity: A fair, green and growing economy
Community: Prioritising our public services

These missions will be underpinned by the refreshed National Outcomes. A programme is underway to align our central performance reporting to these three missions and annual updates will be published on our delivery against these missions. The three missions align with the three shared priorities between local and national government within the Verity House Agreement signed by the First Minister and the COSLA President on 30 June 2023. This Agreement sets out how local and national government will work together toward shared priorities to achieve better outcomes for communities across Scotland.

Overview of performance in 2022-23

Over 2022-23, the Scottish Government with its partners across Local Government, the wider public sector, the third sector and business, has made progress towards many of our shared priorities, but has also faced a range of challenges, including the cost of living crisis triggered by Russia’s invasion of Ukraine, the impact of high inflation and the continued impact of the COVID-19 pandemic on public services. To respond to these challenges, Scottish Government has focused resources on immediate priorities and, at times, allocated funds to different areas than those set out in the 2022-23 Scottish Government Budget publication.

The financial situation facing the Scottish Government in 2022-23 was by far the most challenging since devolution. As a result of inflation, in November 2022 the 2022-23 budget was worth less than when it was introduced to Parliament in December 2021. In addition, we saw demands for pay increases that reflected the increased cost of living, and we had to deal with the unforeseen costs of resettling displaced people fleeing the war in Ukraine. Meeting these demands required a difficult process of re-prioritisation.

The Emergency Budget Review^[19] in November 2022 was necessary to ensure a path for the Scottish Government to balance the Budget, and to identify additional resources that could be made available to support those hardest hit by the cost of living crisis. The changes meant supporting public sector workers in Scotland with enhanced pay offers, plus additional resource for a range of initiatives to support people with the increased cost of living, including doubling the Fuel Insecurity Fund, doubling the December Scottish Child Bridging Payment, and a new Island Cost Crisis Emergency Fund to help island households manage higher energy costs.

A headline summary of progress made towards Scottish Government’s strategic priorities during 2022-23 is set out below. More detailed information is then set out on a portfolio-by- portfolio basis in the subsequent Performance Analysis section.

Supporting children and young people and reducing child poverty (Children & Young People, Poverty)

Across 2022-23 we have faced challenging economic conditions with high inflation and falling real earnings creating significant pressures on household budgets. The increased cost of essentials, including energy and food, has impacted on households, and has had a disproportionate impact on those on the lowest incomes. We have allocated almost £3 billion to support policies which tackle poverty and to protect people as far as possible during the cost of living crisis.

Increased the value of Scottish Child Payment by 150% in November 2022 and extended it to under 16s - forecast to lift 50,000 children out of poverty in 2023-24

We delivered the expansion and increase in value of the Scottish Child Payment, raising the incomes of families and strengthening protections for the lowest income households in the face of the cost of living crisis.
Updated modelling, published recently^[20], estimates that relative poverty is predicted to be around 9% lower than it would have been in 2023-24 in the absence of Scottish Government policies.

1,800 fewer children in care in 2022, compared to 2020

As of 31 July 2022 (the latest data available), 12,596 children were being looked after – down 5% on 31 July 2021; and there were 2,031 children on the Child Protection Register – down 4% on 31 July 2021.

Affordable homes (Communities, Poverty)

Built more affordable homes in 2022-23

10,458 affordable homes were delivered over the 12 months to end March 2023 - the highest annual figure since the start of the statistical series in 2000. The latest data (June 2023) shows that 79% of the homes delivered since March 2022 are for social rent - in line with our target for 70% of the 110,000 homes to be built by 2032 to be available for social rent.

Tackling the twin challenges of biodiversity loss and climate change (Environment, Economy)

While the longer-term trend shows Scottish emissions are down from the 1990 baseline by 49.9%, we are only halfway on our journey to net zero.

Official statistics published in June 2022^[21] showed that Scotland’s statutory interim emissions reduction target for 2020 was met, although emissions during 2020 were significantly influenced by the impacts of the COVID-19 pandemic, in particular in the transport sector. The latest emissions data for 2021^[22] confirmed an anticipated increase in transport emissions as a result of pandemic restrictions easing and an increase in domestic heating emissions due to relatively colder weather in the early part of 2021. As a consequence, Scotland’s 2021 greenhouse gas emissions reduction target of 51.1% was narrowly missed.

The recent data does not yet capture the next steps in our updated Climate Change Plan, which was finalised in March 2021.

38% increase in peatland restoration between 2021-22 and 2022-23

7,468 hectares of degraded peatland was restored across 2022-23 - a 38% increase on the 5,373 hectares restored in 2021-22.
We have a target of 10,700 hectares of peatland restoration in 2023-24 - a 43% increase over the output for 2022-23, and a budget of £30 million has been made available to Peatland Action by the Scottish Government to achieve this.

£41 million invested in woodland creation, creating 8,190 hectares of new woodland in 2022-23

£41 million, including EU co-finance, was invested in 2022-23 to support increased woodland creation in Scotland to 18,000 hectares per year by 2024-25. A total of 8,190 hectares of new woodland were created in the year ending 31 March 2023.

Free bus travel (Children and Young People, Poverty, Environment)

More people eligible to travel for free on Scotland’s buses than ever before

In January 2022, we launched the Young Persons’ Free Bus Travel Scheme, providing free bus travel to those under 22 years of age. To March 2023, more than two thirds of young people had joined the scheme, making over 56 million journeys.
Through the concessionary travel schemes for disabled and older people, and for young people and children, up to 2.3 million people in Scotland now have access to free bus travel.

Building a strong and resilient economy (Economy, International, Fair work & Business)

Across 2022-23 we have faced challenging economic conditions. Inflation peaked at 11.1% in October 2022, its highest level since the 1970s, causing falling real earnings and creating significant pressures on household budgets. Although it has gradually fallen back, inflation is still higher than forecast and wider inflationary pressures remain.

Scotland maintained its position as the top performing region or nation of the UK, outside of London, for Foreign Direct Investment (FDI) projects

Scotland’s FDI projects outpaced growth in both Europe and the rest of the UK for the second year in a row – Scottish projects were up by 3.3% in 2022, compared to a 6.4% fall in UK and 1.4% increase in Europe. Scotland secured a record number of foreign direct investment projects; 126 projects in 2022, up from 122 in 2021.

Scotland’s international goods exports continue to grow

Scotland’s international goods exports value increased by 17.7% compared to the previous financial year (when oil and gas are excluded), larger than the 13.5% increase experienced by the UK.
Over 2022-23 there was growth in the value of exports to the EU compared to the previous year across multiple sectors, including oil and gas (up £3.5 billion or 38.1%), machinery and transport equipment (up £566 million or 23.3%), and drinks (up £155 million or 10.2%).

In the first quarter of 2023, the employment rate was 75.3%

Performance of the Scottish labour market remains robust - the employment rate for 16 to 64 year olds was 75.3% in the first quarter of 2023.^[23] The employment rate for 16-24 year olds was 56.9% in April 2022 to March 2023, 0.6 percentage points (pp) higher than the previous year but 1.4pp lower than in April 2018 to March 2019 (pre-pandemic period).^[24]
However, the number of vacancies within the economy is still estimated to be significantly higher than pre-pandemic levels, with ongoing recruitment difficulties in key sectors, and the number of people economically inactive due to long-term sickness has also risen relative to before the pandemic.

The first year of the National Strategy for Economic Transformation saw the successful establishment of the Techscaler Network and successful implementation of No One Left Behind Phase 2 - moving towards an employability system which is flexible, joined up and responsive

Over 2022-23 we successfully established the Techscaler Network, which supports tech founders to scale up their businesses by accessing advice and mentorship from industry experts. To date, around 400 founders and businesses have joined the network.
In partnership with Local Government and a range of private, public and third sector partners, the number of people starting to receive support through the No One Left Behind employability approach continued to increase in 2023, including the number of parents who started to receive support – which reached a high in the quarter between January and March 2023, aligning with our ambition to tackle child poverty through helping parents into fair, sustainable jobs.^[25]

Public service recovery: Health and social care (Health)

2022-23 has been an extremely challenging year for health and social care against the continued impact of the COVID-19 pandemic on health and care related services, and a challenging financial environment due to the ongoing cost crisis, the impact of inflation and the ending of specific COVID-19 consequentials from the UK Government.

Continued reduction in long waits for new outpatient appointments and in-patient/day-case treatments

In July 2022 we introduced a series of ambitious targets for planned care to reduce long waits over two years, 18 months and one year in most specialities.
As of 31 March 2023, 33 out of 41 (80%) outpatient specialities and 18 of 30 (60%) inpatient/day-case specialities had fewer than ten patients waiting more than two years, and 24 out of 41 (59%) outpatient specialities had fewer than ten patients waiting more than 18 months.
However, just 41% of outpatient specialities had fewer than 10 patients waiting over 52 weeks. Therefore, the target to clear waits of over 12 months in most specialities was not met by the target date.

The number of new outpatients waiting longer than two years for an appointment was reduced by 68% between July 2022 and the end of March 2023, by 48.5% for those waiting over 18 months and by 11.4% for those waiting over 12 months. The number of patients waiting longer than two years for inpatient or day-case treatment was reduced by 27% over the same period.

Increased capacity to support reduction in waiting times through opening of NHS Fife’s National Treatment Centre in March 2023

The opening of our second National Treatment Centre (NTC) in Fife in March 2023 provides additional capacity for almost 500 orthopaedic procedures this year, rising to more than 700 by 2025-2026. NHS Highland NTC opened shortly afterwards in April 2023.

21% reduction in suspected drug related deaths in 2022, compared to the previous year

Official statistics show that during 2022 (Jan-Dec), there were 1,051 drug misuse deaths, a reduction of 279 (21%) on the previous year.

Public service recovery: Education (Education, Poverty)

Poverty-related attainment gap down for primary school pupils

Between 2020-21 and 2021-22^[26] there was a 3.4 percentage point reduction in the primary school literacy attainment gap and a 3.7 percentage point reduction in the numeracy attainment gap.
Data for S3 pupils was not collected in 2020-21 and so similar comparisons cannot be made. However, at secondary level^[27]:
- the attainment gap in Higher pass rates between the least and most deprived areas was down to 16 percentage points in 2023 (from 16.9 percentage points in 2019)
- the gap among those obtaining SCQF Level 5 or better was 19.1 percentage points - wider than in 2020-21 but narrower than all other years back to 2009-10
- At SCQF Level 6 or better, the gap was 37 percentage points in 2021-22, again wider than in recent years although narrower than in 2017-18 and all earlier years.

Highest number of school leavers in positive destinations at 3 and 9 month follow- up in 2021-22 since comparable records began

95.7% of 2021-22 school leavers were in a positive destination three months after the end of the school year, higher than in 2020-21 (95.5%), and 93.5% were in a positive destination at the 9 month follow-up, higher than in 2020-21 (93.2%). Both measures were at the highest level since comparable data was first gathered in 2009-10.
The poverty related gap in positive destinations 9 months after the end of the school year was also at a record low of 7 percentage points amongst 2021-22 school leavers, lower than in 2020-21 (7.5 percentage points), and narrowing from 18.7 percentage points in 2009-10.

41% increase in the most deprived students entering university since we accepted the recommendations of the Commission on Widening Access in 2016

In 2021-22, 16.5% of Scottish resident full-time first-degree entrants were from the 20% most deprived areas in Scotland – a slight decrease from 16.7% in 2020-21, albeit partly due to a large increase in entrants from those in the 20-40% most deprived areas. We have seen a 41% increase in the most deprived students entering university since we accepted the recommendations of the Commission on Widening Access in 2016.

Public service recovery: Justice (Human Rights)

Court backlog down over 15,000 on pandemic peak

Since January 2022, the number of scheduled court trials had fallen by over 15,000 (36%) by May 2023.
The reduction has been driven by reductions in summary cases (cases that are heard at Sherriff and Justice of the Peace Courts without a jury), and the backlog in summary cases is on track to be resolved by March 2024. This reflects in part the impact of the court recovery programme, which supports additional court capacity through Scottish Government funding.
The backlog of solemn cases (cases that are heard at either the Sherriff Court or the High Court with a jury), however, continued to rise. Recovery funding has been redirected to tackle this backlog, introducing two additional High Courts and six additional Sheriff Solemn courts.

The prison population is growing

The overall daily prison population has increased since the beginning of 2023 and is now approaching pre-pandemic levels. On the 1st August 2023 it stood at 7,887, an increase of 399 people since 1st April 2022.
This increase is driven by a long-term increase in those serving longer sentences of 4+ years, as well as shorter term growth in the population serving sentences of 1 to 4 years.
The remand population remains elevated, and has also increased somewhat in recent months standing at 2,275 (29%) on the 1st August 2023.

Support for Ukrainians (International)

Support for 24,000 displaced people from Ukraine.
As of 18 April 2023, 24,263 displaced people from Ukraine had arrived in the UK on a visa with a Scottish sponsor – either via our super sponsor scheme or through individual sponsorship by Scottish households.
We launched the Ukraine Longer Term Resettlement Fund to bring vacant homes back into use and a national campaign for volunteer hosts. The national response has been unprecedented, and the Scottish Government has worked closely with partners, local authorities and community groups to offer Ukrainians a ‘Warm Scottish Welcome’.
The number of people in temporary accommodation has been on a decreasing trend since November 2022 and the number continues to reduce during 2023-24. As of March 2023, 3,500 of the Ukrainians who had arrived in Scotland were in employment.

Performance Analysis

Performance Analysis by Portfolio

The following sections set out performance by portfolio. For each portfolio, we set out portfolio aims, key priorities and deliverables for 2022-23 and progress against them, and a summary overview of performance over the year. Financial results are reported for each portfolio, which tie into the Portfolio Outturn Statements on pages 121 to 132. Financial information is also provided on key areas within portfolios. A summary of the Financial Performance: Outturn against Budget is provided on page 10 in the Performance Overview.

We also include information on performance against outcomes for those areas where outcome performance is reported on centrally within Scottish Government. As discussed above, this reporting currently focuses on the Scottish Government’s strategic priorities, as set out in the 2022 Resource Spending Review:

reducing child poverty;
addressing the climate crisis;
building a strong and resilient economy;
helping our public services recover strongly from the pandemic;
providing help to those struggling with the increased cost of living.

In future years, the performance analysis report in the consolidated accounts will report against the outcomes set out in the Policy Prospectus^[28].

Social Justice, Housing and Local Government

During 2022-23 the Social Justice, Housing and Local Government (SJHLG) portfolio was responsible for work on tackling inequalities; embedding equality, inclusion and human rights into our policy-making and public service delivery; delivering the national mission to reduce child poverty; creating a fairer Scotland; and providing accessible and affordable housing.^[29] Together, these ambitions enhance the wellbeing, financial capabilities and participation of people in Scottish life.

Key Priorities and Deliverables

Action to tackle child poverty, including doubling Scottish Child Payment for eligible children under six years from April 2022 and extending it to under 16s from November 2022; investing in Discretionary Housing Payments to provide direct financial support to those struggling with housing costs; and supporting our continued major expansion of affordable and social housing.

In 2022-23, we delivered the planned expansion and further increase in the value of the Scottish Child Payment. Between April 2022 and March 2023, a total of £190 million was made in payments, supporting around 303,000 children under the age of 16 across all local authorities in Scotland. In 2023-24, around 370,000 children will be eligible for this benefit, which is unique to Scotland.
We raised the incomes of thousands of families impacted by UK Government welfare changes. Working with local authorities, we made 136,800 awards and invested around £84 million in Discretionary Housing Payments in 2022-23, to support people with housing costs.
Since March 2022, 11,570 homes have been delivered towards our target of 110,000 affordable homes by 2032. 9,121 (79%) of these homes are for social rent, in line with our target for 70% of the 110,000 homes to be available for social rent.
We strengthened the protections for the lowest income households in the face of the cost of living crisis, allocating almost £3 billion to support policies which tackle poverty and protect people as far as possible.

Supporting vital day to day Local Government services with £10.6 billion in 2022-23

We allocated £10.6 billion for Local Government to support essential services, such as schools, housing, social work, street lighting, road maintenance, refuse collection, elections and planning.
In 2022-23 we commenced work with local government on a new partnership agreement, which culminated in the signing of the Verity House Agreement in June 2023. In the year ahead, we will work with our local authority partners to develop a ‘Fiscal Framework with Local Government’ in order to support the sustainability of local services.

Providing wider social justice support to those impacted by the cost of living crisis though our financial wellbeing programmes

We allocated £12.5 million to support income maximisation, welfare and debt advice. This included the Money Talk Team which supported over 30,000 clients, 7,000 of whom achieved financial gains totalling £20.7 million. In addition, the funding supported over 60,000 people to manage over £380 million in debt, with over £16 million in debt written off.
We invested nearly £1.8 million in food insecurity responses over the winter months, helping people access emergency cash in their local communities so they could buy the food they needed. Interim reporting suggests that over 20,000 people directly benefitted, and that the funds supported many more people through a further 570 organisations.

Investing over £4 billion in social security and welfare payments, providing vital support for low income families, carers and disabled people

Following a successful phased rollout, Adult Disability Payment was available across Scotland from 29 August 2022. As of 31 March 2023, 45,810 people were in receipt of Adult Disability Payment. Of those, 20,545 (45%) were new applicants and 25,260 (55%) had their award transferred from the Department for Work and Pensions (DWP). The total value of Adult Disability Payments issued in the financial year 2022-23 was £79.4 million.
Between April 2022 and March 2023, the total value of Child Disability Payments issued was £201.6 million. As of 31 March 2023, it is estimated that 62,325 children and young people were in receipt of Child Disability Payment. Of these, 45,535 were people who had their award transferred from DWP’s Disability Living Allowance for children.
We also made £190 million payments during this period as part of the expansion and increase of the Scottish Child Payment.
In further response to the cost of living crisis and our winter preparedness, following the Emergency Budget Review, the Scottish Government doubled the Fuel Insecurity Fund to £20 million across 2022-23, supporting people who are struggling with their energy costs and households who are at risk of self-rationing or self-disconnecting their energy.
In February 2023, we launched our new Winter Heating Payment, which provides a stable, reliable annual payment to help low-income individuals with their heating expenses each winter, replacing the DWP’s Cold Weather Payment. As of 31 March 2023, we paid out over £19.6 million to nearly 400,000 people on low incomes to help them with winter heating costs.

Continue investment to ensure our existing homes offer everyone a warm, safe home that meets their needs; invest to prevent and end homelessness; support households struggling to sustain tenancies; mitigate the bedroom tax and benefit cap through discretionary housing payments; and deliver rented sector reform for more affordable, high-quality homes, rented on a fair basis.

In 2022-23, we spent almost £10 million from the Ending Homelessness Together Fund. Of this, £8 million was distributed across local authorities to support the implementation of their Rapid Rehousing Transition Plans, which play a key role in reducing the need for temporary accommodation.
The remainder of the budget resourced a range of projects, including the Change Team, Housing First, and Rapid Rehousing Welcome Centres. It also provided £485,000 to the Homelessness Prevention Fund.
£1.2 million was provided for the Third Sector Homelessness Fund, supporting third sector organisations to collaborate with local authorities and other statutory services as part of the transition to a rapid rehousing model.
In February 2023, we provided £8.6 million via local authorities to directly support people affected by the UK Government benefit cap, £2.6 million of which was for the 2022-23 financial year. This is on top of our existing investment to mitigate the UK Government’s bedroom tax and the on-going freeze to Local Housing Allowance rates. Our funding to mitigate the bedroom tax has helped around 91,000 households to maintain their tenancies each year.
We introduced legislation to initially freeze rents in the private and social rented sector and increased protections for tenants in response to the cost of living crisis.

Provide support to over 24,000 displaced Ukrainians

As of 18 April 2023, a total of 24,263 displaced people from Ukraine had arrived in the UK on a visa with a Scottish sponsor, either via our super sponsor scheme or through individual sponsorship by Scottish households. This has been supported by resource spending of £231 million in 2022-23, £197 million of which has been spent on temporary accommodation across a network of hotels and two passenger ships. Additionally, we provided £19 million of dedicated funding to local authorities to support Ukrainian resettlement in 2022-23.
The number of people in temporary Welcome Accommodation has been on a decreasing trend since November 2022, when more than 7,000 guests had been residing in hotels and ships. Published statistics show, as of 28 March 2023, the number of people in Welcome Accommodation was 5,051. This number continues to reduce during 2023-24.
In September 2022, we launched the Ukraine Longer Term Resettlement Fund, a £50 million capital fund to enable local authorities to bring vacant homes back into use. Between launch and the end of March 2023, £10 million of the fund had been allocated. On 28 November, a national campaign for volunteer hosts was also launched, including a new online application portal and improved guidance on what to expect.
As of March 2023, 3,500 of the Ukrainians who had arrived in Scotland were in employment.

Outcomes: Performance against Key Targets and Indicators

The latest data on progress towards the child poverty targets shows that in 2021-22, 23% of children in Scottish households were living in relative poverty, 19% were living in absolute poverty, 9% were living in low income and material deprivation and 18% were living in persistent poverty. Further information on trends over time is provided in the most recent Tackling child poverty delivery plan: progress report 2022-23^[30].
Progress towards the child poverty targets needs to be considered in the context of the current socio-economic and political climate, such as the impact of inflation, EU exit and COVID-19 which continue to have a disproportionate impact on low-income families.
Updated modelling^[31], published alongside our most recent progress report, with up-to- date policies included, estimates relative poverty to be around 9 percentage points lower in 2023-24 than it would have been in the absence of Scottish Government policies. The relative child poverty rate is estimated to fall to around 19% by 2023-24 (compared to the interim 2023-24 target of 18%) and the absolute child poverty rate to around 16% (compared to the interim target of 14%).

Performance overview – Key Successes, Challenges and Forward Look

Over 2022-23 we continued to drive our national missions to reduce child poverty, create a fairer Scotland, and provide accessible and affordable housing, set against considerable economic challenges.

‘Best Start, Bright Futures’, our second Tackling Child Poverty Delivery Plan, sets out a range of cross government actions towards achieving our statutory child poverty targets. Its first progress report^[32] showed that 40 of the 101 actions in the plan are complete or delivery is ongoing, 39 are in progress and 19 are in the early stages of development. We estimate that over 2022-23, £3 billion was invested across a range of programmes targeted at low income households, with £1.25 billion directly benefitting children.

We have also continued to support people through social security and welfare benefits, investing over £4 billion in benefits expenditure in 2022-23, directly supporting over 1 million people.

Our Ending Homelessness Action Plan focuses on preventing homelessness, responding quickly when homelessness happens and prioritising settled housing for all. In response to a report^[33] published by the Temporary Accommodation Task and Finish Group, we set out the actions we will take to reduce the number of households in temporary accommodation by the year 2026.

We set up the Ukraine ‘super sponsor’ scheme so that Ukrainians displaced by war could select the Scottish Government as a sponsor and travel immediately. Scotland is reporting the highest number of total applications, visas issued and arrivals per head of population of any of the UK nations. We worked with our local authority partners to set up a network of short-term accommodation across a large number of hotels, as well as two passenger ships. All guests have since disembarked the two ships ahead of their respective contract end dates and were supported into onward accommodation. Overall numbers in short term accommodation have been consistently reducing since January 2023.

We will continue to use the powers we have to tackle poverty and inequality, in partnership with Local Government, communities, businesses, social enterprises and third sector organisations. Our work will continue to maximise household incomes and deliver improved employment outcomes, saving money for people who need it most through provision of services such as childcare, transport and free school meals, and providing support to disabled people and carers.

Financial Results

Social Justice, Housing and Local Government reported an overspend of £5 million for the year ended 31 March 2023 (Budget: £18,002 million, Outturn: £18,007 million). More details are included in the Portfolio Outturn Statement at page 122.

Other Relevant Portfolio Performance Information

Tackling child poverty delivery plan: fourth year progress report 2021 to 2022 (www.gov.scot)

Tackling Child Poverty Delivery Plan: progress report 2022-2023 (www.gov.scot)

Social Security Scotland - Adult Disability Payment: high level statistics to 30 April 2023

Social Security Scotland - Child Disability Payment: high level statistics to 31 March 2023

Social Security Scotland - Scottish Child Payment: high level statistics to 31 March 2023

Social Security Scotland - Winter Heating Payment Statistics: Winter 2022/2023

Ukraine Sponsorship Scheme in Scotland: statistics - June 2023 (www.gov.scot)

Health and Social Care

The Health and Social Care portfolio is responsible for improving the health and wellbeing of the population, ensuring that care and support is delivered when, how and where people need it.

Key Priorities and Deliverables

Recover and redesign services to increase capacity and deliver a financially, environmentally and socially sustainable health service, providing additional funding of £550 million for NHS Boards and funding of £232 million for addressing waiting times and supporting our National Treatment Centres in 2022-23.

Primary and Community Care:

We have increased the number of professionals to support GPs and general practice teams by 518 since March 2022. There are now more than 4,730 professionals working in multi-disciplinary teams, meaning that the average practice now has access to more than 5 additional professionals. We will continue to support implementation of the GP contract to deliver more appointments for people through the use of wider healthcare professionals, underpinning the evolution of the GP role and enhanced multi-disciplinary teams, alongside investment of at least £170 million per annum.
We are providing £1 million of inclusion funding to general practices in the most disadvantaged areas of Glasgow to help them tackle health inequalities, and by the end of 2023-24, we will use the lessons learned from this for sustained or increased investment and expansion to other areas to better assist people with complex needs.
Throughout 2022-23 we have worked with stakeholders to significantly reform and revise the payment structures for NHS dentistry with the aim of sustaining population access to oral healthcare. The revised payment model is intended to reduce the administrative workload on dental teams, as well as facilitating a move towards greater clinical discretion and focus on patient-centred care. Shortly following the year-end, the revised model was shared with the wider sector and general public, ahead of implementation on 1 November 2023.
Our Community Glaucoma Service is now live in the Glasgow City, East Renfrewshire and East Dunbartonshire areas of NHS Greater Glasgow and Clyde. A third cohort of optometrists have commenced training and are scheduled to qualify in March 2024, supporting the move to community care and away from hospital-based services. We will continue to roll out the Community Glaucoma Service across NHS Boards in 2023-24, ahead of anticipated full implementation across Scotland by 2025-26. At full implementation, the service will reduce hospital ophthalmology waiting pressures by discharging an estimated 20,000 lower risk glaucoma and treated ocular hypertension patients into the management of accredited community optometrists.

Urgent Care:

We have continued the Redesign of Urgent Care, which aims to:
- support people to access the right care, delivered at the right time and in the right place;
- reduce unnecessary Emergency Department (ED) attendances by directing people to more appropriate urgent care settings;
- provide 24/7 Flow Navigation Centres with immediate access to a senior clinical decision-maker;
- improve patient safety by scheduling urgent appointments to ED/ Minor Injury Units and avoiding unnecessary waits;
- strengthen the interface between professionals through the Flow Navigation Centres (for example, development of ‘call before you convey’, reducing ambulance conveyance levels to hospital);
- expand the use of technology to support timely assessment of patients.
This combination of services has contributed to reduced attendance at ED, with self- presentations in the year to June 2023 down by approximately 84,000 (10%) compared to the year to June 2019.
We are continuing to manage ongoing pressures on acute care by expanding our ‘Hospital at Home’ capacity across the country. Hospital at Home is growing to be the fifth biggest hospital for older people emergency inpatients.

Planned Care:

High levels of occupancy, delayed discharges, an increase in the complexity of cases, and challenges with workforce availability have seen NHS Boards reporting pressures impacting on the delivery of planned care targets.
Working closely with NHS boards, we have continued to maximise capacity wherever possible, including:
- Four National Treatment Centres (NTCs) are opening in 2023, including NTC Fife which opened in March 2023. These centres will deliver around 25,000 additional planned care procedures by 2024-25.
- Good progress has been made with recruitment for the NTCs due to go live by the end of 2023. As of 31 March 2023, 502 people were employed in an NTC (excluding those staff delivering pre-existing NHS services which have been relocated to NTC sites). 130 (26%) of these are new entrants to NHS Scotland.
- In 2022, we funded a mobile operating theatre to enable almost 350 planned care surgeries to go ahead for patients in Orkney and Shetland. This closed as planned in October 2022, when the backlog had been addressed.
- We opened a urology hub at Forth Valley Royal Hospital, providing a one-stop diagnostic and treatment service for patients.
- In 2022-23, we funded seven mobile MRI and five mobile CT scanners to help people get the diagnostic tests they needed, and supported additional activity throughout the week, including weekends, to help reduce diagnostic waits.
Recent data shows new outpatient activity has continued to rise since July 2022, with the first quarter of 2023 seeing the highest new outpatient activity since the start of the pandemic. Inpatient/day-case activity has also continued to increase since October 2021, with the first quarter of 2023 also seeing the highest activity since the start of the pandemic.

Centre for Sustainable Delivery (CfSD):

The Centre for Sustainable Delivery continued to work with our NHS Boards to introduce new ways of delivering care that creates additional capacity. Its Modernising Patient Pathways and Scottish Access Collaborative programmes have developed strong clinically-led Specialty Delivery Groups, which promote multidisciplinary team working and local adoption of service improvement programmes. These groups are now well established and have supported several new and innovative developments, many of which are now being successfully scaled up across Scotland, including Cytosponge and Colon Capsule Endoscopy (CCE).

Investment in social care, including a transfer for 2022-23 of £846.6 million to Local Government

Within the £846.6 million transfer to Local Government, the Scottish Government provided funding of £200 million in 2022-23 to ensure the minimum hourly rate for workers providing direct adult social care increased to £10.50 per hour from April 2022. This was in addition to a recurring investment of £144 million to ensure that all Adult Social Care workers are paid at least the Real Living Wage.

Begin the legislative phase of establishing the National Care Service, to bring social care into parity of esteem with health care and transforming the provision of this essential service

The National Care Service Bill has been drafted and introduced to Parliament in June 2022, setting out a framework for change and giving us the time to work through the detail with those who either receive or deliver community healthcare and social work and care services in Scotland.

Continue work to reduce health inequalities, including investing an additional £50 million annually in the National Mission to reduce drug deaths and improve lives

We have continued the expansion of residential rehabilitation, with over 800 publicly funded referrals supported in 2022-23. We invested an additional £14 million in new facilities and bed capacity projects, adding much needed capacity to previously underserved areas.
Over £15 million funding has been provided to community and grassroots organisations, supporting over 200 projects across Scotland.
Since the launch of the National Mission and the national Naloxone Campaign, over 60,000 Naloxone kits have been distributed. Police Scotland Naloxone roll out is near completion, with more than 12,000 police officers carrying kits.
Since 2021, we have implemented Medication Assisted Treatment Standards to improve access, choice and support for people impacted by drugs and to reduce drug-related deaths. In 2022-23, local areas fully implemented 66% of standards 1-5, which focus on improving treatment services (compared to 17% in 2021-22). For standards 6-10, which have a more holistic focus, local areas achieved 88% of the target to partially implement these. Full implementation of standards 1-10 is expected by April 2025.

Deliver quality community care to reduce pressures on frontline hospital services, including over £1.6 billion in health and social care integration

In addition to what was included in the 2022-23 published budget, and the £846.6 million transfer to Local Government, a further investment of £8 million was made available to Health and Social Care Partnerships in January 2023 to make use of additional interim care home beds to alleviate pressures on acute services caused by delayed discharges. Around 500 people benefited from this additional funding.

Direct investment of £290 million to improve access to mental health services and to improve early intervention and preventative support

£38 million of this was reprioritised in the Emergency Budget Review, reducing the available budget to £252.4 million

In 2022-23 we supported:
- improvements in child and adolescent mental health and psychological services, addressing waiting list backlogs and introducing national standards;
- rapid expansion in perinatal mental health services;
- expansion in community-based support for children, young people and adults, focused on prevention and early intervention;
- increases in the mental health workforce;
- development of new suicide prevention services; and
- the establishment of a cross-sector National Trauma Training Programme and improved support for survivors of sexual abuse.
Year 2 of the Communities Mental Health and Wellbeing Fund for adults launched in October 2022, with funding of £15 million being awarded to over 1,400 community projects, many of which focused on supporting low income groups and responding to the cost of living crisis.
The commitment to fund 1,000 additional staff to help community mental health resilience and social prescribing is paused for the remainder of 2022-23.

Outcomes: Performance against Key Targets and Indicators

Progress against the new targets set out in July 2022 to address the impact of the pandemic on long waiting times for planned care are set out in Table 3 below.

Table 3: Progress against targets to reduce waiting times for NHS treatment introduced in 2022

Key target: Clear over two years’ waits in most specialities by the end of August 2022 for new outpatients, and by the end of September 2022 for inpatients/day- cases

Performance indicators and progress:

Published Public Health Scotland data shows the number of new outpatients waiting over two years has reduced by 68% since the targets were introduced (from 2,721 at 30 June 2022 to 864 at 31 March 2023).
At 31 March 2023, 33 out of 41 new outpatient specialties (80%) had fewer than 10 waits over two years, and of those, 20 had none.
The numbers waiting longer than 2 years for inpatient or day- case treatment has reduced by 27% since targets were announced (from 9,572 at 30 June 2022 to 6,985 at 31 March 2023).
At 31 March 2023, 18 of 30 inpatient / day-case specialities had fewer than ten patients waiting more than two years, and 13 had no-one waiting more than 2 years.

Key target: Clear over 18 months’ waits in most specialities by December 2022 for new outpatients, and by September 2023 for inpatients / day-cases

Performance indicators and progress:

The number of new outpatients waiting over 18 months had reduced by 48.5% as of 31 March 2023 compared to 30 June 2022, from 8,804 to 4,534.
At 31 March 2023, 24 out of 41 new outpatient specialties (59%) had fewer than 10 waits over 18 months, and of those 10 had none.

Key target: Clear over one year waits in most specialities by 31 March 2023 for new outpatients, and by September 2024 for inpatients / day-cases

Performance indicators and progress:

Since the target was introduced in early July 2022, the number of new outpatients who waited over a year has reduced by 11.4.% (from 35,540 on 30 June 2022 to 31,498 on 31 March 2023).
In the three quarters preceding the target announcement (31 December 2021 to 30 June 2022), the numbers waiting longer than one year for new outpatient treatments increased by 6,833. In the following three quarters (30 September 2021 to 31 March 2023) the number waiting over one year decreased by 5,767.
At 31 March 2023, 41% of new outpatient specialties had fewer than 10 patients waiting over 52 weeks.
In the three quarters preceding the target announcement (31 December 2021 to 30 June 2022), the numbers waiting longer than one year for inpatient or day-case treatment increased by 8,676. In the following three quarters (30 September 2021 to 31 March 2023), the number waiting over one year increased by 2,439, a slower rate.

Drug deaths:

Official statistics show that during 2022 (Jan-Dec) there were 1,051 drug misuse deaths, a reduction of 279 (21%) on the previous year (Figure 1). Quarterly data from Police Scotland on suspected drug deaths suggests that after following a downward trend since early 2021, the rolling 12-month total number of suspected drug deaths has increased slightly over recent quarters, as can be seen in Figure 2.

A graph showing the trend of reported drug misuse deaths to 2022, showing a drop to 1,051 in 2022 from a high point in 2020. — Figure 1: Drug Misuse Deaths in 2022, (Source: National Records of Scotland)

A graph showing the number of suspected drug deaths by calendar quarter and year from January 2017 to March 2023. — Figure 2: Number of suspected drug deaths by calendar quarter and year, January 2017 to March 2023^[34]

Performance overview – Key Successes, Challenges and Forward Look

We have continued to implement our £1 billion NHS Recovery Plan, which drives the ongoing recovery from the COVID-19 pandemic. This was accompanied by £600 million to support resilience over a very challenging winter season for both staff and patients.

High levels of occupancy, delayed discharges, an increase in the complexity of cases, and challenges with workforce availability have seen NHS Boards reporting pressures impacting on the delivery of planned care targets. We have continued to take action on long waits, working closely with NHS boards to maximise capacity and reduce the length of time people are waiting for appointments and treatment. NHS Fife’s National Treatment Centre opened in March 2023 and will provide capacity for almost 500 orthopaedic procedures in 2023-24, increasing to over 700 by 2025-26. In addition, we invested a further £3.6 million in Hospital at Home to support more than 150 extra virtual beds, and invested £1.8 million in a new national digital dermatology programme to help speed up treatment.

This has yielded improvements in terms of reducing long waits. As of 31 March 2023, 33 out of 41 (80%) new outpatient specialties and 18 of 30 (60%) inpatient / day-case specialities have fewer than ten patients waiting more than two years, and 24 out of 41 (59%) new outpatient specialities have fewer than ten patients waiting more than 18 months. Our health service, however, has continued to experience significant challenges over the last year, including pandemic backlogs and the most difficult winter the NHS has ever faced. Therefore, the target to clear waits of over 12 months in most new outpatient specialities was not met by the 31 March 2023 target.

The NHS is also continuing to experience significant workforce issues, including demand for workforce, workforce supply, levels of absence, recruitment and retention. To strengthen the health and social care workforce, we took action to hire an additional 800 nurses, midwives and allied health professionals from overseas, with £8 million of funding. In our constant efforts to not only recruit and build our future NHS workforce, but also retain expertise, our staff remain the best paid in the UK – with an average pay increase of 10.5% over the past two years (2021-2023). Over the last 12 months, Nursing and Midwifery vacancies have reduced by 10.3%, Consultant vacancies have reduced by 8.2% and Allied Health Professionals vacancies have reduced by 10.6%. Our long term investment in NHS staffing has accelerated since the outset of the pandemic and staffing numbers have increased by 9.6% since December 2019. These achievements took place against a background of the continued impact of the COVID-19 pandemic on health and social care services, and a challenging financial environment due to the ongoing cost crisis and impact of inflation.

In 2023-24, we will continue to embed the recovery and redesign of our key NHS and social care services. Included in this work will be an invitation to people across Scotland to have their say on how the new National Care Service should work, and an international recruitment pilot in summer 2023 to support expansion of our social care workforce. To continue to reduce waiting times, NTC Highland was opened in April 2023, creating capacity for over 1,500 orthopaedic procedures this year, and two further NTCs will open later this year, including Forth Valley and the second phase of NHS Golden Jubilee in Glasgow.

Financial Results

Health and Social Care reported an underspend of £261 million for the year ended 31 March 2023 (Budget: £17,895 million, Outturn: £17,634 million). More details are included in the Portfolio Outturn Statement at page 121.

Other Relevant Portfolio Performance Information

Suspected drug deaths in Scotland: January to March 2023 - gov.scot (www.gov.scot)

Suspected drug deaths in Scotland: April to June 2023 - gov.scot (www.gov.scot)

National Naloxone programme Scotland - Quarterly Monitoring Bulletin October to December (Q3)

Stage of treatment waiting times - Inpatients, day cases and new outpatients 30 May 2023 - NHS waiting times - stage of treatment - Publications - Public Health Scotland

Public Health Scotland Stage of Treatment report

NHS Recovery Plan 2021-2026

Justice and Veterans

The purpose of the Justice portfolio is to keep our communities safe and support the administration of justice. We aim to improve the wellbeing and life chances of all who engage with the justice system by enabling our communities to be safe and resilient, reducing crime and offending and supporting victims and witnesses. In doing this, the portfolio plays its part in tackling inequalities, protecting and promoting human rights and contributing to a sustainable, inclusive and prosperous economy.

Key Priorities and Deliverables

Provide over £50 million in annual funding for both recovery and reform, to support justice partners to address the unavoidable backlog of cases built up during the pandemic, and to deliver system-wide transformation, including shifting the balance between custody and community-based interventions

During 2022-23, over £50 million of annual demand-led funding was set aside through the Justice Recover, Renew and Transform (RRT) Fund for post-COVID-19 recovery and reform. £29 million of this was allocated towards court recovery, including for remote jury centres and on-going COVID-19-related costs, reducing the backlog of criminal cases built up during the pandemic and reducing associated end-to-end delays.
The RRT fund also provided:
- £15 million (on top of existing baseline funding) to support the recovery and enhanced availability of community justice services. This included £3.2 million in funding to support the expansion of bail support and supervision services across local authority areas.
- Funding for legal aid trainee solicitors and for additional COVID-19 related costs for the Scottish Prison Service.
During 2022, the Scottish Government introduced the Bail and Release from Custody (Scotland) Bill to Parliament, including provisions to re-focus the use of remand on those who pose a risk to public and victim safety and, in certain circumstances, delivery of justice. The Bill (which became an Act on 1 August 2023) also aims, once implemented, to improve support for people leaving prison to reduce the risk of reoffending and to help people resettle positively into their communities.

Improve front-line victim support services, with an investment of £48 million over three years through the newly created Victim Centred Approach Fund, which also supports the overall vision for Justice - to embed person-centred, trauma-informed practices throughout our services

More than 20 organisations received awards from the Victim Centred Approach Fund during 2022-23, totalling £16.3 million.

Continued investment in the modernisation and efficiency of the justice system, including the new Digital Evidence Sharing Capability (DESC), which will allow users such as police officers, prosecutors, court staff and defence agents to digitally access evidence in a more efficient and user-friendly way

DESC represents an investment by the Scottish Government of £33 million over 10 years and will deliver significant savings of time and cost in the way that evidence is managed and used. DESC launched its pilot phase in January 2023 in Dundee.

Provide support for the Armed Forces community, ensuring no disadvantage in accessing public services and support, thus promoting Scotland as a destination of choice for Service leavers

In 2022-23, 26 projects supporting veterans and their families across Scotland were funded through the Scottish Veterans Fund.
We continued to fund the Unforgotten Forces Consortium to coordinate activity amongst their 19 member organisations who provide support to veterans aged over 60 in Scotland, directly supporting over 1,800 veterans in the first six months of 2022-23.
We provided funding to continue the National Education Officer role, which supports and advocates for service children.
The Veterans’ Employment campaign was launched, focused on reaching employers across Scotland to communicate the benefits that employing veterans can bring to their businesses.

Outcomes: Performance against Key Targets and Indicators

Progress against key indicators of Covid recovery in the justice system are set out below.

Community and custody disposals^[35]

The proportion of custody disposals, as measured by management information at a charge level, fell from 12.5% to 10.0% of all disposals between 2018-19 Q4 and 2022-23 Q4. The proportion of community disposals over the same period dropped very slightly from 17.1% to 15.9%.

Prison and remand population

The overall daily prison population has increased since the beginning of 2023 and is now approaching pre-pandemic levels. On the 1^st August 2023 it stood at 7,887, an increase of 399 people since 1^st April 2022^[36] (see Figure 3 below). This increase is driven by a long-term increase in those serving longer sentences of 4+ years, as well as shorter term growth in the population serving sentences of 1 to 4 years.
The remand population remains elevated, and has also increased somewhat in recent months, standing at 2,275 (29%) on the 1^st August 2023, compared to 1,114 on 24th April 2020.
Among the 2,275 people on remand as of the morning of Tuesday 1st August 2023, the median continuous time spent with this status to date was 70 days.

The Friday prison population overall and the remand population up to July 2023. Thereafter, daily population figures are provided. The trends are described in the body text. The highest line to lowest line categories Long: 4 years plus (highest line), Short: less that 4 years, Life, Short: one year or less, Orders of Lifelong Restriction (lowest line).Last updated August 2023. Next update due September 2023. — Figure 3: Prison populations (total and remand), January 2019 to 1st August 2023

Courts backlog

Between January 2022 and March 2023, the national total of scheduled trials (a proxy for the court backlog) fell by over 16,000 (or 37%), from 43,606 to 27,406^[37]. This reflects the impact of the court recovery programme, with additional court capacity supported by Scottish Government funding.
The overall reduction was driven largely by reductions in summary cases in the Sheriff Courts and Justice of the Peace (JP) Courts. The Scottish Courts and Tribunals Service (SCTS) assess that the summary backlog is on track to be resolved during 2024.
The backlog, however, in solemn cases in the High Court and Sheriff solemn court is continuing to grow, in part reflecting an upward trend in the overall number of indictments compared with pre-COVID-19 levels, including more sexual offences cases. Following agreement among Justice partners to shift recovery funding from summary business to prioritise solemn business, SCTS have introduced two additional High Courts and six additional Sheriff Solemn courts to help reduce this backlog.

Performance overview – Key Successes, Challenges and Forward Look

During 2022-23, recorded crime remained at historically low levels. Scottish Government invested in recovering justice services from the impacts of the COVID-19 pandemic and in wider reform and transformation. This included launching and allocating funds as part of the new Victim-Centred Approach Fund; providing practical and emotional support to victims, survivors and witnesses of crime; and funding two new Restorative Justice Hubs which will have a strategic role in the development and delivery of restorative justice in Scotland. Work will continue in financial year 2023-24 to address the court backlogs and overall waiting times for justice, aided by the publication of new experimental statistics on journey times through the system.

Capital investment in the prison estate in 2022-23 saw two innovative Community Custody Units being opened in Dundee and Glasgow, and HMP & YOI Stirling opening in June 2023. These are new national facilities for women prisoners, specifically designed to take account of the trauma and adversities experienced by many women in custody. This investment will continue, ensuring modern facilities that promote rehabilitation.

Over 2022-23, community-based interventions, such as the CashBack for Communities scheme, delivered 31 projects working with young people who experience multiple risk factors, including adverse childhood experiences, to improve relationships, behaviour, education and employment outcomes. To further reduce harm in our communities, two provisions of the Fireworks and Pyrotechnic Articles Scotland Act 2022 were implemented: introducing a proxy purchase and supply offence prohibiting fireworks or other pyrotechnic articles being provided to children, and introducing a statutory aggravation for offences involving pyrotechnic articles and emergency workers.

Financial Results

Justice and Veterans reported an underspend of £31 million for the year ended 31^st March 2023 (Budget: £3,329 million, Outturn: £3,298 million). More details are included in the Portfolio Outturn Statement at page 126.

Other Relevant Portfolio Performance Information

Scottish Courts and Tribunals Service Annual Reports and Accounts Reports and Data (scotcourts.gov.uk)

Justice Analytical Services (JAS) Safer Communities and Justice Statistics Monthly Data Report: August 2023 edition

Financial Reports and Key Strategies - Scottish Police Authority (spa.police.uk)

Scottish Fire & Rescue Service: SFRS Annual Performance Review 2022-23 (firescotland.gov.uk)

Annual Report and Accounts - Scottish Legal Aid Board (slab.org.uk)

Scottish Prison Service Annual Report and Accounts Publications (sps.gov.uk)

Reports & Statistics - Community Justice Scotland

HMICS | Annual Reports

Publications | HM Inspectorate of Prosecution in Scotland (prosecutioninspectorate.scot)

Publications | HMIPS (prisonsinspectoratescotland.gov.uk)

Publications | HM Fire Service Inspectorate in Scotland (hmfsi.scot)

Education and Skills

Improving the life chances of our children, young people and learners of all ages through excellence and equity in education continues to be a key priority for the Scottish Government. The Education and Skills portfolio invests in changing lives for the better and underpins key cross-cutting government priorities, in particular promoting population wellbeing, tackling child poverty and encouraging sustainable and inclusive economic growth.

Key Priorities and Deliverables

Continue to provide funding to support the recruitment of 3,500 teachers and 500 support staff over this parliament

We have recruited 40% of our target, with the 2022 school census showing a total of 54,193 teachers, 1,946 higher than the 2019 baseline of 52,247 (representing the annual teacher census figure for the number of teachers employed in all settings).

Continue to tackle the poverty related attainment gap and support education recovery through an investment of £1 billion in the Scottish Attainment Challenge over the course of this parliament

We have dedicated £200 million annually to the Scottish Attainment Challenge. In 2022-23 this included:
- £130 million in Pupil Equity Funding to schools (for head teachers to direct)
- £44.7 million to local authorities through Strategic Equity Funding
- £11.5 million to support care-experienced children and young people
- £13 million for national programmes
We published the Scottish Attainment Challenge Framework for Recovery and Accelerating Progress,^[38] which introduced a requirement for local authorities to set ambitious aims for progress in closing the poverty related attainment gap. These aims were published in December 2022.^[39]

Deliver 1,140 hours of high quality, funded early learning and childcare to all three and four year olds and eligible two year olds, as well as 5 year olds who defer their school start

1,140 hours of early learning and childcare is now available for all three and four year olds and eligible two year olds in Scotland, supported by a programme budget and specific and general revenue grants to local authorities, totalling around £1 billion each year.
As of April 2023, 119,108 children were in funded early learning and childcare (ELC) places, 84% of these taking advantage of the full offer of 1,140 hours of funded ELC per year.^[40]
We are committed to developing a funded early learning and childcare offer for one and two year olds by 2026, focusing on those who need it most.

Progress work to build a system of school age childcare that is free to those on the lowest incomes, and consider how we can most effectively invest in early years support for the families who need it most

Between 2020 and 2022, individual service level ‘tests of change’ were implemented through 15 Access to Childcare Fund projects, supporting 1,500 children from 1,000 families. In 2022-23 we continued supporting eight of those projects to deliver childcare for 650 children from 526 families, as well as supporting pilot projects with the Scottish Childminding Association and Ayr United Football Academy, who supported 228 children from 165 families.
Community ‘tests of change’ have also been implemented in four local authorities to co- design and establish local systems of school age childcare that can support families on the lowest incomes. Over 300 children have been supported across these communities, in Clackmannanshire, Dundee, Glasgow and Inverclyde, allowing the Scottish Government and local authority colleagues to learn how best to build meaningful local systems of school age childcare.
Around 158,000 children and young people were supported by the summer programme in 2022, providing targeted holiday childcare, activities and food in the summer holidays. The majority of these children were from the six priority family types at greatest risk of poverty.

Implementation of measures to reduce the cost of the school day, including providing over £40 million to deliver free school lunches to all children in Primary 4 and 5 and in special schools, and £30 million capital allocation for initial investment in school kitchens ahead of expanding free school meal provision to all primary school children later in the parliamentary term; continuing to provide funding for the school clothing grant; investing £15 million in the roll-out of digital devices and connectivity to Scotland's school pupils; and providing a curriculum free of core charges and free music tuition

All pupils in Primary 1 - 5 and in special schools are now provided with free school lunches, with a 68.4% uptake in Primary 1 - 5, supported by funding of £42.2 million in revenue and £30 million in capital during 2022-23.
To support the commitment to provide a digital device for every school-aged child by 2026, discovery work has been undertaken on the existing state of schools’ digital infrastructure. This was concluded in December 2022 and the remainder of the work to deliver this commitment is in the scoping stage. Capital funding for 2023-24 was reduced as a result of the Emergency Budget Review in December 2022.
We continue to engage with the UK Government on the commitment to increase and automate the school clothing grant for children from low-income households. We are in the process of seeking an amendment to the UK Digital Economy Act to provide a legal gateway for data sharing.
We continued to support the removal of core curriculum costs for all primary and secondary pupils. Responding to feedback from local authorities, we provided £6 million for academic year 2021-22 and increased funding to £8 million for academic year 2022- 23 and we have committed a further £8 million for financial year 2023-24.
The Scottish Government and COSLA have agreed funding of £12 million for instrumental music tuition in the financial year 2023-24, meaning that where music tuition is offered in schools, parents and carers will not be required to pay fees, further removing barriers to participation. This represents an increase on the £8 million funding provided for the 2021- 22 academic year.

Implement the recommendations of the Independent Care Review and meet the Scottish Government’s commitment to keep The Promise by 2030

In March 2022, the Scottish Government set out in a comprehensive Promise Implementation Plan a number of key commitments and actions that we are taking forward to Keep The Promise that care experienced children and young people will grow up loved, safe and respected.
We progressed work on the Children’s Care and Justice Bill, which aims to improve experiences and outcomes for children in Scotland who interact with the children’s hearing and criminal justice systems. It will ensure that children who come into contact with care and justice services are treated with trauma-informed and age-appropriate support and will put an end to placing under 18s in Young Offenders’ Institutions.
As part of the Whole Family Wellbeing Programme in 2022-23, £32 million was allocated to local children’s service planning partnerships, to build local service capacity and transform family support services to wrap around the holistic needs of families, and shift investment towards early intervention and prevention. This is a critical part of how we will keep The Promise, by ensuring families can access the support they need, where and when they need it.
We have committed £4 million per year to the Promise Partnership Fund until 2024-25, to help organisations with early intervention and to deliver changes to better support children, young people and families in or on the edges of care. During 2022-23, this supported delivery of two funding rounds: A Good Childhood and Keep the Promise Round 1. A total of 69 applications were funded, from 58 different organisations.

Outcomes: Performance against Key Targets and Indicators

Attainment gap

Between 2020-21 and 2021-22, there was a 3.4 percentage point reduction in the ACEL (Achievement of Curriculum for Excellence Levels) attainment gap among primary school pupils in literacy and a 3.7 percentage point reduction in numeracy. Data for S3 pupils was not collected in 2020-21 and so similar comparisons cannot be made.
The gap in Higher pass rates has also narrowed from the pre-pandemic level, reducing from 16.9 percentage points in 2019 to 16 percentage points in 2023 between the least and most deprived areas.
Among school leavers at SCQF Level 5 or better, the gap was 19.1 percentage points in 2021-22. This is wider than in 2020-21 (18.2 percentage points) but narrower than all other years back to 2009-10. At SCQF Level 6 or better, the gap was 37 percentage points in 2021-22. Again, this was wider than in recent years although it remains narrower than in 2017-18 and all earlier years.

National stretch aims are an aggregation of local authority ambition to reduce the attainment gap in their areas.

Comparison of school leaver attainment between 2020-21 and 2021-22 may be of limited value due to different models of certification in place.

Positive destinations for school leavers

95.7% of 2021-22 school leavers were in a positive destination three months after the end of the school year, higher than the previous year (95.5%).^[42] Nine months after the end of the school year, 93.5% were in a positive destination, again higher than the previous year (93.2%).^[43]
The poverty related gap in positive destinations 9 months after the end of the school year was also at a record low of 7 percentage points among 2021-22 school leavers, lower than the previous year (7.5 percentage points). This gap has narrowed from 18.7 percentage points in 2009-10.^[44]

Access to higher education

Overall, we have seen a 41% increase in the most deprived students entering university since we accepted the recommendations of the Commission on Widening Access in 2016.
In the most recent year for which we have data, 2021-22, 16.5% of Scottish domiciled full- time first-degree entrants were from the 20% most deprived areas in Scotland. This is a slight decrease from 16.7% in 2020-21, but does represent a small increase in numbers (of 80), to 5,595 students from deprived areas.
The small decrease in proportion of entrants from the most deprived areas in 2021-22 is partly due to a large increase in entrants from those in SIMD 20-40 (i.e. the 20-40% most deprived areas). Therefore, combined, in 2021-22 we had record numbers and proportions of higher education entrants from the most deprived 40% of Scotland.
When looking at entrants to both college and university, 19.1% of all Scottish domiciled undergraduate Higher Education entrants were from the most deprived areas in 2021-22.
More timely UCAS data covering 2022 entrants, shows that the number of 18-year-olds securing places at university through UCAS from the most deprived areas had increased by 31% between the 2019 cycle and the 2022 cycle, to a record high. All-age acceptances from the most deprived areas increased by 4% over the same timescale.

A graph showing the proportion of Scottish-domiciled undergraduate higher education entrants from SMID 0-20 areas between 2013-2014 to 2021-2022. — Figure 5: The proportion of Scottish-domiciled undergraduate HE entrants from SIMD 0-20 areas, 2013-14 to 2021- 22^[45].

Children in care and on the child protection register

On 31 July 2022, 12,596 children were looked after – down 5% on 31 July 2021, and 2,031 children were on the Child Protection Register – down 4% on 31 July 2021.^[46]

A graph showing the number of children looked after / on child protection registers, from 2004 to 2022. — Number of children looked after / on child protection register, 2004-2022

Performance overview – Key Successes, Challenges and Forward Look

As of April 2023, almost 120,000 three and four year olds and eligible two year olds were accessing funded early learning and childcare (ELC), of which 84% were accessing the full 1,140 hours, supported by annual investment of around £1 billion. We are working to build a future system of school age childcare and developing a new ELC offer for one- and two- year-olds, starting in this Parliament with those who need it most.

We have progressed work to Keep the Promise and transform how Scotland cares for children, young people and families, delivering on our commitments in the Promise Implementation Plan, including investment through our Whole Family Wellbeing Funding, to ensure families get the right support, in the right place, at the right time.

There is strong evidence that progress on reducing the poverty related attainment gap is being made, and there are signs of recovery from the pandemic, with 2021-22 Achievement of Curriculum for Excellence Levels data showing the biggest single year decrease in the attainment gap in primary numeracy and literacy levels since records began (in 2016-17), with the gaps now more similar to those seen before the pandemic.

The 2022 exam pass rates for National 5s, Highers and Advanced Highers increased to record levels for any exam year since current qualifications were introduced, and the latest figures for 2021-22 show that more school leavers in Scotland are in employment, training or further study 3 months and 9 months after the end of the school year than in the previous year and at any time since the current time series began in 2009-10.

Our education reform programme gathered pace, driven by a National Discussion held over the last year to develop a compelling and consensual vision for Scottish education. This reached 38,000 people and attracted more than 5,400 responses, making it the biggest listening exercise in Scottish education.

We have continued to invest in our colleges and universities and their students to support the development of well-educated, highly skilled people and to secure world-class research and cutting-edge innovation. Scotland has three universities in the latest top 200 according to the Times Higher Education World University Rankings (2023).

The Education and Skills Portfolio has experienced ongoing budget and resource challenges due to the Scottish Government facing wider fiscal constraints. This has led to difficult decisions being made with some portfolio activity being re-prioritised or paused to allow a focus on critical provision, such as universal early learning and childcare, raising educational attainment and free university tuition.

Financial Results

Education and Skills reported an underspend of £56 million for the year ended 31 March 2023 (Budget: £4,004 million, Outturn: £3,948 million). More details are included in the Portfolio Outturn Statement at page 125.

Other Relevant Portfolio Performance Information

Education Scotland Scottish Attainment Challenge: National Summary report December 2022 to March 2023

Education Scotland Scottish Attainment Challenge: National Summary report September 2022 to November 2022

Attainment Scotland Fund - improvement in attainment and health and wellbeing: evaluation report - gov.scot (www.gov.scot)

Evaluation Strategy for the Attainment Scotland Fund 2022 – 2026

Children's Social Work Statistics Scotland: 2021 to 2022 - gov.scot (www.gov.scot)

Finance and Economy

The Finance and Economy portfolio leads on the management of sustainable public finances and is at the heart of the Scottish Government’s determination to build a net zero wellbeing economy. It helps drive and shape our response to, and recovery from, the COVID-19 pandemic by ensuring that we protect and create good quality, green jobs in every region of Scotland and support workers to upskill and reskill so that they can prosper in the economy of the future.

The Finance and Economy portfolio and its funding directly supports delivery of the National Strategy for Economic Transformation’s (NSET) six transformational programmes, alongside funding and support from other portfolios and partners.

Key Priorities and Deliverables

Managing sustainable public finances

In May 2022, we delivered a Resource Spending Review setting out high level resource spending plans over five years from 2023-24, providing a basis for the Scottish Government and partners to plan with more certainty. Alongside this, we delivered the Targeted Review of the Capital Spending Review, updating the spending allocations for 2023-24 to 2025-26 in response to a challenging funding and economic outlook, and confirming an increased commitment to tackle the global climate and nature emergencies.
To respond to the ongoing cost crisis and support those who need most help, whilst also managing the nation’s budget, we delivered an Emergency Budget Review of the 2022- 23 Scottish Budget in October 2022. The 2023-24 Scottish Budget was delivered in December 2022, and in March 2023 we also set the 2023-24 Public Sector Pay Strategy.
The Scottish Government’s strategy for managing the public finances and the medium term economic and fiscal outlook was laid out in the Medium Term Financial Strategy in May 2022.
We delivered tax policy commitments set out in the Scottish Budget 2022-23, continuing to deliver a more progressive tax system and raising revenue to fund Scotland’s essential public services. Both Land and Buildings Transaction Tax and Scottish Landfill Tax outturn in 2022-23 exceeded forecasts, with Revenue Scotland reporting total provisional outturn revenues for the two fully devolved taxes at £956 million (excluding penalties), compared to the £850 million forecast by the Scottish Fiscal Commission in December 2021.^[47]

Continue to drive forward a programme of targeted export support and promotion, implement our Sector Export Plans and attract high quality inward investment; work with public and private sector partners to raise levels of investment across the economy and implement the recommendations from the Investor Panel to attract global capital investment and support delivery of our net zero ambitions.

The First Minister’s Investor Panel is finalising a set of recommendations around how we attract mobile capital investment to the infrastructure needed to support a just transition. The panel has looked at market intelligence, investor environment and priority growth sectors.
In a little over two years since it was established, the Scottish National Investment Bank has committed over £445 million of long-term strategic investment. A further £703 million has been attracted in from other sources, ensuring the Scottish economy has benefitted from over £1.1 billion of support. All investments help achieve the Bank’s missions of supporting Scotland’s transition to net zero, improving places and communities or harnessing innovation. Over the course of the 2022-23 financial year its portfolio has: expanded from 14 to 27 investments; secured the completion of 481 mid-market rental homes; helped support 43 patents; and placed 30% of the total value of investments into 20% of the most deprived communities in Scotland.
Throughout the year we have worked with Scottish Development International to target export support and to deliver our Sector Export Plans for life sciences, technology and renewables. We have also supported the Scottish Chambers of Commerce International Trade Programme. We have also worked with SDI to attract high quality inward investment to Scotland – in 2022-23 more than 8500 jobs were created through inward investment.
A £25 million Low Carbon Manufacturing Challenge Fund (LCMCF) was launched in May 2022 to help Scottish manufacturing companies develop low carbon products, processes or services. This LCMCF is facilitated by Scottish Enterprise as part of the Scottish Government’s initiative, ‘Making Scotland’s Future’, to promote low carbon alternatives in manufacturing.

Digital transformation, supported by the development of common platforms and adoption of cloud-based technology, will support modern, citizen-focused public services, as well as better outcomes for Scotland’s citizens through programmes such as: enabling access to gigabit and superfast broadband via the R100 connectivity programme; helping close the mobile coverage gap through the Scottish 4G Infill Programme; and delivering on NSET objectives via the expansion of CivTech

In August 2022, we announced a £36 million expansion of the Reaching 100% (R100) North and South contracts, which will extend full fibre, gigabit capable broadband to a further 2,637 rural and island properties. Sixteen subsea cables connecting 15 Scottish islands to superfast broadband were delivered in 2022-23 as part of the R100 North contract. As of 30 April 2023, 22,421 premises were connected through the R100 contracts and a further 5,779 were delivered as a result of contractual overspill at no extra cost to the Scottish Government. Over 3,000 properties have also been connected to faster broadband thanks to the R100 Scottish Broadband Voucher Scheme.
Through the Scottish 4G Infill (S4S4GI) programme, we are investing £28.75 million to deliver future-proofed, 4G mobile infrastructure at 5 mobile “notspots”, providing connectivity in rural and island areas. By 31 March 2023, the programme was nearing completion with 48 of the 55 masts built and activated for 4G, 21 of which were delivered during 2022-23.

Ensuring Fair Work, and investment to strengthen our employability offer to parents, as set out in the Tackling Child Poverty Delivery plan, through actions taken over the remainder of the parliament, aiming to support up to 12,000 parents to access and sustain employment and support up to 3,000 parents already in work to increase their earnings

Under the No One Left Behind approach, a total of 17,667 people started to receive support between April 2022 and March 2023; of those, 4,201 (24%) were parents. 11,247 parents started on Fair Start Scotland over the same period. For more information, see Scotland’s Devolved Employment Services, Statistical Summary July 2023^[48].
In December 2022, we published the Fair Work Action Plan and Ethnicity Pay Gap Strategy.
We announced Fair Work conditionality on grants, which came into effect in July 2023 as the default position, so that all grant recipients will be required to pay at least the real Living Wage and provide appropriate channels for effective workers’ voice.
We now have a strengthened approach to conditionality through Fair Work First, which we have already applied to some £4 billion of public funds since 2019 and we have published updated Fair Work First guidance for this new requirement.

Continuing to deliver Ministers’ statutory responsibilities and policies for the operation of the planning system, a package of reforms to transform Scotland’s planning system, and continued investment in our communities and places

Scotland’s fourth National Planning Framework (NPF4) was adopted and published on 13 February 2023. It sets the context for development planning in Scotland, providing a framework for the spatial development of Scotland as a whole, and identifies 18 national developments.

Stimulating entrepreneurship, including embedding entrepreneurship in our education system to help young people realise their ambitions and to give them the opportunity to start and grow businesses in Scotland.

Through a £42 million investment, the Scottish Government established the Techscaler Network, which supports tech founders scale up their businesses by accessing advice and mentorship from industry experts. To date, around 400 founders and businesses have joined the network.
A redesigned online platform and resource pack has been launched to promote enterprise opportunities, and ‘starting your own business’ is now positioned as a positive destination in the Young Persons Guarantee for 16–24 year olds across Scotland.
An independent review into women in entrepreneurship in Scotland: Pathways: A new approach for women in entrepreneurship, was launched in February 2023, making recommendations to address the root causes of female under-participation.

Outcomes: Performance against Key Targets and Indicators

The National Strategy for Economic Transformation (NSET) sets out three broad outcomes for the type of economy we want Scotland to have in ten years’ time:
- Wealthier: with an internationally competitive economy that is founded on entrepreneurship and innovation
- Greener: through delivery of a just transition to a net zero, nature positive economy and rebuilding our natural capital
- Fairer: where work pays for everyone through better wages and fairer work, reducing poverty and improving life chances
The strategy comprises six programmes which will help to deliver this transformation – each tracking their own measures of success. The latest Annual performance against these success measures was set out in the National Strategy for Economic Transformation progress report published in June 2023. Data from that report is set out below.

Table 4: Progress Against NSET Programmes and measures of success

Programme 1 Entrepreneurial people & culture

Early-stage entrepreneurial activity:

Latest: 8.0% (2021)
Previous data point: 6.9% (2020)

3-year survival rates of newly born businesses:

Latest: 59% (2018)
Previous data point: 58.5% (2017)

Number of high growth registered businesses:

Latest: 1,530 (2022)
Previous data point: 2,050 (2021)

Despite a challenging global business environment, the latest data shows an increase in early-stage entrepreneurial activity and modest growth in the three-year business survival rate. While the number of high growth registered businesses has decreased between the latest two data points, it is important to note that there are lags associated with the turnover data used to measure high growth, for example the 2022 data will largely be from 2020 when turnover would have been much lower due to the COVID-19 national lockdowns and other restrictions that impacted trading conditions.

Programme 2 New market opportunities

Level of capital investment (Gross Fixed Capital Formation, GFCF):

Latest: £34.4 billion (2022)
Previous data point: £31.4 billion (2021)

Exports (as a share of GDP):

Latest: 21.0% (2021)
Previous data point: 21.1% (2020)

Number of planned inward investment jobs:

Latest: 8,533 (2022-23)
Previous data point: 7,781 (2021-22)

Capital investment within the Scottish economy rose by 8.7% in 2022 despite the increase in the cost of borrowing from higher interest rates and uncertain economic conditions. The value of annual goods and services exported overseas increased by around 20% in 2022 compared to the previous year, but overall exports as a share of GDP remained at around 21%. Latest data from the Purchasing Managers Index (PMI) survey indicates supply chain disruption has moderated over the year with supplier delivery times continuing to improve. The latest HMRC statistics show that compared to the previous year, Scotland’s international goods exports continue to grow, outperforming the UK when oil and gas are excluded - the value of Scotland’s international goods exports increased by 17.7% in the year ending in March 2023 compared to the previous year, which is greater in percentage terms than the 13.5% increase experienced by the UK. Scottish Enterprise, on behalf of the enterprise agencies (including Highland and Islands Enterprise and South Of Scotland Enterprise) publishes Scottish Development International’s annual inward investment results. The number of planned inward investment jobs reported above are both new and safeguarded jobs that were supported by the enterprise agencies.

Programme 3 Productive businesses and regions

Productivity (GVA per hour worked):

Latest data: £37.92 (Q4 2021)
Previous data point: £36.73 (Q4 2020)

Business R&D spend (£ million):

Latest data: £3,121 million (2021)
Previous data point: £2,927 million (2020)

Proportion of businesses that are innovation active:

Latest data: 39.0% (2018-2020)
Previous data point: 32.2% (2016-2018)

Digital skills in businesses:

Latest data: 21.0% (2021)
Previous data point: 26.0% (2017)

Business confidence weakened slightly in March 2023, however, it remained notably higher than in the second half of 2022, reflecting that while conditions are challenging, there is a greater degree of resilience than previously forecast. The latest data reports a marked improvement in the proportion of businesses that were innovation active in Scotland between 2018-2020. However, Scotland still lags behind the UK, where 44.9% of businesses were innovation active. Business R&D spend increased by 6.6% in 2021, and revisions in the methodology indicate that Scotland performs significantly better than previously estimated. However, further work is underway to test the robustness of these new estimates.

Programme 4 Skilled workforce

Skill shortage vacancy rate:

Latest data: 3% (2020)
Previous data point: 6% (2017)

Percentage of young people (16-19) participating in education, training or employment:

Latest data: 92.4% (2022)
Previous data point: 92.2% (2021)

Percentage of adults (16-64) with low/no qualifications (SCQF Level 4 qualifications or below):

Latest data: 9.1% (2021)
Previous data point: 9.7% (2020)

Proportion of establishments reporting at least one employee whose skills are under-utilised:

Latest data: 33% (2020)
Previous data point: 35% (2017)

Percentage of people in employment aged 16- 64 (excluding full-time students) receiving job related training:

Latest data: 25.5% (2022)
Previous data point: 23.5% (2021)

In some respects, performance of the Scottish labour market remains robust, with near- record low unemployment rates. However, the number of vacancies within the economy are still estimated to be significantly higher than pre-pandemic levels, and recruiters face recruitment difficulties in key sectors of the economy. There is also evidence that the number of people economically inactive due to long-term sickness has risen relative to before the pandemic.

Programme 5 A fairer and more equal society

Percentage of employees aged 18 or over earning the real living wage or higher:

Latest data: 91.0% (2022)
Previous data point: 85.5% (2021)

Employment rate (16-64):

Latest data: 75.3% (Jan 23 – Mar 23)
Previous data point: 75.5% (Jan 22 – Mar 22)

Gender pay gap for full-time employees:

Latest data: 3.7% (2022)
Previous data point: 3.0% (2021)

Employee voice:

Latest data: 35.4% (2022)
Previous data point: 36.4% (2020)

Proportion of employees in contractually secure employment:

Latest data: 94.1% (2022)
Previous data point: 95.0% (2021)

Average pay growth continues to lag behind inflation, reducing the real purchasing power of households. Although inflation has begun to fall, prices are expected to be around 20% higher by the end of 2023 than they were in 2020, meaning that household finances will continue to face significant pressures. In 2022, 91.0 per cent of employees in Scotland were paid at least the real living wage, increasing over the year and continuing the longer-term upward trend seen since 2018 (when it stood at 80.6 per cent). The employment rate remains close to a record high, although the young people’s (16-24) employment rate dropped to 55.8% between July 2022 and June 2023, 2.5 percentage point (pp) lower than the previous year and 3.3 pp lower than pre-pandemic. In 2022, the median gender pay gap for full time employees increased slightly to 3.7 per cent, but it has remained below the gap in the UK (8.3 per cent).

Performance overview – Key Successes, Challenges and Forward Look

In March 2022 we published our National Strategy for Economic Transformation (NSET), setting out bold and ambitious actions to deliver fairer, greener prosperity for all of Scotland’s people and places, and to make our economy more sustainable and resilient in the longer term.

We published the first NSET Annual Progress Report in June 2023^[49], which outlines the significant progress that has been made, including the establishment of our national Techscaler network and progressing the opportunities from our transition to a net zero economy. In addition, we have completed a review setting out a new approach to increase the participation of women in entrepreneurship, announced over £50 million funding through the £500 million Just Transition Fund to support the transition of the North East and Moray towards a low carbon economy, and expanded Productivity Clubs and piloted Digital Productivity Labs.

The first Annual Progress Report also provides a fresh focus on the new actions the Scottish Government will progress to deliver a growing economy that increases wellbeing. This includes the New Deal for Business Group, which will deepen public sector links with business and work towards creating the best environment for business to succeed. Transforming the economy, however, is a long-term endeavour. Over the coming months, work will take place to examine what more can be done to accelerate economic growth. This will build on the priorities set out in the Policy Prospectus and be reflected in updated delivery plans for NSET.

The cost of living crisis and wider economic challenges have had a detrimental effect on several of NSET’s measures of success. Economic indicators such as GDP growth, business activity, consumer sentiment, and the UK public finances have all been weak over the last year, and living standards are expected to have fallen by over 4% between 2021-22 and 2023-24. Although unemployment has remained low, with continued shortages in the labour market, the outlook for the economy remains uncertain, with the risk of inflation becoming more persistent and the full impact of increases in interest rates yet to feed through to household finances.

Fiscal constraints have also led to ongoing budget and resource challenges, resulting in delays in the delivery of a number of NSET actions. To address these challenges, we have identified and prioritised critical actions that are most likely to make an impact on transforming the Scottish economy.

Businesses have also expressed concern with high inflation, supply chain issues, labour shortages and the impact of regulations. In light of these concerns, the First Minister has committed to agreeing a ‘New Deal’ with the private sector. Announcements on the delay of the Deposit Return Scheme (also see page 88) and on alcohol marketing have been well received by business, and a Regulatory Joint Taskforce has been established to consider improvements to Scottish Government regulations.

Financial Results

Finance and Economy reported an underspend of £40 million for the year ended 31 March 2023 (Budget: £1,496 million, Outturn: £1,456 million). More details are included in the Portfolio Outturn Statement at page 123.

Other Relevant Portfolio Performance Information

Scotland's National Strategy for Economic Transformation: Annual Progress Report (www.gov.scot)

The Wellbeing Economy Monitor - December 2022 update (www.gov.scot)

Scotland's Devolved Employment Services: Statistical Summary July 2023 - gov.scot (www.gov.scot)

Labour Market Statistics for 16 to 24 year olds: Scotland and the United Kingdom - July 2022 to June 2023 - gov.scot (www.gov.scot)

Net Zero, Energy and Transport

During 2022-23, the Net Zero, Energy and Transport (NZET) portfolio was charged with achieving a just transition to a net zero carbon emission Scottish economy, in line with the Scottish Government’s updated Climate Change Plan, and for enhancing climate resilience through the Scottish Climate Change Adaptation Programme. The portfolio was also charged with tackling the biodiversity crisis by protecting and enhancing our natural environment and resources, and had responsibility for physical connectivity (transport) and infrastructure. The portfolio aimed to capitalise on significant opportunities to diversify our economy, create good, green jobs, and to be a world leader in a just transition to a net zero, nature-positive Scotland.

Key Priorities and Deliverables

Implementation of the updated Climate Change Plan (CCP) and the Scottish Climate Change Adaptation Programme (SCCAP)

The annual monitoring reports for the CCP and SCCAP were laid in Parliament in May 2022, alongside publication of our response to the Climate Change Committee’s annual progress report. The latest official statistics on greenhouse gas emissions in Scotland were published in June 2022 and showed that Scotland’s statutory annual target for 2020 was met. The Climate Change Plan Advisory Group was established with representation from all political parties, as well as academia, industry and trade unions, to contribute to the development of the next Climate Change Plan, a draft of which is planned to be laid in parliament in 2023-24.
In February 2023, the Scottish Government published the Coastal Change Adaptation Guidance to support the long-term adaptation and resilience of our coastal communities. During 2022-23, £1.6 million was given to coastal local authorities through the general capital grant to allow them to prepare and implement coastal change adaptation plans.
We invested £243.5 million between April 2021 and the end of March 2023 in the Heat in Buildings Strategy, resulting in 8,878 fuel poor households being warmer with easier to heat homes due to the Warmer Homes Scotland programme and Area-Based Schemes. 7,570 homeowners applied for a grant or loan to undertake energy efficiency works, and funds were paid out supporting around 500 installations of energy efficiency measures, 1,250 heating measures, and 1,200 solar installations. 4,400 domestic Zero Direct Emissions Heat (ZDEH) installations were funded this year through our schemes and 652 homes will be connected to the ZDEH heat network because of funding approved in 2023- 24.

Continue to support the energy sector in the North East of Scotland via the Energy Transition Fund; invest alongside energy-intensive manufacturing industries to reduce energy costs and emissions via the Scottish Industrial Energy Transformation Fund; and launch our Hydrogen Innovation Scheme – the first tranche of the Emerging Energy Technologies Fund

The Scottish Government has accelerated the energy transition through the Just Transition Fund, spending £10.9 million on projects in the North East and Moray in 2022-23, supporting skills interventions, innovation and emerging technologies, and empowering local communities. A total of £50 million was awarded in 2022-23 supporting the delivery of 24 projects within a multi-year programme. Grants worth over £7 million from the Hydrogen Innovation Scheme, part of the Emerging Energy Technologies Fund, have been allocated to 32 projects to support research and innovation in hydrogen production, storage and distribution.
Our Scottish Industrial Energy Transformation Fund continues to receive a significant number of applications from a wide range of industrial manufacturing sectors across the country. Over 20 projects have been offered grants totalling £12 million.
Through the Energy Transition Fund, the Energy Transition Zone (ETZ), the Global Underwater Hub (GUH), the Aberdeen Hydrogen Hub (AHH) and the Net Zero Technology Transition Programme (NZTPP) together received £16.25 million in 2022-23, supporting delivery of energy transition innovation and development. Key outcomes this year included:
- ETZ completing the purchase and refurbishment of their floating offshore wind centre;
- GUH engaging with an increased number of international delegations;
- AHH moving towards delivering, ahead of schedule, hydrogen conversion equipment for buses, public sector vehicles and waste trucks;
- NZTTP showcasing a gas turbine run on e-methanol, a world first.

Action to tackle the twin challenges of biodiversity loss and climate change, including scaling-up of activity to meet our annual target of 18,000 hectares of woodland creation by 2024-25; supporting actions to drive Scotland's circular economy; and delivery of our ambitious programme of nature-based solutions, such as peatland restoration

We have continued to invest in our natural environment:
- £41 million, including EU co-finance, was invested in 2022-23 to support increased woodland creation in Scotland to 18,000 hectares per year by 2024-25. A total of 8,190 hectares of new woodland were created in the year ending 31 March 2023.
- A total of £17.9 million was invested across Peatland Action, restoring 7,468 hectares of degraded peatland, a 38% increase on the 5,373 hectares restored in 2021-22.
A total of £13.5 million was invested in addressing biodiversity loss at scale in 2022-23 through the Nature Restoration Fund (NRF), including direct allocation of £6.5 million to fund 44 projects in local authorities and 31 projects in the National Parks, through the NRF Helping Nature^[50] and NRF Transforming Nature^[51] funding streams. A further investment of £2.9 million was spent on conservation, research and connecting people with nature, which included £1.3 million on restoring the Atlantic Rainforest.
There has been continued investment in driving Scotland’s circular economy, including through the Recycling Improvement Fund, which provides capital funding grants for local authorities to improve recycling infrastructure and services across Scotland. In total, 16 local authorities received grant funding in 2022-23, with a value of £9.79 million.

Develop a new National Marine Plan (NMP2)

Our updated National Marine Plan (NMP2) will seek to deliver a streamlined decision- making framework to better address increasing competition for Scotland’s marine space and resources. NMP2 will be a key mechanism through which to address the twin climate and nature crises and ensure progress towards achieving the outcomes of Scotland’s Blue Economy Vision.

Invest in Scotland's transport network, including over £4.2 billion across the Resource Spending Review period (to 2026-27) on our bus, rail and ferry services, as well as investing up to £150 million in resource to support capital expenditure on active travel, as part of a shift of transport funding to walking, wheeling and cycling – supporting our commitment to cut car kilometres by 20 per cent by 2030, and enabling Active Travel funding to reach a combined annual budget of £320 million by 2024-25, in line with the Bute House Agreement

Active Travel:

In 2022-23, £150 million was provided for the Active Travel budget, including the Cycling, Walking, Safer Routes grant of £35 million that goes directly to local authorities on a pro rata basis.
Over £52 million of the capital budget was allocated to the Sustrans Places for Everyone infrastructure programme, which has approximately 200 active travel projects in train nationally.

Decarbonisation:

£485,000 in grant funding for Scottish businesses was allocated through the Can Do Innovation Challenge on Zero Emissions Heavy Duty Vehicles, delivered in partnership with Scottish Enterprise.
Twelve feasibility studies are ongoing, covering full vehicle development of battery electric, hydrogen and retrofit, as well as subsystem developments for hydrogen, energy storage and battery control systems.

Electric Vehicles:

In 2022-23, we launched the Electric Vehicle Infrastructure Fund, aiming to leverage £60 million of public and private funding to double the size of the public charging network to 6,000 charge points by 2026^[52]. In November 2022, the building regulations were updated to ensure that new residential buildings with a parking space have at least one EV charge point. The updated regulations came into effect from June 2023.
We commissioned options appraisal for car demand management as part of our commitment to reduce car kilometres by 20% by 2030, alongside our work to shift to sustainable alternatives. A route map setting out our approach to achieving the 20% reduction in car kilometres will be published later in 2023.

Rail:

In the current five year railway funding period (2019-2024), the Scottish Government has allocated £4.85 billion to maintain and enhance Scotland’s railway, including ongoing electrification and decarbonisation through our Rail Services Decarbonisation Plan. In 2022-23 a total of £980 million Capital funding was provided for Operations, Maintenance, Renewals, Enhancements projects and Fixed Track Access Charges. There was a total of £412 million Resource funding provided, £382 million subsidy to Scottish Rail Holdings and £30m to Serco Caledonian Sleeper Ltd and Cross Border Services.
We brought ScotRail into public control and ownership on 1 April 2022. In the last Transport Focus survey results, published in March 2023, overall satisfaction with ScotRail was at 90%^[53]. This is 5% above the Great Britain average. During 2022-23, ScotRail has successfully settled pay deals with the rail trade unions, which include a revenue share scheme for staff.
We have also made further improvements to our network, with the opening of Inverness Airport station in February 2023 and invested in the electrification of the Barrhead route to continue the decarbonisation of the rail network in Scotland. In 2022-23, around 13,000 trains moved over four million tonnes of goods, saving millions of lorry miles in Scotland. 50% of these trains were electrically hauled.

Ferries:

£283 million was spent on providing support to ferry services in the financial year 2022-23.
We froze fares on the Northern Isles and Clyde & Hebrides networks.
We invested in the ferry system through our deployment of the MV Loch Frisa and by chartering the MV Arrow and the MV Alfred.
We continued to work on planning, assurance, and reporting around the delivery of the delayed hulls 801 and 802, currently under construction at Ferguson Marine (Port Glasgow) Ltd; for more information see Governance Statement, page 93.

Buses:

In 2022-23, we spent over £270 million to provide up to 2.3 million eligible people in Scotland with access to free bus travel.
On 31 January 2022, we launched the Young Persons’ Free Bus Travel Scheme, which provides national free bus travel to those aged under 22. In the scheme’s first year we saw almost 50 million journeys made that were free at the point of access. To 31 March 2023, more than two-thirds of young people had joined and over 56 million journeys had been made.

Roads:

In 2022-23, Transport Scotland invested over £828 million in motorways and trunk roads, on both infrastructure projects and maintaining and operating the trunk road network.
Work progressed on the A83 Access to Argyll and Bute to develop safe and sustainable medium and long-term solutions. The preferred route for the medium-term solution was announced in December 2022.
A number of transport infrastructure projects were completed, including the A92/A96 Haudagain improvement project in Aberdeen, which officially opened on 16 May 2022.
The Scottish Government remains committed to dualling the A9 from Perth to Inverness, and during 2022-23 investment in a range of interim road safety measures took place on the route.
Work continued to introduce and implement Low Emission Zones (LEZs) across Glasgow, Edinburgh, Dundee and Aberdeen. LEZs are a huge public health moment for Scotland, improving air quality by preventing entry of the highest polluting vehicles into city centres.

Outcomes: Performance against Key Targets and Indicators

The monitoring framework for Scotland’s emissions reduction goals includes a high-level measure of progress at a national level, using greenhouse gas emissions statistics to track performance against targets, and a suite of sector-lever indicators reported against annually in our monitoring and evaluation report. The most recent performance against these measures is set out below.

1. Performance against Greenhouse Gas Emissions targets

The Climate Change (Emissions Reduction Targets) (Scotland) Act 2019 implements the Climate Change Committee (CCC)’s recommended method of reporting emissions for the purposes of assessing progress against targets. This method acts to remove the impact of technical data revisions to the historical time-series and is known as the Greenhouse Gas (GHG) Account. Further detail can be found in the latest statistics release^[54]. On this adjusted basis, the GHG Account reduced by 49.9 per cent between the baseline period^[55] and 2021. The Climate Change (Emissions Reduction Targets) (Scotland) Act 2019 specifies a target reduction of 51.1 per cent over this period. Therefore, the interim target for 2021 was not met.

2. Sector-level Indicators

The Climate Change Plan includes key policy outcomes for each sector, defined as a measurable change on the ground resulting from a policy or combination of related policies. A set of indicators has been developed to monitor long-term progress towards these outcomes, and specific milestones (or targets) are set, where appropriate, for the level to be achieved at a given time. A summary of the indicators is provided below, and more detail can be found in the latest report^[56].

Table 5: Progress Against Climate Change Plan Policy Outcome Indicators
Progress against outcome indicators		On Track	Too Early to Say	Off Track
Electricity	Electricity grid intensity (CO2e per kilowatt hour)	X
	Installed capacity of renewable generation (GW)	X
	Renewable capacity at planning stages (GW: 3 categories)	X
	Loss of Load Expectation (hours per year)	X
Buildings	% new homes built with a calculated space heating demand of not more than 20 kWh/m2/year	X
	Number of existing domestic properties using low and zero direct emissions heating (LZDEH) systems		X
	Services sector fossil fuel heat consumption		X
	% of non-electrical heat consumption met from renewable sources		X
	% of homes with an Energy Performance Certificate (Energy Efficiency Rating, or equivalent) of at least C		X
	% of households in fuel poverty^[57]		X
	Energy intensity of residential buildings (MWh per household)^[58]			X
	Emissions intensity of non-domestic buildings (tCO2e per £ million Gross Value Added)^[59]			X
Transport	% reduction in car kms	X
	% of new bus registrations that are ULEV (Ultra Low Emission Vehicles)	X
	% of new car registrations that are ULEV	X
	% of new van registrations that are ULEV	X
	% of single track kms electrified	X
	% of ferries that are low emissions	X
	% of new HGV registrations that are ULEV		X
	% of train kms powered by alternative traction		X
	% reduction in emissions from scheduled flights		X
Industry	% of Scottish gas demand accounted for by biomethane and hydrogen blended into the gas network		X
	Industrial energy productivity (£GVAm per GWh)^[60]			X
	Industrial emissions intensity (tCO2e per £GVAm)^[61]			X
Waste and the Circular Economy	Total waste generated (tonnes)	X
	Total amount of biodegradable landfilled waste (tonnes)	X
	Number of closed landfill sites with exploratory landfill gas capture/ flaring^[62]			X
	Household and non-household food waste reduced (tonnes)^[63]			X
	Landfilled waste^[64]			X
	The Waste Route Map seeks to address the reduction of landfilled waste
Land Use, Land-Use Change and Forestry	Woodland Carbon Code	X
	Peatland Carbon Code	X
	Woodland ecological condition		X
	Area of peatland restored^[65]			X
	Hectares of woodland created per year as part of Climate Change Plan^[66]			X
	Peatland restoration is a relatively new industry and there are a number of complex challenges - work is being progressed to build capacity at pace. Woodland creation levels have been consistently just over 10,000 hectares a year between 2019- 2022, but recently dipped. The sector is facing constraints on pushing higher to achieve the 18,000 per year target.
Agriculture	Increased engagement with Farm Advisory Services on environmental issues and climate change	X
	Use of nitrogen fertilisers	X
	Spreading precision for nitrogen fertilisers	X
	Time taken from birth to slaughter and increased efficiency through improved health and reduced losses	X
	Improvement in covered slurry storage	X
	Area of woodland on agricultural land	X
	Nitrogen use efficiency for crop production		X
	Precision application of manure and slurry		X

Performance overview – Key Successes, Challenges and Forward Look

In 2022-23 we have continued to address the climate and biodiversity crises by delivering funding to projects protecting Scotland’s natural environment so that the people of Scotland continue to benefit from access to nature. There has also been significant work taken forward to continue the transition from using fossil fuels for heating and transport in order to reduce greenhouse gas emissions, while encouraging active travel for its climate and health benefits. We have continued to provide significant support for transport operations, including bringing ScotRail services into public control and ownership.

Our new Climate Change Plan will extend Scotland’s emissions reduction pathway, identifying the costs and benefits of the policies required to achieve this and how they will build resilience to the impacts of climate change. A significant step will be our consultation on the Heat in Buildings Bill, which will enable regulations designed to support the transition of heating in Scotland’s homes and other properties to zero direct emissions by 2045.

Our biodiversity strategy and delivery plan will identify the steps we will take to halt biodiversity loss and reverse species declines, as well as protecting 30% of our land and seas for nature by 2030.

Substantial progress was made in detailed planning and practical preparation for a Deposit Return Scheme (DRS) in Scotland, the first such scheme in the UK. Rollout of the scheme was subsequently delayed due to the UK Government granting only a temporary, partial exclusion from the UK internal market which terminally compromised the planned scheme to be delivered by Circularity Scotland Ltd on behalf of drinks producers. The Scottish Government is now working with other governments across the UK to explore how a consensus can be built for interoperable schemes that could be rolled out in 2025 at the earliest.

We will continue to make public transport more accessible, available and affordable through our Fair Fares review and piloting the removal of peak time rail fares in October 2023. We have published our vision for Scotland’s public EV Charging Network and will consider the potential introduction of a zero-emission mandate for cars and vans. We will continue to progress the delivery of six major ferry vessels, the dualling of the A9, and the phased improvements to the A83 and the ‘Rest and Be Thankful Old Military Road’.

Looking ahead, the key challenges facing Scotland are achieving our ambitious climate change targets and continuing to tackle biodiversity loss. While the longer-term trend shows Scottish emissions are down dramatically from the 1990 baseline by 49.9%, we are only halfway on our journey to net zero, with emissions needing to halve again by 2030. Scotland’s 2021 greenhouse gas emissions reduction target of 51.1% was narrowly missed – although the recent data does not yet capture the next steps in our updated Climate Change Plan, finalised in March 2021. In 2023-24 the focus will continue to be on managing the heat transition across Scotland’s buildings and addressing the future of public transport to ensure it is an attractive and affordable alternative to car use.

Financial Results

Net Zero, Energy and Transport reported an underspend of £110 million for the year ended 31 March 2023 (Budget: £4,141 million, Outturn: £4,031 million). More details are included in the Portfolio Outturn Statement at page 127.

Other Relevant Portfolio Performance Information

Scottish Greenhouse Gas Statistics 2021 - gov.scot (www.gov.scot)

Climate change monitoring report 2023 - gov.scot (www.gov.scot)

Rural Affairs and Islands

Rural Affairs and Islands is a diverse portfolio which includes farming and food production, animal health and welfare, rural and island communities, food and drink, crofting, fisheries and aquaculture. The reach of the portfolio is broad, and it is vital to supporting the Scottish Government’s overarching ambition to tackle the twin crises of climate change and biodiversity loss.

Key Priorities and Deliverables

Investing in the transformation of agriculture and farming, to ensure we support and prepare a thriving sector that will fully contribute to our net zero and environmental ambitions

In 2022-23, we consulted on a Bill, which has now been introduced in September 2023 to replace the current EU Common Agricultural Policy framework for agriculture and land use support. In February 2023 we published the Agricultural Reform Route Map, which sets out what changes recipients of current farm payments will be expected to make from 2025, as well as setting out the process for changing to a new agricultural support framework from 2026.

Delivering economic recovery and resilience in our rural, coastal and island communities, including rural businesses, the third sector and food and drink industries, alongside fisheries, farming and crofting

The Islands Programme invested £4.45 million of capital funding to support all six island local authorities to fund the improvement, creation or safeguarding of locally developed infrastructure projects that align with the strategic objectives of the National Islands Plan. This funding was spread across 31 islands, and included projects directly supporting population retention and growth; new facilities to deliver services helping to alleviate child poverty; innovative circular economy solutions; measures to address climate change impacts; development of digital and community hubs; management of tourism impacts; iconic heritage projects; and support for key local services.
The Carbon Neutral Islands project provided £820,000 to six islands to carry out carbon audits and develop Community Climate Change Action Plans. We also provided £11.6 million through the Community Led Local Development Fund in 2022-23 to support over 400 community led projects, strengthening the resilience and sustainability of grassroots rural community groups and businesses. This included over 120 projects directly or indirectly addressing child and fuel poverty.

Delivery of a strategic approach to the management of our marine resource which supports ecosystem health, improved livelihoods, economic prosperity, social inclusion and wellbeing

The Blue Economy Vision was published in March 2022, aiming to support ecosystem health, improved livelihoods, economic prosperity, social inclusion and wellbeing.
In November 2022 we published Delivering Scotland’s Blue Economy Approach,^[67] setting out the first phase of delivery towards the Blue Economy Vision and providing a clear picture of where we are now in relation to blue economy outcomes. One of the early priorities of this approach will be to deliver blue economy outcomes through the development of the National Marine Plan (NMP2).

Performance overview – Key Successes, Challenges and Forward Look

In 2022-23, farmers faced a range of increasing costs, including animal feed, fertiliser, and general increased costs facing all businesses. In response, we accelerated our annual payments of around £420 million, making them in September 2022.

Our Agricultural Reform Programme will ensure future support payments are linked to the contribution farmers and crofters make in delivering our climate and nature objectives. Our Agricultural Reform Route Map, published in February 2023 and updated in June, sets out key dates, expectations and support that will be available for farmers and crofters to prepare for implementing change.

We successfully negotiated fishing opportunities for the Scottish fleet, working closely with coastal state partners across six key multi and bilateral forums to deliver opportunities worth more than £400 million to Scotland in 2022. We achieved bilateral agreements with the EU, and new arrangements with Norway and the Faroe Islands, giving Scottish fishermen access to those fishing grounds.

We have launched the Joint Fisheries Statement, which sets out how fish stocks can be sustainably managed whilst respecting the devolution settlement. We also published the Implementation Plan for our Wild Salmon Strategy to restore Scotland’s iconic wild salmon populations and support the rural economy depending on it. This establishes the role and remit of the Delivery Group which will oversee delivery of the actions.

In 2023-24, we will continue to be a responsible custodian of the land and sea, respecting and nurturing the ecosystem that forms our foundation – protecting it for future generations. We will do this through job creation, tackling rural inequalities, strengthening food production and food security, and supporting repopulation and green skills development in our rural communities – building on our Vision for Agriculture and Vision for Sustainable Aquaculture. We will continue to focus on addressing the key challenge of climate change mitigation and adaptation – strengthening our resilience to extreme weather patterns.

Financial Results

Rural Affairs and Islands reported an underspend of £3 million for the year ended 31 March 2023 (Budget: £898 million, Outturn: £895 million). More details are included in the Portfolio Outturn Statement at page 129.

Constitution, External Affairs and Culture

This portfolio engages at home and internationally to enhance Scotland’s reputation and increase its economic success, prosperity, culture and wellbeing. It is also responsible for promoting Scotland as a great place to live, visit, work, study and do business, and to protect and develop the responsibilities and powers of the Scottish Parliament and Government.

Key Outcomes and Deliverables

Give the people of Scotland the information they need to make an informed choice on Scotland’s constitutional future

A series of papers, titled ‘Building a New Scotland’, has been published that together form a prospectus for an independent Scotland, so that the people of Scotland have the information they need to make an informed choice about Scotland’s future. These include:
- Independence in the modern world. Wealthier, happier, fairer: why not Scotland (June 22)
- Renewing democracy through independence (July 22)
- Building a New Scotland: A stronger economy with independence (October 22)

Increase our International Development Fund, to make a real difference to some of the world's poorest people

We have increased our International Development Fund from £10 million to £11.5 million from April 2022, in line with our commitment to increase our International Development Fund to £15 million. That fund supports development work in our partner countries – Malawi, Zambia, Rwanda and Pakistan, in pursuit of the UN Global Goals. Through that fund, during 2022-23 we provided:
- £4.5 million in support of partner-led programmes in our African partner countries on health, education, renewable energy, civic governance and sustainable economic development through our Malawi, Zambia and Rwanda Development Programmes; and on women’s leadership through Sport for Development, our match-funded collaboration with Comic Relief.
- £1.4 million to support equitable access to vaccines and therapeutics in our three African partner countries, in line with our commitments on vaccine equity.
- £900,000 for our Scotland Pakistan Scholarships through the Young Women and Girls Programme.
- £898,724 to support global citizenship in Scotland, primarily through our core funding to international development networking organisations, such as Scotland’s International Development Alliance, the Scotland Malawi Partnership and the Scottish Fair Trade Forum, as well as contributing to support for Scotland’s Development Education Centres.
Through our £1 million per annum Humanitarian Emergency Fund, during 2022-23, we provided:
- £375,000 to the British Red Cross for the purchase and repair of diesel generators to support families and essential facilities.
- £375,000 to the Scottish Catholic International Aid Fund to deliver support including fuel for households, heaters and blankets and home repairs.
- £250,000 to Christian Aid to focus on damaged housing repairs, improving food and nutrition, and reconstruction or repair of water wells.
- £160,724 to The HALO Trust, a Scottish-based charity specialising in removing landmines and other dangerous explosive devices, helping build capability to continue this work. As of 28 February 2023, 169,531 square meters of land were assessed, and clearance and survey teams identified 60 explosive items and handed them over to state authorities for disposal. The manual clearance team funded through the project released 8,497 square meters of land, directly benefitting 372 and indirectly benefiting 13,636 individuals

Support the establishment of a Scottish Council for Global Affairs which will coordinate Scottish expertise and research on global issues and their impact on Scotland

As a result of an investment of £120,295 the Scottish Council on Global Affairs was successfully established and developed a wide range of activities to meet its ultimate goal of being an independent, non-partisan research institute that fosters public debate in Scotland on international affairs and harnesses relevant expertise across a range of Scottish universities.

Expand our network of international offices, increasing opportunities for policy exchange and enhancing Scotland's economic and cultural visibility

We have expanded our network of international offices by opening a Scottish Government Office in Copenhagen in summer 2022, which has established itself as an effective promoter of Scotland’s interests in the Nordic countries.

Support Scotland's culture and historic environment

We have invested £277 million in Scotland’s culture and historic environment to ensure our diverse and world-class cultural scene and rich heritage continue to thrive against the backdrop of the impacts of the COVID-19 pandemic and public spending constraints.
As part of this investment, Historic Environment Scotland are continuing to protect and care for our heritage and communities through a £13.7 million uplift in funding.

Invest in Creative Scotland and our world class museums, collections and national performing companies

Free access to the permanent collections of the National Galleries of Scotland, National Libraries of Scotland and National Museums Scotland has been maintained through £90 million invested in cultural collections. The creative industries and creative economy are being supported through £64.4 million of investment.
Our unique culture is continuing to reach a wide audience, both digitally and through live performances, with a £22.7 million investment in the five National Performing Companies. We have also continued to support Scotland’s Regularly Funded Organisations, including providing £6.6 million funding in 2022-23 to enable Creative Scotland to maintain support for the Regular Funding programme in the face of decline in National Lottery receipts.

Invest in major events, recognising the economic and broader policy benefits they can bring

We have invested over £16 million in Major Events and Themed Years. This included £9 million to enable Scotland to host the first ever Cycling World Championships in 2023, the biggest cycling event ever, which welcomed almost 8,000 elite and amateur cyclists from over 130 countries. The preliminary estimated spectator numbers reached 1 million, and 4,000 volunteers supported in key roles across every venue.

Performance overview – Key Successes, Challenges and Forward Look

Promoting Scotland internationally is important in realising our commitment to be a good global citizen and play our part in tackling global challenges. The Scottish Government Office in Copenhagen is a new base connecting Scotland’s interests with the Nordic countries and supporting our international and European relationships. We have made good progress under our Arctic Connections strategy, including by implementing a further round of funding under our Arctic Connections fund, encouraging links between Scottish stakeholders and Arctic partners.

The Scottish Council on Global Affairs has successfully contributed to a range of important international affairs debates through in-depth research on issues such as security in the high north, the war in Ukraine and feminist foreign policy. We have taken steps to ensure that we remain closely aligned to the laws and standards of the European Union, an objective made increasingly challenging as a result of the UK's Retained EU Law Bill. We have also increased our International Development Fund to continue to support development work in our partner countries – Malawi, Zambia, Rwanda and Pakistan – in pursuit of the UN Global Goals and to support some of the world’s poorest people.

We are working to ensure Scotland is able to attract the right talent to support our communities, economy and environment. Our Talent Attraction and Migration service is supporting both people and employers to navigate the complex UK immigration system. We have designed Scotland’s Rural Visa Pilot proposal, with support from a wide range of local authority, community and business sector stakeholders, though challenges remain around securing UK Government agreement to proceed with delivering the scheme. In the interim, we continue to scope options available to us around rural attraction schemes, within devolved competency.

We have continued to deliver the aims of the Culture Strategy to nurture, value and protect culture across Scotland and ensure that its transformative potential can be experienced by everyone. One challenge is the continued impacts from COVID-19 and public spending constraints in the culture sector. Despite this, we have continued to provide investment to protect Scotland’s culture and historic environment to ensure our diverse and world-class cultural scene and rich heritage continued to thrive. The principles of the Culture Strategy remain relevant, but we understand the significant continued impacts of the COVID-19 pandemic, EU Exit and the ongoing cost of living crisis on the culture sector. Therefore, we are refreshing the Action Plan which supports the Culture Strategy and will publish this later in 2023.

This year, Scottish Government also supported those wishing to pay respects to Her Late Majesty Queen Elizabeth through the ceremonial events programme in Scotland known as Operation Unicorn. The cost to the Scottish Government to deliver Operation Unicorn in Scotland was £1.655 million, which was recovered in full from HM Treasury. Around 33,000 people filed past Her Late Majesty Queen Elizabeth’s coffin, lying at rest in St Giles’ Cathedral in Edinburgh, to pay their respects.

Financial Results

Constitution, External Affairs and Culture reported an underspend of £4 million for the year ended 31 March 2023 (Budget: £271 million, Outturn: £267 million). More details are included in the Portfolio Outturn Statement at page 131.

Deputy First Minister (DFM) & Covid Recovery

This portfolio supports the delivery of the Covid Recovery Strategy and contributes to strategic oversight and co-ordination of Covid recovery activity across the Scottish Government. It co- ordinates the development and implementation of Scottish Government’s policy on Freedom of Information; relations with the other three governments in the UK; Scottish Parliament and local government elections; Cabinet business; and the government’s legislative programme.

The portfolio supports more resilient communities and works to build resilience by improving Scotland’s understanding and preparedness against a range of hazards and threats. It also includes work on winter preparedness, assessment and co-ordination of concurrent risk across the Scottish Government and integrated monitoring and reporting arrangements for delivery of key government priorities. It also supports the delivery of Scotland’s National Performance Framework, and promotes public sector reform and leadership development.

Key Priorities and Deliverables

Transformation of public services, including those delivered by Scottish Government, through the Christie Commission Principles

During this period, we continued to promote the collective ambitions of the Covid Recovery Strategy to deliver ongoing and ambitious public service reform and to ensure public services are outcome-focused and person-centred in design and delivery. The Covid Recovery Strategy Programme Board^[68] met from December 2021 to June 2023 and was co-chaired by the DFM and COSLA President.
This commitment to partnership working has been further strengthened through the Verity House Agreement, signed in June 2023. Work was also progressed alongside partners to identify and reduce barriers to progress (such as data sharing and funding flexibility).
A ten-year programme of public service reform was initiated, focused on ensuring Scotland’s public services are sustainable and continue to improve outcomes and reduce inequalities. We are working closely with public bodies to consider all opportunities to reduce cost and direct collective resources towards shared priorities. We are also working to review and reform structures that support local governance and community planning.
We collaborated with partners in Glasgow to deliver a pathfinder project focused on integrating child poverty interventions and bringing services together. Over 1,500 people have been supported directly as a result. Work is underway to evaluate the pathfinder and identify opportunities to scale the approach.

Move to further transparency through the Open Government Action Plan

The third Scottish Open Government Action plan will progress transparency through commitments on fiscal transparency and open data.
In 2022, the ‘Your Scotland Your Finances’ publication was reviewed to update and improve its accessibility. The publication has been transformed to a plain text web page, produced alongside the Scottish Budget and updated on conclusion of the Budget Bill.

Support for public service leaders to drive innovation and focus on outcomes

The Scottish Government supported and promoted a common purpose and focus on outcomes amongst public sector leaders through the Scottish Leaders Forum (SLF) and delivered an annual SLF conference in October 2022.

We delivered two initial cohorts of the pilot Scottish Leadership Academy which tested a new approach to collaborative and values-based leadership, as well as four Action Learning Sets facilitated by external partners.

The establishment and operation of, and preparation for, public inquiries into the handling of the COVID-19 pandemic

We supported the establishment and operation of the Scottish COVID-19 Inquiry and also undertook work to provide information from the Scottish Government to allow the Scottish inquiry, and the parallel UK public inquiry, to take forward their investigations, provide scrutiny and answers to the questions people have about the handling of the pandemic, and deliver lessons for the future.
Expenditure for this work in 2022-23 includes £3.6 million for staff costs associated with the establishment of and preparation for the Scottish inquiry, as well as preparation for the UK inquiry, and £1.9 million provision for the operational costs of the Scottish inquiry.

Delivery of Scottish Parliament and Local Government elections, ensuring that elections in Scotland are held safely and securely with a high level of public confidence in the process and outcome

The eCounting Project was successfully delivered with partners for the Local Government elections held in May 2022, which saw counts in all 32 local authorities completed within target timescales.
During these Local Government elections, we also conducted candidate diversity surveys in conjunction with a number of electoral stakeholders, including the Electoral Commission, the Electoral Management Board for Scotland, COSLA and the Improvement Service.
A prototype of a tactile ballot paper aimed at helping people with sight loss to vote unaided was developed and underwent initial usability tests with service users.

Ensuring more resilient communities and building Scotland's resilience by improving understanding of, and preparedness for, a range of hazards and threats, through multi- agency planning, strengthening national work on risk and prevention, and working with partners to build and deliver capacity

We have contributed to the development of the UK Government’s National Security Risk Assessment that details the most serious civil contingencies risks facing the UK, and subsequent briefing across SG and external resilience partners to support resilience planning.
During this period, development work was also underway for the third iteration of the Scottish Risk Assessment (released in May 2023) which supplements the UK Government’s National Security Risk Assessment by providing Scotland-focused context for risks which would affect Scotland differently to other parts of the UK were they to occur.

Deliver a statutory financial redress scheme for survivors of historic child abuse in care

Scotland’s Redress Scheme was successfully launched in December 2021. During 2022- 23, we received 1,239 applications in total to the scheme and made redress payments of over £23 million. An additional 11 case workers were in place during this period, to provide support for survivors in applying and preparing applications for the redress scheme.

Performance overview – Key Successes, Challenges and Forward Look

Successful collaboration between the Scottish Government, Local Government and other partners has supported effective delivery of the shared ambitions of the Covid Recovery Strategy. This approach to partnership working has been further strengthened through the Verity House Agreement. Over 2023-24, we will continue to work closely with partners as we develop and deliver an ambitious ten-year programme of public service reform, which will ensure that Scotland’s public services are sustainable and that people and communities can get the holistic support they need, where and when they need it.

In 2022-23 we continued our work on Scotland’s Redress Scheme, encouraging ongoing feedback from individual survivors and survivor groups, and increased engagement and activity through our Survivor Forum. We will continue to build on the progress made during the scheme’s first year of operation and strive to raise awareness of the scheme so that those who are eligible to apply are able to do so should they wish. Looking forward, the main challenges for the scheme are to ensure that it is adequately resourced and managed effectively and efficiently in accordance with legislation and guidance.

32 electronic counts of the votes at Local Government elections were successfully delivered in partnership with the Electoral Management Board and Returning Officers responsible for the counts. Work has already begun on the eCounting Project for the Local Government elections which will be held in May 2027, drawing on lessons learned. We are continuing to work to improve the accessibility of elections with the ongoing testing of tactile ballot papers, particularly focusing on voters with sight loss. Other innovations are also under consideration to assist voters wherever they encounter barriers.

Financial Results

Deputy First Minister and Covid Recovery reported an underspend of £5 million for the year ended 31 March 2023 (Budget: £45 million, Outturn: £40 million). More details are included in the Portfolio Outturn Statement at page 130.

Other Relevant Portfolio Performance Information

Freedom of Information (FOI) reporting - gov.scot (www.gov.scot)

Crown Office and Procurator Fiscal Service

The Crown Office and Procurator Fiscal Service (COPFS) is the public prosecution authority in Scotland, prosecuting cases independently, fairly, and effectively in the public interest. It is also responsible for investigating sudden, unexplained and suspicious deaths, and allegations of criminal conduct by police officers. Its purpose is to secure justice for the people of Scotland in respect of the investigation and prosecution of crime and the investigation of deaths, ensuring that those responsible are identified and held accountable and that appropriate lessons are learned with a view to reducing the incidence of avoidable deaths. The Lord Advocate has Ministerial responsibility for the work of the COPFS. Her position as head of the systems of criminal prosecution and investigation of deaths is enshrined in the Scotland Act 1998 and she exercises that responsibility independently of any other person.

Key Priorities and Deliverables

Delivering the Scottish Government’s Strategy for Justice in Scotland, in particular its priorities of reducing crime, particularly violent and serious organised crime, tackling hate crime and sectarianism, supporting victims and witnesses, and increasing public confidence and reducing fear of crime

Throughout 2022-23, we worked with our justice partners to outline and implement plans to reduce the backlog in the justice system and trial delay periods as a result of the COVID-19 pandemic.
Additional summary trial courts established during 2022-23, as part of the post pandemic recovery programme, saw a 34% reduction in the number of outstanding scheduled summary trials in the sheriff courts. Outstanding trials in the Justice of the Peace courts are now close to pre-pandemic levels.
In 2022-23, COPFS received 14,147 death reports, a slight decrease from the 15,377 received in 2021-22, but still a significant increase (almost 50%) over pre-pandemic levels. As of April 2023, 5,985 COVID-19 deaths have been reported to COPFS for investigation since the pandemic started.^[69] We set up a dedicated COVID-19 Deaths Investigation Team during the year to develop expertise and focus on COVID-19 death investigations. It is anticipated that it will take a further two years to complete these investigations.
Improvements to our operations during 2022-23 include:
- improvements to our Digital Workplace solutions to further equip our people to work productively and collaboratively from the office, home or from any secure connected location, supporting our Future Ways of Working;
- working with our partners to launch the Digital Evidence Sharing Capability (DESC) pilot in Dundee in January 2023;
- implementing a new Human Resources digital system and further corporate applications to replace manual and paper-based processes; and
- completing a new Strategic Plan to be implemented in April 2023.

Performance overview – Key Successes, Challenges and Forward Look

The public interest is at the heart of everything COPFS does, and COPFS promotes this through the independence and rigour of decision making, investigations and conduct of cases in court.

The complexity and profile of casework which the service deals with has changed significantly in recent years. While overall criminal reports received are falling over time, the number of serious and complex crimes being reported is continuing to increase, a trend which was evident before the pandemic. Complex cases require longer investigations and court hearings. Gathering and analysis of digital evidence is more time-consuming and the service increasingly relies on the evidence of expert witnesses to interpret technical, scientific and medical issues. The impact of the pandemic and associated restrictions, including court closures, has also resulted in a backlog of cases across the criminal justice system which has had significant impacts on workload, including extended support to victims and witnesses throughout their wait for a delayed trial. Over the last 24 months, there has also been a 50% increase in the number of death reports received.

The key achievements for COPFS over 2022-23 were:

delivering casework reform and improvement programmes, resolving more cases at an earlier stage by providing advanced disclosure of key evidence where possible;
expanding Case Management in Court applications to enable digital case files in court for Sherriff and Jury cases;
enhancing digital systems resiliency and support capabilities;
undertaking a comprehensive review of victim information and advice services to deliver improved services to victims, witnesses and nearest relatives;
implementing new working arrangements for staff to make COPFS more effective and bring wellbeing, organisational efficiency and carbon reduction benefits; and
implementing a new COPFS website to improve access to information and services online and further digital applications to improve business efficiency by replacing manual and paper-based processes.

The new Strategic Plan for 2023-27, developed in consultation with stakeholders and staff in 2022-23, provides more detail and context on the work of COPFS.

Financial Results

The Crown Office and Procurator Fiscal Service reported an underspend of £4 million for the year ended 31 March 2023 (Budget: £195 million, Outturn: £191 million). More details are included in the Portfolio Outturn Statement at page 132.

Other Relevant Portfolio Performance Information

Strategic Plan 2023-27 | COPFS

Annual Accounts Publications | COPFS

Sustainability and Environmental Reporting

The Scottish Government recognises that it has a responsibility to achieve the best results in terms of meeting sustainability criteria, and has set ambitious targets for improving the environmental performance of our estate.

The Scottish Government has developed guidance for central government and the wider public sector on the preparation of sustainability reports to complement Annual Reports and Accounts. The guidance is intended to form a key element of a sustainability reporting framework for the Scottish public sector (referred to as the Scottish Sustainability Reporting Framework). The Framework aims to inform best-practice across the public sector and demonstrate a coherent approach which meets statutory and non-statutory sustainability reporting requirements in the most cost effective and least burdensome manner to help drive improvements in sustainability performance.

The guidance relates specifically to information to be included in Scottish Public Sector Sustainability Reports ^[70] intended to complement Annual Reports and Accounts and expected to be consistent with the reporting requirements flowing from the Climate Change (Scotland) Act 2009 and the principles for sustainability reporting contained in HM Treasury guidance.

John-Paul Marks

Principal Accountable Officer

31 October 2023

Contact

Email: angela.flynn@gov.scot

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Information

Performance Report

Introduction

About the Scottish Government

Scottish Cabinet Ministers and their responsibilities

Law Officers during 2022-23

The Civil Service and Government Officials

Scottish Government Senior Management Team (Corporate Board)

Register of Interests

Staff:

Non-Executive Directors:

Performance Overview

Financial Performance: Outturn against Budget

How the Scottish Budget is funded

Accounting Boundary

Finance and Economy Portfolio

Health and Social Care Portfolio

Education and Skills Portfolio

Justice and Veterans Portfolio

Social Justice, Housing and Local Government Portfolio

Net Zero, Environment and Transport Portfolio

Rural Affairs and Islands Portfolio

Constitution, External Affairs and Culture Portfolio

Deputy First Minister and Covid Recovery

Statement of Financial Position

Assets and liabilities

Burntisland Fabrications Limited (BiFab)

Ferguson Marine (Port Glasgow) Limited (FPMG)

Lochaber Aluminium Smelter

Reinforced Autoclaved Aerated Concrete (RAAC)

Pensions

Borrowing

Capital Borrowing

Resource Borrowing

Payment Policy

The Budget Framework

The Scottish Government’s Purpose

The Programme for Government

Managing risks

In the Service of Scotland – our vision for the Scottish Government

Scottish Government Performance against Outcomes

National Performance Framework

Table 1: National Performance Framework: National Outcomes

Performance against the National Outcomes

Table 2: National Indicators performance as at July 2023

Children & Young People

Communities

Culture

Economy

Education

Environment

Fair work & Business

Health

Human Rights

International

Poverty

Scottish Government performance against strategic priorities

Overview of performance in 2022-23

Supporting children and young people and reducing child poverty (Children & Young People, Poverty)

Affordable homes (Communities, Poverty)

Tackling the twin challenges of biodiversity loss and climate change (Environment, Economy)

Free bus travel (Children and Young People, Poverty, Environment)

Building a strong and resilient economy (Economy, International, Fair work & Business)

Public service recovery: Health and social care (Health)

Public service recovery: Education (Education, Poverty)

Public service recovery: Justice (Human Rights)

Support for Ukrainians (International)

Performance Analysis

Performance Analysis by Portfolio

Social Justice, Housing and Local Government

Key Priorities and Deliverables

Outcomes: Performance against Key Targets and Indicators

Performance overview – Key Successes, Challenges and Forward Look

Financial Results

Other Relevant Portfolio Performance Information

Health and Social Care

Key Priorities and Deliverables

Outcomes: Performance against Key Targets and Indicators

Table 3: Progress against targets to reduce waiting times for NHS treatment introduced in 2022

Performance overview – Key Successes, Challenges and Forward Look