The Scottish Government Consolidated Accounts for the year ended 31 March 2024

Accountability Report

Corporate Governance Report

The Directors General Report

Information about the Scottish Government, the Scottish Cabinet Ministers and their responsibilities and the Scottish Government Senior Management Team, including the Permanent Secretary is provided within the Introduction to these accounts, along with the Register of Interests of the members of the Corporate Board of company directorships and other significant interests held.

The governance structure as presented in Figure 1 (below) outlines the current structure.

Statement of Principal Accountable Officer’s Responsibilities

In accordance with the accounts direction (reproduced on page 172) issued under Section 19(4) of the Public Finance and Accountability (Scotland) Act 2000 the Scottish Ministers are required to prepare resource accounts for each financial year in the form and on the basis set out in the Government Financial Reporting Manual, detailing the resources acquired, held, or disposed of during the year and the use of resources by the Scottish Ministers during the year.

The resource accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of the Scottish Government, the net resource outturn, resources applied to objectives, recognised gains and losses and cash flows for the financial year.

The Permanent Secretary is the most senior member of the staff of the Scottish Administration and as the Principal Accountable Officer is the Accountable Officer responsible for preparing the accounts and submitting them to the Auditor General for Scotland.

In preparing the accounts the Principal Accountable Officer was required to comply with the Government Financial Reporting Manual (FReM) and in particular to:

• observe the accounts direction including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis;
• make judgements and estimates on a reasonable basis;
• state whether applicable accounting standards as set out in the FReM have been followed and disclose and explain any material departures in the accounts; and
• prepare the accounts on a going concern basis.

The Principal Accountable Officer confirms that the Annual Report and Accounts as a whole are fair, balanced, and reasonable. The responsibilities of the Principal Accountable Officer are described in the Memorandum to Accountable Officers from the Principal Accountable Officer published in the Scottish Public Finance Manual^[24].

For the purposes of the audit, so far as the Principal Accountable Officer is aware, there is no relevant audit information of which the auditors are unaware, and all necessary steps have been taken by the Principal Accountable Officer to ensure awareness of relevant audit information and to establish that the Scottish Government’s auditors are aware of that information.

The Principal Accountable Officer authorised these accounts for issue on the date signed at the end of this report.

Governance Statement

Scope of Responsibility

The Scottish Government’s role is to deliver our Purpose and National Outcomes, guided by the National Performance Framework.

As the Permanent Secretary, I am responsible for ensuring that robust governance arrangements are in place to deliver our Purpose and National Outcomes in an open and transparent way, including for the year 2023-24 and up to the date of the approval of the Annual Accounts. I am also the Principal Accountable Officer for the Scottish Administration (under the terms of the Public Finance & Accountability (Scotland) Act 2000) and responsible for ensuring the propriety and regularity of finances and the economic, efficient, and effective use of resources. In discharging these overall responsibilities, I am supported by the designated Portfolio Accountable Officers within the core Scottish Government; the Crown Office and Procurator Fiscal Service Scottish Government Executive Agencies and Health Bodies.

Detailed information on the role and responsibilities of Accountable Officers is set out in the Accountability chapter^[25] of the Scottish Public Finance Manual (SPFM) and further detail on the context and purpose of the Governance Statement can be found in the Governance Statement chapter^[26] of the SPFM. Figure 1 sets out the approach I have put in place to achieve this.

Corporate Governance System

The Scottish Government’s Corporate Governance system has been designed to provide me with support and advice as Principal Accountable Officer in relation to strategic issues of organisational health, performance, vision and strategy, and effective governance.

The Scottish Government’s corporate governance system provides for clear lines of accountability, effective reporting, and appropriate escalation routes. It enables scrutiny and oversight of the Scottish Government’s activities and provides me with a source of assurance on the effectiveness of the internal controls framework and corporate governance arrangements in place. In addition, it complies with all governance-related guidance in the SPFM, the Civil Service Code^[27] and relevant elements of the Good Governance Standard for Public Services^[28] produced by the Independent Commission on Good Governance in Public Services.

In 2023-24, a review of the corporate governance system was undertaken. The recommendations were endorsed by Corporate Board in June 2024 and will be implemented in the course of the 2024-25 reporting year.

A diagram of the corporate governance structure as of June 2024 is included below at Figure 1. The Accountability and Assurance Framework is also provided at Figure 2 describing the assurance structures operating within Scottish Government.

Governance arrangements for separate accounting entities

The separate accounting entities within the Scottish Government consolidation boundary have corporate governance arrangements in place appropriate to their individual circumstances and in compliance with relevant guidance. The effectiveness of those governance arrangements is addressed in the Governance Statements provided by the entities as part of their annual accounts. As with the Scottish Government, these arrangements comply with relevant guidance in the SPFM and accepted best practice principles.

Corporate Board

Corporate Board’s purpose is to provide myself, as Principal Accountable Officer, with objective strategic oversight, guidance, and advice in relation to the Scottish Government’s vision and strategy, performance, organisational health, and effective governance. Membership of Corporate Board includes myself, Directors General as my Portfolio Accountable Officers and at least four Non-Executive Directors (NXDs). The current Non-Executive Director members are the Lead NXD, the chair of Scottish Government Audit and Assurance Committee (SGAAC), deputy Chair of SGAAC and Strategic Design Authority (SDA) NXD lead. (Belinda Oldfield, Jayne Scott, Manish Joshi and Jenny Stewart). There are also a number of standing attendees including the Chief Financial Officer, the Director of People Directorate, and the Board Secretary.

Corporate Board has met quarterly over the course of the reporting period and its minutes are published. Alongside core areas of business, it has considered the following specific issues over the reporting period: workforce planning; average working days lost; identifying and addressing emerging risks; the work of the Strategic Design Authority; Public Service Reform; the National Performance Framework; fiscal sustainability; strategic horizon scanning of longer term risks; Covid Inquiries response; management of the 2024-25 budget.

The Executive Team

The Executive Team met on at least a twice-weekly basis throughout the reporting period and more frequently as appropriate, focusing on developing and implementing the Scottish Government’s vision and strategy, managing performance and delivery, deploying resources in response to Ministerial priorities and ensuring effective governance and organisational health.

The Executive Team meets in distinct ‘modes’: Strategic, People, Delivery and Investment Assurance, which facilitates enhanced focus on key priorities and issues. The strands of business which are considered in each mode support the delivery of shared objectives that I, and my Executive Team, have put in place for 2023-24: prioritise, collaborate, design, deliver and perform, develop, and lead.

Meeting in Strategic mode, the Executive Team has provided leadership and direction to ensure that the Scottish Government achieves its goals, considering issues of a cross-cutting nature, including: the implementation of our corporate vision ‘In the Service of Scotland’, the Resource Spending Review and Fiscal Sustainability, the National Care Service; Human Rights Bill, and strategic sponsorship of public bodies.

Meeting as the People Executive, the Executive Team has focused on issues relating to workforce strategy and planning, hybrid working arrangements, succession and talent management, diversity and inclusion.

The weekly Delivery mode of Executive Team is responsible for providing challenge, leadership, and direction on key delivery priorities across the organisation. The Delivery Executive considers corporate finance monthly, corporate risk quarterly and provides a space for constructive mutual challenge and partnership to support improved delivery and outcomes. It continues to provide increased focus and enhanced assurance to myself as Principal Accountable Officer on monitoring the performance and delivery of key Ministerial priorities including tackling child poverty, growing a fair and green economy, and prioritising our public services.

In Investment Assurance mode the Executive Team considers Business Cases for endorsement, with a focus on those that are novel and contentious or with significant recurrent spend, to ensure improved investment decision making and fiscal planning and prioritisation.

Scottish Government Audit and Assurance Committee

The Scottish Government’s Audit & Assurance Committee (SGAAC) members are our Non-Executive Directors, and its role is to provide advice and support in discharging my Principal Accountable Officer responsibilities in relation to risk, control and governance and associated assurance through the provision of constructive challenge.

Jim Robertson has been Chair of the Committee for the reporting period with Jayne Scott in the role of Deputy Chair. Jayne Scott replaced Jim as Chair in September 2024 as part of our succession planning in the Non Executive Director cohort. Newly appointed Non-Executive Directors Neil Wooding, Manish Joshi, Rory Mair and Helen Dean became members during the reporting period with Neil appointed in April 2023 and Manish, Rory, and Helen in March 2024). I attend along with Directors General, the Chief Financial Officer, the Director for Internal Audit & Assurance and the Board Secretary. Audit Scotland attend SGAAC and have an open invite to attend Director General Assurance meetings as the Scottish Government’s External Auditors. The Auditor General attends SGAAC annually when the Committee considers the Scottish Government’s Annual Accounts and the Governance Statement.

Relevant issues discussed at Director General Assurance meetings are escalated for awareness and discussion to SGAAC or elsewhere in the governance system (e.g., Corporate Board or the Executive Team) as appropriate based on clear escalation criteria. Issues which have been considered for assurance purposes at SGAAC in this reporting period have included: the process for the 2023-24 budget flightpath and medium and longer term improvement activity relating to fiscal sustainability, Corporate Transformation, the Covid Inquiry, European Structural Investment Funds, Strategic Sponsorship, ongoing development of the Counter Fraud activity across Scottish Government, and a new approach to monitoring Audit Scotland recommendations. In addition to findings from key Directorate for Internal Audit & Assurance activity, and key findings from Audit Scotland reviews, SGAAC also considered an outline of the approach and early development of Risk Appetite Statements.

The issues raised throughout this year, alongside the Director General Certificates of Assurance which underpin this Statement, have been discussed by SGAAC in the period up to my signature of the Statement and the Scottish Government’s Annual Accounts. SGAAC subsequently considered the Statement and the draft Annual Accounts on 7th October 2024 and no significant control weaknesses were raised other than those disclosed in the significant control issues section of this Statement. A similar process is in place in each of the separate accounting entities within the Scottish Government consolidation boundary.

Director General Assurance meetings

Director General Assurance meetings take place quarterly, providing a dedicated forum in which assurance is sought on the core elements of good governance. Each meeting covers: financial stewardship, people and capability, performance and outcomes, organisational efficiency, risk management and the internal control environment. Relevant risks and issues are escalated for awareness, discussion and/or action as appropriate by SGAAC, the Executive Team or Corporate Board in line with the associated escalation criteria.

Assurance meetings are attended by each Director from the Director General family; the Non-Executive Directors that are aligned with the particular Director General portfolio in their pairing relationship; Non-Executive Directors; Audit Scotland; Internal Audit & Assurance; the Board Secretary and relevant officials as appropriate and they provide me with support as the Principal Accountable Officer in the preparation of this Governance Statement and the Scottish Government’s Annual Accounts. The Chair and Deputy Chair of SGAAC have open invitations to attend Director General Assurance meetings and have done so frequently over the reporting period, primarily with a view to calibrating risks, and their management, across Director General Areas and their Directorates.

Improvements to the Scottish Government’s assurance arrangements continue. At Corporate Board in March 2024, following initial pilots in Director General Net Zero and Director General Education & Justice, a new approach to Director General Assurance was approved for rollout across Director General Assurance. The new approach, which builds on the current approach, supports a more thematic and assurance-focussed conversation on Director General priorities, connecting all lines of assurance and aiming to streamline the process and reduce the overall volume of papers. Aligned to this new approach, government missions and associated risks, reformation including corporate transformation, and financial management risks featured prominently across Assurance. The impact of this change will be assessed as part of the annual review of the Governance system, which will commence in January 2025.

Following enhancements to performance dashboard material and progress in risk maturity, the need for continued robust risk management, incorporating useful appetite statements, effective performance reporting; and up to date financial and corporate information was recognised in supporting evidence based assurance. Arrangements for supporting evidence based assurance will be reviewed throughout 2024-25 to identify and develop areas for improvement.

Other Corporate Governance Boards

The Corporate Board is supported by a number of corporate sub-boards:

People & Place Board

The People & Place Board provides advice on the creation of the culture and conditions for individuals to be successful in the Scottish Government. It has an information flow into the Executive Team’s People Executive. The Board met in April 2023, August 2023, October 2023, and January 2024. In the reporting period the Board has discussed key issues including In the Service of Scotland, People Survey 2023 results and actions, Corporate Transformation, Diversity & Inclusion Strategy, Estates Strategy, Workforce planning and Temporary Promotion.

Infrastructure Investment Board

The Infrastructure Investment Board (IIB) is chaired by Director General Scottish Exchequer, and it strengthens strategic direction, prioritisation, and oversight to ensure coherent advice and aligned delivery of an effective, fiscally sustainable programme which maximises our ambitions for infrastructure investment. It is concerned with the impact of overall investment on the economy, how best and by whom major and critical infrastructure is financed and ensuring that all infrastructure investment supports the National Outcomes.

The Board met in May 2023, August 2023, November 2023, and February 2024. In the reporting period it considered items including: the Capital Spending Review which will be monitored until 2025; the National Infrastructure Mission; the Infrastructure Investment Plan, the National Planning Framework, and 2023-24 capital budget planning.

Strategic Design Authority (SDA)

The Strategic Design Authority (SDA) provides strategic oversight, advice and recommendations to the Permanent Secretary about the organisation’s design and vision. It enables us to apply intentional design to the way we change our organisation and will provide further structure around our organisation’s development – so future changes over the coming years are consistent with the kind of organisation we aspire to be.

The Board met in May, June, August, September, October, November & December 2023, and February 2024. In the reporting period it considered items including: lessons learned from Scottish Water on their Target Operating Model (TOM) development, overview work in DGs Scottish Exchequer and Corporate in relation to their design of Corporate Centre, communication plan, In the Service of Scotland vision, review operating model changes in infrastructure and digital alongside updates and reviews of the TOM development.

Talent

The purpose of Talent Board is to provide assurance to Executive Team that there is a fair, transparent, consistent, and robust approach to talent management across the Scottish Government with a focus on developing a diverse pipeline to senior roles and aligning talent and succession activities with broader workforce planning It is chaired by DG Strategy and External Affairs.

The Board met in July and September 2023 and January and March 2024. In the reporting period it considered items including: updates to talent governance, talent management and associated communications strategy, outputs from 9 box grid process, feedback from developing diverse leaders Programme members, embedding of talent operating model update, implementation of Leadership framework and succession planning.

Internal Audit and Assurance

The Directorate of Internal Audit and Assurance (DIAA) brings together three independent assurance teams (Internal Audit, Digital Assurance Office and Portfolio, Programme and Project Assurance) the Head of Counter Fraud Profession and Counter Fraud Service, and the role of the Data Protection Officer. While the services provided by each of the teams continue independently, an integrated approach to assurance is taken to support the Scottish Government through the provision of proportionate assurance activities throughout the policy to delivery lifecycle.

Audit Scotland, as the Scottish Government’s External Auditors, assess the extent to which they will use the individual reviews undertaken by Internal Audit to inform their opinion on the financial statements, and meet their wider responsibilities, depending on their direct relevance to their work. Each year they also undertake a review of the Scottish Government’s Internal Audit arrangements. Audit Scotland confirmed that their review did not find any areas of non-compliance with the public sector internal audit standards.

Audit Scotland

Audit Scotland attend Director General Assurance meetings and SGAAC, providing updates in relation to current and future work plans. Periodic meetings take place between the Executive Team, the Auditor General and Audit Scotland as part of the Scottish Government’s wider commitment to working together, with the most recent taking place in June 2024.

Regular engagement has also taken place between Audit Scotland and the Directors General, the Chief Financial Officer, the Director of Internal Audit & Assurance and the Board Secretary and others as required. In addition, Audit Scotland meet regularly with the Chair and Deputy Chair of SGAAC in order that Audit Scotland can support them in discharging SGAAC’s responsibilities to me as Principal Accountable Officer.

Non-Executive Directors

At present, there are nine Non-Executive Directors providing support, guidance, and constructive challenge to the Scottish Government through the governance structures set out above and through individual pairing arrangements with Directors General. I am thankful to the Non-Executive Directors as the Scottish Government’s ‘critical friends,’ undertaking and supporting a wide range of work which has assisted me in identifying the issues I have raised in this Governance Statement.

Scottish Government Lead Non-Executive Director, David Martin, stepped back from this role with effect 18 June 2024. I asked Belinda Oldfield to step in as Interim Lead Non-Executive Director from that date while recruitment is concluded. Neil Wooding stepped back from his role as a Non-Executive Director from 28 June 2024. Helen Dean, Manish Joshi and Rory Mair were appointed as Scottish Government Non-Executive Directors within the reporting year. Manish and Rory commenced their terms on 15 April 2024, and Helen commenced her appointment on 29 July. All new Non-Executive Directors have a tailored induction programme to support them into role. As part of planning for the succession of Non-Executive Director roles, Jim Robertson chaired his final SGAAC on 3 June and he has been succeeded as Chair by Jayne Scott, who has been succeeded as Interim Deputy Chair, by Manish Joshi.

National Performance Framework

The Scottish Government’s National Performance Framework and Programme for Government set the priorities, plan the activity and monitor the progress and performance across the organisation. This framework continues to develop to reflect the Government’s approach to accountability and support the Government’s aim for transparency. The internal Performance and Delivery process provides the Cabinet, Ministers and the Executive Team with routine, regular and transparent reporting, and assurance on the performance of the Government’s key priority areas, as set out in its Programme for Government. The framework seeks to align across programme, budget, and resourcing, bringing more visibility, support, and challenge to delivering outcomes and developing key performance indicators.

The National Performance Framework has been the foundation for a transformative shift in how policy is developed and delivered in Scotland. It is Scotland’s wellbeing framework, which highlights 11 key National Outcomes and combines measurement of how well Scotland is doing in economic terms with a broader range of wellbeing measures. These indicators incorporate a range of different types of data, from social attitudes and perceptions to economic and environmental statistics, to paint a broad picture of Scotland’s performance. A statutory review of the National Outcomes is underway and will fulfil the requirement of the Community Empowerment Act (2015) to review the National Outcomes within 5 years, in consultation with communities in Scotland. The review ensures that the National Outcomes continue to reflect the priorities of communities in Scotland. As part of the Review, the Scottish Government has heard from communities across Scotland about what matters most to them. A report^[29] setting out the activity undertaken as part of the Review of National Outcomes, and the proposed changes to the National Outcomes arising from it, was laid in the Scottish Parliament on 1^st May 2024. It is expected that the revised National Outcomes will be published in early 2025.

The statutory responsibility of Scottish Ministers to “prepare and publish reports about the extent to which the national outcomes have been achieved” is discharged through the National Performance website^[30], where data and performance assessment are published as and when new data on the National Indicators becomes available.

Social Security Scotland

The annual accounts of Social Security Scotland have had an audit qualification each year since 2018-19. This is in respect of the regularity of an estimated level of overpayments attributable to fraud and error in benefits administered by the Department of Work and Pensions. The estimated level of overpayments attributable to fraud and error in the benefits, delivered by the Department of Works and Pensions (DWP) on the Agency’s behalf, is not deemed material for the Scottish Government consolidated accounts.

Work to develop the capability to estimate the extent of fraud and error present within Social Security Scotland caseloads has progressed in 2023-24. The methodology agreed, necessary legislative change requested, and first testing relating to levels of official error in Scottish Child Payment have been completed. Work was also undertaken in collaboration with the Department for Work and Pensions to explore fraud and error loss which is transferred between departments as a result of passporting/qualifying benefits. Social Security Scotland has its own counter-fraud response measures in place and continues to develop both its data-driven approach to proactive identification of fraud risk, and its investigative capability.

Although actual benefit expenditure was in line with forecasts for 2023-24, the Scottish Government have specifically recognised the risk to the budget of Social Security Scotland expenditure being materially different from forecasts. The Scottish Fiscal Commission has formal responsibility for producing forecasts and explaining variations from forecast.

Scottish Government’s Assurance Framework

Annual assurance on the adequacy and effectiveness of the core Scottish Government’s governance, risk management and internal control systems is provided by the Scottish Government’s Director of Internal Audit and Assurance. In the annual assurance report submitted to SGAAC at its meeting on 3 June 2024, the Director of Internal Audit and Assurance confirmed that a reasonable assurance opinion had been provided on the systems for risk management, control, and governance within the Scottish Government.

Risk Management Arrangements

Effective risk management continues to be at the heart of the Scottish Government’s Assurance Framework. The Scottish Government’s approach is published on the Scottish Government website¹ within the Scottish Public Finance Manual and was reviewed in November 2023. Internal guidance was subject to significant review and update in October 2023 and incorporated a review of the Scottish Government’s Risk Management Strategy and Policy. All guidance is also consistent with the UK Government’s Orange Book² and best practice.

The Scottish Government is committed to continuous improvement of its risk management arrangements and capability. In 2023-2024, there has been considerable focus developing organisational maturity through a complete revision to the Scottish Government Risk Guide, enhancing our principles-based approach alongside the implementation of the organisation’s policy and strategy, supported by practical, ‘how-to’ supplementary guidance. The updated guidance was introduced in response to significant improvement in the organisation’s maturity and the need for a shift away from process-led risk management towards culture-building where risk management is embedded and integrated the way that the Scottish Government delivers. The implementation of refreshed guidance was completed in coordination with a follow-up to the 2022 organisation-wide maturity exercise, where further testing of maturity at directorate level was undertaken to measure improvement. Whilst there has been some improvement in capability, it was recognised that further effort was required to embed the Scottish Government’s processes more deeply within each directorate. Mandatory eLearning for all staff remains in place to ensure that there is a consistent knowledge of the principles of risk management and processes for identifying and managing risk. As at 31 May 2024, 96% of the organisation had undertaken the required learning.

There has also been considerable focus placed on reporting capability, with each Director General and Director provided with tools to summarise and visualise their risks in a way that supports tailored and targeted discussion management of risk. To ensure that the Executive Team is fully appraised of the wider risk eco-system, a Strategic Risk Landscape report has been developed to provide a multiple-horizon view of risk, encompassing short-term issues, medium term delivery risk, civil contingency emergency risk and longer term horizon risks stretching into the next 10 to 20 years. This reporting is designed to inform decision making on the management of current risks as well as policy design and decision making.

The risk management arrangements within the Scottish Government have continued to mature and provide a more responsive and dynamic approach to emerging risk and the external risk environment. During 2023-24, this has worked particularly well in developing the Scottish Government’s strategic response to improving the Scottish Government’s approach to the management of Freedom of Information requests; developing the appropriate and proportionate arrangements for the management of Strategic Commercial Assets, and developing a new approach to the sponsorship of public bodies.

Scottish Government Key Risks

The Scottish Government’s corporate governance system has been designed to ensure that risks to its organisational health and policy performance in this environment are identified, managed, and mitigated effectively.

Over the last year a number of policy-specific risks have been identified, managed, and monitored through the assurance processes and included in the Scottish Government’s Corporate Risk Register. The Register is a living document and is updated on an ongoing basis. A short summary of the risk focus at the end of the period covered in this Statement is included below:

• Fiscal Sustainability: ensuring the long term sustainability of public sector finances through understanding of fiscal performance, risks, management of spending and credible expectations around the resources available in the future. Linked to ensuring that Public Sector Pay settlements do not exceed affordable pay metrics as this would have a material impact on the sustainability of public finances.
• Climate Change Mitigation: the delivery of policies that will reduce Greenhouse Gas emissions in response to the climate emergency and deliver a just transition to Net Zero.
• Climate Change Adaptation: strengthening approaches to adapting to the ‘locked in’ impact of climate change on Scotland and its people, ensuring adequate preparedness and resiliency to the risks posed by a changing climate.
• Child Poverty: taking significant action, in tandem with delivery partners across Scotland, to address child poverty ahead of interim targets in 2023 (published in 2025) and statutory targets in 2030.
• Short and Long Term Sustainability of Health & Social Care Services: the need to solve short term performance issues alongside development and implementation of a reform strategy to improve population heath, planned care, mental health, primary, communicate and social care aligned with the work to establish a National Care Service and ensure the sustainability of health and social care services across Scotland.
• Public Service Reform: collective development, implementation and monitoring of long term and short term plans for service reform across the public sector.
• Public Sector Cyber Resilience: ensuring awareness of, and preparation for, the growing cyber threat to the public sector in alignment with Framework for a Cyber Resilient Scotland and supported by the National Cyber Resilience Division within the Scottish Government.
• Prison Population: ensuring that appropriate measures are in place, both long and short term, to manage the increasing population of Scotland’s prisons.
• Cladding Remediation: delivering activity to assess and remediate buildings with unsafe cladding, in conjunction with building owners and developers, as set out in the Housing Cladding Remediation Bill.
• Preventative Population Health: developing a decisive shift towards greater prevention of ill health and promotion of wellbeing across all government policy to improve the health of the people of Scotland and reduce demand on services.

The Scottish Government’s risk management arrangements have also surfaced several cross-cutting risks and themes, which are reflected in the current iteration of the Corporate Risk Register and have been highlighted via Director General assurance or through the Certificates of Assurance provided to me by my Directors General. Many of these risks and themes are also addressed specifically within other sections of the statement as appropriate. These include:

• Resourcing: Capability, Capacity and Wellbeing of the Scottish Government’s staff, ensuring a collective approach to effective prioritisation of delivery and workforce planning capability to flexibly deploy staff.
• The importance of maintaining strong and productive relationships with Local Government and Business through the Verity House Agreement and New Deal for Business, respectively, to understand the impact of policy decisions and foster collaborative approaches to delivery. As well as the need to ensure productive engagement between the UK and Scottish Governments on both devolved and reserved matters through maximisation of opportunities to collaborate.
• The challenges surrounding the annual financial outturn amidst a backdrop of an increasingly challenging fiscal position, a demand-led budget, and rising costs.
• The importance of ensuring appropriate information management; drawing on the recent review of corporate processes for the storage, retrieval, and deployment of corporate information and taking into account lessons learned from both UK and Scottish Covid Inquiries and Scottish Information Commissioner’s intervention on informal messaging (please also refer to Information Management item raised in the significant issues section below).
• Strategic Commercial Asset Management: ensuring the organisation has the capability and capacity to manage opportunities for the development of commercial assets currently owned by the Scottish Government.
• Open and Transparent Government: taking action to commit to a more proactive approach to transparency, openness and accountability in decision making.
• Infrastructure Resilience and Performance: ensuring portfolio asset strategies are in place to support the direction of capital funding towards the resiliency and optimisation of public sector assets and infrastructure.

Sponsorship of Public Bodies

During 2023, Scottish Government have focused on embedding Strategic Sponsorship as best practice. Now that Sponsorship risk has been de-escalated and removed from the Corporate Risk Register in February 2024, sponsorship will be actively managed as a risk at both a Portfolio and Directorate level, with assurance processes being utilised to ensure that Strategic Sponsorship is used as best practice. An annual session on public bodies will be held by the Executive Team going forward and the Public Bodies Support Unit is actively following the processes established as part of Strategic Sponsorship and continues to explore new ways to improve processes and systems. In light of issues highlighted by Audit Scotland regarding the Water Industry Commission for Scotland, deep dives will be held with each Director General area to review its sponsorship arrangements and reinforce the recommendations of the Ryan review. The outputs of these deep dives will be used to refresh the advice and guidance available on sponsorship.

In December 2023 Scottish Government published a refreshed 10-year programme for Public Service Reform (PSR). The objectives of this programme are: to ensure public services remain fiscally sustainable, by reducing the costs, and reducing long term demand through investment in prevention; alongside improving outcomes, which will improve lives and reduce inequalities of outcome amongst communities in Scotland. This recognises the need not just for improved outcomes but a focus in policy and delivery on those most disadvantaged. This programme provides a clear framework for activity with portfolio savings and reform plans forming part of the commitments, setting out how each portfolio will deliver reform. Work is in hand to establish the appropriate governance and portfolio approach to deliver a distributed model of delivery across Government.

Significant Issues

The process for the provision of annual assurances by senior staff within the core Scottish Government (and the other constituent parts of the Scottish Administration) is set out in the Scottish Public Finance Manual^[31]. The culmination of this process is the provision of Certificates of Assurance from Directors General that reflect any issues raised by Directors, as well as any other issues raised throughout the course of the year in either the Director General Assurance process, by SGAAC, by Non-Executive Directors, the annual assurances by Internal Audit and consideration of information on control issues received in respect of any associated executive agencies, non-ministerial departments and sponsored bodies.

In preparing this Statement, my assessment of whether an issue represents a significant issue is based on a review of its materiality, relevance, and impact on the organisation and its governance as a whole. It is also based on the assurances provided by Directors General, including whether they believe they have been able to effectively discharge their responsibilities as Portfolio Accountable Officers. On this basis, the issues I have identified are as follows:

Corporate Transformation

The Shared Services Programme will deliver a new HR and Finance platform (Oracle Cloud), which replaces decades-old systems and will sit at the heart of our new corporate shared services offering to over 20,000 staff in Scottish Government core and over 30 public bodies.

We have closely managed capacity and budget to ensure appropriate coverage for the implementation of Oracle Cloud. The decision to delay implementation from spring to autumn 2024 was taken as we could not see a clear and safe path to implementation on the previous timeline. Indicators of task completion, issue resolution, risk reduction and overall readiness were not providing the required assurance to proceed with that plan. We are now making satisfactory progress across all key measures.

The introduction of the new Oracle Cloud platform will contribute to enhanced people and resource management practice across Scottish Government and the public bodies taking the new system. The implementation of Oracle Cloud in tandem with maintaining business-as-usual core services in the run-up to that implementation and beyond presents a number of risks as we change more than 250 of our key finance, HR and procurement processes. There are robust plans in place to understand, manage and mitigate those risks and we are monitoring those, and benefits realisation, closely.

Financial Management

Financial management was a critical area of activity in 2023-24, with the overall Scottish Government position exceedingly challenging, necessitating continued and strengthened Accountable Officer controls throughout 2023-24, to deliver a path to balance. The risk of not achieving a path to balance was driven primarily by an increase in a number of variable factors and demand-led expenditure in the budget. Scottish Government are continuing a range of actions to mitigate the risks of an overspend. While significant spending and headcount controls and management activity are in place to support these challenges, collective action across all portfolios and stakeholders continues to be essential to provide the necessary assurances regarding the delivery of the path to budget balance.

Fiscal Sustainability

The Scottish Government continues to face significant challenges to its medium-term fiscal position due to a range of external and internal factors therefore the sustainability of the public finances remains a key corporate risk.

Over the past year we have continued to focus on delivering the Government’s medium-term financial strategy. This has included work to strengthen how we manage the fiscal risk, embed medium-term fiscal discipline and improve spending controls. Key deliverables include publishing a clear strategy to improve the sustainability of the public finances in the Government’s annual Medium-Term Financial Strategy publication^[32]; strengthening governance and oversight of the medium-term funding position; further developing reporting on fiscal performance and associated risks; strengthening pay controls and governance through the Scottish Government Strategic Pay Coordination Group and publishing multi-year pay metrics^[33]; progressing Public Service Reform; and supporting Ministers to take decisions on revenue raising, spending and delivery priorities within the annual budget process^[34]. This has included maximising the value of public spend, driving the reform of public services and focusing on decisions around Scottish Tax policy.

The fiscal position remains challenging with the major drivers of public spending outpacing expected growth in funding over the medium term. This includes forecast increases in social security expenditure, inflationary pressure on pay deals, and wider cost growth. The focus on improving sustainability will continue including full integration of the Programme for Government and Budget processes; continuing to implement the medium-term strategy; and continuing to embed medium-term fiscal discipline across the organisation. The SGAAC considered these challenges through the year and whilst previously reserving assurance on the path to balance 2023-24, the 2024-25 budget and on the medium term sustainability of the Scottish Government finances, the 2023-24 outturn delivered an underspend against the budget and SGAAC now recognise that there is a credible path to balance for 2024-25. SGAAC continue to reserve their assurance over the medium term fiscal sustainability.

European Structural and Investment Funds (ESIF)

The long term financial risks at the close of the ESIF Programmes in 2025 remain. This relates to the ability to claim re-imbursements from the European Commission for the full amount paid out to our partners, and the level of any penalties applied by the European Commission to the reimbursements. Issues of performance, financial, people and reputational risks in relation to ESIF have been a key focus and was escalated to SGAAC and the Corporate Risk Register. These risks are being managed by ensuring robust compliance with European regulations and cycles of audits, the implementation of a staff retention and closure programme, and maximising the value of all reimbursement claims. Scottish Government intend to make use of the European Commission’s Strategic Technologies for Europe Platform regulation to make a final reimbursement claim in October 2024.

Ferguson Marine Port Glasow

The management of Ferguson Marine Port Glasgow (FMPG) and the delivery of the two ferries continue to be high priority areas for the Scottish Government. The Strategic Commercial Assets Division (SCAD) has instituted a series of weekly meetings with all parties involved in the handover and entry to service of vessel 801 Glen Sannox, involving Caledonian Maritime Assets, CalMac, Transport Scotland and FMPG. In addition, SCAD is represented at monthly programme meetings, while there is also a SCAD presence in the yard twice weekly. Officials from the Economic Development Directorate, as the sponsor Directorate, attend the bi-monthly Board meetings of Ferguson Marine. They also meet regularly with the Chair, the interim Chief Executive Officer (CEO) and Chief Financial Officer (CFO), who is also the Accountable Officer for FMPG. The sponsor Directorate works with the Board and executives of FMPG on all matters related to the delivery of the vessels under construction for the CalMac fleet and supports the shipyard in developing an investable business plan.

In May 2023, the Portfolio Accountable Officer/Director General for Economy was not assured on the value for money of expenditure on 802 Glen Rosa and sought a written authority from Ministers to proceed (see section of Governance Statement ‘Written Authority’ below). Concerns remain over the costs of 802 Glen Rosa and the Board of FMPG are expected to monitor this closely and deliver to existing estimates. Risks relating to both the future of the yard and the delivery of the ferries are monitored as part of the Director General Economy risk management process, with additional oversight being provided by the Strategic Assets Review Group.

Resilience of the NHS

There continues to be sustained pressure across the system for planned and unscheduled care. To support recovery, improve performance and reduce waiting lists, a range of actions have been put in place to improve sustainability in managing patient treatment. The Operational Programme Delivery Board is responsible for overseeing delivery of national and local plans for delivery of waiting times targets alongside wider system impact on areas such as urgent and unscheduled, delayed discharges and cancer and diagnostics. The Centre for Sustainable Development is designed to sustainably improve and transform Scotland's health care system within the NHS through innovation, collaboration, and clinical leadership, is currently commissioned to monitor improvements, opportunities, and initiatives.

To consider interagency, whole-system activity across the Health and Social Care System, with COSLA, Ministers jointly chair the Collaborative Response and Assurance Group which oversees the whole system response. At the current time, the group is specifically focussed on the collaborative approach to reducing the level of delayed discharge. The group meets weekly and brings together a coordinated response to system wide issues, supported by a number of specific workstreams including additional targeted resource to support local systems. In addition the Whole System Improvement Group and the Social Services Workforce Taskforce meet regularly to drive improvement across the community health and social care system.

To bring further strength to assurance arrangements across Community Health and Social Care, the development of the National Care Service continues and a Director level Assurance Board and Programme Delivery Board is in place. This is responsible for providing strategic assurance to the Executive Team (ET) in relation to the delivery of the National Care Service. Robust programme arrangements are in place and these are regularly reviewed to enable the progression of key priorities and deliverables.

Scottish Government continues to monitor the outcome of Healthcare Improvement Scotland (HIS) Safe Delivery of Care Inspections. Concerns are escalated by HIS to Scottish Government via the Support and Intervention Framework and are taken through National Planning and Performance Oversight Group, where mitigating actions and targeted improvement and support are agreed.

Scottish Government continue to manage escalated risks in connection with workforce planning and capacity within the health service given the budget and resourcing challenges in 2024/25. Capital infrastructure challenges also continue to have an impact on the workforce, alongside underlying inflationary pressures and negotiated settlements across staff contract groups. On 1 April 2024, Scottish Ministers commenced the Health and Care (Staffing) (Scotland) Act 2019, requiring Ministers to report annually to Parliament on the steps they have taken to support safe staffing in the Health service. Workforce planning, strategy, and recruitment activity over the last year has focused on extracting maximum value from recruitment activity in 2023-24, as well as improving retention and attraction. Significant work has also been taken forward to support the implementation of Agenda for Change non-pay reform. Overall, approximately a third of the actions set out in the National Workforce Strategy, aiming to support the recovery, growth and transformation of the Health and Social Care workforce,^[35] have been delivered, with many of the remainder having a longer timeframe for delivery.

As of March 2024, six territorial Health Boards were escalated in terms of their financial position to Stage 3 or above including NHS Ayrshire & Arran, NHS Borders, NHS Highland, NHS Tayside, NHS Orkney and NHS Forth Valley. A Framework Document^[36] for territorial NHS Boards has been developed and was published in April 2024, supported by an internal Scottish Government Health and Social Care specific Sponsorship Code of Good Practice developed in June.

Capital Investment - NHS Estate

The value of replacing the NHS estate has significantly increased since 2020 alongside backlog maintenance. Following the recent budget settlement, a new approach to strategic infrastructure planning and investment across NHS Scotland has been implemented which requires each NHS Board to prepare and submit to the Scottish Government, a Programme Initial Agreement (PIA) which sets out their whole-system service and infrastructure change plans for the next 20-30 years. Each Board will develop a lifecycle maintenance plan based on a risk-based assessment of existing infrastructure, mitigating inherent risks associated with existing infrastructure, meeting environmental sustainability standards, and providing the necessary accommodation for service delivery needs. The next phase of the work will inform a long term asset management and investment plan that will take account of the service and population needs.

Population Health

The Scottish Government is developing a Population Health Framework, to improve the key building blocks of health including; employment, housing, education and skills, economic stability and complemented with the promotion of positive health behaviours and appropriate healthcare. The Framework is being developed in collaboration with key system wide partners and will be a joint SG-COSLA publication, anticipated in autumn 2024.

Primary Care services have a critical preventative role and there are continued risks to service delivery, with many areas of the system under extremely serious pressure resulting in escalation of the risk to the Corporate Risk Register, encouraging greater prevention of ill health across all government policy. Wider Primary Care reform plans are being prepared, with a draft target operating model, and the commencement of a new Primary & Community Health Steering Group.

Water Industry Commission (WICS)

In December 2023, the Auditor General for Scotland published their Section 22 report into WICS which highlighted failures in the financial management and governance of the organisation in the 2022-23 financial year. Director General Net Zero, the Director for Energy and Climate Change, and the former Deputy Director for Water Policy attended a meeting of the Public Audit Committee on 21 March 2024, alongside the WICS Chair, Interim CEO and Chair of their Audit Committee, to discuss the findings of the Section 22 report.

In June 2024 a further issue arose from a Freedom of Information (FOI) response released by WICS regarding other training and travel expenditure in a number of prior financial years dating back to 2016. The Director General Net Zero, the Director for Energy and Climate Change and the interim Director of Water Policy also provided further evidence on the Section 22 Report on the 19^th September 2024.

An independent review of WICS is currently being undertaken by the Scottish Government and will support gaining greater assurance on this public body. An internal review of the sponsorship arrangements in place for WICS is also underway. The findings from both reviews are expected to be published in 2024 and the Scottish Government will carefully consider the conclusions of both reviews to inform further improvements in relation to WICS or sponsorship processes more generally.

There will be further focus on actions required to support improvements in our public bodies and sponsorship oversight drawing on the support of the Public Bodies Support Unit as required and working alongside other Executive Team colleagues in this wider corporate task.

Electronic Purchasing Cards (ePC)

An accidental breach of ePC transactional data in December 2023 led to the undertaking of two separate reviews, the first covering policy and compliance of purchasing rules and processes and the second regarding analysis of transactions to identify areas of non-compliance. Following these two reviews a range of new policy and recommendations have been put in place to strengthen practices. These include mandatory attendance to ePC awareness sessions, non-attendance resulting in cards being suspended, reduction of single (£5,000) and monthly transaction limits (£10,000) and rationalisation of cards used across the Scottish Government. Additional support has been provided to staff in the area on Data Management and release of data under the FOI Act. Scottish Government currently publish monthly reports of Electronic Purchasing Cards expenditure over £500.

Information Management

Scottish Government records management policy and implementation was a matter of interest in relation to the Covid-19 Inquiries (further detail on the Inquiries response is provided on below) and an internal review of our records management function and compliance was initiated. Separately, the former First Minister commissioned an externally led review of Scottish Government’s use of mobile messaging apps and non-corporate technology, while another review, led by the Scottish Information Commissioner will consider the a Level Three Intervention in relation to compliance with FOI requirements. It is anticipated that these reviews will report in due course and inform the wider records management review. Over the last year the FOI Unit has also worked closely with business management teams, using strengthened data recording and tracking processes, to enable early support in progressing cases. In the 2023-24 financial year, this resulted in 95% of requests being issued on time. The increase in performance has been recognised by the Scottish Information Commissioner. Initiatives in this area are continuing to improve both the quality of responses and the experience for those seeking recorded information from the Scottish Government.

Management of Climate Change

The scope of the Scottish Government’s climate change agenda is such that there are multiple parts of the organisation involved in the change required. The focus is on maintaining delivery of the transformational mitigation interventions required within the timescales set by statutory targets. There is also an effort to ensure mitigation and adaptation approaches take into account other priorities, while transitioning societal systems to address the effects of climate change.

A decision to amend Climate Change Statutory targets was announced on 18 April 2024. Extensive analysis leading to that position was undertaken throughout the 2023-24 financial year. As a result, and by November 2024, Parliament will consider a new legislative framework to amend targets and Climate Change Plan requirements. Cabinet and the Cabinet Sub-Committee for Climate Emergency are providing Ministerial oversight and senior leaders have governance responsibility through the Global Climate Emergency Programme Board under the chair of DG Net Zero.

Covid Inquiries and Investigation

There are two public inquiries that have been established to investigate matters relating to the Covid-19 response between 2020 and 2022. The Scottish Government is fully committed to support both Inquiries in their important work and during 2023-24 resource and support was allocated accordingly, with Director General Corporate chairing a quarterly Oversight Board and regular updates to ET, the Permanent Secretary and Ministers, including as part of the Corporate Risk Register. The UK Inquiry - chaired by Baroness Heather Hallett – is examining the UK’s response to and impact of the Covid-19 pandemic in England, Wales, Scotland, and Northern Ireland, up to and including the Inquiry’s formal set up date of 28 June 2022.

The Inquiry has adopted a modular approach to its investigations. During 2023-24, the Inquiry completed its investigations into Preparedness and Resilience and Strategic Governance and Decision-making. The latter module contained a specific set of hearings on decision making in Scotland which took place in Edinburgh in January 2024. Reports are expected during the course of 2024-25. The Scottish Covid-19 inquiry - chaired by Lord Brailsford – has been established by the Scottish Government and is investigating the devolved strategic response to the pandemic in Scotland between 1 January 2020 and 31 December 2022. The Scottish inquiry has adopted a thematic approach, examining the impact of the pandemic, implementation of the response and decision making on the response in relation to health and social care, education and young people, and finance, business, and welfare. During 2023-24 the Inquiry has focussed on the impact of the pandemic on health and social care in Scotland.

Counter Fraud Activity

Guidance on the prevention, detection, reporting and handling of fraud is included in the SPFM^[37]. The Integrity Group is responsible for improving fraud prevention measures across the Scottish Government as well as monitoring relevant cases of suspected external and internal wrongdoing made through formal reporting lines. This includes supporting and reporting on the concerns that are raised under the Public Interest Disclosure Act 1998. The Group is also available to provide advice on the handling of specific allegations of external and internal wrongdoing where required. The Group meet quarterly, and report work annually to SGAAC as part of the Annual Fraud Report. The membership of the Group is represented by Counter Fraud, Risk, Control and Assurance, Propriety and Ethics Group, Finance, Human Resources, Information Security, Scottish Government Legal Directorate, and Internal Audit.

An annual report on fraud within the Scottish Government’s consolidation boundary is prepared annually for SGAAC and includes all types of fraud, error, and other acts of dishonesty such as theft which have been reported to the Scottish Government during the 2023-24 financial year excluding the NHS which is reported by NHS National Services Scotland Counter Fraud Services (NHS NSS CFS). During the 2023-24 financial year a total of 83 cases of fraud and 30 cases of suspected or attempted fraud were recorded in addition to 1 case of wrongdoing and 6 cases of 3^rd party grant fraud were reported.

The Scottish Government also continues to participate in the biennial National Fraud Initiative (NFI) exercise led by Audit Scotland to help public bodies minimise fraud and error in their organisations. Audit Scotland published ‘National Fraud Initiative in Scotland 2024’^[38] ‘which covered the data from the 2022-23 exercise aiming to prevent and detect fraud across public bodies in Scotland. We reported last year that the 2022-23 NFI Exercise identified a total of 4,283 matches for the Scottish Government, ranging over 19 reports. As in prior years, the investigations are split between payables (creditors), payroll and procurement. The total number of matches processed so far has been 4,282, of that number; 504 were closed due to already being known and 784 were closed after finding no frauds or errors were detected. A further 2,994 matches were closed as they were not selected for investigation due to their being assessed as low risk. The next set of data for matching for the next exercise will be submitted and we expect to see these results approximately in January 2025. These matches will be reviewed and reported on as part of the 2024-25 Annual Fraud report and the Governance Statement as in previous years.

During 2023-24 improvements towards greater counter fraud maturity have been made, including several fraud risk assessments completed in areas of high fraud risk, the Counter Fraud Service has developed a Counter Fraud Toolkit containing tools, guidance, and templates for managing fraud risk. This is accessible to colleagues across Scottish Government and Scottish Government organisations and ensures that fraud risk management is consistent and targeted at the highest risk areas. In addition, counter fraud guidance following review will be updated and made available to colleagues in 2024-25

In addition to the Counter Fraud Activity above, there is also a whistleblowing policy available to all staff. The policy covers the types of concerns that can be raised, general processes and support that can be accessed. To ensure that employees who raise a concern feel safe from repercussion, the Scottish Government maintain their commitment to confidentiality and anonymity by enabling employees to raise concerns via several routes, which includes the organisation’s counter fraud processes.

Cyber Security

Cyber resilience is a critical enabler as we continue towards economic and societal recovery. The landscape has changed significantly over the last few years. Whilst organisations have been focused on rapidly adapting new and hybrid working arrangements, cyber criminals have been evolving their capabilities and methods in parallel.

As demonstrated very visibly by the cyber-attacks on the Scottish Environment Protection Agency in 2020, Comhairle nan Eilean Siar in 2023 and NHS Dumfries and Galloway in March 2024, the cyber threat is very real and growing. In May 2021, Audit Scotland published a blog^[39] which highlighted the risk and potential impact of cybercrime in the public sector in Scotland. Phishing continues to be the most common form of attack as a springboard for more sophisticated ransomware attacks. The Scottish Government reviews public sector cyber resilience annually and is improving its strategic capability and capacity to respond to the escalating level of threat, working towards accreditation for Cyber Essentials this year. Cyber security and resilience will continue to require attention and focus in 2024-25.

Multiagency cyber incident coordination groups were formed in response to incidents involving Comhairle nan Eilean Siar and NHS Dumfries and Galloway, these quickly assisted the public bodies affected with the incident response by ensuring that Police Scotland, Scottish Government and National Cyber Security Centre were fully sighted on the incidents and by ensuring that all appropriate resources were in place to mount a quick and effective response.

Proportionate cyber protection is in place, including a Cyber Incident Response Plan tested through exercise. Several work streams which underpin the strategy are in progress and a Cyber Education plan has been developed. Cyber security incidents are co-ordinated as required with relevant stakeholders and the Scottish Government are demonstrating leadership around cyber resilience, sharing knowledge and learning and seeking to pro-actively identify and resolve issues. The Cyber Security Strategy will be updated again in 2025.

Data Protection

The landscape in this subject area has remained stable over the year. Information assurance and security are strategic risks for the Scottish Government. Director General Corporate, as the Senior Information Risk Owner (SIRO), is the owner for these risks at Executive Team level. Corporate policies and guidance are in place to ensure that the Scottish Government meets its legislative and procedural obligations to protect the information assets and minimise the likelihood of a data loss incident. A Deputy SIRO now supports the SIRO.

107 data security incidents were recorded internally and reported in the Director General Assurance reports covering the 2023-24 period for the Core Departments (a small (8) increase on last year). One report was made to the Information Commissioner’s Office (ICO) in this period and no enforcement action was taken by the Commissioner. All internally reported incidents were assessed, and actions taken where necessary to minimise impact and recurrence. The number of incidents is similar to that recorded last year with most being minor (misdirected e-mails or redaction errors).

The ICO undertook a consensual audit of Scottish Government in 2022-23 and provided a high / reasonable assurance opinion. Data protection controls are in place and audit improvements are being tracked by the Information Governance Board. These actions have now been closed and moved into business as usual operations.

A dedicated Data Protection Officer has been in place since the introduction of the (General Data Protection Regulation (GDPR) in May 2018 and registration with the ICO is up to date. Staff are trained in data protection and engagement with ICO on legislation and data protection impact assessments is frequent and cooperative.

Written Authority

A written authority^[40] as described in the Scottish Public Finance Manual ^[41], was sought by the Portfolio Accountable Officer for Director General Economy in relation to the contract for the delivery of vessels 801 and 802 awarded by Caledonian Maritime Assets Ltd (CMAL) to Ferguson Marine Engineering Ltd (FMEL) in August 2015, and later brought into public ownership in August 2019 as Ferguson Marine Port Glasgow Limited (FMPG). This was on the basis the Portfolio Accountable Officer was not assured on the value for money of expenditure on 802. A value for money written authority need only be sought in relation to the implementation of policy. Accountable Officers are not answerable to the Parliament in respect of policy decisions. Policy is the responsibility of Ministers.

Risks relating to both the future of the yard and the delivery of the ferries are monitored as part of the Scottish Government risk management process with additional oversight being provided by the Strategic Assets Review Group. Further, the Scottish Government has instituted a series of regular meetings with the Chair, Interim Chief Executive and Chief Financial Officer, who is also the Accountable Officer for FMPG and weekly meetings with all operational parties as vessel 801 Glen Sannox moves towards its scheduled handover in 2024.

Remuneration and Staff Report

The information in the Remuneration and Staff Report relating to the remuneration and pension benefits of ministers, law officers, senior management and non-executive directors, fair pay disclosures, staff numbers, staff costs, analysis by pay bands and the number of exit packages have been audited by external auditors.

Appointments

Civil service appointments are made in accordance with the Civil Service Commissioners' Recruitment Principles, which require appointments to be on merit on the basis of fair and open competition, but also include the circumstances when appointments may otherwise be made.

Director-General members of the Scottish Government Corporate Board are appointed following approval by the Head of the Home Civil Service, following consultation with the First Minister in accordance with the Constitutional Reform and Governance Act 2010. Prior to the introduction of the Constitutional Reform and Governance Act 2010, appointments were approved by the Prime Minister.

Unless otherwise stated, all of the Executive members of the Scottish Government Corporate Board, covered by this report, hold appointments which are open-ended until they choose to retire. The rules for termination of appointments are set out in chapter 11 of the Civil Service Management Code. Early termination, other than for misconduct, would result in the individual receiving compensation as set out in the Civil Service Compensation Scheme. The Scottish Government, its Agencies and the Crown Office and Procurator Fiscal Service, in line with the rest of the UK Civil Service, introduced a policy of no mandatory retirement age for the Senior Civil Service from 1 October 2009, in line with the implementation of the Employment Equality (Age) Regulations 2006. Under current arrangements, an individual's pension will become payable from age 60 if they were employed in the Civil Service prior to 30 July 2007, and in these circumstances that employee can choose to leave work and collect his or her pension at any time from age 60, subject only to compliance with the basic notice of leave requirements. The Government announced a number of reforms to civil service pensions which were applied from 1 April 2015. Subsequent pension arrangements are detailed further below in the appropriate sections.

The Civil Service Commissioners website^[42] provides further information about their work.

The Non-Executive Directors provide advice, support and challenge to the Permanent Secretary as Principal Accountable Officer (PAO) and Director Generals as Accountable Officers (AO). Non-Executive Directors of the Scottish Government are appointed by the Permanent Secretary for an initial period of three years with an annual review.

Ronnie Hinds attended his final Corporate Board in March 2023 and ended his second and final term of appointment as a Non-Executive Director in June 2023. David Martin, who was appointed as a Non-Executive Director in March 2022, joined the Corporate Board for the first time in June 2023 and took over the Lead Non-Executive Director role from Ronnie Hinds.

The Terms and Conditions of Non-Executive Directors set out that the appointments may be terminated at any time by agreement, or with three months’ notice, provided by either party.

Remuneration Policy

The remuneration of senior civil servants (SCS) is set in accordance with the Civil Service Management Code^[43] and with independent advice from the Review Body on Senior Salaries (SSRB).

In reaching its recommendations, the SSRB is to have regard to the following considerations:

• The need to recruit, retain, motivate and where relevant, promote suitably able and qualified people to exercise their different responsibilities;
• Regional / local variations in labour markets and their effects on the recruitment, retention and, where relevant, promotion of staff;
• Government policies for improving the public services including the requirement on departments to meet the output targets for the delivery of departmental services;
• The funds available to departments as set out in the Government's departmental expenditure limits; and
• The Government's inflation target.

Further information about the work of the SSRB can be found via the Office of Manpower Economics.^[44]

SCS pay is reserved and decisions regarding pay levels and pay awards are in line with the UK SCS pay and performance framework and rules. Scottish Ministers provide governance oversight to support alignment with the Scottish Public Sector Pay Policy.

The SCS pay ranges with effect from 1 April 2023 were as follow:

SCS Pay Steps	Deputy Director 1	Deputy Director 1A	Director	Director General
Target Rate-4			£103,231	£131,936
Target Rate-3			£105,296	£134,574
Target Rate-2	£86,398	£86,398	£107,402	£137,265
Target Rate-1	£88,126	£88,126	£109,550	£140,011
Target Rate	£89,888	£89,888	£111,741	£142,812
Target Rate +1 (DD1A)		£91,152

There were no non-consolidated payments in 2023-24.

The Permanent Secretary’s salary and performance-related pay are set as part of a UK Cabinet Office framework and agreed by the Prime Minister.

Non-executive directors receive fees on a quarterly basis. Non-executive directors are also reimbursed for expenses incurred in the course of their duties.

Remuneration

The remuneration of the Cabinet Ministers who served over the year to 31 March 2024 and members of the Scottish Government Corporate Board is noted below.

Ministers (audited)

The remuneration of the First Minister and the Cabinet Ministers during the year to 31 March 2024 is shown in the table below. Ministerial salaries included in the table below are additional to the salaries (2023-24: £67,662, 2022-23: £66,662) and entitlements as MSPs which are borne by the Scottish Parliament. The full year salary rate for the First Minister is £98,016 (2022-23: £96,567) and for all other Cabinet Ministers is £50,849 (2022-23: £50,097).

	Salary 2023-24 £	Salary 2022-23 £	Pension Benefits *2023-24 £	Pension Benefits *2022-23 £	Total Remuneration 2023-24 £	Total Remuneration 2022-23 £
Humza Yousaf, MSP (1)	99,971	50,676	38,929	20,121	138,900	70,797
Nicola Sturgeon, MSP (2)	64,378	97,666	-	39,175	64,378	136,841
John Swinney, MSP (3)	12,524	49,828	-	20,311	12,524	70,139
Michael Matheson, MSP (4)	43,543	50,097	0	20,075	42,162	70,172
Shirley-Anne Somerville, MSP	50,849	50,097	9,795	19,812	60,644	69,879
Kate Forbes, MSP (5)	12,524	49,693	-	19,585	12,524	69,278
Keith Brown, MSP (6)	12,524	49,828	-	19,410	12,524	69,238
Mairi Gougeon, MSP	50,849	50,097	15,881	19,601	66,730	69,698
Angus Robertson, MSP	50,849	50,097	15,881	19,601	66,730	69,698
Shona Robison, MSP	50,849	50,097	15,881	19,601	66,730	69,698
Neil Gray, MSP (7)	50,849	404	22,356	181	73,205	585
Angela Constance, MSP (7)	50,849	404	17,275	140	68,124	544
Jenny Gilruth, MSP (7)	50,849	404	19,814	161	70,663	565
Mairi McAllan, MSP (7)	50,849	404	19,814	161	70,663	565
Fiona Hyslop (8)	7,452	-	2,803	-	10,255	-

* The value of pension benefits accrued during the year is calculated as the real increase in pension multiplied by 20 less the contributions made by the individual. The real increase excludes increases due to inflation or any increase or decrease due to a transfer of pension rights.

(1) Humza Yousaf was appointed as First Minister on 29 March 2023. The salary and total remuneration for 2023-24 includes a benefit-in-kind of £1,955 arising from the provision of accommodation at Bute House (2022-23: £79).

(2) Nicola Sturgeon stepped down as First Minister on 28 March 2023. The salary and total remuneration for 2022-23 included a benefit-in-kind of £1,878 arising from the provision of accommodation at Bute House. The former First Minister’s pension for 2022-23 was revised from £38,272 due to aggregating salaries for the Cabinet and First Minister roles, rather than calculating pension separately.

(3) John Swinney stepped down as Cabinet Minister as of 29 March 2023.

(4) Michael Matheson stepped down as Cabinet Minister 8 February 2024. As a result, the increase in pension was not sufficient to offset inflation increase, that is, in real terms, the pension value was negative. It is instead expressed as zero.

(5) Kate Forbes stepped down as Cabinet Minister on 28 March 2023.

(6) Keith Brown stepped down as Cabinet Minister on 29 March 2023.

(7) Neil Gray, Angela Constance, Jenny Gilruth and Mairi McAllen were appointed as Cabinet Ministers on 29 March 2023.

(8) Fiona Hyslop was appointed as Cabinet Minister on 8 February 2024.

Nicola Sturgeon, John Swinney, Keith Brown and Kate Forbes received MSP and office-holder resettlement grants in 2023-24 as per the Scottish Parliamentary Pensions Act 2009.

Scottish Government Ministers’ Pay Freeze Commitment

The Scottish Parliament Corporate Body (SPCB) is required under Chapter 46, Section 81 of the Scotland Act 1998 to make provision for the payment of salaries to MSPs, Officeholders of the Parliament and Ministers. A resolution of the Parliament to pay salaries in accordance with the Scottish Parliamentary Salaries Scheme was passed by the Parliament on a free vote on 21 March 2002. The Scheme determines that the Scottish Parliamentary Corporate Body should decide the salary levels for Members and Officeholders including the Law Officers. The Scheme determines that Members’ and Officeholders’ salary rates should be increased annually from 1 April in line with public sector pay rises in Scotland, using the Annual Survey of Hours and Earnings published by the Office for National Statistics.

Scottish Government Ministers and the Law Officers have previously agreed to freeze pay as at their April 2009 pay level. The Salaries Scheme does not give the power to withhold an annual increase. To achieve the required reduction, pay increases are deducted from the Ministers’ and the Law Officers’ net salaries and repurposed for use by the Scottish Government. The disclosure reflects the salary awarded under the Scottish Parliamentary Salaries Scheme.

Law Officers (audited)

The remuneration, comprising of salary and pension benefits, of the serving Law Officers for the year to 31 March 2024 is shown below:

	Salary 2023-24 £’000	Salary 2022-23 £’000	Pension Benefits *2023-24 £’000	Pension Benefits *2022-23 £’000	Total Remuneration 2023-24 £’000	Total Remuneration 2022-23 £’000
Dorothy Bain KC	134	132	42	52	176	184
Ruth Charteris KC	116	114	42	50	158	164

* The value of pension benefits accrued during the year is calculated as the real increase in pension multiplied by 20 less the contributions made by the individual. The real increase excludes increases due to inflation or any increase or decrease due to a transfer of pension rights.

No Law Officers received benefits-in-kind.

Senior Management Team (audited)

The remuneration of the Permanent Secretary and members of the Scottish Government Corporate Board for the year to 31 March 2024 were as follows:

	Salary 2023-24 £’000	Salary 2022-23 £’000	Pension Benefits *2023-24 £’000	Pension Benefits *2022-23 £’000	Total Remuneration 2023-24 £’000	Total Remuneration 2022-23 £’000
John-Paul Marks	180-185	170-175	58	87	240-245	260-265
Lesley Fraser	140-145	130-135	65	0	205-210	130-135
Paul Johnston (1)	-	140-145	-	8	-	150-155
Ken Thomson (2)	90-95	135-140	105	0	195-200	135-140
Alyson Stafford CBE	155-160	150-155	-	-	155-160	150-155
Nicky Richards	110-115	105-110	68	3	175-180	110-115
Ruaraidh Macniven	105-110	100-105	47	8	155-160	105-110
Elinor Mitchell (3)	-	30-35	-	17	-	50-55
Caroline Lamb	200-205	195-200	-	74	200-205	270-275
Joe Griffin	135-140	125-130	62	10	195-200	135-140
Jackie McAllister	110-115	100-105	52	0	160-165	100-105
Andy Bruce	105-110	95-100	48	15	155-160	110-115
Roy Brannen	135-140	125-130	65	65	200-205	190-195
Louise Macdonald OBE (4)	135-140	115-120	-	46	135-140	160-165
Gregor Irwin (5)	145-150	0-5	-	2	145-150	5-10
Neil Rennick (6)	90-95	-	-	-	90-95	-

* The value of pension benefits accrued during the year is calculated as the real increase in pension multiplied by 20 less the contributions made by the individual. The real increase excludes increases due to inflation or any increase or decrease due to a transfer of pension rights.

The final salary pension of a person in employment is calculated by reference to their pay and length of service. The pension will increase from one year to the next by virtue of any pay rise during the year. Where there is no or a small pay rise, the increase in pension due to extra service may not be sufficient to offset the inflation increase – that is, in real terms, the pension value can reduce from one year to the next. Where pension benefit would be a negative value, it is instead expressed as zero.

(1) Paul Johnston stepped down from the Corporate Board on 17 March 2023. The full year salary band in 2022-23 was £135-140k, however, his salary and total remuneration in the table above includes untaken annual leave and backdated salary payment as part of the 2022 pay award across the Scottish Government.

(2) Ken Thomson formally retired on 24 November 2023. The full year salary band in 2023-24 was £135-140k. His salary and total remuneration for 2023-24 includes untaken annual leave.

(3) Elinor Mitchell was the interim Director General of Economy until 2 May 2022. The full year salary band in 2022-23 was £120-125k. Her salary and total remuneration for 2022-23 included untaken annual leave and backdated salary payment as part of the 2022 pay award across the Scottish Government.

(4) Louise Macdonald joined the Corporate Board as the interim DG Economy on 2 May 2022 and was appointed as DG Communities on 20 March 2023. Her salary in 2022-23 has been restated due to a misstatement in the published accounts. The full year salary band in 2022-23 was £125-130k.

(5) Gregor Irwin was appointed as DG Economy as of 20 March 2023. The full year salary band in 2022-23 was £135-140k.

(6) Neil Rennick joined the Corporate Board as DG Education and Justice on 17 July 2023. He took over from Joe Griffin who moved into the role of DG Strategy and External Affairs from 4 September 2024. The full year salary band in 2023-24 was £130-135k.

The pension benefit figures for Caroline Lamb, Louise Macdonald, Gregor Irwin, and Neil Rennick are not included in this table for 2023-24 due to an exceptional delay in the calculation of these figures following the application of the public service pensions remedy.

No members of the Scottish Government Corporate Board received performance pay, or payments for voluntary severance or loss of office.

Fair pay disclosures (audited)

In accordance with the Government Financial Reporting Manual (FReM), reporting bodies are required to disclose the relationship between the mid-point of the remuneration of the highest-paid member of the Senior Management Team in their organisation and the median, 25^th and 75^th percentile remuneration of the organisation's workforce. The median and percentile calculations include directly employed staff paid through Scottish Government Core payroll, including both permanent staff and those on fixed term contracts.

Although the FReM requires agency and other temporary employees covering staff vacancies to be included in the below disclosures, annualised salaries are not set against Scottish Government grades in the current system and therefore cannot be included in the fair pay calculations. Additional information on agency and other temporary employees will be captured in Oracle Cloud, meaning that enhanced reporting will be possible following implementation.

The ratios are calculated as the mid-point of the highest band divided by the total remunerations.

The pay system within Scottish Government is such that there are a large number of staff on relatively few pay steps with significant gaps between some of them, resulting in a median, 25^th and 75^th percentile pay figure occasionally changing markedly from one year to the next.

The pay ratios are consistent with the pay, reward and progression policies for the Scottish Government’s employees taken as a whole.

	2023-24 £'000	2022-23 £'000
Minimum Total Remuneration	24	22
Maximum Total Remuneration	205	196
Band of Highest Paid member of the Corporate Board Total Remuneration	200-205	195-200

The total remuneration of the highest paid member of the Corporate Board increased by 5.5% between 2022-23 and 2023-24, while the total remuneration of Scottish Government employees taken as a whole increased by 13.8% in the same period.

The total pay and benefits and pay ratios to the highest paid Director are shown in the table below.

	2023-24	2022-23	Movement
25th percentile remuneration	£37,156	£33,120	12.2%
Ratio to highest paid Director	5.4:1	6.0:1
Median remuneration	£48,031	£42,855	12.1%
Ratio to highest paid Director	4.2:1	4.6:1
75th Percentile remuneration	£62,969	£57,355	9.8%
Ratio to highest paid Director	3.2:1	3.4:1

Equivalent information relating to senior managers of the other bodies consolidated within these accounts is given in their respective annual accounts.

Total remuneration includes salary, non-consolidated performance-related pay, and benefits-in-kind. It does not include severance payments, employer pension contributions or the cash equivalent transfer value of pensions.

No Senior Management Team officials received non-consolidated performance-related pay or benefits-in-kind.

Non-Executive Directors (audited)

Remuneration

Fees are paid on a quarterly basis for their position as Scottish Government Non-Executive Directors. The Scottish Government is treated as a Tier 1 organisation with reference to the Public Sector Pay Policy which describes pay arrangements for Chairs, Board Members and Public Appointments in terms of a daily fee, in a tiered system. Tier 1 reflects the importance, size and responsibilities of the Scottish Government within the Scottish public sector.

There is a differentiation in remuneration levels between:

• The Chair of SGAAC, who undertakes additional responsibilities compared with members of the Committee;
• The Lead Non-Executive Director, who undertakes additional supporting functions for the Principal Accountable Officer; and
• All other Non-Executive Directors who do not undertake any of the above roles.

Benefit-in-Kind

The monetary value of benefits-in-kind covers any benefits provided by the Scottish Government and treated by HM Revenue and Customs as a taxable emolument. No non-executive members of the Scottish Government Corporate Board received benefits-in-kind. The Non-Executive Directors do not participate in the Civil Service Pension Scheme.

The fees for the Non-Executive Directors who were members of the Scottish Government Corporate Board were as follows:

	2023-24 Fees £ ’ 000	Restated 2022-23 Fees £ ’ 000
Linda McKay (1)	-	5-10
Annie Gunner Logan (1)	-	5-10
Ronnie Hinds (2)	0-5	15-20
Jim Robertson (3)	15-20	0-5
Jayne Scott (3)	10-15	0-5
Belinda Oldfield (3)	10-15	0-5
David Martin (4)	10-15	-

The fees included for 2022-23 have been restated to reflect only the amounts received for their roles on the Corporate Board.

(1) Linda McKay and Annie Gunner Logan stepped down from the Corporate Board on 6 December 2022. Their full year fees were £10-15k.

(2) Ronnie Hinds concluded his Non-Executive Director appointment on 5 June 2023. The full year fee was £15-20k.

(3) Jim Robertson, Jayne Scott and Belinda Oldfield joined the Corporate Board on 21 March 2023. Their full year fees were £15-20k, £10-15k and £10-15k, respectively.

(4) David Martin joined the Corporate Board and became Lead Non-Executive Director on 6 June 2023. The full year fee was £15-20k.

Pension Benefits

Ministers (audited)

The pension entitlements of the Cabinet Team for the year to 31 March 2024 are shown below:

	Accrued pension at age 65 as at 31-Mar-24 £'000	Real increase in pension at age 65 £'000	CETV at 31-Mar-24 £'000	CETV at 31-Mar-23 £'000	Real Increase in CETV £'000
Humza Yousaf, FM	0-5	0-2.5	27	0	16
Michael Matheson, MSP	10-15	0-2.5	180	157	2
Shirley-Anne Somerville, MSP (1)	5-10	0-2.5	103	82	7
Mairi Gougeon, MSP	0-5	0-2.5	40	25	7
Angus Robertson, MSP	0-5	0-2.5	57	36	12
Shona Robison, MSP	0-5	0-2.5	61	38	13
Neil Gray, MSP	0-5	0-2.5	14	0	11
Angela Constance, MSP	0-5	0-2.5	16	0	13
Jenny Gilruth, MSP	0-5	0-2.5	14	0	9
Mairi McAllan, MSP	0-5	0-2.5	15	0	9
Fiona Hyslop, MSP	0-5	0-2.5	3	0	2

(1) Shirley-Anne Somerville’s CETV at 31 March 2023 has been revised due to an incorrect age factor used in last year’s pension calculations.

The real increase is the increase due to additional benefit accrual (i.e., because of salary changes and service) that is funded by the employer. It will be smaller than the difference between the start and end Cash Equivalent Transfer Values (CETVs) because it does not include any increase in the value of the pension due to inflation or due to the contributions paid by the employee or the value of any benefits transferred from another pension scheme. Nor does it include any increases (or decreases) because of any changes during the year in the actuarial factors used to calculate CETVs.

The Cash Equivalent Transfer Value

This is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the pension benefits they have accrued in their former scheme.

The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total Ministerial service, not just their current appointment as a Minister.

The Ministers are members of the Scottish Parliamentary Pension Scheme. Full details are available on the scheme website.^[45]

CETVs are calculated in accordance with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are taken.

Law Officers (audited)

The pension entitlements of the Law Officers are shown below:

	Accrued pension at pension age as at 31-Mar-24 £’000	Real increase in pension at pension age £’000	CETV at 31-Mar-24 £’000	CETV at 31-Mar-23 £’000	Real Increase in CETV £’000
Dorothy Bain KC	5-10	2.5-5	168	104	39
Ruth Charteris KC	5-10	0-2.5	116	72	30

Senior Management Team (audited)

The pension entitlements of the Permanent Secretary and Executive Members of the Scottish Government Corporate Board are as follows (equivalent information relating to senior managers of other bodies consolidated within these accounts is given in their respective annual accounts):

	Accrued pension at pension age and related lump sum as at 31-Mar-24 £'000	Real increase in pension and related lump sum at pension age £'000	CETV at 31-Mar-24 £'000	CETV at 31-Mar-23 £'000	Real Increase in CETV £'000	Employer contribution to partnership pension account £'000
John-Paul Marks	60-65	2.5-5	1,044	924	27	-
Alyson Stafford CBE (1)	-	-	-	-	-	23
Ken Thomson	65-70	5-7.5	1,461	1,330	103	-
Nicky Richards	45-50 plus a lump sum of 20-25	2.5-5 plus a lump sum of 0-2.5	937	804	56	-
Lesley Fraser	60-65 plus lump sum of 160-165	2.5-5 plus lump sum of 0-2.5	1,475	1,300	53	-
Ruaraidh Macniven	35-40 plus a lump sum of 100-105	2.5-5 plus a lump sum of 0-2.5	842	737	33	-
Joe Griffin	50-55 plus lump sum of 130-135	2.5-5 plus lump sum of 0-2.5	1,075	940	44	-
Jackie McAllister	55-60	2.5-5	1,034	913	35	-
Andy Bruce	30-35 plus a lump sum of 85-90	2.5-5 plus a lump sum of 0-2.5	664	577	29	-
Roy Brannen	60-65 plus a lump sum of 160-165	2.5-5 plus a lump sum of 0-2.5	1,467	1,293	53	-

(1) Alyson Stafford chose not to be covered by the Principal Civil Service Pension Scheme arrangements during the reporting years.

* CETV as at 31 March 2023 has been restated due to the application of the public service pension remedy for the Corporate Board members who started before 1 March 2015 and a change in calculation method for all Corporate Board members.

The pension benefit figures for Caroline Lamb, Louise Macdonald, Gregor Irwin, and Neil Rennick are not included in this table for 2023-24 due to an exceptional delay in the calculation of these figures following the application of the public service pensions remedy.

There is no automatic right to a lump sum for officials who are members of the Premium Pension Scheme or the Nuvos Pension Scheme.

The real increase is the increase due to additional benefit accrual (i.e., because of salary changes and service) that is funded by the employer. It will be smaller than the difference between the start and end Cash Equivalent Transfer Values (CETVs) because it does not include any increase in the value of the pension due to inflation or due to the contributions paid by the employee or the value of any benefits transferred from another pension scheme. Nor does it include any increases (or decreases) because of any changes during the year in the actuarial factors used to calculate CETVs.

Civil Service Pensions

Pension benefits are provided through the Civil Service pension arrangements. Before 1 April 2015, the only scheme was the Principal Civil Service Pension Scheme (PCSPS), which is divided into a few different sections – classic, premium, and classic plus provide benefits on a final salary basis, whilst nuvos provides benefits on a career average basis. From 1 April 2015 a new pension scheme for civil servants was introduced – the Civil Servants and Others Pension Scheme or alpha, which provides benefits on a career average basis. All newly appointed civil servants, and the majority of those already in service, joined the new scheme.

The PCSPS and alpha are unfunded statutory schemes. Employees and employers make contributions (employee contributions range between 4.6% and 8.05%, depending on salary). The balance of the cost of benefits in payment is met by monies voted by Parliament each year. Pensions in payment are increased annually in line with the Pensions Increase legislation. Instead of the defined benefit arrangements, employees may opt for a defined contribution pension with an employer contribution, the partnership pension account.

In alpha, pension builds up at a rate of 2.32% of pensionable earnings each year, and the total amount accrued is adjusted annually in line with a rate set by HM Treasury. Members may opt to give up (commute) pension for a lump sum up to the limits set by the Finance Act 2004. All members who switched to alpha from the PCSPS had their PCSPS benefits ‘banked’, with those with earlier benefits in one of the final salary sections of the PCSPS having those benefits based on their final salary when they leave alpha.

The accrued pensions shown in this report are the pension the member is entitled to receive when they reach normal pension age, or immediately on ceasing to be an active member of the scheme if they are already at or over normal pension age. Normal pension age is 60 for members of classic, premium, and classic plus, 65 for members of nuvos, and the higher of 65 or State Pension Age for members of alpha. The pension figures in this report show pension earned in PCSPS or alpha – as appropriate. Where a member has benefits in both the PCSPS and alpha, the figures show the combined value of their benefits in the two schemes but note that the constituent parts of that pension may be payable from different ages.

When the Government introduced new public service pension schemes in 2015, there were transitional arrangements which treated existing scheme members differently based on their age. Older members of the PCSPS remained in that scheme, rather than moving to alpha. In 2018, the Court of Appeal found that the transitional arrangements in the public service pension schemes unlawfully discriminated against younger members.

As a result, steps are being taken to remedy those 2015 reforms, making the pension scheme provisions fair to all members. The public service pensions remedy^[46] is made up of two parts. The first part closed the PCSPS on 31 March 2022, with all active members becoming members of alpha from 1 April 2022. The second part removes the age discrimination for the remedy period, between 1 April 2015 and 31 March 2022, by moving the membership of eligible members during this period back into the PCSPS on 1 October 2023. This is known as “rollback”.

For members who are in scope of the public service pension remedy, the calculation of their benefits for the purpose of calculating their Cash Equivalent Transfer Value and their single total figure of remuneration, as of 31 March 2023 and 31 March 2024, reflects the fact that membership between 1 April 2015 and 31 March 2022 has been rolled back into the PCSPS. Although members will in due course get an option to decide whether that period should count towards PCSPS or alpha benefits, the figures show the rolled back position i.e., PCSPS benefits for that period.

The partnership pension account is an occupational defined contribution pension arrangement which is part of the Legal & General Mastertrust. The employer makes a basic contribution of between 8% and 14.75% (depending on the age of the member). The employee does not have to contribute but, where they do make contributions, the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer’s basic contribution). Employers also contribute a further 0.5% of pensionable salary to cover the cost of centrally provided risk benefit cover (death in service and ill health retirement).

For 2023-24 Scottish Government employers’ contributions of £189 million (2022-23: £169 million) were payable to PCSPS at one of four rates in the range 26.6% to 30.3% of pensionable pay, based on salary bands. The Scheme Actuary reviews employer contributions every four years following a full scheme valuation. The contribution rates are set to meet the cost of the benefits accruing during 2023-24 to be paid when the member retires, and not the benefits paid during this period to existing pensioners.

For 2023-24 the value of Scottish Government employers’ contributions relating to the partnership pension account was £984k (2022-23: £869k). There were no contributions due to the partnership pension or prepaid at the balance sheet date.

Further details regarding the Civil Service pension arrangements are available on the scheme website.^[47]

Cash Equivalent Transfer Values for Civil Service pensions

A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies.

The figures include the value of any pension benefit in another scheme or arrangement which the member has transferred to the Civil Service pension arrangements. They also include any additional pension benefit accrued to the member as a result of their buying additional pension benefits at their own cost.

CETVs are worked out in accordance with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are taken.

Real increase in CETV

This reflects the increase in CETV that is funded by the employer. It does not include the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.

Court of Appeal judgement on public sector pension reforms

In 2015 the UK Government introduced reforms to public sector pensions. Most civil servants were moved into a new (“alpha”) pension scheme. In December 2018, the Court of Appeal ruled that the transitional protection provided to some members of the judicial and fire fighters’ schemes as part of the reforms amounted to unlawful age discrimination. On 15 July 2019 the Chief Secretary to the Treasury made a written ministerial statement confirming that, as ‘transitional protection’ was offered to members of all the main public service pension schemes, the difference in treatment will need to be removed across all those schemes for members with relevant service.

Following consultation, the UK Government announced ‘2015 Remedy’ on 4 February 2021 according to which all members of civil service pensions who continued in service from 1 April 2022 onwards do so as members of alpha. Classic, classic plus, premium and nuvos were closed in relation to service after 31 March 2022.

The McCloud 2015 Remedy project formally commenced in April 2021 to address the discrimination deemed to have affected younger members when the reformed schemes were introduced in 2015. The decision announced in February 2021 was that a Deferred Choice Underpin would be introduced allowing members to choose which scheme they wished to be part of for the remedy period which spans from 1 April 2015 to 31 March 2022. Active and deferred members will have the opportunity to make that choice on retirement while retired members will have their award assessed separately for any detriment and they can also choose which scheme benefits they wish to take with their pension payment being retrospectively amended.

A public consultation ran from 6 March 2023 to 14 May 2023 for the detailed changes needed to carry out the McCloud remedy for affected Civil Service Pension Scheme members. These changes will be made in the proposed scheme regulations which will allow the scheme manager to put right any unlawful treatment that happened, whilst providing members with a choice about their pension benefits for the remedy period.

The 2015 Remedy (McCloud) legislation came into effect on 1 October 2023. Any members that wish to retire from this date onwards will receive an expended quote pack which outlines two retirement quotations under their Legacy (classic, classic plus, premium and nuvos) and Reformed scheme (alpha). At the retirement stage, they will be required to choose the benefits they wish to receive for their service within the Remedy period, that is, between 1 April 2015 and 31 March 2022. Retired members will receive a Remediable Service Statement providing them with their Immediate Choice options for both Legacy and Reformed schemes. They will receive an illustration document and additional supporting information to help them decide on the benefits they wish to receive for their service within the Remedy period.

Further information regarding this discrimination, the latest update on the legislative process and scheme valuations can be found on the Civil Service Pensions website.^[48]

People and Culture

Staff numbers and related costs (audited)

Staff numbers (Full time equivalent)	No. of Special Advisers	Perman-ent Staff	Other	2023-24 Total	Restated 2022-23* Total
Administration	16	1,788	493	2,297	2,116
Constitution, External Affairs and Culture		147	95	242	233
Deputy First Minister and Finance		1,209	172	1,381	1,406
Education & Skills		1,555	201	1,756	1,785
Wellbeing Economy, Fair Work and Energy		799	145	944	1,037
NHS Recovery, Health and Social Care		160,389	6,329	166,718	163,972
Justice and Home Affairs		4,685	5	4,690	4,589
Transport, Net Zero and Just Transition		933	187	1,120	1,054
Rural Affairs, Land Reform and Islands		1,973	97	2,070	2,239
Social Justice		4,641	165	4,806	5,019
Crown Office and Procurator Fiscal Service		2,465	66	2,531	2,326
Scottish Government Corporate Board		13	0	13	13
Total	16	180,597	7,955	188,568	185,789

Staff costs		2023-24 £'m			2022-23 £'m
Wages and Salaries (Permanent staff)		8,763			7,951
Social security costs (Permanent staff)		960			889
Other pension costs (Permanent staff)		1,671			1,519
Sub-total		11,394			10,359
Non-Permanent Staff (including Agency, temporary, contract staff and inward secondments)		686			746
Total		12,080			11,105
Less recoveries in respect of outward secondments		(206)			(180)
Total net costs		11,874			10,925

Number and cost of exit packages

Exit Packages Cost Band	No of compulsory redundancies agreed 2023-24	No of other departures agreed 2023-24	Cost of exit packages 2023-24 £000	No of departures agreed 2022-23	Cost of exit packages 2022-23 £000
<£10,000	9	47	256	250	1,038
£10,000 to £25,000	-	18	278	16	300
£25,000 to £50,000	1	12	463	23	817
£50,000 to £100,000	-	46	3,456	63	4,636
£100,000 to £150,000	-	2	234	1	131
£150,000 to £200,000	-	1	160	1	158
£200,000 to £250,000	-	-	-	-	-
£250,000+	-	-	-	-	-
Total number / cost of exit packages	10	126	4,847	354	7,080

There were 10 compulsory redundancies in 2023-24 (2022-23: 15).

*The staff numbers for 2022-23 have been restated due to the new Portfolio structure introduced for 2023-24 and additional non-permanent staff (1,327) not included previously.

Diversity and Inclusion

Our ambition in Scottish Government is to be a diverse and inclusive organisation where everyone feels welcome and respected, and which better reflects the communities we serve. Our two Employer Equality Outcomes set the future state where we seek to become more diverse and more inclusive by 2025.

Diversity and Inclusion Employer Strategy

In April 2024 Scottish Government launched its Diversity and Inclusion Employer Strategy which puts equality and inclusion at the heart of our workplace.

The strategy is designed to concentrate efforts and help us apply our resources and capacity to where experience at work is the poorest. Priorities have been shaped by the lived experiences of staff from all equality groups. These were drawn from the most comprehensive data ever gathered on our workforce diversity and experience.

Our approach covers all protected characteristics within the Equality Act 2010 whilst our scope was also extended to socio-economic backgrounds as far as possible to recognise our Fairer Scotland Duty. Collectively, these are our equality groups.

The whole employee journey was analysed and we identified poorer experience for equality groups in 14 of the 26 different points. Of those, nine points showed a poorer experience for four or more equality groups. This indicated that a multi strand and intersectional approach was needed. Focus has therefore shifted from single group plans to a single strategy and action plan that will deliver the greatest impact.

Gamechangers and hot topics

For our 2024-27 action plan our focus is across four gamechanger themes grouping together related areas of the employee lifecycle where two or more of our data sources indicate a poorer experience for one, multiple or all equality groups. We call these related areas our hot topics.

The gamechangers and hot topics within each are:

• Getting Started in Scottish Government: application, sift, interview and onboarding;
• Promoting Positive Behaviours: line managers, discrimination, and bullying and harassment;
• Achieving Equity: absences, leavers, performance, workplace adjustments, and workplace and hybrid; and
• Opportunities, Connections and Voice: learning and development, and progression.

By grouping them into broader gamechangers we are promoting cross cutting activity to create synergy and to maximise the potential for positive impact across multiple hot topics.

The strategy builds on the learning and experience from our previous disability, race and socio-economic diversity action plans which it replaces. It has also been shaped by our diversity staff networks and their valuable work over many years in building a more progressive and inclusive organisation.

The Action Plan

The strategy is supported by an iterative Action Plan. Actions have been co-produced by action owners from across the DG Corporate. Key performance indicators (KPIs) are embedded within the Action Plan. They will monitor impact and be the clear indicators of success from the outset.

Plans will be delivered, updated and reproduced on a three-year to four-year cycle, adopting the same change theory approach and aligning with revisions of our Employer Equality Outcomes.

Diversity and Inclusion Governance Group

The role of the Diversity and Inclusion Governance Group is to create accountability. Chaired by the Executive Team Ally for diversity and inclusion, who is also the Director General Corporate, this group will oversee successful implementation of the strategy, monitoring the pace and the scale of impact.

Diverse voices are represented via diversity staff networks and the Council of Scottish Government Unions to represent employee collective interests. Also included are external equality group organisations and senior leaders accountable for delivery of actions in their functional areas and role modelling the changes we want to see.

Workforce data and insights

To make this strategy data driven, we broadened and deepened our workforce data. Applying equal weighting to qualitative data we heard directly from employees and quantitative data from workforce statistics.

More broadly, a Diversity and Inclusion dashboard was developed in 2023-24 which sets out a single set of KPIs to measure progress towards targets. It provides a red, amber and green impact status report for each target and is updated every six months for review and discussion by our Executive Team.

This year also saw the Employee Insights series. This was an initiative to fill gaps in qualitative data for developing the strategy and for ongoing use in corporate Equality Impact Assessments. This was co-designed by diversity staff networks and delivered by the Strategy and Insights Team. Employees from all equality groups used focus groups, surveys and interviews to share experience at work and in particular at specific points of the employee journey. They also shared perceptions and expectations around inclusion issues and what they would like to see in the future.

Our Mutual Mentoring Programme

The Mutual Mentoring Programme is in its fifth year and extended to all traditionally under-represented equality groups where leaders and individuals with a protected characteristic share experience for mutual benefit. There were 179 partnerships in 2023-24. Hearing personal experiences promotes a more inclusive leadership and allies which helps remove barriers stopping our diverse talent make their best contributions. Matching that talent with senior leaders creates a unique space to share career advice, helping increase representation at all levels.

Our Employee Passport

The passport was launched in January 2022 and was adopted in 2023-24 by over a dozen Scottish Government agencies. This represents a further 10,000 colleagues. An employee passport provides a framework for colleagues to have a discussion with their managers about individual circumstances, health conditions or commitments which impact their work and agree any informal adjustments to support them.

It also creates a direct entry route to the HR Workplace Adjustments Service team when more formal or more complex reasonable adjustments are needed.

The passport takes a new approach to support employees to perform at their best. Recognising everyone, at some point in their career, will face circumstances that impact them at work.

Inclusive learning and culture

Opportunities for learning, building an understanding of the value of diversity and what it means in practice, and how to take action to build an inclusive culture are at the heart of our Diversity and Inclusion work.

We have a distinct Diversity and Inclusion curriculum. It operates as an agile project meaning we can adapt quickly to concentrate on developing resource where it is needed most. Following on from the mandatory training roll out, an updated mandatory e-learning was released for all Core Scottish Government staff and available to any other agency.

Other resources developed included diversity data packs and equality impact assessment learning resources, a learning suite for building meaningful diversity and inclusion objectives. We also developed an Islam awareness learning pack, lived experience animations, learning packs to mainstream Diversity and Inclusion sessions as part of the DG Corporate quarterly event series and strengthening our seven equality mainstreaming asks delivery.

Recruitment and Progression

We are constantly adapting our service to deliver a better candidate experience based on their feedback.

We are making it easier to request adjustments at the assessment stage of the recruitment process and this empowers candidates to get the support they need. Greater flexibility and choice in candidate assessments have also enabled hiring managers to create assessments which are inclusive and accessible for all.

A new portal for external recruitment was launched in April 2024. It contains short lived experience videos of staff talking about their experience of working in Scottish Government. It also highlights that support is available to anyone considering a career in the Scottish Government by showcasing the work of the workplace adjustments team.

Diversity staff network support framework

Diversity staff networks provide peer support and make connections that build the sense of belonging, a core aspect of inclusion. The Scottish Government has a long history of supporting diversity staff networks. Introduced in 2022, the network support framework offers corporate support along with an Executive Team Ally and a Senior Civil Servant (SCS) Champion for each equality group.

Designated diversity staff networks represent the collective interests of their network members. Staff diversity networks help us make our best and most inclusive employer policies and services and they raise awareness of issues and challenges relating to employee experience in the workplace.

Staff Relations and Equality

The annual Civil Service People Survey looks at civil servants’ attitudes to, and experience of working in government departments. Every year, a Civil Service benchmark report is published along with a summary of department and agency scores. The Scottish Government staff response rate for 2023 was 75% (2022: 73%). Further information, including in regard to the consolidated agencies, can be found via our People Survey.^[49]

Staff turnover based on permanent staff average headcount in the Core Scottish Government for 2023-24 was 4.38% (2022-23: 4.44%).

In 2023-24, an average of 8.16 working days (2022-23: 8.05) were lost per staff year for the Core Scottish Government with the target at 7 days. The NHS Bodies in Scotland report their sickness absence rates based on contracted hours lost rather than days lost due to different shift patterns in the NHS Scotland workforce. The sickness absence rate across NHS Scotland for the year to 31 March 2024 was 6.3% of total contracted hours (2022-23: 6.2% of total contracted hours). Sickness absence rates for agencies and other consolidated bodies can be found in their individually published annual accounts.

During 2023-24 there were 57,049 male staff, 182,906 female staff and 96 who prefer not to say (2022-23: 56,448 male, 181,599 female and 127 prefer not to say staff). Within these totals were 6,545 male and 6,714 female Senior Civil Servants or equivalent (2022-23: 4,338 male and 3,781 female Senior Civil Servants). These staff numbers are measured as head count numbers and not full time equivalents as used in the staff numbers table. Further information on staff composition can be found in our Equality Outcomes and Mainstreaming Report.^[50]

Number of Senior Civil Servants and equivalent by pay band (audited):

Pay band	2023-24 headcount	2022-23 headcount
Deputy director or equivalent	5,510	3,973
Director or equivalent	2,307	2,152
Director General or equivalent	5,504	4,792
Permanent Secretary	1	1
Total	13,322*	10,918*

* The difference between total male and female Senior Civil Servants and the total number of Senior Civil Servants by pay band is due to the different pay ranges for Senior Management of the Core Scottish Government and NHS Scotland. These numbers include senior clinical staff in NHS.

Facility time used by recognised trade union representatives of the Scottish Government and its non-consolidated entities has been reported^[51] for the period between 1 April 2023 and 31 March 2024 as follows:

• Number of employees who were trade union officials during the relevant period: 165
• Full time equivalent employee number: 159
• Total cost of facility time: £827,593
• Total pay bill spent on paying employees who were relevant trade union officials for facility time: £977,347,330
• Facility time as a percentage of total pay bill*: 0.08%
• Time spent on paid Trade Union activities as a percentage of total paid facility time**: 33.81%

* Calculated as (total cost of facility time / total bill) x 100

** Calculated as (total hours spent on paid trade union activities by relevant trade union official during the relevant period / total paid facility time hours) x 100

Percentage of working hours spent on facility time by trade union representatives	Number of trade union representatives
0%	24
1 – 50%	134
51 – 99%	0
100%	7

The average number of disabled employees employed by the Scottish Government, its Executive Agencies, Health Bodies and the Crown Office and Procurator Fiscal Service over the year to 31 March 2024 was 4,968 (2022-23: 4,536).

Losses, Gifts and Special Payments

The following losses and special payments have been audited by the Scottish Government’s auditors. Losses and special payments are in the nature of transactions which Parliament cannot be supposed to have contemplated when approving the annual Budget Act and subsequent Amendment Orders. The Scottish Public Finance Manual requires a formal approval procedure to regularise such transactions and their notation in the annual accounts.

Losses Statement

Portfolio	2023-24	2023-24	Restated 2022-23
	No. of Cases	£m	£m
NHS Recovery, Health and Social Care	4,291	21.93	20.36
Social Justice	1,975	2.90	0.80
Wellbeing Economy, Fair Work and Energy	15	0.32	1.00
Education and Skills	6,611	12.32	0.19
Justice and Home Affairs	438	0.01	0.13
Transport, Net Zero and Just Transition	13	0.43	0.57
Rural Affairs, Land Reform and Islands	42	0.31	0.01
Deputy First Minister and Finance	564	1.01	0.67
Constitution, External Affairs and Culture	-	-	-
Crown Office and Procurator Fiscal Service	8	0.02	-
Administration	42	0.46	1.02

* Restated due to prior year adjustment to the Deputy First Minister and Finance figures from £0.85m to £0.67m due to change in AiB prior year reported losses.

Details of cases over £0.30m:

Portfolio	2023-24	Details	2023-24
	No of Cases		£m
NHS Recovery, Health & Social Care: NHS National Services Scotland	1	Expired stock – flu and COVID vaccines	2.83
	1	National Distribution Centre stock loss	1.48
	1	Surplus PPE pandemic stock – donated to KidsOR for Africa charity	0.69
	1	Expired stock – Pandemic Personal Protection Equipment	5.59
	1	Expired stock – National Emergency planning medicines stockpile	2.09
NHS Recovery, Health & Social Care: NHS Boards		Unable to recover advance payments made to Lloyds Pharmacy Ltd following liquidation:
	1	NHS Ayrshire & Arran	0.39
		NHS Dumfries and Galloway	0.39
	1	NHS Fife	0.95
	1	NHS Forth Valley	0.56
	1	NHS Greater Glasgow and Clyde	1.43
	1	NHS Highland	1.08
	1	NHS Lanarkshire	0.56
	1	NHS Lothian	2.38
Education and Skills	6,605	Write offs of student loans, none of which are individually over £0.3m	12.22

Special Payments

Portfolio	2023-24	2023-24	2022-23
	No. of Cases	£m	£m
NHS Recovery, Health and Social Care	1,005	59.57	56.62
Social Justice	919	0.27	-
Wellbeing Economy, Fair Work and Energy	-	-	-
Education and Skills	-	-	-
Justice and Home Affairs	1,646	7.99	5.39
Transport, Net Zero and Just Transition	-	-	-
Rural Affairs, Land Reform and Islands	1	0.01	-
Deputy First Minister and Finance	17	0.02	0.01
Constitution, External Affairs and Culture	-	-	-
Crown Office and Procurator Fiscal Service	19	0.34	16.24
Administration	-	-	-

Details of cases over £0.30m:

Portfolio	2023-24	Details	2023-24
	No of Cases		£m
NHS Recovery, Health & Social Care: NHS Boards		Clinical Compensation Payments:
	2	NHS Ayrshire & Arran	4.82
		NHS Dumfries and Galloway
	1	NHS Fife	0.57
	2	NHS Forth Valley	8.64
	3	NHS Grampian	5.21
	6	NHS Greater Glasgow and Clyde	3.56
	2	NHS Highland	0.85
	2	NHS Lanarkshire	0.73
	5	NHS Lothian	2.47
	4	NHS Tayside	5.05
NHS Recovery, Health & Social Care: NHS Boards		Non-clinical compensation payments
	1	NHS Highland	0.37
	1	NHS Grampian	0.61
	1	NHS Greater Glasgow and Clyde	0.55

Gifts

The Scottish Government made gifts in the year as follows:

Portfolio	2023-24	2023-24	2022-23
	No. of Cases	£m	£m
NHS Recovery, Health and Social Care	-	-	-
Social Justice	-	-	-
Wellbeing Economy, Fair Work and Energy	-	-	-
Education and Skills	2	-	-
Justice and Home Affairs	-	-	-
Transport, Net Zero and Just Transition	-	-	-
Rural Affairs, Land Reform and Islands	2	-	-
Deputy First Minister and Finance	-	-	-
Constitution, External Affairs and Culture	-	-	-
Crown Office and Procurator Fiscal Service	-	-	-
Administration	-	-	-

There were no cases over £0.30 million in 2023-24 (2022-23: nil).

John-Paul Marks

Principal Accountable Officer

08 October 2024