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

Summaries of Resource, Capital and Total Outturn Consolidated Portfolio Outturn Statements

NHS Recovery, Health and Social Care

Explanation of Major Variances greater than £5m:

1. £69 million resource underspend arising due to late consequentials and Portfolio drive to reduce expenditure and support 2024-25 position, offset by overspends in depreciation (£26m) within the Care Inspectorate (£4m) and other expenditure across the Portfolio.

2. Higher than anticipated levels of non-cash NHS provisions and impairments.

3. Higher than anticipated depreciation, impairments and liability revaluations of NHS NPD/PPP/PFI schemes, primarily due to changes in accounting standards; the application of IFRS 16.

4. Higher than anticipated capital requirements for NHS Right of Use Assets recognised under IFRS 16 Leases.

Social Justice

Explanation of Major Variances greater than £5m:

1. The majority of the underspend relates to budget transfers not processed at Spring Budget Revision, including £17m for the Ukraine Long Term Resettlement Fund (ULTRF) which supports Local Authorities and Registered Social Landlords to bring empty properties back into use for Ukrainians to live in and £9m underspend in More Homes to relieve pressures in other areas of the Social Justice Portfolio. See also note 4, where the expenditure has been incurred.

2. Planned saving to assist with balancing Scottish Government budget. Achieved through staffing and discretionary cost savings including lower than anticipated charges for formal agreements with the Department for Work and Pensions and lower than anticipated depreciation charge due to changing asset lives.

3. Benefit expenditure is demand led and cannot be controlled in the same way as other budgets where spending limits can be set. Further information on benefit spend can be found in the Social Security Scotland accounts for 2023-24 at Social Security Scotland Publications.

4. £17m of the overspend relates to the required budget transfer not being processed at Spring Budget Revision for the Ukraine Long Term Resettlement Fund (ULTRF) which supports Local Authorities and Registered Social Landlords to bring empty properties back into use for Ukrainians to live in (see note 1). In addition, £4m overspend as a result of higher than anticipated cost of temporary accommodation in 23-24 due to the success of the super sponsor scheme (displaced Ukrainians are sponsored by hosts that offer them accommodation for at least six months).

5. Relates to year-end fair value adjustments for housing loans, shared equity schemes and charitable bands. Loan adjustments are discounted in year 1 (depending on the interest rate charged on loans), and the discount unwound in subsequent years.

6. This expenditure is to recognise a new provision in year, in relation to a Legal Entitlement and Administrative Practices (LEAP) review being conducted by the Department for Work and Pensions on Personal Independence Payment. New data resulted in a late shift of liability between the Department for Work and Pensions and Social Security Scotland and Scottish Government have provided written permission for the overspend.

7. £20m uncommitted spend in More Homes Financial Transactions programme (a combination of shared equity investment and medium/long term loans and repayments from various loan schemes) off-set by £12m reduction in anticipated receipts from the sale of investments in shared equity properties due to unfavourable market conditions.

Wellbeing Economy, Fair Work and Energy

Wellbeing Economy, Fair Work and Energy Outturn Statement (continued)

Explanation of Major Variances greater than £5m:

1. There are several directorates within Energy that have contributed to the overall underspend within this budget line, including a £5m underspend within the directorate for Offshore Wind due to prudent recruitment policy and delayed timelines in Scottish Marine Energy Research projects with £2m of spend now expected to occur in 2024-25. There was a net £4m underspend within the Directorate for Energy and Climate Change due to: Electricity Statutory Consents income being higher than expected; £3m underspend in Energy Industries reflecting the final position of demand led claims across various projects; and £3m underspend in the Community and Renewable Energy Scheme (CARES) programme due to slippage on both the Community Buildings Fund and off electricity grid projects.

2. There was £6m underspend due to pausing and reprioritisation of spending plans to assist with balancing the SG budget. Income was also higher than budgeted due to a release of £10m Gainshare Income. As part of the agreement between Scottish Ministers and BT, under the Digital Scotland Superfast Broadband programme, SG was entitled to a clawback of funds. This £10m tranche of Gainshare income was realised in 23-24 and utilised to offset cost of infrastructure relating to the R100 programme.

3. There was an underspend of £15m for Employability Services and Workplace Skills programmes due to difficulties in recruiting onto the programmes and contributions to overall savings to support overall financial pressures which resulted in delays to programme delivery. This underspend was partially offset by staffing pressures following restructure of DG Economy and salary uplifts after pay awards.

4. There are several directorates within Enterprise, Trade and Investment that have contributed to the overall underspend within this budget line including:

• £10m underspend relates to the revaluation of a loan to Prestwick Airport. The loan had been impaired in 2018-19 but following the improved performance and valuation of the airport, the impairment has been partially reversed;
• £9m underspend for European Social Funds following technical assistance income of £2.5m, and due to the recording of write offs against the European Social Funds/European Regional Development Fund level 2 (see note 5 below);
• £5m underspend following the return of unused prior year Covid spend to the SG by Edinburgh City Council;
• £7m unbudgeted income from the Scottish Growth Scheme and Energy Investment Fund after accounting for fund management fees;
• £12m underspend in Grant in Aid to Scottish Enterprise. The main reasons behind this were higher than expected investment income (£4m), and a number of deals planned for March slipping into 2024-25 (£5m); and
• £4m overspend relating to the Techscalers programme and Stewart Review activity, due in part to the Stewart Review activity being initially unfunded.

5. Overspend of £9m following write offs for the European Social Funds, the budget for which was held within the Enterprise Trade and Investment Directorate (see note 4 above).

6. The £8m underspend on City and Region Investments is mainly due to several projects slipping into 2024-25 due to higher construction costs relating to inflation, changes to unviable projects, and local authority resource constraints. Spend also slowed due to delays in Skills Projects.

7. Ferguson Marine overspend due to impairment of assets under construction following updated valuation of vessels 801 and 802, and £3m overspend in relation to crew costs for operational readiness of Glen Sannox (vessel 801).

8. There has been a decrease in the provision held against the European Social Fund. This provision initially arose due to the risk of financial loss in the European Social Fund as forecasts estimate that the value of reclaimable funds from the EU is less than the total amount approved and paid by the Scottish Government to Lead Partners within the programme.

9. Overspend following an impairment in the valuation of the bank’s investments. These have partially been affected by movements in the Bank of England’s base interest rate.

10. Overspend for additional reworks by Ferguson Marine for the construction of vessels 801 (Glen Sannox) and 802.

11. The main reason for the underspend against other Capital expenditure are unbudgeted loan repayments of £15m from the Scottish Growth Scheme, in relation to the multiple funds managed by them (see further information at Scottish Growth Scheme website).

Education and Skills

Education and Skills Outturn Statement (continued)

Explanation of Major Variances greater than £5m:

1. There is a £4m overspend relating to 6 projects supported by the Learning Estate Investment Programme (LEIP). In addition there was a £2m Teacher Training overspend due to the Teacher pay deal and other smaller variances elsewhere in the portfolio.

2. Payments from linked contributors to the Redress Scheme for survivors of historic abuse in care were higher than anticipated resulting in a £14m cost reduction to the Scottish Government. Scottish Child Abuse Inquiry spend was £7m higher than budget (no budget adjustment made at Spring Budget Revision). Scottish Child Abuse Inquiry Costs are mainly demand led based on evidence sessions held. There were also savings within the Child Protection directorate of £5m due to the later start of Pathfinder and Affiliate schemes and a £2m saving from Promise Scotland and Promise Partnership funding being transferred to Early Learning and Childcare.

3. Due to delays in claims of European Social Funding in 2020-21, Skills Development Scotland (SDS) were previously provided with additional cashflow support to continue to pay training providers at the request of Scottish Ministers. In 2023-24 European Social Fund income was received so less grant in aid was therefore required in 2023-24, resulting in an underspend of £13m. There was also an underspend of £2m related to the Education Maintenance Allowance (EMA) as demand for this grant was lower than expected.

4. There was a £92m saving in 2023-24 due to the Scottish Government decision on Scottish Funding Council 2022-23 reprofiling at the end of March 2023. During 2023-24 there was an additional £28.5m Scottish Funding Council saving to provide funding to help meet Scottish Government spending priorities. The savings were generated from natural underspends which included: college student support of £2m; unspent reprofiling from 2022-23 of £11.5m; job evaluation underspend of £6m as the liability for job evaluation has now passed to the Scottish Government; and underspends from ring-fenced amounts totalling £10m. These savings were partially offset by a £5m Scottish Government payment to the Scottish Funding Council for Glasgow School of Art and the allocation of £6m Barnett consequentials to the Scottish Funding Council.

5. The reported underspend in Higher Education Student Support is driven by the cost of Providing Student Loans though the RAB and Stock Charges. A ring-fenced non-cash credit budget of £463m was provided however due to the drivers in the Student Loan model (including set interest rates and discount rates) the final charge was a cost of £312 million, a movement of £151m driven by lower provision for write offs. (for more details see the accounting policies note and note 11e.) This is a ring-fenced budget and not available for use elsewhere in the Education portfolio. In addition there was a £17m Student Support and Tuition Fee underspend due to lower than anticipated student numbers.

6. Redress Scheme - creation of a provision for future payments under the Redress Scheme. This is the value estimated as at 31st March 2024 based on average payments per application type and anticipated application numbers, after discounting the provision to present value (in line with accounting standards). The overall cost will be offset by amounts due to the SG from contributors to the scheme, in line with the legal arrangements in place with these bodies. However in line with accounting standards (IAS 37), this income cannot be recognised until it is virtually certain we will receive it. See Contingent Assets note 20a.

7. This non-cash variance is predominantly due to movement in the fair value calculation in relation to Student Loans caused by the inflation rate remaining higher than forecast (for more details see the accounting policies note and note 11e).

8. Student Loans - applications for loan funding were below expected levels. There were also higher student loan repayments than expected. In addition capitalised interest was lower than anticipated.

Justice and Home Affairs

Explanation of Major Variances greater than £5m:

1. The Legal Aid overspend for 2023-24 is mainly derived from an increase in costs in relation to uplifts in legal aid fees, the introduction of the summary case management pilot as part of the wider programme of the Scottish Government's Transformation Change for Criminal Justice system, Solemn Fee reform, increases in civil and summary cases, increases in applications for Civil Advice by way of representation and the increased uptake of Interim Fees.

2. £11m of the variance is due to changes in the Scottish contribution to the UK Government led emergency services telecoms systems Airwave, Firelink and the Emergency Services Communication Programme (ESMCP). Airwave and Firelink are the existing Home Office led Emergency Services telecommunications systems. ESMCP is a Home Office led programme to deliver the new Emergency Services Network (ESN). The Scottish Government is a Funding Sponsor Body on behalf of the three Scottish Emergency Services, contributing 11.2% of total Programme Costs.

3. Police and Fire pensions are demand led, therefore the variance is the result of fewer than expected officers retiring in 2023-24 than projected. This may have a knock on effect to forecasts in 2024-25.

4. Police Scotland required an additional £10m in working capital to ensure a sufficient cash balance was maintained at year end.

5. Scottish Fire and Rescue Service required an additional £13m in working capital requirements.

6. The overspend in AME largely relates to a downward valuation of HMP Stirling to the extent of £19m. The building was revalued when it became operational during 2023-24.

Transport, Net Zero and Just Transition

Transport, Net Zero and Just Transition Outturn Statement (continued)

Explanation of Major Variances greater than £5m:

1. £43 million of the underspend in Rail Services is predominantly due to the finalisation of the close down of the previous franchise agreement for Scotrail resulting in a one off and non-recurring receipt back to government; the continued efforts of the, now government owned, operator to drive efficiency has also contributed to supporting the wider Scottish Government savings objectives to achieve fiscal balance. Additionally, there was a £5 million overspend on Infrastructure rail projects offset by £42 million of underspend relating to timing of cash grants payments.

2. £20 million savings in Other Transport were, in part, due to lower than forecast patronage on the Young Persons Free Bus Travel scheme but mainly across a number of Active Travel grants that were unable to be fully utilised in year. This saving was partly offset by additional grant payments due to Strathclyde Partnership for Transport falling due during the year.

3. There was an overspend of £23m on roads capital expenditure due to the reclassification of project spend as resource from capital expenditure in relation to Bridge Strengthening and Structural Repairs work. See related underspend on capital expenditure at note 8 below.

4. There were a number of pressures across the ferry services line relating to higher than anticipated maintenance costs as well as a reclassification of Ferry Support spend across capital and resource lines, resulting in a resource overspend.

5. There was a £4m underspend on the Climate Justice Fund and Climate Engagement Fund due to delays in mobilising projects, as well as underspend on staff costs due to vacancies. There was also £3m underspends on climate change projects due to supply chain issues and local authority planning timescales. Some project spend has been reprofiled to 2024-25.

6. There was an overspend of £9m due to expenditure associated with Orkney and Shetland Ferry Support, partially offset by a £1m underspend on the Cycling, Walking, Safer Routes grant that were unable to be fully utilised in year.

7. Underspend on AME expenditure due to the release of a number of previously made provisions where the liability had crystallised or, upon reconciliation, were no longer required.

8. There was an underspend due to a lower than budgeted drawdown on Voted Loans of £15m. There was also an underspend of £23m on roads capital expenditure due to the reclassification of project spend to resource from capital expenditure in relation to Bridge Strengthening and Structural Repairs work. See related overspend on Roads resource expenditure at note 3 above.

9. Underspend on AME expenditure due to the release of a number of previously made provisions where the liability had crystallised or, upon reconciliation, were no longer required.

Rural Affairs, Land Reform and Islands

Explanation of Major Variances greater than £5m:

1. There are several schemes within Agricultural Support and Related Services that have contributed to the overall underspend within this budget line:

• There was a £14m underspend against the Agricultural Reform Programme. There was £5m underspend against Delivery costs and £9m against the National Test Programme due to the delay of the Agricultural Reform Programme business case. Within the National Test Programme, demand has been lower than expected for Preparing for Sustainable Farming schemes (carbon audits and soil sampling).
• Less Favoured Area Support Scheme (LFASS) £7m underspend is due to being a demand led scheme and successfully appealing a penalty resulting in saving of £2m. There was also an underspend against the demand led Pillar One Scheme of £4m.
• Other minor underspends were noted across the rest of the Programme.

2. There was an underspend of £9m on woodland planting targets. Although Scottish Forestry had a record year in woodland creation planting over 15,000ha and approving over 13,000ha, there were approx. 2,000ha of projects that have been delayed due to various reasons including operational issues, forestry contractor availability and land ownership changes.

3. £7m underspend consists of £4m in relation to Royal Botanic Gardens Edinburgh as a result of slippage in Biomes project due to weather delays and issues around conservation. Underspend within programmes of research, in particular £1m within ClimateXChange (CXC) Scotland's centre of expertise on climate change, where forecast spend was impacted by the late delivery of some research projects. There were other minor variances across the programme.

Deputy First Minister and Finance

Explanation of Major Variances greater than £5m:

1. Additional funding provided approved after deadline for Spring Budget Revision (SBR) therefore budget could not be transferred, including £22m for a Local Government pay award, £13m relating to Employability, £6m spend in the Redress Scheme for survivors of historic abuse in care. There was £5m overspend on the Bellwin Scheme, which provides support to local authorities responding to extreme weather events, and various smaller overspends across the programme.

2. £22m unexpected legacy European Investment Bank income in relation to Scottish Partnership for Regeneration in Urban Centres (SPRUCE) Urban Regeneration fund and £3m unbudgeted income received through other EU grants on the Regeneration budgets, has resulted in an overall underspend against budget.

3. The Regeneration scheme had forecast income which was included in budgets at the time of the Spring Budget Revision, however this income was not received in year due to late re-profiling of repayments.

4. There was an overspend on digital capital projects including expenditure on the Digital Identity platform and Payments Platform.

Constitution, External Affairs and Culture

There are no variances greater than £5m.

The Crown Office and Procurator Fiscal Service

Explanation of Variances:

1. The total resource underspend was largely due to the volatility in legal expenses associated with major cases brought against COPFS, following the Court of Session ruling which lifted immunity from suit and various smaller underspends against non-staff expenditure categories.