Scottish Spending Review 2011 and Draft Budget 2012-13

Chapter 8 Finance, Employment and Sustainable Growth

PORTFOLIO RESPONSIBILITIES

The Finance, Employment and Sustainable Growth (FESG) portfolio seeks to deliver the Government's Purpose of sustainable economic growth with opportunities for all of Scotland to flourish. Excluding local government (discussed separately) and pensions, the majority of the portfolio's spend is focused on support for businesses through enterprise, energy and tourism funding. The portfolio also covers public service reform, including modernisation of the planning system and promoting the growth of the third sector.

SUPPORTING RECOVERY AND INCREASING SUSTAINABLE ECONOMIC GROWTH

The portfolio forms a central part of the government's refreshed economic strategy by maintaining and further developing a supportive business environment and focusing on infrastructure development and place. The Government Economic Strategy sets out in detail the measures that we are taking, across all portfolios, to accelerate Scotland's recovery and support jobs. It also has a key role to play in Effective Government and Transition to a Low Carbon Economy. The Transition to a Low Carbon Economy is a central component of our new Government Economic Strategy ^[1]. Increasing resources for energy and enterprise demonstrates this Government's commitment to deliver jobs and green energy for business and communities throughout Scotland. It also reinforces Scotland's ambition to be a world leader in developing a low carbon economy.

The portfolio also contributes towards ensuring that we achieve balanced economic growth that provides the most disadvantaged in society with the opportunity to prosper. Equity, whether it be social, regional, inter-generational or a combination of these factors, is also seen as a key driver of economic growth. Creating a fairer society, as we stimulate growth and create jobs, is central to this portfolio's focus.

Maintaining and Further Developing a Supportive Business Environment

We are doing everything within our existing powers to strengthen the growth of the economy as Scotland recovers from the recession; through increasing overall productivity across the Scottish economy; making the transition to a low carbon economy; and boosting jobs and growth.

Scottish businesses are the primary driver of sustainable economic growth. Our ability to succeed as a nation depends critically on the competitiveness of our businesses - both large and small.

Our Programme for Government sets out our approach to delivery. We want to provide a business environment attractive to international growth companies, target support on Scottish companies to internationalise and in particular focusing on those growth companies, sectors and markets which have the potential to drive further growth.

Targeting support to help Scottish companies internationalise is a key priority. Exports are a vital source of growth and will be essential to our future prosperity as world trade - particularly from emerging economies - continues to expand. We have set a target for Scottish businesses to deliver a 50 percent increase in the value of international exports by 2017, and the efforts of our Enterprise bodies will be directed toward achieving this ambition.

We recognise it is essential for all businesses to easily access the support they need. That is why we are working with our local government partners to ensure that the services provided through Business Gateway can be accessed easily and are joined up effectively with those offered by Scottish Enterprise (SE), Highlands and Islands Enterprise (HIE) and VisitScotland.

We are also prioritising our efforts to support small businesses. Small and medium enterprises (SMEs) are the bedrock of our economy, accounting for 295,000 of our enterprises and employing over one million people across the country. In addition to continuing with the Small Business Bonus Scheme and the most generous package of business rates relief in the UK, we are taking forward a range of policies to help SMEs grow and take on new workers.

We are looking to streamline the approach to supporting innovation and commercialisation in the coming year to ensure that the support to businesses and universities offered through the FESG and Enterprise and Lifelong Learning (ELL) portfolios is better aligned.

We will continue to work to address the demand for risk capital by companies with the greatest opportunity for sustained growth and exports, using the loan and equity finance provided through the Scottish Investment Bank's Scottish Co-Investment Fund and Scottish Loan Fund to unlock additional funding from banks and other private sector sources.

We are working to introduce four Enterprise Areas in Scotland, including sites with a particular focus on low carbon manufacturing opportunities so as to maximise their economic impact and attractiveness to investment. We will make decisions about the introduction of Enterprise Areas later this year.

We are continuing to support the third sector and encourage the social enterprise model, ensuring its important role in developing programmes of preventative spend in order to improve employability prospects, support better care for the elderly and provide opportunities for young people. The funding for the third sector continues to support equity by strengthening the capacity of the sector to respond at a local level, complementing the work funded by the Health, Wellbeing and Cities Strategy portfolio.

To enable a single regeneration budget to be created, the budget previously held by Scottish Enterprise for assisting development in the Urban Regeneration Companies will now form part of the Regeneration support contained within the Infrastructure and Capital Investment portfolio.

Focusing on Infrastructure Development and Place

In Chapter 13 the investment we are making on improving connections internationally and within Scotland is highlighted.

Improved connections will increase opportunities and allow our communities to flourish. In particular, investment in digital and broadband infrastructure is key to improving access to services and markets across Scotland.

Creating a dynamic infrastructure for research and innovation alongside this will also enable Scotland to compete in those industries such as low carbon, life sciences and digital set to drive the global economy in the years ahead.

Cities are vital to our economy's success. The more successful our cities and city regions, the more successful Scotland will be. That is why we will publish later this year a Cities Strategy to act as the catalyst for collaborative action: between the government and cities; between cities themselves; and between the public and private sectors. We will provide strategic leadership where necessary to galvanise city growth. This renewed focus on cities is being led by the Deputy First Minister in recognition of the significant contribution our cities make towards achieving our Purpose.

Effective Government

Effective government is critical to successful implementation of our Economic Strategy. Closer collaboration across the public sector to deliver priority outcomes can maximise the impact of our actions. We will continue with our public service reforms and improvements to align activities and deepen collaboration, optimising delivery and impact.

Priorities include implementing the recommendations of the Review of ICT Infrastructure in the Public Sector in Scotland by John F McClelland, CBE. Simplification and better alignment of information and communications technology (ICT) provides potential savings of around £870 million to the public sector.

The third sector has an important part to play in reforming public services at the local level. We will continue to support the increasing engagement of the third sector in Community Planning Partnerships (CPPs) so that its skills, knowledge and expertise provide the fullest possible support to the delivery of the Single Outcome Agreement benefitting local communities, especially the most vulnerable in each local authority area.

Transition to a Low Carbon Economy

Scotland's competitive advantage in the low carbon economy offers significant business and economic opportunities helping to meet the environmental imperative of reducing carbon emissions. We have set out wide ranging plans to achieve Scotland's low carbon ambitions in: Low Carbon Scotland: Meeting the Emissions Reductions Targets 2010-2022 (2011); Conserve and Save - our Energy Efficiency Action Plan (2010); A Low Carbon Economic Strategy (2010); and the 2020 Routemap for Renewable Energy in Scotland (2011). Our ambitious energy and climate change targets include:

• 42 per cent reduction on emissions between 1990 and 2020;
• 100 per cent of electricity demand from renewable sources by 2020;
• 11 per cent of Scotland's heat demand from renewables by 2020;
• At least 30 per cent of Scotland's overall energy demand ( i.e. heat, transport and electricity) from renewables by 2020; and
• 12 per cent decrease in energy consumption by 2020.

Government is delivering on its commitment in the 2020 Routemap for Renewable Energy by focusing new resource on securing the benefits of renewable energy in Scotland. To propel Scotland towards a low carbon future, we intend to invest a further £60 million of new capital in renewables over the next three years bringing the planned total on renewables to £200 million, and our overall energy related spend to £300 million. The majority of this will be channelled through our enterprise bodies to maximise the support to business, and we will also explore ways to address gender and other inequalities issues in this sector in line with the Government Economic Strategy commitment to tackle gender stereotyping and occupational segregation.

We are already witnessing a positive impact with tens of thousands of jobs as well as hundreds of millions in investment.

• Since 2007, we have invested around £30 million to support householders and small businesses with a range of energy efficiency and micro-generation advice, grants and loans through the Energy Saving Trust. Over one million householders and SMEs have received advice and support from the Energy Saving Trust's local advice network since 2007.
• We continue to deliver the Climate Challenge Fund, empowering 345 communities across Scotland to take forward their own solutions to reduce their carbon footprint.
• Our Energy Assistance Package has helped nearly 200,000 people on low incomes reduce their energy bills and keep their homes warm, as well as reducing greenhouse gas emissions.
• The introduction of new energy standards in October 2010 are expected to deliver a 30 per cent reduction in carbon dioxide emissions from new buildings when compared to 2007 standards.
• Through the provision of technical and scientific advice, Historic Scotland is leading on improving the energy efficiency of Scotland's 460,000 traditional buildings.
• Our business resource efficiency programme Zero Waste, has helped more than 800 Scottish businesses to reduce their waste and resource consumption in 2010.
• Working together, the farming sector, Scottish Government and the Scottish Environment Protection Agency have made significant progress in managing diffuse pollution issues in 14 priority catchments. The related Water Environment Restoration Fund also provided funding for 40 projects to address adverse impacts on the water environment resulting from past human activities.

Delivering reductions in energy demand is securing financial savings to hard pressed families and businesses. Through the Spending Review this Government will streamline the delivery landscape for energy efficiency to ensure more effective action at local level. Complementing the significant investment in renewable energy, we will be investing £75 million over the next three years in low carbon technologies and energy efficiency for businesses.

OUR NATIONAL OUTCOMES

The policies, activities and expenditure of the Finance, Employment and Sustainable Growth portfolio contribute to the National Outcomes and in particular to ensure that:

• We live in a Scotland that is the most attractive place for doing business in Europe;
• We realise our full economic potential with more and better employment opportunities for our people;
• We have reduced the significant inequalities in Scottish society;
• We reduce the local and global environmental impact of our consumption and production; and
• Our public services are high quality, continually improving, efficient and responsive to local people's needs.

The portfolio is ensuring that Scotland is the most attractive place for doing business in Europe by providing a competitive, supportive business environment that has the right infrastructure in place, is friendly to enterprise, attractive to entrepreneurs, inward investors and skilled migrants and where key Scottish companies and sectors are seen as market leaders.

By focusing our efforts on growth companies, growth markets and growth sectors, as set out in the Government Economic Strategy, and by enhancing their international competitiveness, we will realise our full economic potential with more and better employment opportunities for our people.

Scotland's energy ambition is to be a world leader in sustainable energy production and use so that Scotland is a leading location for investment in the low carbon economy. Our prime objectives are to deliver more secure and affordable energy supplies to

the people of Scotland to help deliver more effectively on fuel poverty and demand reduction targets. By ensuring that all products and services, right through the supply chain, embrace a low carbon approach to the economy, we reduce the local and global environmental impact of our consumption and production.

We take the lead responsibility for ensuring that our public services are high quality, continually improving, efficient and responsive to local people's needs by supporting the delivery of better quality, user-focused services and smaller, simpler, better aligned and more efficient government.

Through our portfolio spend; we will contribute to reducing inequalities by developing more responsive services through community engagement, widening access and opportunity and addressing discrimination where it persists. The balanced economic growth we seek draws upon the potential of all in Scotland, and our investment in the improvement of public services and the third sector will provide us with opportunities to explore best practice moving forward.

OUR ACHIEVEMENTS

Maintaining and Further Developing a Supportive Business Environment

Working with our enterprise bodies we have invested in growth companies, growth sectors and growth markets to improve employment opportunities across Scotland.

Scottish Development International, in partnership with Scottish Chambers International and with funding from the European Social Fund, launched Smart Exporter in September 2010. Smart Exporter will deliver a programme of free and subsidised export support to Scottish companies who want to internationalise regardless of size or export experience.

The Scottish Government recently announced the launch of a new online toolkit which will be the first in a range of services to encourage and assist companies as they move into international markets. The online diagnostic tool, delivered through http://www.sdi.co.uk/ will encourage and assist companies seeking to access international markets.

The new Export Support Initiative, which has been supported by the Scottish Government with £2.5 million, will accelerate the international development of at least 100 companies which currently have zero, or low level exports, and have the potential to reach £0.5 million over a five year period.

More than 80 companies have been contacted over a four week period and the first 50 companies who will participate in the Initiative have been recruited. The next step is to begin a series of export review activities that will reflect on where their export ambitions lie, what they want to achieve and how they will go about this.

This will help businesses make the most of their current skills and expertise in exporting and direct them to the services and advice that they need to expand further. It will allow new exporters to identify and quickly take their first steps towards moving into international markets as well as help existing exporters to grow their activity.

We are also investing in growth sectors. At Edinburgh Bioquarter for example we have invested £52 million so far with the capacity for around 6,000 jobs in life sciences to be created over the next 25 years.

In the Highlands and Islands area we continue to invest in such projects as the Inverness Campus - the Highlands and Islands Enterprise Board has approved up to £25 million

to deliver over five years the first phase of the Inverness Campus. An economic impact assessment showed that Inverness Campus could support up to 6,000 jobs over the next 30 years, attract investment of up to £300 million and generate more than £38 million for the regional economy every year.

We continue to provide by far the most generous rates relief for SMEs in the UK. Current figures show 74,000 premises benefit and to date the Small Business Bonus Scheme has reduced the tax burden for Scottish businesses by £300 million providing a major boost during difficult times.

In the third sector we have focused on actions set out in the Enterprising Third Sector Action Plan and have delivered a programme of business support that has led to greater collaborative working and third sector success in tendering and winning contracts. Examples of these are £28.8 million of investment awarded to over 50 organisations from the Scottish Investment Fund and £10.9 million Third Sector Enterprise Fund grant provided to 186 organisations to secure a transformational change in their financial sustainability.

147 individuals have also been assisted in establishing their social enterprise through the Social Entrepreneurs Fund.

We continue to support the delivery of local advice and services to business through Business Gateway and will continue to work with all of our partners to explore how collaboration and joined up services can be further improved. We, along with the enterprise bodies and the Business Gateway Scotland Board, are aware of some stakeholders' views of the need to widen the qualifying criteria for more intensive support to equalise opportunities and address any identified gaps in provision. We are exploring potential approaches as part of the Business Gateway review.

We are entering the second phase of the Scottish Business Portal Programme, which the Scottish Government established to oversee the development of the Business Gateway website into a primary 'portal' for government business advice and services in Scotland. The portal aims to provide a Scottish website where businesses can access all relevant regulation, information and advice from across the public sector from one place, including reserved UK matters, such as the taxation regime.

To make it easier for private and public stakeholders we have modernised our planning system to support our priority of sustainable economic growth, by improving planning performance and delivering an ePlanning programme. We have also ensured that effective and proportionate support is in place for environmental assessments.

We have published our second National Planning Framework which sets out a clear strategy for Scotland's long-term spatial development.

Tourism continues to grow and our first Year of Homecoming in 2009 was a great success with over 400 events and more than 95,000 visitors influenced to travel to Scotland. The year delivered a return on investment of nearly 10:1 and exceeded its target by generating £53.7 million in additional tourism revenue for Scotland in what was a difficult year for global tourism.

VisitScotland won four Gold Awards and was given the title Brand Owner of the Year 2011 at the Institute of Promotional Marketing annual awards. We intend to build on this and utilise the marketing expertise within VisitScotland to support other areas of the public sector.

Effective Government

Our Efficient Government Programme exceeded its target by £300 million in 2008-09 and by £400 million in 2009-10, and by £600 million in 2010-11, whilst demonstrating our commitment to public sector staff by maintaining a policy of no compulsory redundancies. This meant that we were able to free up finances for investment into key services.

Our Simplification Programme has reduced the number of national, devolved public bodies from a baseline of 199 in 2007 to 145, and on present plans this will reduce further to around 114, delivering estimated net savings of around £125 million by 2013 and estimated net recurring savings of £39 million per annum thereafter.

We have audited performance of all 32 local authority building standard verifiers and strengthened governance and local leadership following the reform of Architecture and Design Scotland (A+DS), extending its remit to run a cultural programme on architecture at The Lighthouse architecture centre in Glasgow.

Transition to a Low Carbon Economy

We have already made good progress towards delivering on our ambition to become a low carbon economy that is already bringing in jobs and investment to communities across Scotland.

We have increased by a third the proportion of electricity consumption met by renewables between 2007 and 2009.

We have doubled the proportion of Scotland's heat demand met by renewables between 2009 and 2010. We are on track to meet the target of 11 percent by 2020.

We announced a £70 million National Renewables Infrastructure Fund to leverage private sector investment to develop ports and manufacturing facilities for offshore renewables.

Our £13 million WATERS fund is supporting development and testing of new marine energy prototypes in Scottish waters.

We expect ten wave and tidal energy devices to be grid connected at the EMEC on Orkney by the end of 2011.

Also on tidal energy £2.95 million was awarded on 22 November 2010 to create six new industrial units in Kirkwall for tidal energy developers using the test site at Eday, supporting the European Marine Energy Centre (EMEC) and creating up to 35 jobs.

Our support to the industry continues with the Scottish Energy Laboratory (SEL) launched on 9 February 2011 to strengthen collaboration across 50 energy research, test and demonstration facilities for Scotland's low carbon energy development. In addition on 18 May the First Minister officially launched a new Scottish offshore wind web portal to provide up-to-the-minute signposting for all information relating to this rapidly-emerging industry.

We have successfully promoted the use of well-designed, sustainable places through the ground breaking Scottish Sustainable Communities Initiative (SSCI) and associated Charrette series; and have supported innovative low carbon housing through Scotland's first Housing Expo. Work continues on delivering the recommendations of the Low Carbon Buildings Standards Strategy for Scotland (The Sullivan Report) to improve energy efficiency. We have improved the energy standards for new buildings by over 70 percent when compared to buildings built in 1990.

Our international arm, Scottish Development International (SDI), has helped secure major inward investment in Scotland's renewables sector from world-leading firms Mitsubishi, Gamesa and Doosan.

In March 2011 Doosan Power Systems announced investment of £170 million in Scottish wind power over the next ten years. An R&D centre will be set up near Glasgow, creating 200 jobs, following which the company is looking to establish a manufacturing and assembly facility in Scotland. Doosan expects its offshore wind plans in Scotland to create up to 1,700 new jobs.

In January 2011 the Spanish company Gamesa announced its intention to establish an offshore wind technology centre in Glasgow. Dundee could also benefit from plans to establish a manufacturing and maintenance base in the city. This could represent a further investment of around £40 million in Scotland and the creation of 300 jobs. In June 2011 Gamesa announced it was to create its offshore wind technology centre at

Strathclyde Business Park with plans to create up to 180 jobs at the centre over the next three years.

In December 2010 Mitsubishi Power Systems Europe Ltd announced its intention to invest in an engineering facility in Edinburgh to carry out R&D into offshore wind turbine technology. Their presence in Scotland is likely to create up to 200 jobs over the next five years and lever up to £100 million investment into the economy.

In June 2011, Alstom, one of the world's leading power generation and transmission companies acquired a 40 percent stake in Inverness based AWS Ocean Energy Ltd. This is Alstom's first ever investment in the wave energy sector.

In November 2010, Aquamarine announced £8 million investment from ABB, one of the world's leading power and automation technology companies. In September 2011, Aquamarine announced a £3.4 million loan with Barclays Corporate. This is the first ever loan secured by a marine energy project.

The Scottish Government allocated £16 million for over 800 community renewables projects and raised the bar for community benefits from commercial renewables developments by requiring a rate of £5,000 per MW from new wind and hydro developments on the National Forest Estate - twice the standard industry rate.

On 2 June 2011, HSBC's Future of Business report named Glasgow as a green energy "super city", and a leading international force in renewable energy. The world-class electrical engineering department at Strathclyde University, work by scientists at Glasgow University on the use of hydrogen fuels, and decisions by Iberdrola, SSE and Gamesa to locate offshore wind centres of excellence in the city are cited as examples of Glasgow's success.

Steel Engineering, based at Westway, will create a least 120 new jobs, supported by £1.8 million Regional Selective Assistance through Scottish Enterprise - to double its full-time workforce and expand its business, servicing a range of clean energy sectors, including offshore wind, wave and tidal power.

MANAGING PRESSURES AND CUTS IN PUBLIC EXPENDITURE

The reduction of the Scottish Budget for 2012 through to 2015 is unprecedented and this coupled with the impact of recession across the globe and the UK Government's austerity measures has required us to make some tough decisions on our expenditure and priorities.

Within the FESG portfolio, resource and capital budgets are set out at Table 7.01. The portfolio faces real challenges in the period 2012 through to 2015 to ensure that our Enterprise bodies and VisitScotland are resourced to support economic recovery and `to provide adequate support to develop a low carbon economy in Scotland that will deliver on our ambitions. We are working to develop and introduce our four Enterprise Areas, host the 2014 Ryder Cup, deliver Themed Focus Years in the lead up to Homecoming in 2014, implement public sector pension reform, and deliver on Local Government Elections commitments.

To deliver these commitments and maximise efficiency and value for money across not only the portfolio but the wider public sector. We are looking to move towards greater alignment, collaboration and shared services with an emphasis on working across organisational boundaries to collectively reduce costs and drive out inefficiencies.

Within the FESG portfolio we will use the Account Management expertise within Scottish Enterprise and Highlands and Islands Enterprise and the marketing expertise within VisitScotland to help maximise income and reduce costs within other public bodies, starting a process that we expect will continue across the public sector.

We are also investing in developing the third sector in order that it can play a full role in reforming our public services; through greater involvement in service design and delivery with an emphasis on developing programmes with a focus on preventative spend. The third sector has a key role to play in delivering the Christie Commission's recommendations on place, collaborative spend in localities and preventative spend. We will be working across Government and the public sector to ensure that the third sector's role can be maximised, supporting greater collaboration between the public and the third sectors both at the local and national levels.

Taking these challenges and possible contributing approaches into account, we have considered the scope for efficiencies and the contribution that spending programmes make to sustainable economic growth and the delivery of portfolio priorities in all areas of expenditure within the FESG portfolio. This is reflected in our allocation of resources across the portfolio.

OUR PRIORITIES

Maintaining and Further Developing a Supportive Business Environment

We will in 2012-13:

• support growth companies, growth sectors and growth markets through maintaining the budgets of our three key business support bodies - SE, HIE and VisitScotland;
• provide support to increase international trade and exports and attract visitors to Scotland;
• better integrate our support for innovation and commercialisation; and
• better align our resources with European Funds to support our growth agenda across the whole of Scotland.

Focusing on Infrastructure Development and Place

We will in 2012-13:

• develop a coherent approach to assisting our cities and city regions in being the engines of growth for the Scottish economy; and
• continue to implement the modernisation of the planning system.

Effective Government

We will in 2012-13:

• continue to progress our public sector reforms;
• encourage the greater use of shared services between public bodies;
• promote the use of skills held by Agencies and NDPBs for the benefit of the wider public sector; and
• implement our response to the John McClelland's Review of ICT infrastructure in the Public Sector in Scotland.

Transition to a Low Carbon Economy

We will in 2012-13:

• increase the priority given to securing the opportunities provided by renewable energy;
• implement our 2020 Routemap for Renewable Energy;
• implement our Energy Efficiency Action Plan; and
• invest in action to meet our world leading climate change targets.

Spending plans for 2012-15 are set out below.

Table 8.01: Detailed Spending Plans (Level 2)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Scottish Public Pensions Agency	3,241.6	3,212.8	3,388.2	3,569.5
Committees, Commissions & Other	11.7	19.9	10.4	10.4
Planning	4.1	3.8	3.6	3.5
Enterprise, Energy & Tourism	410.7	421.2	412.7	406.3
Third Sector	27.0	24.5	24.5	24.5
Accountant in Bankruptcy (AiB)	3.2	2.0	2.0	2.0
Registers of Scotland (RoS)	-	-	-	-
Total Level 2	3,698.3	3,684.2	3,841.4	4,016.2
of which:
DEL Resource	379.2	416.6	416.8	414.6
DEL Capital	88.7	66.8	49.4	45.9
AME	3,230.4	3,200.8	3,375.2	3,555.7

Table 8.02: Detailed Spending Plans (Level 2 real terms) at 2011-12 prices

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Scottish Public Pensions Agency	3,241.6	3,134.5	3,218.6	3,301.8
Committees, Commissions & Other	11.7	19.4	9.9	9.6
Planning	4.1	3.8	3.4	3.2
Enterprise, Energy & Tourism	410.7	410.9	392.0	375.9
Third Sector	27.0	23.9	23.3	22.7
Accountant in Bankruptcy (AIB)	3.2	2.0	1.9	1.8
Registers of Scotland (RoS)	-	-	-	-
Total Level 2	3,698.3	3,594.5	3,649.1	3,715.0
of which:
DEL Resource	379.2	406.4	395.9	383.5
DEL Capital	88.7	65.4	46.9	42.5
AME	3,230.4	3,122.7	3,206.3	3,289.0

Scottish Public Pensions Agency

Table 8.03: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Agency Administration	11.2	12.0	13.0	13.8
Scottish Teachers Pension Scheme	1,424.3	1,434.2	1,500.0	1,568.0
NHS in Scotland Pension Scheme	1,806.1	1,766.6	1,875.2	1,987.7
Total	3,241.6	3,212.8	3,388.2	3,569.5
of which:
DEL Resource	10.7	11.5	11.9	12.6
DEL Capital	0.5	0.5	1.1	1.2
AME	3,230.4	3,200.8	3,375.2	3,555.7

What the budget does

The Scottish Public Pensions Agency's (SPPA) principal role is to administer the pensions, premature retirement and injury benefits schemes for members of the National Health Service in Scotland Pension Scheme and the Scottish Teachers Superannuation Scheme.

The Agency also develops the regulations covering the National Health Service in Scotland, the Scottish Teachers Superannuation, and the Local Government, Police and Fire pension schemes in Scotland. It determines appeals made by members of these schemes; and provides a pensions calculation service for a small number of small public pension schemes operating in Scotland and elsewhere.

The pension scheme funding represents the costs of pensions accrued in that year plus notional interest on current liabilities less income received. It is classified as annually managed expenditure (AME), funded separately by Treasury from the Departmental Expenditure Limit (DEL) settlement and, as such, variations in the scheme expenditure do not have to be balanced by adjustments elsewhere in the Scottish Budget.

On pensions, the UK Government has made it clear that if we do not implement their short-term proposals to increase employee contributions by an average of 3.2 per cent of pay for the unfunded schemes covering the NHS, Teachers, Police and Fire, they will make corresponding reductions in the Scottish Budget over the Spending Review period. This would have a direct detrimental impact upon our ability to support public services.

In 2012-13 we will:

• maintain our core service standards for approximately 450,000 members, pensioners and dependants for the Scottish NHS and Teachers' superannuation schemes; and
• contribute to the development of policy arising from the pension reform agenda in respect of the Scottish Teachers, NHS, Police, Fire and Local Government Schemes; and to commence implementing the necessary administrative arrangements for the NHS and Teachers' schemes.

Committees, Commissions and Other

Table 8.04: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Improving Public Services	4.7	3.3	3.5	3.5
Public Sector ICT Policy*	3.3	4.7	4.7	4.7
Local Governance*	1.4	1.4	1.4	1.3
Commissions	0.1	0.2	0.4	0.5
Local Government Elections	2.1	10.2	0.3	0.3
Council of Economic Advisers (CEA)	0.1	0.1	0.1	0.1
Total	11.7	19.9	10.4	10.4
of which:
DEL Resource	8.7	19.9	10.4	10.4
DEL Capital	3.0
AME	-	-	-	-

*note: previously part of 'Improving Public Services'

What the budget does

The Improving Public Services, Public Sector ICT Policy and Local Governance budgets provide support to programmes and projects designed to improve public sector efficiency and effectiveness. The aim is improved services for people and communities, through a focus on outcomes, good governance and effective accountability. We take the lead responsibility for ensuring that our public services are high quality, continually improving, efficient and responsive to local people's needs by supporting the delivery of better quality, user-focused services and simpler and more efficient government.

The Commissions budget funds the work of the Local Government Boundary Commission for Scotland (LGBCS) which is an advisory NDPB created by Section 12 of the Local Government (Scotland) Act 1973. The LGBCS is responsible for statutory and ad hoc reviews of electoral and administrative arrangements.

The Local Government Elections budget will meet the costs associated with the Scottish Government's initiatives on improving the co-ordination and administration of elections. These initiatives have been introduced to address the problems identified by the independent Gould Report into the 2007 joint local government and Scottish Parliament elections. Spending on elections is cyclical by its nature and larger sums are required in preparation for an election (local government elections are due in May 2012) than in the years between.

The main purpose of the Council of Economic Advisers budget is to support the provision of economic advice to Ministers, both privately in meetings and publicly through its Annual Report. The majority of the costs incurred are due to travel expenses and subsistence for the members attending meetings. Members are not paid. A small portion of the budget is used to pay for the production of the Annual Report.

In 2012-13 we will:

• implement our response to the John McClelland's Review of ICT infrastructure in the Public Sector in Scotland. If fully implemented, this has the potential to deliver a cumulative saving of between £870 million to £1 billion over five years;
• continue the development and operation of enhanced National ICT infrastructure, for example through development of the DirectScot Portal and Customer First programmes to support key public services, such as the National Entitlement Card;
• ensure delivery of local outcomes, which in turn help to achieve Scotland's National Outcomes, by supporting Community Planning and wider community engagement. The Scottish Government provides a range of support (including pilot funding and support for practitioners) to Community Planning Partnerships and Community Councils to build capacity in outcomes-based working at the local level;
• continue to support the development of Business Improvement Districts across Scotland;
• provide an electronic counting system to all local authority areas in Scotland to enable the accurate and timely counting of ballot papers in the May 2012 local elections;
• work with the Electoral Commission to develop and deliver a public awareness and information campaign ahead of the local government elections;
• fund the recently established Electoral Management Board for Scotland;
• support the Electoral Commission in the exercise of its statutory activities in relation to local government elections (conferred by the Local Electoral Administration (Scotland) Act 2011); and
• support local authorities with the costs of running a local government election separately from a Scottish Parliament election in line with the commitment made by the Scottish Government during the passage of the Scottish Local Government (Elections) Act 2009.

Planning

Table 8.05: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Planning	1.5	1.2	1.2	1.2
Building Standards	0.3	0.3	0.2	0.2
Architecture and Place	1.6	1.6	1.5	1.4
Planning and Environmental Appeals	0.7	0.7	0.7	0.7
Total	4.1	3.8	3.6	3.5
Of which:
DEL Resource	3.9	3.7	3.5	3.4
DEL Capital	0.2	0.1	0.1	0.1
AME	-	-	-	-

What the budget does

The Planning budget supports key elements of the planning modernisation programme including: building on the success of the e-planning project, which has transformed access to the planning system and secured substantial savings for users; support for community engagement, principally through funding to Planning Aid for Scotland (PAS); the Planning Development Programme which is designed to ensure the planning services have the skills and competences required to make the system work effectively; and monitoring delivery of the development strategy set out in the National Planning Framework. This budget also supports PAS in carrying out equality impact assessments focusing on engaging individuals and communities across Scotland.

The Building Standards budget provides for the preparation and updating of building standards legislation and guidance documents. A key work area is to ensure that European obligations are met and currently work is ongoing for the second stage of the Energy Performance of Buildings Directive.

Architecture and Place budget provides sponsorship to the NDPB, A+DS, which carries out a variety of advisory roles to improve the quality of Scotland's built environment and to support sustainable place-making. It also provides funding that supports the National Outcome that we value and enjoy our built and natural environment, including efforts aimed at mainstreaming sustainable design and supporting the 'greener' objectives of government.

Planning and Environmental Appeals budget provides for determination of appeals made to Scottish Ministers under planning and environmental legislation against decisions made, or enforcement action taken, by planning authorities and the Scottish Environment Protection Agency. It conducts examinations of strategic and local development plans and inquiries held in relation to compulsory purchase orders, transport and other infrastructure projects such as on shore renewables, and core path plans which promote access to the countryside.

In 2012-13 we will:

• continue the implementation of a modernised planning system to support sustainable economic growth and ensure the right development is located in the right place. This will include: further reform of domestic and non-domestic permitted development; promotion of good practice; and refining aspects of the planning legislation based on emerging experience;
• continue to support planning's role in sustainable economic growth and recovery. This will include: ensuring greater focus on development delivery and viability through development plan action programmes; better liaison with the business community; examining innovative ways of funding infrastructure including development charges; concluding a best practice programme on CPO use; culture change and skills development;
• continue progress towards a well resourced planning system with an appropriate system of fees and charges in the context of a new performance framework agreed across local and central government, agencies and the private sector;
• continue to focus on the delivery of better places through mainstreaming the Scottish Sustainable Communities Initiative (SSCI) and other exemplars such as the 2014 Commonwealth Games Village. The SSCI encourages development that provides economic, social and environmental, including health benefits, to new and regenerated communities;
• support the work of A+DS in championing the highest standards in architecture and placemaking across all sectors, advocating a better understanding of the importance and economic value of quality design in both the public and private sectors;
• reduce the local and global environmental impact of our consumption and production;
• prepare legislation to increase the energy efficiency of existing non-domestic buildings and review energy standards for new buildings for 2013;
• continue to provide support to facilitate robust but proportionate environmental assessment of development plans;
• through A+DS we will also promote sustainable, low carbon design in the built environment;
• conduct robust research to fully inform Scottish Government policies supporting Scotland's climate change commitments;
• build on the success of the e-planning programme to continue to drive public sector efficiencies by delivering a modern, efficient and inclusive planning service to the people of Scotland; and
• continue to support engagement in the planning system, including through the grant funding of Planning Aid for Scotland for its core services to communities and individuals across Scotland.

Enterprise, Energy and Tourism

Table 8.06: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Enterprise Bodies	283.4	322.0	326.2	330.2
Industry and Technology Grants	45.2*	-	-	-
Energy	34.6	64.3	56.2	60.0
Tourism	41.0	49.1	49.5	50.3
Innovation and Industries	5.8	5.8	5.8	5.8
Scottish Development International	0.7*	-	-	-
Strategic Forum	-	-20.0	-25.0	-40.0
Total	410.7	421.2	412.7	406.3
of which:
DEL Resource	325.7	355.0	364.5	361.7
DEL Capital	85.0	66.2	48.2	44.6
AME	-	-	-	-

Note: Industry and Technology Grants and Scottish Development International from 2012 onwards are contained within the Enterprise Bodies budget line

What the budget does

The Enterprise budget is focused on supporting growth companies, sectors and markets. Scottish Enterprise and Highlands and Islands Enterprise will have the flexibility to use resource budget to support capital programmes in pursuit of these objectives.

The Enterprise bodies' budget funds SE and HIE and from 2012 onwards includes the Scottish Development International (SDI) budget element for supporting local SDI services to companies that wish to internationalise. SE and HIE focus on developing those sectors in which Scotland has a comparative advantage, as well as supporting businesses expanding into new markets, helping companies invest in innovation and commercialise research, providing finance through the Scottish Investment Bank and supporting companies to develop their leadership and workforce. Core to this is the switch to the low carbon economy which offers Scotland economic advantages from its wealth of natural resources. In addition to its key role of supporting sustainable economic growth in the Highlands and Islands area, HIE also plays an important role in strengthening local communities, particularly in some of Scotland's most fragile areas. Our enterprise bodies actively embrace the opportunities that an equality and diversity approach provides, ensuring that their projects and work with local communities in particular benefits from this.

The Industry and Technology Grants budget includes the SMART: Scotland programme and Regional Selective Assistance (RSA). The SMART: Scotland programme is our foremost policy instrument to support near-market research and development projects (feasibility and prototype development) by small and medium enterprises whereas RSA, the main national scheme of grant assistance to industry, supports investment, increased productivity and sustained employment in selected areas of Scotland and accounts for the bulk of this spend. RSA is particularly critical to securing the investment needed to deliver our renewable energy ambitions. The budget includes provision to meet commitments made in previous years which are paid in instalments as projects reach agreed milestones. Responsibility for both grants transferred to SE on 1 April 2011 and are included in the enterprise bodies budget line from 2012-13.

The Energy budget supports activities that contribute towards the achievement of Scotland's energy ambition which is to be a world leader in sustainable energy production and use so that Scotland is a leading location for investment in the low carbon economy.

Targeted investment in renewable energy in partnership with our enterprise bodies will act as a key motor of the Scottish economy. Scotland is blessed with abundant energy resources and we are committed to taking full advantage of the opportunities that exist in transforming to a low carbon economy. Renewable energy and low carbon technologies are two growth sectors, and through our renewable wealth we will reindustrialise Scotland as we research, develop, engineer, fabricate, install, export, and service the new energy systems and clean technologies that will power this century.

Over the course of the Spending Review period, there will be £300 million spent on energy related projects, of which £200 million will be spent on supporting renewables. As part of this, a new £60 million capital budget will be allocated to renewable energy proposals, including to SE and HIE over and above their agreed expenditure lines, to support inward investment developments in offshore wind and support for marine energy projects and infrastructure.

The Tourism budget supports VisitScotland, enabling it to continue to undertake award-winning campaigns to promote Scotland as a tourism destination, both within the UK and in key overseas markets. As part of wider equalities actions, VisitScotland is working with partners to boost accessible tourism, with a particular focus on disabled and older people.

Our continuing levels of support to VisitScotland reflect the scale of the opportunity that events like the Ryder Cup, the Olympic and Commonwealth Games and the next Year of Homecoming present to grow tourism in Scotland and realise significant short term economic return.

We are seeking to enhance collaboration between business and the science base; improve business innovation and investment in research and development; and therefore result in greater economic growth. We are looking to streamline the approach to supporting innovation and commercialisation in the coming year to ensure that the support to businesses and universities is better aligned. The Innovation and Industries budget in FESG funds Scottish Executive Expertise, Knowledge and Innovation Transfer

(SEEKIT) and Knowledge Transfer Partnerships (which will be managed by the Scottish Funding Council going forward) and Innovators Counselling and Advisory Service for Scotland (which is managed by SE).

The aim has been to try to maintain enterprise bodies and VisitScotland's operating budget despite the tight overall Spending Review settlement for Scotland so that they can continue the important work they undertake in implementing the Government Economic Strategy and increasing sustainable economic growth. Ministers have challenged the bodies included in the Strategic Forum (SE, HIE, VisitScotland, Skills Development Scotland and the Scottish Funding Council) to work together, and with other public bodies, to achieve savings of £20m/£25m/£40m over the Spending Review period. It is anticipated that they will do this through greater collaboration and alignment, including further work to integrate and streamline back-office and corporate services and potential asset sales. They are also being asked to use their expertise to assist other public bodies to achieve savings and/or increased income - for example, VisitScotland will use its acknowledged expertise in marketing to help other public bodies to improve the efficiency and effectiveness of their marketing and SE and HIE will use their expertise in delivering business and commercial advice to assist other public bodies to explore the potential for increased income generation.

In 2012-13 we will:

• support more companies to trade overseas and look to attract new inward investment;
• support businesses and social enterprises to shape and realise their growth aspirations;
• capitalise on existing competitive advantage in renewables to attract investment
• and establish a strong supply chain. We published an updated and expanded Routemap on 30 June 2011, built around the challenge of our new targets; in particular to meet an equivalent of 100 per cent demand for electricity from renewable energy by 2020, as well as our target of 11 per cent renewable heat;
• create the conditions for a competitive and low carbon economy. We will continue to pursue efficiencies ( e.g. through the creation of a single Scottish Energy and Resource Efficiency Service) and explore alternative sources of funding such as EU, private finance and local authority funding;
• develop growth sectors and look to maximise distinctive regional opportunities;
• streamline investment in innovation and commercialisation to boost productivity and translate great business ideas into great business practice;
• consider how best to introduce four Enterprise Areas in Scotland, including exploring the creation of sites with a particular focus on low carbon manufacturing opportunities so as to maximise their economic impact and attractiveness to investment. We will make decisions about the introduction of Enterprise Areas later this year; and
  • provide core grant to VisitScotland to allow it to :
  • deliver high yield marketing campaigns overseas and in the UK and harness the potential for tourism over the next three years by maximising the opportunities presented by major events taking place in the run up to, and during, 2014;
  • deliver major conferences via the VisitScotland Bid Fund;
  • grow Scotland's reputation as a quality destination through VisitScotland's Quality Assurance advisory services;
  • deliver the Themed Years and Homecoming 2014; and
  • strengthen and promote Scotland's events industry and help deliver the National Events Strategy.

Third Sector

Table 8.07: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Third Sector	24.0	23.5	23.5	23.5
Scottish Investment Fund	3.0	-	-	-
Reducing Re-offending Change Fund	-	1.0	1.0	1.0
Total	27.0	24.5	24.5	24.5
of which:
DEL Resource	27.0	24.5	24.5	24.5
DEL Capital	-	-	-	-
AME	-	-	-	-

Note: Scottish Investment Fund was originally set up to run from 2008 - 2011; we extended this to the end of 2011-12.

What the budget does

The Third Sector budget helps to grow and strengthen the sector. From 2012-13 Scottish Investment Fund will be incorporated within the Third Sector budget. This will enhance the sector's ability to play a full role in the Scottish economy and in the reform of public services. It will better position the third sector to ensure that individual users, social enterprises and communities are at the centre of service design so that opportunities are maximised in the development of preventative programmes.

Third Sector activity centres on support for the development of a thriving third sector that is a key social partner in decisions around the design and delivery of public services. This will be achieved by focusing on building the capacity and credibility of third sector input to public policy, ensuring that it can respond positively to a stronger and growing role in public life. More specifically to increase its potential economic contribution we will encourage the social enterprise model, whilst ensuring its important role in developing programmes of preventative spend are realised enhancing its potential for improving employability prospects, better care for the elderly and providing opportunities for young people.

The Reducing Re-offending Change Fund is a fund that will support innovation and increase the impact and coverage of interventions that help to reduce reoffending and supports work within the Justice portfolio.

In 2012-13 we will:

• provide strategic support to encourage effective engagement between third sector and Community Planning Partnerships;
• provide business development support that delivers third sector growth, skills development and opening public sector markets;
• direct investment in enterprising third sector organisations and the development of new finance models; and
• work across the Scottish Government to identify and exploit opportunities for third sector engagement and to increase the role of the third sector in the transformation of public service delivery.

Accountant in Bankruptcy

Table 8.08: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Accountant in Bankruptcy	3.2	2.0	2.0	2.0
Total	3.2	2.0	2.0	2.0
of which:
DEL Resource	3.2	2.0	2.0	2.0
DEL Capital	-	-	-	-
AME	-	-	-	-

What the budget does

Accountant in Bankruptcy (AiB) is an Executive Agency of the Scottish Government. The Agency supervises the process of personal insolvency in Scotland; approves debtor applications for bankruptcy; acts as Trustee in bankruptcy; investigates complaints against private sector Trustees in bankruptcy, and acts as the Administrator in the Debt Arrangement Scheme. This includes approving money advisers, payment distributors and debtors' debt payment programmes. The Agency also maintains the public register of bankruptcies, Protected Trust Deeds and company insolvencies. The Agency has the policy lead for the development of policy in relation to bankruptcy, corporate insolvency, the Debt Arrangement Scheme and diligence.

In 2012-13 we will:

• deliver, in conjunction with stakeholders, a range of options for individuals seeking debt relief and debt management;
• support Ministers to develop and refine policy; and
• supervise the process of debt relief.

Registers of Scotland

Table 8.09: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Registers of Scotland	-	-	-	-
Total	-	-	-	-
of which:
DEL Resource	-	-	-	-
DEL Capital	-	-	-	-
AME	-	-	-	-

What the budget does

Registers of Scotland (RoS) is a Trading Fund and is self-financing from fees (so does not receive direct funding from government). RoS maintains and supplies information from a range of public registers. The main two registers, the Land Register and the General Register of Sasines, are concerned with the ownership of land and property. The public registers play a key role in underpinning the economic and social stability of Scotland. RoS's purpose is to record and safeguard rights, providing the people and institutions of Scotland with the social and economic benefits that flow from a publicly guaranteed system of rights in land and property.