Spring Budget Revision 2019-20 Supporting Document

Introduction

1. This booklet provides information for the Parliament and others in support of the 'Budget (Scotland) Act 2019 (Amendment) Regulations 2020' - the Spring Budget Revision. The Order is a Scottish Statutory Instrument laid before the Scottish Parliament by the Scottish Government in February 2020. The booklet itself has no statutory force - it is produced as an aid to understanding the Order.

2. The purpose of the Spring Budget Revision is to amend the Budget (Scotland) Act 2019, which authorises the Scottish Government's spending plans for the financial year 2019-20.

3. The main changes to the Scottish Government's spending plans, as set out in the supporting document to the Budget Bill, are explained below:

i) funding changes to reflect deployment of available resources to portfolios (total net increase to the budget of £255.9 million);

ii) technical adjustments (net increase to the budget of £714.8 million);

iii) Whitehall Transfers and HM Treasury allocations to the Scottish Government (£138.0 million); and

iv) the transfer of resources between Scottish Government portfolios (-£0.2 million due to roundings).

In total these changes will increase the Scottish Government budget by £1,108.5 million from £43,094.8 million to £44,203.3 million.

4. The purpose of the Spring Budget Revision is to seek Parliamentary approval for these changes.

Funding Changes

5. The funding changes (£255.9 million) are allocated over a number of lines. As in past years, as part of the internal robust monitoring process and in line with good practice, we have also taken the opportunity at the Spring Budget Revision to ensure that we maximise the budget available in 2019-20 through the redeployment of emerging/planned underspend alongside the remaining unallocated resources held centrally. This strategy is reflected in the portfolio schedules.

Technical Adjustments

6. The Spring Budget Revision records net technical changes of £714.8 million. The largest technical change is the increase to the AME provision for future NHS and Teachers pension costs (£594.6 million). This arises from indexation and equalisation; There is additional non cash funding for Health (£105.1 million) and other portfolios (£1.3 million) and notional funding to cover expected credit losses (£35.6 million); £37 million has been provided to police (SPA) and £5.5 million to Culture for working capital. There are also additional allocations of AME budget, as agreed and funded by HM Treasury, to cover provisions, impairments, fair value adjustments and pension liabilities (net £2.1 million) as well as a small number of changes (-£66.4 million) to align budgets with accounting requirements under the Government Financial Reporting Manual (the FReM).

Transfers

7. There are 16 specific Whitehall Transfers totalling £138.0 million recognised as part of the Spring Budget Revision. Transfers include an £80m transfer from HM Treasury for convergence funding for farmers, a £35.0 million Reserve Claim as additional funding for the Personal Injury Discount Rate; £4.9 million from BEIS in respect of public sector energy efficiency; £3.0 million from DEFRA in relation to EMFF; £1.6 million for the Tampon Tax; £1.4 million from the Department of Transport for the Dundee to Stansted PO; £0.8 million from the Department of Health and Social Care for HIV funding; a transfer from the home office for Migrant Surcharge (£0.5 million) five transfers from the Department for Work and Pensions in relation to funding for the Single Gateway Project (£0.4 million), for Specialist Employment Support (£0.3 million), for the GP IT Project (£0.2 million), and two payments for the Fit for Work programme (both £0.1 million); £0.1 million from the Home Office in respect of Marriage Civil Partnership Changes; and £0.1 million from Department of Digital, Culture, Media and Sports in respect of the Edinburgh Cultural Summit. A further transfer of -£0.4 million was made to the Department of Health and Social Care in relation to the Ambulance Radio Programme. Alongside this is the deployment of EU exit consequentials to various portfolios (£9.9 million).

8. Internal transfers do not affect the Scottish Government's budget as a whole and net to zero. Internal transfers move budget provision within or between portfolios, often to reflect changes in responsibility between portfolios, changes in payment mechanisms and virement intended to maximise the use of available resources. The significant portfolio transfers are as follows:

• transfer from Finance, Economy & Fair Work portfolio to the Communities & Local Government portfolio from the Building Scotland Fund (£10.5 million) ); and
• transfer from Transport, infrastructure & Connectivity portfolio to the Communities & Local Government for Tay cities Region Michelin Scotland (£7.5 million).

Format of Supporting Document

9. The Scottish Government continues to discuss with the Finance and Constitution Committee and others how it can improve the presentation and usefulness of supporting information.

10. The summary tables on pages 4 to 9 set out the changes sought in the Order at portfolio level, and the effect of the proposed changes on the overall cash authorisations. There is a clear read across from the numbers shown on the face of the Budget Act to those in these tables, and to the revised numbers shown in the Spring Budget Revision Order itself. Tables 1.5 and 1.6 provide a reconciliation between the resource budgets and the cash authorisations. Tables 1.7 (a) and (b) show the sources of funding that support the changes applied and the movement of available resources. Table 1.8 shows the voted Capital Spending and Net Investment for each portfolio following the SBR adjustments. It should be noted that for the remainder of the document, only spending that scores as capital in the Scottish Government's or Direct Funded Bodies' annual accounts is shown as capital.

11. The main body of the document then provides a more detailed analysis of the proposed changes on a portfolio by portfolio basis. For each portfolio and direct-funded body, it shows:

• a summary of the changes proposed for the portfolio;
• how the proposed revised portfolio budget is comprised in terms of operating and capital resources, divided into the main spending aggregates: Expenditure Limit, UK Funded AME (Annually Managed Expenditure) and Other spending to show TME (Total Managed Expenditure) in respect of the Scottish Budget;
• details of the proposed major changes; and
• details of the proposed revised budgets disaggregated to Level 3.

12. The Scottish Government's spending proposals are in the main presented to Parliament in resource terms. But to meet the requirements of the "Public Finance and Accountability (Scotland) Act 2000", Budget Bills and Revisions seek authority for the budgets of NDPBs in cash, and NDPB numbers in this supporting document are also given in cash terms. In order to allow comparison with NDPB budgets presented in other Scottish Government publications, the following table compares cash and resource budgets.

Table A - Revised NDPB Cash and Resource Budgets by Portfolio, 2019-20

Process for the Budget Revision

13. Following detailed consideration by the Subordinate Legislation and Finance Committees, the Scottish Parliament has an opportunity to vote on the Spring Budget Revision order subject to a recommendation by the Finance and Constitution Committee.