Spring budget revision 2021 to 2022: supporting document

Introduction

1. This booklet provides information for the Parliament and others in support of the 'Budget (Scotland) Act 2021 (Amendment) Regulations 2022' – the Spring Budget Revision. The Order is a Scottish Statutory Instrument laid before the Scottish Parliament by the Scottish Government in February 2022. 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 2021, which authorises the Scottish Government's spending plans for the financial year 2021-22.

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 (including COVID-19 allocations) to reflect deployment of available resources to portfolios (total net increase to the budget of £1,428.3 million);

ii) technical adjustments (net decrease to the budget of -£357.3 million);

iii) Whitehall Transfers and HM Treasury allocations to the Scottish Government (£131.2 million); and

iv) the transfer of resources between Scottish Government portfolios.

4. In total these changes will increase the Scottish Government budget by £1,202.2 million from £56,495.2 million to £57,697.4 million.

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

Funding Changes

6. Covid allocations, on a gross basis, amounting to £1,386.7 million have been allocated in this budget revision. This is funded from a combination of Covid-19 consequentials and reallocations of existing funding as shown below.

7. Additional non-COVID-19 related funding allocations have been made from the reserve and reprioritised resources where emerging pressures have been identified through the monthly monitoring of budgets.

8. In areas where underspends have emerged through the monthly budget management and monitoring process, budgets have been reduced and redeployed to areas, including on COVID-19 related measures, where pressures have been identified. The areas affected by these transfers are detailed throughout the document.

Technical Adjustments

9. The Spring Budget Revision records net technical changes of -£357.3 million. The largest technical change (-£298.7 million) relates to a reduction in the Student loans non cash Resource Accounting & Budgeting (RAB) charge requirement. There is a reduction to the AME provision for future NHS and Teachers pension costs (-£94.2 million). This arises from reduced opening pension liability and reduced current service costs. There is additional non cash funding for Health (£12.6 million), Social Security (£2.3 million) and adjustments to other portfolios (net £3.5 million); A technical accounting adjustment in respect of a pre-payment for the sleeper service (£5 million). There are also revisions of AME budget, as agreed and funded by HM Treasury, to cover provisions, impairments, fair value adjustments and pension liabilities (net -£44.1 million) as well as a small number of changes (£36.6 million) to align budgets with accounting requirements under the Government Financial Reporting Manual (the FReM). Finally, there is an adjustment for working capital for SPA (£15 million) along with other minor technical adjustments (£4.7 million).

Transfers

11. There are eight Whitehall Transfers recognised as part of the Spring Budget Revision totalling £131.2 million. The largest of these relates to the migrant health surcharge £62.4 million. There is a transfer related to COP26 (the transfer is split over a number of budget lines) of £65.0 million, a transfer of £0.7 million in respect of the Scottish Infected Blood Support Scheme, a transfer from Department for Transport of £0.9 million for Dundee to Stanstead PO, a £0.8 million transfer from DEFRA to Marine Scotland, a £1.1 million transfer of funding from the Tampon Tax for Scottish Charities, a transfer to Food Standards Scotland of £0.1 million and a £0.1 million transfer for the Edinburgh Cultural Summit.

12. 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 Health & Social Care to Social Justice, Housing & Local Government to support the Adult Social Care Winter Plan (£142.3 million);
• transfer from Health & Social Care to Social Justice, Housing & Local Government for the Best Start Foods Scheme(£12.0 million);
• transfer from Health & Social Care to Social Justice, Housing & Local Government for the Self Isolation Assistance service (£9.1 million);
• transfer from Health & Social Care to Marketing for public awareness campaigns about Covid-19 (£15.0 million);
• transfer from Health & Social Care to Marketing for various Health marketing campaigns (£6.8 million);
• transfer from Health & Social Care to Education & Skills in respect of nursing and midwifery education (£13.3 million);
• transfer from Health & Social Care to Education & Skills in respect of Clinical Academies and SAGP funding (£7.3 million);
• transfer from Social Justice, Housing & Local Government to Finance & Economy for the Community Recovery Fund (£9.0 million);
• transfer from Net Zero, Energy & Transport to Finance & Economy to fund Offshore Wind projects (£6.5 million);
• transfer from Finance & Economy to Education & Skills for additional college courses and grad internships (£9.5 million); and
• transfer from Finance & Economy to Education & Skills for the National Transition Training Fund (£7.5 million).

Format of Supporting Document

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

14. The summary tables 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 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.

15. 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.

16. 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 budgets.

Process for the Budget Revision

17 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 Public Administration Committee.