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SP Paper 604 Web only FI/S3/11/R4

4th Report, 2011 (Session 3)

Report on the draft Budget (Scotland) Act 2010 Amendment Order 2011

Remit and membership

Remit:

1. The remit of the Finance Committee is to consider and report on-

(a) any report or other document laid before the Parliament by members of the Scottish Executive containing proposals for, or budgets of, public expenditure or proposals for the making of a tax-varying resolution, taking into account any report or recommendations concerning such documents made to them by any other committee with power to consider such documents or any part of them;

(b) any report made by a committee setting out proposals concerning public expenditure;

(c) Budget Bills; and

(d) any other matter relating to or affecting the expenditure of the Scottish Administration or other expenditure payable out of the Scottish Consolidated Fund.

2. The Committee may also consider and, where it sees fit, report to the Parliament on the timetable for the Stages of Budget Bills and on the handling of financial business.

3. In these Rules, "public expenditure" means expenditure of the Scottish Administration, other expenditure payable out of the Scottish Consolidated Fund and any other expenditure met out of taxes, charges and other public revenue.

(Standing Orders of the Scottish Parliament, Rule 6.6)

Membership:

Derek Brownlee
Malcolm Chisholm
Linda Fabiani
Joe Fitzpatrick
Tom McCabe (Deputy Convener)
Jeremy Purvis
Andrew Welsh (Convener)
David Whitton

Committee Clerking Team:

Clerk to the Committee
Jim Johnston

Senior Assistant Clerk
Terry Shevlin

Assistant Clerk
Allan Campbell

Committee Assistant
Jennifer Bell

Report on the draft Budget (Scotland) Act 2010 Amendment Order 2011

The Committee reports to the Parliament as follows—

Introduction

1. At its meeting on 1 March 2010, the Finance Committee considered the draft Budget (Scotland) Act 2010 Amendment Order 2011. This affirmative instrument seeks to make changes to the cash authorisations set out in the Budget (Scotland) Act 2010.

Finance Committee consideration

2. The Committee took evidence on the draft instrument from John Swinney MSP, Cabinet Secretary for Finance and Sustainable Growth, John Williams, Head of Finance Co-ordination, and Stuart Dickson, Finance Co-ordination, Scottish Government.

3. The Committee is grateful to the Scottish Government for providing a detailed list of the changes made in the draft instrument in advance of the Committee meeting. This is reproduced as annexe A to this report.

4. The Committee asked for and received clarification on a number of points during the evidence session. The Official Report of the meeting is available on the Parliament’s website, at:

http://www.scottish.parliament.uk/s3/committees/finance/meetings.htm.

5. Following the evidence session, John Swinney MSP moved motion S3M-7799—

That the Finance Committee recommends that the draft Budget (Scotland) Act 2010 Amendment Order 2011 be approved.

6. The motion was agreed to.

Annexe A: A BRIEF GUIDE TO THE 2010-11 SPRING BUDGET REVISION

1. The changes proposed in the Spring Budget Revision result in an increase in the approved budget of approximately £126m from £34,720m to £34,846m.

2. Once again this is in essence a very simple revision. The main changes to the Government’s spending plans set out in the supporting document to the Spring Budget Revision are to reflect:

  • Reduction of £130m as agreed with HM Treasury to produce a corresponding carry forward into 2011-12 (DEL).

  • Additional (DEL) cover for student loan subsidy of £29m

  • Additional (AME) budget cover to reflect revised budgeting treatment of provisions £106m,

  • Additional (AME) cover for pensions of £23m.

  • Additional (AME) cover for impairments and financial guarantees of £67m

  • IFRS Adjustments of £35m (ODEL).

3. Virement between and within portfolios is a ‘zero sum’ approach. What appears to be a small imbalance of -£3.8 mainly reflects the transfer of budget provision to support NDPB capital charges which are not included in the Parliamentary approval. Major transfers included the following:

  • Transfer from Justice to Transport (F&SG) for roads depreciation and winter Maintenance (£25.5m);

  • Transfer from Health to Local Government for Adult Support and Protection (£15.6m); and

  • Transfer to Local Government for Schools Capital Funding (19.4m).

4. Details of the major changes are summarised in the following table:

2010-11 Budget Approved at ABR     34,720.4
       
Funding Changes      
Reduction of £130m to produce corresponding carry forward for 2011-12 (DEL) -130.0    
Additional cover for Student Loan subsidy (DEL) 28.7    
Additional budget cover for provisions (AME) 105.8    
Additional budget cover for impairments and financial guarantees (AME) 66.7    
SPPA – increase in NHS and Teachers’ Pension Costs (AME) 22.6    
IFRS changes 35.4    
    129.2  
      34,849.6
Net Whitehall Transfers      
FSG – From DFT 0.4    
    0.4  
      34,850.0
       
Internal Transfers within Scottish Block      
Office of the First Minister 2.3    
Finance and Sustainable Growth 30.6    
Health and Wellbeing -17.5    
Education and Lifelong Learning -2.2    
Justice -46.4    
Rural Affairs and Environment -13.7    
Administration 3.9    
Local Government 38.3    
Other 0.9    
    -3.8
Proposed Budget following Spring Revisions     34,846.2

Revisions by type

 

DEL AME Other Total

 

£m £m £m £m
Funding Changes -101.3 195.1 35.4 129.2
Net Whitehall Transfers 0.4 0.0 0.0 0.4
Scottish Block Transfers -3.8 0.0 0.0 -3.8
Total Changes -104.7 195.1 35.4 125.8

Significant revisions include:-

Office of the First Minister

  • Transfer from Major Events to Tourism -£1.5m.

  • Transfer from other portfolios to social advertising £4.3m.

  • Transfer from other portfolios to public information campaigns £2.2m.

  • Miscellaneous minor transfers of -£2.5m.

Finance and Sustainable Growth

  • Additional funding for provisions of £27m across transport directorates.

  • Underspend contributing to corporate budget reduction in committees of -£4.7.

  • Underspend contributing to corporate budget reduction in Transport of -£51.0.

  • Underspend contributing to corporate budget reduction in Water of -£34m.

  • Transfer from ELL to Public Service reform for eCare of £2.3m.

  • Transfer from Bus Services for Smartcard programme of £2.7m.

  • Transfer from Administration for Directorate staff costs of £3.8m.

  • Transfer from Justice for both roads depreciation and maintenance of £25.5m due to damage to roads because of extreme weather conditions in December.

  • Reclassification of Capital due to IFRS of £19m.

Health and Wellbeing

  • Additional funding for impairments and provisions within the Health Directorate of £84m.

  • Additional funding in respect of National Housing Trust provision of £4.0m.

  • Transfer to Local Government from Health for Adult Support and protection of -£15.6m due to the additional budget placed on Local Authorities.

  • Transfer from AHIP to Health in relation to capital charges of £5m.

  • Further miscellaneous minor transfers of around -£7.0 to other portfolios.

  • IFRS Adjustments of £41m.

Education & Lifelong Learning

  • Additional funding from HMT for Student Loan subsidy of £28.7m.

  • Miscellaneous transfers from Schools People and places to Children and Young People of -£3.9m.

Justice

  • Additional funding for AME provisions and impairments of £24.9m.

  • Underspend contributing to corporate budget reduction in Police Central Government of -£8m.

  • Underspend contributing to corporate budget reduction in Police and Fire pensions of -£10.5m.

  • Underspend contributing to corporate budget reduction in SPS of -£7.5m.

  • Underspend contributing to corporate budget reduction in Accountant in Bankruptcy of -£2.5m.

  • Transfer from Justice to FSG for roads depreciation and maintenance of -£25.5m due to damage to roads because of extreme weather conditions in December.

  • Transfer of -£19.4m to LG Capital for Schools Hybrid Orkney and Western Isles in respect of the £1.2b schools investment programme.

Rural Affairs and the Environment

  • Additional funding for AME provisions and impairments of £15.4m.

  • Underspend contributing to corporate budget reduction in EU Support and Related Services of -£8.0m.

  • Technical adjustments to Main Research Providers’ depreciation budget of -£4.1m.

  • Transfer to Administration for Marine Scotland core charges of £-5.1m.

  • Other Miscellaneous minor transfers of approximately - £4m.

Administration

  • Additional funding for AME provisions and impairments of £18.0m.

  • Transfer to Administration from RAE for Marine Scotland core charges of £5.1m.

Local Government

  • Transfer to LG Capital of £19.4m for Schools Hybrid Orkney and Western Isles from Justice in respect of the £1.2b schools investment programme.

  • Transfer from Health to Resource Grants for Adult Support and Protection of £15.6m due to the additional budget placed on Local Authorities.

Finance Co-ordination
January 2011