The spring budget revision provides the final opportunity to amend formally the Scottish budget for 2014-15. This year’s revision deals with three types of amendments to the budget. First, it deals with a number of technical adjustments that have no impact on spending power; secondly, it deals with a small number of Whitehall transfers; and, thirdly, it deals with budget-neutral transfers of resources between portfolio budgets, including a modest budget redirection to ensure that we maximise our available budget. The net impact of all the changes is an increase of £475.1 million in the approved budget, from £36,431.4 million to £36,906.5 million.
Table 1.2 on page 6 of the supporting document—“Scotland’s Budget Documents: The 2014-15 Spring Budget Revision to the Budget (Scotland) Act for the year ending 31 March 2015”—shows the approved budgets following the autumn budget revision as realigned to reflect the new portfolio structure that the First Minister announced on 21 November 2014 and the changes that are sought in the spring budget revision.
The supporting document and the brief guide prepared by my officials provide background on the net changes.
The first set of changes comprises a number of technical adjustments to the budget. The technical adjustments are mainly non cash and budget neutral and have a net positive impact of £452.2 million. It is necessary to reflect the adjustments to ensure that the budget is consistent with accounting requirements and the final outturn that will be reported in our annual accounts.
In my letter of 2 February to the Finance Committee, I provided information on the Scottish Government’s response to updates to relevant Eurostat technical guidance on accounting, applied from September 2014 in relation to non-profit-distributing hub projects.
In the interests of clarity, I advise members that the contingency arrangements that I have agreed with Her Majesty’s Treasury do not impact on the spring budget revision, as those relate to HM Treasury budgeting at a UK level. That should not be confused with the routine Scottish budget adjustments that are made each year in relation to revenue financed projects.
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The Scottish budget aligns with the accounting requirements under the Government’s financial reporting manual. Accordingly, budget provision is included within the Scottish budget for the financial year to reflect the recognition of relevant health and transport assets within revenue finance infrastructure schemes in accordance with the accounting requirements. In numerical terms, that is the most significant technical adjustment at the spring budget revision, with an adjustment to the budget of £253.4 million. With regard to Whitehall transfers and allocations from HM Treasury, there is a net positive impact on the budget of £22.9 million.
The final part of the budget revision concerns the transfer of funds within and between portfolios to better align the budgets with profiled spend. There are a number of internal transfers as part of the revision process that have no impact on overall spending power. The main transfers between portfolios are noted in the spring budget revision supporting document and the guide to the SBR. In line with past years, there are a number of internal portfolio transfers that have no effect on portfolio totals but which ensure that internal budgets are monitored effectively.
As I have said previously, the committee will wish to note that as part of our robust budget management process and in line with good practice, we have taken the opportunity at the spring budget revision to deploy emerging underspends to ensure that we maximise public expenditure in 2014-15, in particular to support capital investment where possible.
The spring budget revision records the deployment of some £115 million of redirected budget, which represents around 0.4 per cent of the fiscal departmental expenditure limit budget. Details are provided at annex C of the brief guide prepared by my officials.
The spring budget revision also reflects the proposed transfer of budget from resource to capital in respect of the Scottish budget. Members should note that the Scottish budget records capital that scores in the Scottish Government’s consolidated accounts or the accounts of our directly funded bodies. In the context of our HM Treasury budget, the planned resource-to-capital transfer is £190 million. The switching is managed within the total DEL available to the Scottish Government. That approach takes into account the latest profile of the Government’s overall capital programme.
As in previous years, once we have provisional outturn figures, it is my intention to write to the Finance Committee with a table setting out the actual resource-to-capital transfers by portfolio and programme in a similar format to the table that was provided in my letter of July 2014 in respect of financial year 2013-14.
As we approach the financial year end, we will continue, in line with our normal practice, to monitor forecast outturn against budget and wherever possible we will seek to utilise any emerging underspends to ensure that we make optimum use of the resources available in 2014-15 and that we proactively manage the flexibility provided under the budget exchange mechanism agreed between HM Treasury and the devolved Administrations.
I confirm that, in line with past years, it is my intention to make a statement to Parliament on provisional outturn in respect of both our Scottish Parliament budget and Her Majesty’s Treasury budget.
The brief guide prepared by my officials sets out the background and details of the main changes that are proposed. I look forward to discussing the issues with the committee.