Scottish Government

Building a Better Scotland

INTRODUCTION

Building a Better Scotland outlines our spending strategy to improve the lives of people across Scotland. It sets out how we will allocate resources to meet our objectives, use our resources more productively and invest in a sustainable future for the next generation.

This introductory chapter highlights:

• our vision for a better Scotland, outlining the key improvements we intend to deliver;
• a set of priorities, drawn from our government programme to grow the economy, improve public services, support stronger, safer communities and build a confident and democratic Scotland;
• the step change we will make to direct more of our resources to frontline services and the people and places that matter;
• details of the budget levels each portfolio will spend; and
• detail of how we are planning our capital investment.

Growing the Economy

Economic growth is critical to Scotland's future. It is the foundation on which we secure our children's future, the prosperity of our families and the capacity to drive up standards of public service that allow everyone to achieve their ambitions.

Employment in Scotland has reached its highest level since 1992 and more people than ever before are active in the labour market. That means more people with jobs and the independence and self respect that come from a job well done and fairly rewarded.

The decline in manufacturing has been halted and we have begun to see an improving trend in our growth rate, with independent forecasters predicting above trend growth this year and next.

But there is more to do. Growth must be sustainable. Opportunities to contribute to economic growth and share Scotland's increased prosperity must be genuinely open to all. Productivity in the private and the public sector must rise. Investment by our companies - small and large - in research and development must increase to take us level with, and then surpass, our key competitors.

And it is government's job to invest to help create the conditions in which our businesses can thrive and our competitiveness grow.

Excellent Public Services

The Scottish Executive is committed to excellent public services, designed and delivered to make sure that the interests of those who use them - the pupil, the patient, the passenger or the victim of crime - come first.

That means making sure that we have the right staff, with the right skills and in the right numbers, working in the right way to deliver the high quality public services people expect and deserve. To secure that, the Scottish Executive will increase the levels of investment in our public services to ensure that they are backed by the resources they need. But we are also working to make sure that the services are designed and delivered in the most effective way possible, and that means focusing on people; the people who use and receive those services and the staff who deliver them.

The health of Scotland's people will continue to be a key challenge over the period, so we will continue to support health services in Scotland with the resources they need - by 2008 we will be spending more than 2,000 per person on health services. Much of this money will be spent on modernising working practices through reformed staff contracts, and on re-designing services to meet the needs of patients, putting them first in order to ensure the highest possible levels of care. But by 2008 there will also be even more nurses, more health care professionals and more NHS consultants ensuring that there are higher levels of staff to do the job. And we will continue and expand our work to improve health in Scotland, putting health promotion at the heart of our long term plans.

There can be no doubt that where possible smaller class sizes help to improve educational attainment. The Scottish Executive is committed to making the investment necessary to achieve smaller classes. We will increase teacher numbers to 53,000 by 2008, reducing class sizes in Primary 1 and also for Maths and English in the first two years of secondary school.

Provision of services in rural areas is a particular challenge given the higher costs of delivery. By 2008 we will improve service delivery in rural areas so that agreed improvements in accessibility and quality are achieved for key services in remote and disadvantaged areas. As rural services are provided by a number of agencies, specific targets for improvements in access and quality will be agreed through community planning partnerships and will reflect the outcome of local consultations. Community-led projects to pilot new methods of service delivery and to share best practice will be supported by the Scottish Rural Partnership Fund.

Safer, Stronger Communities

Safe, strong and sustainable communities are the building blocks of our society. They are essential for economic growth, building excellent public services and realising the ambitions of all. The Scottish Executive is committed to improving the quality of life in our communities, a quality of life that includes good quality housing, a clean and safe local environment and access to support and advice. It is also about ensuring that our communities are places where people and property are respected, and anti-social behaviour is not tolerated.

We will continue to build on the investment we have already made through the Quality of Life fund that supports a range of projects from community safety schemes to providing better play facilities.

We will also improve quality of life by establishing a national concessionary fares scheme for older people and those with disabilities. And we will work to improve local opportunities by providing or improving cultural facilities in communities.

Ensuring an adequate supply of decent, affordable housing is vital for the quality of life of Scotland's communities. Having enough houses of the right type available in the right place is also vital for economic growth. We will fund the building of homes that people can afford, in areas they are needed: building high quality housing in all areas of Scotland and building sustainable communities. Making sure that we connect the regeneration of our disadvantaged communities with our strategy for growing the economy. Our investment will be over and above any new, affordable housing created by local councils using the opportunity they have from the reduction in the Council Tax discount on second homes.

We will increase our spending on police numbers in each region to ensure that we maintain and improve upon our current performance in protecting Scotland's communities from crime. Meanwhile, we will invest 75/106m to improve our prisons and also invest in our courts, to ensure that offenders are dealt with swiftly and effectively, while providing better services for witnesses and victims of crime.

Recognising that some of our most disadvantaged communities are those who potentially face life in the poorest environment, we will invest in an Environmental Justice Fund to support communities seriously affected by quarrying, landfill and opencast workings.

We have also set new targets through our National Waste Strategy and will help Scotland's households to improve levels of recycling, building on the progress we have made, reducing our dependence on landfill.

And we will begin introducing noise nuisance services across the country.

Confident, Democratic Scotland

For Scotland to be successful, we must be ambitious. Our ambitions include greater public participation and greater involvement by individuals, families and communities in the decisions that shape their lives. Our Budget will help us to pursue these.

Scotland's image and connections abroad are central to our economic success. We will increase our investment on targeted marketing and other activity to promote Scotland overseas.

A strong cultural base not only supports our efforts to promote a clear identity abroad, but is central to our sense of who we are and is one foundation of a strong, vibrant Scotland. We will therefore invest in Scotland's cultural life, for example by making a major investment in educational and visitor facilities in the Highlands in advance of the 2007 Year of Highland Culture.

While we are investing in the development of skills here in Scotland, we know it is critical to respond to the challenge of a declining population by seeking to retain and attract people to live and work in Scotland. We will do this through the Fresh Talent initiative. Alongside our work to promote Scotland, this will help to project an image of a modern, vibrant and diverse country - an attractive place to visit, with which to do business, and in which to study and live.

Securing Efficient Government

Managing public sector resources more effectively is a central component of our strategy for growing the economy and for the modernisation and improvement of Scotland's public services. Our goal is to deliver excellent public services and to secure greater user choice.

Our determination to pursue effectiveness and value for money is central to the Scottish Executive's Efficient Government review that began in June. A three-year plan to attack waste, bureaucracy and duplication in Scotland's public sector. A target was set to achieve more than 500m of annual efficiency savings by 2007-08 and up to 1bn per year by 1 April 2010. Meeting this target will enable us to move more resources to the people and places that matter.

We are building on the work that has already been done over the last five years, but we are now stepping up a gear and going much further, with more ambitious targets. We want to ensure that every pound has a positive impact. We will publish our plan with details of how we will implement this work over the next three years, and the specific steps that each portfolio will take to improve their efficiency and the resources that they will release for investment in frontline services.

These plans are for genuine efficiencies. Efficiencies that will improve the level, quality and accessibility of public services and secure real, measurable service improvements. Efficiencies that have allowed us to allocate additional resources in the Spending Review to our key priorities that will be delivered across the whole of the public sector.

The process of continuous service improvement will become part of the day-to-day way in which Government and the rest of the public sector acts. An exercise which becomes normal every time and everywhere. A cultural shift, but one with a real purpose - better public services.

Local authorities, health boards and other public bodies who make efficiencies from within their spending allocations will be able to retain those savings and redirect them to their own frontline services.

To make this happen, the Executive is taking strong action to improve efficiency within its own expenditure and is working with public bodies to develop detailed efficiency plans, to ensure the rigorous monitoring of delivery against targets, and to co-ordinate in those areas that require joint effort and joint working by different public bodies.

We have identified major efficiency gains that will be secured in three areas:

• better procurement;
• shared support and transactional services; and
• streamlining bureaucracy.

Procurement. We know there are major gains to be made from better procurement practice through using e-procurement and by joining together to maximise purchasing power by the public sector.

The eProcurement Scotland service represents one of the most significant commitments to eCommerce by any government organisation. We will accelerate and expand take-up of the service, both to realise the substantial savings that are available, and to make Scotland the easiest place for suppliers to do business with the public sector.

Shared support and transactional services. All public bodies have a basic core of support services, including payroll, Human Resources, IT and finance. Other support services are common across a large number of organisations, including legal and communications services. Sharing these support services can generate substantial efficiency savings by realising economies of scale and through greater standardisation and adoption of best practice. There are also many transactional processes where costs can be reduced, by simplifying processes, replacing paper-based with electronic systems and joining up.

But we need to go further and faster - joining up across different sectors in new ways as well as within them.

Streamlining bureaucracy. Accountability and scrutiny are important but do not have to be as bureaucratic as they currently are. We will end unnecessary bureaucracy across the public sector by ensuring that audit and scrutiny is co-ordinated and the number of forms required by all levels of Government is reduced. We will also streamline the collection of performance data to ensure that the public's ability to understand, and make judgements on, the performance of the Executive or their local Council is improved.

Our spending plans

We try to make the presentation of our spending plans as clear as possible, and we regularly discuss with the Scottish Parliament's Finance Committee how we can make information available to the public in as clear a manner as possible. This document continues many of the innovations which were made in the 2002 Spending Review document. Individual chapters set out each portfolio's spending plans, and also the portfolio's aim, objectives and targets - making explicit what each portfolio expects to achieve with its extra resources.

The text of the chapters tries to be explicit about how much additional money is being spent on a programme or project. Most additional funding for portfolios is being allocated in 2006-07 and 2007-08 - however in some cases we are also providing additional money in 2005-06.

Where spending is described as increasing by 10/20m this means that, in comparison to the allocations published in the Annual Evaluation Report 2005-06, spending will not increase in 2005-06. It will increase by 10m in 2006-07, and by 20m in 2007-08. Therefore, if our previous plans have indicated that we will spend 100m in 2005-06, and spending is shown as increasing by 10/20m, then expenditure over the period from 2005-06 to 2007-08 will be 100/110/120m.

There are spending increases for some lines in 2005-06. If spending is described as increasing by 5/10/20m, then expenditure, in the example used above, will be 105/110/120m.

The tables below set out how total expenditure across the Executive will increase as a result of this year's Spending Review. More detailed information is then provided in the individual portfolio chapters. Full information on the Executive's spending plans will be provided in the 2005-06 Draft Budget, which will be published in October 2004.

Table 0.01 Total Managed Expenditure (TME) by portfolio

The table below shows the real terms value of these increases. This has been calculated using the GDP deflator, which is equal to 2.31% in 2004-05, 2.52% in 2005-06, 2.68% in 2006-07 and 2.70% in 2007-08. References to spending increases in the text of this document will refer to cash rather than real terms figures unless otherwise stated.

Table 0.02 Total Managed Expenditure (TME) by portfolio in real terms at 2004-05 prices

Total Managed Expenditure is divided up into Departmental Expenditure Limit (DEL) and Annual Managed Expenditure (AME). The majority of the Executive's expenditure is DEL. DEL spending is discretionary, and is the element of spending on which the Barnett Formula operates. AME tends to be demand-led. For that reason, the Executive's choices in the Spending Review have been about DEL spending.

Table 0.03 Departmental Expenditure Limits (DEL) by portfolio

Table 0.04 Annual Managed Expenditure (AME) by portfolio

Planning our Capital Investment

Maintaining and further investing in Scotland's infrastructure and asset base is required to grow the economy and provide better public services. The Scottish Budget recognises the need to build on the substantial capital investment over the last five years to further improve Scotland's physical infrastructure and public services to meet the needs of the public.

The objectives for our Capital Investment Plan are to:

• improve the efficiency of how services are being delivered;
• improve the standard of our infrastructure, such as our transport network and school building estate;
• improve the business economy, enabling employment and training opportunities for Scotland's workforce;
• improve the co-ordination of our infrastructure investment by geographical area and between portfolios in order to secure extra value from our existing investment and infrastructure programmes; and
• improve the co-ordination with the private sector and secure a mixed economy and mixed tenure of investment.

These objectives will be delivered through net investment in 2005-06 of 2,732m with significant growth thereafter of 15% in 2006-07 and 7% in 2007-08.

This growth in capital investment will allow Scotland to achieve its aims of delivering the required infrastructure following years of under-investment and more than meets the target of a 5% real terms annual increase in net investment over the Spending Review period set in June 2004.

This investment is allocated across each aspect of government as follows:

Table 0.05 Total net investment by portfolio⁽¹⁾⁽²⁾

( ¹) These figures include capital grants to the private sector, which score as resource expenditure in the Executive's accounts.
( ²) These allocations are provisional before publication of the Executive's full Capital Investment Plan later this year.

This capital investment represents the majority of the significant improvements that will be made to the infrastructure over the next three years. We also intend to improve Scotland's infrastructure further through the use of Public Private Partnerships (PPP) where this procurement route has been identified as providing the best value for money.

We will review the procurement method of each capital scheme on its individual merits to ensure best value is obtained and resources are used effectively. This means choosing the most appropriate means of investment for each individual case whether through PPP, direct investment, or supporting others to invest and implement infrastructure schemes on our behalf. We remain determined to further improve the methods of delivery we use and will continue to learn from best practice. We also work with the construction industry and financial markets to co-ordinate the delivery of this investment growth.

We are also determined to improve the co-ordination of the infrastructure investment we make in different communities across Scotland by geographical area and between portfolios in order to secure extra value from our existing investment and infrastructure programmes. This will ensure that we maximise the opportunities for community, area and economic regeneration and sustainable development, through improved design, resource efficiency and waste minimisation.

Full details of our capital investment plans, incorporating plans beyond the period of the Spending Review, will be published later in the year.