Scottish Government

Introduction

1. This booklet provides supporting information for the Parliament and others in support of the "Budget (Scotland) Act (Amendment) Order 2006" - the Autumn Budget Revision. The Order is a Scottish Statutory Instrument laid before the Parliament by the Executive in November 2006. The booklet itself has no statutory force - it is produced as an aid to understanding the Order.

2. The purpose of the Autumn Budget Revision is to amend the Budget (Scotland) Act 2006, which authorises the Executive's spending plans for the financial year 2006-07.

3. The main changes to the Executive's spending plans set out in the supporting document to the Budget Bill are to reflect:

i) the take up of End Year Flexibility;
ii) the transfer of resources between Scottish Executive departments, and between the Executive and UK Departments; and
iii) the transfer of resources from Departmental budgets into Departmental CUPs (for further details see page 4).

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

End Year Flexibility

5. "End Year Flexibility" is a financial system that allows the Executive to carry forward any unspent resources from one year to the next so that spending programmes can be planned over the medium term. It also removes the previous incentives for wasteful end of year spending.

6. It is necessary because when both the Scottish and the UK Parliament authorises the Executive's spending, they do so only for one financial year at a time. So, if the Executive seeks Parliament's agreement to spend, for example, £10 million on a new road, the money must be spent in the same financial year. If for some reason the money is not spent by 31 March - for example, if bad weather delays construction - the Executive has to ask Parliament to approve the expenditure again.

7. Details of this year's end year flexibility allocations to each portfolio were published on 28 June 2006, and are summarised in table 1.1:

Table 1.1 End Year Flexibility Allocation by Portfolio, 2005-06

Transfers

8. Most transfers do not affect the Executive's budget as a whole. Instead, they move provision within or between portfolios, often to reflect changes in responsibility between departments or changes in payment mechanisms. Transfers to and from UK departments do affect the total of the Scottish Budget, but largely reflect either transfers of responsibility or work done by UK departments on our behalf, or vice versa. The most significant transfers are as follows:

9. From 2006-07, as part of its policy to more closely align resource accounting and budgeting ( RAB) treatment HM Treasury has made some changes to the classification of certain programmes. This has no bearing on the level of gross expenditure previously planned and simply brings budgets in line with existing accounting treatment. Income has been matched against expenditure in this way in our published accounts since the introduction of RAB. While this means that the budgets are reported differently in the budget documents, the reclassifications have no effect on the amounts provided to departments. The main changes are as follows:-

Central Unallocated Provision

10. The central unallocated provision ( CUP) was first introduced at Autumn Budget Revision 2005. Further information on the CUP is set out in Scotland's Budget Documents: The 2004-05 Autumn Budget Revision.

11. The revisions detailed in this document show the following amounts being transferred to and from the CUP.

Table 1.2 Transfers to Central Unallocated Provision by Portfolio

The form of this supporting document

12. The Executive continues to discuss with the Finance Committee and others how it can improve the presentation of supporting information, and which material they find most useful. This document builds on changes introduced in previous Budget (Scotland) Bill supporting documents, and the rest of the document is set out as follows:

13. Following this introduction, the summary tables set out the changes sought in the Order at departmental level, and the effect of the proposed changes on the overall cash authorisations. There should therefore be 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 Autumn Budget Revision Order itself. A third set of summary tables provides a reconciliation between the resource budgets and the cash authorisations. A final table shows the voted Capital Spending and Net Investment for each department. It should be noted that for the remainder of the document, only spending that scores as capital in the Executive's or Direct Funded Bodies' accounts is shown as capital.

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

15. The Executive'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 non-departmental public bodies ( 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 Executive publications - including " Draft Budget 2007-08" - the following table compares cash and resource budgets at departmental level.

Table 1.3 - Revised NDPB Cash and Resource Budgets by Department, 2006-07

Process for the Budget Revision

16. Following detailed consideration by the Subordinate Legislation and Finance Committees, the Scottish Parliament has an opportunity to vote on the Autumn Budget Revision order.