Scottish Government

Introduction

1. This booklet provides supporting information for the Parliament and others in support of the "Budget (Scotland) (No.4) Bill". The Bill was laid before the Parliament by the Executive in January 2007. The booklet itself has no statutory force - it is produced as an aid to understanding the Bill.

2. The purpose of the Bill is to seek Parliamentary approval to the Executive's spending plans for the financial year 2007-08. These plans were set out in Building a Better Scotland: Spending Proposals 2005-2008 Enterprise, Opportunity, Fairness published in September 2004, following the 2004 Spending Review. More detailed plans for 2007-08 were published in September 2006 in Draft Budget 2007-08. The Parliamentary Committees have already scrutinised the draft plans across the autumn of 2006, culminating in the debate on the Finance Committee's Report on Stage 2 of the Budget Process on 21st December 2006.

3. There are a number of changes between the figures given in Draft Budget 2007-08 and those set out in the rest of this document and the bill. The major changes are presentational and largely reflect statutory requirements. These are explained below:

i) The Executive's spending proposals are presented to the Parliament in departmental terms;

ii) While spending proposals are in the main expressed in resource terms the 'Public Finance and Accountability (Scotland) Act 2000' requires authority for the budgets of non-departmental public bodies ( NDPBs) to be given in cash. In order to allow comparison with NDPB budgets presented in other publications - including Draft Budget 2007-08 - table 1.1 compares cash and resource budgets at departmental level;

iii) Income from National Health Insurance Contributions of £1,406m is netted off against the Health Department expenditure in the Budget Bill;

iv) Cost of capital charges and loan repayments by Scottish Water of £137m require Parliamentary approval and are therefore included in the Budget Bill; and

v) Local Government Supported Borrowing of £305m appears in the Draft Budget but is excluded from the Budget Bill as it does not require Parliamentary approval.

4. There are also a number of minor transfers of budget provisions between portfolios and two other significant changes detailed below:

i) Additional funding of £201m for local authorities as announced by the Minister for Finance and Public Sector Reform on 13 December 2006; and

ii) Transfers to the Central Unallocated Provision of £21m, mainly from the Environment and Rural Affairs Department.

5. There is a new table in this year's supporting document, Table 1.8, which shows a full reconciliation between the portfolio budgets shown in the Draft Budget 2007-08 and the departmental budgets shown in this supporting document to the Budget Bill. This reflects all the changes referred to above.

6. Since the introduction of resource accounting and budgeting, there has been a difference between the spending that scores as capital in the Executive's accounts, and that which scores as capital within DEL (the departmental expenditure limit).

7. Draft Budget 2007-08 reported as capital spending which scores against capital DEL, but since the Executive accounts are against the aggregates set in the Budget Bill, this supporting document uses the "accounts definition" of capital, so that only spending that scores as capital in the Executive's or Direct Funded Bodies' accounts is shown as capital (see the first column in table 1.2).

Table 1.1 - NDPB Cash and Resource Budgets by Department, 2007-08

Table 1.2 Capital Spending 2007-08

1. Estimated payments under PPP contracts ( FCSD figures comprise PPP projects undertaken by Local Authorities and so include waste management and schools PPP projects)
2. Approximately £168m of the ETLL direct capital scores in AME
3. Approximately £305m of FCSD capital grants to local authorities is Local Authority Supported Borrowing

Central Unallocated Provision

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

9. The amounts shown in the table below show transfers to the CUP made by portfolios as part of their preparation for the Budget (Scotland) (No.4) Bill. Where negative balances are shown below these will be offset by balances brought forward from 2006-07.

Table 1.3 Transfers to Central Unallocated Provision by Portfolio at Budget Bill 2007-08

The form of this supporting document

10. The Executive continues to discuss with the Finance Committee and others how it can improve the presentation of supporting information, and which material is find most useful.

11. Following this introduction, the summary tables set out the overall resource authorisations sought in the Budget Bill at departmental level, and the cash equivalents. The numbers shown in these summary tables will in general read directly across to the numbers shown on the face of the Bill. The main body of the document then provides a more detailed analysis of the proposed plans on a department by department basis. For each department and direct funded body, it shows:

• the proposed departmental budget split in terms of operating and capital resources, divided into the main spending aggregates: DEL (Departmental Expenditure Limit), AME (Annually Managed Expenditure) and spending outside TME (Total Managed Expenditure); and
• details of the proposed budget for each individual Level 2.