Scottish Government

Introduction

1. This booklet provides supporting information for the Parliament and others in support of the "Budget (Scotland) Bill". The Bill was laid before the Parliament by the Scottish Government in January 2008. 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 Scottish Government's spending plans for the financial year 2008-09. These plans were set out in Scottish Budget: Spending Review 2007 published in November 2007, following the 2007 Spending Review. The Parliamentary Committees have already scrutinised the draft plans across the autumn of 2007, culminating in the Finance Committee's Report on Stage 2 of the Budget Process on 16 ^th January 2008.

3. There are a number of changes between the figures given in Draft Budget 2008-09 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) 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;

Table 1.1 - NDPB Cash and Resource Budgets by Department, 2008-09

ii) Income from National Health Insurance Contributions of £1724.1m is netted off against the Health Department expenditure in the Budget Bill;
iii) Cost of capital charges and loan repayments by Scottish Water of £239.9m require Parliamentary approval and are therefore included in the Budget Bill; and
iv) Local Government Supported Borrowing of £305.2m and Judicial Salaries of £28.4m appear in the Draft Budget but are excluded from the Budget Bill as they do not require Parliamentary approval.
v) There are a number of directly funded external bodies which require separate parliamentary approval from the portfolio total.

4. Table 1.2 shows a full reconciliation between the portfolio budgets shown in the Draft Budget 2008-09 and the departmental budgets shown in this supporting document to the Budget Bill. This reflects all the changes referred to above.

5. 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).

6. Draft Budget 2008-09 reported as capital spending which scores against capital DEL, but since the consolidated 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 consolidated or Direct Funded Bodies' accounts is shown as capital (see the first column in table 1.3).

Table 1.2 Reconciliation between Draft Budget 2008-09 and Budget Bill 2008-09

Note on columns
A - Draft budget as shown in table 1 of 'Scottish Budget Spending Review 2007' on page 6.
B - To meet the requirements of the Public Finance Accountability (Scotland) Act 2000 ( PFA Act 2000) NDPBs are approved in cash only
C - To meet the requirements of the PFA Act 200O Health spending is approved net of National Insurance income
D - To meet the requirements of the PFA Act 2000 LA supported borrowing is excluded from parliamentary approval but lending to Scottish Water included.
E - To meet the requirements of the PFA Act 2000 Student loans subsidy to banks is included for parliamentary approval.
F - To meet the requirements of the PFA Act 2000 judicial salaries are excluded from parliamentary approval.
G - Direct funded and other external bodies requiring separate parliamentary approval. Reduction in SPCB and AS reflects timing difference.
H - Draft budget restated on basis of funding requiring parliamentary approval
I - Restatement of ring fenced grants under appropriate Cabinet Secretary responsibility.
J - 2008-09 Budget Bill

Table 1.3 Capital Spending 2008-09

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 £124m of the ELL direct capital scores in AME
3. Approximately £305m of LG capital grants to local authorities is Local Authority Supported Borrowing

The form of this supporting document

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

8. The following 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.

9. The Administration budget includes the costs of central services and directly allocated administration costs for the core Scottish Government which are managed by the Directors General ( DG). The precise final allocations of the Administration budget for each DG have not yet been finalised and are not therefore detailed within this document. This breakdown will be provided in the Autumn Budget Revision.