Scottish Government

THE SCOTTISH GOVERNMENT ANNUAL REPORT

For the year ended 31 March 2008

INTRODUCTION/BACKGROUND

Basis of Accounts

1. These accounts have been prepared in accordance with the accounts direction issued by the Scottish Ministers under section 19(4) of the Public Finance and Accountability (Scotland) Act 2000. The accounts direction is reproduced at page 104 to these accounts.

Scottish Government Consolidation Accounting Boundary

2. These accounts reflect the consolidated assets and liabilities and the results of all entities within the Scottish Government consolidation accounting boundary as defined in the Government Financial Reporting Manual ( FReM). This consists of the six internal Portfolios, supported by Administration, their Executive Agencies (each linked to a specific portfolio), the Crown Office and Procurator Fiscal Service and the NHS Bodies responsible for the planning, promotion, commissioning and the delivery of healthcare. The bodies within the boundary are as follows:

Core Portfolios:

• Office of the First Minister
• Finance and Sustainable Growth
• Health and Wellbeing
• Education and Lifelong Learning
• Justice
• Rural Affairs and the Environment

Executive Agencies:

Office of the First Minister

• Historic Scotland ( www.historic-scotland.gov.uk)

Finance and Sustainable Growth

• Scottish Public Pensions Agency ( www.sppa.gov.uk)
• Scottish Building Standards Agency ( www.sbsa.gov.uk)
• Transport Scotland ( www.transportscotland.gov.uk)

Health and Wellbeing

• Mental Health Tribunal ( www.mhtscot.org)
• Communities Scotland ( www.communitiesscotland.gov.uk)

Education and Lifelong Learning

• Her Majesty's Inspectorate of Education ( www.hmie.gov.uk)
• Social Work Inspection Agency ( www.swia.gov.uk)
• Student Awards Agency for Scotland ( www.student-support-saas.gov.uk)

Justice

• Scottish Prison Service ( www.sps.gov.uk)
• Scottish Court Service ( www.scotcourts.gov.uk)
• Accountant in Bankruptcy ( www.aib.gov.uk)

Rural Affairs and the Environment

• Scottish Agricultural Science Agency ( www.sasa.gov.uk)
• Scottish Fisheries Protection Agency ( www.sfpa.gov.uk)
• Fisheries Research Services ( www.marlab.ac.uk)

Other Consolidated Bodies:

• The NHS Bodies in Scotland responsible for the planning, promotion, commissioning and delivery of healthcare.
• The Crown Office and Procurator Fiscal Service ( www.copfs.gov.uk)

3. Within the accounts the Core Portfolios are referred to as 'Core', while the other consolidated bodies, including the Executive Agencies, Crown Office and Procurator Fiscal Service and the Health Bodies, are referred to as 'Other'.

4. The Scottish Government is also the sole shareholder of Caledonian Maritime Assets Ltd, David MacBrayne Ltd and Highland and Islands Airports Limited; a shareholder in Partnerships UK Limited; and sponsor of a number of executive, advisory and tribunal Non-Departmental Public Bodies. These bodies are regarded as related parties with which the Scottish Government has had various transactions during the year, but do not fall within the Scottish Government consolidation accounting boundary. Further details of Scottish Public Bodies are available from the Scottish Government website at http://www.scotland.gov.uk/Topics/Government/public-bodies.

5. The Crown Office and Procurator Fiscal Service, the Executive Agencies and the individual Health Bodies also produce and publish their own annual accounts. These accounts can be accessed via the Scottish Government website at www.scotland.gov.uk. Useful information on the Core Portfolios is also provided in a separate balance sheet (see page 48) and accompanying notes (see pages 53 to 103).

Comparison of Budget to Outturn

6. These accounts seek to report actual outturn compared to the budget authorised by the Scottish Parliament. The annual budget authorised by the Scottish Parliament, however, is the budget for the wider Scottish Administration. It therefore includes the funding of activities which are not within the Scottish Government, and not, therefore, dealt with in these accounts. There are also some differences between the budgeting rules and the accounting requirements that have to be accommodated in any comparison. These accounts therefore seek to compare the actual outturn to the budget stated on the same basis, with a reconciliation and explanation of the budget reflected in the accounts with that shown in the annual budget documents provided in Note 25.

Brief History

7. The Scottish Government is the devolved administration in Scotland. The Scottish Government was established at devolution in 1999. From 1 July 1999, the Scottish Government and Scottish Parliament assumed legislative responsibility for a wide range of devolved matters, including agriculture, economic development, education, environment, fisheries, food standards, forestry, health, housing, local government, planning, social work, most aspects of transport, and tourism. Matters such as the constitution, defence, foreign policy, national taxation and social security are reserved to the UK Parliament.

Principal Activities and Key Aims

8. The principal activities and key aims of the Scottish Government are set out below by Cabinet Secretary portfolio. The aims and objectives of all operating Portfolios are provided in the Statement of Resources by Objectives at pages 51 and 52 of these accounts.

MINISTERS AND SENIOR OFFICERS

9. Elections to the Scottish Parliament were held on 3 May 2007, and as a result of these elections, a new administration was elected to lead Scotland from 16 May 2007. Therefore, information for both administrations serving during the financial year has been provided below.

10. The responsibilities of the First Minister and his Cabinet Team during the period 16 May 2007 to 31 March 2008 were:

First Minister

Head of the devolved Scottish Government: responsible for development, presentation and implementation of Scottish Government policy, constitutional affairs, culture and the arts, Gaelic, Historic Scotland, the National Archives of Scotland and for promoting and representing Scotland.

Deputy First Minister and Cabinet Secretary for Health and Wellbeing

Responsible for NHS, health service reform, allied healthcare services, acute and primary services, performance, quality and improvement framework, health promotion, sport, public health, health improvement, pharmaceutical services, food safety and dentistry, community care, older people, mental health, learning disability, substance misuse, social inclusion, equalities, anti-poverty measures, housing and regeneration.

Cabinet Secretary for Finance and Sustainable Growth

Responsible for the economy, the Scottish Budget, public service reform, de-regulation, local government, public service delivery, cities and community planning, General Register Office, Registers of Scotland, e-government, procurement, budgetary monitoring, business and industry including Scottish Enterprise, Highlands and Islands Enterprise, trade and inward investment, corporate social responsibility, voluntary sector and the social economy, community business and corporate development, European Structural Funds, energy, tourism, land use planning system, climate change, building standards, transport policy and delivery, public transport, road, rail services, air and ferry services, Scottish Water and the Scottish Public Pensions Agency.

Cabinet Secretary for Education and Lifelong Learning

Responsible for further and higher education, science and lifelong learning, school education, training and skills, HM Inspectorate of Education and the Scottish Qualifications Authority, nurseries and childcare, children's services, children's hearings, social work and the Social Work Inspection Agency.

Cabinet Secretary for Justice

Responsible for criminal law and procedure, youth justice, criminal justice social work, police, prisons and sentencing policy, legal aid, legal profession, courts and law reform, anti-social behaviour, sectarianism, human rights, fire and rescue services, community safety, civil contingencies, drugs policy and related matters, liquor licensing, vulnerable witnesses, victim support and civil law, charity law, religious and faith organisations.

Cabinet Secretary for Rural Affairs and the Environment

Responsible for Common Agricultural Policy support, rural development, agricultural and biological science, natural heritage, fisheries, environmental protection and Greener Scotland.

11. The First Minister and Cabinet Secretaries were supported, during the period 16 May 2007 to 31 March 2008, by a number of Ministers covering a range of Scottish Government business:

• Minister for Europe, External Affairs and Culture
• Minister for Parliamentary Business
• Minister for Public Health
• Minister for Communities and Sport
• Minister for Enterprise, Energy and Tourism
• Minister for Transport, Infrastructure and Climate Change
• Minister for Children and Early Years
• Minister for Schools and Skills
• Minister for Community Safety
• Minister for Environment

12. The responsibilities of Scottish Ministers in place prior to the election during the period 1 April 2007 to 16 May 2007 were:

First Minister

Head of the Scottish Executive, responsible for the development, implementation and presentation of Scottish Executive policies. Also responsible for the strategic relationship with the UK government, the European Union and other external relations.

Deputy First Minister and Minister for Enterprise and Lifelong Learning

With the First Minister, responsible for the development, implementation and presentation of Scottish Executive policies. As Enterprise and Lifelong Learning Minister, responsible for the economy, business and industry including Scottish Enterprise, Highlands and Islands Enterprise, European Structural Funds, trade and inward investment, energy (including renewable energy), further and higher education, lifelong learning and training and science, and devolved interests in telecommunications and post offices.

Minister for Communities

Responsible for tackling poverty, housing and area regeneration, the land use planning system and building standards, equality issues, voluntary sector, religious and faith organisations and charity law.

Minister for Education and Young People

Responsible for school education, nurseries and childcare, Gaelic, children's services, social work, Her Majesty's Inspectorate of Education, Her Majesty's Social Work Inspectorate and the Scottish Qualifications Authority.

Minister for Environment and Rural Development

Responsible for environment and natural heritage, land reform, water, sustainable development, agriculture, fisheries and rural development including aquaculture and forestry.

Minister for Finance and Public Service Reform

Responsible for the Scottish Budget, public service delivery, modernising government including civil service reform, local government, cities and community planning, and external relations issues and Scotland's international image.

Minister for Health and Community Care

Responsible for NHS, community care, health service reform, health improvement, health promotion, public health, allied healthcare services, acute, primary and mental health services, addiction services, pharmaceutical services, performance, quality and improvement framework and food safety.

Minister for Justice

Responsible for tackling anti-social behaviour, criminal justice, youth justice, victims support, criminal justice social work, police, prisons and sentencing policy, courts, law reform including civil law and fire services.

Minister for Parliamentary Business

Responsible for Parliamentary affairs and the management of Scottish Executive business in the Parliament.

Minister for Transport

Responsible for transport policy and delivery, public transport, road, rail services, air and ferry services.

Minister for Tourism, Culture and Sport

Responsible for tourism, culture and the arts, sport, major events strategy, built heritage, architecture, Historic Scotland and lottery funding.

13. Further information on Ministerial responsibilities is available from the Scottish Parliament and Scottish Government websites:

www.scottish.parliament.uk/home.htm

www.scotland.gov.uk/Home

14. The Scottish Ministers and their Deputies during the period 16 May 2007 to 31 March 2008 were:

15. The Scottish Ministers and their Deputies during the period 1 April 2007 to 16 May 2007 were:

16. The Law Officers serving during the year to 31 March 2008 were:

17. The Scottish Government Senior Management Team are responsible for ensuring that the Scottish Government is organised and managed in the most effective way to support Ministers in the implementation of their policies. During the year the management structure of the Scottish Government was revised to align management systems and structures more closely with the Government's objectives and the Scottish Government Strategic Board was formed. Further information on the management structure of the Scottish Government is available on the Scottish Government website at www.scotland.gov.uk. The Scottish Government Strategic Board Members who served in the year were as follows:

18. The non-executive directors bring an external perspective to the consideration of corporate management issues such as staffing, administration costs, monitoring of programme expenditure, training and development, accommodation strategy and relations with stakeholders. Professor Bill Bound chaired the Scottish Government Audit Committee ( SGAC) from 16 August 2007. Shonaig Macpherson chaired SGAC from 1 April 2007 to 16 August 2007.