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 2009. 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 2009-10. These plans were set out in Scottish Budget: Draft Budget 2009-10 published in September 2008, following the 2007 Spending Review. The Parliamentary Committees have already scrutinised the draft plans across the autumn of 2008, culminating in the Finance Committee's Report on Stage 2 of the Budget Process on 10 ^th December 2008.

3. There are a few changes between the figures given in Draft Budget 2009-10 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 2009-10 - table 1.1 compares cash and resource budgets at portfolio level;

Table 1.1 - NDPB Cash and Resource Budgets by Portfolio, 2009-10

ii) income from National Health Insurance Contributions of £1,724.1m is netted off against the Health and Wellbeing Portfolio expenditure in the Budget Bill.

iii) Local Government Supported Borrowing of £305.2m and Judicial Salaries of £29.2m appear in the Draft Budget but are excluded from the Budget Bill as they do not require Parliamentary approval.

iv) Cost of capital charges in relation to Scottish Water are treated differently for budgeting and accounting purposes. This results in a reduction of £51m in the total which is approved by Parliament.

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 2009-10 and the portfolio budgets referred to above restated for parliamentary approval.

Table 1.2 Draft Budget restated for Parliamentary approval

A - Draft budget as shown in table 1 of 'Scottish Draft Budget 2009-10' on page 3.

B - To meet the requirements if the Public Finance Accountability (Scotland) Act 2000 NDPBs are approved in cash only

C - In accordance with current accounting practice National Insurance Contributions require parliamentary approval as income as do student loans bank interest subsidy and police loan charges. An element of Scottish Water capital charges is excluded to reflect accounting policy. Local Authority supported borrowing and judicial salaries are excluded from parliamentary approval.

D - Direct funded and other external bodies requiring separate parliamentary approval

E - Restatement of remaining specific grants under appropriate Cabinet Secretary responsibility.

F - Draft Budget restated on basis of funding requiring parliamentary approval.

5. Since the publication of the Draft Budget there have been a number of revisions to spending plans to reflect additional expenditure on pensions and the acceleration of capital spending following the PBR. These are reflected in Table 1.3 which provides a full reconciliation with the numbers included in the Budget Bill.

Table 1.3 Reconciliation between Draft Budget and Budget Bill 2009-10

G - AME expenditure is adjusted to reflect revised estimates of expenditure

H - Revised spending includes provision for police, fire and teachers pensions and the Scottish Futures Trust

I - Capital expenditure brought forward as detailed in table 1.4

J - 2009-10 Budget Bill

6. In response to the current economic situation we have brought forward further capital expenditure in 2009-10 of £227m. This is in addition to the accelerated spending on the Affordable Housing Investment Programme of £70m already included in our budget plans for 2009-10. After taking account of recently announced consequentials of £5m a total of £232.5m in additional capital expenditure has been built into the budget for 2009-10 as detailed in table 1.4 below.

Table 1.4 Capital Acceleration

7. 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).

8. Draft Budget 2009-10 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 1.5).

Table 1.5 Capital Spending 2009-10

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 £132m 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

9. 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.

10. The following summary tables set out the overall resource authorisations sought in the Budget Bill at portfolio 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 portfolio by portfolio basis. For each portfolio and direct funded body, it shows:

• the proposed portfolio 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.

11. 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).