Scottish Government

INTRODUCTION

1. This booklet provides supporting information for the Parliament and others in support of the "Budget (Scotland) Act 2009 (Amendment) Order 2009" - the Autumn Budget Revision. The Order is a Scottish Statutory Instrument laid before the Parliament by the Government in October 2009. 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 2009, which authorises the Government's spending plans for the financial year 2009-10.

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

i) A technical change to the presentation of the income from National Insurance Contributions (£1,724m) which is no longer shown as a source of income in the Health and wellbeing portfolio in order to bring it in line with the presentation in the Draft Budget and consolidated accounts. A similar change was made to the 2008-09 budget in the Spring Budget Revision;

ii) Technical adjustments resulting from the implementation of International Financial Reporting Standards (£248m);

iii) Reduction in AME to reflect a reduction in pension costs following an increase in the Treasury discount rate (-£316.2m);

iv) Additional funding for Town Centre Regeneration Fund (£60m), Modern Apprenticeships (£16m) and home insulation (£15m) as announced by the Cabinet Secretary for Finance and Sustainable Growth in January 2009;

v) The release of deeds of assumption provision in respect of an early repayment to Strathclyde Passenger Transport using resources outside DEL (£20.4m); and

vi) The transfer of resources between Scottish Government portfolios, and between the Scottish Government and UK Departments.

In total these changes will increase Scottish Government spending by £1,810.6 million from £32,900.7 million to £34,711.3 million. This largest element of this change is due to the presentational change to National Insurance Contributions (£1,724m).

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

Transfers

5. Most internal transfers do not affect the Government's budget as a whole. Instead, they move provision within or between portfolios, often to reflect changes in responsibility between portfolios, changes in payment mechanisms and virement intended to maximise the use of available resources. Transfers to and from UK departments do affect the total of the Scottish Budget, but largely reflect transfers of responsibility or work done by UK departments on our behalf, or vice versa and technical adjustments. The most significant transfers are as follows:

• Transfer from Health to Scottish Funding Council for Nursing and Midwifery Training (£59m).
• Transfers to Local Government from Zero Waste Fund to be distributed to councils to invest in waste infrastructure (£31.5m).
• Transfer from Justice to Health for drug treatment (£28m).
• Transfer from Local Government to fund Police Information Communications Technology (£16.8m).

International Financial Reporting Standards ( IFRS)

6. The adoption, across central government of IFRS from 1 April 2009, requires the Scottish Government to convert our 2009-10 budget from a UKGAAP (Generally Accepted Accounting Principles) basis to an IFRS basis

7. The Autumn Budget Revision presents the first opportunity to begin this process and reflects a number of IFRS budget adjustments agreed with HM Treasury. There are likely to be additional adjustments as part of the Spring Budget Revision process in light of on-going dialogue with HM Treasury.

8. It is important to recognise that the conversion of the Scottish Government's budget onto an IFRS basis is spending power neutral and the budget adjustments are technical non-cash adjustments or transfers reflecting a change in expenditure classification from resource to capital.

9. It has always been the aim of the Scottish Government to present a budget to the Scottish Parliament with a clear read across to the Scottish Government's Consolidated Annual Accounts. In order to maintain this transparency the IFRS based budget presented to the Scottish Parliament will reflect Public Private Partnership and Private Finance Initiative schemes - and any future revenue-financed infrastructure investment scheme - on the basis that such schemes be classified as on-balance sheet for IFRS accounts purposes. The budget consequences of the recognition of the change in treatment of PPP/ PFI schemes in the Scottish Parliament's budget are reflected in ' Expenditure Outside DEL/ AME' in the Supporting Document.

10. A new column in Table 1.3 'Summary of Changes by Type' separately details the impact of the IFRS changes on the originally approved budget for 2009-10.

Format of Supporting Document

11. The Scottish Government 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:

12. 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 Scottish Government's or Direct Funded Bodies' accounts is shown as capital.

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

• a summary of the changes proposed for the portfolio;
• how the proposed revised portfolio budget is comprised 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);
• details of the proposed major changes; and
• details of the proposed revised budgets disaggregated to Level 3.

14. The Scottish Government'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 Scottish Government publications - including " Draft Budget 2010-11" - the following table compares cash and resource budgets at portfolio level.

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

Process for the Budget Revision

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