Scottish Government

Introduction

1. This booklet provides supporting information for the Parliament and others in support of the "Budget (Scotland) Act 2009 (Amendment) Order 2010" - the Spring Budget Revision. The Order is a Scottish Statutory Instrument laid before the Parliament by the Government in February 2010. The booklet itself has no statutory force - it is produced as an aid to understanding the Order.

2. The purpose of the Spring 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 the transfer of resources between Scottish Government portfolios, and between the Scottish Government and UK Departments:

• Increase in funding for Pandemic flu (£28.3m) and housing and regeneration (£30.9m) from Budget consequentials;
• Additional funding for the Local Government Bellwin scheme (£2m);
• Increases in the AME budgets for NHS and Teachers' pensions (£33.1m), NHS impairments (£19.6m) and a decrease for student loans (-£13.3m);
• A technical change to the presentation of the Scottish Water Cost of Capital (-£84.5m). The budget now shown reflects the income from the interest payable on loans to Scottish Water from Scottish Ministers which offsets the cost of capital in line with the consolidated accounts; and
• Further IFRS adjustments (£44.4m).

In total these changes will increase Scottish Government spending by £58.5 million from £34,711 million to £34,770 million.

4. The purpose of the Spring 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.

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. Initial IFRS budget adjustments agreed with HM Treasury were processed in the Autumn Budget Revision for 2009-10. Further adjustments have now been made in this document to the 2009-10 budgets.

8. It is important to recognise that the conversion of the Scottish Government's budget onto an IFRS basis is spending power neutral. The budget adjustments are either technical non-cash adjustments or transfers reflecting a change in expenditure classification from resource to capital which do not impact on the volume of goods and services that the Scottish Government is able to buy using its budget.

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 clear link, 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 are 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.

Format of Supporting Document

10. 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:

11. Following this introduction, the summary tables set out the changes sought in the Order at portfolio 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 as amended by the Autumn Budget Revision, to those in these tables, and to the revised numbers shown in the Spring 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 portfolio. 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.

12. 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.

13. 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 2009-10 " - 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

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