APPENDIX F GLOSSARY
Accountable Officer
Accountable Officers are responsible for the propriety and regularity of the public finances for which they are responsible, and for the economic, efficient and effective use of all available resources. They are personally answerable to Parliament for the exercise of their functions which are designated by the Principal Accountable Officer (Permanent Secretary in the Scottish Executive).
Administration costs
Reflect the resources consumed by departments in providing services which are not directly associated with frontline delivery. Main components are civil service pay and current spending on accommodation, capital charges and office services.
Agenda for Change
Major National Health Service change programme agreed in November 2004. Aims to modernise pay structures, assist service delivery of patient care, aid recruitment and retention and allow for personal development of staff. Applies to all staff except very senior managers and those within the remit of the Doctors and Dentists Review Body.
Aggregate External Finance ( AEF)
The total funding which is centrally distributed to local government. It includes the Revenue Support Grant, specific grants to local government and income from non- domestic rates.
Annually Managed Expenditure ( AME)
Set each year and contains those elements of expenditure that are not readily predictable - such as demand-led programmes under the Common Agricultural Policy.
Arbuthnott Formula
Calculation used to allocate central funding for hospital and community health services and prescribing. Formula is population-based and gives extra weight to certain factors such as the number of older people in particular areas, levels of deprivation and additional costs of providing services in remote and rural areas. Designed to provide greater resources in areas of greater need.
Atkinson Review
Independent review of future development of measures of government output, productivity and associated prices indices for UK national accounts. Report published in January 2005.
Audit Scotland
Set up in April 2000 to audit the accounts of the Executive and other public sector bodies in Scotland, and to ensure that public funds are used properly, efficiently and effectively.
Balanced Scorecard
A performance management tool which brings together information about a range of performance indicators for an organisation. Involves the organisation identifying what it is trying to deliver, the factors and processes critical to that delivery and then measuring the performance of each of those critical success factors.
Barnett Formula
Allocates Scotland a population share of changes in comparable spending programmes in England. For comparable expenditure, Scotland gets exactly the same £s per head increase as in England. Comparability is the extent to which services delivered by Whitehall departments correspond to services delivered by the devolved administrations. Barnett only applies to expenditure classified within Departmental Expenditure Limits - about 85% of Scotland's total budget.
Best Value
Arrangements to secure continuous improvement in performance (while maintaining an appropriate balance between quality and cost), and in doing so, to have regard to economy, efficiency, effectiveness and equal opportunities requirements and to the achievement of sustainable development. Seeks to change what we do in a way that transforms and sustains the delivery of quality public services in Scotland.
Bonomy Report
Review of practice and procedures of the High Court of the Justiciary. Report published in December 2002.
Budget
The amount of money available for a specific purpose.
Building a Better Scotland: Enterprise, Opportunity, Fairness
Also known as BABS or BABS2. The Scottish Executive's high level spending plans for 2005-08 published in September 2004, following Spending Review 2004.
Capital
Spending on the purchase of assets which are above a certain capitalisation threshold and which are expected to be used for at least a year. Includes the purchase of buildings and equipment. Items below the capitalisation threshold are not counted as capital assets even if they have a productive life of more than one year.
Central Unallocated Provision ( CUP)
Mechanism designed to manage provision set aside for future commitments. By holding the provision that portfolios estimate will not be spent in the CUP, the Executive can ensure that the budgets it seeks authorisation from Parliament for are taut and realistic.
Closing the Opportunity Gap
The approach used by the Executive to tackle poverty and disadvantage. One of the Executive's cross-cutting themes in Spending Review 2004.
Cost of Capital
A notional non-cash item which reflects the cost of holding assets and liabilities. The theory is that if the asset were sold, overall public sector borrowing would be lower by the value of the asset, so the cost of keeping the asset is the same as the interest paid on this higher level of borrowing. Cost of capital charges are calculated as being 3.5% of net asset and liability value.
Cross-cutting
Budgets and policies which are shared between Ministerial portfolios and departmental responsibilities, across traditional boundaries. The Executive's cross-cutting themes in Spending Review 2004 were growing the economy; closing the opportunity gap/promoting equality; and sustainable development.
Departmental Expenditure Limits ( DEL)
Forms the majority of the Executive's budget and is made up of operating and capital expenditure. It is the element of the budget which is determined by the Barnett formula. DEL is set for three years during the Spending Review process, and the annual DEL spend is subject to End Year Flexibility.
Depreciation
A non-cash item which measures the wearing out, consumption or other reduction in useful life of a fixed asset.
Economy
Concerns the cost of inputs being consumed. Economic measures can indicate whether the right price was paid to acquire the necessary inputs.
Effectiveness
Concerns the extent to which outputs achieve the desired outcomes. Effectiveness measures are concerned with the strength of the relationship between a given intervention and outcomes.
Efficiency
Represents the relationship between outputs and inputs and in the ratio of outputs to inputs.
Efficient Government
Programme of long-term change in the way that public services are administered and delivered. Savings will be reinvested in improving public services. Efficient Government plan published in November 2004 contains measures to deliver at least £745m of annual recurring cash-releasing efficiency savings and at least £300m of annual recurring time-releasing efficiency savings by 2007-08. These have now risen to £912m of annual recurring cash-releasing savings and £337m of annual recurring time-releasing savings by 2007-08.
End Year Flexibility ( EYF)
The mechanism whereby the Scottish Executive can carry forward unspent resources from one financial year to the next. Most EYF relates to provision for future spending; slippage in committed capital projects; and fluctuations in demand-led expenditure.
Equality
Equality is about creating a fairer society where everyone can participate and has the opportunity to fulfil their potential. One of the Executive's cross-cutting themes in Spending Review 2004.
European Structural Funds
The second largest item of EU spending. Includes the European Regional Development Fund ( ERDF), European Social Fund ( ESF), European Agricultural Guidance and Guarantee Fund ( EAGGF) and Financial Instrument for Fisheries Guidance ( FIFG). They are targeted at three main objectives: Objective 1 to promote the development of regions lagging behind the EU average; Objective 2 to support the economic and social conversion of areas facing structural difficulties; and Objective 3 to support education, training and employment. The Executive is the 'managing authority' for the funds in Scotland.
Executive Agency
Semi-autonomous executive agencies operate within a framework set by the responsible Minister, which specifies policies, objectives, and available resources. All agencies are set annual performance targets by their Minister, and the Minister accounts to Parliament for the work of the agency. In the UK, nearly 80% of civil servants now work in executive agencies.
Government Accounting
Manual produced by HM Treasury which provides guidance on the proper handling and reporting of public money.
Grant Aided Expenditure ( GAE)
Relates to the levels of local authority net revenue expenditure on core services that the Executive is supporting through grant. GAEs are not budget, but more a basis for the distribution of grant through Aggregate External Finance. Local authorities are, however, free to allocate their available resources to each service on the basis of local need.
Gross Domestic Product ( GDP)
Measure of economic activity. The total value of goods produced and services provided in a country in one year.
Growing the Economy
To raise the quality of life of the Scottish people through increasing economic opportunities for all on a socially and environmentally sustainable basis. Top priority and cross-cutting theme in Spending Review 2004.
Joint Police and Fire Boards
Made up of elected representatives of all councils within a police force or fire brigade area. Responsible for setting budgets and ensuring that best value is obtained. Funding for police forces and fire brigades is partly by grant from the Scottish Executive and partly from local authorities.
Legacy spending
Expenditure based on priorities and/or commitments that pre-date the Partnership Agreement and Spending Review 2004.
Level 1 Budgets
Departmental Budgets.
Level 2 Budgets
Sub-Departmental Budgets i.e. at programme level (e.g. Natural Heritage).
Level 3 Budgets
Sub-Programme Budgets (e.g. National Parks).
Lock-in
Limits ability to reduce legacy spending through statutory or contractual commitments, e.g. PPP payments.
Mainstreaming Equality
The Executive aims to ensure that all policies address equality issues, including work relating to the budget and public appointments.
MSP
Member of the Scottish Parliament.
Non-Departmental Public Body ( NDPB)
Also known as 'quangos'. NDPBs operate independently of Ministers, although Ministers have ultimate responsibility. There are two main types of NDPB: executive NDPBs, which carry out administrative, regulatory, executive or commercial functions; and advisory NDPBs, which provide independent, expert advice to Ministers.
Partnership for a Better Scotland (or the Partnership Agreement)
A Partnership for a Better Scotland was published in May 2003, following the Scottish Parliament elections when the Labour Party and Liberal Democrats agreed to work together in government. It sets out the commitments which the Executive expects to deliver over the lifetime of this parliament under four themes: growing Scotland's economy; delivering excellent public services; supporting stronger, safer communities; and developing a confident, democratic Scotland.
Portfolio
The formal area of responsibility of a cabinet Minister.
Priority-based budgeting
Intended to ensure spending is allocated to areas which can demonstrate the most effective use of spend to meet the organisation's priorities. See Box 8 on P.24 for more detail.
Private Finance Initiative ( PFI)
Projects in which the public sector contracts to purchase services on a long-term basis, taking advantage of the skills of the private sector which is incentivised by having its own money at risk. The private sector role normally includes construction, maintenance and enhancement of the necessary infrastructure to deliver the service.
Programme
Component expenditure of main departmental budget.
Prudential Regime
The prudential regime for local authority capital expenditure took full effect in April 2004. It allows local authorities to make their own decisions about how much to borrow or spend, but they are under a duty to determine how much they can afford and to keep that under review.
Public Private Partnership ( PPP)
An umbrella term covering projects which bring the public and private sectors together in long-term risk-sharing partnerships. Includes PFI (see above), introduction of private sector ownership into state-owned businesses and selling government services into wider markets.
Resource
Also known as revenue, current or operating. Expenditure which is neither capital expenditure (i.e. it does not result in the creation of assets on the balance sheet) nor financial expenditure (i.e. on transactions such as loans). Includes spending on the provision of services such as administration costs like pay and programme costs.
Resource Accounting and Budgeting ( RAB)
System of planning, control and reporting on public spending for government. Puts accounting and budgeting on an accruals basis so that spending is measured when it is incurred rather than when bills are paid. Three year expenditure limits are set to provide certainty and flexibility for long- term planning and management, and capital and current spending are separated to ensure the fiscal rules are met and investment is not cut to meet short-term pressures.
Scottish Block
The Scottish Block is determined by HM Treasury using the Barnett Formula. It includes the budgets for the Scottish Executive, Scotland Office, Scottish Parliamentary Corporate Body and Audit Scotland.
Spending Review 2004 ( SR 2004)
The UK Government's spending review in July 2004 set the overall total of the Scottish budget for 2005-08. It provided an additional £1.5bn for 2006-07 and £2.9bn for 2007-08 for Scotland, which Scottish Ministers allocated to front-line services to deliver the commitments made in the Partnership Agreement. Spending Review 2004 incorporated the four themes of the Partnership Agreement, as well as cross-cutting themes.
SMART
Good targets should be SMART, that is:
- Specific - so it is clear what is to be achieved;
- Measurable - there should be an objective way of measuring the outcome so all stakeholders will agree when the target has been met;
- Achievable - the target should be stretching, but realistic;
- Relevant - the target should reflect what Ministers are trying to achieve; and
- Timed - it should be clear when the target will be delivered.
Sustainability/sustainable development
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs. One of the Executive's cross-cutting themes in Spending Review 2004.
Total Managed Expenditure ( TME)
Comprises the Departmental Expenditure Limit and Annually Managed Expenditure.
Value for money
Also known as cost-effectiveness. Concerns the relationship between resources consumed and outcomes achieved. Value for money measures how well the costs of interventions have been translated into desired outcomes.