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Autumn Budget Revision

Introduction

1. This booklet provides supporting information for the Parliament and others in support of the "Budget (Scotland) Act 2007 (Amendment) Order 2007" - the Autumn Budget Revision. The Order is a Scottish Statutory Instrument laid before the Parliament by the Government in October 2007. 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 2007, which authorises the Government's spending plans for the financial year 2007-08.

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

i) Restructuring of former Scottish Executive Departments to the new Scottish Government portfolios

ii) Additional budget provision for spending on capital schemes brought forward and delivery of 100 day commitments;

iii) Increase in income from National Insurance contributions which is offset by reductions in the amount of funding sought from the Scottish Consolidated Fund.

iv) The transfer of resources between Scottish Government portfolios, and between the Scottish Government and UK Departments; and

v) The transfer of resources from portfolio budgets into portfolio CUPs (for further details see below).

In total these changes will increase Scottish Government spending by £1,128.5 million from £29,774.1 million to £30,902.6 million.

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

Restructuring of Portfolios

5. As a result of the Scottish Government's decision to restructure the administration the budgets shown in this document reflect the new portfolios. Table 1.10 provides a reconciliation between the former Scottish Executive Departments and the new Scottish Government structure. This provides an explicit link with table 1.4 of the Supporting Document to the 2007-08 Budget Bill.

Additional Capital Expenditure

6. Capital expenditure has been accelerated in a number of areas to maximise the available budget and relieve pressure on the next spending review period. This includes £187m of additional expenditure on Education and Lifelong Learning, £77m on Health and Wellbeing initiatives and £72m on Enterprise programmes.

Transfers

7. 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 or changes in payment mechanisms. Transfers to and from UK departments do affect the total of the Scottish Budget, but largely reflect either transfers of responsibility or work done by UK departments on our behalf, or vice versa. The most significant transfers are as follows:

for Scottish Agricultural and Biological research Institutes' Pension liabilities, essentially an accounting adjustment;

National Insurance Contributions

8. The budget sought for the Health and Wellbeing portfolio in the Order reflects the resources sought from the Scottish Consolidated Fund ( SCF). The Health and Wellbeing portfolio also receives part of its funding from National Insurance contributions which are classified as income outside DEL and AME. Because income from this source has been higher than forecast at the time of the Budget Act. Schedule 3.1 for the Health and Wellbeing portfolio shows an increase in income this year from National Insurance contributions of £319m.

9. The Health and Wellbeing portfolio's budget is not affected by changes in the balance of funding between the SCF and national insurance - and, since the SCF is itself largely funded by the Treasury, changes in the balance of funding have no real world effect. Therefore, any increases in funding from national insurance are exactly offset by reductions in the amount of funding sought from the SCF. Because the Order only seeks Parliamentary authority for resources from the SCF, the increase of £319m in funding from national insurance appears in the Order and this supporting document as a reduction in the budget sought. The change is presentational and has no impact on the Health and Wellbeing portfolio's spending.

End Year Flexibility

10. "End Year Flexibility" is a financial system that allows the Scottish Government to carry forward any unspent resources from one year to the next so that spending programmes can be planned over the medium term. It also removes the previous incentives for wasteful end of year spending.

11. The Cabinet Secretary for Finance and Sustainable Growth announced on 28 June that no End Year Flexibility would be distributed to portfolios in 2007-08, pending the outcome of the Strategic Spending Review.

Central Unallocated Provision

12. The central unallocated provision ( CUP) was first introduced at Autumn Budget Revision 2004 to provide a more flexible mechanism for managing budgets between financial years.

13. The revisions detailed in this document show the following amounts being transferred to and from the CUP.

Table 1.1 Transfers to Central Unallocated Provision by Portfolio

Format of Supporting Document

14. 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:

15. 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.

16. 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.

17. 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 2008-09" - the following table compares cash and resource budgets at portfolio level.

Table 1.2 - Revised NDPB Cash and Resource Budgets by Portfolio, 2007-08

Process for the Budget Revision

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

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