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Operating and Financial Review 2006-07
Background
37. As part of the annual Parliamentary budget process, the Scottish Executive publishes spending plans for the next three financial years. These are then refined through consultation with the Parliament and the public, and to reflect changing circumstances, before Parliamentary approval is sought for plans for the forthcoming year in the annual Budget Act. These plans can themselves then be refined through in year budget revisions, implemented by statutory instrument.
38. The size of the Scottish Budget is partly determined by the block grant which is separately approved to the Secretary of State for Scotland by the UK Parliament (now accounted for by the Department for Constitutional Affairs), and forms part of the UK public expenditure control regime. This requires the Executive to plan, monitor and report its spending against the control aggregates set by the UK Parliament and HM Treasury alongside those set by the Scottish Parliament. A reconciliation between the UK "Departmental Expenditure Limit/Annually Managed Expenditure" framework and the Scottish Parliamentary aggregates is given in the supporting documents to the Budget Act and subsequent revisions.
2006-07 Spending Plans and Service Delivery Targets
39. Spending plans for 2006-07 were initially published in 'Building a Better Scotland: Spending Proposals 2005-2008: Enterprise, Opportunity, Fairness' following the 2004 Spending Review. This document introduced new targets for the Spending Review period as well as setting out the priorities for each portfolio. It also emphasised the Executive's commitment to the cross-cutting themes of growing the economy; closing the opportunity gap/promoting equality; and sustainable development. Full details of the 2006-07 budget are set out in the 'Draft Budget 2006-07' published in September 2005. Agencies within the Scottish Executive also publish annual reports and accounts, and corporate plans.
40. After consideration by the Finance and other Committees, these plans were embodied in the Budget Bill laid in January 2006, and which received royal assent as Budget Act 2006 in March 2006. Parliamentary approval for the in-year revisions to the plans set out in the Budget Act was granted in the Autumn Budget Revision ( SSI 2006 No. 589), made in December 2006 and Spring Budget Revision ( SSI 2007 No. 244), made in March 2007.
Financial Performance
41. The original budget of £28,761m which received parliamentary approval as Budget Act 2006 was decreased by £546m and £126m respectively at the Autumn and Spring Budget Revisions to produce a final approved budget of £28,089m. These apparent decreases are largely accounted for by an HM Treasury classification change which resulted in EU income being brought into account within the approved budget for the first time and increased income from national insurance contributions. Details of all budget revisions are published in Scotland's Budget Documents: The 2006-07 Autumn Budget Revision and The 2006-07 Spring Budget Revision. The budget reported in these accounts of £25,920m is net of adjustments to reflect those activities not included in the accounting boundary as set out in Note 24.
42. The financial results for the year are reported in the attached accounts. They record a Net Resource Outturn of £24,861m, compared to the Resource Budget of £25,030m, yielding an underspend of £169m. The Net Capital Outturn for the year was £803m, compared to the Capital Budget of £890m, yielding an underspend of £87m. See the Summary of Total Outturn on page 26 for further information. The total underspend of £256m represents just over 1% of the total budget and an explanation of the major resource and capital variances is included within the accounts at page 38-39 and page 64.
Performance Against Targets
43. Key objectives and targets for 2006-07 were set as part of the 2004 Spending Review. Normally a mid-term report on progress against these targets would have been published in April 2007 as part of the Annual Evaluation Report. However such a report is not published in an election year and it will be for the new Administration to decide how and when progress is reported. The net expenditure incurred in this financial year is reported for the objectives of each department in these accounts.
44. As agreed with the Parliament's Finance Committee, a final report on delivery against Spending Review 2002 targets was published in September 2006 - Draft Budget 2007-08: Final Report on SR2002 Targets. This indicates that 67% of the targets have been achieved and 16% reported as ongoing. Of the remainder, 7% have been replaced and a further 5% have been updated and are expected to be met in the future.
45. Copies of all the documents mentioned above, giving full details of the subjects covered, are available on the Executive's website at www.scotland.gov.uk/publications
Future Developments
46. Spending plans beyond 2007-08 will be set as part of the next spending review which will cover the years 2008-09, 2009-10 and 2010-11. Work on the 2007 Spending Review is currently underway and is intended to give greater focus than ever on long-term outcomes for Scotland. This is based on thinking from the Executive's Futures project - for example around the impact of globalisation, technology and changing demographics, as well as the importance of learning. It is further informed by insight and evidence from the Efficient Government initiative, the external Budget Review and evaluations of past policies.
47. The timing of the election in May 2007 and the Spending Review 2007 offers a unique opportunity to align the three-year spending allocations with the Scottish Government's priorities for the entire Parliamentary term to 2011. However, this timing, and the time required to appoint a new government, also means that the priorities for the new administration could not be confirmed until late May/early June 2007. The delay in the announcement of the results of the Comprehensive Spending Review by the UK Government to October 2007 leaves a very tight timescale before portfolio allocations are finalised and plans published in November 2007.
Post-Balance Sheet events
48. Elections to the Scottish Parliament were held on 3 May 2007 and as a result of these elections a new administration assumed office on 16 May 2007. The incoming administration has made a number of changes to government portfolios and the Permanent Secretary has taken the opportunity presented by the formation of a new government to align management systems and structures more closely with the incoming administration's objectives. Further information on the new Ministers, their Portfolios and the current Scottish Government management structure is contained on the Scottish Government website at www.scotland.gov.uk.
49. The new administration has announced a number of new policy initiatives and a re-prioritisation of existing policy which will have a significant financial impact on plans in the forthcoming spending review period. A full breakdown of the Government Programme, including planned legislation for the coming year, can be accessed through the attached link Programme for Government. www.scotland.gov.uk/News/Releases/2007/09/05141912
50. On 3 September 2007 the Scottish Executive was re-branded as the Scottish Government in order to help clarify wider public understanding of the nature and function of the organisation.
51. Nicola Munro retired on 31 March 2007, with Mike Neilson becoming acting Head of Development Department from 1 April 2007 until the re-organisation referred to above.
PUBLIC INTEREST REPORTING
Employment of People with Disabilities
52. The Scottish Government follows Cabinet Office good practice guidance on the employment of people with disabilities and is a Job Centre Plus Disability Symbol user. As such, the Scottish Government ensures that there is no discrimination on the grounds of disability and that access to employment and career advancement is based solely on ability, competence and suitability for the work.
53. The average number of disabled employees employed by the Scottish Executive, its Executive Agencies, Health Bodies and the Crown Office and Procurator Fiscal Service over the year to 31 March 2007 was 901.
Staff Relations and Equal Opportunities
54. The Scottish Government is an equal opportunities employer. Policies are in place to guard against discrimination and to ensure that there is no unfair or illegal discriminatory treatment or any barriers to employment or advancement in the Scottish Government.
55. The Scottish Government gives a high priority to the development of all its staff. Training, development and learning in the Scottish Government is quality assured through our commitment to the Investor in People (IiP) Scheme. The Scottish Office was first recognised as an Investor in People in 1997 and since then has gone through five post-recognition reviews. We are committed to a programme of continuous improvement in relation to our implementation of the IiP standard.
56. The Cabinet Office is responsible for developing, formulating and promulgating equal opportunities guidance for the Civil Service as a whole, but operational responsibility rests with individual Departments. The Scottish Government has an Equal Opportunities Officer who is responsible for developing and promulgating equal opportunities and diversity policies and acting as an inter-departmental liaison officer with the Cabinet Office.
57. The Scottish Government Equal Opportunities policy states that all staff should be treated equally irrespective of their sex, marital status, age, race, ethnic origin, sexual orientation, disability or religion. Employment and promotion are solely on merit. Staff who work full time and those who work an alternative pattern are assessed on exactly the same basis.
58. The Scottish Executive adopted a Diversity Strategy, which was launched by the then Permanent Secretary, in November 2000. The strategy commits the Scottish Government to increasing the diversity of staff within the organisation, to develop them regardless of irrelevant differences and to valuing the contribution of each individual.
Payment Policy
59. The Scottish Government policy requires that all suppliers' invoices not in dispute are paid within the terms of the relevant contract. The Scottish Government aims to pay 100% of invoices, including disputed invoices once the dispute has been settled, on time in these terms. During the year ended 31 March 2007, the Scottish Executive, its Executive Agencies and the Crown Office and Procurator Fiscal Service paid 97% (2005-06: 95%) of all invoices within the terms of its payment policy. The specific payment performance of the individual bodies consolidated here will be reported separately within their individual accounts. The Scottish Executive's Core Departments paid 95.3% (2005-06: 89.7%) of all invoices within the terms of its payment policy.
Environmental Reporting
60. The Scottish Government publishes annual reports on its environmental performance. Each report summarises the actions taken within its own buildings to reduce environmental impact and contribute to sustainable development. They also outline some of the challenges to be faced over the coming years in improving environmental performance.
61. The aim of the report is to outline the environmental issues affecting the Scottish Government, the policies for managing them and provide a review of environmental performance. In order to reduce the amount of paper consumed by the Scottish Government, these Reports are published in electronic form only and the latest report is available at the Environmental Management section of the Scottish Government website at www.scotland.gov.uk
Auditors
62. The accounts of the Scottish Executive are audited by the Auditor General for Scotland. So far as the Principal Accountable Officer is aware, there is no relevant audit information of which the auditors are unaware. In addition, the Principal Accountable Officer has taken all the steps he ought to have taken to make himself aware of any relevant audit information and to establish that the Department's auditors are aware of that information.
Principal Accountable Officer
Date: 23 October 2007
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