2nd Report, 2008 (Session 3)

Subordinate Legislation

Remit and membership

1. The remit of the Finance Committee is to consider and report on-

(a) any report or other document laid before the Parliament by members of the Scottish Executive containing proposals for, or budgets of, public expenditure or proposals for the making of a tax-varying resolution, taking into account any report or recommendations concerning such documents made to them by any other committee with power to consider such documents or any part of them;

(b) any report made by a committee setting out proposals concerning public expenditure;

(c) Budget Bills; and

(d) any other matter relating to or affecting the expenditure of the Scottish Administration or other expenditure payable out of the Scottish Consolidated Fund.

2. The Committee may also consider and, where it sees fit, report to the Parliament on the timetable for the Stages of Budget Bills and on the handling of financial business.

3. In these Rules, "public expenditure" means expenditure of the Scottish Administration, other expenditure payable out of the Scottish Consolidated Fund and any other expenditure met out of taxes, charges and other public revenue.

(Standing Orders of the Scottish Parliament, Rule 6.6)

Membership:

Andrew Welsh (Convener)
Derek Brownlee
Joe FitzPatrick
James Kelly
Liam McArthur
Tom McCabe
Elaine Murray (Deputy Convener)
Alex Neil

Committee Clerking Team:

Clerk to the Committee
Susan Duffy

Senior Assistant Clerk
Mark Brough

Assistant Clerk
Allan Campbell

Committee Assistant
Katie Packer

Committee Assistant
Katie Packer

Subordinate Legislation

The Committee reports to the Parliament as follows—

Introduction

1. At its meeting on 19 February 2008, the Finance Committee considered the draft Budget (Scotland) Act 2007 Amendment Order 2008.  This affirmative instrument was laid on 24 January 2008 and seeks to make changes to the cash authorisations set out in the Budget (Scotland) Act 2007.  

Finance Committee consideration

2. The Committee took evidence on the draft instrument from John Swinney MSP, Cabinet Secretary for Finance and Sustainable Growth, John Williams, Head of Finance Co-ordination, and Martin Bolt, Finance Co-ordination, Scottish Government. 

3. The Committee is grateful to the Scottish Government for providing a detailed list of the changes made in the revision in advance of the Committee meeting.  This is reproduced as Annexe A to this report.

4. The Committee asked for and received clarification on a number of points during the evidence session.  The Cabinet Secretary also provided the Committee with further information on certain issues following the meeting.  This additional information can be found in Annexe B.

5. The Official Report of the meeting is available on the Parliament’s website, at: http://www.scottish.parliament.uk/s3/committees/finance/meetings.htm

6. Following the evidence session, John Swinney MSP moved motion S3M-1272—

That the Finance Committee recommends that the draft Budget (Scotland) Act 2007 Amendment Order 2008 be approved.

7. The motion was agreed to.

annexe A– submission from the scottish government

A Brief Guide to the 2007-08 Spring Budget Revision

1. The changes proposed in the Spring Budget Revision result in an increase in the approved budget of approximately £157m from £30,902.6m to £31,059.4m.  This is net of additional funding of £89.7m from national insurance contributions which is treated as income for the purposes of parliamentary control.  Therefore, gross expenditure is increasing by £248m.

2. The largest part of the increase is accounted for by the £179.6m transfer to the Health and Wellbeing portfolio from HM Treasury to reflect revised treatment of NHS Impairments (£90m) and to cover the housing debt repayments for Inverclyde Council (£89.6m).  In addition, a further £60m provision was provided for the Scottish Agriculture and Biological Research Institutes (SABRI) pensions transfer.  There are further minor transfers of about ‑£1.9m. 

3. Income from national insurance contributions is estimated to increase by approximately £90m from £1,724m to £1,813.7m
Other SBR proposals reflected the Government’s intention to maximise the use of available resources in 2007-08 and have been informed by the latest forecasts of outturn provided as part of the regular budget monitoring process.

4. Virement between and within portfolios is a ‘zero sum’ game.  What appears to be a small imbalance of £5.9m reflects the transfer of budget provision to support NDPB capital charges which are not included in the Parliamentary approval.

5. Details of the major changes are summarised in the following table:

Revisions by type

Significant revisions include:-

Office of the First Minister

• £10m - deferral of RCAHMS storage facilities will enable purchase of d’Offay collection. 

• £13.5m transfer from Other Arts to Bord na Gaidhig and Gaelic Broadcasting (internal Level 2 transfer) to meet Government commitments on Gaelic.

Finance and Sustainable Growth

• £71.3m from Education to enable payment of education grants to Local Government via Revenue Support Grants (RSG).

• Transfer of £18.3m from Health and Wellbeing to make payments for Working with Families and Choose Life funding to local authorities.

• Transfer from Justice of £33.2m to RSG for payment of Anti-Social Behaviour funding to councils.

• £44.7 drawn down from CUP by Scottish Water.   

• Drawdown from CUP of £24.1m for Efficiency and Reform projects and Cities Growth Fund.

Health and Wellbeing

• Increase in National Insurance contributions of £89.7m. This represents Scotland's share of the health portion of national insurance contributions and is outside DEL and AME. The Health and Wellbeing Portfolio is not affected by this change which impacts on funding alone.

• Health Boards have raised additional receipts of £88.1m from the sale of land and building and general capital and revenue income, which have been recycled accordingly. 

• £90m from HM Treasury to cover projected NHS impairments (AME).

• £89.6m provided by HM Treasury for the repayment of Inverclyde Council’s housing debt following the stock transfer.    

Education & Lifelong Learning

• -£71.3m to Finance and Sustainable Growth to enable payment of education grants to Local Government via Revenue Support Grants (RSG).

• Transfer of £56.9 from Health and Wellbeing to SFHEFC to fund nursery and midwifery registration education in Scotland. 

• Additional £18.9m and £6.1m transfer from Schools for Children Young People and Social Care and Specific grants due to Ministerial reprioritisation.

Justice

• Transfer of £68.5m from Scottish Prison Service in year savings to meet requirements elsewhere in the Justice and other portfolios. This is possible due to a delay in the new prison at Addiewell and the termination of the competition to design and build a new prison at Bishopbriggs.

• Transfer of £21m from Local Government and Justice Support and £3.8m from Scottish Prison Service to Police Central Government for forensic science running costs and capital respectively.

• Transfer of £7m from Scottish Prison Service to the Legal Aid Fund.  This budget line is, demand led and, under pressure as a result of greater volumes and costs of cases eligible for funding.  The legislative provision means that Ministers have no option but meet the costs as demanded.

Rural Affairs and the Environment

• Additional £60m provided by Treasury to complete the transfer of the former SEERAD pension scheme to the BBSRC scheme which will facilitate more co-ordinated and efficient management and delivery of superannuation arrangements for Research Institutes. 

• Internal transfer to provide additional funding of £22.6m to the sheep sector following the recent foot and mouth outbreak. 

• Reallocation of resources (£18.2m) freed up by reduced requirement for SABRI pension payments due to implementation of new pension scheme. 

• Transfer of £5.7m to National Parks for completion of Loch Lomond and the Trossachs National Park Headquarters.  Staff have been working in portacabins from 2001 and the new accommodation will benefit staff and visitors.

Finance Co-ordination
February 2008

annexe b – supplementary submission from the scottish government

During the course of the meeting of the Finance Committee held on 19 February 2008, I agreed to provide some further information on a few items discussed in relation to the Spring Budget Revision. 

New Educational Developments

James Kelly asked what the £12.6m increase in the budget line for New Educational Developments would deliver.  As a result of a restructuring within the portfolio, the budget line now covers a wider area of responsibility, including the review of curriculum, and therefore the budget increase shown was no more that pre-existing baselines being incorporated into the new grouping, a corresponding decrease was made to the Qualifications, Assessment and Curriculum budget line.

Administration

On the question posed by Tom McCabe about the £19.1m increase in the Administration budget, the majority of the increase is due to the realignment of the 2007-08 budget to support the deployment of staff on existing and new Scottish priorities.  Additional funding for staff costs has been provided by transfers from within the existing administration budget, a transfer from the Rural Affairs and Environment portfolio to fund the operation of an IT system used to manage the Common Agricultural Policy application and increases in income from receipts for secondment costs and the provision of IT services to agencies.

Forestry Commission

The apparent reduction in the Forestry Commission is mainly due to a transfer to Forest Enterprise of £7.7m to cover its share of the costs incurred in relation to climate change.   This is merely a realignment of the budgets.  The reduction of £3m in the budget is due to a delay in claims for Private Woodland grants.  These will be paid in 2008-09 on receipt of relevant claims.

I trust the Committee will find this information useful.

John Swinney
Cabinet Secretary for Finance and Sustainable Growth