Select Committee on Scottish Affairs Minutes of Evidence


Memoranda submitted by the Scotland Office

SCOTLAND OFFICE MAIN ESTIMATE 2007-08

  This memorandum provides information in relation to the Main Estimate for the Scotland Office. The provision for the Scotland Office (including the Grant to the Scottish Executive) is carried as a separate Request for Resources on the Main Estimate for the Department for Constitutional Affairs.

EXPENDITURE DETAILS

The 2007-08 baseline provision for the Scotland Departmental Expenditure Limit (DEL) agreed at the 2004 Spending Review has increased from £25,877,034,000 (SE £25,870,350,000 and SO £6,684,000) to £26,634,731,000 (SE £26,627,863,000 and SO £6,868,000). The changes include:

SCOTLAND OFFICE DEL

  The only change to the Scotland Office DEL is as a result of the reclassification of the reporting of Accruing Superannuation Liability Charges (ASLC), which increased the SO DEL by £184,000 from £6,684,000 to £6,868,000.

SCOTTISH EXECUTIVE DEL

2004-05 Winter Supplementary

  1.  Pre Budget Report (PBR) 2004 consequentials of £1,938,000.

  2.  Budgeting changes transferring £365,000,000 from AME to DEL in respect of Supporting People.

  3.  A number of changes in the DEL arise from transfers to and from other departments. Details are:

    —  surrender of £88,649,000 in respect of Housing Benefit/Council Tax Benefit Administration funding;

    —  a transfer of £649,000 in respect of non cash capital charges for National Parks; and

    —  a transfer of £1,112,000 to the Ministry of Defence in respect of severe weather systems (NMS & NSWW).

2004-05 Spring Supplementary

  1.  PBR 2004 consequentials of £29,633,000.

  2.  A change in the DEL arises from a transfer of £405,000 from the Home Office in respect of funding for Immigration Advisory Service.

2005-06 Main Estimate

  Budget 2005 consequentials of £90,803,000.

2005-06 Winter Supplementary

  The change in the DEL arises from a transfer of £47,000 to the Department of Health in respect of Infectious Diseases.

2006-07 Main Estimate

  1.  PBR 2005 consequentials of £22,356,000.

  2.  Budget 2006 consequentials of £47,598,000.

  3.  Budgeting Changes resulting in a decrease of £151,935,000 in the DEL in respect of the net effect of the transfer of AME EC expenditure and Non Budget EC receipts.

  4.  A number of changes in the DEL arise from transfers from other departments. Details are:

    —  a transfer of £338,000,000 from Department for Transport in respect of Rail Services in Scotland—Network Grant;

    —  a transfer of £17,000 from Department for Transport in respect of Integrated Transport Fund;

    —  a transfer of £7,500,000 from Department for Transport in respect of Transport Agency Administration Costs; and

    —  a transfer of £74,000 from Department of Trade and Industry in respect of Civil Contingencies for Oil Emergency Training.

2007-08 Main Estimate

  1.  PBR 2006 consequentials of £15,998,000.

  2.  Budget 2007 consequentials of £893,000.

  3.  Baseline funding in respect of Police Safety Cameras for 2007-08 of £8,549,000.

  4.  Budgeting changes, transferring £44,580,000 from AME to DEL in respect of Education Maintenance Allowances.

  5.  Two changes in the DEL arise from transfers to and from other departments. Details are:

    —  a transfer of £9,540,000 from Department for Transport in respect of Rail Services in Scotland; and

    —  a transfer of £1,260,000 to Department for Environment, Food and Rural Affairs in respect of staff transfer costs to the State Veterinary Service.

  The reconciliation from the SE DEL figure of £26,627,863,000 to the grant payable to the Scottish Consolidated Fund of £24,613,393,000, can be found on page 34 of the Scotland Office and Office of the Advocate General Annual Report 2007.

  A Grant reconciliation table is attached at Annex A.

J R Wildgoose

Accounting Officer

Scotland Office

July 2007

Annex A
Changes to 2007-08 SE DEL from SR2004 £m
SR2004 Baseline 25,870.350

2004-05 Winter Supplementary
PBR 2004 Consequentials1.938
Surrender for Housing Benefit/Council Tax Benefit Administration Funding -88.649
Non cash costs for National Parks0.649
Transfer to MoD/Met Office iro Severe Weather Systems (NMS and NSWW) -1.112
Budgeting Changes—AME to DEL transfer iro Supporting People 365.000
Sub Total277.826
2004-05 Spring Supplementary
PBR 2004 Consequentials29.633
Inter Departmental Transfers:
Transfer from Home Office iro funding for Immigration Advisory Service 0.405
Sub Total30.038
2005-06 Main Estimate
Budget 2005 Consequentials90.803
Sub Total90.803
2005-06 Winter Supplementary
Inter Departmental Transfers:
Transfer to Department of Health iro Infectious Diseases -0.047
Sub Total-0.047
2006-07 Main Estimate
Inter Departmental Transfers:
Transfer from Department for Transport iro Rail Services in Scotland 338.000
Transfer from Department for Transport iro Integrated Transport Fund 17.000
Transfer from Department for Transport iro Transport Agency Admin Costs 7.500
Transfer from DTI iro Civil Contingencies for Oil Emergency Training 0.074
PBR 2005 Consequentials22.356
Budgeting Changes—AME/Non Budget EU Funding into DEL -151.935
Budget 2006 Consequentials47.598
Sub Total280.593
2007-08 Main Estimate
Inter Departmental Transfers:
Transfer from Department for Transport iro Rail Services in Scotland 9.540
Transfer to DEFRA iro SVS Staff transfer costs -1.260
Police Safety Cameras Baseline for 2007-08 8.549
Budgeting Changes—AME to DEL transfer of Education Maintenance Allowances 44.580
PBR 2006 Consequentials15.998
Budget 2007 Consequentials0.893
Sub Total78.300
SE DEL Position at publication of 2007-08 Main Estimate 26,627.863


ANSWERS TO THE COMMITTEE'S WRITTEN QUESTIONS, 11 JULY 2007

  The Committee Clerk wrote to the Scotland Office on 11 July 2007 conveying a set of questions to which replies were requested in advance of the evidence session with the Secretary of State and the Minister of State on 17 July. The replies to the questions are set out in the following paragraphs.

1.   The Explanatory Memorandum by the Scotland Office on the Spring Supplementary Estimate mentions "a transfer of £16,000,000 to the Scotland Office for the funding of the 2007 Scottish Parliament Election". Why was this expenditure not identified at the time of the Main Estimate?

  The likely costs of the Scottish Parliament Election in May 2007 had not been fully assessed at time of submitting the 2006-07 Main Estimate in early 2006. Only as the year progressed were officials able accurately to assess probable costs in consultation with Returning Officers and in the light of developments.

2.   What is the Scotland Office record on efficiency?

    (a)   What did you contribute to the Department for Constitutional Affairs' £244 million of efficiency improvements as at December 2006?

    (b)  What efficiency targets will the Scotland Office have to help the Ministry of Justice live within its Comprehensive Spending Review settlement? Why isn't there a formal efficiency target in the Annual Report?

    (c)   Your staffing profile at Annex 9 portrays an essentially flat complement over the next couple of years. Have you reached a steady state in terms of your staffing needs? Will changes in the administration of the Scottish Executive, with the possibility of more Joint Ministerial Committees, require an increase in staff, or will you be able to accommodate changes with existing resources?

  The Scotland Office is a small organisation of about 50 staff and expenditure of about £6.5 million. The costs of the Office are top-sliced from the Scottish Block which is a ring-fenced element of the MoJ Estimate. The Scotland Office is having to operate efficiently to live within the 2004 spending review settlement.

  Turning to staff, the staffing figures in Annex 9 reflect steady state assumptions under the previous spending review. They do not reflect possible changes arising under the 2007 Comprehensive Spending Review, decisions on which have yet to be taken.

3.   What sort of new Public Service Agreements or Departmental Strategic Objectives are being considered for the Department's activities under the Comprehensive Spending Review?

    (a)  Will these be subsumed within the Ministry of Justice's new PSAs/DSOs, or will there be stand-alone objectives and targets for the Scotland Office?

  The Scotland Office is unlikely—given its size and activities—to have a Public Service Agreement and will probably have stand alone objectives, as in previous years. These will be reviewed in the light of the Secretary of State's consideration of the forward strategy of the Office.

4.   The Pre-Budget Report told us that the then Chancellor was planning for the Comprehensive Spending Review to cut Administration Cost budgets cut by 5% a year in real-terms. Why are your Administration costs growing by 12% this year?

    (a)  Last year you told us that you expected Administration costs to be £6.5m in 2006-07. In the event the costs are expected to be £5.8m. To what extent is this lower-than-expected cost the result of continuing staff vacancies in the Scotland Office?

  The Committee is comparing the total provision in 2007-08 for both the Office of the Advocate General and the Scotland Office, with the estimated outurn for both bodies in 2006-07. There were several reasons for the underspend in 2006-07; the delay in the expensive repairs to the roof at Dover House has had an impact and may result in the Office spending up to provision in 2007-08; also, there have been inevitable periods of unfilled posts which have resulted in savings.

  Underspends by the Scotland Office from 2006-07 and previous years are being rolled forward as End Year Flexibility and, with the agreement of the Treasury, will be available for draw down in 2007-08 and subsequent years. The Comprehensive Spending Review covers the years 2008-09 to 2010-11 and the Scotland Office have yet to discuss likely outcomes with the Treasury.

5.   Over the last few years the provision for the Scottish Consolidated Fund grant has been consistently under-spent, including by £1 billion last year. Is all of the under-spend available for the Scottish Executive to draw-down in the following years?

    (a)   Government departments need to get the Treasury's approval to draw down previous under-spent budgets, as part of the End Year Flexibility arrangements. Does the Executive need Treasury and/or Scotland Office approval to make similar draw downs?

    (b)  Is the Executive able to hold Consolidated Fund grant balances in interest-earning accounts? What happens to any such interest, or any interest accrued on grant disbursements to the Executive but not spent by Executive within the year?

  The grant payable to the Scottish Consolidated Fund is calculated on the basis of a full spend in each year. Many factors will contribute to an underspend. The Scottish Executive can only draw down funds from the Scotland Office on the basis of need, and this is still subject to the overall provision approved by the Westminster Parliament.

  Any portion of the Executive's grant that is not drawn down from the Scotland Office is not held by the Executive but retained by the Treasury. There is no question of the Executive accruing interest on unspent draw down. As to interest accruing from monies disbursed by the Executive to other bodies, this is a matter for the Scottish Parliament and its auditors, not the Scotland Office. However, should the Scottish Executive, or any of its bodies, accrue interest on cash balances held, such interest would not afford additional spending power but merely reduce cash requirement.

  Scotland has benefited from the Treasury's macro-economic management and sound public sector finances. Hence, like all other Devolved Administrations and all Whitehall Departments, it must play its part in minimising public borrowing where possible.

  Underspends from the part of the Scottish Executive's budget classified as Departmental Expenditure Limit may be rolled forward under the Treasury's End Year Flexibility scheme. EYF is a prudent and proper part of the Public Expenditure System that recognises that real world expenditure may not neatly match the financial year; it also rewards departments for careful management of budgets. The Devolved Administrations are part of the UK public expenditure framework and are subject to the same rules as Whitehall departments for matters such as the calculation and drawing down of End Year Flexibility stocks. Drawdown of EYF results in higher block grant in Scotland Office Estimates which are subject to Treasury and UK Parliament approval.

J R Wildgoose

Accounting Officer

Scotland Office

July 2007



 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2007
Prepared 23 October 2007