Memorandum from the Scottish Executive
1. Page 33 of the Scotland Office Annual Report
shows that the Scottish Government DEL budget for 2007-08 increased
during the year from £26,628 million to £27,409 million.
What if any of that increase was the Barnett Formula consequence
of government departments' budgets being increased?
Scottish Government Response: None of the increase
during 2007-08 was the Barnett Formula consequence of government
departments' budgets being increased.
The increase in the Scottish Government DEL
budget for 2007-08 from £26,628 million to £27,409 million
related to:
— £655 million take up of End
Year Flexibility;
— £100 million net increase in
classification/budgeting changes ie £130 million increase
for cost of capital charge in respect of definitional changes
for Scottish Water / £25 million decrease for the re-classification
of NHS impairments to AME / £5 decrease for the re-classification
of a by analogy pension scheme; and
— £27 million in Inter-Departmental
Transfers.
2. The pension costs of NHS staff and teachers
in Scotland are included in the Scottish Government AME allocation,
whereas staff payroll costs are borne on its DEL budget. Would
pension costs continue to be included on AME if the Scottish Government
decided to increase/reduce the numbers of such staff employed?
Scottish Government Response: The pension costs
of NHS staff and teachers in Scotland would continue to be included
in AME unless a decision is made by the Chief Secretary/HM Treasury
to move them into DEL. It is the net public service pensions that
score in AME with the main schemes in AME being for NHS staff,
teachers, the civil service and the armed forces. AME scores the
majority of the operating costs, net of income, for the main public
service unfunded pendion schemes. Operating costs are measured
under Financial Reporting Standard 17 (FRS17) compliant with UK
GAAP as amended for the public sector.
3a. The Scottish Government spent £27,385
million of its DEL budget in 2007-08 compared with £25,389
million the year before, a £2 billion (8%) increase. £127
million of that increase might be attributed to the transfer of
responsibility for rail services and "budgetary changes"
itemised in the Supplementary Estimates. What accounts for the
remainder of the increased expenditure?
Scottish Government Response: The Scottish Government
received a large increase in spending in the 2004 Spending Review,
with spending some £4.2 billion higher by 2007-8 compared
to 2004-05. The £2bn increase in 2007-08 was included in
this SR04 spending allocation, with Health and Local Government
being two of the main areas to benefit from the increased SR allocations.
3b.What expenditure was the £655 million
End Year Flexibility draw-down specifically intended to cover?
Scottish Government Response: It is for the
Scottish Government to decide how to allocate the EYF drawdown
agreed with the UK Government.
4a. Page 31 of the Scotland Office Annual
Report identifies "Budget 2008" changes for the CSR
years of only £6 million, £3 million and £5 million.
What Budget measures or programmes are involved, and to what extent
are these figures the consequences of the application of the Barnett
Formula to changes in budgets of government departments?
Scottish Government Response: The budget measures
involved are (1.) Child Poverty as a consequence of increased
spending on DCSF Child Poverty measures and (2.) Modernisation
Funding meeting CST's commitment in the CSR to provide Barnett
consequentials on drawdown of modernisation funding.
4b. The Treasury's press notices accompanying
the 2008 Budget highlight an additional £26 million for the
Scottish Government as a result spending increases for government
departments. What Budget measures or programmes are involved?
Is this £26 million increase for 2008-09, or for the CSR
years as a whole? How does the £26 million cited in the Treasury
press release relate to the figures cited on page 31 of the Scotland
Office Annual Report?
Scottish Government Response: As detailed in
response to 4a £14 million (6/3/5m) related to budget measures
across the CSR years. The remainder of the £26 million relates
to consequentials arising from the known drawdown of modernisation
funding by Whitehall Departments in 2007-08 and is to be added
to the Scottish Government's EYF balance. The figures cited on
page 31 of the Scotland Office Report (6/3/5m) are included in
the £26 million alongwith the remainder which has been added
to our EYF balance at HMT.
4c. What are the "budgeting changes"—£40
million in 2008-09 and £20 million in 2009-10—cited
in the Scotland Office Annual Report (page 31)?
Scottish Government Response: The budgeting
changes cited in the Scotland Office Annual Report (page 31) relate
to the net figures of reclassifications of three areas of funding
(1) Re-classification of impairments from DEL to AME (+£55/55/55m)
(2) Re-classification of a by analogy Pension Scheme from DEL
to AME (+£5/5/5m) and (3) Increase in cost of capital charge
in respect of Scottish Water as a result of definitional changes
(-£20/40/60m).
5. The Committee would like to have a reconciliation
between the different CSR figures for the Scottish Government
DEL, reported in the 2007 Pre-Budget report and CSR [Cm 7227]
and PESA 2008 [HC 489], as set out below?
| 2008-09 | 2009-10
| 2010-11 |
CSR Review report, Oct 2007
[Cm 7227, Table D27(p263) and Table 1.3(p12)]
| £27.244bn | £28.399bn
| £29.784bn |
PESA 2008, April 2008
[HC 489, Table 1.12]
| £27.267bn | £28.377bn
| £29.752bn |
| |
| |
Scottish Government Response: Reconciliation between the
different CSR figures
| 2008-09 |
2009-10 | 2010-11
|
CSR Review report, Oct 2007 [Cm 7227, Table D27(p263) and Table 1.3(p12)]
| £27.244bn | £28.399bn
| £29.784bn |
| Increase in cost of capital charge in respect of Scottish Water as a result of definitional changes
| +£0.020bn | +£0.040bn
| +£0.060bn |
| Net transfers in Main Estimate 2008-09 |
-£0.058bn | -£0.058bn
| -£0.059bn |
| Budget 2008 | +£0.006bn
| +£0.003bn | +£0.005bn
|
| Change in Depreciation | +£0.055bn
| -£0.007bn | -£0.038bn
|
| PESA 2008, April 2008 [HC 489, Table 1.12] |
£27.267bn | £28.377bn
| £29.752bn |
| |
| |
6. Why are the Scottish Government DEL CSR figures reported
in the Scotland Office Annual Report (page 31) generally £300
million-£400 million more than the figures reported in Cm
7227 or HC 489 for each year? What mainly accounts for the difference?
Scottish Government Response: The DEL CSR figures reported
in the Scotland Office Report (page 31) include depreciation (£27.569/28.740/30.148
billion) whereas the figures reported in Cm 7227 (£27.244/28.399/29.784
billion) and HC 489 (27.267/28.377/29.752 billion) are net of
depreciation.
June 2008
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