As the committee will know, the spring budget revision provides the final opportunity to formally amend the Scottish budget for 2019-20. This year’s spring budget revision deals with four different types of amendments to the budget. First, there are a few funding changes. Secondly, there are a significant number of technical adjustments that have no impact on spending power. Thirdly, there are some Whitehall transfers. Finally, there are some budget-neutral transfers of resources between portfolio budgets, including a modest budget redirection to ensure that we maximise our available budget. The net impact of all those changes is an increase in the approved budget of £1,108.5 million, from £43,094.8 million to £44,203.3 million.
Table 1.1 on page 5 of the supporting document shows the approved budgets following the autumn budget revision and the changes sought in the spring budget revision. The supporting document to the spring budget revision and the brief guide prepared by my officials provide background on the net changes.
The first set of changes increases the budget by £255.9 million and comprises funding that has been allocated over a number of lines as detailed in the brief guide.
The second, most significant, set of changes comprises a number of large technical adjustments to the budget. Those adjustments are mainly non-cash and therefore budget neutral—as they cannot be redeployed to support discretionary spend elsewhere. They have a net positive impact of £714.8 million on the overall aggregate position. It is necessary to reflect those adjustments to ensure that the budget is consistent with the accounting requirements and with the final outturn that will be reported in our annual accounts.
By far the largest of the adjustments relates to an increase to the annually managed expenditure provision for future national health service and teachers’ pensions costs. That flows mainly from past service costs for guaranteed minimum pensions equalisation relating to the full indexation of pensions in respect of members reaching state pension age after 6 April 2021. However, last year’s higher-than-expected pay award for teachers and the outcome of Court of Appeal rulings on the judicial pension scheme and the firefighters’ pension scheme discrimination claims have also contributed to the increase of £594.6 million.
With regard to Whitehall transfers and allocations from Her Majesty’s Treasury, there is a net positive impact on the budget of £138 million from a number of transfers, the most significant of which are the transfers of £80 million convergence funding for farmers from HM Treasury and the £35 million reserve claim to cover the costs of the changes to the personal injury discount rate.
The final part of the budget revision concerns the transfer of funds within and between portfolios to better align the budgets with profiled spend.
The main transfers between portfolios are noted in the supporting document and the guide to the SBR.
As we approach the financial year end, we will continue—in line with our usual practice—to monitor forecast outturn against budget and, wherever possible, we will seek to utilise any emerging underspends to ensure that we make optimum use of the resources available in 2019-20 and manage the necessary carry-forward to meet the additional spending commitments reflected in the budget agreement reached for 2020-21.
In line with the budget process review group’s recommendations, my officials have included in the brief guide that was sent to the committee an indication of the forecast outturn position as at 31 January. That is the latest position that was available when the brief guide was prepared and gives the committee the best view of the emerging underspend position. Provisional outturn figures will be announced by the Cabinet Secretary for Finance in early June.
The brief guide to the spring budget revision prepared by my officials sets out the background to and the details of the main proposed changes. I hope that colleagues have found the guide to be helpful.