At its meeting on 7 November 2023, the Committee took evidence from the Minister for Community Wealth and Public Finance on—

• The Budget (Scotland) Act 2023 Amendment Regulations 2023 [draft]("the Regulations")

During its scrutiny of the Regulations, the Committee also considered the content of the Budget (Scotland) Act: Autumn Budget Revision 2023-24 Supporting Document, which provides additional information regarding the revised spending plans for which the Scottish Government is seeking Parliamentary approval.

The Scottish Government also produced a detailed Guide to the Autumn Budget Revision, and the Scottish Parliament Information Centre’s Financial Scrutiny Unit produced a briefing to support the Committee’s scrutiny of the Regulations. These documents were published as part of the meeting papers for 7 November 2023.

The Regulations were laid on 28 September 2023. The purpose of the Regulations is to make in-year changes to The Budget (Scotland) Act 2023, which authorised the Scottish Government’s spending plans for the current financial year.

The changes proposed in the Autumn Budget Revision (ABR) result in an increase in the approved budget of £562.4 million from £59,643.5 million to £60,205.9 million.

The ABR supporting document states that the changes to the Scottish Government’s spending plans are broken down into four main areas as follows:

• Funding changes to reflect deployment of available resources to portfolios (total net increase to the budget of £361.3 million);

• Technical adjustments (net increase to the budget of £188.0 million);

• Whitehall Transfers and HM Treasury allocations to the Scottish Government (£13.1 million); and

• The transfer of resources between Scottish Government portfolios.

In correspondence with the Scottish Government, prior to it formally considering the draft Regulations at its meeting on 31 October 2023, the Delegated Powers and Law Reform (DPLR) Committee queried aspects of the drafting of three provisions. These were as follows—

1. Regulation 2(b) of the instrument amends the amount specified for the Scottish Parliamentary Corporate Body, but it replaces the existing figure in section 4(3)(a) of the 2023 Act with the same figure.

   • The Scottish Government advised that the insertion of an unchanged figure was unintentional, but that the figure remains correct.

2. Second, Regulation 3(2)(c)(iv) amends purpose 3 in schedule 1 of the Act, which sets out policy purposes against which resources are allocated. It changes: “support for Growth Accelerator and Green Growth Accelerator programmes” to “support for Growth Accelerator programmes”.

   • The Scottish Government advised that failing to make “programmes” singular when removing the reference to the “Green Growth Accelerator” programme was an oversight. It has given a commitment to address this in the next amending instrument.

   • The DPLR Committee welcomed the Scottish Government’s commitment to address this in the next amending instrument.

3. Third, amendments by regulation 3(2)(i)(ii) and (iv) to purpose 9 in schedule 1 introduces two references to “the organisation”: “funding of a strategy function which supports effective policy across the organisation”; and “expenditure on corporate and central services, funding to support the central performance, delivery and resilience functions of the organisation”. The DPLR Committee queried what “the organisation” refers to.

   • The Scottish Government advised it refers to the Scottish Administration, and that it considers this is clear from the context of schedule 1, which sets out the various purposes for which the Scottish Administration may use resources.

   • The term “organisation” is not defined in the instrument or the 2023 Act. The Committee also noted that various other bodies are mentioned in purpose 9 which could be described as organisations in their own right, funded by the Scottish Administration.

   • The DPLR Committee invited the Scottish Government to consider addressing this in the next amending instrument.

The Committee’s report, published on 1 November 2023, confirmed that, for the reasons outlined above, the Committee agreed to draw the instrument to the attention of the Parliament.

On 7 November 2023, the Committee took evidence on the draft Regulations from:

• Tom Arthur, Minister for Community Wealth and Public Finance;

• Craig Maidment, Finance Manager, Scottish Government; and

• Niall Caldwell, Corporate Treasurer, Scottish Government.

During evidence, the Committee asked a number of questions of the Minister, the responses to which can be found in the Official Report.

The Committee has previously corresponded with the Deputy First Minister and Cabinet Secretary for Finance on 21 September 2023 and 17 October 2023 in relation to proposals to improve Budget transparency. The Committee continued this dialogue with the Minister, seeking responses to several questions regarding the transparency of decisions made as part of the ABR.

As with previous years, questions were asked about the in-year movement of significant internal transfers between portfolios. As the Committee heard, these transfers arise because funding allocated in the Budget to areas accountable for policy is then reallocated, in-year, to those areas responsible for policy delivery.

Responding, the Minister confirmed that these issues are being actively considered and “it is being done in the context of the Verity house agreement, given that a number of transfers to local government take place.” He added that “we are considering how we can address those matters and how that will inform the presentation of the forthcoming budget.”

In its correspondence with the Deputy First Minister, the Committee has been seeking greater transparency in Scottish Budget documents to include publication of outturn and latest forecasts as prior year comparators to the budget being proposed.

In response, the Minister explained that this is a shared endeavour between the Scottish Government and the Finance and Public Administration Committee. He added, however, that there is a balance to be struck between “consistency of messaging and understanding of what the numbers actually say,” without an “overprovision of information, although well intentioned, [which] can add to the complexity and make it more challenging for the budget to be understood and comprehended more widely.”

The Committee heard that, as a consequence of in-year reprofiling of expenditure, some funding for specific organisations has been moved, in-year, for redistribution to other priority areas.

i. The Minister committed to provide further information about the reprofiling, across the years, of pupil equity funding within the Education and Skills portfolio which had resulted in funding being returned, in-year.

ii. A combination of common agricultural policy pillar 1 and environmental and agricultural reform funding had resulted in £40 million of funding “returned to the centre because forecasts were lower than anticipated.” The Minister confirmed that there “is a commitment to return those amounts to the rural portfolio in future financial years.”

iii. In relation to Creative Scotland’s budget, funding had also been returned in-year. The Minister explained that the Scottish Government had already committed to reinstate that funding in future years.

Following our evidence session on 7 November 2023, the Constitution, Europe and External Affairs Committee (CEEAC) wrote to the Committee regarding the commitment made at Stage 3 of the 2023-24 Budget to reverse a proposed £6.6 million cut to Creative Scotland’s funding. The detail of the budget revisions for the increased funding commitments was to be reported to Parliament as part of the ABR, however the CEEAC noted that there was no mention of the commitment made, and no explanation in the ABR or its supporting document.

While CEEAC recognised that the reinstatement of this cut was not required to be formally reported in the ABR, it considered that an explanation why should have been and therefore brought it to the FPA Committee’s attention.

In evidence, the Committee heard that some reductions in portfolios arose as a result of organisations using reserves enabling funding to be returned to the Government – for example, Forestry and Land Scotland was highlighted as having returned £6 million in-year as a result of using its reserves. This, the Minister explained, meant that the funding could then be reallocated to meet the “very challenging fiscal environment that we are in”.

Following evidence, the Minister for Community Wealth and Public Finance moved motion S6M-10683—

That the Finance and Public Administration Committee recommends that The Budget (Scotland) Act 2023 Amendment Regulations 2023 [draft] be approved.