Finance Committee, 13 Mar 2001
Meeting date: Tuesday, March 13, 2001
Official Report
125KB pdf
Scottish Parliamentary Corporate Body (Expenditure Plan)
Item 4 is the Scottish Parliamentary Corporate Body's provisional expenditure plan for 2002-03. The letter from the Presiding Officer is quite clear. He highlights the increase of about £9.7 million from the estimate that we received from the corporate body last year. He goes on to explain that this
"Capital expenditure of £9.7 million has now been accelerated from 2003-04 to 2002-03."
We may wish to note the penultimate paragraph, on the second page of the letter, on the Holyrood progress group. In particular, we may wish to note the part that says:
"Additional resources will be required".
No doubt David Davidson has taken note of that. Does he wish to comment on that, or indeed any other, aspect of the project?
I appreciate the committee's confidence in appointing me as reporter to consider the effect of the Holyrood project on the Scottish budget. I have discussed with the clerk an avenue of approach that I intend to take shortly, depending on the availability of witnesses. In real terms, and as regards the paper in front of us today, it is a matter of the £9.7 million being brought forward from within the vote of £195 million. The progress group's talk of inflationary pressures is something else that we will have to address in the near future. That will require the taking of further evidence from the HPG.
My one point, which I mentioned to the clerk earlier this morning, concerns the introduction of capital charges with regard to resource accounting and budgeting. Presumably, that will be seen as a revenue item, which is nothing to do with the capital vote that came from the Parliament. That is something that I would want to discuss with the HPG, with regard to whether the level of charges is appropriate to the type of project.
Are you referring to the capital charges shown?
I am referring to the projected ones.
The charges for the three financial years?
Yes.
I do not think that the increase of £9.7 million is really a concern, given that it is a carry-forward or re-phasing. However, it would be useful to find out, if that is feasible, whether the entire underspend is being carried forward, or only one portion.
The inflationary aspects have been discussed at previous committee meetings, and are something for David Davidson to consider closely and separately. They are not yet a question for our budget, as there are no specific proposals in the budget to deal with them.
A few points arise from the table that is attached to document FI/01/7/8. The first is on capital charges. A footnote to the table for the operating budget states:
"Capital charges were introduced … to reflect the depreciation"
as well as the cost of capital. I am not sure that that is strictly accurate, and I wonder whether we could seek clarification from the SPCB as to how the capital charges break down. They rise to nearly £20 million in 2003-04—and we should bear in mind that we are charging at 6 per cent. I am not sure how the SPCB is valuing the estate.
It would be useful to know how the capital charges have been calculated. That would be helpful for both our resource accounting and budgeting inquiry and our current discussions. How do the figures break down in terms of both depreciation and capital charges? How was the estate valued? Other than that, I have no problems with the provisional expenditure plan.
We will ask the SPCB for that information.
The £9.7 million that Andrew Wilson mentioned at the beginning of his comments is not a carry-forward: the underspends that are referred to come under revenue. It is actually a pull-back, or draw-down, from 2002-03 to 2003-04.
I beg your pardon; I did not see that. It is good news, then.
I still think that it would be useful to ask what proportion of the underspends that represents. We can add that point in writing.
I remind members of my earlier comment. I want to take evidence from the SPCB on how it constructs some of its figures, because if we must predict spending, we must know its basis in any bids for which the SPCB asks for support.
We will ask the SPCB to answer those two points.