I am grateful for the opportunity to inform the Parliament of the Scottish Government’s provisional financial outturn for 2013-14.
The Government attaches the greatest priority to the effective management of the public finances and the information that I will set out to the Parliament today is further demonstration of the Government fulfilling that commitment. It is essential that we maximise the value of every public pound as we take forward programmes to support economic recovery and deliver high-quality, efficient public services.
Today’s outturn figures must also be set in the context of continued United Kingdom Government reductions to the Scottish budget. Since 2010-11, the Scottish Government has managed an almost 8 per cent real-terms decline in public spending while supporting our economy and investing in public services.
As a demonstration of this Government’s sound financial management, I can report to the Parliament that within the fiscal departmental expenditure limit—the resources over which this Parliament has discretion—the provisional outturn for 2013-14 is expenditure of £28,238 million against a limit of £28,383 million, delivering an overall cash underspend of £145 million. That reflects an underspend of £144 million on resource and £1 million on capital budgets.
There is also a provisional outturn underspend of £31 million in respect of financial transactions. As I confirmed in the draft budget 2014-15 last September, those resources will be carried forward to support help to buy in 2014-15, reflecting the fact that the scheme commenced part way through financial year 2013-14.
Finally, in respect of non-cash DEL, there is a provisional outturn underspend of £111 million, after taking account of the pre-planned budget exchange carry-forward of £42 million to support our plans in 2014-15. That non-cash underspend reflects differences between expected accounting adjustments and actual amounts. For example, £56 million of that total relates to less than anticipated write-down of the carrying value of the income-contingent repayment student loan book. The non-cash underspend does not reflect resources that could be spent on public services.
To summarise, by using the budget exchange mechanism to carry forward £218 million, the overall underspend based on the provisional outturn for 2013-14 is £111 million of non-cash resources, which represents less than 0.4 per cent of the total 2013-14 budgets of Her Majesty’s Treasury. None of that underspend represents any loss of spending power on behalf of the Scottish Government.
At the time of the spending review in 2011, I made it clear to the Parliament that I would plan our public expenditure using budget exchange facilities over a three-year period to level out fluctuations in the resources available to us. I estimated that that would require my having to find £57 million to support our plans in 2014-15 and I confirm that that has been achieved as part of the £145 million fiscal DEL underspend.
As the spending review has progressed, other financial commitments have emerged that the Parliament has agreed that we must try to address. One of the most significant has been the mitigation of welfare reform measures. In 2013-14 and 2014-15, those measures include funding for the council tax reduction scheme, which is benefiting over 500,000 people, support for the Scottish welfare fund and the increased funding of discretionary housing payments. We will use resources carried forward in the budget exchange mechanism to fulfil our commitment to mitigate the effects of welfare reform where we are able to do so. Our financial commitment to welfare mitigation is now £260 million over the period 2013-14 to 2015-16. I welcome the broad support that the Parliament has shown for this area of our activity.
Our choices about public spending continue to be focused on the economy. We have seen continual growth for almost two years and rising confidence across both households and the private sector. The economy is growing, employment is rising and business confidence continues to increase.
We are continuing to support employment, including by maintaining our record commitment to modern apprenticeships and working with our local authority partners to take forward our commitment to early learning and childcare. A priority will be to work with our delivery partners in following up the report of the Wood review. I have already confirmed that additional resources of £12 million will be available in 2014-15 to support initial work in that area.
Although the outlook remains positive, Scotland’s economy will face headwinds, such as the relatively subdued recovery in key export markets such as the European Union, as well as legacy effects from the financial crisis that continue to take time to unwind.
In response to continuing challenges in the housing market, we confirmed in April and May further allocations that amount to £50.3 million in financial transactions funding for the help to buy scheme in 2014-15. That brings overall investment in the help to buy (Scotland) scheme to £275 million. That investment has brought substantial support to the construction sector in Scotland.
At the same time, the Scottish Government has continued to provide support to Scottish businesses and households through the small business bonus scheme and our support for a social wage and a council tax freeze.
Throughout the recession and the recovery, the Government has taken the firm view that infrastructure investment has a central part to play in boosting the economy. Today’s outturn figures demonstrate how we are maximising the impact of our capital budget each year in the face of the real-terms reduction of 26 per cent that the chancellor has made to our capital budget over the current spending review period.
In 2013-14, we expanded the infrastructure programme by switching from resource budgets to capital budgets. I will write to the Finance Committee to set out the final details of the 2013-14 resource-to-capital switches.
We also remain fully committed to the non-profit-distributing pipeline of infrastructure projects. The Aberdeen health village, which was the first revenue-funded finance project, was opened in 2013-14; £750 million-worth of projects are in construction and another £1.35 billion of projects are in procurement. We expect all major NPD projects to begin construction in the coming financial year. For example, the £46 million acute mental health and North Ayrshire community hospital project will start construction on the site of Ayrshire central hospital in Irvine shortly.
In April, I announced to the Parliament that we will continue that approach with a £1 billion increase in the NPD pipeline, extending it to 2019-20. That will provide the construction sector with the long-term certainty of a pipeline of work. That expansion is taking place within the framework that we have established that future revenue payments in support of NPD should not exceed 5 per cent of revenue budgets. That ensures that we can deliver now for the economy without overconstraining future budget choices.
The Scottish Futures Trust is considering a range of infrastructure investments. I will confirm in the draft budget in the autumn the full detail of the planned extension, which will build on the successes of our current programmes in delivering colleges, schools, roads, hospitals and community health facilities across Scotland. However, where we are able to make progress now, I am clear that we should do so.
I am pleased to confirm today two significant decisions about that additional investment at Aberdeen royal infirmary and in our schools programme.
We will allocate £120 million in NPD investment to fund two developments at the Aberdeen royal infirmary campus. We will fund a new maternity hospital on the ARI site. NHS Grampian has identified in its maternity services strategy that Aberdeen maternity hospital will continue to provide a specialist obstetrics and neonatal service, accommodate a community maternity unit for Aberdeen and the surrounding area, and provide support for maternity services across Grampian. A new hospital will provide high-quality new facilities as well as remove £4.2 million-worth of backlog maintenance and reduce estates and facilities costs. NHS Grampian’s plan is that the new hospital would be designated a women’s hospital and would include accommodation for all existing services as well as the neonatal unit, theatres and gynaecology in-patient and out-patient services.
The new maternity hospital will be followed by the development of a cancer centre, which is another important element of the development of the campus. That centre will enable the co-location of our cancer services, which are currently spread across the Aberdeen royal infirmary site, and enable the delivery of care that is patient centred, safe and effective in the face of increases in population and forecast demand.
The development would complement existing investment that has been pursued through national radiotherapy programme funding. That has provided replacement linear accelerators and bunkers in a new radiotherapy department, which has been sited to be consistent with the future development of the cancer centre.
The second major decision, which I am also pleased to announce, is the immediate release of a further £100 million of NPD investment in school infrastructure through the Government’s “Scotland’s schools for the future” school building programme. The Government and our local authority partners share the objective of working to improve the quality of the school estate and ensuring that young people are educated in appropriate conditions in the 21st century.
We are making progress on that objective, as I saw at first hand when I opened Invergowrie primary school in my constituency earlier this week. The Cabinet Secretary for Education and Lifelong Learning and I will work with local authorities over the coming weeks to agree the most effective use of the additional investment of £100 million and to agree precise funding allocations. I know that the Parliament will welcome these announcements on the quality of our health and education infrastructure.
Today’s outturn figures and the extension of our NPD programme demonstrate once again the firm grip that this Government has on Scotland’s public finances, our focus on supporting Scotland’s economy, our approach to investing in our public services and our determination to deliver on the priorities that we share with the people of Scotland.
For a moment, I thought that Mr Rennie was on the right lines. I heard Alison McInnes’s point, which was well made, and I am glad that the Government, at the health secretary’s instigation, has taken the step that it has in relation to the Aberdeen royal infirmary site.
On Mr Rennie’s wider point about the infrastructure of the north-east of Scotland, the development of the new Her Majesty’s Prison Grampian has been a significant investment in recent months and years. We are also now at an advanced stage of being able to deploy expenditure on the Aberdeen western peripheral route, which is a project that the Liberal Democrats supported during their time in government. That project is at a very advanced stage of procurement, and we expect construction to start in quarter 4 of 2014. The western peripheral route will be a welcome contribution to the improvement of the infrastructure of the north-east.
In relation to the general point that Mr Rennie made about NPD, I do not think that I could have been more open with Parliament about the fact that we estimated that it would take a shorter time to get NPD projects up and running, but it is clear from the data that I shared in response to Mr Brown’s question that the NPD programme now has real momentum. The procurement activity is being undertaken very swiftly. Indeed, one of the most recent projects to reach financial close has done so in a much shorter period than, ordinarily, we would have imagined. Significant progress is being made on the NPD programme, and that will continue in the period ahead.
The Government has committed itself to £61 million-worth of expenditure to support the early years commitments. That is an increase on the estimate that we originally set out, which has arisen as a result of further design work that we have undertaken with our local authority partners.
Our discussions with COSLA continue and, of course, support for that £61 million is provided for in the Government’s capital programme. It may not all fall within the 2014-15 financial year, but that will be a subject that I will continue to discuss with our local authority partners.
If we have short questions and short answers, that will allow us to endeavour to get everyone in.
Briefly and finally, Christian Allard.
I thank the cabinet secretary for advance sight of his statement. In comparing this year’s table to last year’s, I note that there appear to be significant increases in the cash underspends for education, justice, rural affairs and infrastructure. Will the cabinet secretary give us more details about why those underspends came about for those portfolios?
On NPD, we certainly welcome the announcements about Aberdeen royal infirmary and the other project, and we also welcome the schools infrastructure announcement for NPD2.
The cabinet secretary said that NPD is about ensuring that
“we can deliver now for the economy”
with emphasis on the word “now”. With that in mind, can the cabinet secretary tell us what value was delivered via NPD in the last financial year? I ask that because, at the halfway stage, only £46 million out of £185 million had been delivered on the ground. Can he tell us, or at least pledge to tell us very soon, what was delivered on the ground in 2013-14 via NPD?
I have heard that one a number of times from the Labour Party—[Interruption.] Let us have a period of quiet for me to explain this carefully to the members of the Labour front bench, who need to hear it loud and clear.
The total cost of mitigating the bedroom tax in Scotland is £50 million. Under the existing statutory arrangements, it is possible for us to spend about £38 million on mitigating the bedroom tax over the whole financial year—which, Ms Marra has conveniently and helpfully explained to me, has run for only about three months. We are a quarter of the way through the financial year and £38 million can legitimately and fully be deployed to deal with the bedroom tax in Scotland. We will be required to apply £12 million, which the Government has provided for, once we reach the necessary statutory agreements with the UK Government. I have no reason to think that that process is being in any way held up—I have no complaint about it at all. It is all going in a perfectly agreeable fashion with the UK Government.
We have £38 million legally available in Scotland today, we are a quarter of the way through the year and the total liability is £50 million. I make the basic, fundamental, arithmetic point to the Labour Party in Scotland that, if we divide 50 by four, we get a number that is lower than 38. Is that simple enough for even that dynamic trio on the front bench of the Labour Party to understand the second—and bluntest—time that I have expressed it?
Unlike those on the Liberal front bench, who never cared for the needs of the people of the north-east when the Labour-Liberal Government was in power, I welcome the investment announced by the cabinet secretary for health facilities in Aberdeen, which should be of great benefit to all my constituents across the north-east. Can the cabinet secretary tell me what timescales are in place for delivery of that project?
I very much welcome the cabinet secretary’s announcement of £100 million for school infrastructure. That is incredibly encouraging, especially as schools in Glasgow and beyond have been in a poor state for some time. Can the cabinet secretary give us any idea of the timescale for that work?
Mr Brown has sight of the note for MSPs that accompanied my statement. It was circulated to Opposition parties and is available in the chamber. In that note, I indicate that the Government will provide further detail on significant variances at portfolio level, once the consolidated accounts have been produced, which will be towards the end of September. We will certainly report on the variances in fuller detail as part of our consolidated accounts.
On Mr Brown’s second question about NPD, I answered an oral or written question from Mr Brown that indicated that the Scottish Futures Trust is updating the data that are available on the level of activity during 2013-14, which will be available by the time of the draft budget in October.
I reiterate to Mr Brown that in my statement I indicated that £750 million of projects that will obviously span the years 2013-14 and 2014-15 are now in construction. Some of them might even go into 2015-16. Despite the fact that it has, as I have conceded to Parliament on many occasions, taken us longer to mobilise the NPD programme than we would have liked, it is now making a substantial contribution to construction activity. As a consequence of my statement today, it will continue that process for a longer period, which will give greater clarity to the construction industry about the opportunities that exist to participate in the programme.
The project forms part of NHS Grampian’s capital programme, and the Government will work with NHS Grampian to put in place the steps that are necessary to apply the project. The typical lead-in time to a project reaching financial close can be about two years. We will try to accelerate that timescale if it is at all possible, and I can assure Mr Allard that the health secretary will take steps to ensure that the project is delivered as swiftly as it can be.
I welcome very much the comments by Mr Allard, who represents North East Scotland, on the important investment that has been made in the Aberdeen royal infirmary campus.
Good afternoon, everyone. The first item of business this afternoon is a statement by John Swinney on the provisional outturn for 2013-14. The cabinet secretary will take questions at the end of his statement and there should therefore be no interventions or interruptions. Cabinet secretary, if you are ready, you have 10 minutes.
I welcome the statement, particularly the announcement of the investment of £46 million in acute mental services through the provision of a North Ayrshire community hospital.
The Scottish Government has prioritised affordable housing by, for example, investing in the social rented sector and abolishing the right to buy, which is in sharp contrast to Westminster’s approach. Does the cabinet secretary share my concerns that the Scottish Government is being penalised for investing more in social housing while HM Treasury reaps the rewards of lower housing benefit payments that should accrue to Scotland, as has been detailed by the work of the Institute for Fiscal Studies?
That will be the subject of the discussions that the education secretary and I will have with our local authority partners. The objective that we share with our local authority partners is to ensure that we make progress as swiftly as we can in improving the quality of the school estate and school infrastructure. Our local authority partners are at one with us on that priority, and the discussions will proceed in that spirit to ensure that we deploy that resource effectively and swiftly.
I thank the finance secretary for the advance copy of his statement. In this very seat, at lunch time, Alison McInnes asked for more NHS investment in Grampian. I am sure that there must be a connection with the announcement this afternoon.
I welcome the investment in Aberdeen and in the schools, especially considering the short-changing that Aberdeen and the north-east have received from the Government in recent years. I am sorry to introduce a discordant note but, given the contribution that the north-east makes to our economy, it is important that it gets a return from the Government. I appreciate the cabinet secretary’s frankness about the delays in the NPD programme in his answer to Gavin Brown. Can he guarantee that the significant problems that we faced in the early days of the NPD programme have been fully overcome?
Mr Gibson has clearly explained the difficulty that arises out of the fact that the Government does not have control of both sides of the balance sheet. We are unable to reap the rewards and benefits of some of the other policies that we have implemented for the right reasons, including provision of affordable housing for citizens in Scotland. Mr Gibson makes a strong point about the opportunities that the Government would have if we had control of the financial levers on both sides of the balance sheet, in an independent country.
The cabinet secretary told us that he has budgeted for mitigation of the bedroom tax. We knew that and we welcomed it. However, he promised that he would have a system in place by 1 April to make sure that no one in Scotland would have to pay the bedroom tax, irrespective of the position of the Department for Work and Pensions. It is nearly July now and no such system is in place. He might have the money, but has he not betrayed Scottish families who are still paying the tax three months after he promised to have a system in place and have it sorted?
I, too, welcome the statement.
The cabinet secretary has had to deal with declining settlements from Westminster. Once again, he has done so within budget. Does he agree that changing from an austerity approach to using the powers of independence to invest in the economy could increase revenues for Scotland and support further investment in public services?
It is clear that having the ability to take decisions that create stronger and more effective economic infrastructure in Scotland will help the long-term progress of the Scottish economy. Having a wider range of powers will enable us to fulfil that objective.
The cabinet secretary will be aware that 150,000 fewer students are studying at Scottish colleges as a direct result of the decisions that he has taken since 2007 as finance secretary. In recent years, he has tried to use some of the consequentials or outturn moneys to unpick or mitigate some of the damage that he has wrought on Scotland’s colleges, but budgets continue to fall.
I note that education is one of the biggest contributors to the cabinet secretary’s underspend. Why has he not offered anything to Scotland’s colleges in today’s announcement?
The Government committed itself to maintaining the number of full-time equivalent places in Scotland’s colleges, and that is exactly what we have done.
As has been independently verified by the Wood commission in its analysis, in which it highlighted that the college sector in Scotland had been strengthened as a consequence of the Government’s reforms, we have focused the college sector more and more on supporting the journey that individuals make into employment. I think that that is the right approach to take so that individuals can acquire the more specific skills that will enable them to participate in the labour market and to fulfil their potential.
When independent exercises such as the Wood review highlight the fact that the college sector has been strengthened as a consequence of the Government’s reform programme, members such as Mr Macintosh should be reassured that that programme has been effective and that we now need to sustain our investment, as the Government is committed to doing, to ensure that we reap the rewards of our reforms.
Is the cabinet secretary aware that, this week, research was published by Sheffield Hallam University that indicated that, as a consequence of the Scottish Government’s investment in welfare reform mitigation, the impact of the UK Government’s welfare reforms is some £35 less per working-age adult in Scotland? What assessment has the Scottish Government made of the impact of its £260 million investment in welfare reform mitigation?
The investment that the Government has made has been designed to support financially vulnerable individuals. It will assist people in contributing to the Scottish economy by sustaining their livelihoods and circumstances.
The Government continues to review the challenge of welfare reform and the effect that it is having on the population in Scotland, and we will continue to do that throughout the spending review period.
A week or two ago, the cabinet secretary allocated an additional £31 million for the capital implications of expanding early education and childcare for two-year-olds, but I think that the Scottish Government has estimated that that will cost £61 million, and the Convention of Scottish Local Authorities believes that the figure will be significantly higher. Has any of the underspend money been allocated for that purpose?
The cabinet secretary will now take questions on the issues that were raised in his statement. I intend to allow about 20 minutes for questions, after which we will move to the next item of business.
I thank the cabinet secretary for his statement and for early sight of it. As always, he has made a polished presentation of his provisional outturn figures. I expect no less.
However, there is a gap in the figures. Mr Swinney mentioned towards the end of his statement his determination to deliver on his priorities. For all of 2013-14, his Government had no priority but promotion of its independence prospectus, but the resource that was devoted to that is hidden in these high-level figures. Can he tell us exactly how much the Scottish Government spent in 2013-14 on the independence referendum and on making the Government’s case for separation? That includes the cost of preparing, publishing, producing and promoting its white paper and the consequent documents on pensions, the economy, welfare and so on to try to cover up the white paper’s flaws. It also includes the billboards, the mailings that went out to every unsuspecting household in the country, the First Minister’s trips to America and Europe to preach the independence gospel, the Cabinet’s endless rolling referendum roadshows and, above all, the civil service staff and resources that have been diverted to making the case for separation.
How much was spent on all that in 2013-14? Is the figure, like the set-up costs for a new country, one of those inconvenient figures that seem to have escaped the firm grip on finances that Mr Swinney boasted of a moment ago?
That will be a very interesting question for the people of Aberdeen to study, given what Mr Gray has said. There was not a single word of welcome from Mr Gray for the Government’s commitment to invest in healthcare facilities in the city of Aberdeen, nor was there a word of welcome for the fact that the Government has just committed more resources to improving the infrastructure of our schools. That tells us all that we need to know about the Labour Party’s lack of connection to the real priorities of the people of Scotland.
I know that Iain Gray does not bother himself with participating in the affairs of Parliament’s committees. If he did, he would see that I have set out to the Finance Committee, in the course of the autumn budget revision and the spring budget revision, the allocations of resources that have been made to support the marketing costs of the white paper. That information has been shared with Parliament. We have, of course, committed ourselves to updating that information when all this activity is completed. The Government will do exactly that.
As for the accusation that we sent mailings to the “unsuspecting” householders of Scotland, when I got home last night I discovered the shocking delivery of a booklet from Her Majesty’s Government direct to my house in Perthshire, setting out the arguments of the United Kingdom Government. Before Iain Gray starts questioning the Scottish Government about what we are undertaking in order to pursue legitimately the policy agenda of this Government, he should ask Downing Street what it is up to.
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