Chamber and committees

The order specifies the standard rate and lower rates for Scottish landfill tax, consistent with the rates in the 2022-23 Scottish budget as published on 9 December 2021. It sets out that the standard rate will increase from £96.70 to £98.60 per tonne, while the lower rate, for less polluting inert materials, will increase from £3.10 to £3.15 per tonne. The proposed rates will come into effect from 1 April 2022.

Committee members will wish to note that the rates match landfill tax rates for 2022-23 in the rest of the UK, as confirmed in the UK and Welsh budgets. The Scottish Government is continuing to act to avoid any potential for what is referred to as waste tourism as a result of material differences between the tax rates north and south of the border. The increased rates also provide appropriate financial incentives to support delivery of our ambitious waste and circular economy targets.

I will conclude there, convener. I am happy to take questions.

Thank you, convener, and good morning to the committee.

The spring budget revision provides the final opportunity to formally amend the Scottish budget for 2021-22. The budget revision contains the usual four categories of changes: allocation of the remaining Covid-19 consequentials, along with some other funding changes; a number of technical adjustments that have no impact on spending power; some Whitehall transfers; and some budget-neutral transfers of resources between portfolio budgets.

The supporting document on the spring budget revision and the finance update prepared by my officials provide background information on the net changes. The funding changes increase the budget by £1,428.3 million and comprise the majority of the Covid-19 funding, which has been allocated over a number of lines, as detailed in the finance update.

The technical adjustments are mainly non-cash and have a net negative impact of £357.3 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.

Whitehall transfers total £131.2 million and largely comprise funding for the 26th United Nations climate change conference of the parties—COP26—along with a second instalment of the migrant health surcharge.

The final part of the budget revision concerns the transfer of funds within and between portfolios to better align the budgets with profiled spend.

At the time of the publication of the spring budget revision, we did not have final confirmation from HM Treasury on the amount of Barnett consequentials being allocated in the UK supplementary estimates. As a result, we were forced to base the budget revision on the best estimate at that time. There were further developments in the funding position following the SBR’s publication and my officials have provided additional information on the subsequent changes in the finance update.

That information, together with the background information provided, is intended to support the scrutiny process and to offer committee members more insight into the challenges of managing the budget position while the funding position is so volatile.

As we approach the financial year-end we will continue, in line with our normal practice, to monitor forecast outturn against budget and utilise any emerging underspends to ensure that we make optimum use of the resources available in 2021-22 and manage the necessary carry forward to meet additional spending commitments that are reflected in the budget agreement reached for 2022-23.

In line with previous years, my officials have included in the finance update for the committee an indication of the forecast outturn position. Provisional outturn figures will be announced in early June.

I am happy to take any questions that the committee may have.

As you will be aware from previous budget revisions, this has been routine practice in relation to where the budget for the pensions to which you refer has been allocated. I will ask Scott Mackay to provide some more context and background.

Certainly. I will ask Scott Mackay to come in to give a further breakdown on the elements of devolved taxation and the underspend that is emerging in demand-led areas.

Okay. Have you got that detail in front of you, Scott?

Yes, but the issue is ultimately not one about having the resource to deploy; it is about having the materials to spend the resource on. This is a broad reflection of the challenges around supplying and sourcing materials, which are obviously impacting the construction sector.

I think that Niall Caldwell and Scott Mackay would agree with me that it is always a very busy and intense workload in finance but particularly as we get to this point of the year.

It will always be challenging, just by dint of the fact that we are approaching end of year. We can perhaps remove some of the complexity and what can at times be the capricious nature of the arrangements by having a better process for how the Treasury and the UK Government engage, so as to provide a bit more certainty. We had a Barnett guarantee in a previous year, and that was enormously helpful. That allows us to plan with more certainty and—touching on the points that we have discussed regarding the reserve—increased flexibility. That, in turn, allows us to think about ways to deploy funds more efficiently, rather than having to make what can be an artificial end-of-year deadline to make the budget balance and to ensure that we still have enough headroom in the reserve and that we are not underspending to a degree where we lose the funding. It is an intense process.

As for quantifying the resource and the operational costs within the SG, I do not have the figures to hand. I do not know whether we have those figures available.

It is a fair point, and obviously we will continue to keep the rates under review. However, we are on a journey towards banning biodegradable municipal waste by the end of December 2025, and we will consider the rates in the broader context of our actions to reduce waste and move to a circular economy. For the reasons that I set out in my opening remarks, we are continuing to ensure parity with rates elsewhere in the UK to avoid the risk of waste tourism emerging.

That is a very fair point to make. I do not think that the current set of arrangements is optimal, and we can hopefully remedy that through the fiscal framework review.

Yes. I think that we discussed the matter at the evidence session on the autumn budget revision. That income is collected and administered centrally; although the process involved is analogous to that for the Barnett formula, it is not a Barnett transfer, and it is reflected in budget revisions as a means of allocating it to the budget. I do not know whether Scott Mackay or Niall Caldwell has anything else to add.