We are testing a new beta website for gov.scot go to new site

The Scottish Government Consolidated Accounts for the year ended 31 March 2017

Listen

Notes To The Accounts

For the Year Ended 31 March 2017

1. Statement of Accounting Policies

In accordance with the accounts direction issued by Scottish Ministers under section 19(4) of the Public Finance and Accountability (Scotland) Act 2000 these financial statements have been prepared in accordance with the 2016-17 Government Financial Reporting Manual (FReM). The accounting policies contained in the FReM apply International Financial Reporting Standards (IFRS) as adapted or interpreted for the public sector context.

The accounts are prepared using accounting policies, and, where necessary, estimation techniques, which are selected as the most appropriate for the purpose of giving a true and fair view in accordance with the principles set out in International Accounting Standard 8: Accounting Policies, Changes in Accounting Estimates and Errors. Changes in accounting policies which do not give rise to a prior year adjustment are reported in the relevant note.

The particular accounting policies adopted by the portfolios of the Scottish Government are described below. They have been applied consistently in dealing with items considered material in relation to the accounts.

1.1 Accounting Convention and basis of consolidation

These accounts have been prepared under the historical cost convention modified to account for the revaluation of property, plant and equipment (PPE), intangible assets, and, where material, financial asset investments and inventories to fair value as determined by reference to their current costs.

These accounts reflect the consolidated assets and liabilities and the results for the year of all the entities within the Scottish Government accounting consolidation boundary. The structure of the Scottish Government and further information about the entities within the consolidation boundary is provided within the introduction of the Performance Report of these accounts.

The Executive Agencies detailed within the Performance Report mentioned above are reported within the Outturn Statements of their sponsoring portfolio.

1.2 Property, Plant and Equipment (PPE)

Recognition

All PPE assets will be accounted for as non-current assets unless they are deemed to be held-for-sale (see note 1.3 below), and will be accounted for under IAS16 Property, Plant and Equipment.

Scottish Ministers hold the legal title or effective control over all land and buildings shown in the accounts.

Assets classified as under construction are recognised in the statement of financial position to the extent that money has been paid or a liability has been incurred.

Capitalisation

The minimum levels for capitalisation of a property, plant or equipment asset are land and buildings £10,000 and equipment and vehicles £5,000. Information and Communications Technology (ICT) systems are capitalised where the pooled value exceeds £1,000. Substantial improvements to leasehold properties are also capitalised. Furniture, fixtures and fittings are treated as current expenditure and are not capitalised. Any assets valued below these thresholds will be treated as expenditure in the year of purchase.

Valuation

Land and buildings have been stated at open market value for existing use or, under IAS 16 as adapted for the public sector, depreciated replacement cost for specialised buildings under a rolling 5-year programme of professional valuations and appropriate indices in intervening years. Other plant and equipment assets, other than vessels and aircraft are reported at depreciated historic cost.

Losses in value reflected in valuations are accounted for in accordance with IAS 36, Impairment of Assets as adapted by the FReM which states that impairment losses that arise from a clear consumption of economic benefit should be taken to the outturn statement. The balance on any revaluation reserve (up to the level of impairment) to which the impairment would have been charged under IAS 36 should be transferred to the general fund.

The road network is valued at depreciated replacement cost as it is deemed to be specialist in nature. The road pavement element is valued using agreed rates determined to identify the gross replacement cost of applicable types of road on the basis of new construction on a greenfield site. These rates are re-valued annually using indices to reflect current prices and are also updated when new construction costs become available as comparators to the costs previously identified for specific road types.

Structures are valued using agreed rates determined to identify the replacement cost of applicable types of structure on the basis of new construction on a greenfield site where these are available, but special structures, which tend to be one off by their nature, are valued using specific costs that are updated to current prices. Communications are valued using agreed rates determined to identify the replacement cost of applicable types of communication.

The indexation factors applied are:

Road Pavement and Structures Baxter Index, published quarterly by the Department of Business, Innovation and Skills
Communications Traffic Scotland provide new gross and calculated depreciated values each year
Land Land indices produced by the Valuation Office Agency (VOA)

Upwards movements in value are taken to the revaluation reserve. Downward movements in value are set off against any credit balance held in the revaluation reserve until the credit is exhausted and thereafter charged to the relevant portfolio outturn statement.

The trunking or detrunkings of roads from or to local authorities is treated as a transfer from or to other government departments. Roads and structures detrunked are effectively dealt with as disposals in accounting terms at nil consideration. Any associated profit or loss is processed through the general fund.

Subsequent Cost

Subsequent costs are only included in the asset’s carrying amount or, where appropriate, recognised as a separate asset, when it is probable that future economic benefits associated with the item will flow to the Scottish Government and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the outturn statement during the financial period in which they are incurred.

1.3 Assets Held for Sale

A property is derecognised and held for sale under IFRS 5 Non-current Assets Held for Sale and Discontinued Operations when all of the following requirements are met:

  • It is available for immediate sale in its present condition
  • A plan is in place, supported by management, and steps have been taken to actively market the asset and conclude a sale at a reasonable price in relation to its current fair value
  • A sale is expected to be completed within 12 months.

Assets classified as held for sale are measured at the lower of their carrying amounts immediately prior to their classification as held for sale and their fair value less costs to sell. Assets classified as held for sale are not subject to depreciation or amortisation.

1.4 Donated Assets and European Union Grants

IAS 20 Accounting for Government Grants and Disclosure of Government Assistance, and SIC10 Government Assistance apply as interpreted by the FReM. Donated assets and grants received from the European Union for capital assets are capitalised at their valuation on receipt and this value is credited as income to the outturn statement. Subsequent revaluations are accounted for in the revaluation reserve, and impairments may be charged to the outturn statement.

1.5 Intangible Assets

In accordance with the FReM, Intangible assets are accounted for in line with the requirements of IAS 38 Intangible Assets, and SIC 32 Intangible Assets- Web Site Costs, and are valued at amortised cost based as a proxy for fair value. Revaluations are carried out according to IAS
38 for assets over a valuation threshold.

Future economic benefit has been used as the criteria in assessing whether an intangible asset meets the definition and recognition criteria of IAS 38 Intangible Assets for assets that do not generate income. IAS 38 defines future economic benefit as, ‘revenue from the sale of products or services, cost savings, or other benefits resulting from the use of the asset by the entity.’

Intangible assets other than assets under development are amortised on a straight line basis over their estimated useful lives. Impairment reviews are carried out if there are any indicators that impairment should be considered.

Intangible assets under development are not amortised.

1.6 Depreciation and Amortisation

Land is considered to have an indefinite life and is not depreciated.

Assets under construction are not depreciated.

For all other property, plant and equipment and intangible assets, depreciation or amortisation is charged at rates calculated to write off their valuation by equal instalments over their estimated useful lives which are normally in the following ranges:

Dwellings and other buildings 5 to 50 years (as per valuation)
Vehicles 3 to 10 years
Vessels 10 to 25 years
Aircraft 5 to 20 years
Equipment 3 to 15 years
ICT systems 3 to 10 years
Internally developed software 3 to 5 years
Leasehold improvements Over the shorter of asset life and lease term

1.7 Financial Instruments

The Scottish Government measures and presents financial instruments in accordance with IAS 32 and 39, IFRS 7, and IFRS 13 as interpreted by the FReM. IFRS 7 requires the classification of financial instruments into separate categories for which the accounting treatment is different. The Scottish Government has classified its financial instruments as follows:

Financial Assets:

  • Cash and cash equivalents, trade receivables, short term loans, accrued income relating to EU funding, amounts receivable and shares and will be reported in the ‘Loans and Receivables’ category. This will also include investment funds managed by third parties which will be reported separately.
  • Shared equity loans advanced to private individuals will be reported in the ‘At fair value through profit & loss’ category.

Financial Liabilities:

  • Borrowings, trade payables, accruals, payables, bank overdrafts and financial guarantee contracts are classified as ‘Other Liabilities’.

Financial instruments are initially measured at fair value with the exception of ‘Shares held in and loans advanced to public sector bodies’ which are held at historic cost, in the absence of an active market. The fair value of financial assets and liabilities is determined as follows:

  • The fair value of cash and cash equivalents and current non-interest bearing monetary financial assets and financial liabilities approximate their carrying value, and
  • The fair value of other non-current monetary financial assets and financial liabilities is based on market prices where a market exists, use of appropriate indices or has been determined by discounting expected cash flows by the current interest rate for financial assets and liabilities with similar risk profiles.

Financial instruments subsequent measurement depends on their classification:

  • Fair value through the profit and loss is held at fair value with any changes going through the outturn statement.
  • Loans and receivables and other liabilities are held at amortised cost and not revalued unless included in a fair value hedge accounting relationship. Any impairment losses go through the outturn statement.
  • Shares which are held in public sector bodies do not have a quoted market price in an active market, and the fair value cannot be reliably measured and reported at historic cost less impairment with any impairment losses going through the outturn statement.

Financial assets

Financial assets include shares in nationalised industries and limited companies, loans issued to public bodies not consolidated in departmental accounts; loans made under the terms of the student loans scheme, repayment and deferred loans relating to housing associations and investment funds. Such investments are generally reported as non-current assets. If an investment is held on a short-term basis, or a loan is due to be repaid within one year, it will be treated as a current asset.

Student Loans

Student loans are classified as ‘Loans and Receivables’, and are initially valued at fair value. They are subsequently recorded in the accounts at amortised cost.

As there is currently no active market for student loans, the Scottish Government values the loans by using a valuation technique. This technique involves the gross value of the loans being reduced by an amount based on:

  • Interest subsidy: This is the difference between the interest paid by students (lower of RPI and Bank of England Base Rate + 1% point) and the cost of capital on loans at the rate provided by HM Treasury. The interest subsidy is estimated to meet the cost of the interest over the life of the loan and is offset by the annual interest capitalised.
  • Write off impairment: This is estimated to meet the future cost of loans that are not likely to be recovered mainly due to the death of the student, their income not reaching the income threshold, or not being able to trace the student. Each year, the future cost of bad debt is estimated based on a percentage of new loans issued during the financial year. This is offset by the actual debts written off by the Student Loan Company.

The estimates underpinning these adjustments are based on a model which holds data on the demographic and behavioural characteristics of students in order to predict their borrowing behaviour and estimate the likely repayments of student loans. Given the long term nature of both adjustments, the time value of money is significant, and they are discounted using the current HM Treasury discount rate.

There are significant uncertainties in assessing the actual likely costs and the impairment will be affected by the assumptions used. These are formally reviewed by the Scottish Government each year and the amounts impaired reflect the Scottish Government’s current best estimate.

Further details of the movements in the loan valuation can be found in note 9, while disclosures relating to risk, required by IFRS 7, can be found in note 19.

Embedded Derivatives

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of host contracts and the host contracts are not measured at fair value with changes in fair value recognised in profit and loss.

Financial Guarantee Contracts

Financial guarantee contract liabilities are measured initially at their fair value and subsequently at the higher of:

  • The amount of the obligation under the contract, as determined in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets; and
  • The amount initially recognised less, where appropriate, cumulative amortisation recognised in accordance with IAS 18 Revenue.

Financial Transactions

Financial Transactions are a capital funding source from HM Treasury which can only be used to fund loans and equity investments that cross the public/private sector boundary. These have to be repaid to HM Treasury in the future through adjustments to baseline funding. A repayment profile has been agreed with HM Treasury which aligns receipts by the Scottish Government with repayment to HM Treasury. This is reviewed annually.

1.8 Inventories

Items that cannot or will not be used are written down to their net realisable value. Taking into account the high turnover of NHS stocks, the use of average purchase price is deemed to represent the lower of cost and net realisable value. Work in progress is valued at the cost of the direct materials plus the conversion costs incurred to bring the goods up to their present degree of completion.

1.9 Non-Profit Distributing (NPD)/ Public Private Partnerships (PPP)/ Private Finance Initiatives (PFI)

NPD/PPP/PFI transactions are accounted for in accordance with IFRIC 12, Service Concession Arrangements which sets out how NPD/PPP/PFI transactions are to be accounted for in the private sector. The Scottish Government currently uses the Non-Profit Distributing model in structuring its service concession arrangements. Previous administrations used the Public Private Partnership and Private Finance Initiative models. As payments made and assets held relating to these models will continue to be recorded in these accounts over the foreseeable future, the accounts refer to the three different service concession models in relevant disclosure.

Assets that are assessed to be on statement of financial position will be measured as follows:

  • Where the contract is separable between the service element, the interest charge and the infrastructure asset, the asset will be measured as under IAS 17, Leases, with the service element and the interest charge recognised as incurred over the term of the concession arrangement; and
  • Where there is a unitary payment stream that includes infrastructure and service elements that cannot be separated, the various elements will be separated using estimation techniques including obtaining information from the operator or using the fair value approach.

The grantor will recognise a liability for the capital value of the contract. That liability does not include the interest charge and service elements, which are expensed annually through the relevant portfolio outturn statement.

Assets should subsequently be measured consistently with other assets in their class using IAS 16, Property, Plant and Equipment, adopting an appropriate asset revaluation approach. Liabilities will be measured using the appropriate discount rate, taking account of the reduction arising from capital payments included in the unitary payment stream.

Any revenue received by the grantor is recognised in line with IAS 18, Revenue.

1.10 Revenue

Revenue is recognised when the amount can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met.

Operating income is income that relates directly to the operating activities of the Scottish Government. It includes fees and charges for services provided, on a full cost basis, to external customers, public repayment work and income from investments. It includes both income applied with limit as outlined by the Scottish Budget documents and income not applied. For income categorised as being applied with limit, any excess income over that approved is surrendered to the Scottish Consolidated Fund. Operating income is stated net of VAT.

Income is analysed in Note 4 between that which, under the regime, is allowed to be offset against gross administrative costs in determining the outturn against the administration cost limit (income applied), and that operating income which is not (income not applied).

1.11 Administration and Programme Expenditure

The Summary Outturn Statement is analysed between administration and programme expenditure:

  • Administration expenditure reflects the costs of running the Core Portfolios as defined under the administration cost control regime, together with associated operating income. This does not include the costs of running other bodies within the departmental boundary: such costs are included within the appropriate category of programme expenditure in the relevant Portfolio Outturn Statements.
  • Programme expenditure reflects non-administration costs, including payments of grants and other disbursements, including the administration costs of those bodies within the departmental boundary. Programme expenditure also takes account of income applied. A note to the accounts provides an analysis of total programme income between income applied and income not applied (Note 4).

1.12 Grants

Grants payable or paid are recorded as expenditure in the period that the underlying event or activity giving entitlement to the grant occurs. Where necessary obligations in respect of grant schemes are recognised as liabilities.

In accordance with the Scottish Public Finance Manual, procedures are in place to ensure compliance with any conditions or provisions attached to any grant payments.

1.13 European Union Funds

Funds received from the European Union (EU), are treated as income and shown in the relevant Portfolio Outturn Statement. Expenditure in respect of grants or subsidy claims is recorded in the period that the underlying event or activity giving entitlement to the grant or subsidy claim occurs. Any related payable or receivable balances are reflected in the Statement of Financial Position.

1.14 Foreign Exchange

Under the requirements of IAS 21 The Effects of Changes in Foreign Exchange Rates and SIC 7 Introduction of the Euro, transactions which are denominated in a foreign currency are translated into sterling at the exchange rate ruling on the date of each transaction, except where rates do not fluctuate significantly, in which case an average rate for a period is used. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the outturn statement.

1.15 Leases

As directed by the FReM, IAS 17 Leases and SIC15 Operating Leases apply. Where substantially all the risks and rewards of ownership of a leased property are borne by the entity, it is recorded as a non-current asset and a corresponding payable recorded in respect of the debt due to the lessor, with the interest element of the finance lease payment charged to the outturn statement. Leases other than finance leases are treated as operating leases, and rentals payable in respect of operating leases will be charged to the outturn statement on a straight line basis over the term of the lease.

1.16 Pensions

The Scottish Government as an employer

Present and past employees are covered by the provisions of the Principal Civil Service Pension Scheme (PCSPS) which is a defined benefit scheme and is unfunded. Portfolios, agencies and other bodies covered by the PCSPS recognise the expected cost of providing pensions for their employees on a systematic and rational basis over the period during which they benefit from their services by payment to the PCSPS of amounts calculated on an accruing basis (relevant disclosures are reported in the Remuneration and Staff Report). Liability for the payment of future benefits is a charge to the PCSPS. Separate scheme statements for the PCSPS as a whole are published.

The Scottish Government as a scheme administrator

Expenditure reported within Portfolio Outturn Statements includes grant in aid to bodies sponsored by the Scottish Government, which covers pension related expenditure in respect of pension schemes operated by the sponsored body for their eligible employees. The arrangements for these pension schemes are reported and explained in the annual accounts of the relevant bodies.

NHS Bodies

The NHS Bodies in Scotland participate in the National Health Service Superannuation Scheme for Scotland which is a notional defined benefit scheme where contributions are credited to the Exchequer and the balance in the account is deemed to be invested in a portfolio of Government securities. The pension cost is assessed every five years by the Government Actuary; details of the most recent actuarial valuation can be found in the separate statement of the Scottish Public Pensions Agency (SPPA).

Additional pension liabilities arising from early retirements are not funded by the scheme except where the retirement is due to ill health. The full amount of the liability for the additional costs is charged to the outturn statement at the time the Board commits itself to the retirement, regardless of the method of payment.

1.17 Provisions

IAS 37 Provisions, Contingent Liabilities and Contingent Assets applies in full, and in these accounts provisions are made for legal or constructive obligations which are of uncertain timing or amount at the statement of financial position date on the basis of the best estimate of the expenditure required to settle the obligation. Where material, they have been discounted using the appropriate discount rate as prescribed by HM Treasury.

Student Loans

The provision is established to reflect the debt sale subsidy.

Early Departure Costs

The Scottish Government is required to meet the additional cost of benefits beyond the normal PCSPS benefits in respect of employees who retired early, prior to 2011. The Scottish Government provides in full for this cost when the early retirement programme has been announced and is binding.

CNORIS

CNORIS is a risk transfer and financing scheme for NHS Scotland, which was first established in 1999. Its primary objective is to provide cost-effective risk pooling and claims management arrangements for Scotland’s NHS Health Boards and Special Health Boards.

A full accounting review was undertaken during 2014/15. The purpose of the review was to ensure that both NHS Boards and the Scottish Government apply the most appropriate accounting treatment.

The outcome of the review is that, as a result of participation in the CNORIS scheme, NHS Boards are now required to create a separate related, but distinct, provision recognising their respective shares of the total CNORIS national scheme liability. This is in addition to the recognition by NHS Boards of a provision for individual claims against their Board along with an associated debtor. The recognition of the separate provision is a technical accounting adjustment to more appropriately reflect the underlying substance of Boards’ liabilities.

On consolidation into the Scottish Government accounts, the Scottish Government’s CNORIS provision represents the national scheme liability and the Boards’ accounting for individual claims is removed.

NHS

In terms of accounting for the CNORIS scheme, NHS bodies provide for all claims notified to the NHS Central Legal Office (CLO) according to the value of the claim and the probability of settlement. Claims assessed as ‘Category 3’ are deemed most likely and provided for in full, those in ‘Category 2’ as 50% of the claim and those in ‘Category 1’ as nil. In conjunction with the CLO, Boards may take a different view on the appropriate level of provision for ‘Category 2’ claims, and may apply a different percentage in calculating the associated provision. The balance of the value of claims not provided for is disclosed as a contingent liability. This procedure is intended to estimate the amount considered to be the liability in respect of any claims outstanding.

1.18 Contingent Liabilities

Contingent liabilities include those required to be disclosed under IAS 37 Provisions, Contingent Liabilities and Contingent Assets and other liabilities arising from indemnities and guarantees (which are not financial guarantee contracts) included for parliamentary reporting and accountability. Portfolios must seek the prior approval of Parliament, via the Finance Committee, before entering into any specific guarantee, indemnity or letter or statement of comfort unless it arises in the normal course of business or the sum of the risk is £1m or less.

1.19 Value Added Tax (VAT)

Most of the activities of the Scottish Government are outside the scope of VAT, and in general output tax does not apply and input tax on purchases is not recoverable. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of fixed assets. Where output tax is charged or input VAT is recoverable, the amounts are stated net of VAT.

1.20 Segmental Reporting

IFRS 8 Segmental Reporting requires operating segments to be identified on the basis of internal reports about components of the Scottish Government and its consolidated bodies that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and assess their performance. The Scottish Government reports segmental information within its outturn statements which are prepared on the basis of Ministerial portfolios.

1.21 Trade Receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an estimate of likely impairment. Impairment of trade receivables is made where there is objective evidence that the Scottish Government will not be able to collect all amounts due according to the original terms of the receivables.

1.22 Cash and Cash Equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position. Balances are analysed between those held with the Government Banking Service and balances held in commercial banks.

1.23 Trade Payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

1.24 Short Term Employee Benefits

A liability and an expense is recognised for holiday days, holiday pay, bonuses and other short-term benefits when the employees render service that increases their entitlement to these benefits. As a result an accrual has been made for holidays earned but not taken.

1.25 New Accounting Standards

A number of new accounting standards have been issued or amendments made to existing standards, but do not come in to force until future accounting periods and therefore are not yet applied. All new standards issued and amendments made to existing standards are reviewed by Financial Reporting and Advisory Board (FRAB) for subsequent inclusion in the FReM in force for the year in which the changes become applicable. The standards that are considered relevant to Scottish Government and the anticipated impact on the consolidated accounts are as follows:

IFRS 9 – Financial Instruments

This standard was issued in November 2014, and is effective from 1 January 2018. The adoption of this standard could change the classification and measurement of financial assets. The interpretation for the public sector is still under consideration and the impact has not been determined.

IFRS 16 – Leases

This standard will come into effect for accounting periods beginning after 1 January 2019, when the distinction between finance and operating leases is removed and all leases become “on balance sheet”. FRAB will consider if this standard is to be adapted or applied in full although it is anticipated that the principles of the standard will be applied.

2. Cash and Cash Equivalents

2016-17
£m
2015-16
£m
Government Banking Service 555 121
Commercial banks and cash in hand 70 13
At 31 March 625 134
At 1 April 134 123
Net change in cash and cash equivalent balances 491 11
At 31 March 625 134
The balance at 31 March comprises Note 2016-17
Net
£m
2015-16
Net
£m
Cash due to be paid to the Scottish Consolidated Fund 11 625 132
Consolidated Fund extra receipts received and due to be paid to SCF 11 - 2
At 31 March 625 134

3. Note to the Cash Flow Statement

3a. Adjustment to Operating Activities for Non-cash Transactions

2016-17
Net
£m
2015-16
Net
£m
Depreciation 463 483
Impairment/Write-backs 57 (2)
Total Capital Charges 520 481
Loss/(Profit) on disposal of property, plant and equipment (27) (10)
Change arising on revaluation of assets held for sale 1 -
Capitalised Interest - financial assets (45) (44)
Investment fair value adjustment 131 146
Income from donated asset additions (12) (13)
Auditors Fees 2 3
Unrealised exchange rate (gain)/loss - 14
NHS Lothian - transfer of assets - 1
Other non-cash items - (12)
Release of finance lease liability (1) -
NHS Forth Valley - family health services (5) -
NHS Highland - movement in year in LG pension costs (7) (4)
Total 557 562

3b. Analysis of Capital Charges by Portfolio

Portfolio Depreciation
£m
Impairment/
Write Backs
£m
2016-17
Total
£m
2015-16
Total
£m
Finance and the Constitution 4 - 4 3
Health and Sport 301 68 369 319
Education and Skills 1 - 1 5
Economy, Jobs and Fair Work 1 - 1 1
Justice 38 (11) 27 27
Communities, Social Security and Equalities - - - -
Environment, Climate Change and Land Reform 5 - 5 5
Culture, Tourism and External Affairs - - - 1
Rural Economy and Connectivity 96 - 96 105
Crown Office and Procurator Fiscal Service 4 1 5 5
Total Programme 450 58 508 471
Administration 13 (1) 12 10
Total Capital Charges 463 57 520 481

3c. Audit Fee

The consolidated audit fee for 2016-17 is £6m (Core Portfolios £1m). Part of the audit fee, including that of the Core Portfolios, is a notional charge, as noted above. Other entities within the consolidation boundary pay fees. The consolidated audit fee for 2015-16 year was £6m (Core Portfolios £1m). There were no additional charges in relation to non audit work undertaken by Audit Scotland.

3d. Movement in Working Capital

Note Opening
Balances
£m
Closing
Balances
£m
2016-17
Net
Movement
£m
2015-16
Net
Movement
£m
Inventories 8 102 106
Net Decrease/(Increase) (4) (2)
Receivables and other assets
Due within one year 10 1,332 1,229 103 (288)
Due after more than one year 10 47 48 (1) 7
Less: Capital included in PPE (10) (23) 13 (4)
Less: Capital included in investment - (10) 10 (34)
Less: Receivable from SCF 10 (289) (298) 9 215
Less: General Fund receivable included above 10 - (10) 10 3
NHS boards prior year adjustments (1) - 1 -
NHS Greater Glasgow and Clyde adjustment - (1) (1) -
NHS boards consolidation adjustment 410 662 (252) -
Total 1,489 1,597
Net Decrease/(Increase) (108) (101)
Payables and other liabilities
Due within one year 11 2,435 3,149 714 100
Due after more than one year 11 3,126 3,587 461 352
Less: Capital included in PPE (61) (93) (32) (149)
Less: Capital included in intangibles (4) (4) - (5)
Less: Capital included in Investment (12) (2) 10 (12)
Less: SCF corporate payable included in above 11 (132) (625) (493) (21)
Less: Payable to SCF 11 (2) - 2 (2)
Less: NLF payable included in above 11 (676) (652) 24 15
Less: PFI imputed leases 11 (2,326) (2,783) (457) (338)
Less: Financial Guarantees included in above - (21) (21) -
NHS boards consolidation adjustment 118 78 (40) -
Total 2,466 2,634
Net (Decrease)/Increase 168 (160)
Provisions (Current and non-current) 12a 717 948 231 (61)
Less: Capital provisions - - - 16
NHS boards consolidation adjustment 252 532 280 -
Total 969 1,480
Net (Decrease)/Increase 511 (45)
Total Net Movement 567 (148)

4. Income

4a. Operating income, analysed by classification and activity, is as follows:

Total Income
£m
Income Not Applied
£m
2016-17
Income Applied
£m
Restated
2015-16
Income Applied
£m
Administration Income:
Allowable within admin cost limit 11 - 11 11
Other:
Fees and charges (1) 6 - 6 7
Total Administration Income 17 - 17 18
Programme Income:
Finance and the Constitution 1 - 1 1
Health and Sport 6,336 - 6,336 1,277
Education and Skills 96 - 96 92
Economy, Jobs and Fair Work 35 - 35 105
Justice 42 26 16 17
Communities, Social Security & Equalities 8 - 8 15
Environment, Climate Change and Land Reform 105 - 105 105
Culture, Tourism and External Affairs - - - 30
Rural Economy and Connectivity 550 - 550 491
Crown Office and Procurator Fiscal Service 5 4 1 1
Total Programme Income 7,178 30 7,148 2,134
Total 7,195 30 7,165 2,152

(1) The SG complies with HM Treasury and Office of Public Sector cost allocation and charging requirements.

4b. Income Not Applied

Income not applied are amounts for surrender to the Scottish Consolidated Fund in accordance with the Scotland Act 1998 (Designation of Receipts) Order 2009.

The major items of income not applied are: Received
Cash
£m
Accrued
£m
2016-17
£m
2015-16
£m
Repayment of interest - - - -
Designated receipts - Fines, forfeitures and fixed penalties 23 - 23 28
Non-designated receipts - Proceeds of Crime and other 7 - 7 11
Total Income Not Applied 30 - 30 39

4c. Interest Receivable

All interest receivable is external to the consolidated portfolio accounting boundary. It is included within the Operating Outturn Statement as income applied, unless it is required to be surrendered to the Scottish Consolidated Fund.

Total
Income
£m
Income
Not
Applied
£m
2016-17
Income
Applied
£m
2015-16
Income
Total
£m
Programme Income:
Environment, Climate Change and Land Reform 80 - 80 84
Communities, Social Security and Equalities 1 - 1 -
Rural Economy and Connectivity 5 - 5 -
Total 86 - 86 84

4c. Interest Receivable

All interest receivable is external to the consolidated portfolio accounting boundary. It is included within the Operating Outturn Statement as income applied, unless it is required to be surrendered to the Scottish Consolidated Fund.

Total
Income
£m
2016-17
Income
Not
Applied
£m
2015-16
Income
Applied
£m
Total
Income
£m
Programme Income:
Environment, Climate Change and Land Reform 80 - 80 84
Communities, Social Security and Equalities 1 - 1 -
Rural Economy and Connectivity 5 - 5 -
Total 86 - 86 84

4d. Interest Payable

2016-17
Total
£m
2015-16
Total
£m
Finance lease charges allocated in the year 156 154
Other interest 2 1
Total 158 155

5a. Property, Plant and Equipment

Cost or valuation Land 1
£m
Buildings 2
£m
Dwellings
£m
Road
Network 3
£m
Transport
£m
Equipment
£m
ICT
Systems
£m
Fixtures
and fittings
£m
Assets under
Construction
£m
Total
£m
At 1 April 2016 508 6,666 671 20,778 200 1,179 405 89 2,138 32,634
Additions 1 45 1 12 10 51 20 1 967 1,108
Adjustments (2) - - (133) - (1) 1 - - (135)
Transfers 6 169 - 4 3 20 11 - (224) (11)
Transfers (to) assets classified held for sale (13) - - - - - - - - (13)
Disposals (12) (90) (4) - (7) (57) (23) (1) (10) (204)
Revaluations to Revaluation Reserve 1 (102) (27) 881 1 - - - - 754
Revaluations to Outturn Statement (8) (59) (4) - - - - - (1) (72)
At 31 March 2017 481 6,629 637 21,542 207 1,192 414 89 2,870 34,061
Depreciation
At 1 April 2016 - 356 19 3,654 116 796 315 61 - 5,317
Charged in year - 192 20 79 16 84 32 7 - 430
Adjustments - 2 (2) (8) - - (1) (3) - (12)
Transfers - - - - - - - - - -
Transfers (to) assets classified held for sale - (1) - - - - - - - (1)
Disposal - (100) (3) - (7) (55) (23) (1) - (189)
Revaluations to Revaluation Reserve - (175) (29) 155 1 - - - - (48)
Revaluations to Outturn Statement - 5 (4) - 1 - - - - 2
At 31 March 2017 - 279 1 3,880 127 825 323 64 - 5,499
Net book value at 31 March 2017 481 6,350 636 17,662 80 367 91 25 2,870 28,562
Net book value at 31 March 2016 508 6,310 652 17,124 84 383 90 28 2,138 27,317
Analysis of asset financing: Land 1
£m
Buildings 2
£m
Dwellings
£m
Road
Network 3
£m
Transport
£m
Equipment
£m
ICT
Systems
£m
Fixtures
and fittings
£m
Assets under
Construction
£m
Total
£m
Owned 474 4,587 554 15,276 73 350 88 23 1,947 23,372
Finance Leased - 38 - - 3 1 - - - 42
PFI included in Statement of Financial Position 7 1,675 82 2,386 - 1 1 1 916 5,069
Donated Asset - 50 - - 4 15 2 1 7 79
Donated Asset Movement Land 1
£m
Buildings 2
£m
Dwellings
£m
Road
Network 3
£m
Transport
£m
Equipment
£m
ICT
Systems
£m
Fixtures
and fittings
£m
Assets under
Construction
£m
Total
£m
Additions - 3 - - - 3 - - 6 12
Disposals - (1) - - - (3) - - - (4)

1 - (land holdings and land underlying buildings); 2 - (excluding dwellings); 3 - (including land)

5a. Property, Plant and Equipment (Cont.)

Prior Year

Cost or valuation Land 1
£m
Buildings 2
£m
Road
Dwellings
£m
Network 3
£m
Transport
£m
Equipment
£m
ICT
Systems
£m
Fixtures
and fittings
£m
Assets under
Construction
£m
Total
£m
At 1 April 2015 497 6,594 653 20,164 204 1,180 393 84 1,497 31,266
Additions - 21 1 14 4 38 14 1 920 1,013
Adjustments - - - (44) - - - - - (44)
Transfers 1 133 4 1,001 (1) 58 17 6 (277) 942
Transfers (to) assets classified held for sale 1 (7) (1) - - - - - - (7)
Disposals (7) (7) - - (5) (84) (16) (2) - (121)
Revaluations to Revaluation Reserve 19 (36) 16 (357) (1) - - - 1 (358)
Revaluations to Outturn Statement (3) (32) (2) - (1) (13) (3) - (3) (57)
At 31 March 2016 508 6,666 671 20,778 200 1,179 405 89 2,138 32,634
Depreciation
At 1 April 2015 - 357 45 3,167 108 808 304 56 - 4,845
Charged in year - 191 19 94 15 90 34 7 - 450
Adjustments - - - (6) - - - - - (6)
Transfers - (6) 1 475 (2) (6) (5) - - 457
Transfers (to) assets classified held for sale - (6) - - - - - - - (6)
Disposal - (7) - - (5) (84) (15) (2) - (113)
Revaluations to Revaluation Reserve - (164) (39) (76) - - - - - (279)
Revaluations to Outturn Statement - (9) (7) - - (12) (3) - - (31)
At 31 March 2016 - 356 19 3,654 116 796 315 61 - 5,317
Net book value 31 March 2016 508 6,310 652 17,124 84 383 90 28 2,138 27,317
Net book value 31 March 2015 497 6,237 608 16,997 96 372 89 28 1,497 26,421
Analysis of asset financing: Land 1
£m
Buildings 2
£m
Dwellings
£m
Road
Network 3
£m
Transport
£m
Equipment
£m
ICT
Systems
£m
Fixtures
and fittings
£m
Assets under
Construction
£m
Total
£m
Owned 488 4,689 570 14,773 75 382 90 28 1,627 22,722
Finance Leased - 41 - - 5 1 - - - 47
PFI included in Statement of Financial Position 20 1,579 82 2,351 - - - - 511 4,543
Donated Assets - 1 - - 4 - - - - 5
Net book value at 31 March 2015 508 6,310 652 17,124 84 383 90 28 2,138 27,317
Donated Asset Movement Land 1
£m
Buildings 2
£m
Dwellings
£m
Road
Network 3
£m
Transport
£m
Equipment
£m
ICT
Systems
£m
Fixtures
and fittings
£m
Assets under
Construction
£m
Total
£m
Additions - 1 - - - 6 1 - 5 13
Disposals - - - - - (3) - - - (3)

1 - (land holdings and land underlying buildings); 2 - (excluding dwellings); 3 - (including land)

5b. Property, Plant and Equipment - NHS non-current assets included within note 5a

Cost or valuation Land 1
£m
Buildings 2
£m
Dwellings
£m
Transport
£m
Equipment
£m
ICT
Systems
£m
Fixtures
and fittings
£m
Assets under
Construction
£m
Total
£m
At 1 April 2016 389 6,011 37 94 1,130 339 85 444 8,529
Additions 1 43 - 10 50 12 1 387 504
Transfers 6 169 - 3 20 9 - (207) -
Transfers (to) assets classified held for sale (15) - - - - - - - (15)
Disposals (12) (87) (4) (7) (55) (21) (1) (10) (197)
Revaluations to Revaluation Reserve 2 (88) (1) - - - - - (87)
Revaluations to Outturn Statement (9) (62) (3) - - (1) - (1) (76)
At 31 March 2017 362 5,986 29 100 1,145 338 85 613 8,658
Depreciation
At 1 April 2016 - 288 4 59 761 268 56 - 1,436
Charged in year - 169 1 11 80 24 6 - 291
Transfers (to) assets classified held for sale - (1) - - - - - - (1)
Disposal - (96) (3) (7) (54) (21) (1) - (182)
Revaluations to Revaluation Reserve - (155) (1) - - - - - (156)
Revaluations to Outturn Statement - 10 - 1 - - - - 11
At 31 March 2017 - 215 1 64 787 271 61 - 1,399
Net book value at 31 March 2017 362 5,771 28 36 358 67 24 613 7,259
Net book value at 31 March 2016 389 5,723 33 35 369 71 29 444 7,093
Analysis of asset financing: Land 1
£m
Buildings 2
£m
Dwellings
£m
Transport
£m
Equipment
£m
ICT
Systems
£m
Fixtures
and fittings
£m
Assets under
Construction
£m
Total
£m
Owned 354 4,062 28 36 340 65 23 387 5,295
Finance Leased - 27 - - 1 - - - 28
PFI included in Statement of Financial Position 7 1,632 - - 1 1 - 219 1,860
Donated Asset 1 50 - - 16 1 1 7 76
Net book value at 31 March 2017 362 5,771 28 36 358 67 24 613 7,259
Donated Asset Movement Land 1
£m
Buildings 2
£m
Dwellings
£m
Transport
£m
Equipment
£m
ICT
Systems
£m
Fixtures
and fittings
£m
Assets under
Construction
£m
Total
£m
Additions - 3 - - 3 - - 6 12
Disposals - (1) - - (3) - - - (4)

1 - (land holdings and land underlying buildings); 2 - (excluding dwellings);

5b. Property, Plant and Equipment - NHS non-current assets included within note 5a (Cont.)

Prior Year

Cost or valuation Land 1
£m
Buildings 2
£m
Dwellings
£m
Transport
£m
Equipment
£m
ICT
Systems
£m
Fixtures
and fittings
£m
Assets under
Construction
£m
Total
£m
At 1 April 2015 393 5,921 39 94 1,119 316 78 324 8,284
Additions - 18 - 3 36 8 1 374 440
Transfers - 155 - 2 65 21 8 (252) (1)
Transfers (to) assets classified held for sale 2 (7) (1) - - - - - (6)
Disposals (1) (6) - (4) (77) (3) (2) - (93)
Revaluations to Revaluation Reserve (2) (33) (1) - - - - 1 (35)
Revaluations to Outturn Statement (3) (37) - (1) (13) (3) - (3) (60)
At 31 March 2016 389 6,011 37 94 1,130 339 85 444 8,529
Depreciation
At 1 April 2015 - 274 4 53 764 248 52 - 1,395
Charged in year - 168 1 10 85 26 7 - 297
Transfers (to) assets classified held for sale - (6) - - - - - - (6)
Disposal - (6) - (4) (76) (3) (2) - (91)
Revaluations to Revaluation Reserve - (136) (1) - - - - - (137)
Revaluation to Outturn Statement - (6) - - (12) (3) (1) - (22)
At 31 March 2016 - 288 4 59 761 268 56 - 1,436
Net book value 31 March 2016 389 5,723 33 35 369 71 29 444 7,093
Net book value 31 March 2015 393 5,647 35 41 355 68 26 324 6,889
Analysis of asset financing: Land 1
£m
Buildings 2
£m
Dwellings
£m
Transport
£m
Equipment
£m
ICT
Systems
£m
Fixtures
and fittings
£m
Assets under
Construction
£m
Total
£m
Owned 369 4,160 33 35 368 71 29 289 5,354
Finance Leased - 28 - - 1 - - - 29
PFI included in Statement of Financial Position 20 1,535 - - - - - 155 1,710
Net book value at 31 March 2015 389 5,723 33 35 369 71 29 444 7,093
Donated Asset Movement Land 1
£m
Buildings 2
£m
Dwellings
£m
Transport
£m
Equipment
£m
ICT
Systems
£m
Fixtures
and fittings
£m
Assets under
Construction
£m
Total
£m
Additions - 1 - - 6 - - 5 12
Disposals - - - - (3) - - - (3)

1 - (land holdings and land underlying buildings); 2 - (excluding dwellings);

5c. Non Current Asset Disclosures

2016-17
£m
2015-16
£m
Net book value of Property, Plant and Equipment 28,562 27,317
Total value of assets held under:
Finance Leases 42 47
PFI and PPP Contracts 5,069 4,543
Total 5,111 4,590
Total depreciation charged in respect of assets held under:
Finance leases 5 5
PFI and PPP contracts - 962
Total 5 967

As part of the 5-year rolling programme, 6 properties including St Andrew's House and Old Governor's House underwent a formal inspection and revaluation on the basis of Existing Use Value, as at 31 March 2017. Valuations were carried out by the VOA. These valuations were carried out in accordance with the Valuation Professional Standards 2014 (the Red Book) published by the Royal Institution of Chartered Surveyors.

In addition to the land and buildings recorded in the core portfolios’ accounts, the consolidated accounts reflect some land and buildings which are specialised operational properties and have been valued at their depreciated replacement cost. As noted in the relevant underlying agency accounts, the open market value of these properties would be significantly lower.

The national NHS estate revaluation scheme came to an end at 31 March 2005. Individual boards have instituted their own scachemes, details of which are available in the various NHS Board accounts. These schemes operate in accordance with Scottish Government policy on revaluation as set out in Note 1.2 to these accounts.

6. Intangible Assets

Cost or Valuation EC Emission
Rights
£m
Software
Licenses
£m
Information
Technology
Software
£m
Websites
that Deliver
a Service
£m
Assets
Under
Development
£m
Total
£m
Balance at 1 April 2016 - 162 277 1 15 455
Additions - 5 6 - 35 46
Disposals - (3) (17) - - (20)
Adjustments - (1) - - - (1)
Transfers - 1 37 - (38) -
At 31 March 2017 - 164 303 1 12 480
Amortisation
Balance at 1 April 2016 - 136 170 1 - 307
Charged in year - 8 25 - - 33
Disposals - (3) (16) - - (19)
At 31 March 2017 - 141 179 1 - 321
Net book value at 31 March 2017 - 23 124 - 12 159
Net book value at 31 March 2016 - 26 107 - 15 148

Prior Year

Cost or Valuation EC Emission
Rights
£m
Software
Licenses
£m
Information
Technology
Software
£m
Websites
that Deliver
a Service
£m
Assets
Under
Development
£m
Total
£m
Balance at 1 April 2015 - 162 234 1 23 420
Additions - 5 5 - 36 46
Donations - - - - - -
Disposals - (4) (6) - - (10)
Transfers - (1) 45 - (44) -
Impairments - - (1) - - (1)
At 31 March 2016 - 162 277 1 15 454
Amortisation
Balance at 1 April 2015 - 129 155 1 - 285
Charged in year - 11 22 - - 33
Disposals - (4) (6) - - (10)
Revaluations - - (1) - - (1)
At 31 March 2016 - 136 170 1 - 307
Net book value at 31 March 2016 - 26 107 - 15 147
Net book value at 31 March 2015 - 33 79 - 23 135

7. Assets Classified as Held for Sale

The following assets have been presented for sale by the Scottish Government. The completion date for sale is expected to be within 12 months. Assets classified as held for sale are measured at the lower of their carrying amount immediately prior to their classification as held for sale and their fair value less costs to sell.

Assets classified as held for sale are not subject to depreciation or amortisation.

Property, Plant
and Equipment
£m
Intangible
Assets
£m
Investment
Assets
£m
Total
£m
At 1 April 2016 29 - - 29
Transfers from Non-Current Assets 13 - - 13
Change arising on revaluation (1) - - (1)
Disposals (16) - - (16)
At 31 March 2017 25 - - 25
Prior year
At 1 April 2015 42 - - 42
Transfers from Non-Current Assets 1 - - 1
Change arising on revaluation (4) - - (4)
Disposals (10) - - (10)
At 31 March 2016 29 - - 29

8. Inventories

2016-17
£m
2015-16
£m
NHS inventories 103 100
Other inventories 3 2
Total 106 102

9. Financial Assets

9a. Non-Current Financial Assets

Interests in
Nationalised
Industries
and Limited
Companies
£m
Voted
Loans
£m
NLF
Loans
£m
Student
Loans
£m
Housing
Association
Loans
£m
Shared
Equity
Housing
£m
Other
Housing
Loans
£m
Other
Funds
£m
Total
£m
Balance at 1 April 2016 25 2,476 652 2,778 59 627 34 183 6,834
Add element reported within current assets - 308 24 130 - - - 54 516
Advances and acquisitions:
Acquisitions - - - - - - - 21 21
Cash advances 1 372 - 577 - 137 24 466 1,577
Fair value adjustment - - - (171) - 14 (12) (9) (178)
Capitalised interest - - - 43 - - - 2 45
Repayments and disposals (1) (309) (24) (143) - (29) (2) (251) (759)
Unwinding of discounted cash flow - - - 43 2 - - - 45
Balance at 31 March 2017 25 2,847 652 3,257 61 749 44 466 8,101
Loans repayable within 12 months transferred to current assets - (81) (30) (135) - - - (187) (433)
Balance at 31 March 2017 25 2,766 622 3,122 61 749 44 279 7,668

Investments have been measured and presented in accordance with IAS 32, IAS 39, IFRS 13 and IFRS 7 as modified by the Government Financial Reporting Manual (FReM). See also note 1.7

Scottish Water National Loans Fund repayments of £24m have not been included in the Environment, Climate Change and Land Reform portfolio capital outturn.

Prior Year

Interests in
Nationalised
Industries
and Limited
Companies
Voted
Loans
NLF
Loans
Restated*
Student
Loans
Housing
Association
Loans
Shared
Equity
Housing
Other
Housing
Loans
Other
Funds
Total
Balance at 1 April 2015 24 2,419 676 2,451 58 450 27 127 6,232
Add element reported within current assets - 276 14 130 - - - - 420
Advances and acquisitions:
Cash advances 1 365 - 549 - 200 13 119 1,247
Fair value adjustment - - - (170) - (8) (5) (9) (192)
Capitalised interest - - - 43 - - - 1 44
Adjustments - - - (1) - - - - (1)
Repayments and disposals - (276) (14) (130) - (15) (1) (1) (437)
Revaluations to revaluation reserve - - - 46 1 - - - 47
Balance at 31 March 2016 25 2,784 676 2,908 59 627 34 237 7,350
Loans repayable within 12 months transferred to current assets - (308) (24) (130) - - - (54) (516)
Balance at 31 March 2016 25 2,476 652 2,778 59 627 34 183 6,834

Investments have been measured and presented in accordance with IAS 32, IAS 39, IFRS 13 and IFRS 7 as modified by the Government Financial Reporting Manual (FReM). See also note 1.7

Scottish Water National Loans Fund repayments of £14m have not been included in the Environment, Climate Change and Land Reform portfolio capital outturn.

9b. Nationalised Industries

As at 31 March 2017, the Scottish Ministers are the sole shareholder in Caledonian Maritime Assets Limited, David MacBrayne Limited, Highlands and Islands Airports Limited and Prestwick Holdco Limited. The Scottish Ministers hold the following investments:

Caledonian Maritime Assets Limited 1,500,000 ordinary shares of £10 each
David MacBrayne Limited 5,500,002 ordinary shares of £1 each
Highlands and Islands Airport Limited 50,000 ordinary shares of £1 each
TS Prestwick Holdco Limited 1 ordinary share of £1

These organisations are operated and managed independently of the Scottish Government, and, therefore, do not fall within the consolidated portfolio accounting boundary. The companies each publish an individual annual report and accounts. The net assets and results of the aforementioned companies are summarised in the table below.

Caledonian Maritime Assets Ltd
£m
David MacBrayne Ltd
£m
Highlands and Islands Airports Ltd
£m
Prestwick
Holdco
Ltd
£m
Net Assets/(Liabilities) as at 31 March 2017 57 19 (28) (27)
Turnover 36 199 22 12
Profit/(Loss) for the financial year 5 5 (1) (9)

These results are in draft as their accounts are yet to be published.

Caledonian Maritime Assets Ltd

Following a restructure of the Caledonian MacBrayne group in 2006, Caledonian MacBrayne Limited became known as Caledonian Maritime Assets Limited (CMAL) and CalMac Ferries Limited (CFL) was incorporated. CFL took over operation of the Clyde & Hebrides Ferry Services as successor to Caledonian MacBrayne Limited. CMAL retained ownership of all vessels and ports, which it leases to the operator of the Clyde & Hebrides Ferry services (currently CFL). CMAL remains wholly owned by Scottish Ministers.

David MacBrayne Ltd

Scottish Ministers previously owned 2 shares of £1 in a dormant company, David MacBrayne Limited. In the course of the restructuring of the Caledonian MacBrayne group in 2006, Scottish Ministers’ shareholding in David MacBrayne Limited was increased by 5,500,000 shares to 5,500,002 ordinary shares of £1. David MacBrayne Limited is now the holding company for the ferry operating companies CalMac Ferries Limited, Argyll Ferries Limited and NorthLink Ferries Limited and for the dormant companies Cowal Ferries Limited and Rathlin Ferries Limited.

Highlands and Islands Airports Ltd (HIAL)

The Scottish Ministers are the sole shareholders in HIAL. The company's purpose is to maintain the safe operation of its airports to support economic and social development in the Highland and Islands. HIAL currently operates 11 airports; 10 in the Highlands and Islands and also Dundee, which it assumed responsibility for in December 2007 and now operates via a wholly owned subsidiary company, Dundee Airport Limited.

TS Prestwick Holdco Limited

In 2013 Transport Scotland purchased the entire share capital of Prestwick Aviation Holdings Limited, the holding company of subsidiaries who own and operate Glasgow Prestwick Airport, through a company set up for this specific purpose – TS Prestwick Holdco Limited. Subsequently Transport Scotland advanced loan funding to the group to cover the cash deficit arising from its operating deficit and capital expenditure.

9c. Other Interests

The loans issued and reported as Financial Assets within these accounts have been valued reflecting current market expectations regarding discounted future cash flows. Under IFRS 13, these valuations have been classed as level 3 unobservable inputs, as there is no active market for the investments.

Student Loan Company (SLC)

The Student Loan Company is a non-departmental public body which administers the payment and collection of loans to UK students. When it was set up in 1990, it was wholly owned by the Secretary of State for Education and Skills (now the Department for Business, Innovation and Skills) and the Secretary of State for Scotland. From 1 July 1999, the student support function was transferred to the Scottish Ministers with respect to students ordinarily resident in Scotland. Following a restructuring the Scottish Ministers hold 1 share with a nominal value of £0.50 (5% of the equity) in the SLC.

Scottish Futures Trust Ltd (SFT)

The Scottish Futures Trust was set up in September 2008 to work collaboratively across the public sector to secure improved value for money in infrastructure procurement, and is working jointly with local authorities, NHS Boards and other public bodies to deliver benefits in cost effective asset procurement and management. The SFT is a limited company owned by the Scottish Ministers with share capital of £100, £2 of which has been issued and is held by the Scottish Ministers.

Scottish Health Innovations Ltd

Scottish Health Innovations Ltd is a company that works in partnership with NHS Scotland to protect and develop healthcare innovations. The company is limited by guarantee with three members, the Scottish Ministers, the National Waiting Times Centre, and NHS Tayside.

Voted Loans

The Scottish Ministers have provided loans from voted provision to Caledonian Maritime Assets Limited of £133m to be used for the construction of new shipping; £6m to crofters for building purposes; and £2,708m to Scottish Water for their capital investment programmes.

National Loans Fund

Prior to 1 July 1999, the Secretary of State lent money to Scottish Enterprise, Scottish Homes and the three Water Authorities (now Scottish Water), out of the National Loans Fund. At 1 July 1999, the right to the sums outstanding was transferred to the Scottish Ministers who must pay the repayments and interest to the Secretary of State for Scotland via the Scottish Consolidated Fund. The loans to Scottish Enterprise and Scottish Homes have since been repaid. The NLF loans remaining are with Scottish Water.

Scottish Water's 2016-17 annual report and accounts can be found at http://www.scottishwater.co.uk/About-Us/Publications/Annual-Reports/Annual-Report-1617

Student Loans

Loans made under the terms of the student loans scheme are administered by the Student Loans Company Limited, a company owned jointly by the Scottish Ministers and the Department for Business, Innovation and Skills. These loans are accounted for on the basis of the loan balances of students domiciled in Scotland and adjusted for fair value and impairment.

9c. Other Interests (Cont.)

Housing Association Loans

Housing Association loans are made up of repayment loans and deferred loans. The repayment loans are secured loans to registered Housing Associations and are repayable on an annuity basis, the deferred loans relate to the transfer of housing stock.

Shared Equity and Other Housing Loans

The Other Housing Loans include Deferred Financial Commitment Loans. The fair value estimation for housing loans is based on the underlying property valuation using the Nationwide Pricing Index method.

Other Funds

The Scottish Government provides funding to three organisations, Salix Finance Limited, Social Investment Scotland (SIS) and Energy Saving Trust (EST), to deliver programmes which include the issue of loans. Salix provides loans (£10m) to the public sector to improve their energy efficiency and reduce their carbon emissions. SIS administer and manage the Scottish Investment Fund (£17m) on behalf of the Scottish Government, the fund was set up to provide loans to build capacity, capability and financial sustainability in the third sector. EST administer and manage funds on behalf of the Scottish Government which provide loans (£62m) to save energy and reduce carbon dioxide emissions.

The Scottish Government, and the European Regional Development Funds, have established the Scottish Partnership for Regeneration in Urban Centres (SPRUCE) Fund. This fund is a JESSICA (Joint Venture Support for Sustainable Investment in City Areas) Urban Development Fund (£41m) that helps fund regeneration and energy efficient projects within targeted areas of Scotland.

During the course of 2015-16, a Scottish Government national loans scheme was put in place to provide support to the farming economy. In 2016-17, advances of £370m were made with repayments of £239m; 80% of loans advanced in 2015-16 were repaid in 2016-17.

Over the past 3 years, the Scottish Government has provided £8.4m to the Scottish Futures Trust for use in their oversight of the Non Profit Distributing (NPD) programme. SFT’s pipeline of NPD projects is delivered through two channels – very large projects such as major roads or large hospitals, procured directly by the public sector organisations through the NPD programme, with smaller Design, Build, Finance and Maintain (DBFM) projects delivered via the Scotland-wide hub initiative in partnership with local authorities, health boards and other public bodies. The funds are used to support subordinated debt investment in individual hub DBFM projects at a commercial rate of return. Interest on this investment contributes to the funding of on-going SFT activity.

The Scottish Government has invested £29.3m in Charitable Bonds to be repaid in 2025-26 with housing associations for the development of new affordable homes. A balance of £6.7m will be donated to one or more charitable Housing Associations by the bond issuer for the provision of new social housing, funded by the Scottish Government foregoing interest on the bond.

In 2016-17, the Scottish Government entered into a guarantee contract in respect of a power purchase agreement between the hydro plant and aluminium smelter at Lochaber (owned by SIMEC and Liberty House respectively). The total discounted value of premiums due to the Scottish Government in respect of this guarantee is £21.4m, and is included within the Other Funds balance.

10. Receivables and Other Assets

Amounts falling due within one year 2016-17
£m
2015-16
£m
Trade receivables 54 62
VAT 58 68
Deposits and advances - -
Other receivables 71 89
Prepayments and accrued income 325 294
Accrued income relating to EU funding 393 499
Interest receivable 30 28
Balances receivable from SCF 298 289
Corporate balance with the SCF - 3
Balance as at 31 March 1,229 1,332
Amounts falling due in more than one year 2016-17
£m
2015-16
£m
Other receivables 17 3
Prepayments and accrued income 31 44
Balance as at 31 March 48 47
Total balance as at 31 March 1,277 1,379

Included within the total is interest receivable on NLF loans of £9m (2015-16: £9m) that will be paid to the Scottish Consolidated Fund as income not applied once the debt has been settled.

Trade Receivables are shown net of impairments as follows: 2016-17
£m
2015-16
£m
At 1 April 11 9
Charge for the year 5 6
Unused amount released - (1)
Utilised during the year (5) (3)
At 31 March 11 11

11. Payables and Other Liabilities

Amounts falling due within one year 2016-17
£m
Restated
2015-16
£m
Trade payables 444 471
Other taxation and social security 131 118
Superannuation payable 97 95
Other payables 212 103
Deferred income and accruals 1,545 1,430
Accrued interest due on NLF loans 9 9
Finance leases 2 3
PFI imputed finance leases 51 44
PFI deferred residual interest 1 1
Corporate balance with the SCF 625 132
Balances payable to the SCF - 2
3,117 2,408
Other financial liabilities:
Current instalments on NLF loans 30 24
Bank overdraft - 3
Financial guarantees 2 -
Other financial liabilities - -
32 27
Total current liabilities 3,149 2,435
Amounts falling due in more than one year 2016-17
£m
2015-16
£m
Other payables 163 104
Deferred income and accruals 25 61
Finance leases 25 26
PFI imputed finance leases 2,732 2,282
Lease adjustment for rent free period 1 1
2,946 2,474
Other financial liabilities
Instalments on NLF loans 622 652
Financial guarantees 19 -
641 652
Total non-current liabilities 3,587 3,126

12a. Provisions for Liabilities and Charges

Student
Loans Sale
Subsidy
£m
Early
Departure
Costs
£m
NHS Clinical
and Medical
Negligence
£m
SPS
Prisoner
Compensation
£m
Other
Provisions
£m
Total
2016-17
£m
Balance as at 1 April 2016 42 141 256 - 93 532
Add: element reported as due within one year - 13 107 3 62 185
Balance as at 1 April 2016 42 154 363 3 155 717
Provided for in year - 18 330 1 24 373
Provisions not required written back - (4) (56) - (4) (64)
Provisions utilised in year (2) (19) (25) (1) (48) (95)
Discount amortised 2 13 - - 2 17
Balance as at 31 March 2017 42 162 612 3 129 948
Payable within one year (2) (13) (174) (3) (52) (244)
Balance as at 31 March 2017 40 149 438 - 77 704
Analysis of expected timing of any resulting outflows of economic benefits:
Payable in 1 year 2 13 174 3 52 244
Payable between 2 - 5 yrs 12 66 338 - 56 472
Payable between 6 - 10 yrs 28 39 15 - 21 103
Thereafter - 44 85 - - 129
Balance as at 31 March 2017 42 162 612 3 129 948

Prior Year

Student
Loans Sale
Subsidy
£m
Early
Departure
Costs
£m
NHS Clinical
and Medical
Negligence
£m
SPS
Prisoner
Compensation
£m
Other
Provisions
£m
Total
2015-16
£m
Balance as at 1 April 2015 44 141 118 - 108 411
Add: element reported as due within one year - 14 184 2 167 367
Balance as at 1 April 2015 44 155 302 2 275 778
Provided for in year - 15 144 2 39 200
Provisions not required written back (1) (3) (42) (1) (68) (115)
Provisions utilised in year (2) (13) (41) - (90) (146)
Discount amortised 1 - - - (1) -
Balance as at 31 March 2016 42 154 363 3 155 717
Payable within one year - (13) (107) (3) (62) (185)
Balance as at 31 March 2016 42 141 256 - 93 532
Analysis of expected timing of any resulting outflows of economic benefits:
Payable in 1 year - 13 107 3 62 185
Payable between 2 - 5 yrs 12 68 171 - 82 333
Payable between 6 - 10 yrs 30 33 13 - 11 87
Thereafter - 40 72 - - 112
Balance as at 31 March 2016 42 154 363 3 155 717

12b. Provisions for Liabilities and Charges

Student Loans

"The debt sale subsidy is the additional cost to the Scottish Government of government subsidies contractually due to the purchaser of the debts, beyond the costs that the government would have incurred had the debts remained in the public sector. The debt sale subsidy provision is estimated to meet the cost of this subsidy over the expected life of loans sold. The utilisation of this provision is dependent on the timing of the repayment of the loans which is uncertain."

NHS Clinical and Medical Negligence

"Included within provisions is an amount of £612m (2015-16: £363m) which relates to clinical and medical negligence costs. Following the accounting review undertaken in 2014-15, on consolidation, the Scottish Government’s CNORIS provision represents the national liability and the Boards’ accounting for individual claims is removed.
In 2016-17 £330m (2015-16: £144m) of estimated settlement value of medical and clinical negligence claims were added to the provision. This includes an increase of £160 million which arises from the change to the discount rate in relation to damages for personal injury. The change to the discount rate in Scotland is applicable from 28 March 2017 and follows the same approach taken in England and Wales.
In 2016-17 £25m (2015-16: £41m) in claims were settled and £56m (2015-16: £42m) was written back as no longer required. "

Early Departure Costs

This provision is based on an estimate of exposure to potential payments in respect of employees leaving service prior to reaching normal retirement age.

Prisoner Compensation

This provision is based on an estimate of exposure to potential prisoner compensation claims; further information can be found within the Scottish Prison Service annual accounts at www.sps.gov.uk.

Other Provisions - NHS Balances

Other provisions include NHS balances of £19m (2015-16: £38m). The NHS balances relate to various Health Boards and Bodies and include: provision for non-medical legal liabilities, employer and third party costs, provision for future development costs, dilapidations, and a variety of other smaller provisions.

Other Provisions - Transport Scotland Balances

"Also included within other provisions are Transport Scotland balances of £84.02m (2015-16: £83.02m) including £73.52m relating to land & property acquisition (2015-16: £72.14m), £4.95m relating to major projects (15-16: £5.27m), and £5.54m relating to other retirement benefit costs (2015-16: £5.61m).

The land & property acquisition provisions relate primarily to estimates made of the likely compensation payable in respect of planning blight, discretionary and compulsory acquisition of property from owners arising from physical construction of a road or rail scheme. When land is acquired by CPO it is not known when compensation settlements will be made. A provision for the estimated total cost of land acquired is created when it is expected that a general vesting declaration will be published in the near future. It may take several years from the announcement of a scheme to completion and final settlement of all liabilities. The estimates provided by the Valuation Office Agency are reviewed bi-annually.

Major projects provisions relate to compensation claims made in respect of work done under on projects that have not yet fully settled

Transport Scotland agreed to meet the additional cost of benefits payable to specific employees who retired early until they reach the age of 60 at which point the liability is assumed by the PCSPS. The cost of these benefits is provided in full when the employee retires."

Other Provisions - European funded schemes

"European Structural Funds Programmes - In 2015-16 a provision of £14m was made in recognition of the anticipated cost of self corrections relating to closed schemes (2007-13). This provision has now been utilised, and a new provision of £1m has been created in anticipation of exchange rate fluctuations between the euro and sterling.
CAP schemes - Provision (£3.5m) has been made in anticipation of exchange rate fluctuations between sterling and the euro, and to recognise the estimated costs of adjustments to EU-related income and expenditure that may arise in future years (£2.5m)."

13. Capital Commitments

Property, Plant and Equipment 2016-17
£m
2015-16
£m
Contracted capital commitments for which no provision has been made 2,326 1,001
Total 2,326 1,001
Intangible Assets
Contracted capital commitments for which no provision has been made 21 19
Total 21 19
Total Commitments 2,347 1,020

2016-17 Property, plant and equipment commitments include future payments of £2,133m (2015-16: £771m) in respect of major road schemes currently under construction, and a number of capital projects being undertaken by NHS Boards £193m (2015-16: £230m)

2016-17 Intangible asset commitments include the development of a replacement IT system for Marine Scotland's vessels of £1.6m (2015-16: £1.7m) (90% reimbursement expected from the European Union), the development of a new pensions administration system of £1.6m (2015-16: £1.7m), and £13m (2015-16: £15m) to complete the CAP Futures project.

14. Commitments Under Leases

14a. Operating Leases

Total future minimum lease payments under operating leases are given in the tables below for each of the following periods:

Obligations under operating leases comprise:

2016-17
£m
2015-16
£m
Land
Within one year 1 1
Between two and five years (inclusive) 3 3
After five years 6 6
Total 10 10
Buildings
Within one year 37 36
Between two and five years (inclusive) 116 113
After five years 148 115
Total 301 264
Other Commitments
Within one year 20 21
Between two and five years (inclusive) 30 33
After five years - -
Total 50 54

14b. Finance Leases

Total future minimum lease payments under finance leases are given in the tables below for each of the following periods:

Obligations under finance leases comprise:

2016-17
£m
2015-16
£m
Buildings
Within one year 6 6
Between two and five years (inclusive) 19 20
After five years 65 70
Total 90 96
Less the interest element (65) (68)
Total 25 28
Other Commitments
Within one year - -
Between two and five years (inclusive) 1 1
After five years - 1
Total 1 2
Less the interest element - (1)
Total 1 1

This total net obligation under finance leases is analysed in Note 11.

14c. Commitments Under Leases

Within the Scottish Government core estate, the main leasing arrangements are entered into on the basis of Market Rent, often incorporating a rent-free period. Subsequent rent reviews are calculated on the basis of (i) the market rental value or (ii) the passing rental if the Market Rent is less than the passing rental at the time of the rent review (i.e. upwards only). The Scottish Government have some properties where the rent at review is calculated by reference to the Retail Prices Index or other index (often also upwards only).

The ground leases covering the land at Saughton House and the Logie Weir Fish Counter are the only properties which have terms of renewal. All other leases have no terms of renewal or purchase options.

15. Other Financial Commitments

15a. Other Commitments

The payments to which the Scottish Government is committed analysed by the period during which the commitment expires are as follows:

2016-17
£m
2015-16
£m
Payable in 1 year 741 760
Payable between 2 - 5 years 3,994 3,094
Payable in more than 5 years - -
Total 4,735 3,854

Other financial commitments payable within one year include £425m (2015-16: £464m) as a committed income stream to Network Rail in accordance with the Deed of Grant, £291m (2015-16: £247m) to Abellio ScotRail and £23m (2015-16: £19m) to Serco Caledonian Sleeper under the Franchise Agreements.

Commitments payable within 2 to 5 years include £2,062m (2015-16: £1,585m) to Network Rail, £1,751m (2015-16: £1,449m) to Abellio, £106m (2015-16: £86m) to Serco and £57m (2015-16: £63m) to fund Scotland's successful bid to co-host the European Sports Championships in 2018.

15b. Guarantees, Indemnities and Letters of Comfort

The Scottish Government entered into the following guarantees, indemnities or provided letters of comfort. None of these is a contingent liability within the meaning of IAS 37, Provisions, Contingent Liabilities and Contingent Assets, since the likelihood of a transfer of economic benefit in settlement is too remote. They therefore fall to be measured following the requirements of IAS 39, Financial Instruments: Recognition and Measurement. They are included for parliamentary reporting and accountability purposes. A number of these arrangements cannot reliably be quantified; where values can be determined these have been provided.

Guarantees

Education and Skills
Guarantees to Local Government Pension Funds in relation to the admission of Children's Hearing Scotland and the Scotland's Rural College.

Communities, Social Security and Equalities
Guarantee of a £0.15m (2015-16: £0.15m) loan between Social Investment Scotland and Glencraft (Aberdeen) Ltd following the restructuring of the business, and guarantees to the Lothian Pension Fund in relation to the admission of the Scottish Homes Pension Fund and Scottish Futures Trust.

Finance and the Constitution
Guarantee to Highlands and Islands Enterprise in relation to their pension scheme.

Rural Economy and Connectivity
The Scottish Government has underwritten the Abellio ScotRail and Serco Caledonian Sleeper pension funds, in line with guarantees provided to other train operators by the Department for Transport.

Guarantee to Strathclyde Pension Fund in relation to admission of Scottish Canals.

Section 54 guarantees issued as part of the rail rolling stock procurement process.

Economy, Jobs and Fair Work
Guarantee in respect of a power purchase agreement between the hydro plant and aluminium smelter at Lochaber (owned by SIMEC and Liberty House respectively) valued at £21.4m (2015-16: nil). The guarantee would be triggered in the event that Liberty House does not make agreed payments to the hydro plant.

Justice
Guarantee to Lothian Pension Fund in relation to the admission of The Scottish Legal Complaints Commission.

15b. Guarantees, Indemnities and Letters of Comfort (Cont.)

Indemnities

Culture, Tourism and External Affairs
At the beginning of the year there was an existing indemnity relating to objects lent under the National Heritage Act 1980 and the National Heritage (Scotland) Act 1985. The year-end balance depends on new acquisitions and the number of exhibitions that these pieces are included in during the financial year, and at 31 March this was £1,165m (2015-16: £1,111m).

Existing indemnity for local museums and galleries dependent on the number of new acquisitions and number of exhibitions that these pieces were included in during the financial year, valued at £22.198m (2015-16: £15.565m) at 31 March.

Communities, Social Security and Equalities
Mortgage lenders held indemnities by Scottish Homes for £0.516m (2015-16: £0.516m) at 31 March.

Rural Economy and Connectivity
Existing indemnity related to operating agreements in respect of the ScotRail and Caledonian Sleeper Franchise Agreements.

Indemnity clause in roads contracts to compensate Network Rail for any damage or loss of access.

Liability agreement for any issues caused by the Glasgow Airport Rail Link ground investigation work for the next 8 years.

Economy, Jobs and Fair Work
Indemnity cover of up to a total of £0.4m (2015-16: £0.4m) to cover legal costs incurred by the Carbon Trust or Salix in the novation of loans to another party.

Letters of Comfort
None

16. Commitments under Service Concession Arrangements

Non-Profit Distributing (NPD), Public Private Partnerships (PPP) and Private Finance Initiative (PFI) transactions are accounted for in accordance with IFRIC 12, Service Concession Arrangements which sets out how NPD/PPP/PFI transactions are to be accounted for in the private sector.

A transaction is deemed to be ‘on balance sheet’ (i.e. included in Statement of Financial Position) when:

- the grantor controls or regulates what services the operator must provide with the infrastructure, to whom it must provide them and at what price; and
- the grantor controls – through ownership, beneficial entitlement or otherwise – any significant residual interest in the infrastructure at the end of the term of the agreement.

Where the transaction is deemed to be ‘on balance sheet’, the substance of that contract is that the Scottish Government has a finance lease, with the asset being recognised as a fixed asset in the Scottish Government’s Statement of Financial Position.

16a. Commitments Under Service Concession Arrangements - Included in Statement of Financial Position

Description of Schemes

Health Bodies:

Ayrshire and Arran Woodland View (formerly North Ayrshire Community Hospital) - sharing a site in Irvine with the Ayrshire Central Hospital. The building is a Non- Profit Distributing model (NPD) and reached practical completion and handover on the 1st April 2016. The building provides a Mental Health and Frail Elderly inpatient facility for Ayrshire. The 25 year contract period commenecd on the 1st April 2016 and will be completed on the 31st March 2041. At the end of the contract period the building will revert to NHS ownership.

Ayrshire and Arran East Ayrshire Community Hospital - situated in Cumnock, the facility provides Inpatient beds, Elderly Mental Ill, and GP Acute; there are day facilities for Frail Elderly and Elderly Mental Ill and Outpatient Clinics (including Allied Health Professions). At the end of the 25 year contract period, negotiations will have been undertaken to determine future options available for the site.

Ayrshire and Arran Ayrshire Maternity Unit - adjoined to University Crosshouse Hospital in Kilmarnock, the facility provides Area Midwifery services for in-patients, day patients, and out-patients. The 30 year contract commenced in July 2006 and will be completed in July 2036. At the end of this period, the building is available for transfer to the NHS at no additional cost.

Dumfries and Galloway Maternity and Day Surgery Unit - situated in Dumfries, is included on the balance sheet (land and buildings) at a valuation of £10.606m as at 31 March 2017 (2015-16 - £10.322m). The premises opened in January 2002 and the contract ends in January 2032. Under IFRIC 12 the asset is treated as an asset of the Board and included in the Board's accounts as a fixed asset. The liability to pay for the property is in substance a finance lease obligation. Contractual payments therefore comprise two elements; imputed finance lease charges and service charges.

Dumfries and Galloway (New) District General Hospital – The Board are in the construction phase of an NPD project to deliver the new District General Hospital replacing the existing Dumfries and Galloway Royal Infirmary. To date, a total of £186.085m of a £212.6m total construction cost has been added to Assets under Construction. The new hospital is due to open during 2017-18. The NPD (Non-Profit Distributing) funding model was developed and introduced as an alternative to, and has since superseded, the traditional PFI (Private Finance Initiative) model in Scotland.

Fife St Andrews Community Hospital and Health Centre - Contract started 31st July 2009. Contract ends 30th July 2039. In accordance with HM Treasury application of IFRIC 12 principles, the property is a Non current asset of NHS Fife Board and the liability to pay for the property is, in substance, a finance lease obligation.

Fife Victoria Hospital - Contract started 28th October 2011. Contract ends 27th October 2041. In accordance with HM Treasury application of IFRIC 12 principles, the property is a Non current asset of NHS Fife Board and the liability to pay for the property is, in substance, a finance lease obligation.

Forth Valley Clackmannanshire Community Healthcare Centre (CCHC)CCHC is a service concession for the development and right of use of Community Health Facilities (incorporating a Health Centre Building including accommodation for 3 GP practices, Associated Clinical Services and accomodation for local Health and Social Work Teams, a Mental Health Resource Centre, a Day Therapy Unit and 45 Inpatient Beds) and provision of services, including maintenance of the facility, under a Project Agreement. Certain facilities management services such as cleaning will be provided by the Board. Services Commencement date was 18th May 2009 and the contract term ends in July 2037. The payment mechanism is incorporated in the Project Agreement and subject to annual adjustment for inflation in line with the Retail Price Index (RPI) and risk sharing arrangements around usage and price of utilities (gas, electricty and fuel oil). At the end of the agreement the asset will revert to the ownership of the Board. There were no significant changes to the contract in the year.

16a. Commitments Under Service Concession Arrangements - Included in Statement of Financial Position (Cont.)

Forth Valley Royal Hospital (FVRH) - Forth Valley Royal Hospital (FVRH) is a service concession for the NHS Forth Valley development and right of use of a new Acute Hospital for Forth Valley (FVRH) and associated provision of services including facilities management services such as patient catering, portering, cleaning and maintenance. Services Commencement (handover of the facility to the Board) was in three phases May 2010, August 2010 and April 2011. The duration of the agreement is for 30 years from practical completion to the end of the financial year in which the 30th anniversary occurs. The payment mechanism is incorporated in the Project Agreement and subject to annual adjustment for inflation in line with the Retail Price Index (RPI) and risk sharing arrangements around volumes of patient catering supplied and usage and price of utilities (gas, electricity and fuel oil). At the end of the agreement the asset will revert to the ownership of the Board. There were no significant changes to the contract in the year.

Grampian Aberdeen Health and Community Care Village - Service Concession agreement with HUB North of Scotland Ltd for occupancy of the Aberdeen Health and Community Care Village effective 14th November 2013. Under the terms of the agreement NHS Grampian have a legal commitment to occupy the buildings for a period of 25 years and will incur annual charges for occupancy, maintenance and running costs.

Grampian Woodside Health Centre - Service Concession agreement with HUB North of Scotland Ltd for occupancy of Woodside Health Centre effective 28 June 2014. Under the terms of the agreement NHS Grampian have a legal commitment to occupy the buildings for a period of 25 years and will incur annual charges for occupancy, maintenance and running costs.

Grampian Forres Health Centre - Service Concession agreement with HUB North of Scotland Ltd for occupancy of Forres Health Centre effective 9 August 2014. Under the terms of the agreement NHS Grampian have a legal commitment to occupy the buildings for a period of 25 years and will incur annual charges for occupancy, maintenance and running costs.

Greater Glasgow and Clyde Larkfield Unit – The Day Hospital Elderly Care Facility contract commenced with Quayle Munro Ltd on 1 November 2000 for a period of 25 years. The estimated capital value at commencement of the contract was £9.1m.

Greater Glasgow and Clyde Southern General Hospital – The Elderly Bed Facility (210 Beds) contract commenced with Carillion Private Finance on 1 April 2001 for a period of 28 years. The estimated capital value at commencement of the contract was £11.1m.

Greater Glasgow and Clyde Gartnavel Royal Hospital – The Mental Health Facility (117 Beds) contract commenced with Robertson Capital Projects Ltd on 1 October 2007 for a period of 30 years. The estimated capital value at commencement of the contract was £17.7m.

Greater Glasgow and Clyde Stobhill Rowanbank Clinic – The Mental Health Secure Care Centre (74 Beds) contract commenced with Quayle Munro Ltd on 1 May 2007 for a period of 35 years. The estimated capital value at commencement of the contract was £19m.

Greater Glasgow and Clyde (New) Stobhill Hospital – The Ambulatory Care and Diagnostic Treatment Centre contract commenced with Glasgow Healthcare Facilities Ltd on 1 April 2009 for a period of 30 years. The estimated capital value at commencement of the contract was £78.7m.

Greater Glasgow and Clyde (New) Victoria Hospital – The Ambulatory Care and Diagnostic Treatment Centre contract commenced with Glasgow Healthcare Facilities Ltd on 1 April 2009 for a period of 30 years. The estimated capital value at commencement of the contract was £99.3m.

Greater Glasgow and Clyde (New) Stobhill Hospital – The Ambulatory Care and Diagnostic Treatment Centre 60 Bed extension. PFI contract commenced with Glasgow Healthcare Facilities Ltd on 25 February 2011 for a period of 30 years. Estimated capital value at commencement £15.8m.

16a. Commitments Under Service Concession Arrangements - Included in Statement of Financial Position (Cont.)

Greater Glasgow and Clyde Eastwood Health and Care Centre - HUB contract commenced with HUB West Scotland Project Co. on 3 June 2016 for a period of 25 years. Estimated capital value at commencement £9.1m.

Greater Glasgow and Clyde Maryhill Health and Care Centre - HUB contract commenced with HUB West Scotland Project Co. on 15 July 2016 for a period of 25 years. Estimated capital value at commencement £12.4m.

Highland New Craigs - The scheme is a replacement for the Craig Dunain Hospital, Inverness and provides inpatient facilities for adults with Mental Health needs or Learning Disabilities. The contract commenced July 2000 for a period of 25 years. The estimated capital value at commencement of the contract was £14.4m.

Highland Easter Ross - This scheme is a redevelopment of County Hospital, Invergordon into a Primary Care Centre and combines a community hospital and a health centre, integrating primary and community care into one community health resource. The contract commenced February 2005 for a period of 25 years. The estimated capital value at the commencement of the contract was £8.8m and the PFI property will revert to the board at the end of the contract.

Highland Mid Argyll Community Hospital and Integrated Care Centre LochgilpheadNHS Highland financed the development of the Mid Argyll Community Hospital and Integrated Care Centre in Lochgilphead. The contract commenced June 2006 and will be completed May 2036 at which point the ownership of the asset will transfer to the board. The estimated capital value at the commencement of the contract was £19.2m.

Highland Tain Health Centre - Service Concession agreement with HUB North of Scotland Ltd for occupancy of the Tain Health Centre effective 24th May 2014. Under the terms of the agreement NHS Highland have a legal commitment to occupy the buildings for a period of 25 years and will incur annual charges for occupancy, maintenance and running costs.

Lanarkshire Hairmyres Hospital - The provision of a large general hospital. The period of contract is 26 March 2001 to 30 June 2031. The estimated capital value is £73.538m. The hospital services are provided under a contract between Lanarkshire Health Board and Prospect Healthcare (Hairmyres) Limited, with hard and soft facilities management services being supplied under a subcontract to ISS Mediclean Limited. The hospital building is provided by way of a capital rental which is non indexed linked and is profiled for the duration of the contract. Major maintenance, risk overhead and margin are set within the contracts financial framework but these increase on an annual basis in line with the retail price index. Hard facilities management services include the provision of estates services, information technology, window cleaning, pest control and energy services. These services are subject to increase in line with the retail price index. Soft facilities management services includes full provision of catering services for patients and staff, housekeeping / ward hostess, linen, portering, transport security, switchboard and waste management. These services are subject to increase in line with the retail price index. The services provided are subject to a performance regime where reductions in the payments are recovered in line with the performance measurement regime. The services provided are subject to "market testing" every seven years.

Lanarkshire Wishaw Hospital - The provision of a large general hospital. The period of contract is 28 May 2001 to 30 November 2028. The estimated capital value is £150.695m. The hospital and services are provided under a contract between Lanarkshire Health Board and Summit Healthcare (Wishaw) Limited, with hard and soft facilities management services being supplied under a subcontract to SERCO health Limited. A managed radiology service is provided by Siemens Ltd. and under this service all major radiology diagnostic equipment is provided, maintained and replaced in line with an investment programme. This sum is fixed within the contract and increased in line with the retail price index. The hospital building is provided by way of an Availability payment which is largely non indexed linked and is profiled for the duration of the contract. Life cycle maintenance costs and insurance are set within the contracts financial framework but these increase on an annual basis in line with the retail price index. Hard facilities management services include the provision of estates and energy services. These services are subject to increase in line with the retail price index. Soft facilities management services include full provision of catering services for patients and staff, cleaning/domestics, linen, portering, security, switchboard and waste management. The services are set to increase in line with the retail price index. The services provided are subject to a performance regime where reductions in the payments charged are recovered in line with the performance measurement regime. The services provided are subject to "market testing" every seven years.

16a. Commitments Under Service Concession Arrangements - Included in Statement of Financial Position (Cont.)

Lanarkshire Stonehouse Hospital - The provision of a small community hospital. The period of contract is 1 May 2004 to 30 April 2034. The estimated capital value is £4.282m. The hospital is provided under a contract between Lanarkshire Health Board and Stonehouse Hospitals Limited, with the service arrangements provided internally by Lanarkshire Health Board.

Lanarkshire Hub Projects - The provision of three community Health Centres in East Kilbride, Kilsyth and Wishaw under the Scottish Future Trust Hubco leased model. These new facilities opened in 2015-16 and are provided by hub South West Scotland under a 25 year contract. The Hubco provides the centres and is responsible for lifecycle and hard facilities management services which are delivered under a subcontract with Graham Facilities Management ltd. The contract is managed under a performance regime with deduction applied to the payment for performance failures. The current estimated capital value of these facilities is £39.486m.

Lothian Royal Infirmary of Edinburgh at Little France - an Acute Teaching hospital. The contract started 1 November 2001 and will end 30 June 2053. The estimated capital value is £177.828m.

Lothian Ferryfield House – The provision of a 30 bedded facility for frail elderly and dementia patients which replaced the 100 year old Northern General Hospital. The contract started 1 October 1996 and will end 1 October 2021. The estimated capital value is £3.091m.

Lothian Ellens Glen - service provides a 60 bedded facility for frail elderly and dementia patients. The contract started 1 November 1999 and will end 1 November 2029. The estimated capital value is £3.805m.

Lothian Findlay House - service provides a 60 bedded facility for frail elderly and dementia patients in the grounds of the Eastern General Hospital. The contract started 13 June 2003 and will end 12 June 2033. The estimated capital value is £4.013m.

Lothian Tippethill - service provides a 60 bedded facility for frail elderly and dementia patients at Whitburn.The contract started 6 September 2000 and will end 5 September 2025. The estimated capital value is £2.889m.

Lothian Bathgate Primary Care Centre - service provides a Primary Care Centre which accommodates 3 GP Practices and the CHP's community activities in the locality. The contract started 1 October 2001 and will end 30 September 2026. The estimated capital value is £2.239m.

Lothian Midlothian Community Hospital - This hospital provides 88 beds for frail elderly and dementia patients, outpatient clinics and a number of CHP led community activities. The contract started 1 September 2010 and will end 31 August 2040. The estimated capital value is £14.946m.

Lothian Royal Edinburgh Hospital Phase 1 - service provides 185 beds for both mental health services and a national acquired brain injury service. The contract started on 5 December 2016 and will end on 4 December 2041. The estimated capital value is £38.175m

Tayside The Carseview Centre - Located on the Ninewells Hospital site in Dundee the centre provides in-patient facilities for Adult Psychiatry and Learning Disability. The contract commenced 11 June 2001 and will be completed 11 June 2026 , when NHS Tayside may negotiate a further contract or purchase the facility.

Tayside The Susan Carnegie Clinic (Mental Health NPDO Phase 1) - Located on the Stracathro Hospital site by Brechin, it provides in-patient facilities and a day hospital for both General Adult Psychiatry and Psychiatry of Old Age. The contract start date was 2 December 2011 and the end date will be 17 May 2042, when NHS Tayside will become owners of the facility.

Tayside Whitehills Community Resource Centre - Covers Forfar, Kirriemuir and the surrounding area in conjunction with Angus Council and Lippen Care. The contract commenced 21 March 2005 and will be completed 21 March 2030, when NHS Tayside will become owners of the facility.

Tayside The Mental Health NPDO - Phase 2 is located on the Murray Royal Hospital site in Perth and provides inpatient, day-patient and out-patient facilities for NHS Tayside's General Adult Psychiatry, Psychiatry of Old Age and Low Secure Forensic services, as well as a regional in-patient unit providing Medium Secure Forensic services for patients from the North of Scotland Health Boards. The contract start date was 1 June 2012 and the end date will be 17 May 2042, when NHS Tayside will become owners of the property.

National Services Scotland Jack Copland Centre - The National Centre for the processing and testing of blood, tissues and cells for patients in Scotland by the Scottish National Blood Transfusion Service (SNBTS).

16a. Commitments Under Service Concession Arrangements - Included in Statement of Financial Position (Cont.)

Transport Scotland:

M6/(74) DBFO - The contract covers the design, construction, financing and operation of 28.3km of the new Scottish motorway as well as the operation and maintenance of 90km of new and existing Scottish motorway. Payments are made under a shadow toll regime. The toll period commenced in July 1997 and expires in July 2027.

M77 Fenwick to Malletsheugh - This is a joint Public Private Partnership (PPP) entered into by the Scottish Government, East Renfrewshire and South Lanarkshire Councils. The project covers the design, construction, financing and operation of 15km of the new Scottish motorway and a new 9km local link road between the new motorway and the A726 trunk road. Payments are made under a shadow toll regime. The toll period began in April 2005 and expires in April 2035.

M80 - The contract covers the design, build and financing of approximately 18km of dual two/three lane motorway, together with, but not limited to, associated slip roads, side roads, junctions, structures, culverts and associated works. The contract also incorporates the operation and maintenance of the new motorways, associated structures, and related elements for a period of 30 years after completion of the new works. Unitary charge payments commenced in September 2011 and will cease in September 2041.

M8, M73, M74 Improvements - the project will upgrade the A8 Baillieston to Newhouse, completing the M8 motorway between Glasgow and Edinburgh, including improvements to the M74 Raith Interchange and widening of key sections of the M8, M73 and M74. The Non Profit Distributing (NPD) contract also incorporates the management, operation and maintenance (routine, winter and major maintenance works) of this core section of the motorway network for the next 30 years. The unitary charge payments will become committed after construction completion in 2017 and will cease in 2047.

Aberdeen Western Peripheral Road/Balmedie and Tipperty - The project will construct a new dual carriageway to by-pass the City of Aberdeen and upgrade the road between Balmedie and Tipperty to dual carriageway. The Non Profit Distributing (NPD) contract also incorporates the management, operation and maintenance of these roads for a period of 30 years. The unitary charge payments have been committed in phases from Autumn 2016 until construction completion in 2018 and will cease in 2048.

Scottish Prison Service:

HMP Kilmarnock - The contract covers the design, construction, financing and operation of a prison, HMP Kilmarnock. The contract commenced in March 1999 for a period of 25 years. The capital liability is now nil, however, payments for the service element continue to the end of the contract.

HMP Addiewell - The contract covers the design, construction, financing and operation of HMP Addiewell. The contract commenced in December 2008 for a period of 25 years.

Court Custody and Prisoner Escort Service - This service concession arrangement covers a service let for 7 years with an option to extend for a further 3 years. The contract commenced in January 2012.

Further details of the individual contracts can be found in the individual accounts of the NHS bodies in Scotland, Scottish Prison Service and Transport Scotland.

16b. Commitments Under Service Concession Arrangements - Included in Statement of Financial Position (Cont.)

Under IFRIC 12 the asset is treated as an asset of the Scottish Government and included in the Scottish Government's accounts as a non current asset. The liability to pay for the property is in substance a finance lease obligation. Contractual payments therefore comprise two elements: imputed finance lease charges and service charges. The imputed finance lease obligation is as follows:

Gross Minimum Lease Payments NHS Bodies
in
Scotland
£m
Scottish
Prison Service
£m
Transport
Scotland
£m
2016-17
Total
£m
2015-16
Total
£m
Rentals due within 1 year 199 70 95 364 195
Due within 2 to 5 years 812 226 341 1,379 813
Due after 5 years 3,630 565 1,590 5,785 3,526
Total 4,641 861 2,026 7,528 4,534
Interest Element NHS Bodies
in
Scotland
£m
Scottish
Prison Service
£m
Transport
Scotland
£m
2016-17
Total
£m
2015-16
Total
£m
Rentals due within 1 year 119 7 28 154 150
Due within 2 to 5 years 441 24 104 569 563
Due after 5 years 1,150 39 229 1,418 1,495
Total 1,710 70 361 2,141 2,208
Present Value of Minimum Lease Payments NHS Bodies
in
Scotland
£m
Scottish
Prison Service
£m
Transport
Scotland
£m
2016-17
Total
£m
2015-16
Total
£m
Rentals due within 1 year 80 63 67 210 45
Due within 2 to 5 years 371 202 237 810 250
Due after 5 years 2,480 526 1,361 4,367 2,031
Total 2,931 791 1,665 5,387 2,326
Service elements due in future periods, included above NHS Bodies
in
Scotland
£m
Scottish
Prison Service
£m
Transport
cotland
£m
2016-17
Total
£m
2015-16
Total
£m
Rentals due within 1 year 44 59 55 158 150
Due within 2 to 5 years 190 187 179 556 567
Due after 5 years 1,122 453 314 1,889 1,966
Total 1,356 699 548 2,603 2,683
Contingent rents

"IAS 17 Leases defines contingent rents as “that portion of lease payment that is not fixed in amount but is based on the future amount of a factor that changes other than with the passage of time (e.g. percentage of future sales, amount of future use, future price indices, and future market rates of interest)".
Contingent rents recognised as an expense in the period were £22m (2015-16: £21m).

17. Contingent Assets/Liabilities disclosed under IAS 37

17a. Contingent Assets disclosed under IAS 37: Provisions, Contingent Liabilities and Contingent Assets

The definition of a Contingent Asset under IAS 37 Provisions, Contingent Liabilities and Contingent Assets is a possible asset, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the entity's control. Contingent Assets often cannot be reliably quantified; where values can be determined these have been provided.

Health and Sport
Clinical and Medical compensation payments of £124.4m (2015-16: £39.7m).

NHS Employer's Liability estimated at £1.4m (2015-16: £1m).

Economy, Jobs and Fair Work
2007-2013 ESF programmes – Closed Schemes.
Recovery of costs from organisations in the public, private and third sectors where errors were found in the detailed operation of projects funded by the programmes and where funds, initially provided by Scottish Government, cannot be reclaimed from the EC. It is recognised that there are a number of organisations which will find it difficult to repay the amount due, and some organisations no longer exist.

Rural Economy and Connectivity
Transport Scotland successfully defended an allegation of Glasgow Airport Rail Link (GARL) copyright infringement, and a subsequent appeal which was dismissed in May 2012. The process of recovering the expenses awarded by the Court of Session is now in the hands of Accountant in Bankruptcy.

Transport Scotland successfully defended a legal challenge in respect of the procurement of the Northern Isles Ferry Service. The legal judgement was confirmed in March 2016. The process of recovering the expenses awarded by the Court of Session is continuing.

Education and Skills
Disclosure Scotland (DS) planned to replace the BT service contract with a new contract for the care and maintenance of the PVG system which would better meet the needs of the organisation. It awarded a new contract to a new supplier in May 2014 with the service due to transfer in December 2014. The delivery and transfer of the service by the “new supplier” did not take place as planned and to protect the business critical operations, DS continued the existing service contract with BT until the end of March 2015. It awarded a new contract to BT for the support and maintenance of the PVG system starting April 2015. DS continues to be in discussions with the “new supplier” around the non-completion of the contract awarded in May 2014 and is therefore unable to quantify any amount claimable or payable at this time.

Communities, Social Security and Equalities
Grants repayable as a result of sales of Housing Association Properties to tenants or as a result of conditions of grant being breached. Grants become repayable when conditions of grant cease to be met. It is not possible to predict the level of activity in future years.

Repayments of grant from the Open Market Shared Equity Scheme which allows people on low incomes to buy a share in a property, the balance being owned by a housing association and funded by grant from the Scottish Government. If the property is sold or an increased share is purchased by the owner, the grant becomes repayable. It is not possible to estimate the level of future receipts.

Receipts payable following right to buy sales of ex-council housing stock and ex-Scottish Homes housing stock. Timing uncertain as to when events giving rise to the realisation of this contingent asset are likely to occur.

Grants repayable from Edinburgh Council Rent Guarantee - Project Resonance. Grant becomes repayable if either (a) projects do not proceed as planned, where it is repayable immediately, or, (b) projects are sold on privately up to 10 years from now. Timing uncertain as to when events giving rise to the contingent asset are likely to occur.

17b. Contingent Liabilities Disclosed under IAS 37: Provisions, Contingent Liabilities and Contingent Assets

The definition of a Contingent Liability under IAS 37: Provisions,Contingent Liabilities and Contingent Assets is as follows:

- a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the entity's control; or
- a present obligation that arises from past events but is not recognised because it is not probable that a transfer of economic benefits will be required to settle the obligation; or
- the amount of the obligation cannot be measured with sufficient reliability.

Contingent Liabilities often cannot be reliably quantified; where values can be determined these have been provided.

Health and Sport
Clinical and Medical compensation payments of £304.4m (2015-16: £225.2m).

NHS Employer's Liability estimated at £3.2m (2015-16: £2.7m).

NHS Third Party Liability and non-clinical compensation estimated at £0.9m (2015-16: £1.4m)

Education and Skills
Additional subsidy chargeable on the Income Contingent Repayment Student Loans if the Bank of England Base Rate plus 1 percentage point is lower than RPI rate modelled to calculate the cost of providing Student Loans over the Spending Review period.

Justice
Claims against former independent Conveyancing and Executry Practitioners in Scotland. This is a contingent liability relating to an agreement to meet any valid claims arising from the acts or omissions of past independent conveyancing and executry practitioners, as defined by the Law Reform (Miscellaneous Provisions) Scotland Act 1990.

Potential prisoner compensation estimated at £3.4m (2015-16: £0.8m). (See note 12).

Scottish Prison Service other costs estimated at £2.9m (2015-16: £0.2m).

Rural Economy and Connectivity
Court of Session has found that the Agricultural Holdings Act 2003 has breached the European Convention of Human Rights - Art 1 P1. Remedial legislation has now been put in place, and the Scottish Government is supporting mediation between parties.

Following the 2015 scheme year for CAP Pillar 1, both the level of late payment penalties from the EC to the UK member state and the split of penalties attributed to administrations are still to be formally concluded. EU CAP audits can result in future disallowances and a number of audits are in progress.

As part of Transport Scotland's normal course of business the Forestry Commission granted the right to use a forestry track as an emergency diversion route on the A83 Rest And Be Thankful on the understanding that Transport Scotland will have liability for any incidents that may occur whilst the track is being used for this purpose. The potential obligation is estimated at £5m (2015-16: £5m) but it is not considered likely that any liability will occur.

17b. Contingent Liabilities Disclosed under IAS 37: Provisions, Contingent Liabilities and Contingent Assets (Cont.)

Communities, Social Security and Equalities
A liability of up to £73.7m (2015-16: £100.1m) following the Glasgow Stock Transfer could arise if HMRC were to successfully challenge the terms of the original VAT agreement that was entered into in 2004 by Glasgow Housing Association and Glasgow City Council.

The Mortgage Indemnity New Home Scheme (MI New Home) allows credit-worthy borrowers, locked out of the market by high deposit requirements, access to 90% to 95% LTV mortgages. The scheme is supported by a SG guarantee which sits behind cash indemnities set aside by participating housebuilders (for each house sold under the scheme). The guarantee valued at £7.19m (2015-16: £7.35m) can only be called upon once the indemnities are exhausted and lasts for 7 years.

National Housing Trust guarantees of £3.2m (2015-16: £3.1m) which the Scottish Government are committed to but which are not activated until construction has been completed.

Culture, Tourism and External Affairs
If the 2019 Solheim Cup were to be cancelled a payment of £5.6m (2015-16: £5.6m) would be due to the European Ladies Tour.

A shortfall in anticipated receipts from the 2019 European Indoor Athletics Championship would trigger a liability of £0.73m (2015-16: nil).

If the 2018 European Championships were to be cancelled or service agreements were breached, a liability capped at £18.3m (2015-16: £7m) could arise.

18. Related Party Transactions

The Scottish Government is the sole shareholder and sponsor of Caledonian Maritime Assets Ltd, David MacBrayne Ltd, Highland and Islands Airports Ltd, Scottish Futures Trust and Prestwick Airport Holdco Ltd; a shareholder in Scottish Health Innovations Ltd and the Student Loans Company; and sponsor of Scottish Water, a number of non-consolidated Health Bodies, and of a number of executive, advisory and tribunal Non Departmental Public Bodies. These bodies are regarded as related parties with which the Scottish Government has had various transactions during the year. Further details of Scottish Public Bodies are available from the Scottish Government website - www.scotland.gov.uk/government/publicbodies.

The Scottish Government is also the sponsor of cross-border public authorities which are listed in The Scotland Act 1998 (Cross-Border Public Authorities) (Specification) Order 1999. These bodies are regarded as related parties with which the Scottish Government has had material transactions during the year.

In addition the Scottish Government has had a number of transactions with other government departments and other central government bodies, primarily the Scotland Office and the Office of the Advocate General, the Rural Payments Agency, the Home Office and the Department for Work and Pensions.

The Scottish Government has material transactions with local government bodies, Regional Transport Partnerships, Community Justice Authorities and Scottish Water.

None of the senior officers, key managerial staff or other related parties has undertaken any material transactions with the Scottish Government during the year.

All Scottish Ministers are required, as Members of the Scottish Parliament, to register information about certain financial interests. The types of financial interest that must be registered are those that might affect any actions, speeches or votes in the Parliament. This register is available for public inspection at the office of the Standards clerks with a further copy available at the main visitor information desk at the Scottish Parliament building.

Accounts of the individual Executive Agencies, the Crown Office and Procurator Fiscal Service and Health Bodies contain details of related party transactions specific to those entities.

19. Financial Instruments

The Scottish Government measures and presents financial instruments in accordance with International Accounting Standard (IAS) 32, IAS 39 and International Financial Reporting Standard (IFRS) 7 as interpreted by the Financial Reporting Manual. International Financial Reporting Standard (IFRS) 7, Financial Instruments: Disclosures, requires disclosure of the role that financial instruments have played during the period in creating or changing the risks that an entity faces in its activities. The Scottish Government is not exposed to the degree of financial risk faced by business entities because of the largely non-trading nature of its activities and the way that government is financed. Moreover, financial instruments play a much more limited role in creating or changing risk than would be typical of the listed companies to which IFRS 7 mainly applies. Financial assets and liabilities are generated by day-to-day operational activities and are not held to change the risks facing the organisation in undertaking its activities.

Liquidity Risk
The Scottish Parliament makes provision for the use of resources by the Scottish Government, for revenue and capital purposes, in a Budget Act for each financial year. Resources and accruing resources may be used only for the purposes specified and up to the amounts specified in the Budget Act. The Act also specifies an overall cash authorisation to operate for the financial year. The Scottish Government is not, therefore, exposed to significant liquidity risks.

A maturity profile of the carrying amount of financial liabilities is presented below. This analysis satisfies the disclosure requirements of International Financial Reporting Standard 7, Financial Instruments: Disclosures (IFRS 7). The maturity profile for NLF loans is matched by the corresponding profile for the related fixed asset investments. The amounts disclosed are undiscounted cash flows as per IFRS 7.

Maturity Profile

Financial Liabilities <1yr
£m
1 - 2 yrs
£m
2 - 5 yrs
£m
>5yrs
£m
2016-17
Total
£m
2015-16
Total
£m
Trade payables 444 - - - 444 471
Accruals 1,396 12 6 - 1,414 1,266
Other payables 212 163 - - 375 207
NLF loans 30 31 110 481 652 676
Accrued Interest due on NLF Loans 9 - - - 9 9
Balances Payable to SCF - - - - - 2
Corporate balance with SCF 625 - - - 625 132
PFI Imputed finance leases 52 57 196 2,479 2,784 2,327
Lease payables 1 3 7 16 27 30
Bank overdraft - - - - - 3
Financial guarantees 2 2 7 10 21 -
Other financial liabilities - - - - - -
Total 2,771 268 326 2,986 6,351 5,123

19. Financial Instruments (Cont.)

Credit risk
Credit risk is the risk that a third party will default on its obligations. The maximum exposure to credit risk at the Statement of Financial Position date in relation to each class of financial asset is the carrying amount of those assets net of any impairment. No collateral is held as security.

Cash at bank is held with major UK banks. The credit risk associated with cash at bank is considered to be low.

The only area where the Scottish Government has significant concentrations of credit risk is on student loans. The Scottish Government has a statutory obligation to issue student loans and seek repayments in line with legislation. The Scottish Government is not permitted to withhold loans on the basis of poor credit rating nor is it able to seek collateral. The Scottish Government is therefore exposed to the risk that some student loans will not be repaid, although this is partly mitigated by the fact that most repayments are collected by Her Majesty's Revenue and Customs as part of the tax collection process. In addition this risk is mitigated through the valuation of student loans at fair value (= amortised cost).

Market risk
There are a number of areas where the Scottish Government is exposed to potential market risk. These relate to interest rates, foreign currency risk and housing market risks.

Interest Rate Risk
64% (2015-16: 66%) of the Scottish Government’s financial assets and 100% (2015-16: 100%) of its financial liabilities carry nil or fixed rates of interest and it is not therefore exposed to significant interest rate risk. The portion of the Scottish Government's financial assets that carry a floating rate of interest relate in the main to student loans.

Foreign Currency Risk
Within payables, the Scottish Government has a balance that is subject to exchange rate fluctuations. This relates to advances received by the Economy, Jobs and Fair Work portfolio from the European Commission (EC) for the 2014-20 European Structural Funds' (ESF) programme. The advances are either utilised by the end of the programme period or returned to the EC when the individual programme is closed. The year end balance of £27.455m is the sterling equivalent of €32.092m translated at the accounting date (at the official EU exchange rate at 31 March 2017).

The Scottish Government has instituted funding advances for certain EU CAP payments. Euro denominations are sold once EU funding is received. As at 31 March the year end balance of £93.908m is the sterling equivalent of €105.109m.

Where there are other transactions denominated in Euros the exchange rate is managed within the programmes.
The Scottish Government has no other significant exposure to foreign currency risk.

Housing Market Risk
The Scottish Government engages in a number of shared equity housing schemes, and is exposed to the risk of potential falls in the value of the housing market. The current investment in such schemes is £749m (2015-16: £627m).

19. Financial Instruments (Cont.)

Categories of financial assets and financial liabilities

The Scottish Government has the following categories of financial assets and financial liabilities:

Financial Assets
Current Year
Note Fair Value Through Profit and Loss
Note a
£m
Loans and Receivables
Note b
£m
Shares Held in or Loans Advanced to Public Sector
Note c
£m
2016-17
Total
£m
Description
Voted loans 9a - 6 2,841 2,847
NLF loans 9a - - 652 652
Housing association loans 9a - 61 - 61
Shared Equity Housing 9a 749 - - 749
Other Housing Loans 9a - 44 - 44
Other Funds 9a - 466 - 466
Student loans 9a - 3,257 - 3,257
Interests in nationalised industries 9a - - 25 25
Trade receivables 10 - 54 - 54
Accrued income 10 - 497 - 497
Interest receivable 10 - 30 - 30
Amounts receivable from the SCF 10 - 298 - 298
Deposits and advances 10 - - - -
Other receivables 10 - 88 - 88
Corporate balance with the SCF 10 - - - -
Cash and cash equivalents 2 - 625 - 625
Total 749 5,426 3,518 9,693

Note: As not all assets are financial instruments, the above table excludes VAT £58m and prepayments £252m included in the associated asset note (Note 10).

19. Financial Instruments (Cont.)

Financial Assets
Prior Year
Note Fair Value
Through Profit and Loss
Note a
Restated Loans and Receivables
Note b
Shares Held in or Loans Advanced to Public Sector
Note c
2015-16
Total
Description
Voted loans 9a - 7 2,778 2,785
NLF loans 9a - - 676 676
Housing association loans 9a - 59 - 59
Shared Equity Housing 9a 627 - - 627
Other Housing Loans 9a - 35 - 35
Other Funds 9a - 236 - 236
Student loans 9a - 2,908 - 2,908
Interests in nationalised industries 9a - - 25 25
Trade receivables 10 - 62 - 62
Accrued income 10 - 636 - 636
Interest receivable 10 - 28 - 28
Amounts receivable from the SCF 10 - 289 - 289
Deposits and advances 10 - - - -
Other receivables 10 - 92 - 92
Corporate balance with the SCF 10 - 3 - 3
Cash and cash equivalents 2 - 134 - 134
Total 627 4,489 3,479 8,595

Note: As not all assets are financial instruments, the above table excludes VAT £68m and prepayments £201m included in the associated asset note (Note 10). Interests in nationalised industries (£25m) has been categorised as Shares Held in or Loans Advanced to Public Sector - this is a minor correction to the 2015-16 published accounts.

19. Financial Instruments (Cont.)

Financial Liabilities

Current Year
Note Fair Value Through Profit and
Loss
Note a
£m
All Other Financial Liabilities
Note d
£m
Shares Held in or
Loans Advanced to the Public Sector
Note c
£m
2016-17
Total
£m
Description
Trade payables 11 - 444 - 444
Accruals 11 - 1,414 - 1,414
Other payables 11 - 375 - 375
NLF loans 11 - - 652 652
Accrued Interest due on NLF Loans 11 - - 9 9
Balances payable to the SCF 11 - - - -
Corporate balance with SCF 11 - 625 - 625
PFI Deferred Residual Interest 11 - - - -
PFI Imputed finance leases 11 - 2,784 - 2,784
Lease payables 11 - 27 - 27
Financial guarantees 11 - 21 - 21
Total - 5,690 661 6,351

Note: As not all liabilities are financial instruments, the above table excludes deferred income £98m, other tax and social security £131m, superannuation payable £97m and employee benefit accrual £58m included in the associated liability note (note 11). The finance leases are disclosed at the discounted cash flow value.

19. Financial Instruments (Cont.)

Financial Liabilities

Prior year
Note Fair Value Through Profit and Loss
Note a
£m
All Other Financial Liabilities
Note d
£m
Shares Held in or
Loans Advanced to the Public Sector
Note c
£m
2015-16
Total
£m
Description
Trade payables 11 - 471 - 471
Accruals 11 - 1,266 - 1,266
Other payables 11 - 207 - 207
NLF loans 11 - - 676 676
Accrued Interest due on NLF Loans 11 - - 9 9
Balances payable to the SCF 11 - 2 - 2
Corporate balance with SCF 11 - 132 0 132
PFI Deferred Residual Interest 11 - - -
PFI Imputed finance leases 11 - 2,327 - 2,327
Lease payables 11 - 30 - 30
Bank overdraft 11 - 3 - 3
Total - 4,438 685 5,123

Note: As not all liabilities are financial instruments, the above table excludes deferred income £156m, other taxation and social security £118m, superannuation payable £95m and employee benefit accrual £69m from the associated liabilities note (Note 11). The finance leases are disclosed at the discounted cash flow value.

Note a: Assets and liabilities held at fair value through the profit and loss are measured at fair value with gains or losses being accounted for through the outturn statement.

Note b: Loans and receivables are measured at amortised cost using the effective interest methods, and any impairment losses go through the outturn statement. Disposal may give rise to a gain or loss, which is recognised through the outturn statement.

Note c: Shares held in or loans advanced to public sector or due to the NLF are held at historic cost less impairment, and any impairment losses go to the outturn statement.

Note d: All other financial liabilities will be measured at fair value initially and subsequently at amortised cost.

The fair value of financial instruments is equivalent to the carrying value disclosed in the financial statements. No financial assets or financial liabilities have been offset and presented net in these accounts.

20. Third Party Assets

Assets held at Statement of Financial Position date to which monetary value can be assigned:

2015-16
£m
Gross Inflows
£m
Gross Outflows
£m
2016-17
£m
Monetary amounts such as bank balances and monies on deposit 49 32 (42) 39
Unclaimed dividends and unapplied balances 19 - (2) 17
Securities - - - -
Other monetary assets - - - -
Total Monetary Assets 68 32 (44) 56

Accountant in Bankruptcy holds funds of £45m (2015-16: £56m) on behalf of third parties. This mainly comprises realised assets that are held whilst awaiting repayment to the public purse or distribution to creditors with a value of £28m (2015-16: £37m). The balance of £17m (2015-16: £19m) relates to money consigned in respect of unclaimed dividends and unapplied balances.

The NHS Bodies hold money on behalf of patients. This totalled £9m in 2016-17 (2015-16: £10m).

The Scottish Prison Service also holds £1m on behalf of prisoners (2015-16: £1m).

Other Assets held at the Statement of Financial Position date all relate to Accountant in Bankruptcy:

Description 2016-17
Number held
Restated
2015-16
Number held
Residential property 1,211 1,267
Motor vehicles, boats and caravans 157 170
Life Policies 434 810
Shares and Investments 153 430
Miscellaneous 290 1,512

No third party assets have been included within the Statement of Financial Position.

21. Resource Budget

The resource budget detailed in the outturn statements is the consolidated budget for the Scottish Government. The following table provides a reconciliation of the budgets shown in the accounts with the total budget for Scotland approved by the Scottish Parliament.

2016-17
£m
2015-16
£m
Budget (Scotland) Act 2016 36,949 37,322
Scotland's Autumn Budget Revisions - Scottish Statutory Instrument 2016 No. 377 259 88
Scotland's Spring Budget Revisions - Scottish Statutory Instrument 2017 No. 104 372 (2)
Total approved spending 37,580 37,408
Less activities not included in these accounts:
National Records of Scotland (26) (23)
Office of the Scottish Charity Regulator (3) (3)
Scottish Courts and Tribunals Service (107) (94)
Revenue Scotland (5) (5)
Food Standards Scotland (15) (16)
Scottish Housing Regulator (4) (4)
NHS and Teachers' Pension Schemes (3,300) (3,398)
Forestry Commission (Scotland) (57) (63)
Scottish Parliament Corporate Body (100) (92)
Audit Scotland (8) (10)
Consolidated Portfolios' approved estimates 33,955 33,700
Portfolio analysis Budget
Act
Approval
£m
2016-17
Capital
Budget
£m
2016-17
Operating
Budget
£m
Finance and the Constitution 104 2 102
Health and Sport 13,241 478 12,763
Education and Skills 3,190 497 2,693
Economy, Jobs and Fair Work 339 15 324
Justice 2,415 11 2,404
Communities, Social Security & Equalities 11,021 238 10,783
Environment, Climate Change and Land Reform 223 40 183
Culture, Tourism and External Affairs 272 5 267
Rural Economy and Connectivity 2,839 762 2,077
Crown Office and Procurator Fiscal Service 115 4 111
Administration 196 13 183
33,955 2,065 31,890

21. Resource Budget (Cont.)

Budgets approved by the Scottish Parliament are applied to the consolidated accounts as detailed above. The budgets advised to HM Treasury include items outwith the scope of the Scottish Parliament. A reconciliation between the 2016-17 budget approved by the Scottish Parliament and the amount drawn down from HM Treasury is provided below.

2016-17
£m
Total spending approved by Scottish Parliament 37,580
NDPB's non cash budgets 163
Judicial salaries 30
Repayment of NLF and other loans by Scottish Water (39)
Forth Road Crossing technical adjustment (22)
Sleeper contract technical adjustment 14
Provision of SFC grant-in-aid to support working capital requirements (5)
Provision of Creative Scotland grant-in-aid to support working capital requirements (7)
IFRS - PPP/PFI adjustments (104)
IFRS - revenue financed infrastructure projects (Transport Scotland) (157)
Police loan charges (5)
HM Treasury funding for DEL not included in Spring Budget Revision 37
HM Treasury funding for AME not included in Spring Budget Revision (inc. NDPBs) 254
Total Managed Expenditure budget draw down from HM Treasury 37,739
Analysed by spending category:
Departmental Expenditure Limit (DEL) 30,837
Annually Managed Expenditure (AME) 6,902
37,739

22. Cash Authorisation

2016-17
£m
2015-16
£m
Cash authorisation for the Scottish Administration:
Budget (Scotland) Act 2016 33,187 33,345
Amended by:
Scotland's Autumn Budget Revisions - Scottish Statutory Instrument 2016 No. 377 310 93
Scotland's Spring Budget Revisions - Scottish Statutory Instrument 2017 No. 104 294 653
Total Approved Cash Authorisation for the Scottish Administration 33,791 34,091
Less non core activities not included in these accounts:
National Records of Scotland (25) (20)
NHS and Teachers' Pension Schemes (384) (475)
Office of the Scottish Charity Regulator (3) (3)
Scottish Housing Regulator (3) (4)
Forestry Commission (EU Funding) - 5
Scottish Courts and Tribunals Service (93) (80)
Revenue Scotland (5) (5)
Food Standards Scotland (15) (15)
Available Cash Authorisation for Consolidated Bodies 33,263 33,494
Funding Drawn down from the Scottish Consolidated Fund (SOCTE) 32,201 32,537