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Annual Budgeting Process

ANNUAL BUDGETING PROCESS

Contents:

Scope

Key Points

Background

 
Scope

1. This section gives guidance on the annual process by which the spending plans of the Scottish Ministers and other bodies funded directly from the Scottish Consolidated Fund are scrutinised and authorised by the Scottish Parliament.

Key Points

2. The budgeting process comprises 3 separate stages involving consideration by the Parliament of: an assessment of the Scottish Government's performance and updated indicative spending priorities prior to the UK spending review; detailed expenditure proposals for the upcoming financial year i.e. a draft budget; and the Budget Bill. The first of these stages will only take place once in each Spending Review period.

3. The Budget Bill includes expenditure which the Parliament has to approve but is not formally for the Scottish Government to propose - notably expenditure by the Scottish Parliament Corporate Body and by Audit Scotland.

4. In-year transfers of provision between individual entities identified in the Budget Act require the prior approval of the Parliament.

5. In-year transfers of provision between "budget sections" in excess of £70 million (at 2011 values) or 15% of the budget for the receiving section require the prior approval of the Parliament.

  

Background

6. Section 1 of the Public Finance and Accountability (Scotland) Act 2000 provides that the use of resources by the Scottish Administration and other bodies funded directly from the Scottish Consolidated Fund must be authorised on an annual basis by Budget Act. The Budget Act (as amended by Order) and supported by Budget Documents specifies the purpose for which resources may be used and the maximum amount of related expenditure in the particular financial year to which the Budget Act relates. The principles and procedures for the annual budgeting process, the format of the budget documents and procedures for in-year reallocation of budgetary provision are the subject of a Written Agreement between the Scottish Government and the Scottish Parliament Finance Committee.

7. Fiscal, economic and monetary policy, including control over public expenditure, are reserved matters.  As a result the devolved administrations’ budgets are set within a framework of public expenditure control and budgeting guidance determined by HM Treasury.  Once overall public expenditure budgets have been determined in accordance with the Statement of Funding Policy, the devolved administrations have freedom to make their own spending decisions on devolved programmes but that must take place within the overall totals set by HM Treasury and in compliance with the Consolidated Budgeting Guidance published by HM Treasury.

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Page Published / Updated: May 2012