Information on the interaction between the Government and the Scotland Reserve: FOI release

Information requested

For information on the interaction between an underspend by the Scottish Government and the Scotland Reserve as well as the current Scotland Reserve balance.

Response

The Scotland Reserve provides the Scottish Government with a limited facility to manage the smoothing of all types of spending, assist the management of tax volatility and manage the timing of  expenditure between financial years. Under the terms of the Fiscal Framework the Scottish Government is unable to overspend its budget in a financial year. It must therefore achieve an underspend each year and these amounts are carried forward within the Scotland Reserve to be utilised in future years.

The Fiscal Framework limits the amount which can be held in the Scotland Reserve to a maximum of £700m. This is approximately 1.5% of the total Scottish Budget.

If cumulative underspends were to exceed £700m then the Scottish Government would be unable to carry this forward within the Scotland Reserve and would lose funding equal to the excess. The Framework also places limits on the amount of funding which can be drawn down from the Scotland Reserve in any one financial year of £250m of Fiscal Resource and £100m Fiscal Capital. These draw down limits do not apply when certain economic circumstances occur (known as a Scotland-specific economic shock), which is the case at the moment.

The 2021-22 Provisional Outturn statement was given in Parliament by the Minister for Public Finance, Planning and Community Wealth on Thursday 23rd June. As detailed by the Minister, the provisional underspend for financial year 2021-22 is £650 million split between £421 million resource funding, £183 million capital funding and £46 million Financial Transactions. All this funding will flow into the Scotland Reserve and has been pro-actively set aside to support ongoing delivery of key priorities in the 2022-23 Budget.

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The Scottish Government is committed to publishing all information released in response to Freedom of Information requests. View all FOI responses at http://www.gov.scot/foi-responses.