Information about Scottish Government reserves with reference to an analysis of local authority reserves.
Scotland Government Reserves - background
Local Authority reserves and Scottish Government Reserves are not directly comparable. Local Authorities are bound by statutory provisions and conditions attached to funding streams that determine whether reserves generated from revenue streams are ring-fenced for specific purposes or usable at the discretion of the Local Authority.
Central Government bodies account for their funding in accordance with the Government Financial Reporting Manual (‘FReM’). The annual accounts of central government bodies report their (limited) reserves. The annual Scottish Government Consolidated Accounts are available here. The Scottish Government does not have ring-fenced and usable reserves in the same way that local authorities do.
The Scotland Reserve
The Scotland Reserve operates at the level of the Scottish Budget as a whole. It allows the Scottish Government limited ability to manage spending across financial years. The agreement between the Scottish and UK Government which sets out the Scottish Government’s Fiscal Framework can be found online here.
The Fiscal Framework sets out the limits of Scotland Reserve – up to £700 million in aggregate may be deposited in the Reserve. This represents just over 1% of the Scottish Governments total budget.
In practice, these heavily constrained limits mean that the Scottish Government has to utilise all reserve availability from one year in the next immediate financial year. This ensures that there is sufficient capacity in the reserve to absorb any unforeseen underspends.
To illustrate the difference it’s worth noting that local authorities General Fund reserves alone at 31 March 2023 were provisionally reported as £2.7 billion.
Maximum drawdown in any one year from the Scotland Reserve is £250 million of Resource budget and £100 million of capital budget (including Financial Transactions). Under the Fiscal Framework the drawdown limits are temporarily waived where a Scotland-specific economic shock occurs.
In January 2021 a Scotland-specific economic shock was triggered following forecasts from the Scottish Fiscal Commission. The economic shock provisions will cease to apply following the end of the 2023-24 financial year.
Scotland Reserve – current position
The Minister for Public Finance and Community Wealth presented the 2022-23 provisional outturn to the Scottish Parliament on the 15th of June 2023. A copy of the statement can be found online, here.
The current position is an underspend of £244.3 million which will be carried forward in full in the Scotland Reserve. The balance is broken down as follows:
Fiscal Resource - £180.6 million
Capital - £24.7 million
Financial Transactions - £39.0 million
Total – £244.3 million
These figures are provisional and the final position will not be confirmed until the Final Outturn exercise is completed. All amounts carried forward into 2022-23 were drawn down in-year meaning the balance of the Scotland Reserve prior to Provisional Outturn was nil.
Scotland Reserve - commitments:
The funding carried forward will be utilised in full to support the 2023-24 position.
The majority of the carry forward was anticipated in the 2023-24 spending plans. The £39 million of Financial Transactions was anticipated within the 2023-24 Budget (published in December 2022), and £115 million of additional funding announced (at stage 3 of the Budget Bill on 21 February 2023) by the Deputy First Minister to further support Local Government, Creative Scotland and the inter-islands ferry network.
The balance of funding will be allocated at the Autumn Budget Revision.
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.
Please quote the FOI reference
Central Enquiry Unit
Phone: 0300 244 4000
The Scottish Government
St Andrews House
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