Scottish Governments Budget calculation: FOI release

Information requested

You asked how the Scottish Government calculated that the Scottish Government’s ‘dayto- day’ budget was £700 million lower in 2024-25 than it was in 2022-23. Furthermore, how was the calculation of £230 million less for ‘infrastructure’ over the same period was calculated.

Response

The table below shows the calculations;

	2022-23	2023-24	2024-25
GDP deflator, Autumn Statement	100	6.10	1.68
Rebase 2023-24 = 1	0.943	1	1.017
RESOURCE
Nominal terms	2022-23	2023-24	2024-25
AS,core Resource Block Grant from UKG	35,578	37,056	37,674
Real Terms figures in 2023-24 prices	37,748	37,056	37,044
Year on Year Change, £m		-692	-12
Cumulative change 2022-23 to 2024- 25 £m			-704
Change, %		-1.83%	-0.03%
Cumulative change 2022-23 to 2024- 25 %			-1.86%
CAPITAL
Nominal Terms	2022-23	2023-24	2024-25
AS,core Capital Block Grant from UKG	5,252	5,552	5,433
Real Terms figures in 2023-24 prices	5,572	5,552	5,342
Year on Year Change £m		-20	-210
Cumulative change 2022-23 to 2024- 25 £m			-230
Change, %		-0.36%	-3.78%
Cumulative change 2022-23 to 2024- 25 %			-4.13%

The Real Terms factor used is the GDP deflator, which can be viewed as a measure of general inflation in the domestic economy and is the standard measure used by government in calculating real terms figures. The GDP deflator figures used were as published by HM Treasury alongside the Autumn Statement (available here: GDP deflators at market prices, and money GDP November 2023 (Autumn Statement) - GOV.UK (www.gov.uk). Real Terms figures are re-based to 2023-24 prices and calculated by multiplying the core block grant figures by the re-based discount factor.

The core Block Grant figures used are derived from those provided by HM Treasury at Autumn Statement, but adjusted for a small number of lines that do not form part of the standard Barnett arrangements for calculating the Block Grant as set out in the UK Statement of Funding Policy available here: Statement_of_Funding_Policy_November_2023__FINAL_.pdf (publishing.service.gov.uk. 

Calculating the same real terms comparison using these unadjusted HM Treasury figures would give a higher figure for the real terms reduction between 2022-23 and 2024-25. The additional table below shows the unadjusted Block Grant figures, the equivalent real terms calculation based on those and the reconciling items that have been adjusted for in arriving at the Core Block Grant figures quoted in the table above. Core block grant is the Latest HMT figure total minus the total adjustments identified.

	2022-23	2023-24	2024-25
Latest HMT total Resource Block Grant	35,993	36,940	37,449
RT 23-24 prices	38,188	36,940	36,831
Year on Year Change, £m		-1,248	-109
Change %		-3.3%	-0.3%
Immigration Health Surcharge	161	81
Spillover correction	375
IFRS 16	-227	-230	-222
Machinery of Government Changes	88	13	-3
Home Office comparability error	18	20
Total adjustments	415	-116	-225
Adjusted Core Resource Grant	35,578	37,056	37,674
Latest HMT total Capital Block Grant	6,064	5,777	5,450
RT 23-24 prices	6,434	5,777	5,782
Year on Year Change, £m		-657	6
Change%		-10.2%	0.1%
Adjustments
IFRS 16	862	323	117
Machinery of Government hanges	13
Ukraine War contribution	-65
Home Office comparability error	2	2
City Deals		-100	-100
Total adjustments	812	225	17
Adjusted Core Capital Grant	5,252	5,552	5,433

Immigration Health Surcharge – This is income derived from charges on migrants for using NHS Services and is collected by the UK Department for the Home Office and redistributed to devolved governments on a Barnett formula basis. Despite the Barnett formula applying, this is not a Barnett Consequential included within the block grant as it has no relationship to UK departmental spending. Amounts are allocated to Scottish Government’s settlements incrementally.

Spillover correction – This was an additional one-off allocation from HM Treasury following the conclusion of a previous dispute on the application of increases to the Income Tax personal allowance on adjustments to the Scottish Block Grant, dating back to 2017-18. An agreement was reached in 2022-23 reflecting all prior year adjustments up to and including financial year 2021-22 resulting in a transfer of £375 million in 2022-23. No adjustment is made or required for 2023-24 onwards.

Public Sector Adoption of International Financial Reporting Standard 16 (IFRS 16) - The public sector adoption of IFRS 16 changes the budgeting and accounting treatment for leases. This is a technical change, with budgets now adjusted to align with the requirement to capitalise the value of leased assets. 2024-25 is the final year of a three year transition period with budgets for 2024-25 and the 2 prior years adjusted to reflect the necessary changes. These changes provide additional capital and non-cash budget cover to be applied for existing and new assets acquired under lease arrangements, to allow for their reclassification and subsequent depreciation. The changes to the resource budget position adjust for the elements of the rental costs that are now capitalised and therefore no longer score as resource. Non-discretionary ring-fenced budget cover is being provided by HM Treasury to support this change in treatment and the Scottish Government’s net discretionary funding is not impacted by these changes.

Machinery of Government changes – These relate to funding transfers from UK Government for specific transfers of responsibility outside of standard Barnett arrangements.

Home Office Comparability Error – this is a specific adjustment related to an error in the HM Treasury allocation process for the last UK Spending Review.

Ukraine War contribution – The Scottish Government made a one-off capital contribution to total UK funding support for the Ukraine war effort in 2022-23.

City Deals - City deals are jointly funded through agreement with the UK Government. UK Government contributions to these agreements are not yet included in their Block Grant figures for 2023-24 and 2024-25 but are anticipated in the Scottish Government Capital Grant figures. The £100 million anticipated here is consistent with the profile of UK Government contributions to these agreements.

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