Guide to the ABR 2024-25 – Finance Update for FPAC
Background information provided to the Finance and Public Administration Committee (FPAC) to help with members' scrutiny of the Autumn Budget Revision (ABR) 2024 to 2025.
A. Guide to the Autumn Budget Revision
1. The budget process for 2024-25 commenced with the publication of the Scottish Budget and annual Budget Bill which provided details of the Scottish Government’s spending plans. These plans (as amended at Stages 2 and 3 of the Budget Bill) were approved by the Scottish Parliament on 27 February 2024 and received Royal Assent on 28 March 2024.
2. Once the Budget Act has been approved by the Scottish Parliament, there are usually two opportunities to amend the budget as the year progresses - the Autumn Budget Revision and a Spring Budget Revision. The Autumn Budget Revision provides the first opportunity to amend the budget figures.
3. The Autumn Budget Revision was finalised on 24 September 2024 ahead of the draft SSI being laid in parliament on 3 October 2024. This guide was provided to the Finance and Public Administration Committee on 25 October 2024 ahead of the scheduled scrutiny session on 12 November 2024.
A.1 Summary of the Autumn Budget Revision
4. The Autumn Budget Revision is routine parliamentary business that proposes amendments to better align the Government’s budget with its planned spending profile.
5. The changes proposed in the Autumn Budget Revision result in an increase in the approved budget of £1,126.6 million from £59,322.5 million to £60,449.0 million.
6. The changes to the Budget are broken down in to four main areas:
- A.2 - Funding changes to reflect deployment of available resources to portfolios (total net increase to the budget of £1,066.2 million);
- A.4 - Technical adjustments (net increase to the budget of £42.2 million);
- A.3 - Whitehall transfers and HM Treasury allocations to the Scottish Government (£18.1 million); and
- A.5 - The transfer of resources between Scottish Government portfolios.
7. The main changes included under each heading are categorised in table 1.2 in the Budget Revision document and summarised below.
| Summary of Changes by Type Scottish Government Portfolios | Resources other than Accruing Resources as shown in Budget Act £m | Funding Changes £m | Technical Changes £m | Net Whitehall transfers £m | Net Transfers within Scottish Block £m | Revised Budget £m |
|---|---|---|---|---|---|---|
| Health and Social Care | 19,558.6 | 1,058.0 | 0.0 | (0.0) | (909.5) | 19,707.0 |
| Social Justice | 7,564.0 | (160.0) | 0.1 | 15.0 | (97.7) | 7,321.4 |
| Net Zero and Energy | 831.4 | (19.6) | 40.3 | 0.0 | (101.1) | 751.0 |
| Education and Skills | 4,859.7 | (6.9) | (0.1) | 0.2 | (315.1) | 4,537.8 |
| Justice and Home Affairs | 3,580.5 | 35.1 | 0.0 | 0.0 | (19.5) | 3,596.2 |
| Transport | 3,703.7 | (26.5) | 0.0 | 1.5 | (21.9) | 3,656.9 |
| Rural Affairs, Land Reform and Islands | 1,109.8 | 5.3 | 0.0 | 0.0 | (15.1) | 1,100.0 |
| Constitution, External Affairs & Culture | 280.8 | 0.0 | 0.0 | 0.0 | 0.3 | 281.2 |
| Finance and Local Government | 12,439.3 | 155.9 | 0.0 | 0.0 | 1,394.3 | 13,989.5 |
| Deputy First Minister, Economy and Gaelic | 1,331.0 | 20.2 | 0.0 | 1.3 | 62.4 | 1,414.9 |
| Crown Office and Procurator Fiscal Service | 222.9 | 1.3 | 1.2 | 0.0 | 0.0 | 225.4 |
| Scottish Government | 55,481.8 | 1,062.8 | 41.4 | 18.1 | (22.9) | 56,581.2 |
| Scottish Housing Regulator | 5.6 | 0.0 | 0.0 | 0.0 | 0.0 | 5.6 |
| National Records of Scotland | 34.5 | 0.0 | 0.0 | 0.0 | 0.6 | 35.1 |
| Office of the Scottish Charity Regulator | 3.6 | 0.0 | 0.0 | 0.0 | 0.0 | 3.6 |
| Scottish Courts and Tribunals Service | 165.9 | 3.5 | 0.0 | 0.0 | 20.9 | 190.3 |
| Scottish Fiscal Commission | 2.7 | 0.0 | 0.0 | 0.0 | 0.0 | 2.7 |
| Revenue Scotland | 11.0 | 0.0 | 0.0 | 0.0 | 0.0 | 11.0 |
| Registers of Scotland | 10.0 | 0.0 | 0.0 | 0.0 | 0.0 | 10.0 |
| Environmental Standards Scotland | 3.0 | (0.1) | 0.0 | 0.0 | 0.0 | 2.9 |
| Food Standards Scotland | 22.9 | 0.0 | 0.0 | 0.0 | 0.5 | 23.4 |
| Consumer Scotland | 2.4 | 0.0 | 0.7 | 0.0 | 1.0 | 4.1 |
| Scottish Teachers’ and NHS Pension Schemes | 3,422.4 | 0.0 | 0.0 | 0.0 | 0.0 | 3,422.4 |
| Scottish Administration | 59,165.9 | 1,066.2 | 42.2 | 18.1 | (0.0) | 60,292.3 |
| Scottish Parliamentary Corporate Body | 143.1 | 0.0 | 0.0 | 0.0 | 0.0 | 143.1 |
| Audit Scotland | 13.5 | 0.0 | 0.1 | 0.0 | 0.0 | 13.6 |
| Total Scottish Budget | 59,322.5 | 1,066.2 | 42.2 | 18.1 | (0.0) | 60,449.0 |
A.2 Funding Changes
8. Funding changes provide additional budget spending power to portfolios and programmes, and also some reductions where funding has been returned to the centre for redeployment elsewhere. Table 1.2 provides the funding changes on a net basis by portfolio of £1,066.2 million, however the gross impact is shown below.
| Scottish Government Portfolios | Funding Additions | Funding Reductions | Net Funding Changes |
|---|---|---|---|
| Health and Social Care | 1,058.0 | 0.0 | 1,058.0 |
| Social Justice | 0.0 | (160.0) | (160.0) |
| Net Zero and Energy | 0.0 | (19.6) | (19.6) |
| Education and Skills | 0.0 | (6.9) | (6.9) |
| Justice and Home Affairs | 35.1 | 0.0 | 35.1 |
| Transport | 0.0 | (26.5) | (26.5) |
| Rural Affairs, Land Reform and Islands | 5.4 | (0.1) | 5.3 |
| Constitution, External Affairs & Culture | 0.0 | 0.0 | 0.0 |
| Finance and Local Government | 155.9 | 0.0 | 155.9 |
| Deputy First Minister, Economy and Gaelic | 20.2 | 0.0 | 20.2 |
| Crown Office and Procurator Fiscal | 1.3 | 0.0 | 1.3 |
| Scottish Government | 1,275.9 | (213.1) | 1,062.8 |
| Scottish Housing Regulator | 0.0 | 0.0 | 0.0 |
| National Records of Scotland | 0.0 | 0.0 | 0.0 |
| Office of the Scottish Charity Regulator | 0.0 | 0.0 | 0.0 |
| Scottish Courts and Tribunals Service | 4.0 | (0.5) | 3.5 |
| Scottish Fiscal Commission | 0.0 | 0.0 | 0.0 |
| Revenue Scotland | 0.0 | 0.0 | 0.0 |
| Registers of Scotland | 0.0 | 0.0 | 0.0 |
| Environmental Standards Scotland | 0.0 | (0.1) | (0.1) |
| Food Standards Scotland | 0.0 | 0.0 | 0.0 |
| Consumer Scotland | 0.0 | 0.0 | 0.0 |
| Scottish Teachers’ and NHS Pension Schemes | 0.0 | 0.0 | 0.0 |
| Total Scottish Administration | 1,279.9 | (213.7) | 1,066.2 |
| Scottish Parliament Corporate Body | 0.0 | 0.0 | 0.0 |
| Audit Scotland | 0.0 | 0.0 | 0.0 |
| Total Scottish Budget | 1,279.9 | (213.7) | 1,066.2 |
A.2.1 Gross Funding Changes
9. The largest allocation of funding deployed in the budget revision is £1,058 million provided to the Health and Social Care portfolio. This funding is split between £864 million to support Health services resource and £194 million of consequentials received in relation to the changes to employer pension contribution rates. The majority of this funding is being provided to support the financial pressures embedded within the Health service, including on pay and to reduce the level of savings required, as was made clear in the Cabinet Secretary’s fiscal statement on 3 September.
10. The Finance and Local Government portfolio has funding additions totalling £155.9 million in the budget revision. All of this funding is being provided to Local Government. Of this total, £86.2 million relates to funding for additional costs of enhanced employer pension contributions for Teachers, £62.7 million relates to additional general revenue grant funding and £4 million for the Island Cost of Living Fund both of which the Cabinet Secretary confirmed to CoSLA and council leaders on the 15th of April. A further £3 million is being provided to support the council tax freeze following engagement with CoSLA (on top of the £144 million provided at Budget Bill).
11. £35 million has been provided to the Justice and Home affairs portfolio to fund additional costs of Police and Fire Pensions. This primarily relates to the impact of the costs of enhanced employer pension contribution rates. Scottish Courts and Tribunals Service are receiving £4 million of funding for the same purpose.
12. £20.2 million of capital funding is being provided to Ferguson Marine within the Deputy First Minister Economy and Gaelic portfolio to fund the costs of the building of vessels 801 and 802. This additional budget requirement is included within the costings which were outlined in the letter sent to the NZET committee on 26 February 2024
13. Additional gross funding changes include:
- £5.4 million of Crown Estate income has been passed directly to Marine for onward distribution to Local Government to reflect the Coastal Communities commitments.
- £1.3 million to Crown Office and Procurator Fiscal Service for additional cost of employer pension contributions.
A.2.2 Reductions to Portfolios
14. The Cabinet Secretary for Finance and Local Government presented her fiscal statement to Parliament on 3 September 2024. The fiscal statement outlined the savings measures required to achieve a balanced budget in 2024-25.
15. An accompanying letter was sent to the committee which included an annex quantifying the savings measures. A reconciliation is included in section C of the Guide of which of the savings measures outlined in the fiscal statement are included within the ABR.
16. As per table A.2, £213.7 million of funding reductions are included in the ABR. While significant savings within the Health and Social Care portfolio were set out in the fiscal statement these amounts are not reflected as a reduction in the portfolio budget. Rather these savings are being repurposed within the portfolio to meet expected pressures. Further details are included in the reconciliation.
17. The largest reduction in funding within the budget revision is the £160 million reduction in funding for Social Security within the Social Justice portfolio. £148 million of this reduction reflects the estimated change to Scottish Government funding following the UK Government’s own decision to limit eligibility for Winter Fuel Payment and the Scottish Government decision to replicate this for Pension Age Winter Heating Payments (PAWHP).
18. Ordinarily Social Security benefit expenditure budgets are not adjusted at the Autumn Budget Revision, however it has been processed as part of ABR given the fundamental change to eligibility for the benefit. The remaining budget is an interim figure pending receipt of the Scottish Fiscal Commission forecast for PAWHP using the new qualification criteria. Funding will be updated at the Spring Budget Revision to reflect the new forecast.
19. The balance of £12 million relates to Social Security programme savings outlined in the Fiscal Statement for reduced costs of workforce and delivery of the PAWHP.
20. Within the Transport portfolio, £26.5 million of Financial Transaction income from the Low Carbon Transport Scheme is included as a saving. Savings as a result of not making permanent the peak fares pilot or progressing the concessionary fares extension to asylum seekers pilot are not included within the budget revision as funding would require to be provided to the portfolio or additional savings taken forward to continue with the schemes.
21. Within the Net Zero and Energy portfolio £19.6 million of savings outlined in the fiscal statement have been included, the largest of which is the £16 million of additional income in respect of Scottish Water Interest on Voted Loan. The additional £3.6 million relates to reduced forecast on the Zero Waste programme, £1 million of savings from Nature Restoration and £0.1 million relating to Air Quality.
22. Within the Education budget £6.9 million of savings have been included. The largest of which is the £6 million forecast reduction in expected demand for Higher Education Student Support.
23. Further funding reductions include:
- £0.5 million of capital funding returned by Scottish Courts and Tribunal Services. This relates to work on the Dundee Justice Hub that was accelerated during 2023-24
- £0.1 million of financial transactions income in Rural Affairs, Land Reform and Islands for financial transactions relating to the panda enclosure.
- £0.1 million of savings within Environmental Standard Scotland as noted in the fiscal statement.
A.3 Whitehall Transfers
24. There are six specific Whitehall transfers and allocations from HM Treasury recognised in the Autumn Budget Revision. The net positive impact on the Scottish Budget is £18.1 million.
25. The largest of the Whitehall transfers is the £7.7 million being provided to the Ukrainian Resettlement budget in the Social Justice portfolio for Ending Homelessness Funding.
26. A further £7.3 million is being provided to the Social Justice portfolio for the Debt Advice Levy. This will be used to fund essential debt advice services provided by a range of organisations across Scotland.
27. The Transport portfolio is receiving a Whitehall transfer of £1.5 million in relation to A75 Union Connectivity Funding, while Digital Strategy in the Deputy First Minister, Economy and Gaelic portfolio will receive £1.3 million of UK Cyber Security funding for a number of cyber projects
28. The Education and Skills portfolio will receive £250k of National Cyber Security Funding in respect of the CyberFirst Programme, while the Health and Social Care portfolio will contribute £20k for the Sport Satellite Programme.
A.4 Technical Adjustments
29. The Autumn Budget Revision records net technical changes of £42.2 million. The single largest change is the £40.3 million adjustment for Scottish Water voted loans. This adjustment is to revise the split of loans issued and repayments between those which score on the SG basis and those which don’t. There is no impact on the Scottish Government’s discretionary spending as a result of this change as this budget was already included on an HM Treasury basis.
30. National Records of Scotland are swapping £0.8 million of depreciation previously identified as IFRS16 depreciation to standard deprecation which is a neutral transaction
IFRS16 adjustments:
31. The balance of changes relate to the ongoing implementation of International Financial Reporting Standard 16 ('IFRS16’) which has resulted in a significant alteration to the accounting treatment for leases, with budgets now adjusted to align with that treatment. We are currently in the final year of a three year transition period with budget initially applied at Budget Bill to reflect the changes but subject to in-year amendment.
32. The IFRS16 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. There are also changes to the resource budget position to adjust for the elements of the rental costs that are now capitalised.
33. Ring-fenced budget cover is being provided by HM Treasury to support this change in accounting treatment and the Scottish Government’s net discretionary funding will not be impacted by these changes subject to agreement with HM Treasury. Final IFRS16 budget cover requirements will be provided to Treasury ahead of the UK Supplementary Estimates exercise. The net total changes as a result of IFRS 16 are £1.2 million.
| Scottish Government Portfolios | Whitehall | IFRS16 | Other Technical | Net Funding Changes |
|---|---|---|---|---|
| Health and Social Care | (0.0) | 0.0 | 0.0 | 0.0 |
| Social Justice | 15.0 | 0.1 | 0.0 | 0.0 |
| Net Zero and Energy | 0.0 | 0.0 | 40.3 | 40.3 |
| Education and Skills | 0.2 | (0.1) | 0.0 | 0.0 |
| Justice and Home Affairs | 0.0 | 0.0 | 0.0 | 0.0 |
| Transport | 1.5 | 0.0 | 0.0 | 0.0 |
| Rural Affairs, Land Reform and Islands | 0.0 | 0.0 | 0.0 | 0.0 |
| Constitution, External Affairs & Culture | 0.0 | 0.0 | 0.0 | 0.0 |
| Finance and Local Government | 0.0 | 0.0 | 0.0 | 0.0 |
| Deputy First Minister, Economy and Gaelic | 1.3 | 0.0 | 0.0 | 0.0 |
| Crown Office and Procurator Fiscal | 0.0 | 1.2 | 0.0 | 0.0 |
| Scottish Government | 18.1 | 1.1 | 40.3 | 59.5 |
| Scottish Housing Regulator | 0.0 | 0.0 | 0.0 | 0.0 |
| National Records of Scotland | 0.0 | (0.8) | 0.8 | 0.0 |
| Office of the Scottish Charity Regulator | 0.0 | 0.0 | 0.0 | 0.0 |
| Scottish Courts and Tribunals Service | 0.0 | 0.0 | 0.0 | 0.0 |
| Scottish Fiscal Commission | 0.0 | 0.0 | 0.0 | 0.0 |
| Revenue Scotland | 0.0 | 0.0 | 0.0 | 0.0 |
| Registers of Scotland | 0.0 | 0.0 | 0.0 | 0.0 |
| Environmental Standards Scotland | 0.0 | 0.0 | 0.0 | 0.0 |
| Food Standards Scotland | 0.0 | 0.0 | 0.0 | 0.0 |
| Consumer Scotland | 0.0 | 0.7 | 0.0 | 0.7 |
| Scottish Teachers’ and NHS Pension Schemes | 0.0 | 0.0 | 0.0 | 0.0 |
| Total Scottish Administration | 18.1 | 1.1 | 41.1 | 60.2 |
| Scottish Parliament Corporate Body | 0.0 | 0.0 | 0.0 | 0.0 |
| Audit Scotland | 0.0 | 0.1 | 0.0 | 0.1 |
| Total Scottish Budget | 18.1 | 1.2 | 41.1 | 60.3 |
A.5 Internal Transfers
34. There are a number of internal transfers within the Scottish Block as part of the Autumn Budget Revision process. Transfers between and within portfolios are ‘zero-sum’.
35. The significant budget internal transfers between portfolios include:
- transfer from Health & Social Care to Local Government within the Finance & Local Government portfolio to support the investment in integration of Health & Social Care (£257.2 million);
- transfer from Education & Skills to Local Government to support the recurring costs of the previous financial year’s Teachers’ Pay Awards (£242 million);
- transfer from Health & Social Care to Local Government for staff providing direct Adult Social Care (£230 million);
- transfer from Health & Social Care to Local Government to provide funding to increase the capacity of care at home (£124 million);
- transfer from Health & Social Care to Local Government to ensure delivery of the commitments set out in the Mental Health Transition and Recovery Plan (£120 million);
- transfer from Social Justice to Local Government to distribute Discretionary Housing Payments (£76.2 million);
- transfer from Health & Social Care to Local Government to provide funding for the implementation of the Carers Act (£60.5 million);
- transfer from Health & Social Care to Education and Skills portfolio to pay teaching grant for Nursery and Midwifery students (£57.8 million);
- transfer from Social Justice to Local Government to provide the Scottish Welfare Fund (£40.1 million);
- transfer from Net Zero and Energy to Social Justice for the installation of zero emission heating systems as part of the affordable homes programme (£40 million);
- transfer from Transport to Local Government to deliver grant payments to local authorities for the provision of Cycling, Walking and Safer Routes programme (£35 million);
- transfer from Net Zero and Energy to Enterprise, Trade and Investment within the Deputy First Minister, Economy and Gaelic portfolio to allow delivery of the Offshore Wind Investment Programme (£32.9 million); and
- transfer from Education & Skills to Local Government within the Finance & Local Government portfolio to provide funding for the delivery of the Whole Family Wellbeing Fund (£32 million).