Scottish Budget 2020-2021
Sets out our proposed spending and tax plans for 2020 to 2021, as presented to the Scottish Parliament.
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Annex H: Glossary
Annually Managed Expenditure (AME)
A small number of programmes that, while they fall within the devolved responsibilities of the Scottish Government, continue to be funded annually by the UK Government on the basis of demand. These budgets are ring-fenced for specific purposes, principally NHS and teachers' pension payments and student loans, and cannot be deployed for any other purpose. This expenditure is generally less predictable and is not subject to multi-year limits.
Audit Scotland was set up in April 2000 to audit the accounts of the Scottish Government and other public sector bodies in Scotland and to ensure that public funds are used properly, efficiently and effectively.
The Barnett Formula allocates to Scotland a population share of changes in comparable spending programmes in England. Comparability is the extent to which services delivered by UK Government departments correspond to services delivered by devolved administrations. Scotland gets exactly the same pounds per head increase as in England. Barnett only applies to expenditure classified within UK Government departments' Departmental Expenditure Limits. Details can be found in the Statement of Funding Policy available on the HM Treasury website.
Block Grant Adjustment
After devolution of taxes through the Scotland Act and Fiscal Framework, the Scottish block grant continues to be calculated by the Barnett Formula. But an adjustment to the block grant needs to be made to reflect that some of the budget is now funded by Scottish tax revenues that were previously retained by the UK Government. There are two steps to this. First, an initial deduction from the block grant is made for each tax. This is to compensate the UK Government for the tax revenue which is now being retained by the Scottish Government. Secondly, for each subsequent year the Block Grant Adjustments (BGAs) for each tax are grown or 'indexed' to take account of changing tax revenue over time.
Figures expressed in cash terms (also known as nominal terms) are not adjusted for the effect of inflation (see Real Terms).
Common Agricultural Policy (CAP)
The Common Agricultural Policy was set up under European Union treaties to increase agricultural production, provide a fair standard of living for farmers and make sure that food is available at reasonable prices.
Convention of Scottish Local Authorities (COSLA)
The Convention of Scottish Local Authorities is a membership organisation which represents the shared interests of Scotland's 32 local authorities.
COP26 is the 26th session of the Conference of the Parties to the UN Climate Change Conference which is taking place in Glasgow in November 2020.
Council of Economic Advisers (CEA)
The Council of Economic Advisers was established in 2007 to advise Scottish Ministers on how to make Scotland's economy more competitive.
A depreciation charge is a non-cash item which measures the wearing out, consumption or other reduction in useful life of a fixed asset.
European Structural Funds
European Structural Funds include the European Regional Development Fund (ERDF), the European Social Fund (ESF), the European Agricultural Fund for Rural Development (EAFRD) and the European Fisheries Fund (EFF). They are used to tackle regional disparities and support regional development through actions including developing infrastructure and telecommunications, developing human resources and supporting research and development. The Scottish Government is the 'managing authority' for the funds in Scotland.
Semi-autonomous executive agencies operate within a framework set by the responsible Cabinet Secretary or Minister, which specifies policies, objectives and available resources. All agencies are set annual performance targets by their Cabinet Secretary or Minister who, in turn, accounts to Parliament for the work of the agency.
Treasury limit applied to spending on either resource, capital or the combination of both. Commonly used in the past in the phrase Departmental Expenditure Limit (DEL).
Financial Transactions are a form of capital budget allocated by HM Treasury to the Scottish Government which can only be used for the provision of loans or equity investment beyond the public sector and cannot be used to fund public services. Financial Transactions facilities have to be repaid to HM Treasury in future years.
The Fiscal Framework is an agreement between the UK and Scottish Governments that governs funding of the Scottish budget and underpins the powers devolved through the Scotland Act 2016.
Gross Domestic Product (GDP)
Gross Domestic Product is a measure of the total economic activity in a region. References to growth in the economy are quoted using GDP. It is a measure of the total amount of goods and services produced within a year in a country. In the UK, three different approaches (measuring production, income or expenditure) are used in the generation of one single GDP estimate.
Growth Accelerator (GA)
The Growth Accelerator is a funding mechanism based on the wider economic impact of infrastructure investment. Capital funding is internally invested, with funding reimbursed by the Scottish Government over a set period following achievement of pre-agreed key milestones and targets.
The Public Bodies (Joint Working) (Scotland) Act 2014 introduced a statutory duty for NHS Boards and local authorities to integrate the planning and delivery of health and social care services. The Act required the establishment of Integration Authorities to oversee the integration. One type of Integration Authority is an Integration Joint Board. The partnership arrangement between the Integration Authority, local authority and NHS Board is a Health and Social Care Partnership.
Land and Buildings Transaction Tax (LBTT)
Land and Buildings Transaction Tax is a tax on land and property transactions which replaced Stamp Duty Land Tax (SDLT) in Scotland from April 2015. LBTT has a progressive rate structure which means that only the proportion of the price above each tax threshold will be taxed at the next rate, rather than the whole purchase price.
A collective term for Scotland's 32 local authorities.
Net-zero refers to achieving an overall balance between greenhouse gas emissions produced and greenhouse gas emissions taken out of the atmosphere, so that the net effect is that the increase in greenhouse gases is zero. The Scottish Government's targets consider all greenhouse gases, such as carbon dioxide, methane, nitrogen gases, chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons.
Non-cash is specified in HM Treasury's Consolidated Budgeting Guidance: the major components are depreciation (see separate definition), impairments and the taking and release of provisions.
Non-Departmental Public Body (NDPB)
A Non-Departmental Public Body is a body that operates independently of Ministers, although Ministers have ultimate responsibility. There are two main types of NDPB: executive NDPBs, which carry out administrative, regulatory, executive or commercial functions; and advisory NDPBs, which provide independent, expert advice to Ministers.
A Non-Ministerial Department (NMD) is a public body with many characteristics of a full department, but without a Minister. NMDs generally cover matters for which direct political oversight is judged unnecessary or inappropriate. They are usually headed by a senior civil servant as Chief Executive, with an independent Chair and non-executive directors for the board.
Non-Profit Distributing (NPD)
The Non-Profit Distributing model is a system for funding capital infrastructure projects. It is fully debt-financed, maximises value for money and allows shareholder transparency.
Office for Budget Responsibility (OBR)
The Office for Budget Responsibility was formed in May 2010 to provide independent assessments of public finances and the economy for each UK Budget, Spring Statement and Autumn Statement.
Any price or value adjusted for the effect of inflation. Real terms figures in the Budget are calculated using the GDP deflators published by HM Treasury.
Regulatory Asset Base (RAB)
The value of a regulated industry's assets. As an example, for the rail industry, this is the Office of Rail and Road's (ORR) calculation of the value of Network Rail's assets. The regulator agrees investment plans for 5-year periods, including adding new investments to the Regulatory Asset Base.
Science, Technology, Engineering and Mathematics (STEM)
The academic disciplines of science, technology, engineering and mathematics are often collectively described as STEM subjects.
The Scotland Reserve arrangements enable the Scottish Government to smooth expenditure, manage tax volatility and determine the timing of expenditure within specified limits. The Scotland Reserve is separated between resource and capital and replaces the previous cash reserve. The Scotland Reserve is capped in aggregate at £700 million. Annual drawdowns from the reserve are limited to £250 million for resource and £100 million for capital. There are no annual limits for payments into the Scotland Reserve. The total annual drawdown limits will be temporarily waived in the face of a Scotland-specific economic shock.
Scottish Fiscal Commission (SFC)
The Scottish Fiscal Commission was established as an independent Non-Ministerial Department on 1 April 2017. Commissioners are accountable to, and give evidence to, the Scottish Parliament. The Commission is responsible for producing independent forecasts of: revenue from fully devolved taxes and non-savings non-dividend income tax; onshore GDP in Scotland; and devolved demand-led social security expenditure.
Scottish Futures Trust (SFT)
The Scottish Futures Trust is the independent company established by the Scottish Government with the objective of maximising value for money across public infrastructure development.
Scottish Income Tax
Scottish Income Tax is a tax paid by Scottish taxpayers on all non-savings, non-dividend taxable income. The devolution of Scottish Income Tax commenced in April 2017.
Scottish Landfill Communities Fund (SLCF)
The Scottish Landfill Communities Fund is a tax credit scheme, linked to Scottish Landfill Tax, that encourages landfill site operators to contribute tax credits to benefit community and environmental projects.
Scottish Landfill Tax (SLfT)
Scottish Landfill Tax is a tax on the disposal of waste to landfill. It replaced UK Landfill Tax in Scotland in April 2015.
Tax Incremental Financing (TIF)
Tax Incremental Financing is a method of unlocking private investment in the regeneration of local areas. Initial borrowing by a local authority to fund the infrastructure is repaid through future increases in non-domestic rate revenues due to increased business creation resulting from the local authority's investment.
Total Managed Expenditure (TME)
Total Managed Expenditure comprises the sum of resource, capital and Annually Managed Expenditure (AME), less depreciation.
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