Information about the structure of the Scottish Government and details of the Scottish Government Ministers and senior officials can be found in the Performance Report and in the Governance Statement.
Statement of Accountable Officer’s Responsibilities
In accordance with the accounts direction issued under Section 19(4) of the Public Finance and Accountability (Scotland) Act 2000 the Scottish Ministers are required to prepare resource accounts for each financial year in the form and on the basis set out in the Government Financial Reporting Manual, detailing the resources acquired, held, or disposed of during the year and the use of resources by the Scottish Ministers during the year.
The resource accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of the Scottish Government, the net resource outturn, resources applied to objectives, recognised gains and losses and cash flows for the financial year.
The Permanent Secretary is the most senior member of the staff of the Scottish Administration and as the Principal Accountable Officer is the Accountable Officer responsible for preparing the accounts and submitting them to the Auditor General for Scotland.
In preparing the accounts the Principal Accountable Officer was required to comply with the Government Financial Reporting Manual (FReM) and in particular to:
- observe the accounts direction including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis;
- make judgements and estimates on a reasonable basis;
- state whether applicable accounting standards as set out in the FReM have been followed and disclose and explain any material departures in the accounts; and
- prepare the accounts on a going concern basis.
The Principal Accountable Officer confirms that the Annual Report and Accounts as a whole are fair, balanced and reasonable.
The responsibilities of the Principal Accountable Officer are described in the Memorandum to Accountable Officers from the Principal Accountable Officer published in the Scottish Public Finance Manual.
For the purposes of the audit, so far as the Principal Accountable Officer is aware, there is no relevant audit information of which the auditors are unaware and all necessary steps have been taken by the Principal Accountable Officer to ensure awareness of relevant audit information and to establish that the Scottish Government’s auditors are aware of that information.
The Principal Accountable Officer authorised these accounts for issue on the date signed at the end of this report.
Scope of Responsibility
The Scottish Government’s role is to deliver our Purpose and National Outcomes, guided by the National Performance Framework.
As the Permanent Secretary, I am responsible for ensuring that robust governance arrangements are in place to ensure that we deliver our Purpose and National Outcomes an open, capable and responsive way. I am also the Principal Accountable Officer (PAO) for the Scottish Administration (under the terms of the Public Finance & Accountability (Scotland) Act 2000) and responsible for ensuring the propriety and regularity of finances and the economic, efficient and effective use of resources. In discharging these overall responsibilities I am supported by the designated Portfolio Accountable Officers within the core Scottish Government; the Crown Office and Procurator Fiscal Service (COPFS); Scottish Government Executive Agencies and Health Bodies.
Detailed information on the role and responsibilities of Accountable Officers is set out in the Accountability chapter of the Scottish Public Finance Manual (SPFM) and further detail on the context and purpose of the Governance Statement can be found in the Governance Statement chapter of the SPFM. Figure 1 sets out the approach I have put in place to achieve this.
Corporate Governance System
The Scottish Government’s Corporate Governance system has been designed in order to provide me with support and advice as Principal Accountable Officer in relation to strategic issues of organisational health, performance, vision and strategy and effective governance.
The Scottish Government’s corporate governance system provides for clear lines of accountability, effective reporting and appropriate escalation routes. It enables scrutiny and oversight of the Scottish Government’s activities and provides me with an independent source of assurance on the effectiveness of the corporate governance arrangements in place. In addition, it complies with all governance-related guidance in the SPFM, the Civil Service Code and relevant elements of the Good Governance Standard for Public Services produced by the Independent Commission on Good Governance in Public Services.
Over the period of the Accounts until the beginning of March 2020, the corporate governance system operated as set out in my Governance Statement for 2018-19. (see Figure 2)
Following the outbreak of Covid-19, I agreed in consultation with my Executive Team, that these corporate governance structures should be streamlined, focussing governance activities and resources on the organisation’s response. This was put in place in March 2020. The underpinning governance structure has therefore been adapted to reflect the response to Covid-19 to deliver timely decisions underpinned by the principles of good governance. A number of Ministerial and corporate groups were also created to supplement those structures in place and support Ministers and Executive Team on the day-to-day and strategic issues.
The adapted structure is set out at Figure 3. Accountable Officer duties set out in the Public Finance and Accountability (Scotland) Act 2000 and the SPFM remain extant and further detail can be found in Good Governance in the Scottish Government, published on 10 June 2020.
In March 2020 I asked the Director of Internal Audit and Assurance (DIAA) to review these arrangements to ensure that they were enabling the Scottish Government to continue to act properly, securely, lawfully and in line with financial accountability requirements. I am pleased to say that this was confirmed to be the case.
Governance arrangements for separate accounting entities
The separate accounting entities within the Scottish Government consolidation boundary have corporate governance arrangements in place appropriate to their individual circumstances and in compliance with relevant guidance. The effectiveness of governance arrangements for the separate accounting entities is addressed in the Governance Statements provided by the entities concerned as part of their annual accounts. As with the Scottish Government, these arrangements comply with relevant guidance in the SPFM and generally accepted best practice principles.
Corporate Board’s purpose is to provide me, as Principal Accountable Officer, with objective strategic oversight, guidance and advice in relation to the Scottish Government’s vision and strategy; organisational performance and development; financial stewardship and the effectiveness of its governance arrangements.
Over the reporting period, it has consisted of myself; Directors General as my Portfolio Accountable Officers; five Non-Executive Directors; the Chief Financial Officer; Director of People; the Director for Communications, Ministerial Support and Facilities and the Board Secretary. The Solicitor to the Scottish Government joined the Corporate Board, as well as my Executive Team, in September 2019.
Corporate Board continued to meet quarterly over the course of the reporting period which this Statement covers and its minutes are published. It has considered the following issues over the reporting period: financial performance and budget monitoring throughout the year to support its consideration of the Annual Accounts; Climate Change; the 2019/20 Scottish Government Annual Consolidated Accounts and this companion Governance Statement and preparations to respond to the end of the European Union (EU) Exit transition period. It also undertook its annual review of corporate risk. A Balanced Scorecard has been developed to support the Board to scrutinise the organisation’s key performance metrics as well as progress towards our National Performance Framework outcomes. From March 2020, Covid-19 has been a standing item for the Board.
Scottish Government Audit and Assurance Committee
The Scottish Government’s Audit & Assurance Committee (SGAAC) members are our Non-Executive Directors and its role is to provide advice and support in discharging my Principal Accountable Officer responsibilities in relation to risk, control and governance and associated assurance through the provision of constructive challenge.
The Committee was chaired by Janet Hamblin until March 2020 and is now chaired by Ronnie Hinds, alongside a newly-appointed Deputy Chair, Jim Robertson. I attend along with Directors General; the Chief Financial Officer; the Director for Internal Audit and Assurance and the Board Secretary. Audit Scotland attend SGAAC and the underpinning Director General Assurance meetings as the Scottish Government’s External Auditors. The Auditor General attends SGAAC annually when the Committee considers the Scottish Government’s Annual Accounts and the Governance Statement.
Relevant issues discussed at Director General Assurance meetings are now escalated for awareness and discussion (and if appropriate, action) to SGAAC based on clear escalation criteria. The issues raised throughout this year, alongside the Director General Certificates of Assurance which underpin this Statement, have been discussed by SGAAC in the period up to my signature of the Statement and the Scottish Government’s Annual Accounts. SGAAC subsequently considered the Statement and the draft Annual Accounts on 8 December 2020 following consideration by Corporate Board on 1 December and no significant control weaknesses were raised other than those disclosed in the significant control issues section of this Statement.
A similar process is in place in each of the separate accounting entities within the Scottish Government consolidation boundary.
Following recommendations by Audit Scotland in its Annual Audit Report for 2018-19, in December 2019 SGAAC undertook a review and agreed to a number of changes and improvements which have been implemented by SGAAC over the reporting period. A revised Terms of Reference for SGAAC and a companion forward work plan have been agreed and approved by Corporate Board, alongside the revised and improved escalation criteria to support the closer integration of SGAAC’s work with Director General Assurance arrangements. All of the recommendations on SGAAC from Audit Scotland’s 2019-20 Annual Audit Report have been implemented through its Review process, including the production of an annual report and an assessment of its performance over the period supported by independent input from myself and those who have attended, participated in and supported SGAAC.
SGAAC’s annual report covers the period December 2019 – September 2020 and included an assessment of its performance over the period. This assessment states that SGAAC has performed effectively against its revised Terms of Reference and that improvements have been noted in the nature and levels of scrutiny and challenge; the quality of the discussions which have taken place over the period and the material provided to support those discussions . I agree with this assessment. SGAAC has enabled me to take assurance as Principal Accountable Officer in the governance arrangements in place in the Scottish Government. I very much welcome these improvements and the support SGAAC has provided, and continues to provide, to me.
Director General (DG) Assurance meetings take place quarterly, providing a dedicated forum in which assurance is sought on the core elements of good governance. Each meeting covers: financial stewardship; people and capability; performance and outcomes; organisational efficiency; risk management and the internal control environment. Relevant risks and issues are escalated for awareness, discussion and/ or action to SGAAC or Corporate Board in line with the associated escalation criteria.
Assurance meetings are attended by each Director from the Director General family; paired Non-Executive Directors; Audit Scotland; Internal Audit and Assurance; the Board Secretary and relevant officials as appropriate and provide me with support as the Principal Accountable Officer in the preparation of this Governance Statement and the Scottish Government’s Annual Accounts. The Chair and Deputy Chair of SGAAC have open invitations to attend each meeting and have done so over the reporting period.
Improvements to the Scottish Government’s assurance arrangements continue, particularly in relation to how the identification and management of risk at Director General family level and how the stewardship of the Scottish Government’s finances and people are evidenced, monitored and improved. Issues escalated to SGAAC this reporting year have included staffing capacity and capability, EU Exit preparedness, the impact of Covid-19 and a number of other areas I have included later in this Statement.
Other Corporate Governance Boards
The Corporate Board is supported by a number of corporate sub-boards. Over the reporting year 2019-20, the Boards have met regularly and undertaken their responsibilities in line with the Scottish Government’s Corporate Governance Manual.
In order to ensure that a timely response to Covid-19 key decisions have been taken by the Executive Team on behalf of the People, Place, Performance and Constitution and Europe Programme Boards since March 2020. This has been in line with the adapted governance arrangements put in place as Figure 1 sets out.
These Boards are being re-instated in a phased way and will adapt to the key priorities of the Scottish Government and the very different environment in which we are now operating given the response to Covid-19.
People Board: chaired by DG Organisational Development & Operations
The People Board’s role is to create the culture and conditions for individuals to thrive and be successful in Scottish Government, and to support the Scottish Government in its commitment to a diverse, skilled, engaged and supported workforce.
Place Board: chaired by DG Education, Communities & Justice and DG Economy
“Place” is defined as the physical and digital space which supports people, visitors and the wider community to work together effectively to support the Scottish Government’s vision and purpose. The Place Board supports the delivery of the Smarter Workplaces Programme, Corporate Systems and the Digital Programme; assuring that investment decisions support the delivery of the Place Board's vision and anticipates and responds effectively to future challenges in terms of our workplace and our systems.
Performance Board: chaired by DG Scottish Exchequer
The Board looks across the whole system of government to assure that Ministerial priorities are delivered with measurable progress and that performance is focused on outcomes. The Performance Board monitors the progress of the delivery of the National Performance Framework (NPF) and provides support and guidance to develop the capacity, capability and culture required to deliver the National Outcomes. It also ensures effective governance in relation to the delivery of the Programme for Government (PfG) and reviews and advises on governance, structures and behaviours needed to optimise the delivery of the NPF and PfG.
Economy Board: chaired by DG Economy
The Economy Board provides strategic oversight on the economy across Scottish Government’s activities by coordinating economic policy across portfolios to optimise opportunities while managing risk; identifying significant cross-cutting issues and issuing subsequent calls for evidence to understand the nature of those; commissioning and gaining assurance on large scale projects related to the economy; continuing to drive improved economic capacity and capability across Scottish Government and strengthening cross-Scottish Government Ministerial action through a coherent message on economic policy.
Following the outbreak of Covid-19 the Board has been repurposed to support the immediate and longer-term strategic economic response to the pandemic, working closely with the Ministerial Economy Cabinet and the Exchequer Board.
Exchequer Board: chaired by DG Scottish Exchequer
The Exchequer Board provides strategic assurance, advice and challenge on Exchequer governance within Scottish Government. This enables DG Scottish Exchequer to provide advice on the medium and long-term sustainability of Scotland’s public finances and on the resilience of Scotland’s fiscal landscape.
Like the Economy Board, following the outbreak of Covid-19 the Board has been repurposed to focus on the current fiscal and macroeconomic environment as impacted by Covid-19.
Infrastructure Investment Board: chaired by DG Scottish Exchequer
The Infrastructure Investment Board (IIB) strengthens strategic direction, prioritisation and oversight to ensure coherent advice and aligned delivery of an effective, fiscally sustainable Programme which maximises our ambitions for infrastructure investment. It is concerned with the impact of overall investment on the economy, how best and by whom major and critical infrastructure is financed as much as that infrastructure is directly funded or financed by Scottish Government.
Its focus following the outbreak of Covid-19 has been on how public sector investment can support economic recovery through, for example, the draft Infrastructure Investment Plan and Capital Spending Review.
Constitution and Europe Programme Board (chaired by DG Constitution and External Affairs)
The Constitution and Europe Programme Board’s role is to ensure that, following the EU referendum result, the Scottish Government brings clarity and leadership to its engagement with citizens; the UK Government; other administrations; the European Institutions and civic and business organisations. Further, its role is to protect and advance Scotland's interests e.g. economic, financial, social, environmental and constitutional and ensure that, whatever happens, Scotland is ready and responds effectively.
Internal Audit and Assurance
From 1 April 2019 the Scottish Government introduced a new Directorate of Internal Audit and Assurance (DIAA). This brought together three independent assurance teams; Internal Audit; Digital Assurance Office; Portfolio, Programme and Project Assurance; and the role of the Data Protection Officer. While the services provided by each of the teams continue independently, an enhanced integrated approach to assurance is being developed to support the Scottish Government’s expanding responsibilities through a proportional provision of assurance activities throughout the policy to delivery lifecycle.
Audit Scotland, as the Scottish Government’s External Auditors, assess the extent to which they will use the individual reviews undertaken by Internal Audit to inform their opinion on the financial statements, and meet their wider responsibilities, depending on their direct relevance to their work. Each year they also undertake a review of the Scottish Government’s Internal Audit arrangements. Audit Scotland confirmed that their review found that the improvements in the standard of internal audit work noted in 2018-19 were maintained during 2019-20 and that they did not find any areas of significant non-compliance with standards. Their review has given them assurance that, in general, the work of Internal Audit is of a sufficient standard to consider using it to support their own audit work and conclusions.
Audit Scotland attend Director General Assurance meetings and SGAAC, providing updates in relation to current and future work plans. I have agreed with the Auditor General that bi-annual meetings should take place between Executive Team, the Auditor General and Audit Scotland as part of the Scottish Government’s wider commitment to working together. I would like to formally record my thanks to Caroline Gardner, the former Auditor General for Scotland, for the significant contribution she has made to Scotland, in particular in supporting our Public Services. I am pleased to note that Executive Team will continue to engage regularly with the new Auditor General for Scotland, Stephen Boyle, most recently in November 2020, and I look forward to working constructively with him in his new role.
In addition, regular engagement has taken place between Audit Scotland and the Directors General, the Chief Financial Officer, the Director of Internal Audit and Assurance and the Board Secretary and others as required. In addition, Audit Scotland meet regularly with the Chair and Deputy Chair of SGAAC in order that Audit Scotland can support them in discharging its responsibilities to me as Principal Accountable Officer.
Non-Executive Directors (NXDs)
There are currently nine Non-Executive Directors providing support, guidance and constructive challenge to the Scottish Government through the governance structures set out above, and through individual pairing arrangements with Directors General. I am thankful to the Non-Executive Directors as the Scottish Government’s “critical friends”, undertaking and supporting a wide range of work which has assisted me in identifying the issues I have raised in this Governance Statement. This has never been more important than in recent months.
I would like to record my appreciation of the work that Non-Executive Directors have undertaken as members of SGAAC to implement continuous performance improvements and, in particular, to Janet Hamblin for her unstinting support as a Non-Executive Director since 2014.
Scottish Government response to Covid-19
Whilst this Statement covers the financial year 2019-20, Covid-19 has impacted on Scotland’s people, businesses, public services and the work of the Scottish Government in ways that I could not have anticipated and I consider it important that this is reflected in my Statement.
Since the outbreak, the Scottish Government has pivoted to support an immediate response, and adapted to ensure we can support the country through the long-term sustained challenges that Covid-19 poses. In addition to the corporate governance adaptations now in place, this has included:
- An immediate and ongoing Resourcing response;
- An immediate and ongoing Financial response supplemented with associated financial controls and governance to ensure effective decision-making and value for money;
- The creation of the “Four Harms” framework to support evidence-based decision-making;
- The Covid-19 Advisory Group and the Chief Advisers;
- Group Hubs to support organisational and Ministerial decision-making;
- The Programme for Government – cross-cutting approach based on minimising the four harms;
- The Economic Recovery Programme and
- Exchequer Transformation, including Respond, Rebalance and Renew.
The response to Covid-19 has necessarily required an unprecedented mobilisation of resource as well as flexibility and reprioritisation. Decisions were taken in the immediate phase to delay the production of the 2020 Medium Term Financial Strategy which will be published alongside the draft Scottish Budget for 2021/22 and National Performance Framework performance report, which had been planned for May 2020; to postpone the Capital Spending Review and infrastructure Investment Plan to the autumn; to postpone preparation for the 2020 Programme for Government which was delivered in line with the original timetable and for a Resource Spending Review.
All Director General families pivoted to supporting the immediate resourcing needs of Director General Health & Social Care and the Exchequer Transformation Programme also pivoted to deliver a new Exchequer-wide Programme around three strategic objectives:
- Respond - supporting the crisis response including clear rules, guidance and support for financial decision making, and taxation and spending adjustments to address the health issues and mitigate the wider harms;
- Rebalance - aligning budget performance and plans (current year, next year, spending review period) with medium and longer term financial strategies and performance outcomes and
- Renew - working across the whole of Government to achieve a creative and ambitious approach to Scotland’s renewal towards a greener, fairer and more prosperous country post Covid-19.
All three areas have been the focus of significant effort. The initial phase of the Renew Programme has focussed on how National Outcomes have been impacted; locking in positive reforms and identifying the most important strategic, policy and delivery shifts for Scotland’s renewal. This has contributed to the shape and focus of the Programme for Government and the Capital Spending Review, and has been developed with teams across Scottish Government, as well as with the support of Non-Executive Directors and contributions from organisations such as the Carnegie UK Trust, Nesta and the Royal Society of Edinburgh. The Respond and Rebalance work streams have provided the framework for rapid action internally and with HM Treasury to address the immediate financial implications of Covid-19 and the development of the Budget 2021-22 process.
As with EU Exit, governance arrangements have been overseen by Corporate Board and SGAAC and supported by our Non-Executive Directors. Internal Audit has also undertaken a number of specific pieces of work to ensure that these governance arrangements are robust.
In March 2020, the Internal Audit and Assurance service pivoted to provide the wider organisation with immediate support in their response to the Covid-19 pandemic. A number of staff were embedded into other areas of to provide advice and support; new audit plans were drawn up to ensure focus was placed on emerging risks relating to the response to the pandemic and additional advisory input was provided to support the development of new processes.
Corporate Risks were subsequently amended to reflect not only their concurrency but their interrelated impacts and I will continue to seek assurance on the management of these risks. I have detailed later in this statement the key risks and control issues which have been further exacerbated by the current Covid-19 situation.
National Performance Framework
The National Performance Framework (NPF) has been the foundation for a transformative shift in how policy is developed and delivered in Scotland. It has been the focus of the Scottish Government’s collective efforts on the delivery of the National Outcomes for Scotland.
The NPF was renewed in June 2018 and put increased wellbeing and sustainable and inclusive economic growth at the heart of the Scottish Government’s work. It includes a statement of the values that guide the Scottish Government’s activities: This work has focussed on consistency and compliance, championing a positive risk culture, embedding positive behaviours and encouraging improvements across the organisation, kindness, dignity, compassion and transparency. The next review of the NPF will need to commence no later than June 2023, and take account of developments such as Covid-19.
The statutory responsibility of Scottish Ministers to “prepare and publish reports about the extent to which the national outcomes have been achieved” is discharged through the NPF website, where data and performance assessment are published as and when new data on the NPF National Indicators becomes available. In May 2019 the Scottish Government published “Scotland’s Wellbeing – Delivering the National Outcomes”, a report which drew together longer term trends and data across the National Outcomes. The Scottish Government will in due course produce a follow up analytical report on Covid-19’s impacts on the National Outcomes. The publication is planned to illustrate the profound effect that Covid-19 has had on Scotland’s wellbeing as a nation, and how it has disrupted progress towards Scotland’s National Outcomes.
The monitoring of our progress towards the delivery of our key commitments and their contributions to National Outcomes has been further developed via the Balanced Scorecard process for the Corporate Board and is becoming better integrated into corporate governance processes. This has helped the organisation to track its progress and sits alongside the continuing improvements to performance reporting on key policy priorities in the Consolidated Accounts. Wider improvement work is planned on performance management and reporting and on how the Scottish Government’s spend and portfolio priorities contribute to our National Outcomes in the presentation of Outcomes information in the Scottish Budget 2020-21.
Creation of Social Security Scotland
Social Security Scotland (SSS) was established on 1 September 2018 and the delivery of benefits as scheduled in the first two years has gone according to plan and to budget. Clear and robust governance is in place within and between the Agency and the Scottish Government and I am content with the Agency Portfolio Sponsorship arrangements and the independently chaired Audit and Assurance Committee established by the Agency. Director General Organisational Development and Operations has direct access to the Chief Executive of the Agency for any issues that are of concern to them as Portfolio Accountable Officer, and they attend the Director General Assurance meetings twice a year, most recently to set out the governance arrangements in place to support the Agency’s Covid-19 response.
The 2018-19 SSS accounts were qualified by Audit Scotland as a result of insufficient appropriate evidence about the extent to which Carer’s Allowance benefit expenditure was in accordance with section 70 of the Social Security Contributions and Benefits Act 1992. As long as the Department for Work and Pensions (DWP) continues to deliver Carer’s Allowance for the SG under Agency Agreements, SSS’s accounts will continue to be at risk of qualification by Audit Scotland given DWP’s accounts may be qualified by the National Audit Office. Director General Organisational Development & Operations receives regular briefings on the Agency’s accounts and Audit Scotland have committed to early warning of issues that may arise during the audit process. The Director General, along with the Chief Executive and Deputy Director Finance & Corporate Services of the Agency engage regularly with Audit Scotland and this issue continues to be monitored at the Director’s bi-monthly meetings between the Programme and Audit Scotland.
It should be noted that considerable risk remains in relation to the impact of Covid-19 and the effect that it will have on Programme delivery where a full re-plan and new delivery schedule will be agreed in 2020-21. The adverse economic effects will add financial pressure in the years ahead due to the demand led nature of the devolved benefits.
Scottish Government’s Assurance Framework
Annual assurance on the adequacy and effectiveness of the core Scottish Government’s internal control system, including risk management, safeguards against losses and the extent to which it can be relied upon is provided through the professional opinion of the Scottish Government’s Director of Internal Audit and Assurance. In the annual assurance report submitted to SGAAC at its meeting on 22 June 2020 the Director of Internal Audit and Assurance confirmed that reasonable assurance could be placed on the internal control arrangements.
Risk Management Arrangements
Effective risk management is at the heart of the Scottish Government’s Assurance Framework. The Scottish Government’s approach is published on the Scottish Government website. It is consistent with the principles highlighted in the Scottish Public Finance Manual which was reviewed in March 2019. It is also consistent with the UK Government’s Orange Book.
A range of improvement work has taken place during 2019-20 led by Director General Organisational Development & Operations and the Chief Financial Officer, supported by the Board Secretary, to address the key recommendations from the 2019 Risk Improvement Project which was highlighted in last year’s governance statement. This work has focussed on consistency and compliance, championing a positive risk culture, embedding positive behaviours and encouraging improvements across the organisation. An action plan has been developed to address these recommendations, though progress has been impacted by the dual challenges of resourcing and responding to Covid-19.
The impact of Covid-19, alongside EU Exit and the range of significant concurrent risks we are managing has emphasised the criticality of corporate risk improvement to ensure a focus on identifying, prioritising and managing risks as individual Accountable Officers and collectively. Work is underway on testing the scale of diversity of approach; the level of compliance with the guidance and the effectiveness of mitigation plans. Alongside this, improvements continue in relation to Director General Assurance risk management and I hope that this will lead to a step-change in both approach and culture as part of the wider improvement agenda.
Scottish Government Corporate Risks
The Scottish Government’s corporate governance system has been designed to ensure that risks to its organisational health and performance in this environment are identified, managed and mitigated effectively.
Over the last year a number of policy-specific corporate risks have been identified, managed and monitored through the assurance processes and included in the Scottish Government’s Corporate Risk Register. The Register is a living document and is updated on an ongoing basis. A snapshot of the risks as they were articulated at the end of the period covering this Statement (March 2020) is included below:
- Following EU Exit and the commencement of the transition period, and in light of the UK Government's policy stance, Scotland's interests are not protected in negotiations (intra-UK, EU-UK and other trade deals) and Scotland is not appropriately prepared. (Director General Constitution & External Affairs)
- Resilience arrangements, staffing levels, skills, (senior capability) and understanding across Scottish Government are not sufficient to deal with sustained and complex, concurrent incidents in 2020 threatening the reputation and competence of SG. (Director General Education, Communities & Justice)
- Scottish prisons face significant risk to their capacity and operation due to both growth in prisoner numbers and the increasing complexity of the prison population. (Director General Education, Communities & Justice)
- If we fail to reform the Health and Social Care system and continue to meet demand in the NHS with resources aimed at Emergency Departments and acute care, then we will consume an unsustainable share of the overall Scottish budget which will lead to a deterioration in Health and wider services. (Director General Health & Social Care)
- The Scottish Government fails to ensure the long term sustainability of the public finances through effective budget-setting and medium term strategic financial planning, with resulting lack of clarity on financial management and spending priorities, and failure to achieve Value for Money and delivery of key outcomes. (Director General Scottish Exchequer)
- We fail to maintain the confidence of survivors in the independence and efficiency of the Scottish Child Abuse Inquiry. (Director General Education, Communities & Justice)
- If new powers over social security are not successfully implemented, with smooth transition from DWP to new Scottish policies and administrative arrangements then we will be unable to deliver the Scottish Government's intended social security system to the citizens resulting in a failure to deliver on SG commitments and reputational damage. (Director General Organisational Development & Operations)
- We do not have the capability and capacity to deliver the Government's priorities and fail to maintain high standards of competence. (Director General Organisational Development & Operations)
- There is a risk that infrastructure across Health and Social Care is insufficient to deliver effective, efficient and safe clinical services. This is driven by constrained capital budgets which are insufficient to meet demand, required maintenance and anticipated future commitments. (Director General Health & Social Care)
- We do not have sufficient resource in place across SG to deliver UNFCC COP26 in Glasgow in 2020 in a way that ensures safety and security, minimises disruption, showcases Scotland and provides appropriate visibility for Scottish Ministers. (Director General Economy)
- Climate Change Response – failure to deliver policies that will result in the necessary reduction in carbon emissions as set out in legislation. (Director General Economy)
- If the performance of the construction sector continues to decline then the SG may not be able to achieve its infrastructure objectives in areas such as affordable housing and ELC construction Programmes due to rising costs, reducing quality and delayed completion of projects. (Director General Education, Communities & Justice)
- Managing the annual financial outturn is increasingly more challenging due to an increase in the number of variable factors and demand-led expenditure in the budget, increasing the risk of overspend. (Director General Organisational Development & Operations)
- That expectations of the financial redress scheme for victims/survivors of in-care child abuse, exacerbated by the short period we have to deliver the statutory scheme, exceed our capacity, or that design or implementation are flawed. (Director General Education, Communities & Justice)
- Capacity and associated investment is insufficient to support our business critical IT systems and maintain robustly delivered business critical IT/digital dependent projects. (Director General Organisational Development & Operations)
- We fail to deliver sustained improvement in responding to FOI requests (the Scottish Information Commissioner's first intervention has set a target in 2019 of replying on time to 95% of requests and reviews); and fail to deliver the changes set out in our action plan aimed delivering improvements required in his second intervention, leading to enforcement action and reputational damage. (Director General Constitution & External Affairs)
- We have the systems, personnel and processes to ensure SCOTS infrastructure and services are protected from cyber threats, ensuring that the SG can play its part in the development of the wider cyber community. (Director General Organisational Development & Operations)
- Public Service Reform and Improvement: We lack suitable arrangements to test how coherent our portfolio of public service reform Programmes is in demonstrating SG’s commitment to improve outcomes and reduce inequalities in a sustainable way. We do not promote corporate commitment to partnership working and preventative approaches; we do not seek to identify evidence of good practice; and we fail to understand and address challenges to successful and impactful reform that are common across reform Programmes. (Director General Education, Communities & Justice)
- Significant economic shock as a result of disorderly EU Exit - either: a short sharp supply shock due to significant restrictions on movement of goods and services along with potential exchange rate depreciation or; initial supply shock which is then sustained and more severe due to subsequent loss of business and consumer confidence, possible squeeze on availability of finance, affecting overall demand. (Director General Economy)
- Coherent actions by core Scottish Government and agencies are appropriately developed, targeted and implemented to strengthen inclusive sustainable economic growth. (Director General Economy)
- Our culture does not support and enable greater diversity and inclusion and we fail to achieve our published equality outcomes for 2017-20 and demonstrate that we are an exemplar employer. (Director General Organisational Development & Operations)
- Public body sponsorship teams don’t fully understand their roles in terms of governance and accountability, risking the opportunity for appropriate and timely interventions and support to our sponsored bodies. (Director General Education, Communities & Justice)
These risk management arrangements have also surfaced several cross-cutting risks, which have been reflected in the current iteration of the Corporate Risk Register and have been highlighted in the Certificates of Assurance provided to me by my Directors General, including:
- Resourcing: the capacity, capability and wellbeing of the Scottish Government’s staff;
- The financial and economic impact of Covid-19 and EU Exit on the SG budget and on Scotland’s economy; public finances and fiscal environment
- The impact of Covid-19 on the delivery of existing policies and commitments designed to support our National Outcomes and the overall aims of the National Performance Framework
- The impact of Covid-19 on Scotland’s delivery partners to support an ongoing response as well as supporting Scotland’s renewal and recovery
- Relationships with our stakeholders, including with the UK Government, the European Union, Local Government and other public sector delivery partners and Scottish businesses.
As previously noted, separate accounting entities within the Scottish Government consolidation boundary have corporate governance arrangements in place appropriate to their individual circumstances and in compliance with relevant guidance. However, the work being undertaken by Director General Education, Communities and Justice alongside Audit Scotland, Internal Audit and the Board Secretary in relation to public body sponsorship has surfaced the importance of strengthening the understanding of the roles and responsibilities in governance across the public sector and I therefore consider it a cross-organisational priority.
It is clear that there will continue to be significant and unprecedented challenges facing the Scottish Government and Scotland more widely as a result of EU Exit. There will be resourcing impacts for the Scottish Government, both in terms of the skills, capacity and wellbeing of staff, but also the demands placed on those corporate services and systems that support the daily running of the organisation. This risk is regularly considered by the Corporate Board and Executive Team to ensure that EU Exit planning is robust and appropriately resourced.
Significant Internal Control Issues
The process for the provision of annual assurances by senior staff within the core Scottish Government (and the other constituent parts of the Scottish Administration) is set out in the Scottish Public Finance Manual.
The culmination of this process is the provision of Certificates of Assurance from Directors General that reflect any internal control issues raised by Directors, as well as any other issues raised throughout the course of the year in either the Director General Assurance process; by SGAAC; by Non-Executive Directors; the annual assurances by Internal Audit and consideration of information on control issues received in respect of any associated executive agencies, non-ministerial departments and sponsored bodies.
In preparing this Statement, my assessment of whether an issue represents a significant internal control issue is based on a review of its materiality, relevance and impact on the organisation and its governance as a whole. It is also based on the assurances provided by Directors General, including whether they believe they have been able to effectively discharge their responsibilities as Portfolio Accountable Officers. On this basis, the issues I have identified are as follows:
Freedom of Information (FOI) Performance: The 2018-19 Governance Statement highlighted the challenges in relation to Freedom of Information performance. Over 2019-20, Freedom of Information performance improved significantly, supported by an improvement plan developed and led by the Director General Constitution and External Affairs family. This supported an outcome of 96% of requests answered on time over the 9 months to March 2020, exceeding the target agreed with the Information Commissioner.
However, the re-assignment of staff to work on overriding Covid-19 priorities is having an inevitable impact on compliance with statutory requirements in relation to Freedom of Information. I remain concerned that we will not be able to return to the significantly-improved levels of performance reached by the organisation before the pandemic and this remains a current risk to be managed on the Corporate Risk Register in 2020-21.
Corporate Systems: Each year Internal Audit provides an assessment of our corporate systems, for which Director General Organisational Development and Operations has responsibility. The Internal Audit report for the financial year 2019-20 provided a reasonable assurance opinion, which has been the case for each of the four previous years, alongside the need for improvements to enhance the adequacy and effectiveness of procedures.
I have been assured by the response of our corporate systems and services to Covid-19, in which we were able to support a wholescale move to remote working almost immediately. The Corporate Continuity Hub was established to coordinate support to the organisation. Business continuity planning remains in place to enable the organisation to be prepared to respond to further events, supported by the Corporate Continuity Recovery Programme.
However, this experience has brought into sharper focus the importance of investment in resilient corporate systems to ensure that high-quality services are provided to the Scottish Government and our public sector partners, and that Internal Audit’s reasonable assurance opinion is maintained. The Scottish Government’s corporate systems need to transform to respond to the increasingly complex demands placed on corporate services.
This is reflected in the Corporate Risk Register. Managing and mitigating this risk is something that Director General Organisational Development & Operations has prioritised with her Senior Management Team and considered at Director General Assurance meetings, providing regular updates to SGAAC on the shared services model which will support corporate transformation. This will include accelerating the development of common platforms and addressing systems strategy for Finance and HR Enterprise Resource Planning systems, which fall out of support from the end of 2021.
SG wide resourcing including Capacity and Wellbeing: Challenges have emerged throughout 2019-20 and into 2020-21 in relation to resourcing including the demands placed on our systems and staff by large-scale internal movement and the response to Covid-19. This is reflected in the current Corporate Risk Register.
Following the outbreak of the pandemic, a central Resourcing Hub was set up to source and match people into support the Covid-19 response and a clear Covid-19 response has been put in place to support capacity requirements, maintain staff health, safety and wellbeing and also maintain core HR systems. Collaborative work is ongoing to assess the workforce costs, both human and financial, and impacts of Covid-19. In relation to wellbeing, supporting our people is a key priority for the Director General Organisational Development & Operations family and I am assured by a range of activity underway to ensure staff feel supported in their work.
In addition, people risks have been, and will continue to be, regularly reviewed by the Scottish Government’s corporate boards to ensure the most effective resourcing decisions are taken as required. Discussions have also taken place at Cabinet with a view to ensuring additional resource is agreed and targeted at areas of significant need, which is the response to Covid-19 and EU Exit work. Direct input has been provided by our Non-Executive Directors on this work.
However, the level of resources required to support the organisation continues to be below a level that is optimum to substantially eliminate risk and there is a risk that resources will be stretched further given the end of the EU Exit transition period.
Individuals and teams have had to adapt to working remotely, often in new roles and working very long hours to support both the Covid-19 response and the delivery of key commitments and priorities. In addition, the absence of a full workflow system in resourcing and bringing staff into the organisation in 2019-20 has continued to impact on the organisation’s ability to handle large peaks in recruitment demands smoothly across Scottish Government and public bodies. The underlying weakness of aging corporate systems, as set out above places a limit on the speed at which we can respond and therefore progress.
The cumulative impact of these requirements alongside an already-challenging capacity situation has made the management of these concurrent risks more difficult both in terms of delivery and staff wellbeing and the management of this risk will continue to be an absolute priority for me.
Exiting the European Union (EU): Preparations for EU Exit have continued throughout 2019-20. A range of mechanisms have been put in place, building on the work the Scottish Government had taken forward to prepare for a “No Deal” scenario, to support Ministers and the organisation to do so ahead of 31 December 2020. That is led and coordinated across Director General Constitution and External Affairs by the Directorate for Organisational Readiness, and includes the refreshing of Transition Plans, and the introduction of an integrated planning approach across both EU Exit and Covid-19 as the pandemic worsened and recognising the interdependence of these issues. Governance arrangements were put in place at Programme and Accountable Officer level, overseen by Corporate Board and SGAAC and supported by Non-Executive Directors. The approach to managing and mitigating the risks arising from EU Exit was documented on the Corporate Risk Register and examined on a regular basis over the period.
The UK Government has now confirmed that there will be no extension to the transition period, ending on 31 December 2020, following the UK’s exit from the EU and during the Covid-19 response. Cabinet has agreed our priorities ahead of the end of the transition period and in the period afterwards – including the prioritisation of resource to support the delivery of this work alongside Covid-19. However, I remain concerned by the very significant challenges posed by the UK Government’s approach, both in terms of the likely impact of their policy decisions and our ability to influence engagement and outcomes. This will become even more challenging as we move towards the end of the negotiation period and decisions will be made at significant pace which will affect Scotland’s interests – both in the immediate sense but also longer term. This already includes challenge to the existing legislative and executive competence and standing of the Scottish Parliament and Scottish Ministers.
The combination of EU Exit as pursued by the UK Government with the continued occurrence of ongoing local and national Covid-19 outbreaks – and a second wave of infections alongside existing winter planning pressures – poses a significant concurrent risk to the Scottish Government’s ability to deliver but also protect the interests and wellbeing of the people of Scotland. This has also been reflected in the Annual Assurance Opinion provided by the Director for Internal Audit & Assurance. Director General Constitution and External Affairs will continue to ensure mitigating actions are in place to ensure that this is minimised, but that much of this we will not have the locus to mitigate ourselves.
Managing the Financial Outturn: Managing the financial outturn has become increasingly challenging over the period, as a result of the level of unfunded commitments present at the beginning of the financial year (because of an increasingly challenging Draft Budget process), an increase in the number of variable factors and demand-led expenditure in the budget and the increasing risk and complexity in a number of Scottish Government budgets and activities, such as Social Security and tax generation, increasing the risk of overspend.
For the 2020-21 financial year, an already challenging process has been significantly exacerbated by the impact of Covid-19 and EU Exit. Significant reprioritisation will be required as well as careful on-going management of expenditure and interaction with HM Treasury colleagues around the need for additional fiscal flexibilities and early certainty on consequentials. Cash management will also be under significant pressure and will need to be managed extremely closely to avoid breaching cash limits.
I am satisfied that the financial governance controls put in place on Covid-19 expenditure are sufficiently robust to ensure that individual decisions are in line with Accountable Officer duties, that there is independent scrutiny of proposals and there is a complete corporate picture of the additional net commitment on the Scottish Budget. These controls have been reviewed at SGAAC, and Non-Executive Directors have received monthly briefings on finance. Director General Assurance meetings continue to require Portfolio Accountable Officers to gain assurance in relation to robust financial management and managing the outturn and associated controls and mitigating actions are reflected. However, significant challenges remain in reducing the deficit for financial year 2020-21.
Cultural Issues related to allegations of Bullying and Harassment in NHS Highland; As part of the action plan to address the findings of the review by John Sturrock QC into allegations of a culture of bullying within NHS Highland, the Scottish Government asked NHS Highland to offer a ‘Healing Process’. This was intended to deal with issues raised by current and former employees, with the principles of fairness, kindness and compassion underpinning the whole process. This has now been put in place and a new Chief Executive has been appointed to take this process forward.
The review recommended that an independent review should be undertaken to further explore culture in Argyll & Bute. This has been undertaken by an independent organisation and the review has now concluded. The final report was submitted to NHS Highland who published this on 19 May 2020. The Scottish Government expect NHS Highland to provide proactive, effective actions to enable the board to move forward. Nationally, work is underway to co-produce a new approach to measuring staff dignity at work, which is designed to deliver meaningful results to inform actions locally and nationally. It is anticipated that the final report will be available in late 2021.
The Ministerial led Short-Life Working Group, was convened to examine how we collectively take forward measures that support open and honest workplace cultures. In particular, this group is specifically looking at what more we need to do to effectively deliver the behavioural and attitudinal approach to leadership and management that is at the heart of the Sturrock Review. Specific recommendations that describe the actions that could be taken have been developed.
Royal Hospital for Children and Young People (RHCYP) and the Department of Clinical Neuroscience: Rectification work to address the issues in the build environment at the Royal Hospital for Children and Young People and Department of Clinical Neuroscience (DCN) in Edinburgh has been progressing throughout 2019-20. All issues with DCN have been addressed and all neuroscience services transferred to the new site in July 2020. Paediatric outpatient services also transferred to the RHCYP in July 2020 and outstanding work is expected to complete in January 2021. Initial estimates of remaining scheduled works had indicated completion by November 2020, however as a result of the Covid-19 pandemic and subsequent impact to construction industries, a revised date of 25 January 2021 has now been agreed. The Cabinet Secretary for Health and Sport had previously highlighted to Parliament that there was a risk of further delay.
Queen Elizabeth University Hospital: To address concerns about patient safety the Cabinet Secretary for Health and Sport set up an Independent Review to look at the buildings’ “design, commissioning and construction, handover and ongoing maintenance and how these matters contribute to effective infection control”. The Review has concluded the hospitals offer a setting for high quality healthcare for patients, staff and visitors and there is no clear evidence linking failures in its design, build commissioning and maintenance to avoidable deaths. A formal response to the report’s findings and recommendations by the Scottish Government will be published in due course.
Inquiry into the Royal Hospital for Children and Young People, the Department of Clinical Neuroscience and the Queen Elizabeth University Hospital: In June 2020, the Cabinet Secretary for Health and Sport ordered an independent inquiry to protect the safety and wellbeing of patients and their families and to investigate the issues identified at the Royal Hospital for Children and Young People, the Department of Clinical Neuroscience, and the Queen Elizabeth University Hospital. The inquiry commenced in August 2020 and will be led by Lord Brodie QC. It will consider the planning, design, construction, commissioning and maintenance of both hospitals and will recommend how issues can be avoided in future capital projects. The inquiry will also consider organisational culture, including whether staff concerns were appropriately considered and escalated, and whether there is any evidence of deliberate concealment of wrongdoing or failures. The inquiry is expected to run over a number of years, and witnesses are expected to be called once initial evidence has been reviewed.
National Complex Pelvic Mesh Removal Service: In the budget for 2020-21, the Scottish Government committed to opening a £1 million fund for those affected by transvaginal mesh complications. Successful applicants will receive a one-off payment of £1,000 towards the cost of practical or emotional support, as appropriate. Alongside this, plans have progressed for the National Complex Pelvic Mesh Removal Service, which will be introduced on a phased basis in line with wider Board remobilisation.
The Independent Medicines and Medical Devices Safety Review Report was published by Baroness Cumberlege in July and the Scottish Government accepted all recommendations which were within Scotland’s devolved powers. Plans have progressed for the Transvaginal Case Record Review. This will commence shortly, with the panel for this currently being finalised. In addition, the Scottish Government has agreed to work with NHS Digital on a UK-wide database of procedures that will involve joining a pilot which has an initial focus on pelvic floor procedures, including those using mesh.
NHS Boards Financial Position: As part of the year-end outturn, we have provided £41 million in additional funding to four Boards; NHS Ayrshire and Arran (£14.7 million), NHS Borders (£8.3 million), NHS Highland (£11.0 million) and NHS Tayside (£7.0 million) this has been managed within the Health Portfolio budget. The additional funding provided is an improvement on original forecasts for the four Boards and a significant reduction on additional funding provided in 2018-19. This reflects the effectiveness of the ongoing work and packages of tailored support for each Board to support recovery.
Safety In Care Homes: Directors of Public Health (DPHs) are providing enhanced clinical leadership as part of local multi-agency oversight teams to support care homes during Covid-19. Working alongside these teams DPHs are assessing how each home is managing infection prevention and control, staffing, training, physical distancing and testing, and reporting on actions they are taking to rectify quickly any deficits they identify. There are ongoing discussions between SG officials and the DPHs on their future role in relation to care homes.
NHS Emergency Footing Arrangements: On 16 March 2020, the Cabinet Secretary for Health and Sport made a statement in the Scottish Parliament that NHS Scotland would be put onto an emergency footing in order to respond to Covid-19. The Chief Executive of NHS Scotland wrote to all Boards on the 17th of March to highlight what this meant in terms of the use of powers contained in the NHS (Scotland) Act 1978 (“the Act”).
The Act sets out both the direction making and emergency powers that allow Scottish Ministers to secure the effective continuance of services through the unprecedented challenge of responding to the Covid-19 pandemic. This meant that the Cabinet Secretary will be utilising the direction making powers, where necessary, to instruct NHS boards to carry out certain actions. Where directions are issued on behalf of the Cabinet Secretary, it was made clear to Boards that they must be implemented in full and without delay in order to maintain the resilience of NHS Scotland through these challenges.
The Cabinet Secretary extended the emergency footing for a further 100 days in a statement to the Scottish Parliament on 2 June, with a letter then sent to all NHS Boards on 4 June.
European Structural Funds (ESF) Suspension: The European Commission (EC) issued decisions, in accordance with Article 142 of Regulation EU no 1303/2013, to suspend payments to SG in respect of the European Social Fund (on 5 November 2019) and in respect of the European Regional Development Fund (on 31 January 2020). The Managing Authority is progressing the remaining actions required to address the ongoing suspensions. While Covid-19 has meant that some elements of the evidence will be restricted, the Scottish Government has a commitment to submit a formal evidence based response to the Commission as soon as possible. It may however take some months for a decision to be made by the Commission on whether there has been sufficient evidence of improvement in the key areas and that the suspension should be lifted.
These formal decisions were taken by the Commission due to “serious deficiencies in the management and control system for the Programme”. The EC may end the suspensions once all necessary measures have been taken to enable the suspensions to be lifted. The Scottish Government’s Managing Authority (MA) for European Structural Funds has been working to correct the deficiencies and errors reported by EC auditors, and to gather evidence of the correct application of the revised management and control system that is now in place. This evidence, together with new claims for financial re-imbursement will be put back to the EC however it is unclear what the timetable for the EC decision on the suspensions will be.
Based on the level of funding awarded to ESF partners and the work undertaken by the MA, should the Scottish Government exit suspension, there is a risk of potential financial loss up to £35m over the Programme period, related to the European Social Fund. This loss is currently forecast to be attributable in the current financial year, and 2 subsequent financial years. This estimate is the difference between the total amount approved within the Programme and the amount currently considered reclaimable from the EC.
In the unlikely event that the suspensions fail to be lifted, the final losses associated with Structural Funds would be significantly higher, potentially up to £95.8m cashflow deficit in 2020/21 because no further Scottish Government claims to the EC will be reimbursed this year. Moreover, should the Scottish Government continue to reimburse Lead Partners and fail to exit suspension, without sourcing alternative funding, there remains a risk to the whole Structural Funds Programme over the remaining years.
However the Scottish Government is working with the Auditing Authorities, with specialists to improve the performance at audit, has increased the regularity of meetings of the ESF Joint Programme Board and has a Programme of improvement work in hand to move out of suspension. I am assured that all actions at our hand to move out of suspension are progressing well.
Counter Fraud Activity
Guidance on the prevention, detection, reporting and handling of fraud is included in the SPFM. The Integrity Group is responsible for improving fraud prevention measures across the Scottish Government as well as monitoring relevant cases of suspected external and internal wrongdoing made through formal reporting lines. This includes supporting and reporting on the concerns that are raised under the Public Interest Disclosure Act 1998. The Group is also available to provide advice on the handling of specific allegations of external and internal wrongdoing where required.
An annual report on fraud within the Scottish Government’s consolidation boundary is prepared annually for SGAAC and includes any and all types of fraud, error and other acts of dishonesty such as theft which have been reported to the Scottish Government during the 2019-20 financial year excluding the NHS which is reported by NHS National Services Scotland Counter Fraud Services (NHS NSS CFS). Within the 2019-20 financial year a total of 48 cases of fraud and error were reported; this number excludes those where subsequent investigations indicated that no actual or attempted fraud had taken place.
The Scottish Government also continues to participate in the biennial National Fraud Initiative (NFI) exercise led by Audit Scotland to help public bodies minimise fraud and error in their organisations. The 2018-19 NFI exercise identified a total of 3,462 matches for the Scottish Government, ranging over 21 reports. As in prior years, the investigations are split between payables (creditors), payroll and procurement. The total number of matches processed was 1,339. Of the 1,339, 44 were closed due to already being known, 1006 were closed after finding no frauds or errors were detected and 289 were closed as they were not selected for investigation due to their being assessed as low risk.
The Covid-19 pandemic has brought significant challenges across the Scottish public sector as bodies seek to deliver services for individuals, communities and businesses in an extremely difficult time. The Scottish Government welcomes the recent Audit Scotland report Covid-19: Emerging fraud risks and in recognising this context and following an Internal Audit Directorate review of counter fraud measures during 2019-20 the Scottish Government will recruit a new Head of the Counter Fraud Profession to enhance counter fraud capacity and capability; support operational and assurance activity; minimise the financial, statutory and reputational fraud risks to the Scottish Government and work with stakeholders across the Scottish public sector to promote a national focus on counter fraud, cross-organisational counter fraud measures and post-event assurance.
Data Security Framework
Information assurance and security are strategic risks for the Scottish Government. Director General Organisational Development and Operations, as the Senior Information Risk Owner (SIRO), is the owner for these risks at Executive Team level. Corporate policies and guidance are in place to ensure that the Scottish Government meets its legislative and procedural obligations to protect the information assets and minimise the likelihood of a data loss incident. The SIRO is now supported by a Deputy SIRO.
One hundred and six data security incidents were internally reported to the Scottish Government Data Protection and Information Assets team in 2019-20 for the Core Departments, of which five were reported to the Information Commissioner’s Office (ICO) during the year. While no enforcement action was taken by the Commissioner, appropriate actions were taken in each case to ensure that the probable impact of any loss was minimised. Additional local procedures were also put in place to minimise the likelihood of any future recurrence. The number of incidents is close to double that recorded last year but most are minor (misdirected e-mails and redaction errors) and reflect good reporting practice. The number of recorded data security incidents has been increasing year on year since the GDPR came into force. The type and rate of incidents do not suggest that remote working has impacted on data handling compliance. Departments have continued to meet their data handling obligations during the Covid-19 response.
A dedicated Data Protection Officer has been in place since the introduction of the General Data Protection Regulations (GDPR) in May 2018 and registration with the ICO is up to date.
Under the terms of the Public Finance & Accountability (Scotland) Act 2000 there is a statutory duty on the Principal Accountable Officer and designated Accountable Officers to obtain written authority from Ministers or governing boards before taking any action which is considered to be inconsistent with the proper performance of the functions of an Accountable Officer.
No such written authority was required during the 2019-20 financial year, or the period up to the signature of the accounts, by Accountable Officers within the Scottish Government consolidation boundary.
Remuneration and Staff Report
The information in the Performance and Accountability Reports is reviewed by the external auditors for consistency with the financial statements, and the information relating to the remuneration and pension benefits of ministers, law officers, senior management and non-executive directors; staff numbers; staff costs and number of exit packages has been audited by them.
Civil service appointments are made in accordance with the Civil Service Commissioners' Recruitment Principles, which require appointments to be on merit on the basis of fair and open competition but also include the circumstances when appointments may otherwise be made.
Directors General members of the Scottish Government Corporate Board are appointed following approval by the Head of the Home Civil Service, following consultation with the First Minister in accordance with the Constitutional Reform and Governance Act 2010. Prior to the introduction of the Constitutional Reform and Governance Act 2010, appointments were approved by the Prime Minister.
All of the Executive members of the Scottish Government Corporate Board, covered by this report, hold appointments which are open-ended until they choose to retire. The rules for termination of appointments are set out in chapter 11 of the Civil Service Management Code. Early termination, other than for misconduct, would result in the individual receiving compensation as set out in the Civil Service Compensation Scheme. The Scottish Government, its Agencies and the Crown Office and Procurator Fiscal Service, in line with the rest of the UK Civil Service, introduced a policy of no mandatory retirement age for the Senior Civil Service from 1 October 2009, in line with the implementation of the Employment Equality (Age) Regulations 2006. Under current arrangements, an individual's pension will become payable from age 60 if they were employed in the Civil Service prior to 30 July 2007, and in these circumstances that employee can choose to leave work and collect his or her pension at any time from age 60, subject only to compliance with the basic notice of leave requirements. The Government announced a number of reforms to civil service pensions which were applied from 1 April 2015.
The Civil Service Commissioners website provides further information about their work.
The Non-Executive Directors provide direct, external, support, challenge and guidance to their “paired” Directors General (DGs) and senior staff in relation to the delivery of their portfolio-based risk, assurance and internal controls framework, and participate in the Corporate Board, one or more of the formal sub-Boards, DG Assurance meetings linked to their paired DG(s) and Scottish Government Audit and Assurance Committee. Janet Hamblin, Non-Executive Director, was the Chair of the Scottish Government Audit and Assurance Committee for the period covered by the Accounts - 2019/20. A Deputy Chair of the Scottish Government Audit and Assurance Committee – Jim Robertson – was appointed in March 2019.
Independent Non-Executive Directors of the Scottish Government are appointed by the Permanent Secretary for an initial period of three years with an annual review.
Three of the SG’s experienced NXDs – Annie Gunner Logan, Hugh McKay and Linda McKay - had their contracts extended in January 2020 for an additional two years in order that we could continue to draw on their expertise and ensure continuity while the NXDs appointed in 2019 increased their knowledge and experience of the Scottish Government. As is the case for all of our NXDs such appointments can be terminated with one month's notice period.
The salaries of the Scottish Government Ministers were established under section 81(1) and (2) of the Scotland Act 1998. They are paid through the Scottish Parliamentary Corporate Body (SPCB).
The remuneration of senior civil servants (SCS) is set in accordance with the Civil Service Management Code and with independent advice from the Review Body on Senior Salaries (SSRB).
In reaching its recommendations, the SSRB is to have regard to the following considerations:
- The need to recruit, retain, motivate and where relevant, promote suitably able and qualified people to exercise their different responsibilities;
- Regional/local variations in labour markets and their effects on the recruitment, retention and, where relevant, promotion of staff;
- Government policies for improving the public services including the requirement on departments to meet the output targets for the delivery of departmental services;
- The funds available to departments as set out in the Government's departmental expenditure limits; and
- The Government's inflation target.
Further information about the work of the SSRB can be found via the Office of Manpower Economics.
Within the Scottish Government the Talent Action Group (TAG), comprising the Permanent Secretary, Director People and two Non-executive Directors, approve SCS pay structures and pay awards. They ensure that pay proposals fall within Scottish Public Sector Pay Policy, and the Cabinet Office framework for SCS pay. During the course of 2019-20 we introduced pay progression towards a target rate for each SCS grade ahead of capability based pay progression arrangements to be introduced for SCS by Cabinet Office. TAG agreed the following SCS pay award for 2019-20, effective 1 April 2019 and 1 October 2019. Payment were made with March 2020 salaries. The Top Level Pay Committee is used to provide an extra level of informal scrutiny on proposals put forward to TAG.
|SCS Pay Steps||Deputy Director 1||Deputy Director 1A||Director||Director General|
|Target Rate +1 (DD1A)||£82,238|
- 1 April 2019 – staff below the SG Target Rate for their grade receive a consolidated 1% increase and move to the nearest higher pay step in the SCS pay structure;
- 1 April 2019 – staff above the SG Target Rate for their grade (but within the overall pay band maximum set by Cabinet Office) receive a consolidated 1% or £1,600 increase (whichever is lesser);
- 1 October 2019 – staff below the SG Target Rate for their grade receive pay progression. For Pay 2019 the number of progression steps to apply is determined by service in grade.
- 1 April 2019 – staff above the SG Target Rate for their grade (but within the overall pay band maximum set by Cabinet Office) receive a non-consolidated, non-pensionable, lump-sum payment worth 0.9% of salary as at 31 March 2019.
The Permanent Secretary’s salary and performance-related pay are set as part of a UK Cabinet Office framework and agreed by the Prime Minister.
Non-executive members receive fees for attendance at the relevant Scottish Government Corporate Boards which they are appointed to as well as the Scottish Government Audit and Assurance Committee (SGAAC) meetings. Non-executive members expenses incurred in attending these meetings are also reimbursed.
The remuneration of the Ministers who served over the year to 31 March 2020 and members of the Scottish Government Corporate Board is noted below.
Ministers and Law Officers
The remuneration of the First Minister and the Cabinet Ministers during the year to 31 March 2020 is shown in the table below. Ministerial salaries are additional to salaries and entitlements as MSPs. The full year salary rate for the First Minister is £92,101 (2018: £90,030) and for all other Cabinet Ministers is £47,780 (2018: £46,705).
|Nicola Sturgeon, MSP (1)||96,379||93,903||39,005||26,721||135,384||120,624|
|John Swinney, MSP||47,780||46,705||20,239||13,865||68,019||60,570|
|Roseanna Cunningham, MSP||47,780||46,705||19,245||16,558||67,025||63,263|
|Michael Matheson, MSP (2)||47,780||46,705||19,245||16,558||67,025||63,263|
|Fiona Hyslop, MSP||47,780||46,705||20,238||13,814||68,018||60,519|
|Fergus Ewing, MSP||47,780||46,705||19,078||17,433||66,858||64,138|
|Humza Yousaf, MSP||47,780||35,317||18,740||13,777||66,520||49,094|
|Michael Russell, MSP||47,780||35,317||18,740||13,777||66,520||49,094|
|Shirley-Anne Somerville, MSP||47,780||35,317||18,740||13,777||66,520||49,094|
|Aileen Campbell, MSP||47,780||35,317||18,740||13,777||66,520||49,094|
|Jeane Freeman, MSP||47,780||35,317||21,129||15,542||68,909||50,859|
|Derek Mackay, MSP (3)||52,448||46,705||16,305||17,433||68,753||64,138|
|Kate Forbes, MSP (4)||5,629||-||25,663||-||31,292||-|
(1) The First Minister’s salary and total remuneration includes a benefit-in-kind for 2019-20 of £4,278 arising from the provision of accommodation at Bute House (2018-19: £3,873).
(2) Michael Matheson’s pension benefits for 2018-19 are restated from £16,812 to £16,558, consequently total remuneration for 2018-19 is restated from £63,517 to £63,263.
(3) Derek Mackay resigned as Cabinet Minister on 05 February 2020. The full year equivalent salary is £47,780. Mr Mackay received an office-holder resettlement grant of £11,945 on 29 May 2020, included within the £52,448 salary.
(4) Kate Forbes was appointed as Cabinet Minister on 18 February 2020. The full year equivalent salary in 2019-20 is £47,780.
* Pension benefits are calculated as the real increase in pension multiplied by 20 plus the real increase in any lump sum less the contributions made by the individual. The real increases exclude increases due to inflation or any increase or decreases due to a transfer of pension rights.
Scottish Government Ministers’ Pay Freeze Commitment
The Scottish Parliament Corporate Body (SPCB) is required under Chapter 46, Section 81 of the Scotland Act 1998 to make provision for the payment of salaries to MSPs, Officeholders of the Parliament and Ministers. A resolution of the Parliament to pay salaries in accordance with the Scottish Parliamentary Salaries Scheme was passed by the Parliament on a free vote on 21 March 2002. The Scheme determines that the Scottish Parliamentary Corporate Body should decide the salary levels for Members and Officeholders including the Law Officers. The Scheme determines that Members’ and Officeholders’ salary rates should be increased annually from 1 April in line with public sector pay rises in Scotland, using the Annual Survey of Hours and Earnings published by the Office for National Statistics.
Scottish Government Ministers and the Law Officers have previously agreed to freeze pay as at their April 2009 pay level. The Salaries Scheme does not give the power to withhold an annual increase. To achieve the required reduction, pay increases are deducted from the Ministers’ and the Law Officers’ net salaries and repaid to the Scottish Consolidated Fund. The disclosure reflects the salary awarded under the Scottish Parliamentary Salaries Scheme.
The remuneration, comprising of salary and pension benefits, of the serving Law Officers for the year to 31 March 2020 is shown below:
|James Wolffe, QC||126||123||50||46||176||169|
|Alison Di Rollo, QC||109||106||43||40||152||146|
* The value of pension benefits accrued during the year is calculated as (the real increase in pension multiplied by 20) less (the contributions made by the individual). The real increase excludes increases due to inflation or any increase or decrease due to a transfer of pension rights.
No Law Officers received benefits-in-kind.
Senior Management Team
The remuneration for the Permanent Secretary and members of the Scottish Government Corporate Board for the year to 31 March 2020 were as follows:
|Sarah Davidson (1)||45-50||120-125||12||40||85-90||160-165|
|Lesley Fraser (2)||90-95||-||156||-||245-250||-|
|Malcom Wright OBE (3)||180-185||50-55||-||-||180-185||50-55|
|Paul Gray (4)||-||150-155||-||-||-||150-155|
|Alyson Stafford CBE||145-150||145-150||-||-||145-150||145-150|
|Ruaraidh Macniven (5)||70-75||-||85||-||155-160||-|
*Pension benefits are calculated as real increase in pension multiplied by 20 plus the real increase in any lump sum less the contributions made by the individual. The real increase excludes increases due to inflation or any increase or decrease due to a transfer of pension rights.
(1) Sarah Davidson left the Corporate Board on 30 June 2019. The full year salary band for this post was £120-125k.
(2) Lesley Fraser was appointed to the role of Acting DG ODO on 1 July 2019. The full year salary band for this post was £120-125k.
(3) Malcolm Wright was appointed on secondment up until his permanent appointment to the Scottish Government on 17 June.
(4) Paul Gray was in post until 31 March 2019.
(5) Ruaraidh Macniven was appointed to the role of Solicitor to the Scottish Government on 17 June 2019. The full year salary band for this post was £ 90-95k.
No members of the Scottish Government Corporate Board received performance pay, or payments for voluntary severance or loss of office.
In accordance with the FReM, reporting bodies are required to disclose the relationship between the remuneration of the highest-paid member of the Senior Management Team in their organisation and the median remuneration of the organisation's workforce. The median calculation includes directly employed staff paid through SG Core payroll. It covers both permanent staff and those on fixed term contracts. It does not include temporary agency staff paid locally by invoice, as these invoices are not processed through the payroll system. The ratio is calculated as the mid-point of the highest band divided by the median total remuneration.
The pay system within Scottish Government is such that there are a large number of staff on relatively few pay steps with significant gaps between some of them, resulting in a median pay figure occasionally changing markedly from one year to the next.
|Minimum Total Remuneration||19||18|
|Maximum Total Remuneration||183||165|
|Band of Highest Paid member of the Corporate Board Total Remuneration||180-185||165-170|
|Median Total Remuneration||37,418||36,328|
Equivalent information relating to senior managers of the other bodies consolidated within these accounts is given in their respective annual accounts.
Total remuneration includes salary, non-consolidated performance-related pay, and benefits-in-kind. It does not include severance payments, employer pension contributions or the cash equivalent transfer value of pensions.
No Senior Management Team officials received non-consolidated performance-related pay or benefits-in-kind.
Fees are paid on a quarterly basis for their position as Scottish Government Non-Executive Director.
The monetary value of benefits-in-kind covers any benefits provided by the Scottish Government and treated by HM Revenue and Customs as a taxable emolument.
No Non-Executive members of the Scottish Government Corporate Board received benefits- in-kind. The Non-Executive members do not participate in the Civil Service Pension Scheme.
The fees for the Non-Executive Directors who are members of the Scottish Government Corporate Board are as follows:
|Annie Gunner Logan||5-10||5-10|
* 2018/19 fees for Janet Hamblin incorporated backdated pay.
Ministers and Law Officers
The pension entitlements of the Cabinet Team for the year to 31 March 2020 are shown below:
|Accrued pension at age 65 as at 31-Mar-20
|Real increase in pension at age 65
CETV at 31-Mar-20
|CETV at 31-Mar-19
|Real Increase in CETV
|John Swinney, MSP||10-15||0-2.5||238||209||20|
|Fiona Hyslop, MSP||10-15||0-2.5||238||209||20|
|Michael Matheson, MSP||5-10||0-2.5||90||70||14|
|Roseanna Cunningham, MSP||5-10||0-2.5||126||100||19|
|Derek Mackay, MSP (to 05/02/20)||0-5||0-2.5||54||39||9|
|Fergus Ewing, MSP||0-5||0-2.5||87||62||19|
|Humza Yousaf, MSP||0-5||0-2.5||21||9||7|
|Michael Russell, MSP||0-5||0-2.5||41||17||18|
|Shirley-Anne Somerville, MSP||0-5||0-2.5||26||11||10|
|Aileen Campbell, MSP||0-5||0-2.5||24||10||9|
|Jeane Freeman, MSP||0-5||0-2.5||41||17||21|
|Kate Forbes MSP (from 18/02/2020)||0-5||0-2.5||12||-||11|
New factors are used in the calculator for the CETV values at the start and end of the period. This means CETV values shown at 31 March 2019 may not match those shown in last year's accounts.
The Cash Equivalent Transfer Value (CETV)
This is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the pension benefits they have accrued in their former scheme.
The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total ministerial service, and not just their current appointment as a Minister. The Ministers are members of the Scottish Parliamentary Pension Scheme, full details are available on the scheme website.
CETVs are calculated in accordance with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are taken.
The pension entitlements of the Law Officers are shown below:
|Accrued pension at pension age as at 31-Mar-20
|Real increase in pension at pension age
|CETV at 31-Mar-20
|CETV at 31-Mar-19
|Real Increase in CETV
|James Wolffe, QC||10-15||2.5-5||203||143||43|
|Alison Di Rollo, QC||10-15||2.5-5||179||126||38|
Senior Management Team
The pension entitlements of the Permanent Secretary and executive members of the Scottish Government Corporate Board are as follows (equivalent information relating to senior managers of other bodies consolidated within these accounts is given in their respective annual accounts):
|Accrued pension at pension age and related lump sum as at 31-Mar-20
|Real increase in pension and related lump sum at pension age
|CETV at 31-Mar-20
|CETV at 31-Mar-19
|Real Increase in CETV
|Employer contribution to partnership pension account
|Leslie Evans||80 - 85 plus a lump sum of 240 - 245||2.5 - 5 plus a lump sum of 10 - 12.5||1903||1,832||65||-|
|Sarah Davidson||40 - 45 plus a lump sum of 90 - 95||0 - 2.5 plus a lump sum of 0||682||672||5||-|
|Liz Ditchburn||40 - 45 plus a lump sum of 15 - 20||2.5 - 5 plus a lump sum of 0 - 2.5||907||803||62||-|
|Paul Johnston||35 - 40 plus a lump sum of 65 - 70||2.5 - 5 plus a lump sum of 0 - 2.5||545||482||34||-|
|Alyson Stafford CBE1||-||-||-||-||-||22.0|
|Ken Thomson||60 - 65||2.5 - 5||1278||1,155||65||-|
|Gordon Wales||45 - 50 plus a lump sum of 110 - 115||0 - 2.5 plus a lump sum of 0||889||830||17||-|
|Nicola Richards||35 - 40 plus a lump sum of 15 - 20||2.5 - 5 plus a lump sum of 0 - 2.5||555||501||26||-|
|Barbara Allison||30 - 35 plus a lump sum of 100 - 105||0 - 2.5 plus a lump sum of 2.5 - 5||779||712||30||-|
|Lesley Fraser||45 - 50 plus a lump sum of 110 - 115||5 - 7.5 plus a lump sum of 15 - 17.5||928||777||136||-|
|Ruaraidh Macniven||30 - 35 plus a lump sum of 60 - 65||2.5 – 5 plus a lump sum of 5 – 7.5||481||403||58||-|
Malcolm Wright, Director General for Health & Social Care, chose not to be covered by the Civil Service pension arrangements during the reporting year.
(1) Alyson Stafford chose not to be covered by the Principal Civil Service Pension Scheme arrangements during the reporting year.
There is no automatic right to a lump sum for officials who are members of the Premium Pension Scheme or the Nuvos Pension Scheme.
New factors are used in the calculator for the CETV values at the start and end of the period. This means CETV values shown at 31 March 2019 may not match those shown in last year's accounts.
Civil Service Pensions
Pension benefits are provided through the Civil Service pension arrangements. From 1 April 2015 a new pension scheme for civil servants was introduced – the Civil Servants and Others Pension Scheme or alpha, which provides benefits on a career average basis with a normal pension age equal to the member’s State Pension Age (or 65 if higher). From that date all newly appointed civil servants and the majority of those already in service joined alpha. Prior to that date, civil servants participated in the Principal Civil Service Pension Scheme (PCSPS). The PCSPS has four sections: 3 providing benefits on a final salary basis (classic, premium or classic plus) with a normal pension age of 60; and one providing benefits on a whole career basis (nuvos) with a normal pension age of 65.
These statutory arrangements are unfunded with the cost of benefits met by monies voted by Parliament each year. Pensions payable under classic, premium, classic plus, nuvos and alpha are increased annually in line with Pensions Increase legislation. Existing members of the PCSPS who were within 10 years of their normal pension age on 1 April 2012 remained in the PCSPS after 1 April 2015. Those who were between 10 years and 13 years and 5 months from their normal pension age on 1 April 2012 will switch into alpha sometime between 1 June 2015 and 1 February 2022. All members who switch to alpha have their PCSPS benefits ‘banked’, with those with earlier benefits in one of the final salary sections of the PCSPS having those benefits based on their final salary when they leave alpha. (The pension figures quoted for officials show pension earned in PCSPS or alpha – as appropriate. Where the official has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the two schemes.) Members joining from October 2002 may opt for either the appropriate defined benefit arrangement or a ‘money purchase’ stakeholder pension with an employer contribution (partnership pension account).
Employee contributions are salary-related and range between 4.6% and 8.05% for members of classic, premium, classic plus, nuvos and alpha. Benefits in classic accrue at the rate of 1/80th of final pensionable earnings for each year of service. In addition, a lump sum equivalent to three years initial pension is payable on retirement. For premium, benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service. Unlike classic, there is no automatic lump sum. classic plus is essentially a hybrid with benefits for service before 1 October 2002 calculated broadly as per classic and benefits for service from October 2002 worked out as in premium. In nuvos a member builds up a pension based on his pensionable earnings during their period of scheme membership. At the end of the scheme year (31 March) the member’s earned pension account is credited with 2.3% of their pensionable earnings in that scheme year and the accrued pension is uprated in line with Pensions Increase legislation. Benefits in alpha build up in a similar way to nuvos, except that the accrual rate in 2.32%. In all cases members may opt to give up (commute) pension for a lump sum up to the limits set by the Finance Act 2004.
The partnership pension account is a stakeholder pension arrangement. The employer makes a basic contribution of between 8% and 14.75% (depending on the age of the member) into a stakeholder pension product chosen by the employee from a panel of providers. The employee does not have to contribute, but where they do make contributions, the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer’s basic contribution). Employers also contribute a further 0.5% of pensionable salary to cover the cost of centrally-provided risk benefit cover (death in service and ill health retirement).
The accrued pension quoted is the pension the member is entitled to receive when they reach pension age, or immediately on ceasing to be an active member of the scheme if they are already at or over pension age. Pension age is 60 for members of classic, premium and classic plus, 65 for members of nuvos, and the higher of 65 or State Pension Age for members of alpha. (The pension figures quoted for officials show pension earned in PCSPS or alpha – as appropriate. Where the official has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the two schemes, but note that part of that pension may be payable from different ages.)
Further details regarding the Civil Service pension arrangements are available on the scheme website.
Cash Equivalent Transfer Values for Civil Service pensions
A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies.
The figures include the value of any pension benefit in another scheme or arrangement which the member has transferred to the Civil Service pension arrangements. They also include any additional pension benefit accrued to the member as a result of their buying additional pension benefits at their own cost. CETVs are worked out in accordance with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are taken.
Real increase in CETV
This reflects the increase in CETV that is funded by the employer. It does not include the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.
For 2019-20 Scottish Government employers’ contributions of £98m (2018-19: £64m) were payable to PCSPS at one of four rates in the range 26.6% to 30.3% of pensionable pay, based on salary bands. The Scheme Actuary reviews employer contributions every four years following a full scheme valuation. The contribution rates are set to meet the cost of the benefits accruing during 2019-20 to be paid when the member retires, and not the benefits paid during this period to existing pensioners.
For 2019-20 the value of Scottish Government employers’ contributions relating to the partnership pension account is £469k (2018-19: £313k). There were no contributions due to the partnership pension or prepaid at the balance sheet date.
Court of Appeal judgement on public sector pension reforms
In 2015 the government introduced reforms to public sector pensions. Most civil servants were moved into a new (“alpha”) pension scheme. In December 2018, the Court of Appeal ruled that the transitional protection provided to some members of the judicial and fire fighters’ schemes as part of the reforms amounted to unlawful age discrimination. On 15 July 2019 the Chief Secretary to the Treasury made a written ministerial statement confirming that, as ‘transitional protection’ was offered to members of all the main public service pension schemes, the difference in treatment will need to be removed across all those schemes for members with relevant service. Further information regarding this discrimination, the latest update on the legislative process and scheme valuations can be found on the Civil Service Pensions website.
The judgment has an impact on other occupational schemes in the public sector where some members benefits may be affected and will therefore require corrective measures. The UK Government is aiming to respond formally in early 2021 to its public consultation on proposed remedies. The Scottish Government has worked with its actuaries to ensure that the financial effect to date is taken into account until such time as the agreed remedy is published and the impact is known with certainty.
People and Culture
Staff numbers and related costs
|Staff numbers (Full time equivalent)||No. of Special Advisers||Perman-ent Staff||Other||2019-20 Total||Restated
|Communities & Local Government||478||27||505||434|
|Culture, Tourism & External Affairs||135||16||151||117|
|Education & Skills||1,393||272||1,665||1,501|
|Environment, Climate Change & Land Reform||164||20||184||162|
|Finance Economy & Fair Work||1,093||69||1,162||1,065|
|Government Business & Constitutional Relations||34||2||36||45|
|Health & Sport||145,812||3,460||149,272||146,835|
|Social Security & Older People||1,068||150||1,218||735|
|Transport Infrastructure & Connectivity||502||33||535||486|
|Crown Office and Procurator Fiscal Service||1,733||81||1,814||1,699|
|Staff costs||2019-20 £'m||Restated
|Wages and Salaries (Permanent staff)||6,213||5,914|
|Social security costs (Permanent staff)||643||608|
|Other pension costs (Permanent staff)||1,168||797|
|Non-Permanent Staff (including Agency, temporary, contract staff and inward secondments)||395||329|
|Less recoveries in respect of outward secondments||(128)||(99)|
|Total net costs||8,291||7,549|
Number and cost of exit packages
|Exit Packages Cost Band||No of departures agreed 2019-20||Cost of exit packages 2019-20 £000||No of departures agreed 2018-19||Cost of exit packages 2018-19 £000|
|£10,000 to £25,000||27||425||21||377|
|£25,000 to £50,000||34||1,307||24||961|
|£50,000 to £100,000||39||2,510||30||1,931|
|£100,000 to £150,000||6||794||2||249|
|£150,000 to £200,000||1||197||2||374|
|£200,000 to £250,000||-||-||-||-|
|Total number / cost of exit packages||133||5,363||99||4,419|
There were no compulsory redundancies in 2019-20 (2018-19 and 2017-18: nil).
Staff Relations, Equality, Diversity and Inclusion
In SG our vision is to be a world-leading, diverse employer where people can be themselves at work. We are committed to building a workforce of people with a wide range of backgrounds, perspectives, and experiences, who are valued for their unique contributions in an environment, that is respectful and free of discrimination, harassment or bullying.
During 2019-2020 we continued to deliver on our two equality outcomes as an employer: to increase our workforce diversity and to foster an inclusive workforce culture. The improvements we made to our Graduate Development Programme 2019 regarding outreach, engagement and language, the design of assessment centres, diversity and skill of assessors and a clear focus on diversity data led to the most diverse and representative success cohort of graduates, particularly in terms of race and disability.
Recognising the persistent underrepresentation of minority ethnic people in Scottish Government, we initiated work to develop a Race Recruitment and Retention Plan which has tackling institutional racism as its core ambition. This Plan, reflecting our actions as an employer, will contribute to the ongoing implementation of Scottish Government’s wider Race Equality Action Plan. The Race Recruitment and Retention Plan will be published later this year.
Working in partnership with the Council of Scottish Government Unions and taking advice and insight from Disabled People’s Organisations and disabled employees, we developed our Recruitment and Retention Plan for Disabled People 2019. The Plan set out the action we have committed to taking to:
- Become an employer of choice with strong representation of disabled people at all levels of the workforce.
- Foster an inclusive and supportive culture where people can be themselves at work.
- Ensure our corporate policies and practices work well, and work well together.
- Create accessible workplaces where everyone can thrive at work
Since launch, delivery activity has focused around testing a new Workplace Adjustment Service designed around a person-centred approach.
More broadly, over the past year we began development of an internal Diversity and Inclusion strategy to set expectations for the leadership and management of equality, diversity and inclusion across the organisation.
A comprehensive assessment of our progress towards mainstreaming equality and delivering on our equality outcomes will be published in April 2021 in our Equality Outcomes and Mainstreaming Report.
In 2019-20, an average of 8.1 working days (2018-19: 7.6) were lost per staff year for the Scottish Government. The NHS Bodies in Scotland report their sickness absence rates based on contracted hours lost rather than days lost due to different shift patterns in the NHS Scotland workforce. The sickness absence rate across NHS Scotland for the year to 31 March 2020 was 5.15% of total contracted hours (2018-19: 5.4% of total contracted hours). Sickness absence rates for agencies and other consolidated bodies can be found in their individually published annual accounts.
During 2019-20 there were 47,202 male staff, 153,922 female staff and 105 who prefer not to say (2018-19: 46,591 male, 151,467 female and 17 prefer not to say staff). Within these totals were 1,815 male and 1,481 female Senior Civil Servants or equivalent (2018-19: 1,818 male and 1,442 female Senior Civil Servants). These are measured as head count numbers and not full time equivalents as used in the staff numbers table.
Facility time used by recognised trade union representatives of the Scottish Government has been reported for the period between 1 April 2019 and 31 March 2020.
The average number of disabled employees employed by the Scottish Government, its Executive Agencies, Health Bodies and the Crown Office and Procurator Fiscal Service over the year to 31 March 2020 was 3,015 (restated 2018-19: 2,738 to include 10 Student Awards Agency Scotland staff).
Losses, Gifts and Special Payments
The following losses and special payments have been audited by the Scottish Government’s auditors. Losses and special payments are in the nature of transactions which Parliament cannot be supposed to have contemplated when approving the annual Budget Act and subsequent Amendment Orders. The Scottish Public Finance Manual requires a formal approval procedure to regularise such transactions and their notation in the annual accounts.
No of Cases
|Finance, Economy and Fair Work||1,175||2.16||1.76|
|Health & Sport (1)||3,742||3.03||3.66|
|Education & Skills (2)||1,363||0.11||0.06|
|Transport, Infrastructure and Connectivity (4)||54||10.49||0.33|
|Communities and Local Government (2)||-||-||-|
|Culture, Tourism and External Affairs (2)||-||-||-|
|Environment, Climate Change and Land Reform (4)||19||0.89||-|
|Social Security & Older People (2)||2,753||4,13||0.005|
(1) £0.13m irrecoverable student nursing bursaries have been included, although information was not accessible to report the number of cases involved (2018: £0.22m 142 cases).
(2) 15 cases amounting to £0.004m in 2018-19 for operating costs have been reclassified from Administration.
(3) 3 cases amounting to £0.11m in 2018-19 for Scottish Prison Service were previously omitted.
(4) 27 cases amounting to £0.33m in 2018-19 for Transport Scotland were previously reported within Environment, Climate Change and Land Reform portfolio accounts instead of Transport, Infrastructure and Connectivity portfolio.
Details of cases over £0.30m:
|Transport, Infrastructure and Connectivity||A commercial loan to Burntisland Fabrications Limited (BiFab) not expected to be recovered.||9.0|
|Rural Economy||A grant to support the building of a new processing facility but the company subsequently went into administration which activated a condition for repayment.||0.97|
There were no cases over £0.30m in 2018-19. (5)
No of Cases
|Finance, Economy and Fair Work (5)||14||0.01||0.007|
|Health and Sport||1,102||51.31||44.9|
|Education and Skills||4||0.03||0.01|
|Transport, Infrastructure and Connectivity||1||65.00||-|
|Social Security and Older People||9||0.004|
|Crown Office and Procurator Fiscal Service (6)||20||0.47||0.23|
(5) 1 case amounting to £0.37m in 2018-19 for Scottish Public Pensions Agency has been removed as it was a provision and no loss or special payment should have been reported for this case.
(6) 24 cases amounting to £0.23m in 2018-19 for Crown Office and Procurator Fiscal Service were previously omitted.
Details of cases over £0.30m:
No of Cases
|Health and Sport: NHS Boards:||Clinical Compensation Payments:|
|1||Golden Jubilee Foundation||0.37||-|
|-||NHS Ayrshire and Arran||-||4.94|
|2||NHS Dumfries and Galloway||1.98||0.40|
|-||NHS Forth Valley||-||0.50|
|2||NHS Greater Glasgow and Clyde||0.94||-|
|Transport, Infrastructure and Connectivity||1||A full and final commercial settlement of £65 million was paid to Aberdeen Roads Limited (ARL) in connection with the construction phase of the AWPR project. The settlement was reached on a commercial basis and without any admission of liability by any party. The terms of the settlement agreement are commercially sensitive and confidential.||65.0||-|
There were 23 cases over £0.30m in 2018-19.
The Scottish Government made gifts in the year as follows:
No of Cases
|Culture, Tourism and External Affairs||170||0.003||0.12|
There were no cases over £0.30m in 2019-20 (2018-19: £nil).
Principal Accountable Officer