The Scottish Government Consolidated Accounts for the year ended 31 March 2018

Annual report of consolidated financial results of the Scottish Government, its Executive Agencies and the Crown Office, prepared in accordance with IFRS


13a. Provisions for Liabilities and Charges

  Student Loans Sale Subsidy Early Departure Costs NHS Clinical and Medical Negligence SPS Prisoner Compensation Other Provisions Total 2017-18
£m £m £m £m £m £m
Balance as at 1 April 2017 40 149 438 - 77 704
Add: element reported as due within one year 2 13 174 3 52 244
Balance as at 1 April 2017 42 162 612 3 129 948
Provided for in year - 8 211 1 10 230
Provisions not required written back (2) (3) (73) (2) (10) (90)
Provisions utilised in year (2) (13) (33) - (17) (65)
Discount amortised 2 2 (2) - (1) 1
Balance as at 31 March 2018 40 156 715 2 111 1,024
Payable within one year (2) (12) (118) (2) (45) (179)
Balance as at 31 March 2018 38 144 597 - 66 845
Analysis of expected timing of any resulting outflows of economic benefits:
Payable in 1 year 2 12 118 2 45 179
Payable between 2 - 5 yrs 14 42 440 - 53 549
Payable between 6 - 10 yrs 24 37 29 - 11 101
Thereafter - 65 128 - 2 195
Balance as at 31 March 2018 40 156 715 2 111 1,024
Prior Year Student Loans Sale Subsidy Early Departure Costs NHS Clinical and Medical Negligence SPS Prisoner Compensation Other Provisions Total 2016-17
£m £m £m £m £m £m
Balance as at 1 April 2016 42 141 256 - 93 532
Add: element reported as due within one year - 13 107 3 62 185
Balance as at 1 April 2016 42 154 363 3 155 717
Provided for in year - 18 330 1 24 373
Provisions not required written back - (4) (56) - (4) (64)
Provisions utilised in year (2) (19) (25) (1) (48) (95)
Discount amortised 2 13 - - 2 17
Balance as at 31 March 2017 42 162 612 3 129 948
Payable within one year (2) (13) (174) (3) (52) (244)
Balance as at 31 March 2017 40 149 438 - 77 704
Analysis of expected timing of any resulting outflows of economic benefits:
Payable in 1 year 2 13 174 3 52 244
Payable between 2 - 5 yrs 12 66 338 - 56 472
Payable between 6 - 10 yrs 28 39 15 - 21 103
Thereafter - 44 85 - - 129
Balance as at 31 March 2017 42 162 612 3 129 948

13b. Provisions for Liabilities and Charges

Student Loans

The debt sale subsidy is the additional cost to the Scottish Government of government subsidies contractually due to the purchaser of the debts, beyond the costs that the government would have incurred had the debts remained in the public sector. The debt sale subsidy provision is estimated to meet the cost of this subsidy over the expected life of loans sold. The utilisation of this provision is dependent on the timing of the repayment of the loans which is uncertain.

NHS Clinical and Medical Negligence

Included within provisions is an amount of £715m (2016-17: £612m) which relates to clinical and medical negligence costs.
Following the accounting review undertaken in 2014-15, on consolidation, the Scottish Government's CNORIS provision represents the national liability and the Boards' accounting for individual claims is removed.
In 2017-18 £211m (2016-17: £330m) of estimated settlement value of medical and clinical negligence claims were added to the provision.
In 2017-18 £33m (2016-17: £25m) in claims were settled and £73m (2016-17: £56m) was written back as no longer required.

Early Departure Costs

This provision is based on an estimate of exposure to potential payments in respect of employees leaving service prior to reaching normal retirement age.

Prisoner Compensation

This provision is based on an estimate of exposure to potential prisoner compensation claims; further information can be found within the Scottish Prison Service annual accounts at www.sps.gov.uk.

Other Provisions - NHS Balances

Other provisions include NHS balances of £11m (2016-17: £19m). The NHS balances relate to various Health Boards and Bodies and include: provision for non-medical legal liabilities, employer and third party costs, provision for future development costs, dilapidations, and a variety of other smaller provisions.

Other Provisions - Transport Scotland Balances

Also included within other provisions are Transport Scotland balances of £77.6m (2016-17: £84.0m) including £68.7m relating to land & property acquisition (2016-17: £73.5m), £3.4m relating to major projects (16-17: £5.0m), and £5.5m relating to other retirement benefit costs (2016-17: £5.5m).

The land & property acquisition provisions relate primarily to estimates made of the likely compensation payable in respect of planning blight, discretionary and compulsory acquisition of property from owners arising from physical construction of a road or rail scheme. When land is acquired by CPO it is not known when compensation settlements will be made. A provision for the estimated total cost of land acquired is created when it is expected that a general vesting declaration will be published in the near future. It may take several years from the announcement of a scheme to completion and final settlement of all liabilities. The estimates provided by the Valuation Office Agency are reviewed bi-annually.

Major projects provisions relate to compensation claims made in respect of work done under on projects that have not yet fully settled.

Transport Scotland agreed to meet the additional cost of benefits payable to specific employees who retired early until they reach the age of 60 at which point the liability is assumed by the PCSPS. The cost of these benefits is provided in full when the employee retires.

Other Provisions - European funded schemes

European Structural Funds Programmes - In 2016-17 a provision of £1m was made in recognition of the anticipated cost of self corrections relating to closed schemes (2007-13). This provision has been reviewed and remains at £1m in anticipation of exchange rate fluctuations between the euro and sterling.

CAP schemes - provisions have been made in anticipation of exchange rate fluctuations between sterling and the euro (£nil; 2016-17: £3.5m) and to recognise the estimated costs of adjustments to EU-related income and expenditure that may arise in future years (£0.8m; 2016-17: £2.5m).

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