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 (reproduced on page 134) 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 23 September 2019.
Scope of Responsibility
As Permanent Secretary to the Scottish Government I am responsible for ensuring that appropriate arrangements are in place for governance; that these arrangements support the Scottish Government's purpose and the achievement of Scottish Ministers' policies, aims and objectives.
As Principal Accountable Officer (PAO) for the Scottish Administration (under the terms of the Public Finance & Accountability (Scotland) Act 2000), I am also 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.
It is my duty as PAO to ensure that the Scottish Government delivers the ambitions and outcomes in line with the National Performance Framework (NPF), in an open, capable and responsive manner. As the Scottish Government's role evolves and responsibilities increase, it is vital that its corporate governance structures operate effectively to demonstrate the economic, effective and efficient use of the resources.
The Scottish Government's corporate governance system has been designed in order to provide me with support and advice in relation to strategic issues of organisational health, performance, vision and strategy and effective governance.
The Scottish Government's governance arrangements provide 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 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. The framework is set out at Figure 1.
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 Scottish Public Finance Manual and generally accepted best practice principles.
Figure 1 Scottish Government Corporate Governance Structure
The Corporate Board's purpose is to provide me with support as I discharge my responsibilities as PAO with objective strategic oversight, guidance and advice in relation to the Scottish Government's organisational performance and the effectiveness of its governance arrangements. It consists of myself, Directors-General (DGs), as my Portfolio Accountable Officers; five Non-Executive Directors (NXDs); 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 in September 2019.
The Corporate Board has met six times since over the course of the period which this Governance Statement covers. Over the period it has considered issues including: financial performance; digital; workforce planning; the Annual Consolidated Accounts and this companion Governance Statement; the implications of new powers under the Scotland Act (2016); European Union (EU) Exit, as well as its annual review of corporate risk. A Balanced Scorecard is used by the Board to scrutinise the organisation's key performance metrics. The Board also undertakes a programme of regular development activity, with a minimum of two sessions each calendar year.
The Board, and wider corporate governance strategy, is supported by the Board Secretary. This role which has significantly strengthened corporate governance through the implementation of the 2017 Governance Review recommendations, a programme of improvement across all elements of the governance system and with the wider organisation. The role was made permanent in March 2019.
The Corporate Board is supported by a number of corporate sub-boards as set out at Figure 1. Over the reporting year each of these boards have met at least once a quarter and have conducted a review of their terms of reference and work-plan with clear routes for escalation and accountability set out. The Corporate Governance Manual was last updated by the Board Secretary in August 2019 as part of its annual review.
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. The People Board focuses on delivering the People Plan and the aspirations set out.
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 SG2020 vision and deliver the Scottish Government's 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 ensure 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.
Exchequer Board - chaired by DG Scottish Exchequer:
The Exchequer Board was established in the course of the reporting year and 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 to the Permanent Secretary, Corporate Board and Ministers.
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 Ministers' ambition 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.
Constitution & Europe Programme Board - chaired by DG Constitution & External Affairs:
The Constitution & 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.
DG Assurance meetings take place quarterly and in line with recommendations from the Governance Review, relevant issues are escalated for awareness, discussion and action to the Scottish Government Audit & Assurance Committee where appropriate. Assurance meetings are attended by each Director from the DG family; NXDs; Audit Scotland; Internal Audit and Assurance; the Board Secretary and relevant officials as appropriate.
Improvements to the Scottish Government's assurance arrangements continue, particularly in relation to how the identification and management of risk and how the stewardship of the Scottish Government's finances and people are evidenced, monitored and improved. Issues escalated to the Scottish Government Assurance and Audit Committee (SGAAC) this reporting year have included EU Exit preparedness and its impact on the Scottish Government and a number of other areas I have included as significant controls issues later in this Statement.
Scottish Government Audit and Assurance Committee
The role of SGAAC is to support me by providing assurance on governance, risk management and scrutinising financial processes through constructive challenge, advice and support. Its membership consists of NXDs, including a newly appointed Deputy Chair and I attend along with Directors-General; the Chief Financial Officer; the Director for Internal Audit and Assurance; Audit Scotland, as the Scottish Government's external Auditors and the Board Secretary. The Auditor General attends the meeting in September to coincide with SGAAC's consideration of the Annual Accounts and Governance Statement.
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 SPFM.
The assurance provided by SGAAC on the 23 September 2019 is timed to support the PAO's signature of the Scottish Government consolidated accounts and the associated Governance Statement, following consideration of the accounts by Corporate Board on 3 September 2019.
In line with recommendations from the 2017 Governance Review, relevant issues discussed at DG Assurance meetings are now escalated for awareness and discussion (and if appropriate, action) to SGAAC. The issues raised throughout this year, alongside the DG Certificates of Assurance have been discussed at SGAAC in the period up to my signature of this Statement and the Scottish Government Accounts which supported me in my consideration of the issues included in this Statement. SGAAC subsequently considered the Statement and the draft Consolidated Accounts on 23 September 2019 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.
From 1 April 2019 the Scottish Government introduced a new Directorate of Internal Audit and Assurance. This brought together three independent assurance teams - Internal Audit, Digital Assurance Office and the Portfolio, Programme and Project Assurance. While the services provided by each of the teams will continue independently, an enhanced integrated approach to assurance will be provided 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 clear improvements in the work of Internal Audit compared to the previous year and 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.
Public Sector Internal Audit Standards require that an independent External Quality Assessment is undertaken of the Internal Audit function every five years. In February 2019 the Institute of Internal Auditors undertook this assessment and confirmed that the Internal Audit Directorate generally conforms to Public Sector Internal Audit Standards.
Audit Scotland attend DG Assurance meetings and provide 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. Two such meetings have taken place since January 2019.
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, NXDs, Board Secretary and others as required.
DG Education, Communities and Justice, working in partnership with Audit Scotland and Internal Audit has also held two workshops in June and July 2019 focussing on the role of sponsor teams with reference to the support for, and the understanding of the governance and accountability of, public bodies. Further work to support sponsor teams in their roles is also being undertaken following these sessions and this joint working has been very much welcomed, not just by the DG Education, Communities and Justice Family but by all of Executive Team.
Non-Executive Directors (NXDs)
There has been a strengthening of independent scrutiny within the Scottish Government's governance structure over the reporting year, particularly with the recruitment of four additional NXDs and two deputy NXDs being appointed on 1 March 2019. The NXDs provide the Scottish Government with constructive challenge, advice and support through the governance structures as well as direct support to the Executive Team through their membership of corporate boards as well as attendance at DG Assurance meetings. Improvements have been made to the support provided to NXDs including regular briefings on key developments, priorities and bespoke NXD Network meetings. New NXDs have undergone a full induction programme and will be supported in their roles over the next year by the Board Secretary.
Development of the Scottish Exchequer Function
2018-19 was an important year for the continued evolution of the DG Scottish Exchequer function. As the organisation's functions and responsibilities have evolved, so too have its requirements to ensure the most effective stewardship of the public funds for which the Scottish Government is now responsible.
Over the period of this Governance Statement, the DG Scottish Exchequer function delivered and supported a range of activity, including:
- The delivery the draft Budget for 2019-20;
- The first Medium Term Financial Strategy (MTFS);
- The first Fiscal Outturn Report; and
- The launch of a refreshed National Performance Framework (NPF) which has been welcomed across Scotland.
Significant investment in capacity and capability has taken place - particularly at senior level. In addition to the Director for Budget & Sustainability, there is now a Director for Tax and a Director of Performance and Strategic Outcomes, whose role is to support the delivery of the National Outcomes as set out in the NPF in conjunction with the wider public sector. This investment in staff has been complemented by a programme of work to inform and deliver an enhanced DG Scottish Exchequer to manage fiscal risks, including longer-term sustainability and realise the opportunities arising from new financial powers. This programme has drawn on stakeholder input and international best practice in areas such as strategic risk, transparency and fiscal sustainability.
National Performance Framework
Scotland's National Performance Framework has been the foundation for a transformative shift in how policy is developed and delivered since 2007, focussing the Scottish Government's collective efforts on the delivery of the outcomes for Scotland.
Through the Community Empowerment (Scotland) Act 2015, this outcome-based approach has been put on a statutory footing and the Scottish Government took this opportunity to undertake a wholesale review of the NPF, in partnership with civic Scotland, culminating in the launch of a renewed NPF in June 2018. The renewed NPF not only guides the activities of the Scottish Government but now puts collective action across the public and private sectors and wider civic society, at the centre of the Scottish Government's efforts. The renewed NPF puts increased wellbeing at the heart of the Scottish Government's collective national endeavours, alongside sustainable and inclusive economic growth. It includes a statement of the values that will guide the Scottish Government's activities and approaches, including with kindness, dignity, compassion and transparency.
These objectives are threaded through the corporate governance system, and are specifically monitored through the Performance sub-board, chaired by DG Scottish Exchequer, using the Scottish Government's risk management and assurance arrangements. Further work is underway to support this monitoring at an organisation-wide level for Corporate Board and will strengthen the ability of the Scottish Government to track its delivery.
In May 2019, the Scottish Government published Scotland's first Wellbeing Report, pulling together key trends and data across the National Outcomes, and drawing on additional existing sources of evidence. The resultant overall picture of wellbeing should encourage decision makers across all sectors to dig deeper into the evidence and look across the National Outcomes.
Creation of Social Security Scotland
One of the key changes to the Scottish Government during the course of the year has been the creation of Social Security Scotland, an Executive Agency that will deliver those benefits devolved under the Scotland Act 2016. The Agency was established on 1 September 2018. The Agency is responsible for ensuring that those benefits are administered in accordance with the Social Security (Scotland) Act 2018 and the values of dignity, fairness and respect which Scottish Ministers have decided should underpin the devolved social security system. They have in place a system of internal control and assurance in line with the Scottish Public Finance Manual. As Accountable Officer for Social Security Scotland, the Chief Executive has responsibility for ensuring that system of risk management and internal control is sound and robust, and identifies the principal risks to the achievement of the Scottish Government's social security policies, aims and objectives.
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 the Scottish Government Assurance and Audit Committee meeting on 24 June 2019 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 and it is also consistent with the UK Government's refreshed Orange Book.
Following an extensive review during 2017-18 which looked to improve consistency and accessibility of the internal Scottish Government risk management process and guidance, the Scottish Government published its new internal risk guidance and approach on 8th May 2018. This approach has been reinforced by investment in training for staff throughout 2018-19 and work is currently underway to provide me with recommendations on how to further strengthen the Scottish Government's risk management approach. Findings will be reported to the Executive Team later in 2019.
Scottish Government Corporate Risks
The Scottish Government operates in an increasingly volatile, uncertain, complex and ambiguous environment, delivering the priorities of the Scottish Ministers whilst managing associated risks and opportunities. 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 at the end of the period covering this Statement (March 2019) is included below:
- The Scottish Government strategy to ensure that Scotland's interests are protected in the UK withdrawal from the European Union. (DGCEA)
- Resilience arrangements are sufficient to deal with major and sustained incidents in a changing threat landscape and that disrupt everyday activities in Scotland. (DGECJ)
- The Scottish Government ensures the long term sustainability of the public finances through effective budget-setting and medium term strategic financial planning. (DGSE)
- The Scottish Government has the capability and capacity to deliver the Government's priorities while maintaining high standards of competence. (DGODO)
- New powers over social security are successfully implemented, with smooth transition from the Department of Work and Pensions to new Scottish policies and administrative arrangements. (DGODO)
- We have the systems, personnel and processes to ensure the Scottish Government IT system's infrastructure and services are protected from cyber threats, ensuring that the Scottish Government can play its part in the development of the wider cyber community. (DGODO)
- We have the capacity to support the Scottish Government's business critical IT systems and robustly deliver business critical IT/digital dependent projects. (DGODO)
- Culture in Scottish Government supports and enables greater diversity and inclusion, demonstrating it is an exemplar employer by committing to and working towards the published equality outcomes for 2017-20. (DGODO)
- Maintaining the confidence of survivors in the independence and efficiency of the Scottish Child Abuse Inquiry.(DGECJ)
- Ensuring the Scottish Government's capacity to deliver the financial redress scheme for victims/survivors of in-care child abuse.(DGECJ)
- Ensuring we respond effectively to the European Audit criticisms relating to 2015 implementation of the Common Agricultural Policy. (DGEcon)
- Coherent actions by core Scottish Government and agencies are appropriately developed, targeted and implemented to strengthen inclusive sustainable economic growth. (DGEcon)
- Health and Social Care Partnerships are able to meet the objectives of the Health & Social Care Delivery Plan. (DG Health & Social Care)
- Public Service Reform and Improvement: We have a coherent framework of activities, centred on the people who need and use public services, promoting partnership working and preventative approaches so that we are better placed to improve outcomes and reduce inequalities in a sustainable way. (DGECJ)
These risk management arrangements have also surfaced two emerging cross-cutting risks, which are also reflected in the Certificates of Assurance provided to me by my Directors General.
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 DG 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.
In addition, it is clear that there will 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, Executive Team and People Board 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 DG Assurance process; by the Scottish Government Assurance and Audit Committee; by NXDs; 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 their materiality, relevance and their impact on the organisation and its governance as a whole. It is also based on the assurances provided by the 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:
Corporate Systems: Each year Internal Audit provides an assessment of the Scottish Government's corporate systems. Last year's report provided a reasonable assurance opinion, alongside the need for improvements in relation to a number of those systems, namely the Scottish Government's Accounting System (SEAS) capacity and capability and payroll, to ensure a reasonable assurance opinion could be provided again.
The demands of large-scale external recruitment and internal movement continue to create challenges for the Scottish Government's legacy systems and services. I am content that corporate services are putting in place short term improvements and developing the investment case to ensure underlying risks can be addressed. I remain mindful of the pressures on corporate services, particularly in the context of the implementation of Social Security and the impact of EU Exit, and the importance of ensuring that they are fit for purpose and able to support the operation of the Scottish Government. The Internal Audit 2019/20 plan provides robust coverage of the 'business as usual' elements of the core systems within the Scottish Government which are critical to ensure that the key controls for the day to day business continue to function.
European Structural Funding (ESF): The European Social Fund programme within the ESF is currently in 'pre-suspension' status due to audit issues identified during a 2018 audit. As a result the Scottish Government is not yet in a position to have these claims refunded by the European Commission (EC) and in turn are also unable to pay out funding to lead partners who are affected by these audit issues, one of which is Skills Development Scotland. The potential financial exposure to the Scottish Government if pre-suspension is not lifted is the loss of the re-imbursements and a penalty imposed by the EC of up to 25% of value of the whole programme.
The Scottish Government is therefore working with lead partners and the EC to address these issues with the aim of having the pre-suspension lifted as soon as possible (the pre-suspension period expires in November 2019). Additionally, performance in respect of audits carried out on behalf of the EC into the verification of claims for EU-funding is subject to a range of urgent improvement actions. These include additional training, updating documentation, guidance and instructions, management information and benchmarking of the systems used against industry standards.
Freedom of Information (FOI) Performance: Last year my statement highlighted the Scottish Information Commissioner's two interventions into Freedom of Information performance across the Scottish Government and the associated FOI processes in place.
On performance, the Scottish Government achieved 91% of FOI responses on time in 2018, exceeding the 90% target set by the Commissioner, despite a 12% increase in caseload compared to 2017. While performance has been maintained during the first part of 2019, it will be challenging to meet the revised target of 95%. Although this intervention formally ended due to the 2018 performance, the Scottish Government continues to provide monthly reports to the Commissioner.
On processes, the Scottish Government has in place action plan agreed with the Commissioner in November 2018. This is being implemented across all Directorates and Agencies, led by an improvement project. The Commissioner carries out quarterly monitoring and published a progress report on 29th July 2019. The progress report highlighted the positive steps taken towards improving practice, while noting the Commissioner's concerns about maintaining consistency in performance. The report also confirms that the Commissioner will expect the monthly reports to continue.
While performance and process improvements remain live issues, both are being pursued within robust governance processes and controls in place, both internally and through the Commissioner's role, from which I take assurance.
European Union (EU) Exit: Preparation and planning in relation to EU Exit continues in the Scottish Government following extensions to the Article 50 period. Whilst uncertainty continues as to whether, when and how, the United Kingdom will leave the EU, there is an extensive and co-ordinated governance structure in place, and supported by programme and project management structures in place, appropriately scaled and tailored for the nature of the challenge, and linking with the Scottish Government's existing governance arrangements. These are set out below:
- The Constitution & Europe Programme Board brings together DGs, lead Directors and portfolio lead NXDs to provide me with advice, support and challenge;
- EU exit preparedness, risk management, resourcing and associated governance requirements has been a standing item at each DG Assurance meeting;
- EU exit preparations have also been considered by the Scottish Government Audit and Assurance Committee, the Executive Team and at Corporate Board;
- In the course of the year, these structures were augmented by use of a Scottish Government Resilience Room (SGoRR)- style meeting format and process in order to bring together Cabinet Ministers, their lead officials and representatives of partner organisations, under the direction of the Deputy First Minister and First Minister, in order to bring rigour and assurance to EU exit preparations; and,
- Scottish Government officials and Ministers have taken part directly in the governance processes of the UK Government, through attendance at meetings of the European Union Exit and Trade (Preparedness) (EUXT (P)) Cabinet Sub-Committee and its officials' group.
These governance processes support the assessment that the Scottish Government was prepared for EU exit by the end of 2018-19, in that it had identified the likely major risks and issues, assessed their impact on and within Scotland, identified and made preparations to mitigate impacts where it is feasible and proportionate to do so, and highlighted the impact of risks that could not be fully mitigated to support preparations by organisations and individuals in Scotland.
This work continues in the current year and is dependent on receiving information and co-operation from the UK Government, the European Commission, and partner organisations in Scotland. It remains the case that preparing for and managing the impact of EU Exit, in particular a disorderly "no-deal" exit, will impact on the ability to deliver the daily business of government and requires Ministers and officials across the Scottish Government to deploy resources flexibly and re-assess priorities, including to ensure that the wellbeing and resilience of staff is maintained.
Post- 31 March event - Royal Hospital for Children and Young People and the Department of Clinical Neuroscience: Following the signing of NHS Lothian annual accounts in June 2019, the Scottish Government was alerted to an issue with the ventilation system at the Royal Hospital for Children and Young People (RHCYP) in Edinburgh, resulting in the halting of planned patient moves to the new building.
Two independent reports were commissioned by the Cabinet Secretary. The first by NHS National Services Scotland (NSS) to undertake a detailed assessment of all systems in the new hospital that could impact on safe operation for patients and staff. NSS will also provide assurance on current and recently completed capital projects to ensure that these are compliant with national standards. In addition, KPMG were engaged to conduct an independent audit of the governance arrangements for RHCYP, ensuring a full understanding of the factors that led to the delay in the hospital's opening on 4 July 2019.
On 11 September the Cabinet Secretary updated parliament on the outcome of the first phase of the NHS NSS work - a review of water, ventilation, drainage and plumbing - and on the findings from the KPMG review.
The NSS report sets out 11 issues to be addressed, 2 of which are categorised as Priority 2: Major - Absence of key controls, major deviations from guidance. Remedial action is now required to address all 11 issues in the report. As a result of the NSS review the estimated timeline for services to migrate to the new hospital is for commencement in spring 2020, with full migration by autumn 2020. The cost of remedial works, maintenance of existing sites and project costs is estimated at £16 million. Given that NHS Lothian took possession of the building in February 2019 the unitary payment will continue to be made, even though the building is not occupied, however these payments have been budgeted for.
The KPMG report into the facts that led to the delay sets out a picture of human error and confusion over interpretation of standards and guidance and missed opportunities to spot and rectify that error.
NHS Lothian had been escalated to Level 3 in July 2019 on a range of performance measures. An Oversight Board was established which includes senior figures from Scottish Government Health and Social Care Directorate, NHS National Services Scotland, Scottish Futures Trust and NHS Lothian and what has overall responsibility for the completion of the works and opening of the hospital, reporting directly to the Cabinet Secretary.
The Health and Social Care Management Board reviewed the level of escalation on 11 September, given the further information available from the NSS and KPMG reports and the Director General took the decision to escalate NHS Lothian to Level 4 for the RHCYP project only. As such a Senior Programme Director has now been appointed and will report directly to Scottish Government and will be a member of the Oversight Board.
A new national body is being established to provide oversight for the design, planning, construction and maintenance of major NHS infrastructure. While it is important to note that not all infections are preventable, this work will focus in particular on mitigating infection risks posed by the built environment.
Queen Elizabeth's University Hospital (QEUH) and Royal Hospital for Children (RHC): Over the past year there have been a number of high-profile infection incidents and outbreaks at the QEUH and RHC within NHS Greater Glasgow and Clyde. The management of the recent issues and concerns expressed have been risk rated as high by the Board.
A range of measures have now been implemented to mitigate the effects of these risks and the Board is working on additional actions to strengthen controls. In response to the infection incidents and outbreaks, a number of investigations have taken place in relation to the QEUH, the RHC and the Institute of Neurosciences including: the Healthcare Environment Inspectorate's report and the Board's resulting action plan following an unannounced inspection; Health Protection Scotland's investigation and subsequent report into the water contamination incident; and the Health and Safety Executive's investigation into the deaths of two patients from Cryptococcus neoformans. The outputs from these investigations will help to inform the Scottish Government's wider Independent Review into QEUH, commissioned by the Cabinet Secretary in January 2019.
A wider programme of work is under way within Scottish Government to consider ways to further strengthen infection prevention and control in healthcare settings across NHS Scotland. While it is important to note that not all infections are preventable, this work will focus in particular on mitigating infection risks posed by the built environment.
It was announced on 17 September 2019 that a public inquiry will be held to examine issues at the new Royal Hospital for Children and Young People (RHCYP) and the Queen Elizabeth University Hospital (QEUH) sites following recent concerns from affected parents over safety and wellbeing. The inquiry will determine how vital issues relating to ventilation and other key building systems occurred, and what steps can be taken to prevent this being repeated in future projects.
Cultural Issues related to allegations of Bullying and Harassment in NHS Highland: On 9th May 2019 the Scottish Government published the findings of a review by John Sturrock QC into allegations of a culture of bullying within NHS Highland. The review considered testimony from current and former staff across various staffing levels, geographic areas, disciplines and departments of NHS Highland. A total of 66% of the 340 people who made contact with the review wished to report experiences of what they described as bullying. The review found that there were weaknesses in governance, culture, leadership, systems and behaviours.
The Scottish Government published its response to the Review alongside the report. A number of initiatives are now in train to strengthen the existing policy architecture in NHS Scotland in relation to bullying, harassment and whistleblowing. All NHS Scotland Boards have been asked to report on the implementation of local staff governance and assurance mechanisms in light of the review findings, while NHS Highland have been formally asked to produce an action plan which responds to all 65 substantive recommendations included in the report.
Notwithstanding that, the Review only examined matters in NHS Highland; it should be acknowledged that there is important learning and reflection for other NHS Scotland health boards and for the Scottish Government. In many respects, what the Review states about working to build supportive cultures that engender and encourage the right behaviours, is of general application. The Ministerially-led Short-Life Working Group, will examine how we collectively take forward measures that support open and honest workplace cultures. In particular, this group will look specifically 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.
The Financial Position of NHS Boards: In 2018-19 in order to deliver a breakeven position, four NHS Boards required additional financial support in the form of brokerage. The level of brokerage amounts to £65.7 million across the following Boards: NHS Tayside (£17.6 million); NHS Ayrshire and Arran (£20.0 million); NHS Highland (£18.0 million); and NHS Borders (£10.1 million). This compares with the level of brokerage required in 2017-18 of £50.7 million, and represents an improvement of £8.8 million on the original forecast for the year.
The financial progress of each of the NHS Boards is published on a monthly basis.
NHS Board Compliance with General Data Protection Regulations (GDPR): The compliance with GDPR (2016) and the Data Protection Act (2018) has been identified as a high risk in most health boards' Governance Statements. This is due to incomplete preparation for the new legislation and a lack of awareness and understanding amongst staff members. The Boards have acknowledged that further work is required to ensure that appropriate improvement plans are in place, with a particular focus on ensuring all staff members fully understand this new legalisation and their responsibilities to comply with it.
The Digital Health and Care Strategy sets out Scottish Government's programme of activities for delivering by 2020 a simplified and consistent national approach for Information Assurance, Governance and Security. This will take into account the different needs of users and citizens, and provide clarity with regards to information sharing across health and social care to help minimise the information risk across NHS Scotland.
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. Within the 2018-19 financial year 38 cases 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 also 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 excise identified 3,407 matches of which 805 were recommended for follow up action. The Scottish Government have to date reviewed 1,282 matches of which no frauds or errors were detected.
The Scottish Government has continued to engage with cross-government groups, sharing the approach taken and supporting the prevention agenda through the Fraud, Error and Debt Team within the UK Cabinet Office.
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, 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.
Fifty seven data security incidents were internally reported to the Scottish Government Data Protection and Information Assets team in 2018-19, of which four 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.
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. In addition, the Scottish Government has continued to make good progress towards implementing actions set out in the Public Sector Action Plan on Cyber Resilience, which will enhance the cyber and information security controls already.
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 2018-19 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 bring an external perspective to the consideration of corporate management issues such as staffing, administration costs, monitoring of programme expenditure, training and development, accommodation strategy and relations with stakeholders. Janet Hamblin, non-executive director, is the Chair of the Scottish Government Audit and Assurance Committee.
Independent non-executive members of the Scottish Government are appointed by the Permanent Secretary for an initial period of two to three years (normally up to a maximum of six years via re-appointment). 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 Top Level Pay Committee, comprising the Permanent Secretary, the Directors-General, Chief Executive of the Crown Office and Non-executive members of the Corporate Board, ensures that the Pay and Performance Management policy falls within the parameters set by the SSRB and Cabinet Office. The Scottish Government's Top Level Pay Committee has agreed that for SCS pay in 2018-19:
- all SCS staff, apart from poor performers and those near the maximum of the pay range will receive a 1% uplift to their consolidated pay;
- SCS staff at the lowest end of the Deputy Director 1 pay band will receive a slightly higher increase, with salaries lifted to a revalorised minimum consolidated pay rate of £74,200.
- all SCS staff will receive a 1% non-consolidated payment;
- those SCS staff furthest below the median of their pay range and/or with longer service in the grade will receive a further non-consolidated payment.
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 2019 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 2019 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 £90,030 (2017: £89,493) and for all other Cabinet Ministers is £46,705 (2017: £46,426).
|Nicola Sturgeon, MSP (1)||93,903||92,680||26,721||29,937||120,624||122,618|
|John Swinney, MSP||46,705||46,426||13,865||15,530||60,570||61,956|
|Roseanna Cunningham, MSP||46,705||46,426||16,558||17,461||63,263||63,887|
|Michael Matheson, MSP||46,705||46,426||16,812||17,461||63,517||63,887|
|Fiona Hyslop, MSP||46,705||46,426||13,814||15,530||60,519||61,956|
|Derek Mackay, MSP||46,705||46,426||17,433||17,868||64,138||64,294|
|Fergus Ewing, MSP||46,705||46,426||17,433||17,868||64,138||64,294|
|Humza Yousaf, MSP (2)||35,317||-||13,777||-||49,094||-|
|Michael Russell, MSP (2)||35,317||-||13,777||-||49,094||-|
|Shirley-Anne Somerville, MSP (2)||35,317||-||13,777||-||49,094||-|
|Aileen Campbell, MSP (2)||35,317||-||13,777||-||49,094||-|
|Jeane Freeman, MSP (2)||35,317||-||15,542||-||50,859||-|
|Keith Brown, MSP (3)||11,132||46,426||2,299||17,461||13,431||63,887|
|Angela Constance, MSP (3)||11,132||46,426||2,110||19,622||13,242||66,048|
|Shona Robison, MSP (3)||11,132||46,426||2,691||15,530||13,823||61,956|
(1) The First Minister's salary and total remuneration includes a benefit-in-kind for 2018-19 of £3,873 arising from the provision of accommodation at Bute House (2017-18: £3,187).
(2) Humza Yousaf, Michael Russell, Shirley-Anne Somerville, Aileen Campbell and Jeane Freeman were appointed as Cabinet Ministers on 29 June 2018. The full year equivalent salary in 2018-19 is £46,705. Pension benefits information was not gathered in 2017-18 and therefore is not available to publish as a prior year figure.
(3) Keith Brown, Angela Constance and Shona Robison resigned as Cabinet Ministers on 26 June 2018. The full year equivalent salary is £46,705.
* 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 2019 is shown below:
|James Wolffe, QC||123||122||46||47||169||169|
|Alison Di Rollo, QC||106||106||40||41||146||147|
*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.
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 2019 were as follows:
|Malcom Wright OBE (1)||50-55||-||-||-||50-55||-|
|Alyson Stafford CBE||145-150||140-145||-||45||145-150||185-190|
*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) Malcolm Wright was appointed on secondment on 11 February, but through an agreed arrangement whereby the Scottish Government funded Malcolm's salary in January, to allow for transition days with Paul Gray in advance of the start date.
No members of the Scottish Government Corporate Board received performance pay or benefits-in-kind.
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||18||18|
|Maximum Total Remuneration||165||165|
|Band of Highest Paid member of the Corporate Board Total Remuneration||165-170||165-170|
|Median Total Remuneration||36,328||34,764|
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.
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:
|Hugh McKay (from January 2018)||5-10||0-5|
|Annie Gunner Logan (from January 2018)||5-10||0-5|
Ministers and Law Officers
The pension entitlements of the Cabinet Team for the year to 31 March 2019 are shown below:
pension at age 65
| Real increase
at age 65
| CETV at
| CETV at
|John Swinney, MSP||10-15||0-2.5||209||186||14|
|Fiona Hyslop, MSP||10-15||0-2.5||209||186||14|
|Angela Constance, MSP||0-5||0-2.5||53||49||2|
|Shona Robison, MSP||0-5||0-2.5||73||67||3|
|Keith Brown, MSP||0-5||0-2.5||70||64||3|
|Michael Matheson, MSP||5-10||0-2.5||70||52||11|
|Roseanna Cunningham, MSP||5-10||0-2.5||100||77||16|
|Derek Mackay, MSP||0-5||0-2.5||39||25||9|
|Fergus Ewing, MSP||0-5||0-2.5||62||39||17|
|Humza Yousaf, MSP||0-5||0-2.5||9||-||5|
|Michael Russell, MSP||0-5||0-2.5||17||-||14|
|Shirley-Anne Somerville, MSP||0-5||0-2.5||11||-||7|
|Aileen Campbell, MSP||0-5||0-2.5||10||-||6|
|Jeane Freeman, MSP||0-5||0-2.5||17||-||15|
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 2018 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-19
| Real increase
in pension at
| CETV at
| CETV at
|James Wolffe, QC||5-10||2.5-5||143||90||38|
|Alison Di Rollo, QC||5-10||2.5-5||126||79||33|
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):
as at 31-Mar-19
| CETV at
| CETV at
|Leslie Evans||75-80 plus lump sum 225-230||2.5-5 plus lump sum 10-12.5||1,832||1,649||67||-|
|Sarah Davidson||40-45 plus lump sum 85-90||0-2.5 plus lump sum 0||672||566||17||-|
|Liz Ditchburn||35-40 plus lump sum 15-20||0-2.5 plus a lump sum 0||803||704||24||-|
|Paul Johnston||30-35 plus lump sum 65-70||2.5-5 plus lump sum 0||482||395||16||-|
|Alyson Stafford CBE1||-||-||-||-||-||21.8|
|Gordon Wales||45-50 plus lump sum 110-115||0-2.5 plus lump sum 0||830||726||8||-|
|Nicola Richards||30-35 plus lump sum 15-20||0-2.5 plus lump sum 0||501||427||14||-|
|Barbara Allison||30-35 plus lump sum of 90-95||0-2.5 plus lump sum 0-2.5||712||631||11||-|
Paul Gray and Malcolm Wright, Directors 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 Primary 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 2018 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 2018-19 Scottish Government employers' contributions of £64m (2017-18: £61m) were payable to PCSPS at one of four rates in the range 20% to 24.5% 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 2018-19 to be paid when the member retires, and not the benefits paid during this period to existing pensioners.
For 2018-19 the value of Scottish Government employers' contributions relating to the partnership pension account is £313k (2017-18: £391k). 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. The judgement is expected to have an impact on other public sector groups who have seen similar changes to their pension schemes. As the courts must agree the next steps, it may be some time before the position becomes clear and it is not possible to say what impact, if any, this will have on the Scottish Government.
People and Culture
Staff numbers and related costs
|Staff numbers (Full time equivalent)|| No. of
|Communities & Local Government||422||12||434||446|
|Culture, Tourism & External Affairs||100||17||117||113|
|Education & Skills||1,253||248||1,501||1,293|
|Environment, Climate Change & Land Reform||148||14||162||182|
|Finance Economy & Fair Work||1,007||58||1,065||909|
|Government Business & Constitutional Relations||42||3||45||81|
|Health & Sport||144,126||2,709||146,835||146,532|
|Social Security & Older People||661||74||735||361|
|Transport Infrastructure & Connectivity||448||38||486||490|
|Crown Office and Procurator Fiscal Service||1,625||87||1,712||1,598|
|Staff costs|| 2018-19
|Wages and Salaries (Permanent staff)||5,914||5,708|
|Social security costs (Permanent staff)||608||582|
|Other pension costs (Permanent staff)||797||769|
|Non-Permanent Staff (including Agency, temporary, contract staff and inward secondments)||317||224|
|Less recoveries in respect of outward secondments||(99)||(45)|
|Total net costs||7,537||7,238|
Number and cost of exit packages
|Exit Packages Cost Band|| No of
| Cost of
| No of
Cost of exit
|£10,000 to £25,000||21||377||17||269|
|£25,000 to £50,000||24||961||30||1,098|
|£50,000 to £100,000||30||1,931||15||1,047|
|£100,000 to £150,000||2||249||4||474|
|£150,000 to £200,000||2||374||0||0|
|£200,000 to £250,000||-||-||0||0|
|Total number / cost of exit packages||99||4,419||89||3,300|
There were no compulsory redundancies in 2018-19 or 2017-18.
Staff Relations, Diversity and Equal Opportunities
In the Scottish Government our ambition 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.
To realise this ambition, we have developed two key Equality Outcomes in April 2017 through
extensive consultation with external stakeholders and Ministers:
- The Scottish Government's workforce increases in diversity to reflect the general Scottish population by 2025; and
- The Scottish Government fosters an inclusive workforce culture and values the contribution of employees from all backgrounds.
In April 2019 we published our Equality Outcomes and Mainstreaming Report 2019 providing a comprehensive assessment of our progress towards mainstreaming equality and delivering on these equality outcomes.
In 2018-19 an average of 7.6 working days (2017-18: 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 2019 was 5.4% of total contracted hours (2017-18: 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 2018-19 there were 46,591 male staff, 151,467 female staff and 17 who prefer not to say (2017: 45,697 male, 148,017 female and 9 prefer not to say staff). Within these totals were 1,818 male and 1,442 female Senior Civil Servants or equivalent (2017-18: 1,619 male and 1,282 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 2017 and 31 July 2018.
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 2019 was 2,728 (2017-18: 2,492).
Losses 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||£m||£m|
|Finance, Economy and Fair Work||1,085||1.76||4.48|
|Health and Sport||4,252||3.66||3.64|
|Education and Skills||719||0.05||0.22|
|Transport, Infrastructure and Connectivity||-||-||0.07|
|Communities and Local Government||-||-||0.002|
|Culture, Tourism and External Affairs||0.01|
|Environment, Climate Change and Land Reform||27||0.33||-|
|Social Security and Older People||10||0.004||-|
Details of cases over £0.30m:
|Finance, Economy and Fair Work||Reinstatement of an individual's membership of the National Health Service Pension Scheme (Scotland)||0.37|
There were two cases over £0.30m in 2017-18.
|No of Cases||£m||£m|
|Finance, Economy and Fair Work||15||0.37||0.02|
|Health and Sport||1,079||44.9||32.53|
|Education and Skills||2||0.01||-|
Details of cases over £0.30m:
|No of Cases||£m||£m|
|Health and Sport: NHS Boards:||Clinical Compensation Payments:|
|4||NHS Ayrshire and Arran||4.94||2.27|
|1||NHS Dumfries and Galloway||0.40||1.90|
|1||NHS Forth Valley||0.50||-|
|Administration||1||Payment to former First Minister (1)||0.51||-|
(1) The accounts contain an accrual in respect of a subsequent payment of £512,250, made in accordance with a decision of the Court of Session to award expenses to Mr Salmond on a specified basis. Established procedures were followed to agree the final sum. As agreement was reached, there was no need to incur the additional expense of having the account taxed by the Auditor of Court.
There were 22 cases over £0.30m in 2017-18.
The Scottish Government made gifts in the year as follows:
|Portfolio||No of Cases||£m||£m|
|Culture, Tourism and External Affairs||4||0.12||-|
There were no cases over £0.30m in 2018-19 (2017-18: £nil).
Principal Accountable Officer
23 September 2019
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