Information

Scottish Government consolidated accounts: 2018-2019

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


13. Provisions for Liabilities and Charges

13a. Provisions for Liabilities and Charges

Student
Loans Sale
Subsidy
Early
Departure
Costs
NHS Clinical
and Medical
Negligence
SPS
Prisoner
Compensation
Other
Provisions
Total
2018-19
£m £m £m £m £m £m
Balance as at 1 April 2018 38 144 597 - 66 845
Add: element reported as due within one year 2 12 118 2 45 179
Balance as at 1 April 2018 40 156 715 2 111 1,024
Provided for in year - 9 200 - 42 251
Provisions not required written back (1) (9) (92) (1) (6) (109)
Provisions utilised in year (2) (11) (40) - (9) (62)
Discount amortised 2 - (2) - (4) (4)
Balance as at 31 March 2019 39 145 781 1 134 1,100
Payable within one year (2) (12) (148) (1) (57) (220)
Balance as at 31 March 2019 37 133 633 - 77 880
Analysis of expected timing of any resulting outflows of economic benefits:
Payable in 1 year 2 12 148 1 57 220
Payable between 2 - 5 yrs 14 37 418 - 67 536
Payable between 6 - 10 yrs 23 37 73 - 9 142
Thereafter - 59 142 - 1 202
Balance as at 31 March 2019 39 145 781 1 134 1,100
Prior Year 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

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 £781m (2017-18: £715m) 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 2018-19 £200m (2017-18: £211m) of estimated settlement value of medical and clinical negligence claims were added to the provision.

In 2018-19 £40m (2017-18: £33m) in claims were settled and £92m (2017-18: £73m) was written back as no longer required.

Early Departure Provisions

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 £12m (2017-18: £11m). 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

A land & property acquisition provision of £61.6m (2017-18: £68.7m) relates 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 of £1.9m (2017-18: £3.4m) relates to compensation claims made in respect of work done under on projects that have not yet fully settled.

Also included in other provisions is £5.5m (2017-18: £5.5m) relating to other retirement benefit costs. 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 (£1m; 2017-18: £nil) and to recognise the estimated costs of adjustments to EU-related income and expenditure that may arise in future years (£nil; 2017-18: £0.8m).

Other Provisions - Lochaber Aluminium Smelter

In December 2016, the Scottish Government entered into a 25-year guarantee relating to the hydro plant and aluminium smelter at Lochaber. This involved the Government guaranteeing the power purchase obligations of the smelter if the business does not fulfil its obligations to pay for contracted power. The Government's potential exposure to default payments and review of a provision valuation in line with new accounting standards has resulted in a new provision of £33 million.

Contact

Email: alison.douglas@gov.scot

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