Information

Scottish Government Consolidated Accounts: year ended 31 March 2021

Annual report of the consolidated financial results of the Scottish Government, its Executive Agencies and the Crown Office, prepared in accordance with International Financial Reporting Standards (IFRS). The Audit Scotland report on the accounts is also linked and is unqualified.


Accountability Report

Corporate Governance

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. The current Governance Systems have been in place for the year under review and up to the date of approval.

Statement of Accountable Officer's Responsibilities

In accordance with the accounts direction (reproduced on page XXX) 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[81].

For the purposes of the audit, so far as the Principal Accountable Officer is aware, there is no relevant audit information of which the auditors are unaware and all necessary steps have been taken by the Principal Accountable Officer to ensure awareness of relevant audit information and to establish that the Scottish Government's auditors are aware of that information.

The Principal Accountable Officer authorised these accounts for issue on the date signed at the end of this report.

Governance Statement

Scope of Responsibility

The Scottish Government's role is to deliver our Purpose and National Outcomes, guided by the National Performance Framework.

As the Permanent Secretary, I am responsible for ensuring that robust governance arrangements are in place to ensure that we deliver our Purpose and National Outcomes in an open, capable and responsive way. I am also the Principal Accountable Officer (PAO) for the Scottish Administration (under the terms of the Public Finance & Accountability (Scotland) Act 2000) and responsible for ensuring the propriety and regularity of finances and the economic, efficient and effective use of resources. In discharging these overall responsibilities I am supported by the designated Portfolio Accountable Officers within the core Scottish Government; the Crown Office and Procurator Fiscal Service (COPFS); Scottish Government Executive Agencies and Health Bodies.

Detailed information on the role and responsibilities of Accountable Officers is set out in the Accountability chapter[82] 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[83] of the SPFM. Figure 1 sets out the approach I have put in place to achieve this.

Figure 1: Accountability And Assurance Framework In The Scottish Government
Diagram 1: Accountability and Assurance Framework in the Scottish Government. Please contact us via https://www.gov.scot/about/contact-information/ to receive a longer text description of these diagrams.

Corporate Governance System

The Scottish Government's Corporate Governance system has been designed in order to provide me with support and advice as Principal Accountable Officer in relation to strategic issues of organisational health, performance, vision and strategy and effective governance.

The Scottish Government's corporate governance system provides for clear lines of accountability, effective reporting and appropriate escalation routes. It enables scrutiny and oversight of the Scottish Government's activities and provides me with a source of assurance on the effectiveness of the corporate governance arrangements in place. In addition, it complies with all governance-related guidance in the SPFM, the Civil Service Code[84] and relevant elements of the Good Governance Standard for Public Services[85] produced by the Independent Commission on Good Governance in Public Services.

During this reporting period, the streamlined governance structures which were put in place in March 2020 to support the Covid-19 response, and which were set out in my Governance Statement in 2019-20, have continued to operate. Accountable Officer duties set out in the Public Finance and Accountability (Scotland) Act 2000[86] and the SPFM remain extant. The structures were kept under on-going review, and as we moved to Covid-19 recovery, some elements which had been paused, were re-commenced. In April 2021 for example, the People and Place sub-Boards which, prior to being paused during the Covid-19 response period, operated as separate Boards, had their first combined meeting. This is reflective of our new ways of working, and of the organisation and its governance structures living our vision and values detailed in our internal "In the Service of Scotland" document. At the time of writing this statement, the governance landscape and structures continue to be under review. The previous structure in place is detailed in Figure 2 below and for comparison the adapted structure which was operational during most of 2020-21 is set out at Figure 3 below, this is the structure which was most relevant during the period to which this statement relates.

Figure 2: Corporate Governance Structure, April 2019 To March 2020
Diagram 2: Corporate Governance structure from April 2019 to March 2020. Please contact us via https://www.gov.scot/about/contact-information/ to receive a longer text description of these diagrams.
Figure 3: Adapted Corporate Governance Structure, March 2020-21
Diagram 3: Adapted Corporate Governance structure for March 2020-2021. Please contact us via https://www.gov.scot/about/contact-information/ to receive a longer text description of these diagrams.

NB: During the 2020-21 financial year DG Organisational Development and Operations was transitioned to DG Corporate and DG Education, Communities and Justice was split into DG Communities and DG Education and Justice.

Governance arrangements for separate accounting entities

The separate accounting entities within the Scottish Government consolidation boundary have corporate governance arrangements in place appropriate to their individual circumstances and in compliance with relevant guidance. The effectiveness of governance arrangements for the separate accounting entities is addressed in the Governance Statements provided by the entities concerned as part of their annual accounts. As with the Scottish Government, these arrangements comply with relevant guidance in the SPFM and generally accepted best practice principles.

Corporate Board

Corporate Board's purpose is to provide me, as Principal Accountable Officer, with objective strategic oversight, guidance and advice in relation to the Scottish Government's vision and strategy; organisational performance and development; financial stewardship and the effectiveness of its governance arrangements.

Over the reporting period, it has consisted of myself; Directors General as my Portfolio Accountable Officers; five Non-Executive Directors[87]; the Chief Financial Officer; Director of People; the Director for Communications and Ministerial Support, the Director for Equality, Inclusion and Human Rights, the Solicitor to the Scottish Government and the Board Secretary[88].

Corporate Board continued to meet quarterly over the course of the reporting period which this Statement covers and its minutes are published. It has considered the following issues over the reporting period: financial performance and budget monitoring throughout the year to support its consideration of the Annual Accounts; Covid-19 and concurrent risk; an economy deep dive; Public Service Reform; climate change deep dive; and the 2020-21 Scottish Government Annual Consolidated Accounts and this companion Governance Statement. It also undertook its annual review of corporate risk. The Balanced Scorecard has continued to be developed to support the Board to scrutinise the organisation's key performance and delivery metrics as well as progress towards our National Performance Framework outcomes.

Scottish Government Audit and Assurance Committee

The Scottish Government's Audit & Assurance Committee (SGAAC) members are our Non-Executive Directors and its role is to provide advice and support in discharging my Principal Accountable Officer responsibilities in relation to risk, control and governance and associated assurance through the provision of constructive challenge.

The Committee is chaired by Ronnie Hinds, alongside Deputy Chair, Jim Robertson. I attend along with Directors General; the Chief Financial Officer; the Director for Internal Audit and Assurance and the Board Secretary. Audit Scotland attends SGAAC and the underpinning Director General Assurance meetings as the Scottish Government's External Auditors. The Auditor General attends SGAAC annually when the Committee considers the Scottish Government's Annual Accounts and the Governance Statement.

Relevant issues discussed at Director General Assurance meetings are escalated for awareness and discussion (and if appropriate, action) to SGAAC based on clear escalation criteria. Issues which have been considered for assurance purposes at SGAAC in this reporting period have included: staffing capacity and capability; EU Exit preparedness; the impact of Covid-19; and a number of other areas I have referenced later in this Statement. The issues raised throughout this year, alongside the Director General Certificates of Assurance which underpin this Statement, have been discussed by SGAAC in the period up to my signature of the Statement and the Scottish Government's Annual Accounts. SGAAC subsequently considered the Statement and the draft Annual Accounts on 13 December 2021 following consideration by Corporate Board on 7 December 2021 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.

DG Assurance

Director General (DG) Assurance meetings take place quarterly, providing a dedicated forum in which assurance is sought on the core elements of good governance. Each meeting covers: financial stewardship; people and capability; performance and outcomes; organisational efficiency; risk management and the internal control environment. Relevant risks and issues are escalated for awareness, discussion and/ or action to SGAAC or Corporate Board in line with the associated escalation criteria.

Assurance meetings are attended by each Director from the Director General family; paired Non-Executive Directors; Audit Scotland; Internal Audit and Assurance; the Board Secretary and relevant officials as appropriate and provide me with support as the Principal Accountable Officer in the preparation of this Governance Statement and the Scottish Government's Annual Accounts. The Chair and Deputy Chair of SGAAC have open invitations to attend DG Assurance meetings and have done so over the reporting period.

Improvements to the Scottish Government's assurance arrangements continue. The Risk Improvement Project which was undertaken has enhanced the arrangements for risk management and reporting which feed into the DG Assurance meetings. The on-going improvement of risk management will continue to be an area of focus in 2021-22 and further detail on these improvements is included later in this statement. The arrangements for the reporting and scrutiny of performance and outcomes were also reviewed in this reporting period and will continue to be developed into 2021-22.

Other Corporate Governance Boards

The Corporate Board is supported by a number of corporate sub-boards;

People and Place Board: chaired by DG Corporate

As outlined above, the People and Place sub-Boards were paused in 2020-21 as part of the streamlined governance arrangements that were put in place to support the organisation in pivoting towards the Covid-19 response. In August 2021, the Corporate Board approved the permanent merger of the People and Place Boards to the combined People and Place Board. The combined Board met for the first time in April 2021 and for the first time as a formally combined Board in September 2021. The Board considered its revised draft Terms of Reference at its meeting in September 2021. The purpose of the Board is to provide advice and guidance to Corporate Board on the creation of the culture and conditions for individuals to thrive and be successful in the Scottish Government, 'In the Service of Scotland' and in the delivery of the Scottish Government's priorities. This is in respect to both the People of the organisation, and the Place that houses and operates for those People. 'People' refers to individuals and teams and the culture and policy environment within which they operate. 'Place' refers to the physical and digital space which supports people, visitors and the wider community to work together effectively across and, as necessary, beyond Scotland.

Performance Board: chaired by DG Scottish Exchequer

The Board looks across the whole system of government to assure that Ministerial priorities are delivered with measurable progress and that performance is focused on outcomes. The Performance Board monitors the progress of the delivery of the National Performance Framework (NPF) and provides support and guidance to develop the capacity, capability and culture required to deliver the National Outcomes. It also ensures effective governance in relation to the delivery of the Programme for Government (PfG) and reviews and advises on governance, structures and behaviours needed to optimise the delivery of the NPF and PfG.

Economy Board: chaired by DG Economy

The Economy Board provides strategic oversight on the economy across Scottish Government's activities by coordinating economic policy across portfolios to optimise opportunities while managing risk; identifying significant cross-cutting issues and issuing subsequent calls for evidence to understand the nature of those; commissioning and gaining assurance on large scale projects related to the economy; continuing to drive improved economic capacity and capability across Scottish Government and strengthening cross-Scottish Government Ministerial action through a coherent message on economic policy.

Following the outbreak of Covid-19 the Board has been repurposed to support the immediate and longer-term strategic economic response to the pandemic, working closely with the Ministerial Economy Cabinet and the Exchequer Board.

Exchequer Board: chaired by DG Scottish Exchequer

The Exchequer Board provides strategic assurance, advice and challenge on Exchequer governance within Scottish Government. This enables DG Scottish Exchequer to provide advice on the medium and long-term sustainability of Scotland's public finances and on the resilience of Scotland's fiscal landscape.

Like the Economy Board, following the outbreak of Covid-19 the Board has been repurposed to focus on the current fiscal and macroeconomic environment as impacted by Covid-19.

Infrastructure Investment Board: chaired by DG Scottish Exchequer

The Infrastructure Investment Board (IIB) strengthens strategic direction, prioritisation and oversight to ensure coherent advice and aligned delivery of an effective, fiscally sustainable programme which maximises our ambitions for infrastructure investment. It is concerned with the impact of overall investment on the economy, how best and by whom major and critical infrastructure is financed as much as that infrastructure is directly funded or financed by Scottish Government.

Its focus following the outbreak of Covid-19 has been on how public sector investment can support economic recovery through, for example, the draft Infrastructure Investment Plan and Capital Spending Review.

Constitution and Europe Programme Board (chaired by DG Constitution and External Affairs)

The Constitution and Europe Programme Board's (CEPB) 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. Its role is to protect and advance Scotland's economic, financial, social, environmental and constitutional interests, ensuring that, whatever happens, Scotland is ready and responds effectively. As outlined above, in figure 3 the sub-Board was paused in 2020-21 as part of the streamlined governance arrangements that were put in place to support the organisation in pivoting towards the Covid-19 response therefore during 2020-21 the board did not meet and Executive Team as noted above undertook any decisions required for that board during the period.

Internal Audit and Assurance

The Directorate of Internal Audit and Assurance (DIAA) brings together three independent assurance teams; Internal Audit; Digital Assurance Office; Portfolio, Programme and Project Assurance; and the role of the Data Protection Officer. While the services provided by each of the teams continue independently, an enhanced integrated approach to assurance is being developed to support the Scottish Government's expanding responsibilities through a proportional provision of assurance activities throughout the policy to delivery lifecycle. Since the year-end, a new post of Head of Counter Fraud Profession has also been established in the Directorate to enhance the Scottish Government's capacity and capability in counter-fraud.

Audit Scotland, as the Scottish Government's External Auditors, assess the extent to which they will use the individual reviews undertaken by Internal Audit to inform their opinion on the financial statements, and meet their wider responsibilities, depending on their direct relevance to their work. Each year they also undertake a review of the Scottish Government's Internal Audit arrangements. Audit Scotland confirmed that their review found that the improvements in the standard of internal audit work noted in the previous two years have continued during 2020-21 and that they did not find any areas of significant non-compliance with standards.

Audit Scotland

Audit Scotland attend Director General Assurance meetings and SGAAC, providing updates in relation to current and future work plans. Bi-annual meetings take place between Executive Team, the Auditor General and Audit Scotland as part of the Scottish Government's wider commitment to working together, with the most recent taking place in October 2021.

In addition, regular engagement has taken place between Audit Scotland and the Directors General, the Chief Financial Officer, the Director of Internal Audit and Assurance and the Board Secretary and others as required. In addition, Audit Scotland meet regularly with the Chair and Deputy Chair of SGAAC in order that Audit Scotland can support them in discharging its responsibilities to me as Principal Accountable Officer.

Non-Executive Directors (NXDs)

There are currently ten Non-Executive Directors providing support, guidance and constructive challenge to the Scottish Government through the governance structures set out above, and through individual pairing arrangements with Directors General. I am thankful to the Non-Executive Directors as the Scottish Government's "critical friends", undertaking and supporting a wide range of work which has assisted me in identifying the issues I have raised in this Governance Statement. This has never been more important than in recent months.

Scottish Government response to Covid-19

Covid-19, the Four Harms of Covid-19[89], and recovery has been the most significant issue and area of focus across the Scottish Government in 2020-21.

Covid-19 was directly referenced in eleven of the risks in the Corporate Risk Register during 2020-21 and it is also covered indirectly through a number of other risks, which reflect the all-encompassing nature of Covid-19. The rapid transition and sustained shift to an entirely remote working model and adapting to new ways of working, as well as additional demands on staff such as home-schooling and other caring responsibilities, have impacted on organisational capacity and staff wellbeing, despite the successful rollout of digital tools to support staff, such as Microsoft Teams. Learning from the Covid-19 response has been considered in the looking back to look forward initiative, which has helped shape the new organisational vision 'In the Service of Scotland' which was launched internally in June 2021. DG Scottish Exchequer and DG Corporate have worked closely on this initiative given the connections through leading transformational change and performance improvement.

All Directors General redeployed key staff into other areas of the Scottish Government to facilitate the organisation's response to Covid-19. DG Scottish Exchequer also redesigned its work to prioritise the Covid-19 response and recovery, and took the lead in establishing the Renew Programme. A number of re-prioritisation decisions have been taken in conjunction with Ministers to reflect the need for the organisation to pivot to the Covid-19 response. The evidence presented in the 'Scotland's Wellbeing: The Impact of Covid-19'[90] report which was prepared by the Scottish Government together with input from the Convention of Scottish Local Authorities (COSLA) and the Improvement Service and was published in December 2020, showed that the pandemic is likely to have significant and wide-ranging impacts right across the National Outcomes, and that the impacts of the pandemic have been, and are likely to continue to be, borne unequally.

The Scottish Fiscal Commission's (SFC's) January 2021 forecasts indicated that the criteria for a Scotland-specific economic shock occurring in 2021-22 would be met. This was confirmed by the subsequent Office for Budget Responsibility (OBR) forecasts, published alongside the UK Budget in March 2021. The significant challenges in the medium term fiscal outlook required concerted action across Government and additional resources and processes were put in place in parallel to those dedicated to in-year financial management in 2020-21 and the development of the Budget 2021-22 to address the immediate risk, the longer term corporate risk is detailed later in this statement.

Corporate risks during the period reflect not only their concurrency but their interrelated impacts and I will continue to seek assurance on the management of these risks. I have detailed later in this statement the key risks and control issues which have been further exacerbated by the current Covid-19 situation.

Assurance on grants to Local Authorities for payment of Covid-19 support schemes

I have provided information within the performance section of these accounts which highlights the response to the pandemic in terms of funding available and support schemes delivered. Effective governance of the schemes was also essential.

In March 2020, Scottish Ministers announced the intention to provide support grants to eligible businesses. It was essential that these be implemented quickly and Ministers recognised that the speed of delivery introduced a greater risk of fraud. Policy design and delivery minimised that risk by using established and tested mechanisms for the delivery of support:

  • Grant funding was provided to Local Authorities to administer grants to eligible businesses. Grant conditions for most of the grants specified that Local Authorities were responsible for ensuring that procedures for administering the grants were "suitably robust".
  • Local Authorities used established administrative capabilities which included mature fraud prevention and detection activities.
  • The schemes were founded on the key qualification criteria of liability for non-domestic rates which meant that Local Authorities were using a well-established, robust, existing data set and had an existing financial relationship with any business claiming a grant, to validate the existence of the business and other information relevant to determining eligibility.
  • The schemes were application based, eligibility criteria was set and guidance provided; this guidance evolved further over time as business support policy developed, enhancing effective control and targeting of support.

The business support funding available under the Strategic Framework, established from November 2020, followed the same principles.

The Scottish Ministers made payment of grants to Local Authorities in exercise of their powers under Sections 126 and 127 of the Housing Grants, Construction and Regeneration Act 1996[91]. The plans and related funding were confirmed in the additional Summer Budget Revision of May 2020 (page 174).

A number of additional grant schemes were put in place to provide specific support to sectors of the economy or groups of workers who were particularly affected by the pandemic or by the restrictions in place. Some of these schemes were specifically designed to support businesses who did not have premises and were not liable for non-domestic rates, and so were not eligible for the main funds. These additional grant schemes were administered by a range of delivery partners, including local authorities, the Enterprise Networks, Creative Scotland, Visit Scotland and a private contractor. In each case, the processes set out above were applied to the policy design and administration of the schemes, setting these out in grant conditions or contracts with a requirement to address fraud risks, allowing delivery partners to use existing data or knowledge where relevant to validate information on applications, setting clear eligibility criteria that applicants would have to meet, and with arrangements for managing fraud risk. These varied depending on the specific aspects of individual funds – for example where the delivery body had existing relationships with the organisations that were eligible to apply for support.

Ongoing monitoring, review and management of the schemes, including information sharing and collaborative working between Local Authorities, helped to further increase detection of fraud, and reduce fraudulent claims:

  • Guidance to Local Authorities specifically advised of the need for due diligence to be undertaken to mitigate fraud and control mechanisms to be in place for effective fraud control.
  • There was an ongoing relationship and engagement between the Scottish Government and Local Authorities as schemes were delivered. A Local Authority working group met regularly and fraud was a live issue that was regularly monitored and reviewed.
  • Grant conditions required Local Authorities to provide regular information on expenditure and there was regular information sharing between Local Authorities, and shared with Scottish Government, on potential fraudulent applications.

In addition a significant amount of retrospective assurance activity was carried out by the Scottish Government policy teams, by Local Authorities and by the Head of Counter Fraud Profession and reported to the Business Support Governance Board, chaired by Director General Economy and set up to provide assurance over the Covid-19 business support schemes:

  • The Head of Counter Fraud Profession assessed the levels of inherent fraud risk within the highest value business support schemes, reviewing the mitigating controls in place in order to provide an opinion on the Scottish Government's resultant exposure to fraud risk, and recommendations to enhance financial governance for future grants. Finding that within Local Authorities, effective controls were in place to mitigate the majority of fraud risks associated with business support, with some areas where controls could be improved. Overall providing an opinion of Reasonable Assurance for the business support grants.
  • The Scottish Government's Internal Audit and Assurance Directorate provided a self-assessment checklist to assist teams responsible for business support grants to ensure they had addressed relevant policy questions, including fraud risk, and recorded decisions on policy development appropriately. Policy teams used these to consider fraud risk and the steps taken to mitigate fraud including the reliance placed on the work of the Local Authorities.
  • The policy team carried out an assurance mapping exercise to assess the assurance processes in place to control risk. This also provided reasonable assurance that fraud risks were managed and adequate controls were in place.

All assessments provided reasonable assurance against the fraud risk for business support schemes, and found that the controls in place were adequate.

The assurance work did however highlight some areas for improvement. The Business Support Scheme fraud assessment recommended that assurance could be improved by the Scottish Government embedding formal processes to assess the risk of fraud within grants design, using this to inform agreements with delivery partners on fraud mitigation activity. The Scottish Government could also have enhanced these activities by promoting the use of business validation tools freely available through UK Government Cabinet Office but not widely used by Scottish Local Authorities. It was also recommended that the Scottish Government should review its requirements for the recording and reporting of fraud and error, ensuring that consistent and specific data is collected across grants and made available to provide better fraud and error metrics.

Assessment of Fraud and Error

Information from these assurance processes can inform an assessment of the estimated level of fraud and error within the schemes. Using the most significant schemes; Figure 4 provides headline spend figures for the three most significant schemes; considering prevented fraud, actual detected fraud, initial proxy comparators and then subsequent estimates.

Figure 4: headline spend figures for the three most significant schemes
Name of scheme Take-up Spend £m
Small Business Grant (SBG) Scheme 82,267 grants 800
Retail, Hospitality and Leisure (RHL) Business Grant Scheme 9,162 grants 220
Strategic Framework Business Fund (SFBF) 47,658 premises 345
SFBF RHL top-up   234
Total   1,599

Information on rejected applications

The effectiveness of the verification process for applications provides a good level of assurance on fraud prevention. The rates were approximately: 25% for RHL grants, 14% for SBG, and 30% for SFBF. These demonstrate an effective control regime within each scheme which is corroborated by the high number of prevented fraud attempts recorded by Local Authorities.

Information on detected fraud

The rates of detected fraud were low. The number of detected or suspected frauds as at June 2021 was 2,186. Of these, 2,086 were prevented and only 100 had been paid, to a value of £605K. This means that only 4.6% of detected fraud resulted in a fraud loss, therefore 95% did not result in loss and were prevented. This indicates proactive and effective pre-payment fraud prevention measures in operation. This data included all Local Authorities, so no extrapolation is required in relation to detected fraud.

For the SBG Scheme and the RHL Business Grant Scheme as at 31st March 2021, 93 grants that were awarded had been successfully recovered due to detection of either fraud or error by Local Authorities. Recovery action had been taken against 115 further awards, although these had not resulted in any recovery at the time of collection. Further information about the outstanding recoveries will be collected from Local Authorities by the end of the 2021-22 financial year.

In relation to undetected fraud, the assurance work confirms that the types of fraud detected aligns with the key risks identified at the outset of the schemes.

Issues in the quality and completeness of fraud information provided by Local Authorities means that there are some limitations in certainty of the overall value of fraud prevented, levels of fraud and consistency of fraud controls in place. The Scottish Government have good information about the fraud controls for business support grants in three Local Authorities, giving a consistent picture between each authority, but recognise that there may be a wider variation in controls across the remaining 29 authorities, and therefore less assurance. We can demonstrate, however, that all 32 local authorities were engaged in fraud prevention activities within business support grants, as fraud detection data was shared between Local Authorities and with the Scottish Government. Inconsistency in that data means total values of fraud prevented is unknown. The data shows approximately £3.1 million of fraud prevented, but this is likely to be between 0.5% and 0.8% (£6.9 million and £10.8 million) based on average grant amounts.

The estimated levels of undetected fraud within business support grants is based on the intelligence available of schemes being targeted, the quality and completeness of fraud controls and the evidence of fraud detected. We recognise that there will have been fraud that went undetected as schemes were inherently higher risk and evidence suggests active organised crime activity in this space. We are confident however, that the controls identified in the sample of three Local Authorities were likely to be replicated across most authorities and were effective in providing assurance against key fraud risks. Information on the fraud detected was shared between all Local Authorities, who also routinely collaborate on best practice as facilitated by the Scottish Local Authorities Investigators Group. This indicates a consistent counter fraud approach. All of which provides confidence that grants were well protected, corroborated by the high number of rejected applications. Whilst the estimated levels of fraud is limited by a number of assumptions, as outlined, the small number of fraudulent grant payments also suggests there were not large numbers of fraudulent applications undetected.

Based on the above we are therefore confident that a reasonable estimate of fraud can be no more than 1-2% equating to £16.0 million - £32.0 million.

Management information and evaluation

Management information was collected for Business Support Schemes (Local Authority and non-Local Authority data providers) for operational and monitoring purposes. These figures were collected at an aggregate level to reduce the administrative burden on data providers, whilst maintaining the value for monitoring.

Scottish Government published regular management information and experimental statistics[92] about all of the business support schemes.

  • Business Support regular management information and experimental statistics[93]
  • Local Government statistics[94]
  • Scottish Government has already published ad hoc experimental statistics publications on the detailed data on the closed schemes that we have now collected from local authorities and other data providers.[95]

This collection provides the most up-to-date high level data on the number of awards and payments made to a large number of schemes as they were delivered. In addition to the management information the experimental statistics provide more detailed breakdowns for a subset of Local Authority delivered funds. This dataset was developed as experimental statistics, as the data collection and quality assurance processes were more robust than the management information collection and the publication as a whole underwent improvements to meet stakeholders' needs.

The next ad hoc experimental statistics will be published on 21st December 2021 and include Local Authority breakdowns of non-Local Authority administered schemes. More detailed statistics will follow early in 2022.

The Office of the Chief Economic Adviser is undertaking an ongoing programme of evaluation of Covid-19 business support schemes available to businesses in Scotland. An interim evaluation will be published soon, and a full evaluation of the support package is planned for 2022.

National Performance Framework

The National Performance Framework (NPF) has been the foundation for a transformative shift in how policy is developed and delivered in Scotland. It has been the focus of the Scottish Government's collective efforts on the delivery of the National Outcomes for Scotland.

The NPF was renewed in June 2018 and put increased wellbeing and sustainable and inclusive economic growth at the heart of the Scottish Government's work. It includes a statement of the values that guide the Scottish Government's activities: This work has focussed on consistency and compliance, championing a positive risk culture, embedding positive behaviours and encouraging improvements across the organisation, kindness, dignity, compassion and transparency. The next review of the NPF will need to commence no later than June 2023, and take account of developments such as Covid-19.

The statutory responsibility of Scottish Ministers to "prepare and publish reports about the extent to which the national outcomes have been achieved" is discharged through the NPF website[96], where data and performance assessment are published as and when new data on the NPF National Indicators becomes available. In May 2019 the Scottish Government published "Scotland's Wellbeing – Delivering the National Outcomes"[97], a report which drew together longer term trends and data across the National Outcomes. The Scottish Government have also produced a follow up analytical report on Scotland's Wellbeing: The impact of Covid-19[98] which was published in December 2020 the publication aims illustrate the profound effect that Covid-19 has had on Scotland's wellbeing as a nation, and how it has disrupted progress towards Scotland's National Outcomes.

The monitoring of our progress towards the delivery of our key commitments and their contributions to National Outcomes has been further developed via the Balanced Scorecard process for the Corporate Board and is becoming better integrated into corporate governance processes. This has helped the organisation to track its progress and sits alongside the continuing improvements to performance reporting on key policy priorities in the Consolidated Accounts, further detail can be found within the Performance section of these accounts

Social Security Scotland – Next phase

The next phase of devolution is the most complex, with benefits for those who have disabilities amongst a series of commitments due to be delivered in the new Parliamentary term. Devolved benefits are demand led and fully funding these, together with the associated Programme charged with their delivery and the Agency which provides services to clients (Social Security Scotland), will remain one of the Government's top priorities in the years ahead. Finally, wherever the Department for Work & Pensions (DWP) delivers services for the Scottish Government under Agency Agreements, Audit Scotland might qualify its regularity opinion on Social Security Scotland's benefit expenditure. The regularity qualification on Social Security Scotland's 2019-20 accounts did not impact the Scottish Government consolidated accounts because the amounts were not material. For 2020-21 the Agency Accounts have again been qualified but the estimated level of overpayments attributable to fraud and error in the benefits delivered by the DWP is not deemed material for the consolidated accounts.

Establishment of Propriety and Ethics Directorate – Response to Complaints Handling Inquiry

The Directorate for Organisational Continuity has undergone transformation into the Directorate of Propriety and Ethics since the completion at the end of March 2021 of the parliamentary inquiry into the Scottish Government's Handling of Harassment Complaints. The review by Laura Dunlop QC and James Hamilton's investigation into the alleged breaches of the Ministerial Code by the First Minister were also completed by the end of March 2021. On receipt of Laura Dunlop QC's review, the Deputy First Minister committed to finalising an implementation plan by June 2021 that drew on the lessons highlighted by this review, as well as the report from the parliamentary inquiry. The SG's response was published in June 2021 with the updated external procedure for handling complaints about Ministers forming the critical path to taking forward the Implementation Plan by December 2021. The SG's response to the reports also committed the organisation to establishing the Propriety and Ethics Directorate to ensure the highest standards of propriety and integrity across the civil service in Scotland. This necessitates change in the purpose and shape of the directorate, requiring changes in its core skillset to become more strategic and programme focussed, while still maintaining the ability to pivot quickly to respond to the likely variation and unknown quantity of what may lie ahead.

Scottish Government's Assurance Framework

Annual assurance on the adequacy and effectiveness of the core Scottish Government's internal control system, including risk management, safeguards against losses and the extent to which it can be relied upon is provided through the professional opinion of the Scottish Government's Director of Internal Audit and Assurance. In the annual assurance report submitted to SGAAC at its meeting on 21 June 2021 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[99] within the Scottish Public Finance Manual which was reviewed in March 2019. It is also consistent with the UK Government's Orange Book[100].

As referenced earlier in this statement a range of improvement work has continued during 2020-21 led by Director General Corporate and the Chief Financial Officer, supported by the Board Secretary, to address the key recommendations from the 2019 Risk Improvement Project. This work has focussed on consistency and compliance via an organisation wide housekeeping exercise which tested each Director General family's compliance with Scottish Government guidance; this enabled an assessment of the maturity of risk management in each area and highlighted any gaps or requirements to ensure the consistency of approach across the organisation. Areas assessed included:

  • governance arrangements including risk appetite and escalation arrangements;
  • reporting processes;
  • discussions and calibration and moderation forums;
  • risk register compliance with corporate requirements and;
  • risk management training levels.

Following this exercise a report was provided to each DG family with key recommendations for each directorate. This exercise will be undertaken periodically going forward. The Governance and Risk Branch have also published enhanced guidance in April 2021 with further templates and materials to support continued improvement. Alongside this the Branch have also launched the new role of Directorate Risk Champions to further embed and drive consistency of risk management across the organisation; each directorate will be expected to have a Champion and they will be supported by training and a best practice network. The Branch has also completed recruitment of several staff to new roles within the team, once in place this further capacity will further support the culture and implementation of the Scottish Government Risk Management framework.

Scottish Government Corporate Risks

The Scottish Government's corporate governance system has been designed to ensure that risks to its organisational health and performance in this environment are identified, managed and mitigated effectively.

Over the last year a number of policy-specific corporate risks have been identified, managed and monitored through the assurance processes and included in the Scottish Government's Corporate Risk Register. The Register is a living document and is updated on an ongoing basis. A snapshot of the risks as they were articulated at the end of the period covering this Statement (March 2021) is included below:

  • The Scottish Government fails to ensure the long term sustainability of the public finances through effective budget-setting and medium term strategic financial planning, with resulting lack of clarity on financial management and spending priorities and failure to achieve Value for Money and delivery of key outcomes.
  • We do not protect Scotland's interests in management of the UK/EU relationship, or establish effective 3rd-country relationships with EU institutions and Member States; and we do not respond to or prepare adequately for impacts on Scotland of leaving the EU and related concurrent issues.
  • We do not have the capability and capacity to deliver the Government's priorities and fail to maintain high standards of competence when faced with the concurrent pressures of Covid-19, EU Exit and the new Programme for Government.
  • Managing the annual financial outturn is increasingly more challenging due to an increase in the number of variable factors and demand-led expenditure in the budget, increasing the risk of overspend. For 2020-21, this has been significantly exacerbated by Covid-19 related expenditure and a currently incomplete picture of the impact of changes to spending at UK level.
  • If combined impacts of Covid-19 and EU exit create significant and prolonged economic downturn, then unemployment will increase significantly and there will be an impact on business viability, investment and trade across sectors of the economy, as well as on household incomes, levels of financial hardship, inequalities and demand on the third sector.
  • Due to the ongoing challenges arising from Covid-19, there is a risk that short and medium term demand for health and social care services will exceed current capacity to treat and care for both Covid and non-Covid patients and care service users, and that the vaccination programme may have an insufficient impact in time to sufficiently mitigate this and allow an exit from the current acute phase of the pandemic response. This may result in health and social care services becoming overwhelmed and unable to provide necessary levels of care, with an associated increased risk of mortality and disproportionate impacts on already disadvantaged communities, as well as further exacerbating existing pressures on the health and social care workforce and budgets.
  • There is a risk to the safe management of prisons in light of the growing prison population, complexity of the prison population and on-going Covid-19 health restrictions.
  • Further waves of Covid-19 and/or a major concurrent event (e.g. EU Exit) occur during the Covid emergency resulting in the Scottish Government being unable to deliver Ministerial priorities or government business.
  • Our approach to managing Scotland's response to Covid-19 across the Scottish Government is not strategic, not underpinned by robust analysis and evidence, and is not integrated into corporate decision-making structures.
  • If we fail to maintain the independence and efficiency of the Scottish Child Abuse Inquiry we risk losing the confidence of adult survivors of child abuse in residential care.
  • If school buildings are unable to re-open to all pupils and remote learning at home continues after mid-February causing some limitations on the provision of learning &/or data collection on educational performance then there will be subsequent impacts on the vision for excellence and equity in Scottish education (Scottish Attainment Challenge), including on attainment levels, the attainment gap, and the Health and Wellbeing of Children and Young People. The National Improvement Framework has refocused on recovery and support and work has begun on the longer term refresh of the Attainment Challenge programme. Resulting in young people are not being able to fulfil their potential and become active contributors to Scotland's future economy.
  • Resilience arrangements, staffing levels, skills, (senior capability) and understanding across Scottish Government are not sufficient to deal with the medium to long term response to Covid-19 and other sustained and complex, concurrent incidents in 2020 threatening the reputation and competence of the Scottish Government.
  • If new powers over social security are not successfully implemented, with smooth transition from the Department of Work and Pensions (DWP) to new Scottish policies and administrative arrangements then we will be unable to deliver the Scottish Government's intended social security system to the citizens resulting in a failure to deliver on Scottish Government commitments and reputational damage.
  • Any cost pressures as a result of the continued Covid-19 response could impact services being provided by councils and Arm's Length External Organisations. This could negatively impact relationships between Scottish Government and local government resulting in non-delivery of key policies and priorities as well as diluting collaboration on Covid recovery and responding to EU Exit impacts. The longer-term outlook for Non-Domestic Rates Income continues to be subject to significant volatility and uncertainty and will in part be linked to business survival when the furlough scheme ends, the persistence of Covid-19 impacts on the economy and the conclusion of circa 40,000 Covid-related Material Change of Circumstance appeals
  • If the Business critical corporate systems that underpin effective governance, performance and organisational health were to fail or become obsolete then this would have a material impact on the ability of core Scottish Government and our shared service partners to function efficiently and effectively, resulting in significant operational and reputational damage.
  • We are unable to reprioritise Freedom of Information handling across the Scottish Government to the extent that we are able to address improvement and return to the standards of improvement achieved pre-Covid before the Commissioner's review, due in "early 2021-22", which may lead to enforcement action and reputational damage.
  • If the Scottish Government does not adequately resource its capability to respond to several concurrent inquiries into complaints handling it is likely to be unable to respond timeously and fully to the various requests and suffer reputational damage and negative impacts to staff wellbeing as a consequence.
  • Due to the significant and ongoing impact of Covid-19, including the need to learn to 'live with the virus', alongside on-going and long term challenges arising from demographic change, financial challenges (including capital investment) and workforce, there is a risk that current health and social care service models are unsustainable in the longer term. This may result in an inability to meet our National Performance Framework ambitions around work class health outcomes, including reducing health inequalities and improving population health, as well as resulting in a deteriorating long term financial position, capital infrastructure unable to meet future demands, and an unsustainable workforce.
  • If we lack suitable arrangements to test the coherence and penetration of our public service reform programmes, then we will not sufficiently demonstrate corporate commitment to whole-systems approaches to reform, nor fully understand progress and challenges to these resulting in the Scottish Government being unable to ensure and demonstrate that our public services are adapting wherever needed to improve outcomes and reduce inequalities in sustainable ways.
  • If Scottish Government fails to deliver policies that will result in the reduction in carbon emissions as required by legislation then its reputation may suffer.
  • If our systems, personnel and processes do not protect SCOTS infrastructure and services from Cyber threats, then this will jeopardise our ability to conduct the business of government in a safe, secure and reliable manner, leading to significant service, financial and reputational damage and undermining the ability of Scottish Government to play its part in the development of the wider cyber security community.
  • If the National Qualifications 2021 Group do not work with the Scottish Qualifications Authority (SQA) and stakeholders to take an appropriate and fair approach to awarding SQA qualifications in 2021, then there remain risks in to the ability to recognise the hard work and achievement of young people this year, with subsequent impacts on their onwards destinations. Resulting in impacts on Further Education and Higher Education institutions, concerns over credibility of results and the reputation of the SQA, trend reporting on education performance and allocation of attainment funding which will severely reduce public confidence.
  • If sponsorship teams and senior sponsors don't fully understand their roles in terms of governance and accountability then we risk the opportunity for appropriate and timely interventions to support our sponsored bodies resulting in failure of effective delivery of public services.
  • Our culture does not support and enable greater diversity and inclusion and we fail to achieve our published equality outcomes for 2017-20 and demonstrate that we are an exemplar employer.

These risk management arrangements have also surfaced several cross-cutting risks and themes, which are reflected in the current iteration of the Corporate Risk Register and have been highlighted in the Certificates of Assurance provided to me by my Directors General, these risks and themes are also addressed specifically within other sections of the statement as appropriate, specifically including:

  • The impact of Covid-19 on the delivery of existing policies and new commitments designed to support our National Outcomes and the overall aims of the National Performance Framework
  • Resourcing: Capability, Capacity and Wellbeing of the Scottish Government's staff to deliver during Covid-19 and EU Exit alongside new and existing pressures;
  • Exiting the European Union and the on-going programme of work on planned activities, issues and impacts arising from EU Exit
  • The challenges surrounding the annual financial outturn amidst a backdrop of the resource spending review, challenging manifesto commitments and the development of the Programme for Government, and Covid-19 recovery.
  • Delivering an ambitious policy agenda on Climate change that meets emissions reductions targets; delivering net zero in a way that ensures a just transition; engaging with stakeholders in developing climate policy; and understanding and addressing the impact climate change has and will increasingly have on our society and economy and how we need to adapt to these changes.
  • The importance of ensuring appropriate information management following the review of corporate processes for the storage, retrieval and deployment of corporate information which identified a number of areas for required improvement of which work to address this is underway.

Sponsorship of Public Bodies

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 Communities (formally 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 spite of having to reprioritise resource to address the Covid-19 pandemic, positive steps have been taken to strengthen understanding of the roles and responsibilities relating to the sponsorship of our Public Bodies. In December 2020 the Director General Communities hosted a sponsorship workshop which focused on roles, responsibilities and learning lessons from Section 22 reports. This event was coproduced with sponsors and had involvement from Audit Scotland.

In March 2021, Director General Communities outlined the latest steps of an improvement plan which focusses on the sponsorship of Public Bodies to the former Public Audit and Post Legislative Scrutiny Committee (now Public Audit Committee). This included the launch of a review of the Scottish Government's relationship with Public Bodies which will report to Executive team in autumn 2021, alongside the rollout of sponsorship training sessions complemented by a mandatory training module for sponsorship practitioners in summer 2021 and work to support the role of the Accountable Officers.

Significant 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[101].

The culmination of this process is the provision of Certificates of Assurance from Directors General that reflect any issues raised by Directors, as well as any other issues raised throughout the course of the year in either the Director General Assurance process; by SGAAC; by Non-Executive Directors; the annual assurances by Internal Audit and consideration of information on control issues received in respect of any associated executive agencies, non-ministerial departments and sponsored bodies.

In preparing this Statement, my assessment of whether an issue represents a significant issue is based on a review of its materiality, relevance and impact on the organisation and its governance as a whole. It is also based on the assurances provided by Directors General, including whether they believe they have been able to effectively discharge their responsibilities as Portfolio Accountable Officers. On this basis, the issues I have identified are as follows:

Resourcing: Capability, Capacity and Well-being

Over the period, capacity across the Scottish Government has been stretched, compounded by the cumulative impact of EU Exit, Covid-19, the Parliamentary Inquiry and working through the delivery priorities of an incoming Administration, including planning the delivery of the First 100 Days commitments. The scale and complexity of staffing demand means that close attention to capacity and well-being continues to be required. A number of mitigating actions have been put in place to address this throughout 2020-21, including; including a strong focus on recruitment, measures in place to support employee well-being both at a local level and corporately, and more support for line managers. Challenges mobilising staff resourcing in DG Health and Social Care (HSC), have been resolved by filling vacancies with recruitment drives and utilising staff from other areas across SG. The Army was also mobilised to provide logistic and delivery support to HSC Directorates. Further, improvement programmes aimed at addressing resourcing and wellbeing risks were also explored, including; work around modelling sustainable and compassionate and collective leadership, staff wellbeing conversations, and 'Building Communication' sessions. As a return to the office is now becoming a possibility, capability, capacity and wellbeing will continue to be a key area of focus in 2021-22.

Exiting the European Union (EU)

The EU Exit Oversight Board met regularly in 2020 throughout the transition period to oversee EU exit readiness preparations and continued in 2021 to govern the ongoing programme of work on planned activities, issues and impacts arising from EU Exit. The extraordinary circumstances of Covid and EU exit was compounded further by the usual winter pressures on the Health Service and on transport networks. Specifically in relation to Health, this required significant preparation, planning and engagement, with a particular emphasis placed on the potential effects on the availability of medicines, Covid-19 vaccine supply, medical devices, clinical consumables and wider supply issues, as well as the possible workforce implications for the Health and Social Care system and support networks, the complexity of this was managed through robust risk management frameworks. The ongoing impact of EU Exit will continue to be a cross-cutting issue in 2021-22, with particular focus on work across the SG on the economic impact, the engagement between the SG and UK Government and international relations. Strong oversight arrangements were put in place by Organisational Readiness (OR) Directorate and is now supporting Ministers on issues emerging in the latter portion of this reporting period, and the next.

Managing the Annual Financial Outturn

This will remain a significant area of challenge and risk in 2021-22; set amidst a backdrop of the resource spending review, challenging manifesto commitments; the development of the Programme for Government; and Covid-19 recovery. There were a unique set of uncertainties and challenges brought about by the Covid-19 pandemic, with significant demand led programmes taken forward late in the financial year, and impacts on forecasting. These issues have already been flagged as part of the work to develop options against targets for 2021-22. Further, over the period, the Scottish Exchequer led on, delivered and supported a range of activity, including, supporting the Cabinet Secretary for Finance and working with Financial Management colleagues, to secure a vital Barnett guarantee from HM Treasury so that the Scottish Government was protected from year-end reductions to its settlement, given substantial expenditure that was Covid-demand led for critical public health interventions and business support.

EU Common Agricultural Policy (CAP)

In response to ongoing uncertainty from EU Exit, some significant risks were mitigated by the progress of the Agriculture (Retained EU Law and Data) (Scotland) Bill through Parliament. While this ensured continuity of payments and improvement outside EU CAP, there remains the issue of a replacement for CAP, meeting the manifesto commitment to align with EU policy within the constraints of the UK Internal Market Act. This programme will need to manage the considerable task of the transition of operational and IT arrangements which will have significant resource implications. Strategic and policy development was impacted as a result of pivoting to support the response to Covid-19.

European Structural Funds – suspension

The European Commission (EC) suspended payments to SG in respect of the European Social Fund (ESF) and subsequently the European Regional Development Fund (ERDF). The ERDF suspension was lifted by the EC on 18 December 2020 and the flow of ERDF reimbursements to SG has resumed. At April 2021, the ESF suspension was still in place because the EC is seeking further assurance that checks have been tested before being re-submitted for final assessment. Once the ESF suspension is lifted, a series of retrospective claims will also be submitted for reimbursement from the EC. There is a further risk that the programmes do not meet their annual expenditure targets required by the EC. A working group has been established to analyse this and to propose solutions to increase the claim rates and amounts going forward.

Impacts of the Pandemic within Health and Social Care

During 2020-21, DG Health and Social Care (DGHSC) responded rapidly to the Pandemic, recognising the need for clear governance supporting unprecedented decision making. Specifically, establishing response arrangements within Health and Social Care Directorates, releasing national stockpiles, feeding into wider SG response (SGORR) and engaging with the four nations of the UK coordinated response, and publishing a joint Covid-19 action plan in March 2020. The SG Re-Mobilise, Recover and Re-Design Framework [102] was also published on 31 May 2020, followed by the Winter Preparedness Plan[103]. Covid-19 short term financial governance principles were implemented to support decision making. The Boards developed and submitted their Covid-19 Remobilisation Plans in line with Scottish Government requirements.

The distribution and supply of PPE was managed through NHS National Services Scotland (NSS) throughout 2020-21 working with SG and NHS Boards. The SG PPE Action Plan[104] was published in October 2020, while a Programme Board is overseeing planning and delivery of vaccinations in autumn/winter 2021-22, namely seasonal flu vaccination, Covid-19 boosters, and outstanding Covid vaccinations, and to develop proposals for long term vaccinations activity. In 2020-21, Scotland has grown its testing capacity over the year and expanded asymptomatic community testing, while introducing routine testing for specific workplaces, additional health and care staff and close contacts of confirmed cases. The Framework for NHS Mobilisation outlined how Health Boards will safely and incrementally prioritise the resumption of services and is monitored through both Health & Social Care Management Board and the Mobilisation Recovery Group. After pausing the Waiting Times Improvement Plan in early 2020, the Framework for Clinical Prioritisation of Elective Care[105] was approved by the Chief Medical Officer and launched by the then-Cabinet Secretary for Health and Sport in November 2020 alongside the NHS Scotland Winter Preparedness Plan 2020-21[106] and the Redesign of Urgent Care (RUC)[107]. Further work was also progressed on unscheduled care pathways, ICU capacity and early detection and intervention. Due to the increased pressure on mental health arising from Covid-19, we have published and are working to deliver a Mental Health in Scotland Transition and Recovery Plan[108]. SG has been working closely with Health Boards to ensure NHS in-patient and community mental health services are maintained within current constraints.

Directors of Public Health (DPHs) provided enhanced clinical leadership as part of local multi-agency oversight teams to support care homes during the pandemic. The Care Inspectorate further augmented care home inspection guidance in line with the Coronavirus (Scotland) (No. 2) Act to effectively assess Care Homes. Public Health Scotland and NSS jointly published the Covid-19: Information and Guidance for Care Home Settings (Adults and Older People)[109] in December 2020 to support Care Homes in managing Covid-19. Following the Independent Review of Adult Social Care in Scotland[110], The Scottish Government will support the consultation on the legislation to create a National Care Service within five years.

The pandemic has significantly altered the resourcing context across the NHS with ongoing demand on resourcing. A Sustainable Vaccinations Workforce Group has been convened to resource vaccination roll out and there has been a focus on recruiting for the National Contact Tracing Centre. Going forward a significant international recruitment effort will be required to tackle elective treatment back-logs. Further, DGHSC is developing support to safeguard long-term physical and mental health and wellbeing of the health and social care workforce. An Oversight Group and Programme Board have been established to support HSC Wellbeing and Mental Health, while an Expert Advisory Group and short life working group were established to also look into staff recovery and supporting staff, post pandemic. A National Wellbeing Hub website, Wellbeing helpline and champions network were also launched.

NHS Board's Financial Management

Due to the impact of the Covid-19 pandemic, the Scottish Government paused the Annual Operating and financial planning process, along with the ladder of escalation. Recognising the exceptional nature of 2020-21 and the impact on delivery of financial plans, additional non-repayable funding was provided to support in-year financial balance across all NHS Boards. A review of escalated Boards was undertaken by Health and Social Care Management Board in March 2021. Despite the challenges of responding to the Covid-19 pandemic, a number of Boards were found to have demonstrated sufficient improvement in relation to the issues which had led to their escalation. Scottish Government officials will continue to closely monitor Board performance during this challenging period.

Cultural Issues related to allegations of Bullying and Harassment at NHS Highland

In May 2019 NHS Highland received a report commissioned by the Cabinet Secretary for Health and Sport, undertaken by John Sturrock QC, the (the Sturrock Report), which found that bullying or inappropriate behaviour occurred within NHS Highland. As part of the action plan to address this NHS Highland have begun the delivery of a Culture Programme, overseen by an independent External Culture Advisor. An independent review of Culture in Argyll & Bute was commissioned in late 2019 from the Progressive Partnership and Internal Audit. An external Speak up Guardian Service was set up in August 2020 and an Employee Assistance Programme was launched. Work on the Culture Programme now progresses under the guidance of a Culture Oversight Group.

Royal Hospital for Children and Young People, the Department of Clinical Neuroscience and the Queen Elizabeth University Hospital

In June 2020, the Cabinet Secretary for Health and Sport ordered an independent inquiry to protect the safety and wellbeing of patients and their families and to investigate the issues around the built environment identified at the Royal Hospital for Children and Young People, the Department of Clinical Neuroscience, and the Queen Elizabeth University Hospital. The inquiry commenced in August 2020 and is led by Lord Brodie QC. Scottish Government is currently gathering documentary evidence and is a core participant in the inquiry. Rectification work to address the issues in the build environment at the Royal Hospital for Children and Young People and Department of Clinical Neuroscience (DCN) in Edinburgh progressed throughout 2020-2021. The Royal Hospital for Children & Young People / Department of Clinical Neurosciences is now open, the Scottish Hospitals Public Inquiry was launched on 3 August 2020 to review all aspects of work in relation to the QEUH including the HSE Appeal and the Legal Claim lodged against the building contractors.

Queen Elizabeth University Hospital (QEUH)

To address concerns about patient safety at the Queen Elizabeth University Hospital (QEUH). The Cabinet Secretary for Health and Sport set up an independent review to look at the buildings' "design, commissioning and construction, handover and ongoing maintenance and how these matters contribute to effective infection control". The Review concluded that the hospital offers a setting for high quality healthcare for patients, staff and visitors and there is no clear evidence linking failures in its design, build commissioning and maintenance to avoidable deaths. A formal response to the report's findings and recommendations by the Scottish Government was published in 2020-21. In 2021-22, the Scottish Government will be taking forward work to support the implementation of the QEUH review's recommendations by Health Boards.

Counter Fraud Activity

Guidance on the prevention, detection, reporting and handling of fraud is included in the SPFM[111]. The Integrity Group is responsible for improving fraud prevention measures across the Scottish Government as well as monitoring relevant cases of suspected external and internal wrongdoing made through formal reporting lines. This includes supporting and reporting on the concerns that are raised under the Public Interest Disclosure Act 1998. The Group is also available to provide advice on the handling of specific allegations of external and internal wrongdoing where required.

An annual report on fraud within the Scottish Government's consolidation boundary is prepared annually for SGAAC and includes any and all types of fraud, error and other acts of dishonesty such as theft which have been reported to the Scottish Government during the 2020-21 financial year excluding the NHS which is reported by NHS National Services Scotland Counter Fraud Services (NHS NSS CFS). Within the 2020-21 financial year a total of 31 cases of fraud and error were reported; this number excludes those where subsequent investigations indicated that no actual or attempted fraud had taken place.

The Scottish Government also continues to participate in the biennial National Fraud Initiative (NFI) exercise led by Audit Scotland to help public bodies minimise fraud and error in their organisations. To date, the 2020 NFI exercise identified a total of 2,634 matches for the Scottish Government, ranging over 18 reports. As in prior years, the investigations are split between payables (creditors), payroll and procurement. The total number of matches processed so far has been 911, of that number; 33 were closed due to already being known, 878 were closed after finding no frauds or errors were detected a further 1,723 matches were closed as they were not selected for investigation due to their being assessed as low risk. The next set of data matches for the 2022-23 exercise will be available for review in 2023.

The Covid-19 pandemic has continued to bring significant challenges across the Scottish public sector as bodies seek to deliver services for individuals, communities and businesses under extremely unprecedented and challenging circumstances. Scottish Government have noted the fraud and error issues highlighted in regards to Carer's Allowance in the 2019-20 Audit of Social Security Scotland in December 2020, including acknowledgement that processes and procedures have since been strengthened within Social Security Scotland. The Scottish Government welcomed the Audit Scotland report Covid-19: Emerging fraud risks[112] in 2020 and in recognising this context and following an Internal Audit Directorate review of counter fraud measures, the Scottish Government recruited a new Head of the Counter Fraud Profession to enhance counter fraud capacity and capability; support operational and assurance activity; minimise the financial, statutory and reputational fraud risks to the Scottish Government and work with stakeholders across the Scottish public sector to promote a national focus on counter fraud, cross-organisational counter fraud measures and post-event assurance. More recently Audit Scotland have released the Fraud and Regularity Report in July 2021 which resonates with the increased risks SG have faced in regards to Fraud as a direct result of the pace, scale and pressure of spend and activity in relation to managing the Covid-19 Pandemic.

The new post holder took up the post in April 2021. The initial focus of their work has been to provide support to the oversight of the range of Business Support Grant schemes that have been initiated in response to the pandemic previously noted earlier in this statement, and to develop the organisation's approach to fraud risk assessments.

Cyber Security

Cyber resilience is a critical enabler as we move towards economic and societal recovery. The landscape has changed significantly over the last 18 months. Whilst organisations have been focused on rapidly adapting to new working arrangements, cyber criminals have been evolving their capabilities and methods considerably in tandem.

As demonstrated very visibly by the cyber-attack on the Scottish Environment Protection Agency (SEPA) at the end of 2020, the cyber threat is very real, growing and potentially devastating. In May 2021, Audit Scotland published a blog[113] which highlighted the risk and potential impact of cybercrime in the public sector in Scotland. It also highlighted that fraud risks have increased with the pandemic, with phishing remaining the most common form of attack, however it also noted that there has been a worrying rise in sophisticated ransomware attacks – such as those in SEPA and the University of Highlands and Islands. The Scottish Government is reviewing its public sector cyber resilience and response risk and its strategic capability and capacity to respond to the escalating level of threat. Cyber security and resilience will require attention and focus in 2021-22.

Proportionate cyber protection is established, with a Cyber Incident Response Plan in place. Several work streams which underpin the strategy are in progress and a Cyber Education plan has been developed. Cyber security incidents are co-ordinated as required with relevant stakeholders and the Scottish Government are demonstrating leadership around cyber resilience; sharing knowledge and learning and seeking to pro-actively identify and resolve issues.

Data Security Framework

Information assurance and security are strategic risks for the Scottish Government. Director General Corporate, as the Senior Information Risk Owner (SIRO), is the owner for these risks at Executive Team level. Corporate policies and guidance are in place to ensure that the Scottish Government meets its legislative and procedural obligations to protect the information assets and minimise the likelihood of a data loss incident. The SIRO is now supported by a Deputy SIRO.

One hundred and fifteen data security incidents were internally reported to the Scottish Government Data Protection and Information Assets team in 2020-21 for the Core Departments, of which two were reported to the Information Commissioner's Office (ICO) during the year. While no enforcement action was taken by the Commissioner, appropriate actions were taken in each case to ensure that the probable impact of any loss was minimised. Additional local procedures were also put in place to minimise the likelihood of any future recurrence. The number of incidents is similar to that recorded last year (106) and most are minor (misdirected e-mails and redaction errors) and reflect good reporting practice. The number of recorded data security incidents has been increasing year on year since the General Data Protection Regulations (GDPR) came into force but appears to have stabilised this year. The type and rate of incidents do not suggest that remote working has impacted on data handling compliance. Directorates have continued to meet their data handling obligations during the Covid-19 response.

A dedicated Data Protection Officer has been in place since the introduction of the GDPR in May 2018 and registration with the ICO is up to date.

Written Authority

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 2020-21 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; fair pay; staff numbers; staff costs and number of exit packages has been audited by them.

Appointments

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.

Unless otherwise stated, 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. Subsequent pension arrangements are detailed further below in the appropriate sections.

The Civil Service Commissioners website[114] provides further information about their work.

The Non-Executive Directors (NXDs) provide direct, external, support, challenge and guidance to their "paired" Directors General (DGs) and senior staff in relation to the delivery of their portfolio-based risk, assurance and internal controls framework, and participate in the Corporate Board, one or more of the formal sub-Boards, DG Assurance meetings linked to their paired DG(s) and Scottish Government Audit and Assurance Committee. Ronnie Hinds, Non-Executive Director, was the Chair of the Scottish Government Audit and Assurance Committee for the period covered by the Accounts – 2020/21.

Independent Non-Executive Directors of the Scottish Government are appointed by the Permanent Secretary for an initial period of three years with an annual review.

Three of the SG's experienced NXDs – Annie Gunner Logan, Hugh McKay and Linda McKay - had their Terms of Appointment extended in January 2020, while Ronnie Hinds' was extended in March 2021 for an additional two years in order to continue to draw on their expertise and ensure continuity. The NXDs appointed in 2019 continued to increase their knowledge and experience of the Scottish Government. Jayne Scott was appointed in January 2021 increasing the number of NXDs to 10. As is the case for all of our NXDs such appointments can be terminated with one month's notice period.

Remuneration Policy

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[115] 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[116].

Within the Scottish Government the Talent Action Group (TAG), comprising the Permanent Secretary, Director People and two Non-executive Directors, approve SCS pay structures and pay awards. They ensure that pay proposals fall within Scottish Public Sector Pay Policy, and the Cabinet Office framework for SCS pay.

The SCS pay ranges with effect from 1 April 2020:

SCS Pay Steps Deputy Director 1 Deputy Director 1A Director Director General
Target Rate-4 £77,340 £77,340 £95,930 £122,605
Target Rate-3 £78,814 £78,814 £97,822 £125,037
Target Rate-2 £80,287 £80,287 £99,713 £127,468
Target Rate-1 £81,760 £81,760 £101,604 £129,899
Target Rate £83,233 £83,233 £103,495 £132,330
Target Rate +1 (DD1A)   £84,706    

Consolidated pay:

  • 1 April 2020 – all salary points within DD1 and DD1A pay ranges revalorised by 3%;
  • 1 April 2020 – all salary points within Director and Director General pay ranges increased by £2,000;
  • 1 April 2020 – all staff on a defined pay step within their pay range remain on that step, but at the revalorised rate;
  • 1 April 2020 – all staff above the Target Rate for their pay range receive an increase of £2,000;
  • 1 October 2020 – all staff on a defined pay step within their pay range which is below the Target Rate progress towards the Target Rate by one pay step.

There were no non-consolidated payments in 2020-21.

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 on a quarterly basis. Non-executive members are also reimbursed for expenses incurred in the course of their duties.

Remuneration

The remuneration of the Cabinet Ministers who served over the year to 31 March 2021 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 2021 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 £93,391 (2019-20: £92,101) and for all other Cabinet Ministers is £48,449 (2019-20: £47,780).

Salary Salary Pension Benefits Pension Benefits Total Remuneration Total Remuneration
2020-21 2019-20 *2020-21 *2019-20 2020-21 2019-20
£ £ £ £ £ £
Nicola Sturgeon, MSP (1) 93,391 96,379 41,573 39,005 134,964 135,384
John Swinney, MSP 48,449 47,780 21,565 20,239 70,014 68,019
Roseanna Cunningham, MSP 48,449 47,780 19,783 19,243 68,232 67,023
Michael Matheson, MSP 48,449 47,780 19,783 19,243 68,232 67,023
Fiona Hyslop, MSP 48,449 47,780 21,565 20,238 70,014 68,018
Fergus Ewing, MSP 48,449 47,780 19,687 19,078 68,136 66,858
Humza Yousaf, MSP 48,449 47,780 19,273 18,740 67,722 66,520
Michael Russell, MSP 48,449 47,780 19,273 18,740 67,722 66,520
Shirley-Anne Somerville, MSP 48,449 47,780 19,273 18,740 67,722 66,520
Aileen Campbell, MSP 48,449 47,780 19,273 18,740 67,722 66,520
Jeane Freeman, MSP 48,449 47,780 21,695 21,129 70,144 68,909
Derek Mackay (2) - 52,448 - 16,305 - 68,753
Kate Forbes, MSP (3) 48,449 5,629 18,920 2,131 67,369 7,760

* The value of pension benefits accrued during the year is calculated as (the real increase in pension multiplied by 20) less (the contributions made by the individual). The real increase excludes increases due to inflation or any increase or decrease due to a transfer of pension rights.

(1) The First Minister's salary and total remuneration for 2020-21 includes no benefit-in-kind arising from the provision of accommodation at Bute House (2019-20: £4,278). The First Minister took the decision not to stay at Bute House during the current Covid-19 pandemic in order to lessen the pressure on staff resources and therefore there is no benefit-in-kind to record for 2020-2021.

(2) Derek Mackay resigned as Cabinet Minister on 5 February 2020. The full year equivalent salary for 2019-20 was £47,780. Mr Mackay received an office-holder resettlement grant of £11,945 on 29 May 2020, included within the £52,448 salary reported for 2019-20.

(3) Kate Forbes was appointed as Cabinet Minister on 18 February 2020. The full year equivalent salary in 2019-20 was £47,780. The pension benefits for 2019-20 are restated from £25,663 to £2,131 to reflect solely the pension accrued in the Cabinet position, consequently total remuneration for 2019-20 is restated from £31,292 to £7,760.

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.

Law Officers

The remuneration, comprising of salary and pension benefits, of the serving Law Officers for the year to 31 March 2021 is shown below:

Salary Salary Pension Benefits Pension Benefits Total Remun-eration Total Remun-eration
2020-21 2019-20 *2020-21 *2019-20 2020-21 2019-20
£'000 £'000 £'000 £'000 £'000 £'000
James Wolffe, QC 128 126 52 50 180 176
Alison Di Rollo, QC 110 109 45 43 155 152

* The value of pension benefits accrued during the year is calculated as (the real increase in pension multiplied by 20) less (the contributions made by the individual). The real increase excludes increases due to inflation or any increase or decrease due to a transfer of pension rights.

No Law Officers received benefits-in-kind.

Senior Management Team

The remuneration for the Permanent Secretary and members of the Scottish Government Corporate Board for the year to 31 March 2021 were as follows:

Salary Salary Total Remun-eration Total Remun-eration Pension Benefits Pension Benefits
2020-21 2019-20 *2020-21 *2019-20 2020-21 2019-20
£'000 £'000 £'000 £'000 £'000 £'000
Leslie Evans 170-175 165-170 73 64 240-245 225-230
Sarah Davidson (1) - 45-50 - 12 - 85-90
Lesley Fraser (2) 120-125 90-95 108 156 225-230 245-250
Liz Ditchburn 130-135 125-130 78 59 205-210 180-185
Malcom Wright OBE (3) 10-15 180-185 - - 10-15 180-185
Paul Johnston 130-135 125-130 78 66 205-210 190-195
Ken Thomson 130-135 125-130 76 66 205-210 190-195
Alyson Stafford CBE 145-150 145-150 - - 145-150 145-150
Barbara Allison (4) 75-80 100-105 13 30 85-90 130-135
Nicky Richards 100-105 95-100 61 44 160-165 135-140
Gordon Wales (5) 35-40 105-110 15 36 50-55 140-145
Ruaraidh Macniven (6) 110-115 70-75 67 85 160-165 155-160
Katrina Williams (7) 35-40 - - - 35-40 -
Elinor Mitchell (8) 85-90 - 175 - 260-265 -
Caroline Lamb (9) 40-45 - 16 - 55-60 -
Joe Griffin (10) 15-20 - 7 - 20-25 -
Kerry Twyman (11) 35-40 - 40 - 75-80 -
Jackie McAllister (12) 35-40 - 56 - 90-95 -
Madhu Malhotra (13) 25-30 - 11 - 35-40 -
Julie Humphreys (14) 35-40 - 29 - 60-65 -

*The value of pension benefits accrued during the year is 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.

(1) Sarah Davidson left the Corporate Board on 30 June 2019. The full year salary band for this post is £120-125k.

(2) Lesley Fraser was appointed to the role of Acting DG Corporate, formerly DG ODO on 1 July 2019. The full year salary band for this post is £120-125k.

(3) Malcolm Wright was appointed on secondment up until his permanent appointment to the Scottish Government on 17 June 2019. He stepped down on 22 April 2020 for personal reasons and formally departed the Scottish Government on 31 July 2020. The full year salary band for this post is £180-185k.

(4) Barbara Allison left the Corporate Board on 11 November 2021. The full year salary band for the post is £100-105k.

(5) Gordon Wales left the Corporate Board on 10 July 2020. The full year salary band for the post is £105-110k.

(6) Ruaraidh Macniven was appointed as the Solicitor to the Scottish Government on 17 June 2019. The full year salary band for this post in 2019-20 was £90-95k.

(7) Katrina Williams joined as the Director General of External Affairs on a secondment from the UK Department of Business, Energy and Industrial Strategy for an initial 6-month period from 1 November 2020 to assist with responding to the challenges of COVID-19 and the impact of EU Exit. She left the Corporate Board and the Scottish Government on 6 June 2021. Her salary and pension matters are the responsibility of her parent employer. The Scottish Government reimbursed her employer on a pro-rata basis to reflect salary, ERNIC and employer pension costs for a secondment equivalent to 0.5 full time.

(8) Elinor Mitchell was on the Corporate Board between 23 April 2020 and 10 January 2021 as an interim DG Health & Social Care until Caroline Lamb's permanent appointment. The full year salary band for this post is £120-125k.

(9) Caroline Lamb joined the Corporate Board on 11 January 2021. The full year salary band for this post is £190-195k.

(10) Joe Griffin was appointed to the role of DG Education and Justice on 15 February 2021. The full year salary band for the post is £120-125k.

(11) Kerry Twyman served on the Corporate Board as interim Chief Financial Officer between 11 July 2020 and 22 November 2020. The full year salary band for the post is £95-100k.

(12) Jackie McAllister took up the permanent post of Chief Financial Officer on 23 November 2020. The full year salary band for the post is £95-100k.

(13) Madhu Malhotra was appointed to the newly created role of Director of Equality, Inclusion and Human Rights on 14 December 2020. The full year salary band for the post is £95-100k.

(14) Julie Humphreys was the interim Director of Communications and Ministerial Support between 12 November 2020 and 31 March 2021. The position was taken up by Andy Bruce from 1 April 2021. The full year salary band for the post is £95-100k.

No members of the Scottish Government Corporate Board received performance pay, or payments for voluntary severance or loss of office.

In accordance with the FReM, reporting bodies are required to disclose the relationship between the mid-point of 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.

2020-21 2019-20
£'000 £'000
Minimum Total Remuneration 20 19
Maximum Total Remuneration 190 183
Band of Highest Paid member of the Corporate Board Total Remuneration 180-185 180-185
Median Total Remuneration 38,541 37,418
Ratio 4.9 4.9

Equivalent information relating to senior managers of the other bodies consolidated within these accounts is given in their respective annual accounts.

Total remuneration includes salary, non-consolidated performance-related pay, and benefits-in-kind. It does not include severance payments, employer pension contributions or the cash equivalent transfer value of pensions.

No Senior Management Team officials received non-consolidated performance-related pay or benefits-in-kind.

Non-Executive Directors

Remuneration

Fees are paid on a quarterly basis for their position as Scottish Government Non-Executive Director.

Benefit-in-Kind

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:

2020-21 Fees 2019-20 Fees
£'000 £'000
Janet Hamblin (1) 0-5 5-10
Linda McKay 5-10 5-10
Ronnie Hinds 5-10 5-10
Hugh McKay 5-10 5-10
Annie Gunner Logan 5-10 5-10

(1) Janet Hamblin departed on 31 August 2020. The full year fee for this post is £5-10k.

Pension Benefits

Ministers and Law Officers

The pension entitlements of the Cabinet Team for the year to 31 March 2021 are shown below:

Accrued pension at age 65 as at 31-Mar-21 Real increase in pension at age 65 CETV at 31-Mar-21 CETV at 31-Mar-20 Real Increase in CETV
£'000 £'000 £'000 £'000 £'000
Nicola Sturgeon 30-35 2.5-5 451 402 36
John Swinney, MSP 15-20 0-2.5 267 238 22
Fiona Hyslop, MSP 15-20 0-2.5 267 238 22
Michael Matheson, MSP 5-10 0-2.5 111 90 15
Roseanna Cunningham, MSP 5-10 0-2.5 152 126 20
Fergus Ewing, MSP 5-10 0-2.5 114 87 21
Humza Yousaf, MSP 0-5 0-2.5 34 21 8
Michael Russell, MSP 0-5 0-2.5 66 41 19
Shirley-Anne Somerville, MSP 0-5 0-2.5 43 26 11
Aileen Campbell, MSP 0-5 0-2.5 39 24 9
Jeane Freeman, MSP 0-5 0-2.5 66 41 21
Kate Forbes MSP (1) 0-5 0-2.5 12 1 6

(1) CETV at 31 March 2020 for Kate Forbes is restated from £12,000 to £1,000 to reflect the CETV earned solely in Ms Forbes' Cabinet position.

The real increase in CETV is the increase due to additional benefit accrual (i.e. as a result of salary changes and service) that is funded by the employer. It will be smaller than the difference between the start and end CETVs because it does not include any increase in the value of the pension due to inflation or due to the contributions paid by the employee or the value of any benefits transferred from another pension scheme. Nor does it include any increases (or decreases) because of any changes during the year in the actuarial factors used to calculate CETVs.

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[117].

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-21 Real increase in pension at pension age CETV at 31-Mar-21 CETV at 31-Mar-20 Real Increase in CETV
£'000 £'000 £'000 £'000 £'000
James Wolffe, QC 15 - 20 2.5 - 5 265 203 47
Alison Di Rollo, QC 10 - 15 2.5 - 5 234 179 42

Senior Management Team

The pension entitlements of the Permanent Secretary and executive members of the Scottish Government Corporate Board are as follows (equivalent information relating to senior managers of other bodies consolidated within these accounts is given in their respective annual accounts):

Accrued pension at pension age and related lump sum as at 31-Mar-21 Real increase in pension and related lump sum at pension age CETV at 31-Mar-21 CETV at 31-Mar-20 Real Increase in CETV Employer contribution to partnership pension account
£'000 £'000 £'000 £'000 £'000 £'000
Leslie Evans 85 - 90 plus a lump sum of 255 - 260 2.5 - 5 plus a lump sum of 10 - 12.5 1956 1903 73 -
Liz Ditchburn 45 - 50 plus a lump sum of 15 - 20 2.5 - 5 plus a lump sum of 0 - 2.5 1002 907 81 -
Paul Johnston 40 - 45 plus a lump sum of 70 - 75 2.5-5 plus a lump sum of 2.5 - 5 615 545 44 -
Alyson Stafford CBE (1) - - - - - 22
Ken Thomson 65 - 70 2.5 - 5 1398 1278 74 -
Gordon Wales 50 - 55 plus a lump sum of 110 - 115 0 - 2.5 plus a lump sum of 0 - 2.5 925 889 10 -
Nicky Richards 35 - 40 plus a lump sum of 15 - 20 2.5 - 5 plus a lump sum of 0 - 2.5 621 555 41 -
Barbara Allison 30 - 35 plus a lump sum of 100 - 105 0 - 2.5 plus a lump sum of 2.5 - 5 821 779 14 -
Lesley Fraser (2) 45 - 50 plus a lump sum of 120 - 125 5 - 7.5 plus a lump sum of 7.5 - 10 1025 902 88 -
Ruaraidh Macniven 30-35 plus a lump sum of 65-70 2.5-5 plus a lump sum of 2.5-5 545 481 41 -
Elinor Mitchell 50 - 55 plus a lump sum of 115 - 120 7.5 - 10 plus a lump sum of 17.5 - 20 1025 840 154 -
Caroline Lamb 0 - 5 0 - 2.5 14 0 11 -
Joe Griffin 35 - 40 plus a lump sum of 65 - 70 0 - 2.5 plus a lump sum of 0 - 2.5 571 551 4 -
Kerry Twyman 25 - 30 0 - 2.5 348 319 26 -
Jackie McAllister 40 - 45 2.5 - 5 562 521 38 -
Madhu Malhotra 0 - 5 0 - 2.5 8 0 6 -
Julie Humphreys 20 - 25 0 - 2.5 294 275 16 -

Malcolm Wright, whilst he was the Director General for Health & Social Care, chose not to be covered by the Civil Service pension arrangements during the reporting year 2019-20 and 2020-21.

(1) Alyson Stafford chose not to be covered by the Principal Civil Service Pension Scheme arrangements during the reporting year.

(2) Lesley Fraser's CETV at 31 March 2020 is restated from £928k to £902k as from 17 January 2020 the Pension Scheme Actuary no longer applies Guaranteed Minimum Pension (GMP) adjustment factors in their calculations for members who reach State Pension age on or after 6 April 2016.

There is no automatic right to a lump sum for officials who are members of the Premium Pension Scheme or the Nuvos Pension Scheme.

The real increase in CETV is the increase due to additional benefit accrual (i.e. as a result of salary changes and service) that is funded by the employer. It will be smaller than the difference between the start and end CETVs because it does not include any increase in the value of the pension due to inflation or due to the contributions paid by the employee or the value of any benefits transferred from another pension scheme. Nor does it include any increases (or decreases) because of any changes during the year in the actuarial factors used to calculate CETVs.

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 switch into alpha sometime between 1 June 2015 and 1 February 2022. Because the Government plans to remove discrimination identified by the courts in the way that the 2015 pension reforms were introduced for some members, it is expected that, in due course, eligible members with relevant service between 1 April 2015 and 31 March 2022 may be entitled to different pension benefits in relation to that period (and this may affect the Cash Equivalent Transfer Values shown in this report – see below). 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 defined contribution (money purchase) 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 is 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 an occupational defined contribution pension arrangement which is part of the Legal & General Mastertrust. The employer makes a basic contribution of between 8% and 14.75% (depending on the age of the member). 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.)

For 2020-21 Scottish Government employers' contributions of £114m (2019-20: £98m) were payable to PCSPS at one of four rates in the range 26.6% to 30.3% of pensionable pay, based on salary bands. The Scheme Actuary reviews employer contributions every four years following a full scheme valuation. The contribution rates are set to meet the cost of the benefits accruing during 2020-21 to be paid when the member retires, and not the benefits paid during this period to existing pensioners.

For 2020-21 the value of Scottish Government employers' contributions relating to the partnership pension account is £532k (2019-20: £469k). There were no contributions due to the partnership pension or prepaid at the balance sheet date.

Further details regarding the Civil Service pension arrangements are available on the scheme website[118].

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.

Court of Appeal judgement on public sector pension reforms

In 2015 the government introduced reforms to public sector pensions. Most civil servants were moved into a new ("alpha") pension scheme. In December 2018, the Court of Appeal ruled that the transitional protection provided to some members of the judicial and fire fighters' schemes as part of the reforms amounted to unlawful age discrimination. On 15 July 2019 the Chief Secretary to the Treasury made a written ministerial statement confirming that, as 'transitional protection' was offered to members of all the main public service pension schemes, the difference in treatment will need to be removed across all those schemes for members with relevant service.

Following consultation, the UK Government announced '2015 Remedy' on 4 February 2021 according to which all members of civil service pensions who continue in service from 1 April 2022 onwards will do so as members of alpha. Classic, classic plus, premium and nuvos will be closed in relation to service after 31 March 2022. It has also been decided that eligible members will receive a choice at retirement of which pension scheme benefits they would prefer to take for the period from 2015 to 2022. The choice will be between their pre-2015 pension scheme or their alpha pension.

The UK Government will introduce new legislation when parliamentary time allows. Pension schemes will also run individual consultations on their specific scheme regulations. Once these steps are complete, implementation will begin, and the changes will then be introduced.

The Scottish Government will continue to engage with the HM Treasury, HMRC and scheme policy leads over the coming months about a number of key outstanding technical and legal points. The Scottish Public Pension Agency's technical solution approach to 2015 Remedy is based on the fundamentals of the Digital Strategy with the emphasis on developing common approaches and making use of existing functionality to minimise development costs. In addition, any necessary development should be reusable and modular allowing portability as the solution will need to be applied for several decades to come as the point of decision for members is not until point of benefit crystallisation.

Further information regarding this discrimination, the latest update on the legislative process and scheme valuations can be found on the Civil Service Pensions website[119].

People and Culture

Staff numbers and related costs

Staff numbers (Full time equivalent) No. of Special Advisers Perman-ent Staff Other 2020-21 Total Restated 2019-20 Total
Administration 14 1,314 143 1,471 1,341
Communities & Local Government   401 31 432 466
Constitution, Europe & External Affairs   208 32 240 227
Economy, Fair Work & Culture   707 14 721 596
Education & Skills   1,216 228 1,444 1,474
Environment, Climate Change & Land Reform   836 62 898 874
Finance   831 81 912 985
Health & Sport   150,599 4,907 155,506 149,260
Justice   4,494 20 4,514 4,478
Rural Economy & Tourism   1,074 66 1,140 1,202
Social Security & Older People   1,402 287 1,689 1,291
Transport, Infrastructure & Connectivity   648 35 683 638
Crown Office and Procurator Fiscal Service   1,796 116 1,912 1,814
SG Corporate Board   12 0 12 11
Total 14 165,538 6,022 171,574 164,657
Staff costs 2020-21
£'m
2019-20
£'m
Wages and Salaries (Permanent staff) 7,131 6,213
Social security costs (Permanent staff) 716 643
Other pension costs (Permanent staff) 1,275 1,168
Sub-total 9,122 8,024
Non-Permanent Staff (including Agency, temporary, contract staff and inward secondments) 431 395
Total 9,553 8,419
Less recoveries in respect of outward secondments (157) (128)
Total net costs 9,396 8,291

Number and cost of exit packages

Exit Packages Cost Band No of compulsory redundancies agreed 2020-21 No of other departures agreed 2020-21 Cost of exit packages
2020-21
£000
No of departures agreed 2019-20 Cost of exit packages
2019-20
£000
<£10,000 1 12 84 26 130
£10,000 to £25,000 - 13 219 27 425
£25,000 to £50,000 - 16 614 34 1,307
£50,000 to £100,000 - 28 1,908 39 2,510
£100,000 to £150,000 - 2 249 6 794
£150,000 to £200,000 - 2 175 1 197
£200,000 to £250,000 - - - - -
£250,000+ - - - - -
Total number / cost of exit packages 1 73 3,249 133 5,363

There was one compulsory redundancy in 2020-21 (2019-20: nil) from the Scottish Ambulance Service.

Diversity and Inclusion

In SG our vision is to be a world-leading, diverse employer where people can be themselves at work. We are committed to building a workforce of people with a wide range of backgrounds, perspectives, and experiences, who are valued for their unique contributions in an environment, that is respectful and free of discrimination, harassment or bullying.

During 2020-21 we continued to deliver on our two equality outcomes as an employer: to increase our workforce diversity and to foster an inclusive workforce culture. We embedded equality into our coronavirus response for employees, taking a person centred approach and adapting people policies and support to meet the needs of our increasingly diverse workforce. At 85% positive, our inclusion and fair treatment score in the 2020 People Survey is our highest on record, putting the Scottish Government among the highest performing departments and agencies across the Civil Service.

Working in partnership with the Council of Scottish Government Unions and taking advice and insight from minority ethnic colleagues, our Race Equality Network and external race-focussed organisations, we published our Race Recruitment and Retention Plan – an instigation for change[120] in February 2020. The Plan adopts an anti-racist approach and sets out the action we have committed to taking across five priorities focused on the whole system, aiming to redistribute power, increase accountability, improve the representation of ethnic minority staff at all grades and levels of the organisation and bring about cultural change.

Delivery activity for this Plan, and our Recruitment and Retention Action Plan for Disabled People published in 2019, has focused on equipping our work force at all levels to understand their responsibilities and take effective action to advance race and disability equality and establishing effective governance through our Diversity and Inclusion Governance Group. This is chaired by Director General Corporate and brings together a range of stakeholders, trade union and networks to oversee implementation.

Recognising the importance of building knowledge and capability of employees to take effective action to advance equality and achieve our organisational vision, we launched a digital Diversity and Inclusion curriculum and developed inclusive culture learning that is being rolled out to all employees, managers and senior civil servants. We initiated work to ensure the curriculum covers a broad range of topics including role specific and specialist learning related to protected characteristics.

More broadly, over the past year we have continued to build on improvements to mainstream and embed diversity and inclusion by developing and testing improvements in recruitment, talent management and wellbeing support, particularly in terms of disability and race.

A comprehensive assessment of our progress towards mainstreaming equality and delivering on our equality outcomes was published in March 2021 in our Equality Outcomes and Mainstreaming Report[121].

Staff Relations and Equality

The annual Civil Service People Survey looks at civil servants' attitudes to, and experience

of working in government departments. Every year, a Civil Service benchmark report

is published along with a summary of department and agency scores. The Scottish Government staff response rate for 2020 was 79% (2019: 81%). Further information, including in regards to the consolidated agencies, can be found via our People Survey[122].

Staff turnover based on permanent staff average headcount in the Core Scottish Government for 2020-21 was 2.85% (2019-20: 4.34%).

In 2020-21, an average of 5.35 working days (2019-20: 8.1) 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 2021 was 4.67% of total contracted hours (2019-20: 5.15% of total contracted hours). Sickness absence rates for agencies and other consolidated bodies can be found in their individually published annual accounts.

During 2020-21 there were 52,904 male staff, 163,509 female staff and 114 who prefer not to say (restated 2019-20: 47,203 male, 153,919 female and 105 prefer not to say staff). Within these totals were 2,174 male and 1,912 female Senior Civil Servants or equivalent (2019-20: 1,815 male and 1,481 female Senior Civil Servants). These are measured as head count numbers and not full time equivalents as used in the staff numbers table. Further information on staff composition can be found in our Equality Outcomes and Mainstreaming Report[123].

Facility time used by recognised trade union representatives of the Scottish Government has been reported[124] for the period between 1 April 2020 and 31 March 2021 as follows:

Number of employees who were union officials during the relevant period 124
Full time equivalent employee number 121.14
Total cost of facility time £506,274
Total pay bill £579,225,482
Facility time as a percentage of total pay bill* 0.09%
Time spent on paid Trade Union activities as a percentage of total paid facility time** 32.75%

* Percentage of total pay bill spent on facility time is calculated as (total cost of facility time / total bill) x 100

** Calculated as total hours spent on paid trade union activities by relevant trade union official during the relevant period / total paid facility time hours) x 100

Percentage of working hours spent on facility time by trade union representatives Number of trade union representatives
0% 46
1 – 50% 70
51 – 99% 2
100% 6

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 2021 was 3,517 (2019-20: 3,015).

Contact

Email: accountancyservicesunit@gov.scot

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