Scottish Government Consolidated Accounts: year ended 31 March 2021

Report of the Auditor General for Scotland to the Scottish Parliament

Reporting on the audit of the financial statements

Opinion on financial statements

I have audited the financial statements in the Scottish Government Consolidated Accounts for the year ended 31 March 2021 under the Public Finance and Accountability (Scotland) Act 2000. The financial statements comprise the Summary of Total Outturn, the Summary of Resource Outturn, the Summary of Capital Outturn, the twelve Portfolio Outturn Statements, the Consolidated Statement of Financial Position, the Statement of Comprehensive Net Expenditure and Changes in Taxpayers' Equity, the Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union, and as interpreted and adapted by the 2020/21 Government Financial Reporting Manual (the 2020/21 FReM).

In my opinion the accompanying financial statements:

• give a true and fair view in accordance with the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers of the state of affairs of the Scottish Government and the consolidation of the entities within the departmental accounting boundary as at 31 March 2021 and of the net resource outturn and resources applied to objectives for the year then ended;

• have been properly prepared in accordance with IFRSs as adopted by the European Union, as interpreted and adapted by the 2020/21 FReM; and

• have been prepared in accordance with the requirements of the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers.

Basis for opinion

I conducted my audit in accordance with applicable law and International Standards on Auditing (UK) (ISAs (UK)). My responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of my report. I am independent of the Scottish Government in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK including the Financial Reporting Council's Ethical Standard, and I have fulfilled my other ethical responsibilities in accordance with these requirements. Non-audit services prohibited by the Ethical Standard were not provided. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Conclusions relating to going concern basis of accounting

I have concluded that the use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the body's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from when the financial statements are authorised for issue.

Risks of material misstatement

I have reported in a separate Annual Audit Report, which is available from the Audit Scotland website^[125], the most significant assessed risks of material misstatement that I identified and my judgements thereon.

Responsibilities of the Principal Accountable Officer for the financial statements

As explained more fully in the Statement of the Accountable Officer's Responsibilities, the Principal Accountable Officer is responsible for the preparation of financial statements that give a true and fair view in accordance with the financial reporting framework, and for such internal control as the Principal Accountable Officer determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Principal Accountable Officer is responsible for using the going concern basis of accounting unless deemed inappropriate.

Auditor's responsibilities for the audit of the financial statements

My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. I design procedures in line with my responsibilities outlined above to detect material misstatements in respect of irregularities, including fraud. Procedures include:

• obtaining an understanding of the applicable legal and regulatory framework and how the Scottish Government is complying with that framework;
• identifying which laws and regulations are significant;
• assessing the susceptibility of the financial statements to material misstatement, including how fraud might occur; and
• considering whether the audit team collectively has the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations.

The extent to which my procedures are capable of detecting irregularities, including fraud, is affected by the inherent difficulty in detecting irregularities, the effectiveness of the Scottish Government's controls, and the nature, timing and extent of the audit procedures performed.

Irregularities that result from fraud are inherently more difficult to detect than irregularities that result from error as fraud may involve collusion, intentional omissions, misrepresentations, or the override of internal control. The capability of the audit to detect fraud and other irregularities depends on factors such as the skilfulness of the perpetrator, the frequency and extent of manipulation, the degree of collusion involved, the relative size of individual amounts manipulated, and the seniority of those individuals involved.

A further description of my responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website^[126]. This description forms part of my auditor's report.

Reporting on regularity of expenditure and income

Opinion on regularity

In my opinion in all material respects:

• the expenditure and income in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers, the Budget (Scotland) Act covering the financial year and sections 4 to 7 of the Public Finance and Accountability (Scotland) Act 2000; and

• the sums paid out of the Scottish Consolidated Fund for the purpose of meeting the expenditure shown in the financial statements were applied in accordance with section 65 of the Scotland Act 1998.

Responsibilities for regularity

The Principal Accountable Officer is responsible for ensuring the regularity of expenditure and income. In addition to my responsibilities to detect material misstatements in the financial statements in respect of irregularities, I am responsible for expressing an opinion on the regularity of expenditure and income in accordance with the Public Finance and Accountability (Scotland) Act 2000.

Reporting on other requirements

Opinions on audited part of the Remuneration and Staff Report

I have audited the parts of the Remuneration and Staff Report described as audited. In my opinion, the audited part of the Remuneration and Staff Report has been properly prepared in accordance with the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers.

Statutory other information

The Principal Accountable Officer is responsible for the statutory other information in the Scottish Government Consolidated Accounts. The statutory other information comprises the Performance Report and the Accountability Report excluding the audited part of the Remuneration and Staff Report.

My responsibility is to read all the statutory other information and, in doing so, consider whether the statutory other information is materially inconsistent with the financial statements or my knowledge obtained in the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this statutory other information, I am required to report that fact. I have nothing to report in this regard.

My opinion on the financial statements does not cover the statutory other information and I do not express any form of assurance conclusion thereon except on the Performance Report and Governance Statement to the extent explicitly stated in the following opinions.

Opinions on Performance Report and Governance Statement

In my opinion, based on the work undertaken in the course of the audit:

• the information given in the Performance Report for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers; and
• the information given in the Governance Statement for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers.

Matters on which I report by exception

I report to you if, in my opinion:

• adequate accounting records have not been kept; or
• the financial statements and the audited part of the Remuneration and Staff Report are not in agreement with the accounting records; or
• I have not received all the information and explanations I require for my audit.

I have nothing to report in respect of these matters.

Conclusions on wider scope responsibilities

In addition to my responsibilities for the annual report and accounts, my conclusions on the wider scope responsibilities specified in the Code of Audit Practice are set out in my Annual Audit Report.

Use of my report

This report is made solely to the parties to whom it is addressed in accordance with the Public Finance and Accountability (Scotland) Act 2000 and for no other purpose. In accordance with paragraph 120 of the Code of Audit Practice, I do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties.

Stephen Boyle,
Auditor General for Scotland,
102 West Port, Edinburgh, EH3 9DN

Summary of Total Outturn

For the year ended 31 March 2021

Restated 2019-20 Outturn £m	Programme Resources	Resource Outturn £m	Capital Outturn £m	Total Outturn £m	Budget £m	Variance £m
14,565	Health and Sport	17,270	528	17,798	18,090	(292)
12,556	Communities and Local Government	12,799	297	13,096	13,050	46
142	Finance	204	24	228	231	(3)
4,328	Education and Skills	4,477	507	4,984	4,950	34
2,786	Justice	2,803	41	2,844	2,885	(41)
2,729	Transport, Infrastructure and Connectivity	3,531	283	3,814	4,135	(321)
765	Rural Economy and Tourism	1,104	(159)	945	998	(53)
162	Environment, Climate Change and Land Reform	216	259	475	502	(27)
647	Economy, Fair Work and Culture	1,983	50	2,033	1,980	53
525	Social Security and Older People	3,604	82	3,686	3,660	26
34	Constitution, Europe and External Affairs	46	-	46	50	(4)
146	Crown Office and Procurator Fiscal Service	163	9	172	170	2
39,385	Total Outturn	48,200	1,921	50,121	50,701	(580)

Summary of Resource Outturn

For the year ended 31 March 2021

Restated 2019-20 Outturn £m	Programme Resources	Outturn £m	Budget £m	Variance £m
14,271	Health and Sport	17,270	17,588	(318)
12,352	Communities and Local Government	12,799	12,730	69
120	Finance	204	206	(2)
3,731	Education and Skills	4,477	4,350	127
2,775	Justice	2,803	2,834	(31)
2,472	Transport, Infrastructure and Connectivity	3,531	3,759	(228)
500	Environment, Climate Change and Land Reform	216	232	(16)
214	Rural Economy and Tourism	1,104	1,156	(52)
621	Economy, Fair Work and Culture	1,983	1,936	47
466	Social Security and Older People	3,604	3,570	34
34	Constitution, Europe and External Affairs	46	50	(4)
139	Crown Office and Procurator Fiscal Service	163	162	1
37,695	Total Resource Outturn	48,200	48,573	(373)
	Of which Operating Costs	1

Summary of Capital Outturn

For the year ended 31 March 2021

Restated 2019-20 Outturn £m	Programme Resources	Outturn £m	Budget £m	Variance £m
294	Health and Sport	528	502	26
204	Communities and Local Government	297	320	(23)
22	Finance	24	25	(1)
597	Education and Skills	507	600	(93)
11	Justice	41	51	(10)
257	Transport, Infrastructure and Connectivity	283	376	(93)
265	Environment, Climate Change and Land Reform	259	270	(11)
(52)	Rural Economy and Tourism	(159)	(158)	(1)
26	Economy, Fair Work and Culture	50	44	6
59	Social Security and Older People	82	90	(8)
-	Constitution, Europe and External Affairs	-	-	-
7	Crown Office and Procurator Fiscal Service	9	8	1
1,690	Total Capital Outturn	1,921	2,128	(207)

Health and Sport

Portfolio Outturn Statement for the Year Ended 31 March 2021

Restated2019-20 Outturn £m	Programme	Variance Note	Gross Expenditure £m	Income Applied £m	Outturn £m	Budget £m	Variance £m
	Expenditure Limit
14,135	Health and Sport	1	17,848	663	17,185	17,475	(290)
14,135	Total Expenditure Limit		17,848	663	17,185	17,475	(290)
	UK Funded Annually Managed Expenditure
92	Health	2	62	-	62	66	(4)
92	Total AME		62	-	62	66	(4)
	Other Expenditure
44	Health - Revenue-financed infrastructure	3	67	44	23	47	(24)
44	Total Other Expenditure		67	44	23	47	(24)
14,271	Total Resources		17,977	707	17,270	17,588	(318)
280	Capital - Additions	4	515	-	515	466	49
(27)	Capital - Disposals	4	-	22	(22)	-	(22)
41	Capital (Other Expenditure) - Additions		35	-	35	36	(1)
294	Total Capital		550	22	528	502	26
14,565	Total Outturn		18,527	729	17,798	18,090	(292)

With effect from 2017-18, gross income and expenditure for the portfolio excludes income received from Integration Authorities on the basis that this presentation better reflects the funding relationship between Integration Authorities and NHS Boards.  This adjustment has no impact on the portfolio’s net outturn position.
Income of £7,034m was received by Boards in 2020-21 (2019-20: £6,353m) for provision of healthcare services commissioned by Integration Authorities. NHS funding to Integration Authorities for 2020-21 totalled £7,328m (2019-20: £6,435m).

Explanation of Major Variances greater than £3m:

Note 1

The variance is driven primarily by the timing of consequentials received from the UK Government at the end of the financial year. The Spring Budget Revision included those consequentials with arrangements in place for their deployment against 2021-22 budgetary commitments via the Scotland Reserve. As such the available budget has been aligned with actual spend and utilised in full.

 

There is a difference between the budgeting and accounting reporting requirements for Personal Protective Equipment (PPE).  The treatment of PPE has been agreed with HM Treasury for budgeting and final outturn purposes, and is in line with the approach taken by the Department of Health and Social Care.  The budget provided for the expenditure on PPE; these accounts report the stock of PPE held at the balance sheet date as a current asset in the Statement of Financial Position as at 31 March 2021.  The available budget has been utilised in full.

Note 2

Lower than anticipated levels of provisions.

Note 3

Higher than anticipated levels of donated assets income.

Note 4

Variance mainly due to additional purchases of Covid-related equipment by NHS National Services Scotland acting on behalf of the Scottish Government, also including £4m of additional loans provided to sports clubs in Scotland.

Communities and Local Government

Portfolio Outturn Statement for the Year Ended 31 March 2021

Restated 2019-10 £m	Programme	Variance Note	Gross Expenditure £m	Income Applied £m	Outturn £m	Budget £m	Variance £m
	Expenditure Limit
7,653	Local Government	1	10,827	-	10,827	10,686	141
11	Planning		11	-	11	12	(1)
691	Housing	2	642	7	635	658	(23)
57	Social Justice and Regeneration	3	169	-	169	199	(30)
-	Connected Communities		4	-	4	4	-
22	Third Sector	4	108	-	108	102	6
6	Governance and Reform		5	-	5	5	-
123	Central Government Grants to Local Authorities		100	-	100	100	-
8,563	Total  Expenditure Limit		11,866	7	11,859	11,766	93
	UK Funded Annually Managed Expenditure
2,853	Non-Domestic Rates		1,868	-	1,868	1,868	-
912	Small Business Grant Fund and Retail, Hospitality and Leisure Grant Fund		(912)	-	(912)	(912)	-
24	Housing	5	(16)	-	(16)	8	(24)
3,789	Total AME		940	-	940	964	(24)
12,352	Total Resources		12,806	7	12,799	12,730	69
282	Capital - Additions/Advances	6	398	-	398	320	78
(78)	Capital - Disposals/Repayments	6	-	101	(101)	-	(101)
204	Total Capital		398	101	297	320	(23)
12,556	Total Outtrun		13,204	108	13,096	13,050	46

Explanation of Major Variances greater than £3m:

Note 1

Over-spend relates to funding awarded to Local Authorities as part of the General Revenue Grant to enable Covid-19 responses. Funding was awarded after the Spring Budget Revision resulting in a misalignment in expenditure and budget allocation and subsequently the over-spend reported.

Note 2

Under-spend mainly due to lower than anticipated demand in Better Homes schemes due to Covid-19 restrictions, cost reductions in the delivery of the Scottish Household Survey due to Covid-19 and marginally lower than expected spend on Affordable Housing Supply Programme due to restrictions on construction due to Covid-19 restrictions.

Note 3

Under-spend resulting from Covid-19 expenditure being incurred by other business areas (see Notes 1 and 4) creating a subsequent budget/expenditure misalignment (£27m). Other under-spends reported in demand led schemes including Access to Sanitary Products (£2m) and Empowering Communities Fund (£2m) in addition to extra EU European Social Fund Tackling Poverty Fund receipts (£1m).

Note 4

Covid-19 Winter Package expenditure incurred whilst budget allocated elsewhere (see Note 3).

Note 5

Relates to the year end loan adjustments where loans are discounted in year 1 (depending on the interest rate charged on loans), and the discount is unwound in subsequent years. The significant adjustments are Shared Equity schemes £(34m), Charitable Bonds net £10m, other schemes £8m.

Note 6

Net under-spend of £23m mainly due to:

Housing - Lower than anticipated demand in the House Builder Loan fund (provision of support to House Builders through Covid restrictions (£82m), reduced demand for Help to Buy and Open Market Shared Equity investments due to Covid restrictions (£26m), lower than anticipated demand on Private Rented Sector (PRS) Emergency and Energy Saving Trust (EST) Tenant Hardship Loans (£13m) and additional Registered Social Landlord (RSL) Fire Safety Loan Receipts (£3m) offset by increased demand in First Home Fund investments (£99m) and an increase in expected shared equity receipts (£15m).

Also, £9m income in relation to Scottish Partnership for Regeneration in Urban Centres (SPRUCE).

Finance

Portfolio Outturn Statement for the Year Ended 31 March 2021

Restated2019-20£m	Programme	Variance Note	Gross Expenditure £m	Income Applied £m	Outturn £m	Budget £m	Variance £m
	Expenditure Limit
18	Scottish Public Pensions Agency	1	20	-	20	23	(3)
78	Other Finance		114	3	111	111	-
24	Digital Strategy		77	5	72	71	1
2	Accountant in Bankruptcy		8	7	1	1	-
122	Total  Expenditure Limit		219	15	204	206	(2)
	UK Funded Annually Managed Expenditure
(2)	Other Finance		-	-	-	-	-
(2)	Total AME		-	-	-	-	-
120	Total Resources		219	15	204	206	(2)
22	Capital - Additions/Advances		24		24	25	(1)
22	Total Capital		24	-	24	25	(1)
142	Total Outturn		243	15	228	231	(3)

Explanation of Major Variances greater than £3m:

Note 1

Under-spend due to lower than expected staffing levels and susbsequently lower spend on staff associated costs due to Covid-19 impacts.

Education and Skills

Portfolio Outturn Statement for the Year Ended 31 March 2021

Restated 2019-20 Outturn £m	Programme	Variance Note	Gross Expenditure £m	Income Applied £m	Outturn £m	Budget £m	Variance £m
	Expenditure Limit
277	Learning	1	368	2	366	355	11
138	Children and Families	2	176	10	166	179	(13)
7	Early Learning and Childcare Programme	3	28	-	28	32	(4)
662	Higher Education Student Support	4	830	2	828	817	11
1,883	Scottish Funding Council		2,143	-	2,143	2,143	-
12	Advanced Learning and Science		15	-	15	16	(1)
269	Skills and Training	5	279	-	279	261	18
589	Central Government Grants to Local Authorities		737	-	737	737	-
3,837	Total  Expenditure Limit		4,576	14	4,562	4,540	22
	UK Funded Annually Managed Expenditure
-	Learning		1	-	1	2	(1)
(106)	Higher Education Student Support	6	(16)	70	(86)	(192)	106
(106)	Total  AME		(15)	70	(85)	(190)	105
3,731	Total Resources		4,561	84	4,477	4,350	127
12	Capital - Additions	7	10	-	10	33	(23)
758	Capital (AME) - Advances	8	701		701	567	134
(173)	Capital (AME) - Repayments	8	-	204	(204)	-	(204)
597	Total Capital		711	204	507	600	(93)
4,328	Total Outturn		5,272	288	4,984	4,950	34

Explanation of Major Variances greater than £3m:

Note 1

Scottish Qualifications Authority (SQA) underspend due to a reduction in expenditure incurred in year on the development of the Alternative Certification Model and the anticipated quality assurance work that SQA have been able to carry out (£9m). Agreed £5m overspend on Free School Meal. Non Profit Distributing (NPD) Unitary Charge underspend due to lower Operational Insurance costs than estimated (£2m). Technologies for Learning capital expenditure incurred whilst budget allocated elsewhere £21m (see note 7).

Note 2

Lower spend on the Scottish Child Abuse enquiry (due to Covid-19 restrictions creating temporary delays to hearings), delays to the Promise Fund, lower applications for Advanced Redress payments (combined total £7m); planned under-spend in Disclosure Scotland to compensate for loss of income due to Covid-19 (£2m); under-spends across Creating Positive Futures (£2m) and Childrens Hearing Work (£1m).

Note 3

The underspend reflects lower than anticipated uptake in demand led Covid-19 schemes, in particular the Temporary Restrictions Fund which provided grant support to childcare services (all day care of children services and to childminding services registered for 12 or more children) during the period of temporary restrictions in place from Boxing Day 2020. 

Note 4

Variance predominantly due to movement in student loan impairment as a result of updated macroeconomic forecasts from the Office of Budgetary Responsibility covering a 30 year time window.

Note 5

Due to delays in claims of European Social Funding in 2020-21, Skills Development Scotland were provided with additional cashflow support to continue to pay training providers at the request of Scottish Ministers (£10m). Flexible Workforce Development Fund £4m overspend and Developing the Young Workforce £4m overspend with corresponding underspends in Economy, Fair Work and Culture portfolio.

Note 6

This non-cash variance is predominantly due to movement in the fair value calculation in relation to Student Loans.

Note 7

Technologies for Learning underspend (£22m) as the budget is allocated here whilst the expenditure was recorded elsewhere (See note 1).

Note 8

Variance due to greater repayment receipts and lower student loan issue than had been predicted. These forecasts had been amended to impact covid, furlough and job losses, but these impacts did not crystallise.

Justice

Portfolio Outturn Statement for the Year Ended 31 March 2021

Restated 2019-20 Outturn £m	Programme	Variance Note	Gross Expenditure £m	Income Applied £m	Outturn £m	Budget £m	Variance £m
	Expenditure Limit
33	Community Justice Services	1	39	-	39	42	(3)
1	Judiciary		1	-	1	1	-
15	Criminal Injuries Compensation		21	-	21	22	(1)
143	Legal Aid		113	-	113	113	-
64	Police Central Government	2	78	2	76	82	(6)
11	Safer and Stronger Communities		16	5	11	12	(1)
493	Police and Fire Pensions		459	-	459	458	1
285	Scottish Prison Service	3	303	8	295	301	(6)
42	Miscellaneous	4	46	1	45	58	(13)
1,212	Scottish Police Authority		1,267	-	1,267	1,267	-
306	Scottish Fire and Rescue Service		308	-	308	308	-
87	Central Government Grants to Local Authorities		85	-	85	86	(1)
2,692	Total  Expenditure Limit		2,736	16	2,720	2,750	(30)
	UK Funded Annually Managed Expenditure
1	Scottish Prison Service		1	-	1	1	-
1	Total AME		1	-	1	1	-
	Other Expenditure
78	Scottish Prison Service		78	-	78	79	(1)
4	Scottish Police Authority Loan Charges		4	-	4	4	-
82	Total Other Expenditure		82	-	82	83	(1)
2,775	Total Resources		2,819	16	2,803	2,834	(31)
11	Capital - Additions	5	41	-	41	51	(10)
11	Total Capital		41	-	41	51	(10)
2,786	Total Outturn		2,860	16	2,844	2,885	(41)

Explanation of Major Variances greater than £3m:

Note 1

Underspend mainly due to significant drop in the volume of electronic monitoring orders as a result of Covid-19.

Note 2

Underspend mainly due to a reduction in the Scottish Government contribution to the UK Government led Emergency Services Mobile Communication Programme.

Note 3

Underspend mainly due to delays in estate maintenance programmes and recruitment due to Covid-19 in addition to lower than expected legal costs.  

Note 4

The Legal Aid Resilience Fund was underspent by £7m as several payments were not made until 2021/22.  Underspends due to lower than anticipated applications to various funding streams and projects due to Covid-19, including Victim/Witness Support (£2m) and Justice Analytical Services (£1m) in addition to other minor operating cost variances. 

Note 5

Underspends due to slippage in the Women's Estate Project (National Facility and Community Custody Units) within Scottish Prison Service.  

Transport, Infrastructure and Connectivity

Portfolio Outturn Statement for the Year Ended 31 March 2021

Restated 2019-20 Outturn £m	Programme	Variance Note	Gross Expenditure £m	Income Applied £m	Outturn £m	Budget £m	Variance £m
	Expenditure Limit
997	Rail Services	1	1,586	-	1,586	1,598	(12)
275	Concessionary Fares and Bus Services	2	403	1	402	482	(80)
160	Active Travel, Low Carbon and Other Transport	3	252	1	251	281	(30)
412	Motorways and Trunk Roads	4	332	-	332	391	(59)
215	Ferry Services	5	269	12	257	265	(8)
59	Air Services	6	74	1	73	101	(28)
14	Digital Connectivity	7	31	-	31	42	(11)
45	Energy	8	155	4	151	194	(43)
115	Cities Investment and Strategy	9	218	-	218	195	23
17	Ferguson Marine	10	51	-	51	28	23
42	Central Government Grants to Local Authorities		49	-	49	51	(2)
2,351	Total Expenditure Limit		3,420	19	3,401	3,628	(227)
	Other Expenditure
121	Motorways and Trunk Roads PPP/PFI		130		130	131	(1)
121	Total Other Expenditure		130	-	130	131	(1)
2,472	Total Resources		3,550	19	3,531	3,759	(228)
302	Capital - Additions/Advances	11	280	-	280	341	(61)
-	Capital - Additions Ferguson Marine	12	23	-	23	35	(12)
(21)	Capital - Disposals/Repayments	13	-	9	(9)	-	(9)
(21)	Capital (AME) - Capital Provision	14	-	11	(11)	-	(11)
(3)	Capital ODEL - Disposals/Repayments		-	-	-	-	-
257	Total Capital		303	20	283	376	(93)
2,729	Total Outturn		3,853	39	3,814	4,135	(321)

Explanation of Major Variances greater than £3m:

Note 1

Under-spends mainly due to delays in Network Rail, joint Abellio ScotRail/Transport Scotland and other projects, in addition to lower than anticipated staffing levels due to Covid-19 impacts.

Note 2

Under-spends mainly due to lower than budgeted demand for Covid related Support Grants and mobilisation costs from Bus Operators (£72m) and lower demand for concessionary schemes, including Young Persons due to Covid-19 impacts (£3m) and other minor variances across the programme.

Note 3

Under-spend mainly due to reprofiling of grant award to Strathclyde Partnership for Transport (£36m), reduced demand for Bus Rapid Priority  Deployment Fund (£8m) offset by repurposing of funding to support increased investment in ultra-low emission buses (£9m), increased staffing costs and other minor variances across the programme.

Note 4

Lower than anticipated non-cash depreciation costs (£60m), underspend in road maintenance due to COVID restrictions and other re-profiling (£10m), partially offset by £11m of additional spend to fund BEAR 3 bus retro-fitting scheme carried over from last year and increased programme staff costs.

Note 5

Net under-spends on Clyde & Hebrides and Northern Isles Ferry Services operations maintenance and contract costs (£22m), slippage in Skye Triangle programme costs due to Covid-19 restrictions (£11m), and net Ardrossan/Troon programme under-spend (£5m) and other minor variances across the programme (£3m), offset by a CalMac Pension Deficit Repayment £33m.

Note 6

Under-spend mainly due to lower than anticipated Covid-19 pressures and works slippage within Highlands & Islands Airports Ltd (£23m) and a (£4m) under-spend in the Air Discount Scheme due to Covid-19 restrictions.

Note 7

Under-spend mainly due to the re-profiling R100 rollout costs across financial years (£7m), lower than anticipated uptake on the Scottish Broadband Voucher Scheme (£3m) and delays to 5G implementation strategy and associated projects.

Note 8

Under-spend mainly due to lower than expected uptake in demand led schemes including Energy Efficient Scotland, Energy Efficiency, Low Carbon Infrastructure, Energy Industries and Renewable Energy due to Covid-19 restrictions. The demand and support for new programmes prevented a number of projects from starting and lockdown restricted progress with projects already underway (£42m). Also additional Energy Consents charging receipts due to higher than anticipated applications made (£1m).

Note 9

Over-spend due to a change in policy resulting in the acceleration of Glasgow City Deal funding to cover expenditure incurred to date.

Note 10

Over-spend due to an increase in the write-off of Voted Loans carrying values following a change in the funding mechanism used.

Note 11

Net under-spends mainly due to:
Energy - lower than anticipated in loan applications to the Energy Efficient Scotland scheme as projects/work supported was unable to be carried out due to Covid-19 restrictions (£19m) and the cessation of funding to BiFab as a result of the entity entering administration (£15m).
Transport Scotland - Net (£65m) reduction in major roads projects, (£14)m underspend on road maintenance due to COVID restrictions and re-profiling, (£32)m underspend due to reprofiling of vessel voted loans.

Note 12

The underspend of £12m is a direct result of Covid-19 delays with significant spells of closure for the shipyard on two occasions (Spring 2020 and January 2021). Furthermore, there is ongoing difficulty in securing the skilled workforce required to progress the capital works of the vessels. 

Note 13

Vessel Voted loan repayments received in year from CMAL (£8m) and repayments to the Low Carbon Transport Loan Fund reflected in net budget for capital additions above.

Note 14

Utilisation of historic provisions for land compensation.

Environment, Climate Change and Land Reform

Portfolio Outturn Statement for the Year Ended 31 March 2021

Restated 2019-20 Outturn £m	Programme	Variance Note	Gross Expenditure £m	Income Applied £m	Outturn £m	Budget £m	Variance £m
	Expenditure Limit
73	Marine		86	12	74	76	(2)
67	Research, Analysis and Other Services	1	72	6	66	69	(3)
144	Environmental Services	2	131	-	131	145	(14)
16	Climate Change & Land Managers Renewables Fund	3	21	-	21	26	(5)
12	Land Reform		13	-	13	14	(1)
(100)	Scottish Water	4	15	105	(90)	(99)	9
212	Total Expenditure Limit		338	123	215	231	(16)
	UK Funded Annually Managed Expenditure
2	Marine		1	-	1	1	-
2	Total AME		1	-	1	1	-
214	Total Resources		339	123	216	232	(16)
256	Capital - Voted Loans	4	357	-	357	267	90
4	Capital - Additions/Advances		4	-	4	3	1
5	Capital - Additions		-	-	-	-	-
-	Capital - Disposals	4	-	102	(102)	-	(102)
265	Total Capital		361	102	259	270	(11)
479	Total Outturn		700	225	475	502	(27)

Explanation of Major Variances greater than £3m:

Note 1

Profit on sale of property assets £1.2m; unclaimed grant, reprioritisation and cancellation of work due to Covid-19 impact on Research Institutes' and policy areas.

Note 2

Lower than anticipated Scottish Environment Protection Agency working capital £6m, due to the timing of payments at the financial year; and reduced spend on programmes such as Peatland Restoration (£4m) and Environmental Quality (£3.4m) for noise and air quality action due to the impact Covid-19 restrictions.

Note 3

Lower than anticipated COP26 expenditure and delayed project spend due to the postponing of COP26 to November 2021.

Note 4

There is a net underspend of £3m within the Scottish Water budgets. £2m resource underspend mainly due to low uptake of Private Water Supply grants by owners and users due to Covid-19 - works to be carried out have been delayed by lockdowns.
The £11m budget for the Return to Work programme is reflected within Capital - Voted Loans,  the outturn is reflected within Scottish Water Gross Expenditure.

Rural Economy & Tourism

Portfolio Outturn Statement for the Year Ended 31 March 2021

Restated 2019-20 Outturn £m	Programme	Variance Note	Gross Expenditure £m	Income Applied £m	Outturn £m	Budget £m	Variance £m
	Expenditure Limit
162	EU Support and Related Services	1	840	117	723	754	(31)
123	Rural Services	2	51	-	51	57	(6)
6	Fisheries and Aquaculture Grants	3	27	5	22	25	(3)
77	Rural Economy Enterprise	4	104	-	104	101	3
54	Scottish Forestry	5	59	15	44	57	(13)
19	Forestry and Land Scotland		23	-	23	22	1
59	Tourism	6	136	-	136	139	(3)
500	Total Expenditure Limit		1,240	137	1,103	1,155	(52)
	UK Funded Annually Managed Expenditure
-	EU Support and Related Services		1	-	1	1	-
-	Total AME		1	-	1	1	-
500	Total Resources		1,241	137	1,104	1,156	(52)
393	Capital - Additions/Advances		354	-	354	-	354
(445)	Capital - Disposals/Repayments		-	513	(513)	(158)	(355)
(52)	Total Capital		354	513	(159)	(158)	(1)
448	Total Outturn		1,595	650	945	998	(53)

Explanation of Major Variances greater than £3m:

Note 1

There are under-spends relating to the release of ring-fenced farm funding relating to Bew monies (£27m) and Pillar 1 support (£9m); Covid-19 restrictions led to supply issues faced by stakeholders in obtaining capital equipment in the Agricultural Transformation Fund (£7m).
Over-spends: Financial Disallowance and other items £9m; Higher than anticipated depreciation charge for Agriculture & Rural Economy directorate £3m.

Note 2

Under-spend due to lower than anticipated demand in the Food and Drink Recovery Plan and delays in related programmes, including the Nextportl project due to Covid-19.

Note 3

Projects have not progressed as anticipated, reduced grant claims due to impact of Covid-19.

Note 4

The overspend is due to acceleration of projects in Highland and Islands Enterprise previously profiled for 21/22. 

Note 5

There was an under-spend of £24m as a result of the Forestry Grant Scheme due to frozen ground during the middle of the planting season, Covid-19 and the EU Exit which all reduced the number of hectares planted. This was offset by the resultant decrease in the EU co-financing element of the Forestry Grant Scheme payments (£13m).

Economy, Fair Work & Culture

Portfolio Outturn Statement for the Year Ended 31 March 2021

Restated 2019-20 Outturn £m	Programme	Variance Note	Gross Expenditure £m	Income Applied £m	Outturn £m	Budget £m	Variance £m
	Expenditure Limit
17	Economic Advice		13	-	13	15	(2)
286	Enterprise, Trade and Investment	1	1,356	6	1,350	1,329	21
50	Central Government Grants to LA		-	-	-	-	-
164	Culture and Major Events	2	266	-	266	269	(3)
48	Employability & Training	3	87	-	87	134	(47)
14	Scottish National Investment Bank	4	24	(5)	29	101	(72)
-	ESF 14-20 Programmes	5	9	(8)	17	-	17
-	ERDF 14-20 Programmes		11	11	-	-	-
-	ESF & ERDF Closed Schemes	6	-	5	(5)	-	(5)
39	Historic Environment Scotland		79	-	79	80	(1)
618	Total Expenditure Limit		1,845	9	1,836	1,928	(92)
	UK Funded Annually Managed Expenditure
-	Scottish National Investment Bank	7	(4)	-	(4)	8	(12)
-	ESF/ERDF	8	26	-	26	-	26
3	Enterprise, Trade and Investment	9	124	-	124	-	124
-	Culture and Major Events		1	-	1	-	1
3	Total AME		147	-	147	8	139
621	Total Resources		1,992	9	1,983	1,936	47
27	Capital - Additions/Advances	10	52	-	52	44	8
(1)	Capital - Disposals/Repayments		-	2	(2)	-	(2)
26	Total Capital		52	2	50	44	6
647	Total Outturn		2,044	11	2,033	1,980	53

Explanation of Major Variances greater than £3m:

Note 1

Over-spend mainly due to the award of additional Covid-19 Business Support Grants (£40m - including expenditure incurred where budget held in other areas) offset by additional funding from centre that was no longer required following the Clyde Mission avoiding slippage, and due to income from Scottish Enterprise in respect of FanDual.

Note 2

Under-spend is due to support for the events sector coming from VisitScotland’s budget, and an underspend at National Museums Scotland, partly offset by additional support for COVID recovery in the heritage sector.

Note 3

Underspend mainly due to lower uptake with demand led funding schemes due to Covid-19 including the National Transition Training Fund (£16m), Pathways to Apprenticeships Fund (£10m), Developing Young Workforce (£8m), Parental Employment Support (£5m), Flexible Workforce Development Fund (£4m) and other minor variances.

Note 4

Under-spend is largely due to a number of proposed investments not being completed by the end of the Financial Year

Note 5

Accrued EC Income write-off (£17m) and the creation of a provision (£28.7m AME) for future potential under-recovery of European Social Fund Income. 

Note 6

EC Creditor released relating to 07-13 ESF/ERDF Programme closure.

Note 7

Under-spend relates to the non-utilisation of a budgeted provision in relation to EU funding risk. No EU funding was claimed and therefore the uptake of the provision was not required

Note 8

Additional spend in year in relation to a provision for future potential under-recovery of European Social Fund Income (£28m) offset by recognition of exchange rate differences (£2m). Remaining £1m consists of minor variances within the portfolio.

Note 9

The Government's potential exposure to the 25-year guarantee relating to the hydro plant and aluminium smelter at Lochaber and it's valuation under accounting standards has been reviewed in year. This has resulted in an increase of £124m in the provision valuation - for more information see Note 14 Provisions.

Note 10

Net over-spend mainly due to:
Innovation and Industries - Provider has over-performed against expected profile resulting in an overspend against exepcted profile (£3.5m)
Scottish National Investment Bank - under-spend is the result of delays in the timing of investments due to Covid-19 and the general uncertainty the timing of investments causing slippages aginast the expected investment profile.

Social Security and Older People

Portfolio Outturn Statement for the Year Ended 31 March 2021

Restated 2019-20 Outturn £m	Programme	Variance Note	Gross Expenditure £m	Income Applied £m	Outturn £m	Budget £m	Variance £m
	Expenditure Limit
90	Social Security		213	1	212	213	(1)
342	Social Security Assistance	1	3,359	-	3,359	3,320	39
29	Equalities		31	-	31	32	(1)
461	Total Expenditure Limit		3,603	1	3,602	3,565	37
	UK Funded Annually Managed Expenditure
5	Social Security Assistance	2	2	-	2	5	(3)
5	Total AME		2	-	2	5	(3)
466	Total Resources		3,605	1	3,604	3,570	34
59	Capital - Additions/Advances	3	83	-	83	90	(7)
-	Capital - Disposals/Repayments		-	1	(1)	-	(1)
59	Total Capital		83	1	82	90	(8)
525	Total Outturn		3,688	2	3,686	3,660	26

Explanation of Major Variances greater than £3m:

Note 1

Benefit expenditure is demand led and cannot be controlled in the same way as other budgets where spending limits can be set. We believe COVID-19 has had an impact on benefit spend but it has not easy to quantify the extent of these impacts. The 2020-21 financial year was the first year the complete set of benefits under the Scotland Act 2016 were devolved to the Scottish Government and it was anticipated that the spend on these benefits would be higher as a result. Additional funding is likely to be provided to Scotland through the Block Grant reconciliation process, although that takes place in a subsequent year. Further information on benefit spend can be found in the Social Security Scotland accounts for 2020-21 at https://www.socialsecurity.gov.scot/reporting/publications/annual-report-2020-2021

Note 2

This is to account for the impairment of demand led benefits. The Department for Work and Pensions advise this figure at the year end so it cannot be easily forecast.

Note 3

Capital expenditure was lower than anticipated, mainly resulting from delays to the programme of works due to the COVID-19 impact on the construction sector.

Constitution, Europe & External Affairs

Portfolio Outturn Statement for the Year Ended 31 March 2021

Restated 2019-20 Outturn £m	Programme	Variance Note	Gross Expenditure £m	Income Applied £m	Outturn £m	Budget £m	Variance £m
	Expenditure Limit
13	Government Business and Constitutional Relations		25	-	25	27	(2)
21	External Affairs		21	-	21	23	(2)
34	Total Expenditure Limit		46	-	46	50	(4)
	UK Funded Annually Managed Expenditure
-	Total AME		-	-	-	-	-
34	Total Resources		46	-	46	50	(4)
-	Total Capital		-	-	-	-	-
34	Total Outturn		46	-	46	50	(4)

Explanation of Variances:

Total £4m consists of minor variances across a number of programmes within the portfolio.

 The Crown Office and Procurator Fiscal Service

Portfolio Outturn Statement for the Year Ended 31 March 2021

2019-20 Outturn £m	Programme	Variance Note	Gross Expenditure £m	Income Applied £m	Outturn £m	Budget £m	Variance £m
	Expenditure Limit
	Staff Costs
89	The Crown Office and Procurator Fiscal Service		100	-	100	100	-
	Administration Expenditure
8	Accommodation		9	-	9	9	-
1	Travel/Transport		-	-	-	-	-
15	Legal		39	-	39	39	-
6	Supplies and Services		7	2	5	4	1
-	Non Cash Costs		-	-	-	-	-
4	Capital Charges		5	-	5	6	(1)
2	Other Office Costs		2	-	2	4	(2)
125	Total Expenditure Limit		162	2	160	162	(2)
	UK Funded Annually Managed Expenditure
14	Impairment		1	-	1	-	1
-	Provisions		2	-	2	-	2
14	Total  AME		3	-	3	-	3
139	Total Resources		165	2	163	162	1
7	Capital - Additions		9		9	8	1
7	Total Capital		9	-	9	8	1
146	Total Outturn		174	2	172	170	2

Explanation of Variances:

Total £2m consists of minor variances across a number of programmes within the portfolio.

Consolidated Statement of Financial Position

As at 31 March 2021

2019-2 Restated £m		Note	2020-21 £m
	Non-Current Assets
30,699	Property, Plant and Equipment	6	30,808
237	Intangible Assets	7	290
9,200	Other Financial Assets including Investments due in more than one year	10	9,845
101	Receivables and Other Assets due in more than one year	12	76
40,237	Total Non-Current Assets		41,019
	Current Assets
142	Inventories	9	243
1,052	Receivables and Other Current Assets	12	1,118
970	Cash and Cash Equivalents	2	708
521	Other Financial Assets including Investments due within one year	10	351
10	Non-Current Assets Classified as Held for Sale	8	17
2,695	Total Current Assets		2,437
42,932	Total Assets		43,456
	Current Liabilities
(3,839)	Payables and Other Current Liabilities	13	(5,085)
(35)	Other Financial Liabilities due within one year	13	(54)
(1,165)	Provisions for Liabilities and Charges due within one year	14	(347)
(5,039)	Total Current Liabilities		(5,486)
37,893	Total Assets less Current Liabilities		37,970
	Non-Current Liabilities
(2,997)	Payables and Other Liabilities	13	(2,937)
(581)	Other Financial Liabilities due in more than one year	13	(519)
(877)	Provisions for Liabilities and Charges due in more than one year	14	(964)
(4,455)	Total Non-Current Liabilities		(4,420)
33,438	Assets less Liabilities		33,550
	Taxpayers' Equity
22,762	General Fund	SOCTE	23,041
10,676	Revaluation Reserve	SOCTE	10,509
33,438	Total Taxpayers' Equity		33,550
The notes on pages 121 to 175 form part of these accounts.

Leslie Evans
Principal Accountable Officer

Statement of Comprehensive Net Expenditure and Changes in Taxpayers' Equity

For the year ended 31 March 2021

	Note	General Fund £m	Revaluation Reserve £m	Total £m
Balance at 1 April 2020		22,762	10,676	33,438
Net operating cost for the year		(48,201)	-	(48,201)
Net gain/(loss) on revaluation/indexation of property, plant and equipment	6	-	(63)	(63)
Non-Operating gain/(loss) on transfer of property, plant and equipment	6	-	-	-
Total Comprehensive Expenditure for the year ended 31 March 2020		(48,201)	(63)	(48,264)
Non Cash Charges
Non cash charges - auditor's remuneration	5e	5	-	5
Non cash charges - NHS adjustment		-	-	-
Non cash charges - Roads adjustment		75	-	75
Total Non Cash charges		80	-	80
Other Reserve movements
Transfer of non-current assets		-	-	-
Other Adjustment		(2)	-	(2)
NHS Adjustment		(77)	-	(77)
Transfer between reserves		104	(104)	-
Total other reserve movements/adjustments		25	(104)	(79)
Funding
Parliamentary Funding		48,290	-	48,290
NHS Adjustment		-	-	-
Less funding to pensions schemes		(113)	-	(113)
Less funding to Revenue Scotland, National Records of Scotland, Office of Scottish Charity Regulator, Scottish Courts and Tribunals Service, Scottish Fiscal Commission and Scottish Housing Regulator		(49)	-	(49)
Net parliamentary funding drawn down	23	48,128	-	48,128
Movement of balance with the SCF		247	-	247
Net funding position		48,375	-	48,375
Net increase/(decrease) in year		279	(167)	112
Balance as at 31 March 2021		23,041	10,509	33,550

Explanation of Reserves:
General Fund – The General Fund represents the total assets less liabilities of the Scottish Government, to the extent that they are not represented by the revaluation reserve and financing items.
Revaluation Reserve – The Revaluation reserve reflects the unrealised element of the cumulative balance of indexation and revaluation adjustments (excluding donated assets).

Statement of Comprehensive Net Expenditure and Changes in Taxpayers' Equity

For the year ended 31 March 2020

	Note	General Fund £m	Revaluation Reserve £m	Total £m
Balance at 1 April 2019		22,862	10,425	33,287
Net operating cost for the year		(37,695)	-	(37,695)
Net gain/(loss) on revaluation/indexation of property, plant and equipment	6	-	395	395
Non-Operating gain/(loss) on transfer of property, plant and equipment		-	-	-
Scottish Forestry transfer in year		-3		(3)
Total Comprehensive Expenditure for the year ended 31 March 2019		(37,698)	395	(37,303)
Non Cash Charges
Non cash charges - auditor's remuneration	5e	3	-	3
Non cash charges - NHS adjustment		-	-	-
Non cash charges - Roads adjustment		(235)	-	(235)
Total Non Cash charges		(232)	-	(232)
Other Reserve movements
Prior year adjustments		(17)	-	(17)
NHS Highland Pension movement		16	-	16
Roads historic adjustment		75		75
Transfer between reserves		144	(144)	-
Prior year adjustment (roundings)		-		-
Total other reserve movements/adjustments		218	(144)	74
Funding
Parliamentary Funding		37,616	-	37,616
Less funding to pensions schemes		(39)	-	(39)
Less funding to Revenue Scotland, National Records of Scotland, Office of Scottish Charity Regulator, Forestry Commission (Scotland), Scottish Courts and Tribunals Service, Revenue Scotland, Scottish Fiscal Commission and Scottish Housing Regulator		(53)	-	(53)
Net parliamentary funding drawn down	24	37,524	-	37,524
Movement of balance with the SCF		88	-	88
Transfer of benefit overpayment receivables from DWP		-	-	-
Net funding position		37,612	-	37,612
Net increase/(decrease) in year		(100)	251	151
Balance as at 31 March 2020		22,762	10,676	33,438

Statement of Cash Flows

For the year ended 31 March 2021

2019-20 £m		Note	2020-21 £m
(35,982)	Net cash outflow from operating activities	(A)	(46,528)
(1,515)	Net cash outflow from investment activities	(B)	(1,670)
(3)	Payments (from)/to the SCF	(D)	(38)
37,450	Cash flows from financing activities	(C)	47,974
(50)	Increase / (Decrease) in cash in the period	2	(262)
	(A) Reconciliation of operating costs to operating cash flows
(37,695)	Net Operating Cost	SoCTE	(48,200)
(3)	Transfer by absoption from FCS to SF	SoCTE	-
5	Income not applied	5b	6
691	Adjustments for non-cash transactions	3	1,011
160	Add back: interest payable for financing		156
(21)	Increase / (decrease) in inventories		(101)
(203)	(Increase) / decrease in receivables and other current assets	4	27
252	Increase / (decrease) in trade and other payables	4	1,446
916	Increase / (decrease) in provisions	4	(731)
(84)	Interest receivable		(142)
(35,982)	Net cash outflow from operating activities		(46,528)
	(B) Analysis of cash flows from investing activities
(501)	Purchase of property, plant and equipment		(651)
(101)	Purchase of intangible assets		(135)
32	Proceeds of disposal of property, plant and equipment		10
2	Proceeds of disposal of intangible assets		13
1	Proceeds of assets held for sale		5
(1,784)	Advances of Investments		(1,871)
809	Repayments of Investments		926
27	NLF Loans	10	33
(1,515)	Net Cash outflow from investment activities		(1,670)
	(C) Analysis of cash flows from financing activities
37,524	From Scottish Consolidated Fund	SOCTE	48,128
77	Funding on NHS Capital		-
(27)	Loan transactions with the National Loans Fund	10	(33)
(16)	Capital element of payments in respect of finance leases		(72)
111	Interest received		108
(221)	Interest element of finance leases and NPD/PPP/PFI contracts included in SoFP		(155)
2	Interest paid		(2)
37,450	Cash flows from financing activities		47,974
50	Decrease/(Increase) in cash equivalents	2	262
37,500	Net cash and cash equivalents requirement		48,236

(D) Payments to the Scottish Consolidated Fund (SCF) represent the income not applied, £2m (Note 5b) offset by the increase in balances payable to the SCF of £1m and decrease in the balance receivable from the SCF of £1m.