Consolidated Accounts: year ended 31 March 2023

Scottish Government Consolidated Accounts for year ended 31 March 2023.

Accountability Report

Corporate Governance Report

The Directors’ Report

Information about the Scottish Government, the Scottish Cabinet Ministers and their responsibilities and the Scottish Government Senior Management Team, including the Permanent Secretary is provided within the Introduction to these accounts, along with The Register of Interests of the members of the Corporate Board of company directorships and other significant interests held.

The governance structure as presented in Figure 1 (below) is reflective of the current structure.

Statement of Principal Accountable Officer’s Responsibilities

In accordance with the accounts direction (reproduced on page 192) 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[71].

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 and transparent way for the year 2022-23 and up to the date of the approval of the Annual Accounts. 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[72] 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[73] of the SPFM. Figure 1 sets out the approach I have put in place to achieve this.

Corporate Governance System

The Scottish Government’s Corporate Governance system has been designed 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[74] and relevant elements of the Good Governance Standard for Public Services[75] produced by the Independent Commission on Good Governance in Public Services.

In 2021-22 a review of core elements of the corporate governance system was undertaken. This resulted in a number of sub-boards being removed from the governance framework and realigned within DG assurance arrangements. In 2022-23 further recommendations from that review were implemented with the addition of the Strategic Design Authority and Executive Team Investment Assurance.

A diagram of the corporate governance structure as of June 2023 is included below at Figure 1. The Accountability and Assurance Framework is also provided at Figure 2 describing the assurance structures operating within Scottish Government.

Figure 1: Corporate Governance Structure, as at June 2023
Figure 2: Overall Governance & Accountability Framework

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 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; performance; organisational health; and effective governance. Membership of Corporate Board includes myself, Directors General as my Portfolio Accountable Officers and at least three Non-Executive Directors. As of June 2023, the Non-Executive Director members are David Martin, Belinda Oldfield, Jim Robertson, and Jayne Scott. There are also a number of standing attendees including the Chief Financial Officer, the Director of People Directorate, and the Board Secretary. All non-executives are invited to attend the Corporate Board meetings.

Corporate Board has met quarterly over the course of the reporting period and its minutes are published. Alongside core areas of business, it has considered the following specific issues over the reporting period: workforce planning; identifying and addressing emerging risks; performance and delivery reporting; performance monitoring on FOIs, PQs, and correspondence; Resource Spending Review; management of public assets; fiscal sustainability; public service reform; the Annual Accounts and Governance Statement (relating to the period 2021-22); Health strategy.

The Executive Team

The Executive Team met on a twice-weekly basis throughout the reporting period and more frequently as needed, focusing on developing and implementing the vision and strategy, managing performance and delivery, deploying resources in response to Ministerial priorities and ensuring effective governance and organisational health.

The Executive Team meets in distinct ‘modes’: Strategic, People, Delivery and Investment Assurance mode which facilitates enhanced focus on key priorities and issues. The strands of business which are considered in each mode support delivery of shared objectives that I and my Executive Team have put in place for 2023-24: prioritise, collaborate, design, deliver and perform, develop, and lead.

Meeting in Strategic mode, the Executive Team has provided leadership and direction to ensure that the Scottish Government achieves its goals, considering issues of a cross-cutting nature, including: the implementation of our corporate vision In the Service of Scotland; the Resource Spending Review; the National Care Service; strategic sponsorship of public bodies; and the response to the crisis in the Ukraine.

Meeting as the People Executive, the Executive Team has focused on issues relating to workforce strategy and planning; hybrid working arrangements; succession and talent management, diversity and inclusion.

The weekly Delivery mode of Executive Team is responsible for providing challenge, leadership, and direction on key delivery priorities across the organisation. The Delivery Executive considers corporate risk and finance monthly and provides a space for constructive mutual challenge and partnership to support improved delivery and outcomes. It continues to provide increased focus and enhanced assurance to me as Principal Accountable Officer on monitoring the performance and delivery of key Ministerial priorities including tackling poverty and protecting people from harm, growing a fair and green economy, and prioritising our public services.

In Investment Assurance mode the Executive Team will consider Business Cases for endorsement, with a focus on those that are novel and contentious or with significant recurrent spend, to ensure improved investment decision making and fiscal planning and prioritisation.

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.

Following completion of Ronnie Hinds’ tenure as SGAAC Chair in June 2022, Jim Robertson was appointed as Chair of the Committee with Jayne Scott, in the role of Deputy Chair for the core reporting period (2022-23), and a further Non-Executive Director appointment for Belinda Oldfield, was also made in 2022-23. I attend along with Directors General; the Chief Financial Officer; the Director for Internal Audit & Assurance and the Board Secretary. Audit Scotland attend SGAAC and have an open invite to attend Director General Assurance meetings as do 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 to SGAAC or elsewhere in the governance system (e.g., Corporate Board or the Executive Team) as appropriate based on clear escalation criteria. Issues which have been considered for assurance purposes at SGAAC in this reporting period have included, the process for the 2023-24 budget flightpath and medium and longer term improvement activity relating to fiscal sustainability, Corporate Transformation, the Covid Inquiry, European Structural Investment Funds, Strategic Sponsorship, ongoing development of the Counter Fraud activity across the SG, and a new approach to monitoring Audit Scotland recommendations. In addition to findings from key Directorate for Internal Audit & Assurance activity, and key findings from Audit Scotland reviews, SGAAC also considered reflections from the departing Director of Internal Audit & Assurance at its meeting in March, and more recently an outline of the approach and early development of Risk Appetite Statements.

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 30th October 2023 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.

Director General Assurance meetings

Director General 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 as appropriate by SGAAC, the Executive Team or Corporate Board in line with the associated escalation criteria.

Assurance meetings are attended by each Director from the Director General family; the Non- Executive Directors that are aligned with the particular DG portfolio in their pairing relationship; Non-Executive Directors; Audit Scotland; Internal Audit & Assurance; the Board Secretary and relevant officials as appropriate and they 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 frequently over the reporting period, primarily with a view to calibrating risks, and their management, across Directorates.

Improvements to the Scottish Government’s assurance arrangements continue. Robust risk management will continue to be an area of focus across the organisation and through various strands of the governance system in 2023-24. Further detail on improvements in this area undertaken in 2022-23, is included later in this statement. Throughout 2022-23 the increased focus on performance and delivery across the organisation continued to be reflected in Director General assurance meetings. In addition to the production of a Scottish Government monthly performance dashboard, many of the DG families established performance dashboards aligned to the delivery of key Ministerial priorities. The arrangements for monitoring and reporting on delivery through Director General assurance will continue to develop in 2023-24 and will focus on alignment with the missions set out in the recently published Policy Prospectus and Programme for Government. More detail on performance can be found in the Performance Report.

Other Corporate Governance Boards

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

People & Place Board

The People & Place Board provides advice on the creation of the culture and conditions for individuals to be successful in the Scottish Government. It has an information flow into the Executive Team’s People Executive. The Board met in April 2022, July 2022, October 2022, and January 2023. In the reporting period the Board has discussed key issues including In the Service of Scotland; Corporate Transformation; workforce planning; Estates Strategy; hybrid working; capacity and capability; and Technology Strategy.

Performance Board

Following the creation of the Delivery Executive in January 2022 and as a product of the corporate governance review and refresh, the Performance Board was re-aligned in the governance system as a ‘mode’ of the Executive Team’s Delivery Executive which I chair. It met in this configuration in April 2022, May 2022, August 2022, November 2022, February 2023. Its membership included myself, Directors General, and two Non-Executive Directors. Its core role and remit remained largely unchanged. In this reporting period the Board discussed key issues including statutory review of the National Outcomes; Impact Assessments; 2022-23 Programme for Government; and Preventative Action, Care and Wellbeing. The Board agreed that February 2023 would be the last meeting of Performance Board, with its role of giving focus to the delivery of outcomes and strategic performance to be reflected in the remit of Delivery Executive.

Infrastructure Investment Board

The Infrastructure Investment Board (IIB) is chaired by DG Scottish Exchequer, and it 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 and ensuring that all infrastructure investment supports the National Outcomes.

The Board met in May 2022, August 2022, November 2022, and February 2023. In the reporting period it considered items including: the Capital Spending Review which will be monitored until 2025; the National Infrastructure Mission; the Infrastructure Investment Plan; the National Planning Framework; and 2023-24 capital budget planning.

Internal Audit and Assurance

The Directorate of Internal Audit and Assurance (DIAA) brings together three independent assurance teams (Internal Audit, Digital Assurance Office and Portfolio, Programme and Project Assurance) the Head of Counter Fraud Profession, and the role of the Data Protection Officer. While the services provided by each of the teams continue independently, an integrated approach to assurance is taken to support the Scottish Government through the provision of proportionate assurance activities throughout the policy to delivery lifecycle.

Audit Scotland, as the Scottish Government’s External Auditors, assess the extent to which they will use the individual reviews undertaken by Internal Audit to inform their opinion on the financial statements, and meet their wider responsibilities, depending on their direct relevance to their work. Each year they also undertake a review of the Scottish Government’s Internal Audit arrangements. Audit Scotland confirmed that their review did not find any areas of 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. Periodic meetings take place between the 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 May 2023.

Regular engagement has also taken place between Audit Scotland and the Directors General, the Chief Financial Officer, the Director of Internal Audit & 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 SGAAC’s responsibilities to me as Principal Accountable Officer.

Non-Executive Directors (NXDs)

There are currently nine 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.

COVID-19 Inquiries

Considerable work continues to support the SG’s response to the COVID-19 public inquiries. There are two public inquiries that have been established to investigate matters relating to the COVID-19 response between 2020 and 2022. The first being the Scottish COVID-19 Inquiry (chaired by Lord Brailsford), which is investigating the devolved strategic response to the pandemic in Scotland between 1 January 2020 and 31 December 2022. The aim of this inquiry is to provide scrutiny on the handling of the pandemic in Scotland, and to learn lessons. The second, being the UK Inquiry (UKI) (chaired by Baroness Heather Hallett). This inquiry will examine, consider, and report on preparations and responses to the pandemic in England, Wales, Scotland and Northern Ireland and the impact of the COVID-19 pandemic, up to and including the Inquiry’s formal set up date of 28 June 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 is Scotland’s wellbeing framework, which highlights 11 key National Outcomes. It combines measurement of how well Scotland is doing in economic terms with a broader range of wellbeing measures. These indicators incorporate a range of different types of data – from social attitudes and perceptions to economic and environmental statistics – to paint a broad picture of Scotland’s performance.

A statutory review of the National Outcomes is underway and will fulfil the requirement of the Community Empowerment Act (2015) to review the National Outcomes within 5 years, in consultation with communities in Scotland. This review is scheduled to conclude in 2024.

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[76], where data and performance assessment are published as and when new data on the NPF National Indicators becomes available. In 2020 the Scottish Government published the analytical report, “Scotland’s Wellbeing: The impact of Covid-19.”[77] The publication aims to 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 Scottish Government’s planning and performance framework sets the priorities, plans the activity and monitors the progress and performance across the organisation. This framework continues to develop to reflect the Government’s approach to accountability and support the Government’s aim for transparency. The internal Performance and Delivery process provides the Cabinet, Ministers and the Executive Team with routine, regular and transparent reporting, and assurance on the performance of the Government’s key priority areas, as set out in its Programme for Government. The framework seeks to align across programme, budget and resourcing, bringing more visibility, support and challenge to delivering outcomes and developing key performance indicators.

Social Security Scotland – Next phase

The annual accounts of Social Security Scotland have had an audit qualification each year since 2018-19 in respect of the regularity of an estimated level of overpayments attributable to fraud and error in benefits administered by the Department of Works and Pensions (DWP).The estimated level of overpayments attributable to fraud and error in the benefits, delivered by the Department of Works and Pensions (DWP) on the Agency’s behalf, is not deemed material for the Scottish Government consolidated accounts.

Social Security Scotland continue to develop their methodology for production of fraud and error estimates in the benefits they administer directly; with initial focus on understanding levels of official error before further development of capability to estimate levels of client induced error and potential fraud. The first estimates of official error in the Scottish Child Payment caseload are being prepared and are being made available to Audit Scotland. We aim to publish these estimates along with our Annual Report and Accounts 2022-23.

The Scottish Government has specifically recognised the risk to the budget of Social Security Scotland expenditure being materially different from forecasts. The Scottish Fiscal Commission (SFC) has formal responsibility for producing forecasts, and so explaining variations, however the expenditure is significant within the overall budget and highlights the need to ensure forecasts are accurate. Actual benefit expenditure was broadly in line with forecasts for 2022-23. Social Security Scotland has its own counter-fraud response measures in place and continues to develop both its data driven approach to proactive identification of fraud risk, and its investigative capability.

The Accountable Officer of Social Security Scotland has overall responsibility for delivery of the functions of the Executive Agency, which would include delivering any targets set out in legislation or our business plan and taking decisions on remedial action where required and is directly accountable to the Scottish Ministers for the standards of its work. The Chief Executive is therefore directly accountable to the Permanent Secretary as Principal Accountable Officer for the Scottish Administration and the Scottish Ministers for delivery.

Scottish Government’s Assurance Framework

Annual assurance on the adequacy and effectiveness of the core Scottish Government’s governance, risk management and internal control systems is provided by the Scottish Government’s Director of Internal Audit and Assurance. In the annual assurance report submitted to SGAAC at its meeting on 5 June 2023, the Director of Internal Audit and Assurance confirmed that a reasonable assurance opinion had been provided on the systems for risk management, control, and governance within the Scottish Government.

Risk Management Arrangements

Effective risk management continues to be at the heart of the Scottish Government’s Assurance Framework. The Scottish Government’s approach is published on the Scottish Government website[78] within the Scottish Public Finance Manual which was reviewed January 2023 and its internal guidance updated most recently in February 2023. The review of the Scottish Government’s Risk Management Strategy and Policy was completed in June 2023 alongside a full review of internal guidance. All guidance is also consistent with the UK Government’s Orange Book[79] and best practice.

The Scottish Government is committed to continuous improvement of its risk management arrangements and capability. In 2022-23, there has been considerable focus developing organisation maturity through completion of an organisation-wide maturity exercise to test compliance with the Scottish Government’s guidance and the effectiveness of arrangements at a local Directorate level. The exercise recognised areas of good practice and identified areas where improvement was required. This activity is supported by the Scottish Government’s Risk Champion community and a dedicated Risk Management Policy Team, who provide bespoke and targeted training, support, and guidance. Mandatory eLearning was introduced in February 2022 to ensure that all staff had an understanding of the fundamentals of risk management and a consistent knowledge of the Scottish Government’s processes for identifying and managing risk. On 31 March 2023, 85% of the organisation had completed this learning, increasing to 92% on 31 May 2023.

The ongoing Risk Improvement agenda has enhanced the arrangements for risk management and reporting. The Risk function has also developed its reporting and analytic capabilities over the period, providing enhanced risk reporting to the Delivery Executive, in alignment with enhanced performance reporting, ensuring direct links are made between risks, priorities and outcomes. To ensure that the Executive Team is fully appraised of the wider risk eco-system, a revised quarterly ‘risk landscape’ report has been developed to provide a multiple-horizon view of risk; encompassing short-term issues, medium term delivery risk, civil contingency emergency risk and longer-term horizon risks stretching into the next 10 to 20 years.

The risk management arrangements within the Scottish Government have become significantly more dynamic over the course of Financial Year 2022-23, with considerable focus provided to the discussion of risk at Executive Team. The corporate risk register has become more dynamic in nature, responding to changes in the external environment to ensure risks are quickly identified, recorded and managed through the risk register. This was deployed in response to the war in Ukraine, where risks related to the Scottish Government’s strategic response were identified at the outset and then pivoted to consideration of the operational risks associated with delivery of the Scottish Super Sponsorship Scheme for Displaced Persons from Ukraine.

Scottish Government Key Risks

The Scottish Government’s corporate governance system has been designed to ensure that risks to its organisational health and policy performance in this environment are identified, managed, and mitigated effectively. Organisational health risks have been woven throughout this statement and are detailed as specific progress updates or where appropriate, issues and risks.

Over the last year a number of policy-specific 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 short summary of the risk focus at the end of the period covered in this Statement (March 2023) is included below:

  • Fiscal Sustainability: i) reducing exposure to Budget volatility through analysis of fiscal performance and risk reporting; ii) securing more proportionate medium-term budget management levers through Medium Term Financial Strategy (MTFS); and iii) setting parameters for multi-year funding to enable Portfolios to manage spending over multiple years and strengthen medium-term financial planning and spending discipline across the organisation.
  • Climate Change Mitigation: the delivery of policies that will reduce Greenhouse Gas emissions in response to the climate emergency and deliver a just transition to Net Zero.
  • Climate Change Adaptation: strengthening approaches to adapting to the ‘locked in’ impact of climate change on Scotland and its people, ensuring adequate preparedness and resiliency to the risks posed by a changing climate.
  • Economic Performance and Cost of Living: ensuring appropriate levers and responses are in place to mitigate the impact of high inflation, the war in Ukraine and residual impacts of COVID-19 on businesses, third sector organisations, household incomes and standards of living, to mitigate against inequalities, increased demand on third sector and the cost of public services.
  • Child Poverty: taking significant action, in tandem with delivery partners across Scotland, to address child poverty ahead of interim targets in 2023 and statutory targets in 2030.
  • Short and Long Term Sustainability of Health & Social Care Services: due to ongoing and legacy impacts of Covid 19 (including the need to manage it as a new endemic virus) alongside long term systemic challenges arising from demographic change, workforce pressures and financial challenges (including pressure on pay costs and capital investment), to meet our National Performance Framework ambitions around world class health outcomes, including reducing health inequalities and improving population health.
  • National Care Service development: developing and delivering of a person-centred, national care system in collaboration and partnership with stakeholders to ensure a sustainable service that meets the needs of citizens.
  • Public Service Reform: delivering suitable arrangements to test the coherence and penetration of our public service reform programmes.
  • Cyber Resilience: ensuring awareness of, and preparation for, the growing cyber threat to the public sector in alignment with Framework for a Cyber Resilient Scotland.

The Scottish Government’s 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 via DG assurance or through 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, including:

  • Performance Management: The increased focus on Performance was a key step change across the Assurance Agenda. Overarching priorities were identified, including Child Poverty, Climate Change, Constitution and Covid-19 Recovery; with a number of significant transformation programmes established across DG families setting the direction of travel for Scottish Government.
  • Resourcing: Capability, Capacity and Wellbeing of the Scottish Government’s staff; ensuring a collective approach to effective prioritisation of delivery and subsequent direction and management of resources
  • The challenges surrounding the annual financial outturn amidst a backdrop of the resource spending review, the emergency budget review in late 2022 and historic commitments.
  • The importance of ensuring appropriate information management; following the review of corporate processes for the storage, retrieval, and deployment of corporate information a number of areas were identified for improvement of which work to address this is progressing well.
  • Public Body Sponsorship: ensuring appropriate governance and accountability within the Scottish Government to support public bodies in the delivery of their services.
  • Public Asset Management: ensuring the organisation has the capability and capacity to manage opportunities for the development of commercial assets currently owned by the Scottish Government.

Sponsorship of Public Bodies

In December 2022, the Scottish Government successfully implemented Strategic Sponsorship. This centred around the 14 recommendations contained within the review of the Scottish Government’s relationship with Public Bodies which reported to Executive team in Autumn 2021. On 28 February 2022, the report was published alongside the Scottish Government response.

Throughout the course of 2022, the Scottish Government focused on implementing the recommendations and rolled out a range of support and guidance to both sponsorship practitioners and Public Bodies. The support focuses on areas such as governance and accountability, escalation of risk, and building and maintaining strategic relationships between sponsors and Public Bodies. The focus of 2023 is embedding Strategic Sponsorship as best practice.

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[80]. 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:

People: Capability, Capacity and Wellbeing (Cross-cutting)

It is essential we continually align business priorities, budgets, and our workforce to deliver on Ministerial priorities. The past year has seen significant focus on improved workforce planning across the wider organisation, following the enhancement of recruitment controls to manage the workforce size and distribution, in accordance with financial management actions (such as the Path to Balance exercise) and delivery monitoring.

A high level multi-year workforce plan for the organisation, in line with the Resource Spending Review (RSR) profile, has been established and will improve strategic decision making on the workforce size, capability and diversity. The enhanced controls provide weekly reporting to the Permanent Secretary, there is improved reporting to support senior leaders and there are routine updates to Ministers. DG Corporate continue to invest in improving its operating model both for the Scottish Government itself and those Executive Agencies that also receive corporate services from the Scottish Government.

Financial Management (Cross-cutting)

Managing the annual financial outturn continued to be a challenge, as expected, throughout 2022-23. There were a number of savings exercises culminating in an Emergency Budget Review in November and the Resource Spending Review was published in May 2022. This provided a critical opportunity for clarity and certainty on what will be delivered in the next five years, and to agree measures to balance the financial context with ministerial priorities. Other challenges to managing the annual financial outturn throughout 2022-23 were the impacts of the significant inflation shock on public sector pay deals and the costs of goods and services.

There is continuous scrutiny of budgets to drive efficiencies and ensure we are following processes consistent with the SPFM (Scottish Public Finance Manual). Accountable Officer Spending Control templates were utilised as a key part of financial governance across all areas as directed by the Chief Financial Officer. Improvements in forecasting and enhanced variance analysis improved in-year budget management. There has also been a focus on systematically maturing the management of the corporate Fiscal Sustainability risk so that it is more data driven, controls confidence is improved, and there is a more robust articulation of the impact that mitigating actions are both expected to make in practice.

Corporate Transformation

In the context of significant resourcing issues and financial challenges, the Scottish Government is reviewing its corporate operating model to align with the new Enterprise Resource Planning system, driving continuous improvement in financial management practices across the organisation, and maximising the benefits of wider corporate transformation. In March 2022, it was agreed with the Scottish Cabinet that “Corporate Transformation: In the Service of Scotland”; a set of priorities to deliver improvement across our culture, organisational design and process and service innovation would be progressed.

Work started across all five priorities in 2022-23 under the direction of DG Corporate, governed by the Corporate Transformation Steering Committee, with a focus on planning system design and classifications, alongside strong engagement building capability around the new system. In 2023-24 the five key priorities have included, enabling a culture of continuous improvement, the People Strategy, the HR and Finance Transformation, the Technology Roadmap, and the Hybrid Estates Strategy. Work continues to manage resource and capacity challenges to underpin the new systems. In particular, due to the complexity and scale of the Shared Services Programme, timelines for the implementation of the new HR and Finance platform have shifted and are still subject to final decision. There are tight governance controls in place to ensure the programme team continues to actively manage timeline planning.

European Structural Fund (ESF)

The long-term financial risks at the close of the European Structural Fund Programmes in 2025 include the ability to claim re-imbursements from the EC for the full amount paid out to our partners, and the level of any penalties applied by the EC to the reimbursements. These risks are being managed via the implementation of a staff retention and resilience programme, prioritising the high value/high-risk claims, and maximising the value of all reimbursement claims, while ensuring compliance with the European regulations and cycle of audits.

Strategic Commercial Assets

The Scottish Government manages a portfolio of strategic commercial assets which includes Ferguson Marine (Port Glasgow) Ltd, Glasgow Prestwick Airport and our interests in the Lochaber smelter and hydro. Management responsibility has been concentrated in a single team to provide greater consistency, assurance, and expertise. The team has developed a whole life cycle model and is working to address comments from Audit Scotland about the Scottish Government’s approach to investment and asset management. The Strategic Assets Review Group provides advice on this approach, and this is enabling the development of a centre of expertise that can offer advice and support across Scottish Government. More information on the developments surrounding Ferguson Marine can be found below in the Written Authority update.

Deposit Return Scheme (DRS)

The Scottish Government is committed to creating a more circular economy, preventing litter, and addressing climate change. The Deposit Return Scheme Governance Framework was renewed in April to encompass system wide delivery. As part of this, sector specific working groups were put in place to resolve operational issues, including considering the output from the latest Gateway review. Together with the Ministerial Strategic Assurance Group they provide governance which allows for close working with businesses to allow us to consider how to effectively deliver the DRS in Scotland. While onus for delivering DRS now rests with the UK Government, these governance groups will support work towards the delayed launch in October 2025 at the earliest.

Recovery of the NHS

The impact of the pandemic continued to affect a number of delivery partners, particularly creating long-term pressures across health, social care, and social work sectors. The Covid Recovery Strategy[81], published by Scottish Government in October 2021, prioritises key outcomes for the people of Scotland, bringing together partners to deliver person centred, relational, outcome led services. The Strategy sets out commitments supporting recovery to 2026, through the implementation of improvements and new models of care. There remains persistent workforce capacity challenges across acute, primary and community care services, with delivery of the National Health and Social Care Workforce Strategy an escalated risk. Over 2022-23, NHS services have faced increasing challenges, not least the demand for unscheduled care due to the combined high incidence of flu, Covid-19, and other respiratory infections. This placed exceptional pressure on an already stretched system recovering from the pandemic, while striving to address the ‘backlog’ and meet high levels of demand for planned care.

These pressures operate in a context of extraordinary efforts to nationally support recovery and reduce the significant elective backlog. The level of delayed discharge is higher than pre- Covid levels and the multi-dimensional nature of the pressures, makes for an extremely challenging situation which has resulted in many hospitals being at or near capacity levels. To assist, the Operational Performance and Delivery Board (OPDB) was established in July 2022, along with the National Planning and Performance Oversight Group (NPPOG) to provide assurance in relation to risks, issues, and dependencies within Health Boards.

Several commitments to build new or replacement health facilities are being considered in the context of the current projected health capital budget over the course of this parliament. To develop a more balanced and co-ordinated approach to NHS capital investment, we are working with Health Boards on a whole system planning model, with a focus on the long-term trajectory for health capital funding. As part of the whole system planning model, Health Boards will be asked to plan for different long-term capital funding scenarios. More detail on the sustainability of the NHS can be found in the Performance Report.

Healthcare Improvement Scotland’s (HIS) Safe Delivery of Care inspection process has provided assurance on patient safety and the safe delivery of care throughout periods of service pressures, and targeted the improvement support to be provided by HIS. The vaccination programme remains our most effective tool against Covid and the successful roll out of the Covid vaccination programme alongside a range of anti-viral drugs and other treatments means that we are now able to live alongside Covid. Over 15 million doses of the vaccine have been administered in Scotland since December 2020 and in line with Joint Committee on Vaccination and Immunisation (JCVI) advice the programme is now focussed on those most at risk. Plans are in place for NHS Boards to deliver a surge vaccination programme in the event of a new, more transmissible, or virulent Covid variant. During 2022- 23 there has been a continued focus on the government’s ongoing response to COVID-19 alongside supporting the Scottish and UK Covid Inquiries which both started to request information from the Scottish Government as part of their initial work during this period.

Drug Deaths

The reporting year 2022-23 was the second full year of the National Mission to reduce drug related deaths and improve lives. The mission is set up to deliver against a clear outcomes framework and have a maturing framework of data for public health surveillance, local performance, change management and local and national evaluation. There are appropriate financial and risk management controls in place, as well as an overarching governance structure. Besides the National Oversight Group, which includes regular management reporting and quarterly financial and Project and Programme Management reports to the Minister for Alcohol and Drugs and quarterly updates to the First Minister. Suspected drug deaths for 2022 show a 21% decrease on previous year. More detail on Drugs Deaths can be found in the Performance Report.

NHS Board Financial Position, Controls and Governance

In the 2022-23 provisional outturn the Portfolio has reported a break-even resource position, and minor underspends in ring-fenced capital (£35 million) and financial transactions (£2 million). The Scottish Government has made available additional funding of £82 million to 6 NHS Boards to ensure that all Boards can deliver a balanced financial position in 2022-23. This additional funding will be repayable in future years on Board return to financial balance. The financial trajectories of all Boards over the period 2023 to 2026 are being assessed as part of our work to support delivery of recurring savings and to improve the underlying financial health of the Boards. The pandemic had a major impact on the boards’ ability to make financial savings when coupled with significant inflationary pressures on their cost base. As a result of this, the reported NHS Boards’ underlying financial deficit has increased to an unprecedented level. NHS Board have been developing financial recovery plans setting out medium to longer term plans to deliver financial recovery and sustainability. However, currently the financial performance still remains a high-risk situation for most of the NHS Boards. NHS Boards are subject to the NHS Board Performance Escalation Framework which has a five-stage escalation process. In 2022-23, 6 territorial Health Boards were escalated to Stage 3 or above on the framework. These Boards included NHS Ayrshire and Arran, NHS Borders. NHS Forth Valley, NHS Highland, NHS Tayside, and NHS Lothian.

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

In September 2019, the then Cabinet Secretary for Health and Sport set out that there would be an independent public inquiry to investigate the issues identified at the Royal Hospital for Children and Young People and Department of Clinical Neuroscience (RHCYP/DCN), in Edinburgh, and the Queen Elizabeth University Hospital for Children (QEUH) in Glasgow. Lord Brodie KC was appointed as Chair to the Inquiry in December 2019. The Scottish Hospitals Inquiry commenced in August 2020. It is considering the planning, design, construction, commissioning, and maintenance of both hospitals and will recommend how issues can be avoided in future capital projects. The inquiry will consider organisational culture, including whether staff concerns were appropriately considered and escalated. A set of hearings took place in May 2022 looking into the construction of the RHCYP/DCN, to understand what went wrong with the construction of these buildings, followed later in 2022 with some additional evidence gathering on technical details surrounding ventilation and its impact on infection prevention and control. Further inquiry hearings in relation to RHCYP/DCN took place in April 2023, with more planned in June 2023 in relation to matters relating to the QEUH. The inquiry is expected to run over a number of years, and witnesses are expected to be called once initial evidence has been reviewed.

Counter Fraud Activity

Guidance on the prevention, detection, reporting and handling of fraud is included in the SPFM[82]. 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. The Group meet quarterly, and report work annually to SGAAC as part of the Annual Fraud Report. The membership of the Group is represented by Counter Fraud, Governance and Risk, Propriety and Ethics Group, Finance, Human Resources, Information Security, Scottish Government Legal Directorate, and Internal Audit.

An annual report on fraud within the Scottish Government’s consolidation boundary is prepared annually for SGAAC and includes all types of fraud, error, and other acts of dishonesty such as theft which have been reported to the Scottish Government during the 2022-23 financial year excluding the NHS which is reported by NHS National Services Scotland Counter Fraud Services (NHS NSS CFS). Within the 2022-23 financial year a total of 51 cases of fraud or suspected fraud, 1 case of error, 4 cases of theft and 4 cases of wrongdoing were reported. This number excludes those cases where subsequent investigations confirmed that no actual error, wrongdoing, 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. Audit Scotland published ‘National Fraud Initiative in Scotland 2022[83]’ which covered the data from the 2020-21 exercise aiming to prevent and detect fraud across 132 public bodies in Scotland. To date, the 2022-23 NFI exercise identified a total of 4,283 matches for the Scottish Government, ranging over 19 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 4255, of that number; 504 were closed due to already being known and 757 were closed after finding no frauds or errors were detected. A further 2,994 matches were closed as they were not selected for investigation due to their being assessed as low risk.

The Head of Counter Fraud Profession has established the 2022-2025 Counter Fraud Plan, setting out the strategic objectives for Scottish Government over the next three years and high-level strategic fraud risk profiling for Scottish Government was progressed within all DG areas leading to in-depth Fraud Risk Assessments in areas of highest fraud risk. Some of the areas to be targeted included developing a Counter Fraud and Corruption Strategy and Policy for Scottish Government, analysis and evaluation of the Counter Fraud Maturity across SG, SG Risk Profiling, promoting a robust Fraud Risk Control Environment, and support arrangements for further reporting and measurement of Fraud and error loss.

In addition to the Counter Fraud Activity above, there is also a whistleblowing policy available to all staff. The policy covers the types of concerns that can be raised, general processes and support that can be accessed. To ensure that employees who raise a concern feel safe from repercussion, the Scottish Government maintain their commitment to confidentiality and anonymity by enabling employees to raise concerns via several routes, which includes the organisation’s counter fraud processes.

Fraud estimates and assurances in business support schemes administered during COVID-19

The Scottish Government undertook a range of unique measures from 2021 through to 2022 to mitigate the risk of fraud within business support schemes. Lessons learned from responding to this risk led to the general introduction of a dedicated grants fraud risk assessment tool to assess and respond to fraud risk at the design phase of grants, and a more mature fraud risk management environment for grants moving forward. Estimated fraud within Covid business support grants in 2021 was found to be low at 1-2% (£16 million - £32 million), and through 2022 the Scottish Government sought to improve its estimate in response to Audit Scotland’s recommendations to establish better mechanisms for capturing and assessing fraud losses. Whilst gathering further broad-spectrum data on fraud within business support concluded in 2022, the Scottish Government is now seeking to set up a data matching exercise with HM Revenue and Customs for business support grants, through use of the powers within the Digital Economy Act. Whilst in the early stages, this work will seek to establish until now, undetected fraud within business support grants and provide more robust evidence to support fraud estimates, improving the Scottish Government’s overall understanding of money lost to fraud within business support schemes.


The Office of the Chief Economic Adviser has undertaken evaluation of COVID-19 business support schemes available to businesses in Scotland, including a report[84] published on 1 June 2022 which assessed the outputs and indicative outcomes of the COVID-19 business support measures in Scotland up to summer 2021. The report drew on scheme management information data, survey data, business intelligence, secondary sources, and modelling work to understand how many businesses have been supported and the extent to which the measures have helped businesses survive through the immediate crisis.

The report found that the support received from the Scottish and UK Governments provided lifeline support for businesses in Scotland, helping most beneficiaries survive through the immediate crisis. Over 70% of businesses in Scotland who received support reported that it had helped them continue trading. While the package of business support did not, and was not intended to, provide full compensation for losses experienced, the report found that Scottish Government support filled many gaps in UK Government support. A higher proportion (82%) of businesses that received Scottish Government support – including those who also received support from the UK Government – felt it helped them continue trading compared to those that received UK Government support only (65%). This suggests Scottish Government support had an additional impact, over and above the impact of the UK Government schemes.

Cyber Security

Cyber resilience is a critical enabler as we continue towards economic and societal recovery. The landscape has changed significantly over the last few years. Whilst organisations have been focused on rapidly adapting new and hybrid working arrangements, cyber criminals have been evolving their capabilities and methods in parallel.

As demonstrated very visibly by the cyber-attack on the Scottish Environment Protection Agency at the end of 2020, the cyber threat is very real, growing and potentially devastating. In May 2021, Audit Scotland published a blog[85] which highlighted the risk and potential impact of cybercrime in the public sector in Scotland. Phishing continues to be the most common form of attack as a springboard for more sophisticated ransomware attacks. The Scottish Government reviews public sector cyber resilience annually and is improving its strategic capability and capacity to respond to the escalating level of threat. Cyber security and resilience will require attention and focus in 2023-24.

Proportionate cyber protection is in place, including a Cyber Incident Response Plan tested through exercise. 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 Protection

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. A Deputy SIRO now supports the SIRO.

Ninety-nine data security incidents were recorded internally and reported in the DG Assurance reports covering the 2022-23 period for the Core Departments. One advisory report was made to the Information Commissioner’s Office (ICO) in this period and no enforcement action was taken by the Commissioner. All internally reported incidents were assessed, and actions taken where necessary to minimise impact and recurrence. The number of incidents is similar to that recorded last year with most being minor (misdirected e-mails or redaction errors).

The ICO undertook a consensual audit of Scottish Government in 2022-23 and provided a high / reasonable assurance opinion. Data protection controls are in place and audit improvements are being tracked by the Information Governance Board.

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. Staff are trained in data protection and engagement with ICO is frequent and cooperative.

Written Authority

The Principal Accountable Officer for the Scottish Administration (the Permanent Secretary) and Accountable Officers designated by them for parts of the Scottish Administration are under a statutory duty to obtain written authority from the relevant Minister where they consider that any action, they are required to take would be inconsistent with their responsibilities. These responsibilities include ensuring financial propriety and regularity and ensuring that relevant resources are used economically, efficiently, and effectively (i.e., value for money). A value for money written authority need only be sought in relation to the implementation of policy. Accountable Officers are not answerable to the Parliament in respect of policy decisions. Policy is the responsibility of Ministers.

A written authority was sought by the Portfolio Accountable Officer for DG Economy under section 15(8) of Public Finance and Accountability (Scotland) Act 2000 in relation to the contract for the delivery of vessels 801 and 802 awarded by CMAL (Caledonian Maritime Assets Ltd) to Ferguson Marine Engineering Ltd (FMEL) in August 2015, and later brought into public ownership in August 2019 as Ferguson Marine Port Glasgow Limited (FMPG).

During 2022-23 the projected increase in costs for the delivery of the two ferries was subject to extensive due diligence supported by external commercial advisors. This concluded that the Accountable Officer tests in relation to vessel 801 had been met. However, it also concluded that although the principles of regularity and propriety of completing vessel 802 in line with the existing contract were met, the value for money case, confirming resources are used economically, efficiently, and effectively, was not. As a result, under section 15(8)(a) of the PFA Act, the Portfolio Accountable Officer sought to obtain written authority from Cabinet Secretary for Wellbeing Economy, Fair Work and Energy. This written authority was provided on the 14th May 2023 acknowledging the concerns over the value for money case, but also recognising a wider set of considerations relating to policy objectives, impacting on people, communities and national resilience. The provision of the authority also stipulated the need for continuing engagement with FMPG to challenge and reduce costs wherever possible. Risks relating to both the future of the yard and the delivery of the ferries are monitored as part of the Scottish Government risk management process with additional oversight being provided by the Strategic Assets Review Group. Further, the Scottish Government has instituted a series of regular meetings with the Chief Executive Officer (CEO) of FMPG and a new Chair was appointed during the year, which strengthened non-executive input.

Remuneration and Staff Report

The information in the Remuneration and Staff Report relating to the remuneration and pension benefits of ministers, law officers, senior management and Non-Executive Directors, fair pay disclosures, staff numbers, staff costs, analysis by pay bands and the number of exit packages have been audited by external auditors.


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.

Director-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[86] provides further information about their work.

The Non-Executive Directors provide advice, support and challenge to the Permanent Secretary as Principal Accountable Officer (PAO) and Director Generals as Accountable Officers (AO). Non-Executive Directors of the Scottish Government are appointed by the Permanent Secretary for an initial period of three years with an annual review.

Ronnie Hinds attended his final Corporate Board in March 2023 and ended his second and final term of appointment as a Non-Executive Director in June 2023. David Martin, who was appointed as a Non-Executive Director in March 2022, joined the Corporate Board for the first time in June 2023 and took over the Lead Non-Executive Director role from Ronnie Hinds. Neil Wooding joined as a Non-Executive Director in April 2023 for an initial term of three years.

Annie Gunner Logan accepted an extension to her appointment for a period of 23 months in February 2022. She stepped down as member of the Corporate Board in December 2022, although will remain a Non-Executive Director until the end of December 2023. Linda McKay stepped down as a member of the Corporate Board on 6 December 2022 and concluded her appointment as a Non-Executive Director on 31 December 2022. Ben McKendrick ended his first term of appointment in June 2023 to take up a full-time role with the Scottish Parliament.

The Terms and Conditions of Non-Executive Directors set out that the appointments may be terminated at any time by agreement, or with three months’ notice, provided by either party.

Remuneration Policy

The remuneration of senior civil servants (SCS) is set in accordance with the Civil Service Management Code[87] 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[88].

SCS pay is reserved to the UK Government and decisions regarding pay levels and pay awards are in line with the UK SCS pay and performance framework and rules. Scottish Ministers provide governance oversight to support alignment with the Scottish Public Sector Pay Policy.

The SCS pay ranges with effect from 1 April 2022:

SCS Pay Steps Deputy Director 1 Deputy Director 1A Director Director General
Target Rate-4 £97,849 £125,057
Target Rate-3 £99,806 £127,558
Target Rate-2 £81,893 £81,893 £101,802 £130,109
Target Rate-1 £83,531 £83,531 £103,838 £132,711
Target Rate £85,201 £85,201 £105,915 £135,366
Target Rate +1 (DD1A) £86,400

Six members of the Corporate Board received non-consolidated payments in 2022-23 as part of the 2022 SCS pay award.

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


The remuneration of the Cabinet Ministers who served over the year to 31 March 2023 and members of the Scottish Government Corporate Board is noted below.

Ministers (audited)

The remuneration of the First Minister and the Cabinet Ministers during the year to 31 March 2023 is shown in the table below. Ministerial salaries included in the table below are additional to the salaries (2022-23: £66,662, 2021-22: £64,470) and entitlements as MSPs which are borne by the Scottish Parliament. The full year salary rate for the First Minister is £96,567 (2021-22: £93,391) and for all other Cabinet Ministers is £50,097 (2021-22: £48,449).

Salary 2022- 23 £ Salary 2021- 22 £ Pension Benefits *2022- 23 £ Pension Benefits *2021- 22 £ Total Remuneration 2022- 23 £ Total Remuneration 2021- 22 £
Humza Yousaf, MSP (1) 50,676 48,449 20,121 18,561 70,797 67,010
Nicola Sturgeon, MSP (2) 97,666 94,056 38,272 34,930 135,938 128,986
John Swinney, MSP (3) 49,828 48,449 20,311 17,270 70,139 65,719
Michael Matheson, MSP 50,097 48,449 20,075 17,858 70,172 66,307
Shirley-Anne Somerville, MSP 50,097 48,449 19,812 18,561 69,879 67,010
Kate Forbes, MSP (4) 49,693 48,449 19,585 18,760 69,278 67,209
Keith Brown, MSP (5) 49,828 42,067 19,410 16,346 69,238 58,413
Mairi Gougeon, MSP (6) 50,097 42,067 19,601 16,346 69,698 58,413
Angus Robertson, MSP (6) 50,097 42,067 19,601 16,346 69,698 58,413
Shona Robison, MSP (6) 50,097 42,067 19,601 16,346 69,698 58,413
Roseanna Cunningham, MSP (7) - 6,512 - 1,928 - 8,440
Fiona Hyslop, MSP (7) - 6,512 - 912 - 7,424
Fergus Ewing, MSP (7) - 6,512 - 1,947 - 8,459
Michael Russell, MSP (7) - 6,512 - 2,201 - 8,713
Jeane Freeman, MSP (7) - 6,512 - 2,594 - 9,106
Aileen Campbell, MSP (8) - 5,340 - 2,330 - 7,670
Neil Gray, MSP (9) 404 - 181 - 585 -
Angela Constance, MSP (9) 404 - 140 - 544 -
Jenny Gilruth, MSP (9) 404 - 161 - 565 -
Mairi McAllan, MSP (9) 404 - 161 - 565 -

* 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) Humza Yousaf was appointed as First Minister on 29th March 2023. The salary and total remuneration for 2022-23 includes a benefit-in-kind of £79 arising from the provision of accommodation at Bute House (2021-22: £0).

(2) Nicola Sturgeon stepped down as First Minister on 28th March 2023. The salary and total remuneration for 2022-23 includes a benefit-in-kind of £1,878 arising from the provision of accommodation at Bute House (2021-22: £665). Pension figures for 2021-22 have been revised due to previous incorrect aggregation of Cabinet and First Minister salaries on which the pension figures were based. As there is a significant difference in salary between these roles, pension is now calculated separately according to policy.

(3) John Swinney stepped down as Cabinet Minister as of 29th March 2023.

(4) Kate Forbes stepped down as Cabinet Minister on 28th March 2023.

(5) Keith Brown was appointed as Cabinet Minister on 20th May 2021 and stepped down on 29th March 2023.

(6) Mairi Gougeon, Angus Robertson and Shona Robison were appointed as Cabinet Ministers on 20th May 2021.

(7) Roseanna Cunningham, Fiona Hyslop, Fergus Ewing, Michael Russell and Jeane Freeman stepped down as Cabinet Ministers as of 19th May 2021.

(8) Aileen Campbell stepped down as Cabinet Minister as of 11th May 2021.

(9) Neil Gray, Angela Constance, Jenny Gilruth and Mairi McAllen were appointed as Cabinet Ministers on 29th March 2023.

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 repurposed for use by the Scottish Government. The disclosure reflects the salary awarded under the Scottish Parliamentary Salaries Scheme.

Law Officers (audited)

The remuneration, comprising of salary and pension benefits, of the serving Law Officers for the year to 31 March 2023 is shown below:

Salary 2022- 23 £'000 Salary 2021- 22 £'000 Pension Benefits *2022- 23 £'000 Pension Benefits *2021- 22 £'000 Total Remun- eration 2022-23 £’000 Total Remun- eration 2021-22 £’000
Dorothy Bain KC (1) 132 90 52 39 184 129
Ruth Charteris KC (1) 114 77 50 38 164 115
James Wolffe KC (2) - 60 - 30 - 90
Alison Di Rollo KC (2) - 51 - 8 - 59

* 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) Dorothy Bain and Ruth Charteris were appointed on 22 June 2021 as Lord Advocate and Solicitor General, respectively.

(2) James Wolffe and Alison Di Rollo served until 21 June 2021 as Lord Advocate and Solicitor General, respectively.

No Law Officers received benefits-in-kind.

Senior Management Team (audited)

The remuneration of the Permanent Secretary and members of the Scottish Government Corporate Board for the year to 31 March 2023 were as follows:

Salary 2022- 23 £'000 Salary 2021- 22 £'000 Pension Benefits *2022- 23 £'000 Pension Benefits *2021- 22 £'000 Total Remun- eration 2022-23 £'000 Total Remun- eration 2021-22 £'000
Leslie Evans (1) - 225-230 - 0 - 225-230
Lesley Fraser (2) 130-135 125-130 0 29 130-135 150-155
Liz Ditchburn (3) - 110-115 - 4 - 115-120
Paul Johnston (4) 140-145 130-135 8 34 150-155 165-170
Ken Thomson 135-140 130-135 0 9 135-140 140-145
Alyson Stafford CBE 150-155 145-150 - - 150-155 145-150
Nicky Richards 105-110 100-105 3 30 110-115 130-135
Ruaraidh Macniven 100-105 95-100 8 30 105-110 125-130
Katrina Williams (5) - 15-20 - - - 15-20
Elinor Mitchell (6) 30-35 45-50 17 7 50-55 50-55
Caroline Lamb 195-200 185-190 74 73 270-275 260-265
Joe Griffin 125-130 120-125 10 142 135-140 260-265
Jackie McAllister 100-105 95-100 0 119 100-105 215-220
Madhu Malhotra (7) - 75-80 - - - 75-80
John-Paul Marks (8) 170-175 40-45 87 23 260-265 65-70
Andy Bruce 95-100 95-100 15 79 110-115 170-175
Roy Brannen (9) 125-130 45-50 65 58 190-195 100-105
Louise Macdonald OBE (10) 115-200 - 46 - 160-165 -
Gregor Irwin (11) 0-5 - 2 - 5-10 -

* 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. The final salary pension of a person in employment is calculated by reference to their pay and length of service. The pension will increase from one year to the next by virtue of any pay rise during the year. Where there is no or a small pay rise, the increase in pension due to extra service may not be sufficient to offset the inflation increase – that is, in real terms, the pension value can reduce from one year to the next. Where pension benefit would be a negative value, it is instead expressed as zero.

(1) Leslie Evans stepped down from the Corporate Board on 31 December 2021 and formally departed the Scottish Government on 31 March 2022. Her salary and total remuneration for 2021-22 includes untaken annual leave and an additional payment made to compensate for the three-month waiting period which is required of permanent secretaries upon leaving the Civil Service. Such payments are permitted under ACOBA's Business Appointment Rules, subject to consultation with Cabinet Office. The full year salary band in 2021-22 was £170- 175k.

The factors used to calculate the pension benefit are such that the value of the pension that could have been taken at normal pension age decreases as the member gets older. Instead of the pension benefit showing as a negative value in 2021-22, it is expressed as zero.

(2) Lesley Fraser’s pension benefit for 2021-22 has been restated to correct an error in the published figure.

(3) Liz Ditchburn was on annual leave from November 2021 and formally retired on 31 January 2022. The full year salary band in 2021-22 was £130-135k.

(4) Paul Johnston stepped down from the Corporate Board on 17 March 2023. The full year salary band in 2022-23 was £135-140k. His salary and total remuneration for 2022-23 includes untaken annual leave and backdated salary payment as part of the 2022 pay award across the Scottish Government.

(5) 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, employer NI contributions and employer pension costs for a secondment equivalent to 0.5 full time.

(6) Elinor Mitchell was the interim Director General of Economy between 16 November 2021 and 2 May 2022. The full year salary band was £120-125k in both 2021-22 and 2022-23. Her salary and total remuneration for 2022-23 includes untaken annual leave and backdated salary payment as part of the 2022 pay award across the Scottish Government.

(7) Madhu Malhotra was the Director of Equality, Inclusion and Human Rights between 14 December 2020 and 31 December 2021. The full year salary band in 2021-22 was £95-100k. As Ms Malhotra left the pension scheme with less than two years of qualifying service, there are no pension benefits to disclose for 2021-22.

(8) John-Paul Marks was appointed as the new Permanent Secretary and joined the Corporate Board on 1 January 2022. The full year salary band in 2021-22 was £165-170k.

(9) Roy Brannen joined the Corporate Board on 16 November 2021 as Director General of Net Zero. The full year salary band in 2021-22 was £120-125k.

(10) Louise Macdonald joined the Corporate Board as the interim DG Economy on 2 May 2022 and was appointed as DG Communities on 20 March 2023. The full year salary band in 2022-23 was £125-130k.

(11) Gregor Irwin was appointed as DG Economy as of 20 March 2023. The full year salary band in 2022-23 was £135-140k.

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

Fair pay disclosures (audited)

In accordance with the Government Financial Reporting Manual (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, 25th and 75th percentile remuneration of the organisation's workforce. The median and percentile calculations include directly employed staff paid through the Scottish Government Core payroll.

It covers both permanent staff and those on fixed term contracts. Although the FReM requires agency and other temporary employees covering staff vacancies to be included in the below disclosures, annualised salaries to be determined for calculations are currently not set against Scottish Government grades or are paid on a daily rate basis. Work will be taken forward in 2024 with regards this additional reporting.

The ratios are calculated as the mid-point of the highest band divided by the total remunerations.

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, 25th and 75th percentile pay figure occasionally changing markedly from one year to the next. The pay ratios are consistent with the pay, reward and progression policies for the Scottish Government’s employees taken as a whole.

Minimum Total Remuneration:

  • 2022-23 (£'000): 22
  • 2021-22 (£'000): 21

Maximum Total Remuneration:

  • 2022-23 (£'000):196
  • 2021-22 (£'000):190

Band of Highest Paid member of the Corporate Board Total Remuneration:

  • 2022-23 (£'000): 195-200
  • 2021-22 (£'000): 185-190

The total remuneration of the highest paid member of the Corporate Board increased by 5.3% between 2021-22 and 2022-23, while the total remuneration of Scottish Government employees taken as a whole increased by 2.9% in the same period. The difference is due to recruitment into lower grades and/or staff being recruited internally or joining a grade at the minimum pay step.

The total pay and benefits and pay ratios to the highest paid Director are shown in the table below.

2022- 23 2021- 22 Movement
25th percentile remuneration £33,120 £31,542 5.0%
Ratio to highest paid Director 6.0:1 5.9:1
Median remuneration £42,855 £39,659 8.1%
Ratio to highest paid Director 4.6:1 4.7:1
75th Percentile remuneration £57,355 £53,476 7.3%
Ratio to highest paid Director 3.4:1 3.5:1

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 (audited)


Fees are paid on a quarterly basis for their position as Scottish Government Non-Executive Director. The Scottish Government is treated as a Tier 1 organisation with reference to the Public Sector Pay Policy which describes pay arrangements for Chairs, Board Members and Public Appointments in terms of a daily fee, in a tiered system. Tier 1 reflects the importance, size and responsibilities of the Scottish Government within the Scottish public sector.

There is a differentiation in remuneration levels between:

  • The Chair of SGAAC, who undertakes additional responsibilities compared with members of the Committee and
  • The Lead Non-Executive Director, who undertakes additional supporting functions for the Principal Accountable Officer.


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 Director 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 were members of the Scottish Government Corporate Board or attended the Corporate Board in 2022-23 were as follows:

2022- 23 Fees £’000 2021- 22 Fees £’000
Linda McKay (1) 10-15 10-15
Ronnie Hinds 15-20 15-20
Hugh McKay (2) - 10-15
Annie Gunner Logan 10-15 10-15
Jim Robertson 15-20 10-15
Jayne Scott 10-15 10-15
Belinda Oldfield (3) 5-10 -
Nichola Clyde (4) 0-5 10-15
Ben McKendrick 10-15 10-15
Neil Richardson 10-15 10-15
Fiona Ross 10-15 10-15
David Martin (5) 10-15 0-5
Jenny Stewart (5) 10-15 0-5

(1) Linda McKay concluded her Non-Executive Director appointment on 31 December 2022. The full year fee was £10-15k.

(2) Hugh Mackay concluded his Non-Executive Director appointment on 31 January 2022. The full year fee in 2021-22 was £15-20k.

(3) Belinda Oldfield was appointed as Non-Executive Director on 5 September 2022. The full year fee was £10-15k.

(4) Nichola Clyde sadly passed away in June 2022. The full year fee was £10-15k.

(5) David Martin and Jenny Stewart were appointed as Non-Executive Directors on 28 March 2022. The full year fee for both was £10-15k.

Nichola Clyde, Ben McKendrick, Neil Richardson, Fiona Ross, David Martin and Jenny Stewart were not members of the Corporate Board, but they were invited to attend Corporate Board meetings in 2022-23.

Pension Benefits

Ministers (audited)

The pension entitlements of the Cabinet Team for the year to 31 March 2023 are shown below:

Accrued pension at age 65 as at 31-Mar- 23 £'000 Real increase in pension at age 65 £'000 CETV at 31-Mar-23 £'000 CETV at 31-Mar-22 £'000 Real Increase in CETV £'000
Humza Yousaf, MSP/FM 5-10 0-2.5 64 48 9
Nicola Sturgeon, FM (1) 25-30 0-2.5 434 377 35
John Swinney, MSP 15-20 0-2.5 332 294 24
Michael Matheson, MSP 10-15 0-2.5 157 131 17
Shirley-Anne Somerville, MSP 5-10 0-2.5 80 60 13
Kate Forbes, MSP 0-5 0-2.5 38 24 7
Keith Brown, MSP 0-5 0-2.5 43 19 18
Mairi Gougeon, MSP 0-5 0-2.5 25 11 8
Angus Robertson, MSP 0-5 0-2.5 36 16 14
Shona Robison, MSP 0-5 0-2.5 38 17 16
Neil Gray, MSP 0-5 0-2.5 0 0 0
Angela Constance, MSP 0-5 0-2.5 0 0 0
Jenny Gilruth, MSP 0-5 0-2.5 0 0 0
Mairi McAllan, MSP 0-5 0-2.5 0 0 0

(1) Nicola Sturgeon’s Cash Equivalent Transfer Value (CETV) at 31 March 2022 has been revised due to previous incorrect aggregation of Cabinet and First Minister salaries on which the pension figures were based. As there is a significant difference in salary between these roles, pension is now calculated separately according to policy.

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

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, 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.[89]

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.

Law Officers (audited)

The pension entitlements of the Law Officers are shown below:

  • Dorothy Bain KC
    • Accrued pension at pension age as at 31-Mar-23 (£’000): 5-10
    • Real increase in pension at pension age (£’000): 2.5-5
    • CETV at 31-Mar-23 (£’00): 104
    • CETV at 31-Mar- 22 (£’000): 43
    • Real Increase in CETV (£’000): 45
  • Ruth Charteris KC
    • Accrued pension at pension age as at 31-Mar-23 (£’000): 5-10
    • Real increase in pension at pension age (£’000): 2.5-5
    • CETV at 31-Mar-23 (£’00): 72
    • CETV at 31-Mar- 22 (£’000): 30
    • Real Increase in CETV (£’000): 34

Senior Management Team (audited)

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-23 £'000 Real increase in pension and related lump sum at pension age £'000 CETV at 31- Mar- 23 £'000 CETV at 31- Mar- 22 £'000 Real Increase in CETV £'000 Employer contribution to partnership pension account £'000
Paul Johnston 45-50 plus a lump sum of 75-80 0-2.5 plus a lump sum of 0 729 664 -9 -
Alyson Stafford CBE (1) - - - - - 22
Ken Thomson 75-80 0 1,570 1,477 -63 -
Nicky Richards 45-50 plus a lump sum of 15-20 0-2.5 plus a lump sum of 0 735 670 -11 -
Lesley Fraser 55-60 plus a lump sum of 125-130 0-2.5 plus a lump sum of 0 1,215 1,100 -25 -
Ruaraidh Macniven 40-45 plus a lump sum of 65-70 0-2.5 plus a lump sum of 0 653 590 -6 -
Elinor Mitchell 55-60 plus a lump sum of 125-130 0-2.5 plus a lump sum of 0-2.5 1,169 1,144 15 -
Caroline Lamb 10-15 2.5-5 150 79 52 -
Joe Griffin 45-50 plus a lump sum of 85-90 0-2.5 plus a lump sum 0 803 724 -7 -
Jackie McAllister 50-55 0-2.5 745 676 -13 -
John-Paul Marks (2) 55-60 5-7.5 683 571 40 -
Andy Bruce 30-35 plus a lump sum of 50-55 0-2.5 plus a lump sum of 0 480 429 -1 -
Roy Brannen 55-60 plus a lump sum of 115-120 2.5-5 plus a lump sum of 0-2.5 1,175 1,006 47 -
Louise MacDonald OBE 0-5 2.5-5 36 0 28 -
Gregor Irwin 0-5 0-2.5 1 0 1 -

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

(2) John-Paul Marks’ CETV at 31 March 2022 has been restated due to a miscalculation in the pension for 2021-22.

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, 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 in 2.32%. In all cases members may opt to give up (commute) pension for a lump sum up to the limits set by the Finance Act 2004.

The partnership pension account is 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 2022-23 Scottish Government employers’ contributions of £169m (2021:22: £131m) 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 2022-23 to be paid when the member retires, and not the benefits paid during this period to existing pensioners.

For 2022-23 the value of Scottish Government employers’ contributions relating to the partnership pension account was £869k (2021-22: £795k). 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[90].

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 UK 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 continued in service from 1 April 2022 onwards do so as members of alpha. Classic, classic plus, premium and nuvos were closed in relation to service after 31 March 2022.

The McCloud 2015 Remedy project formally commenced in April 2021 to address the discrimination deemed to have affected younger members when the reformed schemes were introduced in 2015. The decision announced in February 2021 was that a Deferred Choice Underpin would be introduced allowing members to choose which scheme they wished to be part of for the remedy period which spans from 1 April 2015 to 31 March 2022. Active and deferred members will have the opportunity to make that choice on retirement while retired members will have their award assessed separately for any detriment and they can also choose which scheme benefits they wish to take with their pension payment being retrospectively amended.

A public consultation ran from 6 March 2023 to 14 May 2023 for the detailed changes needed to carry out the McCloud remedy for affected Civil Service Pension Scheme members. These changes will be made in the proposed scheme regulations which will allow the scheme manager to put right any unlawful treatment that happened, whilst providing members with a choice about their pension benefits for the remedy period.

Further information regarding this discrimination, the latest update on the legislative process and scheme valuations can be found on the Civil Service Pensions website[91].

People and Culture

Staff numbers and related costs (audited)

Staff numbers (Full time equivalent) No. of Special Advisers Perman- ent Staff Other 2022- 23 Total Restated 2021-22 Total
Administration 18 1,727 125 1,870 1,565
Constitution, External Affairs & Culture 160 25 185 163
Deputy First Minister & Covid Recovery 312 27 339 269
Education & Skills 1,477 190 1,667 1,581
Finance & Economy 1,576 159 1,735 1,846
Health & Social Care 156,330 7,375 163,705 161,789
Justice & Veterans 4,548 19 4,567 4,597
Net Zero, Energy & Transport 1,191 115 1,306 1,154*
Rural Affairs & Islands 1,687 72 1,759 1,724
Social Justice, Housing & Local Government 4,743 247 4,990 3,278
Crown Office and Procurator Fiscal Service 2,249 77 2,326 2,254
Scottish Government Corporate Board 13 0 13 14
Total 18 176,013 8,431 184,462 180,234
Staff costs 2022- 23 £'m 2021- 22 £'m
Wages and Salaries (Permanent staff) 7,951 7,467
Social security costs (Permanent staff) 889 779
Other pension costs (Permanent staff) 1,519 1,396
Sub-total 10,359 9,642
Non-Permanent Staff (including Agency, temporary, contract staff and inward secondments) 746 592
Total 11,105 10,234
Less recoveries in respect of outward secondments (180) (173)
Total net costs 10,925 10,061
Number and cost of exit packages
Exit Packages Cost Band No of compulsory redundancies agreed 2022-23 No of other departures agreed 2022-23 Cost of exit packages 2022-23 £000 No of departures agreed 2021-22 Cost of exit packages 2021-22 £000
<£10,000 15 235 1,038 14 66
£10,000 to £25,000 - 16 300 9 132
£25,000 to £50,000 - 23 817 18 650
£50,000 to £100,000 - 63 4,636 44 3,071
£100,000 to £150,000 - 1 131 2 226
£150,000 to £200,000 - 1 158 3 489
£200,000 to £250,000 - - - - -
£250,000+ - - - - -
Total number / cost of exit packages 15 339 7,080 90 4,634

There were 15 compulsory redundancies in 2022-23 (2021-22: 0)

* Total staff number for Net Zero, Energy and Transport has been restated for 2021-22.

Diversity and Inclusion

In Scottish Government our ambition is to be a world-leading, diverse and inclusive 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 where staff are valued for their unique contributions in an environment that is respectful, supportive and free of discrimination, harassment or bullying.

During 2022- 2023 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 have focused on embedding equality into our hybrid working arrangements and our practices and policies for employees. We are taking a person-centred approach and adapting our practices to support the needs of our increasingly diverse workforce. At 85.6% positive, our inclusion and fair treatment score in our 2022 People Survey is still one of our highest on record. And it puts the Scottish Government among the highest performing departments across the UK Civil Service.

The Scottish Government published its Recruitment and Retention Action Plans for Disability (2019), Race (2021), and Socio-Economic Diversity (2023). Our Race and Disability Plans were reviewed in 2022 to identify game changer actions within each plan to improve diversity and inclusion. Gamechanger actions were those we anticipated making the greatest positive impact. From the original 100+ actions across both plans, we identified 26 gamechanger actions for Disability and 22 for Race. Our Socio-Economic Diversity Action Plan, published this year, was developed with gamechanger actions in mind from the offset and includes 23 game changer actions. Ongoing delivery of these game changer actions across all three plans, and monitoring their impact, is overseen by a Diversity and Inclusion Governance Group. Its members include our Executive Team Allies, Senior Civil Service (SCS) Champions, Senior Corporate Colleagues and representatives from our Diversity Staff Network Committees, external bodies and our Unions. It is chaired by the Executive Team Champion for Diversity and Inclusion. As we were on schedule to complete all our gamechanger actions across our Race and Disability Plans, we spent time looking even more closely at the impact they had. Across the two plans for Race and Disability there were eight separate outcomes or priorities which could be summarised under four themes: Recruitment, retention and progression; Culture; Systems, policies and practices; and Leadership. We found that across these four different themes we had delivered high numbers of actions. However, this was not having the degree of positive impact we expected. Our review, which included engaging with staff diversity network representatives and action owners in the plan, also highlighted that the actions which had made the biggest impact were ones which were delivered to a broader range of employees. These actions include our Employee Passport, our Mutual Mentoring scheme and our Developing Diverse Leaders scheme.

Learning lessons from what has and has not worked, we are now evolving our approach to Diversity and Inclusion. Our approach will concentrate our collective effort on a smaller number of topics at one time. We will take a broader, multi equality strand approach to our actions and we will supplement these with specific actions for particular groups where we know it is needed. This will be delivered through a single Diversity and Inclusion Strategy which we plan to publish in Winter 2023. The strategy will be impact focussed, data driven, and intersectional.

Our Equality Impact Assessment for the Diversity and Inclusion strategy maps the entire employee journey from application to retirement. We have combined qualitative and quantitative data sources in assessing any difference in experience by protected characteristics. This includes our new Employee Insights Series which is qualitative research undertaken with over 100 staff from different backgrounds in focus groups, surveys and interviews. Working in partnership with our staff networks the research brought together groups of staff by protected characteristic and asked them to describe their experiences of working in Scottish Government in their own way. From this we then broke those experiences into topics across the employee journey and created a qualitative data bank.

Opportunities for learning for staff, to build understanding of valuing diversity and what it means in practice, and how to take action to build an inclusive culture, is at the heart of our Diversity and Inclusion work. We have a distinct Diversity and Inclusion curriculum. This has been developed in two phases. The first phase provides mandatory learning to provide foundational understanding and is supplemented with a digital curriculum with access to over 100 e-learning resources covering the full range of protected characteristics. The second phase focuses on tailored learning for staff in specific roles. It also includes live learning on topics where there was greatest staff self-assessment need. Over the past 12 months this has included live Anti Racism training, Disability Equality and the Social Model of Disability Training and Trans Awareness and LGBTI+ Allyship. We have recently released the first of our animated story telling series. This aims to give a greater voice to the lived experience of staff without them having to constantly retell their story. Our Diversity and Inclusion curriculum operates as an agile project, meaning we can adapt quickly to concentrate on developing resource where it is needed most.

We continue to build on improvements to mainstream and embed Diversity and Inclusion. Following a successful project to improve workplace adjustments using the Social Model of Disability, we established a dedicated workplace adjustments service. We also created an Employee Passport in co-production with staff networks. This provides a framework to enable staff to discuss any circumstances which may be impacting them at work and seeks to remove any barriers that are stopping them perform at their best. The Employee Passport is our most popular inclusion initiative. It is used to cover a whole range of circumstances such as religious observance, disability, caring responsibility or volunteering. It is the first of its kind in the UK Civil Service and believed to be the first of its kind in Scotland.

See our Equality Outcomes and Mainstreaming Report[92] which was published in April 2023, which contains a section on The Scottish Government As An Employer. This provides a comprehensive assessment of our progress towards mainstreaming equality and delivering on our two employer equality outcomes.

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 2022 was 73% (2021: 75%). Further information, including in regard to the consolidated agencies, can be found via our People Survey[93].

Staff turnover based on permanent staff average headcount in the Core Scottish Government for 2022-23 was 4.44% (2021-22: 3.86%).

In 2022-23, an average of 8.05 working days (2021-22: 7.31) 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 2023 was 6.20% of total contracted hours (2021-22: 5.69% of total contracted hours). Sickness absence rates for agencies and other consolidated bodies can be found in their individually published annual accounts.

During 2022-23 there were 56,448 male staff, 181,599 female staff and 127 who prefer not to say employed by the Scottish Government (2021-22: 57,182 male, 172,750 female and 152 prefer not to say staff). Within these totals were 4,338 male and 3,781 female Senior Civil Servants or equivalent (2021-22: 2,526 male and 2,154 female Senior Civil Servants). These staff numbers 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[94].

Number of Senior Civil Servants and equivalent by pay band (audited):
Pay band 2022-23 headcount 2021-22 headcount
Deputy director or equivalent 3,973 3,336
Director or equivalent 2,152 2,073
Director General or equivalent 4,792 4,270
Permanent Secretary 1 2*
Total 10,918** 9,681**

* As noted in the section on the Senior Management team above, there was a change in Permanent Secretary during the year 2021-22.

** The difference between total male and female Senior Civil Servants and the total number of Senior Civil Servants by pay band is due to the different pay ranges for Senior Management of the Core Scottish Government and NHS Scotland. These numbers include senior clinical staff in NHS.

Facility time used by recognised trade union representatives of the Scottish Government and its non-consolidated entities has been reported[95] for the period between 1 April 2022 and 31 March 2023 as follows:

  • Number of employees who were trade union officials during the relevant period: 131
  • Full time equivalent employee number: 129
  • Total cost of facility time: £622,523
  • Total pay bill spent on paying employees who were relevant trade union officials for facility time: £847,472,632
  • Facility time as a percentage of total pay bill*: 0.07%
  • Time spent on paid Trade Union activities as a percentage of total paid facility time**: 34.91%

* 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% 15
1 – 50% 110
51 – 99% 1
100% 5

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 2023 was 4,536 (2021-22: 3,779).

Losses, Gifts and Special Payments

The following losses and special payments have been audited by the Scottish Government’s auditors. Losses and special payments are in the nature of transactions which Parliament cannot be supposed to have contemplated when approving the annual Budget Act and subsequent Amendment Orders. The Scottish Public Finance Manual requires a formal approval procedure to regularise such transactions and their notation in the annual accounts.

Portfolio 2022-23 No of Cases 2022-23 £m Restated 2021-22 £m
Education & Skills (1) 5 0.20 0.31
Finance & Economy 430 1.85 2.51
Health & Social Care (2) 4,059 20.36 3.42
Justice & Veterans 455 0.13 0.31
Net Zero, Energy & Transport 32 0.58 0.35
Rural Affairs & Islands - - 0.06
Social Justice, Housing & Local Government (3) 5,006 0.80 0.32
Administration 18 1.00 0.49

(1) Losses reported for Education & Skills portfolio in 2021-22 has been restated from £0.30 million to £0.31 million due to student loan write-offs previously not included. The number of student loans written off is not accessible for either of the years reported above.

(2) 50 cases amounting to £0.035 million irrecoverable student nursing bursaries have been included (2021-22: £0.027 million, case number was not accessible)

(3) Losses reported for Social Justice, Housing & Local Government has been restated from £0m to £0.32m.

Details of cases over £0.30m:
Portfolio Details 2022-23 £m
Health & Social Care: NHS Boards: NHS National Services Scotland Expired flu and COVID vaccines 6.43
Expired PPE and testing kits 5.75
National Distribution Centre stock loss 0.41
Surplus PPE pandemic stock donated to KickOR charity 2.40
Administration Discontinuation of corporate system upgrade 0.63
Finance & Economy Scottish Growth Scheme write off 0.61

There were two cases over £0.30 million in 2021-22.

Special Payments
Portfolio 2022-23 No of Cases 2022-23 £m 2021-22 £m
Education & Skills 1 0.002 0.01
Finance & Economy 11 0.01 0.01
Health & Social Care 1.156 52.62 98.75
Justice & Veterans 401 5.39 4.09
Rural Affairs & Islands 1 0.01 0.03
Social Justice, Housing & Local Government 12 0.003 0.008
Crown Office and Procurator Fiscal Service 20 16.24 11.45
Administration - - 0.01
Details of cases over £0.30m:
Portfolio 2022-23 No of Cases Details 2022-23 £m 2021-22 £m
Clinical Compensation Payments
Health & Social Care: NHS Boards 2 NHS Ayrshire & Arran 1.60 -
3 NHS Dumfries and Galloway 4.18 3.90
4 NHS Fife 1.50 2.62
3 NHS Forth Valley 1.68 -
2 NHS Grampian 0.66 3.68
7 NHS Greater Glasgow and Clyde 5.34 22.64
2 NHS Highland 1.10 0.75
4 NHS Lanarkshire 2.16 12.77
4 NHS Lothian 3.36 19.74
1 NHS Tayside 0.31 1.67
1 Scottish Ambulance Service 0.44 -
1 NHS Education for Scotland 0.44 -
Non-clinical compensation payments
Health & Social Care: NHS Boards 1 NHS Highland 0.35 -
1 NHS Lothian 0.75 -
1 Scottish Ambulance Service 0.33 -
Crown Office and Procurator Fiscal Service 1 Involvement with civil litigation brought against the Lord Advocate by individuals prosecuted in connection with the acquisition and administration of Rangers Football Club 16.23 11.04

There were 38 cases over £0.30 million in 2022-23 (2021-22: 35).


The Scottish Government made gifts in the year as follows:

Portfolio 2022-23 No of Cases 2022-23 £m 2021-22 £m
Constitution, External Affairs & Culture - - 0.0003
Net Zero, Energy & Transport 1 0.0004 -

There were no cases over £0.30 million in 2022-23 (2021-22: nil).

John-Paul Marks

Principal Accountable Officer

31 October 2023

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 2023 under the Public Finance and Accountability (Scotland) Act 2000. The financial statements comprise the Consolidated Summary of Total Outturn, the Consolidated Summary of Resource Outturn, the Consolidated Summary of Capital Outturn, ten Consolidated Portfolio Outturn Statements, the Explanations of Major Variances in Consolidated Portfolio Outturn Statements, Consolidated Statement of Comprehensive Net Expenditure and Changes in Taxpayer’ Equity, Consolidated Statement of Cash Flows, Consolidated Statement of Financial Position, and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards, as interpreted and adapted by the 2022/23 Government Financial Reporting Manual (the 2022/23 FReM).

In my opinion the accompanying financial statements:

  • give a true and fair view of the state of affairs of the Scottish Government and the consolidation of the entities within the departmental accounting boundary as at 31 March 2023 and of the net resource outturn and resources applied to objectives for the year then ended;
  • have been properly prepared in accordance with UK adopted international accounting standards, as interpreted and adapted by the 2022/23 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 Scottish Government’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.

These conclusions are not intended to, nor do they, provide assurance on the Scottish Government’s current or future financial sustainability. However, the Scottish Government’s arrangements for financial sustainability are reported in a separate Annual Audit Report available from the Audit Scotland website.

Risks of material misstatement

The most significant assessed risks of material misstatement that have been identified and judgements thereon are reported in a separate Annual Audit Report.

Responsibilities of the Principal Accountable Officer for the financial statements

As explained more fully in the Statement of the Principal 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 there is an intention to discontinue the Scottish Government’s operations.

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 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:

  • using my understanding of the central government sector to identify that the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers are significant in the context of the Scottish Government;
  • inquiring of the Principal Accountable Officer as to other laws or regulations that may be expected to have a fundamental effect on the operations of the Scottish Government;
  • inquiring of the Principal Accountable Officer concerning the body’s policies and procedures regarding compliance with the applicable legal and regulatory framework;
  • discussions among my audit team on 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. 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 in respect of irregularities explained in the audit of the financial statements section of my report, 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

Opinion on audited parts 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 parts of the Remuneration and Staff Report have been properly prepared in accordance with the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers.

Other information

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

My responsibility is to read all the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the course of 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 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 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 parts 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 consolidated accounts, conclusions on the wider scope responsibilities specified in the Code of Audit Practice are set out in a separate 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 108 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 FCPFA

Auditor General for Scotland

102 West Port

Edinburgh EH3 9DN

31 October 2023



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