Consolidated Accounts: year ended 31 March 2023

Summaries of Resource, Capital and Total Outturn Consolidated Portfolio Outturn Statements

Health and Social Care

With effect from 2017-18, gross income and expenditure for the portfolio excludes income received from Integration Authorities on the basis that this presentation better reflects the funding relationship between Integration Authorities and NHS Boards. This adjustment has no impact on the portfolio’s net outturn position.

Income of £7,474m was received by Boards in 2022-23 (2021-22: £7,264m) for provision of healthcare services commissioned by Integration Authorities. NHS funding to Integration Authorities for 2022-23 totalled £7,177m (2021-22: £7,751m).

Explanation of Major Variances greater than £3m:

Note 1. The main reason for the reported overspend is due to the difference in budgeting and accounting reporting requirements for Personal Protective Equipment.

Note 2. Lower than anticipated levels of NHS provisions and impairments.

Note 3. Lower than anticipated depreciation and impairments of NHS NPD/PPP/PFI schemes.

Note 4. Lower than anticipated capital budget requirements for NHS Right of Use assets following implementation of the accounting standard IFRS 16 Leases.

Social Justice, Housing and Local Government

Explanation of Major Variances greater than £3m:

Note 1. Additional funding was provided to local authorities after the deadline for the Spring Budget Revision of £33m for the Teachers Pay Award.

Note 2. Lower than expected Discretionary Housing Payments following an overestimation in costs by the Scottish Fiscal Commission, and lower Rented Sector Reform costs following staff resource being diverted to the Cost of Living (Tenant Protection) Act during the year. In addition to the Affordable Housing Supply Programme's slower pace of delivery owing to inflation and the Housing sector's limited capacity.

Note 3. As a result of Programme planning to support delivery timelines, cash-based Resource expenditure was £1.5 million lower than budget. Also, as a result of a review it was agreed that the useful economic life of intangible assets should be extended, resulting in a £19 million reduction for non-cash depreciation expenditure. In addition there were other minor variances across the programme.

Note 4. Benefit expenditure is demand led and cannot be controlled in the same way as other budgets where spending limits can be set. Further information on benefit spend can be found in the Social Security Scotland accounts for 2022-23 at www.socialsecurity.gov.scot/publications/

Note 5. The resource overspend of £19 million represents in the main the higher than anticipated cost of temporary accommodation in 22-23 due to the success of the 'Super Sponsor Scheme' resulting in strong demand. Given the assurances made to displaced Ukrainians, and the risk of homelessness were this support not to be provided, this is broadly a demand-led item of expenditure.

Note 6. Relates to year end fair value adjustments for housing loans, shared equity schemes, and charitable bonds. Loan adjustments are discounted in year 1 (depending on the interest rate charged on loans), and the discount unwound in subsequent years.

Note 7. The budget for impairment for unrecoverable debt was based on prior year experience as we rely on the Department for Work and Pensions for this information. Following a change in methodology and their annual impairment review what materialised was lower.

Note 8. Additional receipts were received in year in relation to house sales which are outside of SG control. Income for this is only received when individual home owners who are part of the shared equity schemes sell their properties.

Note 9. As a result of Programme planning to support delivery timelines, cash-based Capital expenditure was £5million higher than budget.

Finance and Economy

Finance and Economy Portfolio Outturn statement (continued)

Explanation of Major Variances greater than £3m:

Note 1. £1m over spend due to contractual milestone payments regarding delivery within the R100 programme, and other minor variances across the programme.

Note 2. Higher than expected employment programme expenditure primarily relating to North East Economic Recovery & Skills Fund, National Transition Training Fund and the Flexible Workforce Development Fund.

Note 3. Scottish Enterprise underspend of £25m as they used additional non-budgeted income prior to drawing down SG funding. £15m European Structural Fund Write Off underspend, as expenditure was recorded against European Social Fund - 2014-20 Programmes. Return of £10m unspent Covid-19 Business Support grants from 21/22. Transfer of Clyde Mission responsibility to Glasgow City (£8m). Overspends for Covid 19 Business Support Grants to Local Authorities that didn't receive any budget this year.

Note 4. European Structural Fund write offs of £21.5m, related exchange losses of £0.2m, and financial penalties of £0.9m (The budget for which sits within Enterprise Trade and Investment).

Note 5. SNIB generated additional income during the year and reduced the amount of cash it held at year end.

Note 6. Ferguson Marine overspend due to impairment of assets under construction following updated valuation of vessels 801 and 802.

Note 7. £3m Visit Scotland underspend from drawdown in 21/22 which was agreed could be carried over and returned in 22/23. In addition to a further underspend for the Dandelion project.

Note 8. Reversal of a provision for the future potential under-recovery of European Social Fund Income.

Note 9. This non-cash variance is due to the final valuation of investments at year-end not being aligned with the estimated budget requested.

Note 10. There is an underspend on capital expenditure partly due to a mixture of projects: the return of unused Covid 19 Business Support Grants, late decision to move responsibility of Clyde Mission to Glasgow City and Region, a slippage in City Deals following increased construction costs and supply chain issues, the reclassification of Digital Strategy capital spend for Asset Under Construction to resource, and lower than expected capitalisation of the Techscaler project costs.

Note 11. The timing of investments at year-end did not result in the full budget being used by 31 March. Two investment deals that were due to complete in March 2023 were delayed until the 23/24 financial year.

Note 12. Overspend for consultancy costs by Ferguson Marine for the construction of vessels 801 and 802.

Education and Skills

Explanation of Major Variances greater than £3m:

Note 1. Teacher Training overspend due to the Teachers pay deal agreed in March 2023. Gaelic overspend due to the Cnoc Soillier phase 2 project in South Uist.

Note 2. Children’s Services Planning Partnerships was allocated budget of £32m in their first year of a multi-year commitment to drive local transformation of holistic whole family support. £16.5 million was not allocated during the year due to emerging considerations and further development was required to ensure best fit to the Whole Family Wellbeing Programme outcomes fund.

In addition the level of redress payments associated with contributors to the Redress Scheme for survivors of historic abuse in care was higher than anticipated resulting in a cost reduction.

Note 3. The reported overspend in Higher Education Student Support is driven by the cost of Providing Student Loans though the RAB and Stock Charges. A ring-fenced non-cash credit budget of (£323m) was provided based on 2021-22 outturn, however due to the drivers in the Student Loan model (including set interest rates and discount rates) the final charge was a cost of £82 million, a movement of £405m (for more details see the accounting policies note and note 10f.) This is a ring-fenced budget and not available for use elsewhere in the Education portfolio. In addition there was an offsetting £30m Student Support and Tuition Fee underspend due to lower than anticipated student numbers along with a £3m underspend due to fluctuations in debt holder forecasts in terms of write offs.

Note 4. Due to delays in claims of European Social Funding in 2020-21, Skills Development Scotland (SDS) were previously provided with additional cashflow support to continue to pay training providers at the request of Scottish Ministers . In 2022-23 European Social Fund income was received so less grant in aid was therefore required in 2022-23. There was also a Education Maintenance Allowance (EMA) underspend in this demand led programme.

Note 5. This non-cash variance is predominantly due to movement in the fair value calculation in relation to Student Loans - for more details see the accounting policies note and note 10f.

Note 6. Student Loans - applications for loan funding were below expected levels. There were also higher student loan repayments than expected. This was partially offset by higher capitalised interest due to the Bank of England base rate increasing more than anticipated.

Justice and Veterans

Explanation of Major Variances greater than £3m:

Note 1. Overspend due to increased case volume in a demand led, rights based compensation scheme.

Note 2. Police and Fire pensions are demand led. Due to changes in the pensions schemes including the HM Treasury remedy to age discrimination, many police officers and firefighters chose to retire early in 2022-23. The budget was increased to cover the additional cost but unexpectedly the early retirements slowed towards the end of the financial year, leading to an underspend.

Note 3. Additional funding was provided for the Firefighter pay award and working capital requirements.

Net Zero, Energy and Transport

Net Zero, Energy and Transport Portfolio Outturn statement (continued)

Explanation of Major Variances greater than £3m:

Note 1. Underspends mainly due to final outturn for Network Rail Compensation for strikes being less than budget.

Note 2. There was an overspend due to extensions to the Network Support Grant Plus scheme until 31 March 2023. However this was offset by savings against budget in both main National Concessionary Travel Schemes due to demand being less than intially forecast.

Note 3. There was a underspend within Other Transport across the Future Transport Fund. This is due to several schemes including: the deferral of the second phase of the ScotZEB programme and other budgeted but non-committed spend to 2023-24 financial year; lower-than- expected third-party demand and ability to deliver on some grant funding for example within the Bus Partnership Fund and Low Carbon Programmes; and general savings across the programmed driven through improved controls in grant awards and accounting adjustments.

Transport Scotland also received £20m of income late in the year from the sale of a Joint Venture in one of their NDPBs.

Note 4. Overspend in Motorway and Trunk Roads mainly due to accounting adjustments in relation to the final output of the Road Asset Valuation System and calculation of the PFI year-end creditor adjustment.

Note 5. There was also an underspend of £21m on woodland planting targets. Reduced levels of woodland creation were approved for planting during 2022-23. In addition, around 30% of nearly 11,000ha of approved projects have been delayed due to the range of factors including operational issues, forestry contractor availability and land ownership changes.

Note 6. £5m underspend on demand led waste and noise and air quality activities. £2m lower than anticipated drawdown of funding by local authorities related to the Zero Waste Recycling Improvement Fund.

Note 7. £1m staff cost savings due to enhanced recruitment controls during the financial year. £2m delays in asset transfer request decisions by the outside public bodies who owned the assets leading to delayed spend.

Note 8. £5m underspend in Climate Action and Just Transition Fund mainly relates to slippage in community grants and Ministerial prioritisation. £3m underspend in Community Climate Action Programme due to spending controls and other minor variances.

Note 9. £1m Hydro Nation business support grants rephased until 2023-24 due to spending controls. £1m higher than anticipated Interest receivable on Voted Loans. £2m underspend in demand led private Water grants.

Note 10. Additional provisions for Land and for Capital Grants for Motorway and Trunk Roads.

Note 11. Underspend on capital in year within Transport Scotland is due to the impact of changes to assumptions of lease terms for Rolling Stock which transferred to Scotrail Trains on 1 April 2022. This is an IFRS 16 Accounting Adjustment, and the budget is ring fenced specifically for technical adjustments only.

Note 12. The Capital Provision spend relates to Transport Scotland and additional provisions for Land and for Capital Grants.

Further information on the Budget Programme lines relating to Transport Scotland can be found in their accounts available at www.transport.gov.scot/publications/

Rural Affairs and Islands

Explanation of Major Variances greater than £3m:

Note 1. Unfunded compensation payments relating to Avian Influenza and Tuberculosis outbreaks.

Note 2. Submitted claims lower than anticipated within the demand led Marine Fund Scotland grant schemes (£4m). Fisheries Harbour scheme did not progress as planned (£1m) and other minor variances across the programme.

Deputy First Minister and Covid Recovery

Explanation of Major Variances greater than £3m:

Note 1. Underspend relates to the delay in the setting up of the Scottish COVID-19 Inquiry.

Constitution, External Affairs and Culture

Explanation of Variances:

Note 1. Variance is partly from cultural capital underspends due to planned works not proceeding, partly due to leases being lower than anticipated, and partly due to additional grants received in public bodies.

The Crown Office and Procurator Fiscal Service

Explanation of Variances:

Note 1. The variance on supplies and services is made up of various differences across the range of expenditure.

Note 2. The variance on capital is in relation to the implementation of IFRS16 Leases.