The Scottish Government Consolidated Accounts for the year ended 31 March 2025

Notes to the Accounts

For the year ended 31 March 2025

1. Statement of Accounting Policies

In accordance with the accounts direction issued by Scottish Ministers under section 19(4) of the Public Finance and Accountability (Scotland) Act 2000 these financial statements have been prepared in accordance with the 2024-25 Government Financial Reporting Manual (FReM). The accounting policies contained in the FReM apply International Financial Reporting Standards (IFRS) as adapted or interpreted for the public sector context.

The accounts are prepared using accounting policies, and, where necessary, estimation techniques, which are selected as the most appropriate for the purpose of giving a true and fair view in accordance with the principles set out in International Accounting Standard 8: Accounting Policies, Changes in Accounting Estimates and Errors. Changes in accounting policies which do not give rise to a prior year adjustment are reported in the relevant note.

The particular accounting policies adopted by the portfolios of the Scottish Government are described below. They have been applied consistently in dealing with items considered material in relation to the accounts.

1.1 Accounting Convention and basis of consolidation

These accounts have been prepared under the historical cost convention modified to account for the revaluation of property, plant and equipment (PPE), intangible assets, and, where material, financial asset investments and inventories to fair value as determined by reference to their current costs.

These accounts reflect the consolidated assets and liabilities and the results for the year of all the entities within the Scottish Government accounting consolidation boundary. The structure of the Scottish Government and further information about the entities within the consolidation boundary is provided within the introduction of the Performance Report of these accounts.

The Executive Agencies detailed within the Performance Report mentioned above are reported within the Outturn Statements of their sponsoring portfolio.

1.2 Critical accounting judgements and key sources of estimation

The preparation of these accounts requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenditure. These assessments are based on historic and other factors that are believed to be reasonable, the results of which form the basis for making judgements. The estimates and underlying assumptions are reviewed on an ongoing basis.

Student Loan Valuations

The value of Student Loans is calculated using forecasting models which use data on the demographics of higher education and further education students to predict their likely lifetime earnings, and from this their loan repayments. The models depend on a complex set of assumptions, in particular about the trajectory of borrowers’ earnings. The valuation of the student loan book is uncertain as it is highly dependent on macroeconomic circumstances and the estimate of graduate earnings as well as a number of other assumptions. The assumptions used in the repayment models are formally reviewed each year and the amounts provided reflect the estimate as at the year end.

Road Network Valuation

The trunk road network is valued on the basis of current replacement cost, adjusted to reflect the current condition of the road pavement component and the depreciation of structures and communications assets. This valuation reflects assumptions, estimates and professional judgement that are incorporated in the data input to the model used to produce the valuation known as the Road Authorities Asset Valuation System. This model is currently provided by AtkinsRealis using standard costs to value the individual components of the network asset and indices to revalue these on an annual basis through a joint contract with the other UK Road Authorities.

For other areas where judgement and estimation affect the reporting of assets, liabilities, income and expenditure, details are provided within the relevant accounting policy notes below.

1.3 Property, Plant and Equipment (PPE)

Recognition

All PPE assets will be accounted for as non-current assets unless they are deemed to be held-for-sale (see note 1.5 below), and will be accounted for under IAS 16 Property, Plant and Equipment.

Scottish Ministers hold the legal title or effective control over all land and buildings shown in the accounts.

Assets classified as under construction are recognised in the statement of financial position to the extent that money has been paid or a liability has been incurred.

Capitalisation

The minimum levels for capitalisation of a property, plant or equipment asset are land and buildings £10,000 and equipment and vehicles £5,000. Information and Communications Technology (ICT) systems are capitalised where the pooled value exceeds £1,000. Substantial improvements to leasehold properties are also capitalised. Furniture, fixtures and fittings are treated as current expenditure and are not capitalised. Any assets valued below these thresholds will be treated as expenditure in the year of purchase.

These accounts reflect the trunk road network that Scottish Ministers have ownership of and responsibility to maintain. The trunk road network is recognised as a single infrastructure asset in accordance with FReM. However, it comprises four distinct elements that are accounted for differently: land, road pavement, structures, and communications. Subsequent expenditure is capitalised where it adds to the service potential or replaces the existing elements of assets that were previously identified in the Road Authorities Asset Valuation System (RAAVS). Expenditure that does not replace or enhance service potential will be expensed as a charge to the Statement of Comprehensive Net Expenditure.

Valuation

Land and buildings have been stated at open market value for existing use or, under IAS 16 as adapted for the public sector, depreciated replacement cost for specialised buildings under a rolling 5-year programme of professional valuations and appropriate indices in intervening years. Vessels and aircraft are valued at depreciated replacement cost, and other plant and equipment assets are reported at depreciated historic cost.

Losses in value reflected in valuations are accounted for in accordance with IAS 36, Impairment of Assets as adapted by the FReM which states that impairment losses that arise from a clear consumption of economic benefit should be taken to the outturn statement. The balance on any revaluation reserve (up to the level of impairment) to which the impairment would have been charged under IAS 36 should be transferred to the general fund.

The road network is valued at depreciated replacement cost based on service potential and classed as a specialist asset for which a market valuation is not available. The road pavement element is valued using agreed rates determined to identify the gross replacement cost of applicable types of road on the basis of new construction on a greenfield site. These rates are re-valued annually using indices to reflect current prices and are also updated when new construction costs become available as comparators to the costs previously identified for specific road types. However, special structures, which tend to be one off by their nature, are valued using specific costs that are updated to current prices.

The indexation factors applied are:

Road Pavement and Structures and Communications

• Price Adjustment Formulae Indices published by Building Cost Information Service (BCIS). We have a bespoke model for re-basing these rates which combines fourteen individual indices to produce a single Baxter figure used for uplifts on a quarterly basis. The weightings used in this model are regularly reviewed by professional advisors and are deemed to be still representative of current construction practices.

Land Buildings

• Land indices produced by the Valuation Office Agency (VOA) Property indices are provided by or advised by the professionally qualified Valuers used by bodies across the consolidation

Upwards movements in value are taken to the revaluation reserve. Downward movements in value are set off against any credit balance held in the revaluation reserve until the credit is exhausted and thereafter charged to the relevant portfolio outturn statement.

The trunking or detrunkings of roads from or to local authorities is treated as a transfer from or to other government departments. Roads and structures detrunked are effectively dealt with as disposals in accounting terms at nil consideration. Any associated profit or loss is processed through the general fund.

Subsequent Cost

Subsequent costs are only included in the asset’s carrying amount or, where appropriate, recognised as a separate asset, when it is probable that future economic benefits associated with the item will flow to the Scottish Government and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the outturn statement during the financial period in which they are incurred.

1.4 Right of Use Assets

Scope

In accordance with IFRS 16, contracts, or parts of a contract that convey the right to use an asset in exchange for consideration are accounted for as leases, including peppercorn leases. The FReM expands the scope of IFRS 16 to include arrangements with nil consideration. The standard also applies to arrangements with other public sector organisations which share accommodation, often through MOTO (Memorandum Of Terms of Occupation) agreements.

Contracts for services are evaluated to determine whether they convey the right to control the use of an identified asset, as represented by rights both to obtain substantially all the economic benefits from that asset and to direct its use. In such cases, the relevant part is treated as a lease.

Under IFRS 16, lessees are required to recognise assets and liabilities for leases with a term of more than 12 months, unless the underlying asset is of low value. While no standard definition of ‘low value’ has been mandated across the consolidation boundary, NHS Scotland have elected to utilise the capitalisation threshold of £5,000 to determine the assets to be disclosed and other bodies will generally be using the capitalisation thresholds noted above in section 1.3.

Initial Recognition

At the commencement of a lease (or the IFRS 16 transition date, if later), a right-of-use asset and a lease liability are recognised. The lease liability is measured at the present value of the payments for the remaining lease term (as defined above), net of irrecoverable value added tax, discounted either by the rate implicit in the lease, or, where this cannot be determined, the rate advised by HM Treasury for that calendar year.

The liability includes payments that are fixed or in-substance fixed, excluding, for example, changes arising from future rent reviews or changes in an index. The right-of-use asset is measured at the value of the liability, adjusted for any payments made or amounts accrued before the commencement date; lease incentives received; incremental costs of obtaining the lease; and any disposal costs at the end of the lease. However, for peppercorn or nil consideration leases, the asset is measured at its existing use value.

Subsequent measurement

The asset is subsequently measured using the fair value model. The cost model is considered to be a reasonable proxy except for leases of land and property without regular rent reviews. For these leases, the asset is carried at a revalued amount. In these financial statements, right-of-use assets held under index-linked leases have been adjusted for changes in the relevant index, while assets held under peppercorn or nil consideration have been valued using market prices or rentals for equivalent land and properties. The liability is adjusted for the accrual of interest, repayments, and reassessments and modifications. These are measured by re-discounting the revised cash flows.

Lease expenditure

Expenditure includes interest, straight-line depreciation, any asset impairments and changes in variable lease payments not included in the measurement of the liability during the period in which the triggering event occurred. Lease payments are debited against the liability. Rental payments for leases of low-value items or shorter than twelve months are expensed.

1.5 Assets Held for Sale

A property is derecognised and held for sale under IFRS 5 Non-current Assets Held for Sale and Discontinued Operations when all of the following requirements are met:

• It is available for immediate sale in its present condition;
• A plan is in place, supported by management, and steps have been taken to actively market the asset and conclude a sale at a reasonable price in relation to its current fair value; and
• A sale is expected to be completed within 12 months.
• Assets classified as held for sale are measured at the lower of their carrying amounts immediately prior to their classification as held for sale and their fair value less costs to sell. Assets classified as held for sale are not subject to depreciation or amortisation.

1.6 Donated Assets and European Union Grants

IAS 20 Accounting for Government Grants and Disclosure of Government Assistance, and SIC10 Government Assistance apply as interpreted by the FReM. Donated assets and grants received from the European Union for capital assets are capitalised at their valuation on receipt and this value is credited as income to the outturn statement. Subsequent revaluations are accounted for in the revaluation reserve, and impairments may be charged to the outturn statement.

1.7 Intangible Assets

In accordance with the FReM, Intangible assets are accounted for in line with the requirements of IAS 38 Intangible Assets, and are valued at depreciated replacement cost. Revaluations are carried out according to IAS 38 for assets over a valuation threshold.

Future economic benefit has been used as the criteria in assessing whether an intangible asset meets the definition and recognition criteria of IAS 38 Intangible Assets for assets that do not generate income. IAS 38 defines future economic benefit as, ‘revenue from the sale of products or services, cost savings, or other benefits resulting from the use of the asset by the entity.’

Intangible assets other than assets under development are amortised on a straight line basis over their estimated useful lives. Impairment reviews are carried out if there are any indicators that impairment should be considered. Intangible assets under development are not amortised.

1.8 Depreciation and Amortisation

Land is considered to have an indefinite life and is not depreciated.

Assets under construction are not depreciated.

For all other property, plant and equipment and intangible assets, depreciation or amortisation is charged at rates calculated to write off their valuation by equal instalments over their estimated useful lives which are normally in the following ranges:

Road Network assets
Road surface, sub-pavement layer, fencing, drainage and lighting	20 years
Road bridges, tunnels and underpasses	20-120 years
Culverts, retaining walls and gantries	20-120 years
Road communication assets	15-50 years

Other assets
Dwellings and other buildings	10 to 60 years (as per valuation)
Vehicles	5 to 10 years
Vessels	10 to 30 years
Aircraft	15 to 20 years
Equipment	5 to 15 years
ICT Systems	3 to 25 years
Internally developed software	5 to 20 years
Leasehold improvements	Shorter of asset life and lease term

1.9 Financial Instruments

The Scottish Government measures and presents financial instruments in accordance with IAS 32, IFRS 7, IFRS 13 and IFRS 9 as interpreted by the FReM. IFRS 9 contains three principal classification categories for financial assets:

• amortised cost;
• fair value through other comprehensive income (FVOCI); and
• fair value through profit or loss (FVTPL).

The classification of financial assets under IFRS 9 is based on the business model in which a financial asset is managed and its contractual cash flow characteristics. Financial liabilities are classified and subsequently measured at amortised cost, except for:

• Financial liabilities at fair value through profit or loss, which is applied to derivatives and other financial liabilities designated as such at initial recognition;
• Financial liabilities arising from the transfer of financial assets which did not qualify for de-recognition, whereby a financial liability is recognised for the consideration received for the transfer;
• Financial guarantee contracts and loan commitments.

Financial Assets

The Scottish Government has classified its financial instruments as follows:

• Cash and cash equivalents, trade receivables, short term loans, accrued income relating to EU funding, amounts receivable and shares will be classified as amortised cost. This will also include investment funds managed by third parties which will be reported separately.
• Student loans will be reported in the ‘At fair value through profit & loss’ category
• Shared equity loans advanced to private individuals will be reported in the ‘At fair value through profit & loss’ category.

Financial assets include shares in nationalised industries and limited companies, loans issued to public bodies not consolidated in departmental accounts; loans made under the terms of the student loans scheme, loans to private companies, repayment and deferred loans relating to housing associations and investment funds. Such investments are generally reported as non-current assets. If an investment is held on a short-term basis, or a loan is due to be repaid within one year, it will be treated as a current asset.

Financial Liabilities

• Borrowings, trade payables, accruals, payables, bank overdrafts and financial guarantee contracts are classified as ‘Other Liabilities’.
• Financial guarantee contracts are initially recognised at fair value. Under IFRS 9, financial guarantees are subsequently measured at the higher of the initial amount, less any subsequent amortisation where appropriate or of the credit loss allowance.

Financial Instruments

Financial instruments are initially measured at fair value with the exception of ‘Shares held in and loans advanced to public sector bodies’ which are held at historic cost, in the absence of an active market. The fair value of financial assets and liabilities is determined as follows:

• The fair value of cash and cash equivalents and current non-interest bearing monetary financial assets and financial liabilities approximate their carrying value, and
• The fair value of other non-current monetary financial assets and financial liabilities is based on market prices where a market exists, use of appropriate indices or has been determined by discounting expected cash flows by the current interest rate for financial assets and liabilities with similar risk profiles.

Financial instruments subsequent measurement depends on their classification:

• Fair value through the profit and loss is held at fair value with any changes going through the outturn statement.
• Financial assets and liabilities held at amortised cost are not revalued unless included in a fair value hedge accounting relationship. Any impairment losses go through the outturn statement.
• Shares which are held in public sector bodies and private sector bodies that do not have a quoted market price in an active market, and where the fair value cannot be reliably measured and reported at historic cost less impairment with any impairment losses going through the outturn statement. Otherwise they are held at fair value.

Impairment of financial assets

For all financial assets measured at amortised cost or at fair value through other comprehensive income (except equity instruments designated per the irrevocable election), lease receivables and contract assets, a loss allowance is recognised representing expected credit losses on the financial instruments.

A simplified approach to impairment has been adopted, in accordance with IFRS 9, and measures the loss allowance for trade receivables, contract assets and lease receivables at an amount equal to lifetime expected credit losses. For other financial assets, the loss allowance is measured at an amount equal to lifetime expected credit losses if the credit risk on the financial instrument has increased significantly since initial recognition (stage 2), and otherwise at an amount equal to 12-month expected credit losses (stage 1).

HM Treasury has ruled that central government bodies may not recognise stage 1 or stage 2 impairments against other government departments, their executive agencies, the Bank of England, Exchequer Funds, and Exchequer Funds’ assets where repayment is ensured by primary legislation. Therefore loss allowances for stage 1 or stage 2 impairments against these bodies are not recognised.

For financial assets that have become credit impaired since initial recognition (stage 3), expected credit losses at the reporting date are measured as the difference between the asset’s gross carrying amount and the present value of the estimated future cash flows discounted at the financial asset’s original effective interest rate. Any adjustment is recognised in the Consolidated Statement of Comprehensive Net Expenditure as an impairment gain or loss.

Student Loans

Student loans are valued at fair value through profit and loss.

As there is currently no active market for student loans, the Scottish Government values the loans by using a valuation technique. This technique involves the gross value of the loans being reduced by an amount based on:

• Interest subsidy: This is the difference between the interest paid by students (lower of RPI and Bank of England Base Rate + 1% point) and the cost of capital on loans at the rate provided by HM Treasury. The interest subsidy is estimated to meet the cost of the interest over the life of the loan and is offset by the annual interest capitalised.
• Write off impairment: This is estimated to meet the future cost of loans that are not likely to be recovered mainly due to the death of the student, their income not reaching the income threshold, or not being able to trace the student. Each year, the future cost of bad debt is estimated based on a percentage of new loans issued during the financial year. This is offset by the actual debts written off by the Student Loan Company.

The estimates underpinning these adjustments are based on a model which holds data on the demographic and behavioural characteristics of students in order to predict their borrowing behaviour and estimate the likely repayments of student loans. Given the long term nature of both adjustments, the time value of money is significant, and they are discounted using the current HM Treasury discount rate.

There are significant uncertainties in assessing the actual likely costs and the impairment will be affected by the assumptions used. These are formally reviewed by the Scottish Government each year and the amounts impaired reflect the Scottish Government’s current best estimate.

Further details of the movements in the loan valuation can be found in note [11a], while disclosures relating to risk, required by IFRS 7, can be found in note [11e].

Embedded Derivatives

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of host contracts and the host contracts are not measured at fair value with changes in fair value recognised in profit and loss.

Financial Guarantee Contracts

Financial guarantee contract require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. They are initially recognised at fair value.

Under IFRS 9, financial guarantees are subsequently measured at the higher of the initial amount, less any subsequent amortisation where appropriate or of the credit loss allowance.

The expected credit loss model calculates the allowance for credit losses by considering on a discounted basis the cash shortfalls it would incur in various default scenarios for prescribed future periods and multiplying the shortfalls by the probability of each scenario occurring. The allowance is the sum of these probability weighted outcomes.

Financial Transactions

Financial Transactions are a capital funding source from HM Treasury which can only be used to fund loans and equity investments that cross the public/private sector boundary. These have to be repaid to HM Treasury in the future through adjustments to baseline funding. A repayment profile has been agreed with HM Treasury which aligns receipts by the Scottish Government with repayment to HM Treasury. This is reviewed annually.

1.10 Inventories

Items that cannot or will not be used are written down to their net realisable value. Taking into account the high turnover of NHS stocks, the use of average purchase price is deemed to represent the lower of cost and net realisable value. Work in progress is valued at the cost of the direct materials plus the conversion costs incurred to bring the goods up to their present degree of completion.

1.11 Non-Profit Distributing (NPD)/ Public Private Partnerships (PPP)/ Private Finance Initiatives (PFI)

NPD/PPP/PFI transactions are accounted for in accordance with IFRIC 12, Service Concession Arrangements which sets out how NPD/PPP/PFI transactions are to be accounted for in the private sector. The Scottish Government currently uses the Non-Profit Distributing model in structuring its service concession arrangements. Previous administrations used the Public Private Partnership and Private Finance Initiative models. As payments made and assets held relating to these models will continue to be recorded in these accounts over the foreseeable future, the accounts refer to the three different service concession models in relevant disclosure.

Assets that are assessed to be on statement of financial position will be measured as follows:

• Where the contract is separable between the service element, the interest charge and the infrastructure asset, the asset will be measured as under IFRS 16 Leases, with the service element and the interest charge recognised as incurred over the term of the concession arrangement; and
• Where there is a unitary payment stream that includes infrastructure and service elements that cannot be separated, the various elements will be separated using estimation techniques including obtaining information from the operator or using the fair value approach.

The grantor will recognise a liability for the capital value of the contract. That liability does not include the interest charge and service elements, which are expensed annually through the relevant portfolio outturn statement.

Assets should subsequently be measured consistently with other assets in their class using IAS 16, Property, Plant and Equipment, adopting an appropriate asset revaluation approach. Liabilities will be measured using the appropriate discount rate, taking account of the reduction arising from capital payments included in the unitary payment stream.

Any revenue received by the grantor is recognised in line with IFRS 15.

1.12 Revenue

Revenue is accounted for in accordance with IFRS 15, as directed by the FReM. Revenue is recognised when the amount can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met.

Operating income is income that relates directly to the operating activities of the Scottish Government. It includes fees and charges for services provided, on a full cost basis, to external customers, public repayment work and income from investments. It includes both income applied with limit as outlined by the Scottish Budget documents and income not applied. For income categorised as being applied with limit, any excess income over that approved is surrendered to the Scottish Consolidated Fund. Operating income is stated net of VAT.

Income is analysed in [Note 5] between that which, under the regime, is allowed to be offset against gross administrative costs in determining the outturn against the administration cost limit (income applied), and that operating income which is not (income not applied).

1.13 Grants

Grants payable or paid are recorded as expenditure in the period that the underlying event or activity giving entitlement to the grant occurs. Where necessary obligations in respect of grant schemes are recognised as liabilities.

In accordance with the Scottish Public Finance Manual, procedures are in place to ensure compliance with any conditions or provisions attached to any grant payments.

1.14 European Union Funds

Funds received from the European Union (EU), are treated as income and shown in the relevant Portfolio Outturn Statement. Expenditure in respect of grants or subsidy claims is recorded in the period that the underlying event or activity giving entitlement to the grant or subsidy claim occurs. Any related payable or receivable balances are reflected in the Statement of Financial Position.

1.15 Foreign Exchange

Under the requirements of IAS 21 The Effects of Changes in Foreign Exchange Rates and SIC 7 Introduction of the Euro, transactions which are denominated in a foreign currency are translated into sterling at the exchange rate ruling on the date of each transaction, except where rates do not fluctuate significantly, in which case an average rate for a period is used. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the outturn statement.

1.16 Pensions

The Scottish Government as an employer

Present and past employees are covered by the provisions of the Principal Civil Service Pension Scheme (PCSPS) which is a defined benefit scheme and is unfunded. Portfolios, agencies and other bodies covered by the PCSPS recognise the expected cost of providing pensions for their employees on a systematic and rational basis over the period during which they benefit from their services by payment to the PCSPS of amounts calculated on an accruing basis (relevant disclosures are reported in the Remuneration and Staff Report). Liability for the payment of future benefits is a charge to the PCSPS. Separate scheme statements for the PCSPS as a whole are published.

The Scottish Government as a scheme administrator

Expenditure reported within Portfolio Outturn Statements includes grant in aid to bodies sponsored by the Scottish Government, which covers pension related expenditure in respect of pension schemes operated by the sponsored body for their eligible employees. The arrangements for these pension schemes are reported and explained in the annual accounts of the relevant bodies.

NHS Bodies

The NHS Bodies in Scotland participate in the National Health Service Superannuation Scheme for Scotland which is a notional defined benefit scheme where contributions are credited to the Exchequer and the balance in the account is deemed to be invested in a portfolio of Government securities. The pension cost is assessed every five years by the Government Actuary; details of the most recent actuarial valuation can be found in the separate statement of the Scottish Public Pensions Agency (SPPA).

Additional pension liabilities arising from early retirements are not funded by the scheme except where the retirement is due to ill health. The full amount of the liability for the additional costs is charged to the outturn statement at the time the Board commits itself to the retirement, regardless of the method of payment.

1.17 Provisions

IAS 37 Provisions, Contingent Liabilities and Contingent Assets applies in full, and in these accounts provisions are made for legal or constructive obligations which are of uncertain timing or amount at the statement of financial position date on the basis of the best estimate of the expenditure required to settle the obligation. Where material, they have been discounted using the appropriate discount rate as prescribed by HM Treasury.

Student Loans

The provision is established to reflect the debt sale subsidy.

Early Departure Costs

The Scottish Government is required to meet the additional cost of benefits beyond the normal PCSPS benefits in respect of employees who retired early, prior to 2011. The Scottish Government provides in full for this cost when the early retirement programme has been announced and is binding.

Clinical Negligence and Other Risk Indemnity Scheme (CNORIS)

CNORIS is a risk transfer and financing scheme for NHS Scotland, which was first established in 1999. Its primary objective is to provide cost-effective risk pooling and claims management arrangements for Scotland’s NHS Health Boards and Special Health Boards.

NHS Boards are required to create a separate related, but distinct, provision recognising their respective shares of the total CNORIS national scheme liability. This is in addition to the recognition by NHS Boards of a provision for individual claims against their Board along with an associated debtor. The recognition of the separate provision is a technical accounting adjustment to more appropriately reflect the underlying substance of Boards’ liabilities.

On consolidation into the Scottish Government accounts, the Scottish Government’s CNORIS provision represents the national scheme liability.

In terms of accounting for the CNORIS scheme, NHS bodies provide for all claims notified to the NHS Central Legal Office (CLO) according to the value of the claim and the probability of settlement. Claims assessed as ‘Category 3’ are deemed most likely and provided for in full, those in ‘Category 2’ as 50% of the claim and those in ‘Category 1’ as nil. In conjunction with the CLO, Boards may take a different view on the appropriate level of provision for ‘Category 2’ claims, and may apply a different percentage in calculating the associated provision. The balance of the value of claims not provided for is disclosed as a contingent liability. This procedure is intended to estimate the amount considered to be the liability in respect of any claims outstanding.

1.18 Contingent Liabilities

Contingent liabilities include those required to be disclosed under IAS 37 Provisions, Contingent Liabilities and Contingent Assets and other liabilities arising from indemnities and guarantees (which are not financial guarantee contracts) included for parliamentary reporting and accountability. Portfolios must seek the prior approval of Parliament, via the Finance Committee, before entering into any specific guarantee, indemnity or letter or statement of comfort unless it arises in the normal course of business or the sum of the risk is £2.5m or less.

1.19 Value Added Tax (VAT)

Most of the activities of the Scottish Government are outside the scope of VAT, and in general output tax does not apply and input tax on purchases is not recoverable. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of non-current assets. Where output tax is charged or input VAT is recoverable, the amounts are stated net of VAT.

1.20 Segmental Reporting

IFRS 8 Segmental Reporting requires operating segments to be identified on the basis of internal reports about components of the Scottish Government and its consolidated bodies that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and assess their performance. The Scottish Government reports segmental information within its outturn statements which are prepared on the basis of Ministerial portfolios.

1.21 Trade Receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an estimate of likely impairment. Impairment of trade receivables is calculated through an expected credit loss model.

1.22 Cash and Cash Equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position. Balances are analysed between those held with the Government Banking Service and balances held in commercial banks.

1.23 Trade Payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

1.24 Short Term Employee Benefits

A liability and an expense is recognised for holiday days, holiday pay, bonuses and other short-term benefits when the employees render service that increases their entitlement to these benefits. As a result an accrual has been made for holidays earned but not taken.

New Accounting Standards

All new standards issued and amendments made to existing standards are reviewed by Financial Reporting and Advisory Board (FRAB) for subsequent inclusion in the FReM in force for the year in which the changes become applicable. The standards that are considered relevant to Scottish Government and the anticipated impact on the consolidated accounts are as follows:

IFRS 17 - Insurance Contracts

IFRS 17 replaces the previous standards on insurance contracts, IFRS 4. Under the IFRS 17 model, insurance contract liabilities will be calculated as the present value of future insurance cash flows with a provision for risk.

The Standard is adapted and interpreted for the public sector context in the FReM, applying from 1 April 2025. The impact of IFRS 17 application to the Scottish Government has not been fully determined but is being assessed in light of further FReM-related guidance issued in July 2025.

2. Cash and cash equivalents

	2024-25 (£m)	2023-24 (£m)
Government Banking Service	879	776
Commercial banks and cash in hand	13	13
At 31 March	892	789
At 1 April	789	374
Net change in cash and cash equivalent balances	103	415
At 31 March	892	789

The balance at 31 March includes:	Note	2024-25 Net (£m)	2023-24 Net (£m)
Cash due to be paid to the Scottish Consolidated Fund	14	771	631
Consolidated Fund extra receipts received and due to be paid to the SCF	14	-	-
At 31 March	-	771	631

3. Note to the Cash Flow Statement

Adjustment to Operating Activities for Non-cash Transactions

	2024-25 (£m)	Restated 2023-24 (£m)
Depreciation and Amortisation	713	778
Impairments/Write-backs	99	107
Total Capital Charges	812	885
Loss/(Profit) on disposal of property, plant and equipment	(13)	-
Capitalised interest - financial assets	(440)	(461)
Student loans fair value adjustment	106	580
Investment fair value adjustments	(56)	4
Investment impairments and write offs	95	-
Income from donated asset additions	(5)	(3)
Auditor Fees	3	3
Unrealised exchange rate (gain)/loss	-	(2)
PFI Remeasurement (Gain) / Loss	35	-
Other non-cash items	47	31
NHS Board consolidation adjustments	38	67
Total	622	1,104

4. Note to the Cash Flow Statement - Working Capital

Movement in Working Capital

	Note	Opening Balance (£m)	Closing Balance (£m)	2024-25 Net Movement (£m)	2023-24 Net Movement (£m)
Inventories	10	165	180	-	-
Net Decrease/(Increase)	-	-	-	(15)	45
Receivables and other assets
Due within one year	13	975	976	(1)	172
Due after more than one year	13	143	183	(40)	(30)
Assets Held for Sale	9	7	6	1	1
Less: Capital included in PPE	-	(29)	(42)	13	-
Less: Capital included in intangibles	-	-	-	-	-
Less: Capital included in investment	-	(23)	(30)	7	18
Less: Interest Receivable	-	(27)	(28)	1	2
Less: Receivable from SCF	13	(48)	(1)	(47)	(35)
Less: General Fund receivable included above	-	(3)	-	(3)	(25)
Other Adjustment	-	3	-	3	(3)
Prior Year Adjustment	-	-	-	-	-
NHS boards consolidation adjustment	-	883	900	(17)	(38)
Total	-	1,881	1,964	-	-
Net Decrease/(Increase)	-	-	-	(83)	62
Payables and other liabilities
Due within one year	14	4,614	4,876	262	2
Due after more than one year	14	4,004	3,786	(218)	416
Less: Capital included in PPE	-	(148)	(204)	(56)	93
Less: Capital included in intangibles	-	(8)	(4)	4	5
Less: Capital included in Investment	-	(9)	(6)	3	24
Less: SCF corporate payable included in above	14	(631)	(771)	(140)	(306)
Less: Payable to SCF	14	-	-	-	3
Less: Bank Overdraft	14	(4)	(1)	3	1
Less: NLF payable included in above	14	(355)	(273)	82	94
Less: Finance leases including in above	14	(439)	(423)	16	17
Less: PFI Imputed Leases	14	(2,617)	(3,197)	(580)	186
Less: Financial Guarantees included in above	14	-	-	-	-
IFRS PFI Revaluation restatement	14	(716)	-	716	(716)
IFRS 16 Transition adjustment	-	-	-	-	59
NHS Boards - IFRS 16 PFI Revaluation in year	14	(64)	(64)	-	(64)
Other Adjustment	-	15	35	20	10
Prior Year Adjustment	-	-	-	-	59
NHS Board Consolidation Adjustment*	-	(128)	(54)	74	(31)
Total	-	3,514	3,700	-	-
Net (Decrease)/Increase	-	-	-	186	(148)
Provisions
Due within one year	15	561	625	64	195
Due after more than one year	15	1,235	1,201	(34)	238
NHS Board Consolidation Adjustment	-	-	-	-	-
Total	-	1,796	1,826	-	-
Net (Decrease)/Increase	-	-	-	30	433
Total Net Movement	-	-	-	118	392

5. Outturn Income and Expenditure

5a. Operating income analysed by classification and activity, is as follows:

	Total Income (£m)	Income Not Applied (£m)	2024-25 Income Applied (£m)	Restated 2023-24 Income Applied (£m)
Health and Social Care	1,094	-	1,094	1,215
Social Justice	6	-	6	9
Net Zero and Energy	159	-	159	125
Education and Skills	459	-	459	480
Justice and Home Affairs	20	-	20	16
Transport	12	-	12	13
Rural Affairs, Land Reform and Islands	18	-	18	11
Constitution, External Affairs and Culture	-	-	-	-
Finance and Local Government	38	-	38	38
Deputy First Minister, Economy and Gaelic	134	-	134	160
Crown Office and Procurator Fiscal Service	13	5	8	9
Total	1,953	5	1,948	2,076

5b. Income not applied

Income not applied includes amounts for surrender to the Scottish Consolidated Fund in accordance with the Scotland Act 1998 (Designation of Receipts) Order 2009 (as amended by Scotland Act 2012 and Scotland Act 2016) [referred to as Designation of Receipts Order].

The major items of income not applied are:

	Cash received (£m)	Accrued (£m)	2024-25 (£m)	2023-24 (£m)
Repayment of interest	-	-	-	-
Non-designated receipts - Proceeds of Crime and other	5	-	5	5
Total Income Not Applied	5	-	5	5

5c. Interest Receivable

All Interest receivable is external to the portfolio boundary and not from other portfolios. It is included within the Operating Outturn Statement as income applied, unless it is required to be surrendered to the Scottish Consolidated Fund under the requirements of the Designation of Receipts Order.

Programme Income:	Capitalised Interest (£m)	Voted Loans Interest (£m)	Other Interest (£m)	2024-25 Total Interest (£m)	Restated 2023-24 Total Interest (£m)
Social Justice	-	-	1	1	2
Net Zero and Energy	-	127	21	148	141
Education and Skills	440	-	-	440	461
Transport	-	12	-	12	9
Deputy First Minister, Economy and Gaelic	-	-	3	3	8
Total	440	139	25	604	621

All capitalised and voted loans interest in the table above is included within the associated portfolio outturn statement as income applied. There is no interest income that meets the definition of income not applied, in accordance with the Designation of Receipts Order. However, both the Voted Loans interest and National Loan Funds interest (£25m Other Interest within the Net Zero and Energy Portfolio) is due back to the Scottish Consolidated Fund. The Voted Loans interest is specifically excluded from the Designation of Receipts Order, whilst the National Loan Funds interest relates to pre-devolution loans and has a net nil effect on the net outturn of the Net Zero and Energy portfolio against the Scottish Water line.

5d. Interest Payable

	2024-25 Total (£m)	2023-24 Total (£m)
Finance lease charges allocated in the year on balance sheet PFI/PPP contracts	88	229
Finance charges in respect of Right of Use Assets	1	32
Other interest	-	-
Total	89	261

5e. Audit Fee

The consolidated audit fee for 2024-25 is £8m (Core Portfolios £2m). Part of the audit fee, including that of the Core Portfolios, is a notional charge, as noted in Note 3 - Notes to the Cash Flow. Other entities within the consolidation boundary pay fees.

The consolidated audit fee for 2023-24 was £7m (Core Portfolios £1m).

There were no additional charges in relation to non-audit work undertaken by Audit Scotland in either 2024-25 or 2023-24.

5f. Operating Costs

Total operating costs for the Scottish Government are aligned with the portfolio budget that they support. The total operating costs for a portfolio are all the core Scottish Government staff and associated operating costs incurred by the portfolio, plus a share of the costs, such as accommodation, IT, legal services and HR, which cannot be readily attributed to a portfolio (corporate running costs).

Analysis of Net Operating Costs by Category	2024-25 (£m)	Restated 2023-24 (£m)
Staff Costs	739	682
Staff Associated Costs	12	14
Accommodation	34	36
IT Costs	63	38
Legal Costs	4	5
Audit Fee	2	1
Other Office Costs	15	38
Operating Income	(13)	(11)
Total	856	803

Analysis of Net Operating Costs by Portfolio	2024-25 (£m)	Restated 2023-24 (£m)
Health and Social Care	118	115
Social Justice	79	82
Net Zero and Energy	36	31
Education and Skills	45	42
Justice and Home Affairs	33	38
Transport	-	-
Rural Affairs, Land Reform and Islands	144	135
Constitution, External Affairs and Culture	16	15
Finance and Local Government	275	254
Deputy First Minister, Economy and Gaelic	110	91
Crown Office and Procurator Fiscal Service	-	-
Total	856	803

(1) Crown Office and Procurator Fiscal Service and the Transport Portfolio are fully outwith core Scottish Government and is not subject to operating costs.

5g. Analysis of Capital Charges by Portfolio

Analysis of Capital Charges by Portfolio	Depreciation/ Amortisation (£m)	Impairment/ Write back (£m)	2024-25 Total (£m)	Restated 2023-24 Total (£m)
Health and Social Care	472	36	508	487
Social Justice	64	-	64	50
Net Zero and Energy	-	-	-	-
Education and Skills	13	-	13	13
Justice and Home Affairs	50	3	53	69
Transport	84	-	84	169
Rural Affairs, Land Reform and Islands	10	-	10	10
Constitution, External Affairs and Culture	-	-	-	21
Finance and Local Government	18	-	18	-
Deputy First Minister, Economy and Gaelic	1	54	55	55
Crown Office and Procurator Fiscal Service	1	6	7	11
Total Capital Charges	713	99	812	885

6. Property, Plant and Equipment

Cost or valuation	Land 1 (£m)	Buildings 2 (£m)	Dwellings (£m)	Road Network (£m)	Transport (£m)	Equipment (£m)	ICT Systems (£m)	Fixtures and fittings (£m)	Assets Under Construction (£m)	Total (£m)
As at 1 April 2024	485	8,609	810	33,858	289	1,494	375	82	1,319	47,321
Additions	-	39	-	145	9	95	24	4	517	833
Adjustments	(1)	-	-	(4)	-	1	-	(1)	-	(5)
Transfers	-	189	13	31	74	38	10	3	(374)	(16)
Transfers (to)/from Assets Classified as Held for Sale	-	-	-	-	-	-	-	-	-	-
Disposals	(1)	(16)	(1)	-	(73)	(32)	(36)	(3)	-	(162)
Reclassification of Cost / Depreciation4	-	(7)	(14)	-	-	-	-	-	-	(21)
Revaluations to Revaluation Reserve	8	(57)	9	(166)	-	-	-	-	-	(206)
Revaluations to Outturn Statement	-	(28)	-	(382)	(1)	-	-	-	(50)	(461)
Balance at 31 March 2025	491	8,729	817	33,482	298	1,596	373	85	1,412	47,283
Depreciation
As at 1 April 2024	-	382	10	6,430	187	871	254	61	-	8,195
Charged in year	-	262	26	82	30	116	39	4	-	559
Adjustments	-	1	-	2	-	(1)	(2)	(1)	-	(1)
Transfers	-	-	-	-	-	-	-	-	-	-
Transfers (to)/from Assets Classified as Held for Sale	-	-	-	-	-	-	-	-	-	-
Disposal	-	(16)	-	-	(18)	(31)	(36)	(3)	-	(104)
Reclassifications	-	-	-	-		(6)	-	-	-	(6)
Reclassification of Cost / Depreciation4	-	(14)	(7)	-	-	-	-	-	-	(21)
Revaluations to Revaluation Reserve	-	(264)	(26)	(217)	-	-	-	-	-	(507)
Revaluations to Outturn Statement	-	18	-	-	-	-	-	-	-	18
Balance at 31 March 2025	-	369	3	6,297	199	949	255	61	-	8,133
Net book value at 31 March 2025	491	8,360	814	27,185	99	647	118	24	1,412	39,150
Net book value at 31 March 2024	485	8,227	800	27,428	102	623	121	21	1,319	39,126

¹ - (land holdings and land underlying buildings);

² - (excluding dwellings);

³ - (including land)

⁴ The downward revaluation and impairment of land, buildings, and dwellings relating to Scottish Prison Service buidlings from 2023-24, initially classified within Depreciation, has been reclassified in line with the FReM under Cost. For further details see the 2024-25 Scottish Prison Service accounts.

6a. Property, Plant and Equipment (continued)

Prior Year

Cost or valuation	Land 1 (£m)	Buildings 2 (£m)	Dwellings (£m)	Road Network3(£m)	Transport (£m)	Equipment (£m)	ICT Systems (£m)	Fixtures and fittings (£m)	Assets Under Construction (£m)	Total (£m)
As at 1 April 2023	489	8,190	707	33,399	278	1,629	495	100	1,237	46,524
Additions	-	15	-	62	5	58	18	3	511	672
Adjustments	-	2	(2)	(65)	-	-	-	-	-	(65)
Transfers	1	137	34	54	22	78	17	1	(344)	-
Transfers (to)/from Assets Classified as Held for Sale	1	(1)	-	-	-	-	-	-	-	-
Disposals	(1)	(22)	-	-	(13)	(269)	(154)	(22)	-	(481)
Revaluations to Revaluation Reserve	(3)	290	71	408	(2)	-	-	-	-	764
Revaluations to Outturn Statement	(2)	(2)	-	-	(1)	(2)	(1)	-	(85)	(93)
Balance at 31 March 2024	485	8,609	810	33,858	289	1,494	375	82	1,319	47,321
Depreciation
As at 1 April 2023	-	326	2	6,252	177	1,025	369	79	-	8,230
Charged in year	-	250	26	168	24	115	39	4	-	626
Adjustments	-	15	7	(18)	-	-	-	-	-	4
Transfers	-	-	-	-	-	-	-	-	-	-
Transfers (to)/from Assets Classified as Held for Sale	-	-	-	-	-	-	-	-	-	-
Disposal	-	(22)	-	-	(13)	(268)	(154)	(22)	-	(479)
Revaluations to Revaluation Reserve	-	(168)*	(25)	28	(1)	-	-	-	-	(166)
Revaluations to Outturn Statement	-	(19)	-	-	-	(1)	-	-	-	(20)
Balance at 31 March 2024	-	382	10	6,430	187	871	254	61	-	8,195
Net book value at 31 March 2024	485	8,227	800	27,428	102	623	121	21	1,319	39,126
Net book value at 31 March 2023	489	7,864	705	27,147	101	604	126	21	1,237	38,294

¹ - (land holdings and land underlying buildings);

² - (excluding dwellings);

³ - (including land)

Asset Financing and Donated Asset analysis

Analysis of asset financing:	Land 1(£m)	Buildings 2(£m)	Dwellings (£m)	Road Network3 (£m)	Transport (£m)	Equipment (£m)	ICT Systems (£m)	Fixtures and fittings (£m)	Assets Under Construction (£m)	Total (£m)
Owned	482	5,569	736	23,300	97	633	118	24	1,403	32,362
On balance sheet PFI	7	2,703	78	3,885	2	-	-	-	2	6,677
Donated	-	6	-	-	-	-	-	-	4	10
EU Grant	2	82	-	-	-	14	-	-	3	101
Net book value at 31 March 2025	491	8,360	814	27,185	99	647	118	24	1,412	39,150
2024-25 Donated Asset Movement
Additions	-	-	-	-	-	1	-	-	2	3
Disposals	-	-	-	-	-	-	-	-	-	-

Prior Year

Analysis of asset financing:	Land 1(£m)	Buildings 2(£m)	Dwellings (£m)	Road Network3 (£m)	Transport (£m)	Equipment (£m)	ICT Systems (£m)	Fixtures and fittings (£m)	Assets Under Construction (£m)	Total (£m)
Owned	476	5,470	710	23,493	100	608	121	21	1,316	32,315
On balance sheet PFI	7	2,675	90	-	2	-	-	-	-	2,774
Donated	-	-	-	3,935	-	-	-	-	-	3,935
EU Grant	2	82	-	-	-	15	-	-	3	102
Net book value at 31 March 2024	485	8,227	800	27,428	102	623	121	21	1,319	39,126

2023-24 Donated Asset Movement	Land ¹ (£m)	Buildings ² (£m)	Dwellings (£m)	Road Network ³ (£m)	Transport (£m)	Equipment (£m)	ICT Systems (£m)	Fixtures and fittings (£m)	Assets under Construction (£m)	Total (£m)
Additions	-	-	-	-	-	1	-	-	2	3
Disposals	-	-	-	-	-	-	-	-	-	-

¹ - (land holdings and land underlying buildings);

² - (excluding dwellings);

³ - (including land)

6b. Property, Plant and Equipment - NHS non-current assets included within note 6a

Cost or valuation	Land ¹ (£m)	Buildings ² (£m)	Dwellings (£m)	Road Network ³ (£m)	Transport (£m)	Equipment (£m)	ICT Systems (£m)	Fixtures and fittings (£m)	Assets under Construction (£m)	Total (£m)
At 1 April 2024	358	7,844	31	-	139	1,436	302	77	621	10,808
Additions	-	33	-	-	8	91	15	1	263	411
Adjustments	-	-	-	-	-	-	-	-	-	-
Transfers	-	174	1	-	15	42	9	3	(260)	(16)
Disposals	(1)	-	-	-	(18)	(29)	(32)	(3)	-	(83)
Revaluations to Revaluation Reserve	11	(66)	(1)	-	-	-	-	-	-	(56)
Revaluations to Outturn Statement	-	(25)	-	-	(1)	-	-	-	4	(22)
At 31 March 2025	368	7,960	31	-	143	1,540	294	78	628	11,042
Depreciation
At 1 April 2024	-	332	1	-	74	834	204	58	-	1,503
Charged in year		234	2	-	18	111	30	3	-	398
Adjustments		(2)	-	-	(1)	(3)	-	1	-	(5)
Transfers	-	-	-	-	-	-	-	-	-	-
Disposal	-	-	-	-	(17)	(28)	(32)	(3)	-	(80)
Reclassifications	-	-	-	-	-	(1)	-	-	-	(1)
Revaluations to Revaluation Reserve	-	(248)	(1)	-	-	-	-	-	-	(249)
Revaluations to Outturn Statement	-	15	-	-	-	-	-	-	-	15
At 31 March 2025	-	331	2	-	74	913	202	59	-	1,581
Net book value at 31 March 2025	368	7,629	29	-	69	627	92	19	628	9,461
Net book value at 31 March 2024	358	7,512	30	-	65	602	98	19	621	9,305

Analysis of asset financing:	Land ¹ (£m)	Buildings ² (£m)	Dwellings (£m)	Road Network ³ (£m)	Transport (£m)	Equipment (£m)	ICT Systems (£m)	Fixtures and fittings (£m)	Assets under Construction (£m)	Total (£m)
Owned	359	4,892	29	-	69	615	92	19	624	6,699
Finance Leased	-	-	-	-	-	-	-	-	-	-
PFI included in Statement of Financial Position	7	2,649	-	-	-	-	-	-	-	2,656
PFI Residual Interest	-	-	-	-	-	-	-	-	-	-
Donated Asset	2	88	-	-	-	12	-	-	4	106
Net book value at 31 March 2025	368	7,629	29	-	69	627	92	19	628	9,461
Donated Asset Movement
Additions	-	-	-	-	-	2	-	-	3	5
Disposals	-	-	-	-	-	1	-	-	-	1

¹ - (land holdings and land underlying buildings);

² - (excluding dwellings);

³ - (including land)

Prior Year

Cost or valuation	Land ¹ (£m)	Buildings ² (£m)	Dwellings (£m)	Road Network ³ (£m)	Transport (£m)	Equipment (£m)	ICT Systems (£m)	Fixtures and fittings (£m)	Assets under Construction (£m)	Total (£m)
At 1 April 2023	361	7,497	29	-	128	1,571	411	93	544	10,634
Additions	-	9	-	-	2	50	13	3	309	386
Adjustments	-	-	-	-	-	-	-	-	-	-
Transfers	1	83	1	-	22	78	16	1	(202)	-
Transfers (to) assets classified held for sale	-	-	-	-	-	-	-	-	-	-
Disposals	(1)	(19)	-	-	(12)	(261)	(137)	(20)	-	(450)
Revaluations to Revaluation Reserve	(1)	276	1	-	-	-	-	-	-	276
Revaluations to Outturn Statement	(2)	(2)	-	-	(1)	(2)	(1)	-	(30)	(38)
At 31 March 2024	358	7,844	31	-	139	1,436	302	77	621	10,808
Depreciation
At 1 April 2023	-	279	-	-	68	984	312	75	-	1,718
Charged in year	-	221	2	-	17	111	29	3	-	383
Adjustments	-	-	-	-	-	-	-	-	-	-
Transfers	-	-	-	-	-	-	-	-	-	-
Transfers (to) assets classified held for sale	-	-	-	-	-	-	-	-	-	-
Disposal	-	(19)	-	-	(11)	(260)	(137)	(20)	-	(447)
Reclassifications	-	-	-	-	-	-	-	-	-	-
Revaluations to Revaluation Reserve	-	(130)	(1)	-	-	-	-	-	-	(131)
Revaluations to Outturn Statement	-	(19)	-	-	-	(1)	-	-	-	(20)
At 31 March 2024	-	332	1	-	74	834	204	58	-	1,503
Net book value at 31 March 2024	358	7,512	30	-	65	602	98	19	621	9,305
Net book value at 31 March 2023	361	7,218	29	-	60	587	99	18	544	8,916

Prior Year

Analysis of asset financing:	Land ¹ (£m)	Buildings ² (£m)	Dwellings (£m)	Road Network ³ (£m)	Transport (£m)	Equipment (£m)	ICT Systems (£m)	Fixtures and fittings (£m)	Assets under Construction (£m)	Total (£m)
Owned	349	4,794	30	-	65	589	98	19	619	6,563
Finance Leased	-	-	-	-	-	-	-	-	-	-
PFI included in Statement of Financial Position	7	2,636	-	-	-	-	-	-	-	2,643
PFI Residual Interest	-	-	-	-	-	-	-	-	-	-
Donated Asset	2	82	-	-	-	13	-	-	2	99
Net book value at 31 March 2024	358	7,512	30	-	65	602	98	19	621	9,305
Donated Asset Movement
Additions	-	-	-	-	-	1	-	-	2	3
Disposals	-	-	-	-	-	-	-	-	-	-

¹ - (land holdings and land underlying buildings);

² - (excluding dwellings);

³ - (including land)

6c. Property, Plant and Equipment Disclosures

	2024-25 (£m)	2023-24 (£m)
Net book value of Property, Plant and Equipment	39,150	39,126
Total value of assets held under:
Hire Purchase Contracts	-	-
PFI and PPP Contracts	5,417	6,708
Total	5,417	6,708
Total depreciation charged in respect of assets held under:
Hire Purchase Contracts	-	-
PFI and PPP contracts	55	54
Total	55	54

Valuations and Basis of Valuation

'As part of the 5-year rolling programme for Scottish Government assets, 6 properties were revalued - Saughton House, St Andrews House, Science & Advice for Scottish Agriculture (SASA) Headquarters and properties in Stornoway, Portree and Balivanich. The land held at Granton was also revalued. All properties were inspected in person. Except for the SASA Headquarter, the valuations were on the basis of Existing Use Value (EUV). The SASA Headquarters including Laboratory is considered a specialised buildings, for which no market-based evidence is available to support the use of EUV to arrive at Current Value. Depreciated Replacement Cost (DRC) approach has been used to value this building.

Valuations were carried out by the Valuation Office Agency (VOA). These valuations were carried out in accordance with the professional standards of the Royal Institution of Chartered Surveyors: RICS Valuation - Global Standards and RICS UK National Supplement, commonly known together as the Red Book. In particular UK VPGA (Valuation Practice Guidance- Application) 5 addresses the valuation of central government assets for accounting purposes.

In addition to the land and buildings recorded in the core portfolios’ accounts, the consolidated accounts reflect some land and buildings which are specialised operational properties and have been valued at their depreciated replacement cost. As noted in the relevant underlying agency accounts, the open market value of these properties would be significantly lower.

Individual NHS boards have their own revaluation schemes, details of which are available in the various NHS Board accounts. These schemes operate in accordance with Scottish Government policy on revaluation as set out in Note 1.3 to these accounts.

7. Intangible Assets

Cost or Valuation	Software Licenses (£m)	Information Technology Software (£m)	Assets under Development (£m)	Total (£m)
As at 1 April 2024	154	640	136	930
Additions	7	81	42	130
Adjustment	-	9	(9)	-
Disposals	(38)	(20)	-	(58)
Transfers	2	26	(23)	5
Revaluations to Outturn Statement	-	(2)	-	(2)
Other adjustments	(1)	8	(1)	6
Balance at 31 March 2025	124	742	145	1,011
Amortisation
As at 1 April 2024	136	272	-	408
Charged in year	5	74	-	79
Disposals	(38)	(20)	-	(58)
Transfers	-	-	-	-
Revaluations to Outturn Statement	-	(2)	-	(2)
Other adjustments	(1)	8	-	7
Balance at 31 March 2025	102	332	-	434
Net book value at 31 March 2025	22	410	145	577
Net book value at 31 March 2024	18	368	136	522

Prior Year

Cost or Valuation	Software Licenses (£m)	Information Technology Software (£m)	Assets under Development (£m)	Total (£m)
As at 1 April 2023	155	567	116	838
Additions	4	75	71	150
Adjustment	(1)	7	(7)	(1)
Disposals	(9)	(48)	-	(57)
Transfers	5	39	(44)	-
Revaluations to Outturn Statement	-	-	-	-
Balance at 31 March 2024	154	640	136	930
Amortisation
As at 1 April 2023	140	255	-	395
Charged in year	5	65	-	70
Disposals	(9)	(48)	-	(57)
Transfers	-	-	-	-
Revaluations to Outturn Statement	-	-	-	-
Balance at 31 March 2024	136	272	-	408
Net book value at 31 March 2024	18	368	136	522
Net book value at 31 March 2023	15	312	116	443

8. Leases

8a Right-of-Use Lease Assets

Cost or Valuation	Land (£m)	Buildings (£m)	Dwellings (£m)	Transport (£m)	Plant & Machinery (£m)	Total (£m)
Balance as at 31 March 2024	18	506	7	55	78	664
Additions	-	25	3	16	11	55
Disposals	-	(7)	(1)	(5)	(4)	(17)
Transfers	-	10	-	-	-	10
Remeasurement	-	14	-	-	-	14
Balance at 31 March 2025	18	548	9	66	85	726
Amortisation
Balance as at 31 March 2024	1	102	4	26	17	150
Charged in year	1	51	2	17	10	81
Disposals	-	(5)	(1)	(6)	(4)	(16)
Transfers	-	-	-	-	-	-
Remeasurement	-	(1)	-	-	-	(1)
Balance at 31 March 2025	2	147	5	37	23	214
Net book value at 31 March 2025	16	401	4	29	62	512
Net book value at 31 March 2024	17	404	3	29	61	514

Prior year

Cost or Valuation	Land (£m)	Buildings (£m)	Dwellings (£m)	Transport (£m)	Plant & Machinery (£m)	Total (£m)
Balance as at 31 March 2024	21	499	6	32	60	618
Additions	-	23	1	28	22	74
Disposals	-	(13)	-	(4)	(3)	(20)
Transfers	(3)	3	-	-	-	-
Remeasurement	-	(6)	-	(1)	(1)	(8)
Balance at 31 March 2025	18	506	7	55	78	664
Amortisation
Balance as at 31 March 2024	-	56	2	12	9	79
Charged in year	1	53	2	16	11	83
Disposals	-	(8)	-	(3)	(3)	(14)
Transfers	-	-	-	-	-	-
Remeasurement	-	1	-	1	-	2
Balance at 31 March 2025	1	102	4	26	17	150
Net book value at 31 March 2024	17	404	3	29	61	514
Net book value at 31 March 2023	21	443	4	20	51	539

Scottish Government and consolidated body lease contracts comprise leases of operational land and buildings, plant and machinery and motor vehicles. Most leases are individually insignificant, there are no individual leases that are materially significant to the consolidated accounts position.

8b Lease Liabilities

	2024-25 (£m)	2023-24 (£m)
Right of Use Assets
Within one year	72	65
Between two and five years (inclusive)	187	225
After five years	193	235
Less unaccrued interest	(10)	(11)
Total	442	514

8c Amounts Recognised in Outturn

	2024-25 (£m)	2023-24 (£m)
Depreciation	88	82
Interest Expense	8	7
Non Recoverable VAT on lease payments	7	7
Low value and short term leases	6	7
Remeasurement of ROU assets - (gain)/loss charged to SOCNE	2	-
Total Lease Costs through Outturn	111	103

8d Amounts recognised in the Statement of Cash Flows

	2024-25 (£m)	2023-24 (£m)
Interest expense	14	1
Repayments of principal on leases	64	111

9. Assets Classified as Held for Sale

The following assets have been presented for sale by the Scottish Government. The completion date for sale is expected to be within 12 months. Assets classified as held for sale are measured at the lower of their carrying amount immediately prior to their classification as held for sale and their fair value less costs to sell.

Assets classified as held for sale are not subject to depreciation or amortisation.

	Property Plant and Equipment (£m)	Intangible Assets (£m)	Investment Assets (£m)	Total (£m)
As at 1 April 2024	7	-	-	7
Transfers from Non-Current Assets	-	-	-	-
Disposals	(1)	-	-	(1)
Fair Value Adjustment	-	-	-	-
Balance at 31 March 2025	6	-	-	6
Prior year
As at 1 April 2023	8	-	-	8
Transfers from Non-Current Assets	-	-	-	-
Disposals	(1)	-	-	(1)
Fair Value Adjustment	-	-	-	-
Balance at 31 March 2024	7	-	-	7

10. Inventories

Non-Current	2024-25 (£m)	2023-24 (£m)
NHS inventories	7	-
Total	7	-
Current
NHS inventories	167	160
Other inventories	6	5
Total	173	165

11. Financial Assets

11a. Non-Current Financial Assets

	Interests in Nationalised Industries and Limited Companies (£m)	Voted Loans (£m)	NLF Loans (£m)	Student Loans (£m)	Housing Loans (£m)	Housing Shared equity Loans (£m)	Other Funds Restated (£m)	Total (£m)
Balance at 1 April 2024	531	4,495	275	5,859	570	1,365	574	13,669
Add element reported within current assets	-	95	82	200	13	-	33	423
Balance at 1 April 2024	531	4,590	357	6,059	583	1,365	607	14,092
Advances and Acquisitions
Acquisitions	179	-	-		-	-	-	179
Cash Advances	-	447	-	773	46	15	16	1,297
Capitalised interest	-	-	-	440	-	-	-	440
Repayments and disposals	(3)	(96)	(82)	(204)	(11)	(97)	(75)	(568)
Fair Value Adjustment	(77)	-	-	190	-	55	-	168
Unwinding of discounted cash flow	-	7	-	(296)	(1)	-	12	(278)
Other Adjustment	-	-	-	1	-	-	-	1
Impairments	-	-	-	-	1	-	(2)	(1)
Write offs and adjustments	-	-	-	(34)	-	-	(1)	(35)
Balance at 31 March 2025	630	4,948	275	6,929	618	1,338	557	15,295
Loans repayable within 12 months transferred to current assets	-	(111)	(25)	(232)	(37)	-	(39)	(444)
Balance at 31 March 2025	630	4,837	250	6,697	581	1,338	518	14,851

11a. Non-Current Financial Assets (continued)

	Interests in Nationalised Industries and Limited Companies (£m)	Voted Loans (£m)	NLF Loans (£m)	Student Loans (£m)	Housing Loans (£m)	Housing Shared equity Loans (£m)	Other Funds Restated (£m)	Total (£m)
Balance at 1 April 2023	316	4,205	357	5,652	499	1,377	525	12,931
Add element reported within current assets	-	51	94	120	10	-	47	322
Prior year restatement - Transport Scotland	-	(10)	-	-	-	-	2	(8)
Revised Balance at 1 April 2023	316	4,246	451	5,772	509	1,377	574	13,245
Advances and Acquisitions
Acquisitions	237	-	-	-	-	-	-	237
Cash Advances	-	396		638	95	56	45	1,230
Capitalised interest	-	-	-	461	-	-	-	461
Repayments and disposals	(4)	(52)	(94)	(223)	(6)	(75)	(32)	(486)
Fair Value Adjustment	(18)	-	-	(312)	(14)	7	(1)	(338)
Unwinding of discounted cash flow	-	-	-	(268)	(1)	-	15	(254)
Other Adjustment	-	-	-	3	-	-	-	3
Impairments	-	-	-	-	-	-	7	7
Write offs and adjustments	-	-	-	(12)	-	-	(1)	(13)
Balance at 31 March 2024	531	4,590	357	6,059	583	1,365	607	14,092
Loans repayable within 12 months transferred to current assets	-	(95)	(82)	(200)	(13)	-	(33)	(423)
Balance at 31 March 2024	531	4,495	275	5,859	570	1,365	574	13,669

11b. Interests in Nationalised Industries and Limited Companies

As at 31 March 2025, the Scottish Ministers are the sole shareholder in Caledonian Maritime Assets Limited, David MacBrayne Limited, Highlands and Islands Airports Limited, TS Prestwick Holdco Limited and Ferguson Marine (Port Glasgow) Holdings Limited. The Scottish Ministers hold the following investments:

• Caledonian Maritime Assets Limited: 1,500,000 ordinary shares of £10 each
• David MacBrayne Limited: 5,500,002 ordinary shares of £1 each
• Highlands and Islands Airport Limited: 50,000 ordinary shares of £1 each
• TS Prestwick Holdco Limited: 1 ordinary share of £1
• Scottish Rail Holdings: 1 ordinary share of £1
• Ferguson Marine (Port Glasgow) Holdings Limited: 1 ordinary share of £1

These organisations are operated and managed independently of the Scottish Government, and, therefore, do not fall within the consolidated portfolio accounting boundary. The companies each publish an individual annual report and accounts. The net assets and results of the aforementioned companies are summarised in the table below.

	TS Prestwick Holdco Ltd. Note 1 (£m)	Highlands and Islands Airports Ltd. Note 2 (£m)	Caledonian Maritime Assets Ltd. Note 2 (£m)	David MacBrayne Ltd. Note 2 (£m)	Ferguson Marine Ltd. Note 2 (£m)	Scottish Rail Holdings. Note 2 (£m)
Net Assets/(Liabilities) as at 31 March 2025	(12)	164	177	51	13	(27)
Turnover	54	32	53	329	59	417
Profit /(Loss) for the financial year	(1)	(35)	(5)	5	(3)	(821)

Note 1: Published financial results for the year ended 31 March 2024 are shown as the figures for 2024-25 are not yet available.

Note 2: All financial results are draft and subject to audit with final accounts yet to be published.

Caledonian Maritime Assets Limited

Scottish Ministers are the sole shareholder in Caledonian MacBrayne Ltd, which became known as Caledonian Maritime Assets Ltd (CMAL) following a restructure in 2006, and retained ownership of the vessels and ports, which it leases to the operator of the Clyde & Hebrides Ferry services.

David MacBrayne Limited

Scottish Ministers are the sole shareholder in David MacBrayne Ltd, which became the holding company for CalMac Ferries Ltd following the restructuring in 2006. CalMac Ferries Ltd provides the Clyde & Hebrides Ferry Services under a subsidised public service contract with Scottish Ministers.

Highlands and Islands Airport Limited (HIAL)

Scottish Ministers are the sole shareholders in HIAL. The company's purpose is to maintain the safe operation of its airports to support economic and social development in the Highland and Islands. HIAL currently operates 11 airports; 10 in the Highlands and Islands and also Dundee, which it assumed responsibility for in December 2007 and now operates via a wholly owned subsidiary company, Dundee Airport Limited.

TS Prestwick Holdco Limited

In 2013 Transport Scotland purchased the entire share capital of Prestwick Aviation Holdings Limited, the holding company of subsidiaries who own and operate Glasgow Prestwick Airport, through a company set up for this specific purpose – TS Prestwick Holdco Limited.

Scottish Rail Holdings Limited (SRH)

Scottish Ministers are the sole shareholder of SRH. SRH is the holding company of ScotRail Trains Limited (SRT), which took over the operation of ScotRail services on 1 April 2022 and Caledonian Sleeper Limited (CSL), which took over the operation of Caledonian Sleeper services on 25 June 2023. SRH is responsible for providing oversight and managing the provision of SRT and CSL rail passenger services under the terms of their Grant Agreements.

Ferguson Marine

In December 2019 the Ferguson Marine shipyard was brought into public ownership. This followed over two years of support from the Scottish Government to find a resolution to the difficulties at Ferguson Marine and the Scottish Government's priorities still remain the completion of the two public sector ferries, protecting jobs, and securing a long-term future for the yard. Scottish Ministers hold 1 £1 share in Ferguson Marine (Port Glasgow) Holdings Limited.

Scottish National Investment Bank (SNIB)

As per the financial memorandum between the Scottish Government and the Scottish National Investment Bank plc, the Scottish Government receives shares in return for capital provided to the Bank for onward investment. The valuation of SNIB’s underlying investments is used as a proxy for valuation of Scottish Government's investment in SNIB. A share certificate was issued on 31 March 2025 taking the total number of ordinary £1 shares held by Scottish Ministers to 645,853,325 (2024: 492,709,291). A further certificate was issued to the Scottish Government in August 2025, increasing the shareholding to the total invested by SNIB to £672m. This ensures that the total holding of £640m in SNIB is covered by issued share certificate.

11c. Other Interests

The Scottish Ministers hold an interest in the following organisations:

Student Loan Company (SLC)

The Student Loan Company is a non-departmental public body which administers the payment and collection of loans to UK students. When it was set up in 1990, it was wholly owned by the Secretary of State for Education and Skills (now the Department for Education) and the Secretary of State for Scotland. From 1 July 1999, the student support function was transferred to the Scottish Ministers with respect to students ordinarily resident in Scotland. Following a restructuring the Scottish Ministers hold 1 share with a nominal value of £0.50 (5% of the equity) in the SLC.

Scottish Futures Trust Ltd (SFT)

The Scottish Futures Trust was set up in September 2008 to work collaboratively across the public sector to secure improved value for money in infrastructure procurement, and is working jointly with local authorities, NHS Boards and other public bodies to deliver benefits in cost effective asset procurement and management. The SFT is a limited company owned by the Scottish Ministers with share capital of £100, £2 of which has been issued and is held by the Scottish Ministers.

Scottish Health Innovations Ltd

Scottish Health Innovations Ltd is a company that works in partnership with NHS Scotland to protect and develop healthcare innovations. The company is limited by guarantee with three members: the Scottish Ministers, the National Waiting Times Centre, and NHS Tayside.

Burntisland Fabrications

Over recent financial years the Scottish Government advanced loans on a commercial basis to BiFab. As a result of the conversion of these loans to equity the Scottish Government now holds a 32.4% stake in the company. As part of year end processes the Scottish Government valued its equity holding at £nil (2023-24: £nil).

11d. Loans

The loans issued and reported as Financial Assets within these accounts have been valued reflecting current market expectations regarding discounted future cash flows. Under IFRS 13, these valuations have been classed as level 3 unobservable inputs, as there is no active market for the investments.

Voted Loans

In year, £338m of advances were provided to Scottish Water (2023-24: £333m of advances) for their capital investment programme and £108m of advances to CMAL via Transport Scotland for the procurement of new shipping (2023-24: £63m). As at 31 March 2025 a total of £4,592m was held with Scottish Water (31 March 2024: £4,339m), £362m was held with CMAL (31 March 2024: £255m) and £1m with Crofters (31 March 2024: £2m).

National Loans Fund

Prior to 1 July 1999, the Secretary of State loaned money to Scottish Enterprise, Scottish Homes and the three Water Authorities (now Scottish Water), from the National Loans Fund. At 1 July 1999, the right to the sums outstanding was transferred to the Scottish Ministers who must pay the repayments and interest to the Secretary of State for Scotland via the Scottish Consolidated Fund. The loans to Scottish Enterprise and Scottish Homes have since been repaid. The NLF loans remaining are with Scottish Water.

Scottish Water's annual report and accounts can be found at: Scottish Water's annual reports

Student Loans

Loans made under the terms of the student loans scheme are administered by the Student Loans Company Limited, a company owned jointly by the Scottish Ministers and the Department for Education. These loans are accounted for on the basis of the loan balances of students domiciled in Scotland and adjusted for fair value and impairment. Further details on student loan valuation are in note 11e.

The Student Loans Company annual report and accounts can be found at: The Student Loans Company annual reports

Housing Shared Equity

The Scottish Government owns shared Equity stakes. These are not loans but equity stakes and have no payment schedules. They are repaid when the purchaser decides to sell the property.

As at 31 March 2025 £1,336m was held (31 March 2024: £1,365m) after fair value adjustments.

The main shared equity schemes are:

Open Market Shared Equity (OMSE) helps priority access groups to purchase a property off the open market without having to fund its entire cost Buyers will pay for the biggest share which is usually between 60% and 90% of the home's cost. The Scottish Government holds the remaining share under a shared equity agreement.

New Supply Shared Equity (NSSE) helps priority access groups to purchase a property from a housing association or local council without having to fund its entire cost Buyers will pay for the biggest share which is usually between 60% and 90% of the home's cost. The Scottish Government holds the remaining share under a shared equity agreement.

Help to Buy (Scotland) scheme helped with the purchase of new-build homes without the need for a large deposit. With the Affordable New Build and Smaller Developers Schemes the buyer paid a minimum of at least 85% of the home's total purchase price and the Scottish Government will hold the remaining % share under a shared equity agreement.

First Home Fund provided first-time buyers with up to £25,000 to help them buy a property. It was open to all first-time buyers in Scotland and could be used to help buy both new build and existing properties.

Housing Loans

Housing Loans include repayment and deferred loans, for the build or purchase of residential properties, including the delivery of affordable housing. The fair value estimation technique for the loans relates to the underlying property valuations using the Nationwide Pricing Index method, where applicable: Scottish Government's 'Getting help to buy your home' site

The main Housing loan schemes are:

Charitable Bonds

The Charitable Bond model means the Scottish Government can make an ethical investment in affordable housing in the form of loans to social housing providers for up to 15 years, repaid at the end of the term. As at 31 March 2025 a total of £415m (31 March 2024: £380m) was held on Charitable Bond schemes after fair value adjustments. £46m of investments were made by the Scottish Government in Charitable Bonds in 2024-25 (2023-24: £95m).

Mid Market Rented Housing

Mid-market rent (MMR) is a type of affordable housing where rents are lower than in the private market, but higher than social housing. The Scottish Government supports the delivery of MMR through the mainstream grant-funded Affordable Housing Supply Programme, as well as long term loans.

No additional loan advances have been made through MMR schemes during the year. As at 31 March 2025 a total of £85m (31 March 2024: £85m) was held on MMR schemes after fair value adjustment.

Housing Infrastructure Funds

The Housing Infrastructure Fund (HIF) enables funding for housing developments that have stalled or can’t proceed due to the excessive cost or nature of the infrastructure works to be delivered.

No additional loan advances have been made through this fund during the year. As at 31 March 2025 a total of £36m (31 March 2024: £34m) was held on HIF.

Deferred Financial Commitment Loans

These schemes were set up to support individuals to purchase council houses, they include loans provided from 2004-05 and have been closed to new entrants since 2016.

As at 31 March 2025 £76m was held (31 March 2024: £75m) after fair value adjustments.

Other Funds

The Energy Savings Trust (EST) administer and manage funds on behalf of the Scottish Government which provide loans to save energy and reduce carbon dioxide emissions. As at 31 March 2025 a total of £131m funds were held by them (2023-24 £125m). The largest scheme is the Home Energy Scotland Fund which is £93m of the total £125m fund (2023-24 £83m). Further information on the loans provided through EST can be found at: Grants and loans page on the Energy Savings Trust website

Transport Scotland provides funding to the Energy Savings Trust to fund energy efficient transport initiatives, including the Electric Vehicle Loan and electric Taxi support, the Low Carbon Transport Business Loan and eBike loan support. At 31 March 2025 £97m (2023-24: £133m) was held as loan funds.

The Renewable Energy Investment Fund (REIF) is delivered through Scottish Enterprise and Highlands and Islands Enterprise. REIF provides funding to commercial and community renewable energy projects across Scotland. As at 31 March 2025 £30m (31 March 2024: £28m) was held as loan funds.

The Scottish Government and the European Regional Development Funds, have established the Scottish Partnership for Regeneration in Urban Centres (SPRUCE) Fund. This fund is a JESSICA (Joint Venture Support for Sustainable Investment in City Areas) Urban Development Fund (£38m; 31 March 2024: £47m) that helps fund regeneration and energy efficient projects within targeted areas of Scotland.

The Scottish Growth Scheme is a package of financial support of up to £500 million for Scottish businesses. It's backed by the Scottish Government and aims to help businesses grow. £6m was provided to the fund managers in year for distribution (2023-24: £14m). As at 31 March 2025 £57m (31 March 2024: £63m) was held as loan funds.

In 2020-21, the Scottish Government provided Covid support loans totalling £95m. No further advances were provided during 2024-25. The larger loan funds within this were:

• Communities – Third Sector Growth Fund - £32.5 million, with a fair value of £32.5m
• Sport - Football / Rugby clubs - £30 million, with a fair value of £13m

11e. Student Loan Valuation

Student loans are valued in accordance with IFRS 9, and are recognised at fair value through the Statement of Comprehensive Net Expenditure (SOCNE). Their value at any time is dependent upon macroeconomic conditions, forecast over a 30 year repayment profile as well as a number of other complex assumptions.

Estimated value is determined using a discounted cash flow model known as the Stochastic Earnings Path (StEP) model. This model is used across the devolved administrations and is managed by the UK Department for Education (DfE), using various data sources on higher education students to predict the likelihood of loan repayment. There is a standard cycle and process for the production of valuation and modelling information, to encompass financial year-end reporting, and mid-year forecasting, with one-off runs as necessary in response to Scottish and UK Government fiscal events.

Forecasting Model background

The StEP model uses a regression-based approach with earnings history as a predictor of future earnings, along with age, gender and qualification level to give a more accurate estimate.

The model is long-term in nature and depends on a complex set of assumptions, particularly, the latest Office of Budgetary Responsibility (OBR) short-term and long-term forecasts for RPI, Bank of England base rate and earnings growth. The short-term forecasts are generally updated twice per year and long-term forecasts once per year.

Key inputs into the model include:

• Student Loans Company data – used for borrower characteristics, loan amounts and for derivation of earnings and employment models and income distribution in early career stages. Also used in frictional adjustments, such as part-year employment models.
• British Household Panel Survey (BHPS) data – used for derivation of earnings and employment models and income distributions, especially late career stage earnings and steady state models.
• Labour Force Survey data – to convert income percentiles to cash amounts, regarded as more reliable than cash values from BHPS due to large sample sizes.
• Destinations of Leavers from Higher Education survey – used in the graduate age adjustment, taking into account different earnings profiles of mature and typical age borrowers in early career stages.
• Office of National Statistics life tables – data on deaths.
• SAAS data - used for student entrants forecasts.
• HESA data – course lengths and drop outs.
• OBR macroeconomic forecasts – forecasts of earnings growth, Bank of England base rates, and RPI.

Before the model is received by the Scottish devolved administration, further work is required to tailor the content of each model to the circumstances only relevant to the Scottish loan policy.

Forecasting Model changes

The Scottish Government is in the process of moving to new student loan valuation model which will improve the accuracy of student loan repayment forecasts. This new model is composed of four sub-models - an entrants model, an outlay model, an earnings model and a repayments model, to collectively predict outcomes for student borrowers. The entrants model uses Scottish entrants data from SAAS and ONS population forecasts as its input to forecast changes in student entrants in future years. The outlay model is set up to forecast fee loan and maintenance loan outlay for borrowers domiciled in Scotland using historical SLC data and Scottish student loan policy information. The earnings model calculates earnings “paths” for individual borrowers after graduation, using input variables such as course level, domicile and subject studied to estimate earnings in future years. The repayments model then uses macroeconomic forecasts such as Retail Price Index (RPI) inflation, interest rates and earnings growth to predict the repayments in line with each earnings “path".

The new sub-models are introduced on a phased basis, with the 2024-25 valuation done using a “hybrid pipeline” consisting of new entrants and outlay models and old earnings and repayments models. The full transition to new models is expected to happen in Autumn 2025.

Macroeconomic determinants

The information as at 31 March 2025 was prepared using the OBR Economic and Fiscal Outlook (published 26 March 2025). For further information on this economic outlook see the OBR website: Economic and fiscal outlook - March 2025' report on the Office for Budget Rsponsibility website

Forecasting Model updates

Due to the variety of information sources, the complexity of information requirements, and the independence of each variable from one another, it is not feasible to conduct forecasts with significant frequency. For this reason, it is the policy of Scottish Government to only conduct a full impairment review twice per year, in line with the OBR Economic and Fiscal Outlook as detailed above.

Sensitivity Analysis

As described above, there are a number of variables used in the model, and adjusting any of these variables will have an impact on the overall valuation. Each of these variables can be adjusted independently of the others, so the choice of alternative scenarios is extensive. Parameters have been chosen carefully to reflect the most accurate position at the reporting date, but it is recognised that adjusting these variables will have an impact on the valuation.

For 2024-25, the Scottish Government has moved to a new approach regarding the sensitivity analysis conducted on student loan valuation. In the 2023-24 analysis, a 1 percentage point increase and decrease was applied to the inflation (RPI), earnings growth and interest (Bank of England base) rate parameters, set by the OBR in their March Economic and Fiscal Outlook report, over a 5-year period. A 0.5 percentage point increase and decrease was applied to the discount rate. The new approach applies the same magnitude of change to these determinants, but over an extended period, from 2025-26 to 2073-74. This extension better reflects the long-term nature of student loan repayments, where valuations are influenced by economic conditions over the entire repayment period, not just the initial five years. The 0.5 percentage point adjustment to the discount rate remains unchanged, in line with previous analysis. Due to the changes in the approach, these results are not directly comparable with those from 2023-24.

Whilst the effects of changes to each macro determinant have been examined independently of each other, this is highly unlikely in reality, therefore the sensitivity analysis presented is theoretic in nature.

The table below shows the main results of the sensitivity analysis and how each test would impact the value of the loan book.

Table 1: Sensitivity analysis results

Test	Revised Loan Book Value (£)	Change (£)
1. RPI +1 percentage point	6,082,705,271	(814,494,464)
2. RPI -1 percentage point	7,620,872,278	723,672,543
3. Earnings Growth +1 percentage point	7,592,604,826	695,405,091
4. Earnings Growth -1 percentage point	6,061,543,995	(835,655,740)
5. Bank of England rate +1 percentage point	6,897,199,735	0
6. Bank of England rate -1 percentage point	6,896,427,632	(772,103)
7. Discount rate +0.5 percentage point	6,718,172,542	(179,027,193)
8. Discount rate -0.5 percentage point	7,076,226,927	179,027,193

Impact of Model on Current Student Loans Valuation

Since valuation at 31 March 2024, both RPI and Bank of England base rate have shifted in response to economic conditions; RPI has decreased from 4.3% to 3.2% and the Bank of England base rate has decreased from 5.25% to 4.5%.

For further information on these rate changes, see Office of National Statistics and Bank of England websites: RPI All Items: Percentage change over 12 months: Jan 1987=100 - Office for National Statistics (ons.gov.uk) Bank Rate history and data | Bank of England Database

As shown by the sensitivity analysis results above, changes in the Bank of England base rate were found to have little to no impact on the RAB charge and other outputs. This is because RPI is forecast to be lower than the Bank Rate plus 1% in future years, meaning the Plan 4 interest rate will be determined by RPI rather than the Bank Rate.

12. Financial Instruments

The Scottish Government measures and presents financial instruments in accordance with International Accounting Standard (IAS) 32, International Financial Reporting Standard (IFRS) 7 and IFRS 9 as interpreted by the Financial Reporting Manual. IFRS 7, Financial Instruments: Disclosures, requires disclosure of the role that financial instruments have played during the period in creating or changing the risks that an entity faces in its activities. The Scottish Government is not exposed to the degree of financial risk faced by business entities because of the largely non-trading nature of its activities and the way that government is financed. Moreover, financial instruments play a much more limited role in creating or changing risk than would be typical of the listed companies to which IFRS 7 mainly applies. Financial assets and liabilities are generated by day to day operational activities and are not held to change the risks facing the Organisation in undertaking its activities.

Liquidity Risk

The Scottish Parliament makes provision for the use of resources by the Scottish Government, for revenue and capital purposes, in a Budget Act for each financial year. Resources and accruing resources may be used only for the purposes specified and up to the amounts specified in the Budget Act. The Act also specifies an overall cash authorisation to operate for the financial year. The Scottish Government is not, therefore, exposed to significant liquidity risks.

A maturity profile of the carrying amount of financial liabilities is presented below. This analysis satisfies the disclosure requirements of International Financial Reporting Standard 7, Financial Instruments: Disclosures (IFRS 7). The maturity profile for NLF loans is matched by the corresponding profile for the related fixed asset investments. The amounts disclosed are undiscounted cash flows as per IFRS 7.

Financial Liabilities	<1yr (£m)	2 - 5 yrs (£m)	>5yrs (£m)	2024-25 Total (£m)	2023-24 Total Restated (£m)
Trade payables	601	-	-	601	602
Accruals	1,818	29	-	1,847	1,135
Other payables	300	91	-	391	1,078
NLF loans	25	140	108	273	355
Accrued Interest due on NLF Loans	-	-	-	-	5
Balances Payable to SCF	-	-	-	-	-
Corporate balance with SCF	771	-	-	771	631
PFI Imputed finance leases	201	751	2,245	3,197	3,397
Lease payables	65	202	157	424	439
Bank overdraft	1	-	-	1	4
Other financial liabilities	1	60	-	61	55
Total	3,783	1,273	2,510	7,566	7,701

See Note 14 for explanation of the restatement of prior year payables balances.

Credit risk

Credit risk is the risk that a third party will default on its obligations. The maximum exposure to credit risk at the balance sheet date in relation to each class of financial asset is the carrying amount of those assets net of any impairment. No collateral is held as security.

Cash at bank is held with major UK banks. The credit risk associated with cash at bank is considered to be low.

The only area where the Scottish Government has significant concentrations of credit risk is on student loans. The Scottish Government has a statutory obligation to issue student loans and seek repayments in line with legislation. The Scottish Government is not permitted to withhold loans on the basis of poor credit rating nor is it able to seek collateral. The Scottish Government is therefore exposed to the risk that some student loans will not be repaid, although this is partly mitigated by the fact that most repayments are collected by Her Majesty's Revenue and Customs as part of the tax collection process. In addition this risk is mitigated through the valuation of student loans at fair value.

Market risks

There are a number of areas where the Scottish Government is exposed to potential market risk. These relate to interest rates, foreign currency risk and housing market risks.

Interest Rate Risk

59% (2023-24: 61%) of the Scottish Government’s financial assets and 100% (2023-24:100%) of its financial liabilities carry nil or fixed rates of interest and it is not therefore exposed to significant interest rate risk. The portion of the Scottish Government's financial assets that carry a floating rate of interest relates in the main to student loans.

Foreign Currency Risk

Within payables, the Scottish Government has a balance that is subject to exchange rate fluctuations. This relates to advances received from the European Commission (EC) for the 2014-20 European Structural Funds (ESF) programme, which will be settled as part of the closure of the programme. The year end balance of £25m is the sterling equivalent of €30m translated at the accounting date (using the official EU exchange rate as at 31 March 2025). Where there are other transactions denominated in Euros the exchange rate is managed within the programmes. The Scottish Government has no other significant exposure to foreign currency risk.

Housing Market Risk

The Scottish Government engages in a number of shared equity housing schemes, and is exposed to the risk of potential falls in the value of the housing market. The current investment in such schemes is £1,336m (2023-24: £1,365m).

Categories of financial assets and financial liabilities

The Scottish Government has the following categories of financial assets and financial liabilities:

Financial Assets	Note	Fair Value through Profit and Loss. Note a (£m)	Loans and receivables. Note b (£m)	Shares held in or loans advanced to the public sector. Note c (£m)	2024-25 Total (£m)	2023-24 Total (£m)
Voted loans	11	-	-	4,948	4,948	4,596
NLF loans	11	-	-	275	275	357
Housing loans	11	-	618	-	618	583
Shared Equity Housing loans	11	1,338	-	-	1,338	1,365
Other Funds	11		557	-	557	601
Student loans	11	6,929	-	-	6,929	6,059
Interests in nationalised industries	11	-	-	630	630	531
Trade receivables	13	-	101	-	101	103
Accrued income	13	-	242	-	242	282
Interest receivable	13	-	28	-	28	27
Amounts receivable from the SCF	13	-	1	-	1	48
Other receivables	13	-	243	-	243	198
Corporate balance with the SCF	13	-	-	-	-	3
Cash and cash equivalents	2	-	892	-	892	789
Total	-	8,267	2,682	5,853	16,802	15,542

Note: As not all current assets are financial instruments, the above tables exclude VAT £86m (2023-24: £79m) and prepayments £389m (2023-24: £368m) which are included in the associated asset notes.

Financial Liabilities	Note	Fair Value through Profit and Loss. Note a (£m)	All other financial liabilities. Note d (£m)	Shares held in or loans advanced to the public sector. Note c (£m)	2024-25 Total (£m)	2023-24 Restated Total (£m)
Trade payables	14	-	601	-	601	602
Accruals	-	-	1,847	-	1,847	1,865
Other payables	14	-	391	-	391	348
NLF loans	14	-	-	273	273	355
Accrued Interest due on NLF Loans	14	-	-	-	-	5
Balances payable to the SCF	14	-	-	-	-	-
Corporate balance with SCF	14	-	771	-	771	631
PFI Deferred Residual Interest	14	-	-	-	-	-
Lease payables	14	-	424	-	424	439
Bank overdraft	14	-	1	-	1	4
Financial guarantees	14	-	-	-	-	-
Total	-	-	7,293	273	7,566	7,701

Note: As not all liabilities are financial instruments, the above tables exclude deferred income £157m (2023-24: £101m), other tax and social security £256m (2023-24: £238m restated), superannuation payable £220m (2023-24: £193m) and employee benefit accrual £227m (2023-24: £208m) included in the associated liabilities note (note 14). The finance leases are disclosed at the discounted cash flow value. For details of the restatement see note 14 Payables.

Note a: Assets and liabilities held at fair value through the profit and loss are measured at fair value with gains or losses being accounted for through the outturn statement.

Note b: Loans and receivables are measured at amortised cost using the effective interest methods, and any impairment losses go through the outturn statement. Disposal may give rise to a gain or loss, which is recognised through the outturn statement.

Note c: Shares in the public sector are held at historic cost less impairment and any impairment losses go to the outturn statement. Loans advanced to the public sector or due to the NLF are measured in the same manner as in note (b).

The fair value of financial instruments is equivalent to the carrying value disclosed in the financial statements. No financial assets and financial liabilities have been offset and presented net in these accounts.

13. Receivables and Other Assets

Amounts falling due within one year:	2024-25 (£m)	2023-24 (£m)
Trade receivables	101	103
VAT	86	79
Other receivables	140	128
Prepayments and accrued income	607	579
Benefit Overpayments	13	8
Interest receivable	28	27
Balances receivable from SCF	1	48
Corporate balance with the SCF	-	3
Balance as at 31 March	976	975

Amounts falling due after more than one year:	2024-25 (£m)	2023-24 (£m)
Benefit Overpayments	21	15
Other receivables	103	70
Prepayments and accrued income	59	58
Balance as at 31 March	183	143
Total balance as at 31 March	1,159	1,118

Trade Receivables are shown net of impairments as follows:	2024-25 (£m)	2023-24 (£m)
Amounts falling due within one year:
At 1 April	38	29
Charge for the year	28	21
Unused amount released	(3)	-
Utilised during the year	(15)	(12)
At 31 March	48	38

Other Receivables are shown net of impairments as follows:	2024-25 (£m)	2023-24(£m)
Amounts falling due within one year:
At 1 April	2	3
Charge for the year	2	-
Unused amount released	-	-
Utilised during the year	-	(1)
At 31 March	4	2

Amounts falling due after more than one year:	2024-25 (£m)	2023-24(£m)
At 1 April	7	9
Charge for the year	2	-
Unused amount released	-	-
Utilised during the year	-	(2)
At 31 March	9	7

The impairment of Other Receivables is mainly driven from Social Security Scotland and relates to the impairment against Benefit Overpayments. Benefit overpayments arise where a change of circumstances has been processed after that change of circumstances took place, or where client error or fraud have been identified.

14. Payables and Other Liabilities

Amounts falling due within one year:	2024-25(£m)	Restated 2023-24 (£m)
Payables and other current liabilities
Trade payables	601	602
Other taxation and social security	256	238
Superannuation payable	220	193
Other payables	300	262
Deferred income and accruals	2,195	2,162
Accrued interest due on NLF loans	4	5
Finance leases	65	65
PFI imputed finance leases	201	192
PFI deferred residual interest	-	-
Corporate balance with the SCF	771	631
Balances payable to the SCF	-	-
-	4,613	4,350
Other financial liabilities
Current instalments on NLF loans	25	82
Benefits Payable	236	177
Bank overdraft	1	4
Other financial liabilities	1	1
-	263	264
Total current liabilities	4,876	4,614

The prior year note has been restated to:

recategorise the Benefits payable from Payables and other current liabilities to Other financial liabilities; to move £20m which was previously disclosed as Other Payables to Other Taxation and Social Security; to move £365m which was previously disclosed as Other Payables to Deferred Income and Accruals.

Amounts falling due after more than one year:	2024-25 (£m)	2023-24 (£m)
Payables and other non-current liabilities
Other payables	91	86
Deferred income and accruals	33	12
Finance leases	358	374
PFI imputed finance leases	2,996	3,205
-	3,478	3,677
Other financial liabilities
Instalments due on NLF loans	248	273
Financial guarantees	-	-
Derivative financial instruments	-	-
Other financial liabilities	60	54
-	308	327
Total non-current payables and other financial liabilities	3,786	4,004

15. Provisions for liabilities and charges

	Student Loans Sale Subsidy (£m)	Early Departure Costs (£m)	NHS Clinical and Medical Negligence (£m)	SPS Prisoner Compensation (£m)	Other Provisions (£m)	Total 2024-25 (£m)	Total 2023-24 (£m)
Balance as at 1 April	2	92	653	1	487	1,235	997
Add: element reported as due within one year	4	11	408	2	136	561	366
Balance as at 1 April	6	103	1,061	3	623	1,796	1,363
Provided for in year	-	15	99	-	105	219	662
Provisions not required written back	-	(4)	-	(1)	(26)	(31)	(33)
Provisions utilised in year	(3)	(11)	(71)	-	(86)	(171)	(113)
Discount amortised	-	2	-	-	11	13	(83)
Balance as at 31 March	3	105	1,089	2	627	1,826	1,796
Payable within one year	(3)	(13)	(448)	(2)	(159)	(625)	(561)
Balance as at 31 March	-	92	641	-	460	1,201	1,235

Analysis of expected timing of any resulting outflows of economic benefits

	Student Loans Sale Subsidy (£m)	Early Departure Costs (£m)	NHS Clinical and Medical Negligence (£m)	SPS Prisoner Compensation (£m)	Other Provisions (£m)	Total 2024-25 (£m)	Total 2023-24 (£m)
Payable in 1 year	3	13	448	2	167	633	561
Payable between 2 - 5 yrs	-	30	425	-	220	675	774
Payable between 6-10 yrs	-	26	68	-	186	280	283
Thereafter	-	36	148	-	54	238	178
Total as at 31 March	3	105	1,089	2	627	1,826	1,796

Student loans

The debt sale subsidy is the additional cost to the Scottish Government of government subsidies contractually due to the purchaser of the debts beyond the costs that the government would have incurred had the debts remained in the public sector. The debt sale subsidy provision is estimated to meet the cost of this subsidy over the expected life of loans sold. The utilisation of this provision is dependent on the timing of the repayment of the loans which is uncertain.

Early Departure Provisions

This provision is based on an estimate of exposure to potential payments in respect of employees leaving service prior to reaching normal retirement age. For the NHS, Boards meet the additional costs of benefits in respect of employees retiring early by paying the required amounts annually to the NHS Superannuation Scheme for Scotland over the period between early departure and the normal retirement date. Amounts are provided for in full when the early retirement programme becomes binding by establishing a provision for the estimated payments, as discounted by the applicable Treasury discount rate.

NHS Clinical Negligence and Other Risk Indemnity Scheme (CNORIS)

Included within provisions is an amount of £1,071m (2023-24: £1,060m) which relates to the Clinical Negligence and Other Risk Indemnity Scheme (CNORIS). The Scottish Government’s CNORIS provision represents the national liability and Boards’ accounting for individual claims is removed.

In 2024-25 £81m (2023-24: £119m) of estimated settlement value of medical and clinical negligence claims were added to the provision.

In 2024-25 £71m (2023-24: £47m) in claims were settled.

SPS Prisoner Compensation

This provision is based on an estimate of exposure to potential prisoner compensation claims; further information can be found within the Scottish Prison Service annual accounts: Annual report for the Scottish Prison Service

Other Provisions - Justice Pension Provisions

A provision of £20.5m was raised during 2023-24 year, which was initially expected to be paid out in 2024-25, but is now expected to be paid during 2025-26. This is for payments relating to the age discrimination pension remedy agreed by HM Treasury following the cases of McCloud and Sargeant (from the Judges and Firefighter's schemes). This provision is in relation to payments due to Scottish Officers following a UK claim.

Other Provisions - Redress Scheme

Included within other provisions are future payments to be made under the Redress Scotland scheme. The estimated value of this as at 31 March 2025 was £398m (2024: £432m), with valuation based on average payments made per application type and anticipated application numbers. In 2024-25, £59m of the provision was utilised in payments and an additional £24m was provided for.

In line with IAS 37, the provision has been discounted to present value, with a discount of £68m (2024: £81m) applied, resulting in a provision of £329m (2024: £351m) being reported in the 2024-25 consolidated accounts. The overall cost will be offset by amounts due to the Scottish Government from contributors to the scheme, in line with legal arrangements in place with these bodies. However, in line with accounting standards (IAS 37), this income cannot be recognised until it is virtually certain that it will be received.

Other Provisions - Lochaber Aluminium Smelter

In December 2016, the Scottish Government entered into a 25-year guarantee relating to the hydro plant and aluminium smelter at Lochaber. This involved the Government guaranteeing the power purchase obligations of the smelter if the business does not fulfil its obligations to pay for contracted power. The Government's potential exposure to default payments and review of a provision valuation is calculated using the requirements of IFRS 9 for Financial Guarantee Contracts. This has been reviewed and revalued at £130m as at 31 March 2025 (2023-24: £130m). This includes consideration of the comprehensive security package the Scottish Government received in exchange for the provision of the guarantee, consisting of the Smelter, the Hydro power station, extensive land holdings and a series of other protections. See the accounting policies note for further information on the requirements of IFRS 9.

Other Provisions

Other provisions include NHS balances of £93m (2023-24: £48m). The NHS balances relate to various Health Boards and Bodies and include: provision for non-medical legal liabilities, employer and third party costs, provision for future development costs, dilapidations, and a variety of other smaller provisions.

Also included within other provisions are Transport Scotland balances of £19m (2023-24: £16m); £13m (2023-24: £15m) of Scottish Prison Service balances; and £5m (2023-24: £7m) of Crown Office balances relating to litigation.

16. Capital Commitments

Property, plant and equipment	2024-25 (£m)	Restated 2023-24 (£m)
Contracted capital commitments for which no provision has been made	1,345	285
Total	1,345	285
Intangible assets
Contracted capital commitments for which no provision has been made	23	22
Total	23	22
Total Commitments	1,368	307

The 2023-24 capital commitments have been restated to reflect a £5m adjustment by the Scottish Prison Service for VAT.

2024-25 property, plant and equipment commitments includes:

• £68m (2023-24: £86m) in relation to the building of vessel Glen Rosa.
• £119m (2023-24: £14m) in relation to the build of HMP Highland.
• £808m (2023-24: £12m) in relation to the build of HMP Glasgow.
• £263m (2023-24: £79m) in relation to major road schemes currently under construction. The main works contracts have been awarded and the loans agreed.
• £78m (2023-24: £59m) in relation to a number of capital projects being undertaken by NHS Boards.

2024-25 intangible asset commitments includes:

• £14m (2023-24: £15m) for the development of Social Security Digital Portal.

17. Commitments under Leases

17a. Operating Leases

Total future minimum lease payments under operating leases are given in the tables below for each of the following periods:

Obligations under operating leases comprise: Buildings and Land	2024-25 (£m)	2023-24 (£m)
Within one year	8	2
Between two and five years (inclusive)	10	4
After five years	9	1
Total	27	7

18. Other Financial Commitments

18a. Other Commitments

The payments to which the Scottish Government is committed analysed by the period during which the commitment expires are as follows:

	2024-25 (£m)	2023-24 (£m)
Payable in 1 year	1,650	1,650
Payable between 2 - 5 years	5,895	5,113
Payable in more than 5 years	1,380	1,166
Total	8,925	7,929

Other financial commitments payable within one year include:

• £4m (2023-24: £6m) in relation to DWP recharges.

Other financial commitments held by Transport Scotland include:

• Rail Services £1,416m due in 1 year, £5,736m due in 2-5 years and £1,369m due after 5 years;
• Active Travel Services £2m due in 1 year, £8m due in 2-5 years and £6m due after 5 years;
• Air Services £9m due in 1 year and £13m due in 2-5 years; and
• Ferry Services £160m due in 1 year and £93m due in 2-5 years.
• For further details on the responsibilities for rail see the Transport Scotland annual report and accounts.

Other Financial commitments held by Scottish Forestry include:

• £32m for the Forestry Grant Scheme and Rural Priorities payable in 1 year (2023-24: £36m) and £39m payable (2023-24: £44m) payable in 2-5 years.
• For further details on the Forestry Grant and the Rural Priorities commitments, which arose from the Scottish Rural Development Plans, see the Scottish Forestry annual report and accounts.

18b. Guarantees, Indemnities and Letters of Comfort

The Scottish Government entered into the following guarantees, indemnities or provided letters of comfort. None of these is a contingent liability within the meaning of IAS 37, Provisions, Contingent Liabilities and Contingent Assets, since the likelihood of a transfer of economic benefit in settlement is too remote. They are included for parliamentary reporting and accountability purposes.

Only guarantees and indemnities above the threshold of £2.5m, which have to be reported and authorised by the Scottish Parliament in accordance with the written agreement between the Finance Committee and the Scottish Government, are included in the consolidated annual accounts.

Guarantees

Guarantee to Lothian Pension Fund in relation to the admission of Scottish Home Pension Fund and Scottish Futures Trust Ltd.

Guarantees for 10 local government pension schemes, as a result of Visit Scotland taking on the staff from the local area tourist boards.

Guarantee to Fife Council, Edinburgh City Council and Dumfries and Galloway Council in relation to the admission of The Scottish Agricultural College to the Local Government Pension Funds.

Guarantee to Highlands and Islands Enterprise in relation to their pension scheme; to Strathclyde Pension Fund in relation to the admission of Scottish Canals; to Highland Pension Fund, and to Scottish Borders Pension fund in relation to the admission of South of Scotland Enterprise.

Guarantee of the Calmac Pension Scheme as under the terms of the Clyde and Hebrides Ferry Service contract, Scottish Ministers are responsible for any increased pension costs.

Guarantee from Scottish Ministers to underwrite the Highlands and Islands Airport Limited Pension Scheme, if unable to pay any sum owed to the pension scheme.

Commitment towards the continued funding of the pension obligations of ScotRail Trains Ltd and Caledonian Sleeper Limited through the Grant Agreements.

Guarantees have been issued under Section 54 of the Railways Act 1993 as part of rail rolling stock procurement process which enables Scottish Ministers to give undertakings regarding the use of rolling stock. These undertakings can specify that Scottish Ministers will require subsequent operators to use the rolling stock. The table below summarises quantifiable contingent liabilities in relation to these guarantees with the amounts disclosed reflecting the highest reasonable estimate of the possible liability.

	£m
Section 54 guarantee for Caledonian Sleeper Class 385 type Rolling Stock until 31 March 2040	200
Section 54 guarantee for Eversholt Class 380 type Rolling Stock until 31 December 2040	77
Section 54 guarantee for Porterbrook Class 170 type Rolling Stock until 31 March 2035	21
Section 54 Caledonian Sleeper Rail Leasing Class Mk 5 until 31 March 2040	33
Total	331

Note: Scotrail Trains Grant Agreement expires on 31 March 2032 and the liabilities shown above are from that date to the end of the Section 54 guarantee. Caledonian Sleeper Grant Agreement expires on 25 June 2033 and the liabilities shown above are from that date to the end of the Section 54 guarantee.

Indemnities

At the beginning of the year there was an existing indemnity relating to objects lent under the National Heritage Act 1980 and the National Heritage (Scotland) Act 1985. The year-end balance depends on new acquisitions and the number of exhibitions that these pieces are included in during the financial year, and at 31 March 2025 this was £1,297m (2023-24: £1,298m).

Existing indemnity for local museums and galleries dependent on the number of new acquisitions and number of exhibitions that these pieces were included in during the financial year, valued at 31 March 2025 this was £27m (2023-24: £72m).

A new indemnity arising from the Scottish Government's underwriting conditions as part of its financial support for the 2027 Tour de France Grand Depart was created in 2024-25.

Letters of Comfort

For buildings that form part of the Scottish Government’s Cladding Remediation Programme that are classified as an Orphan Building (not a property developer linked building), the Scottish Government have issued letters of comfort to homeowners confirming that public funds will be utilised to address all necessary mitigation and remediation to reduce the risks within the building. The amount and timing of any outlay is currently uncertain.

19. Commitments under Service Concession Arrangements

Non-Profit Distributing (NPD), Public Private Partnerships (PPP) and Private Finance Initiative (PFI) transactions are accounted for in accordance with IFRIC 12, Service Concession Arrangements which sets out how NPD/PPP/PFI transactions are to be accounted for in the private sector.

A transaction is deemed to be ‘on balance sheet’ (i.e. included in Statement of Financial Position) when:

• the grantor controls or regulates what services the operator must provide with the infrastructure, to whom it must provide them and at what price; and
• the grantor controls – through ownership, beneficial entitlement or otherwise – any significant residual interest in the infrastructure at the end of the term of the agreement.

Where the transaction is deemed to be ‘on balance sheet’, the substance of that contract is that the Scottish Government has a finance lease, with the asset being recognised as a fixed asset in the Scottish Government’s Statement of Financial Position.

19a. Commitments Under Service Concession Arrangements - Included in Statement of Financial Position

Description of Schemes

Further details of the individual contracts, including estimated capital value, can be found in the individual accounts of the NHS bodies in Scotland, Scottish Prison Service and Transport Scotland.

Health Bodies

NHS Ayrshire

Woodland View shares a site in Irvine with the Ayrshire Central Hospital. The building is financed through a non-profit distributing model and reached practical completion and handover on 1 April 2016. The building provides a mental health and frail elderly inpatient facility for Ayrshire. The 25 year contract commenced on the 1 April 2016 and will end on 31 March 2041. At the end of the contract/concession period, the building will revert back to NHS ownership.

Ayrshire Maternity Unit is adjoined to University Hospital Crosshouse in Kilmarnock. The facility provides area midwifery services for in-patients, day patients and out-patients. The 30 year contract commenced in July 2006 and will end in July 2036. At the end of the contract/concession period the building is available to transfer to the NHS at no additional cost.

NHS Dumfries & Galloway

The Board has one contract financed under a Public Finance Initiative (PFI) and one under the Non Profit Distributing (NPD). The NPD funding model was developed and introduced as an alternative to, and has since superseded, the traditional PFI model in Scotland.

Dumfries and Galloway Maternity and Day Surgery Unit - The previous maternity and day surgery unit in Dumfries is included on the balance sheet (land and buildings) as a PFI at a valuation of £8m as at 31 March 2025. The contract ends in January 2032 however following the successful migration of these services to the new Dumfries and Galloway Royal Infirmary, the future planning arrangements for this building are now underway. This building is now referred to as Mountainhall.

Dumfries and Galloway District General Hospital – Dumfries and Galloway Royal Infirmary is funded under a non-profit distributing model. The land and buildings are included on the balance sheet at a valuation of £235m as at 31 March 2025 and the contract ends in September 2042.

NHS Fife

NHS Fife hold 2 PFI contracts, which are both held as non-current assets of NHS Fife Board and the liabilities to pay for the properties are accounted for as finance lease obligations.

Fife St Andrews Community Hospital and Health Centre - The St Andrew's Community Hospital contract started on 31 July 2009 and ends on 30 July 2039. In accordance with HM Treasury application of IFRIC12 principles the property is a non-current asset of NHS Fife and that the liability to pay for the property is, in substance, a finance lease obligation.

Fife Victoria Hospital - Victoria Hospital contract started on 28 October 2011 and ends on 27 October 2041. In accordance with HM Treasury application of IFRIC 12 principles the property is a non-current asset of NHS Fife and the liability to pay for the property is, in substance, a finance lease obligation.

NHS Forth Valley

Clackmannanshire Community Healthcare Centre - Clackmannanshire Community Healthcare Centre is a service concession for the development and right of use of Community Health Facilities and provision of services, including maintenance of the facility, under a Project Agreement. NHS Forth Valley provide certain facilities management services such as cleaning. The commencement date was 18 May 2009 and the contract ends in July 2037. At the end of the agreement the asset will revert to the ownership of NHS Forth Valley. There were no significant changes to the contract in the year.

Forth Valley Royal Hospital - Forth Valley Royal Hospital is a service concession for the new acute hospital and associated provision of services including facilities management services such as patient catering, portering, cleaning and maintenance. The facility was handed over to NHS Forth Valley in three phases in May 2010, August 2010 and April 2011 and the accounting treatment is on-balance sheet. The duration of the agreement is for 30 years from practical completion to the end of the financial year in which the 30th anniversary occurs. At the end of the agreement the asset will revert to the ownership of NHS Forth Valley. There were no significant changes to the contract in the year.

Stirling Health and Care Village - Stirling Health and Care Village is a service concession for the development and right of use of Community Health and Care facilities which will bring together on one site a range of health, local authority, and other partner organisation's services. These services include a 116 bed integrated care hub, accommodation for 3 GP practices, associated clinical services and accommodation for Minor Injuries Unit, Diagnostics, Community Nursing, GP Out of Hours and an ambulance station and workshop. The facility was handed over in three phases, in June 2018, October 2018 and October 2019 and the accounting treatment is on-balance sheet. Soft Facilities are provided by NHS Forth Valley including some hard facilities management services. The facility was delivered under the Hub initiative and the contract agreement is for 25 years ending in October 2044.

NHS Grampian

Aberdeen Community Health Village - Project between NHS Grampian and Hub North Scotland Limited. The contract start date was 27 November 2013 and the contract end date is 26 November 2038 when NHS Grampian will become the owners of the facility.

Forres Health and Community Care Centre - Agreement between NHS Highland, NHS Grampian and Hub North Scotland (FWT) Limited.

Woodside Fountain Health Centre - Agreement between NHS Highland, NHS Grampian and Hub North Scotland (FWT) Limited.

Inverurie Health Care Centre and Inverurie Energy Centre - Agreement between NHS Grampian and Hub North Scotland (I&F) Limited, Foresterhill and Inverurie Health Care Project.

Foresterhill Health Centre - Agreement between NHS Grampian and Hub North Scotland (I&F) Limited, Foresterhill and Inverurie Health Care Project.

NHS Greater Glasgow and Clyde

• Larkfield Unit – The Day Hospital Elderly Care Facility contract commenced with Quayle Munro Ltd on 1 November 2000 for a period of 25 years. The estimated capital value at commencement was £10m.
• Southern General Hospital – The Elderly Bed Facility contract commenced with Carillion Private Finance on 1 April 2001 for a period of 27 years. Serco Limited replaced Carillion on 1 August 2018. The estimated capital value at commencement was £11m.
• Gartnavel Royal Hospital – The Mental Health Facility contract commenced with Robertson Capital Projects Ltd on 4 October 2007 for a period of 30 years. The estimated capital value at commencement was £17m.
• Stobhill Rowanbank Clinic – The Mental Health Secure Care Centre contract commenced with Quayle Munro Ltd on 1 May 2007 for a period of 35 years. The estimated capital value at commencement £17m.
• Stobhill Hospital – The Ambulatory Care and Diagnostic Treatment Centre contract commenced with Glasgow Healthcare Facilities Ltd on 1 April 2009 for a period of 30 years. The estimated capital value at commencement was £79m.
• Victoria Hospital – The Ambulatory Care and Diagnostic Treatment Centre contract commenced with Glasgow Healthcare Facilities Ltd on 1 April 2009 for a period of 30 years. The estimated capital value at commencement was £99m.
• Stobhill Hospital – The Ambulatory Care and Diagnostic Treatment Centre contract commenced with Glasgow Healthcare Facilities Ltd on 1 March 2011 for a period of 29 years. The estimated capital value at commencement was £16m.
• Gorbals Health and Care Centre - The HUB contract commenced with HUB West Scotland Project Co. on 6 November 2018 for a period of 25 years. The estimated capital value at commencement was £14m.
• Eastwood Health and Care Centre - The HUB contract commenced with HUB West Scotland Project Co. on 3 June 2016 for a period of 25 years. The estimated capital value at commencement was £9m.
• Maryhill Health and Care Centre - The HUB contract commenced with HUB West Scotland Project Co. on 15 July 2016 for a period of 25 years. The estimated capital value at commencement was £12m.
• Inverclyde Orchardview - The HUB contract commenced with HUB West Scotland Project Co. on 17 July 2017 for a period of 25 years. The estimated capital value at commencement was £8m.
• Woodside Health and Care Centre - The HUB contract commenced with HUB West Scotland Project Co. on 15 May 2019 for a period of 25 years. The estimated capital value at commencement was £18m.
• Appin Ward (Stobhill Mental Health Facility) - Stobhill Mental Health Facility - HUB contract commenced with HUB West Scotland Project Co. on 28 August 2020 for a period of 25 years. The estimated capital value at commencement was £5m.
• Elgin Ward (Stobhill Mental Health Facility) - Stobhill Mental Health Facility - HUB contract commenced with HUB West Scotland Project Co. on 28 August 2020 for a period of 25 years. The estimated capital value at commencement was £5m.
• Greenock Health and Care Centre - The HUB contract commenced with HUB West Scotland Project Co. on 18 March 2021 for a period of 25 years. The estimated capital value at commencement was £21m.
• Clydebank Health and Care Centre - The HUB contract commenced with HUB West Scotland Project Co. on 3 December 2021 for a period of 23 years and 7 months. The estimated capital value at commencement was £20m.

NHS Highland

New Craigs - The scheme is a replacement for the Craig Dunain Hospital, Inverness and provides in-patient facilities for adults with mental health needs or learning disabilities. There is a 25 year contract with an original estimated capital value of £14m. The start date was in July 2000 and ends in July 2025.

Easter Ross Primary Care Resource Centre - This scheme is the redevelopment of County Hospital, Invergordon, into a primary care centre and combines a community hospital and a health centre. There is a 25 year contract with an original estimated capital value of £9m and the PFI property will revert to NHS Highland at the end of the contract. The start date was in February 2005 and ends in January 2030.

Mid Argyll Community Hospital and Integrated Care Centre. The period of the contract runs from June 2006 to May 2036 at which point the ownership of the asset will transfer to NHS Highland. The original estimated capital value of the project is £19m.

Tain Health Centre - A service concession agreement with HUB North of Scotland Ltd for occupancy of the Tain Health Centre effective 24 May 2014. Under the terms of the agreement NHS Highland have a legal commitment to occupy the building for a period of 25 years and will incur annual charges for occupancy, maintenance and running costs. The ownership of the asset will transfer to NHS Highland at the end of the 25 year agreement.

NHS Lanarkshire

University Hospital Hairmyres - The provision of a large general hospital. The period of contract is 26 March 2001 to 30 June 2031. The estimated capital value is £101m. The hospital and services are provided under a contract between NHS Lanarkshire and Prospect Healthcare (Hairmyres) Limited with hard and soft facilities management services being supplied under a subcontract to ISS Mediclean Limited.

University Hospital Wishaw - The provision of a large general hospital. The period of contract is 28 May 2001 to 30 November 2028. The estimated capital value is £188m. The hospital and services are provided under a contract between NHS Lanarkshire and Summit Healthcare (Wishaw) Limited, with hard facilities management services being supplied under a subcontract to SERCO Health Limited.

Stonehouse Hospital - The provision of a small community hospital. The period of contract is 1 May 2004 to 30 April 2034. The estimated capital value is £6m. The hospital is provided under a contract between NHS Lanarkshire and Stonehouse Hospitals Limited, with the service arrangements provided internally by NHS Lanarkshire.

Hub Projects - The provision of three community health centres in East Kilbride, Kilsyth and Wishaw under the Scottish Future Trust Hubco leased model. These new facilities opened in 2015-16 and are provided by Hub South West Scotland under a 25 year contract. The Hubco provides the centers and is responsible for lifecycle and hard facilities management services which are delivered under a subcontract with Graham Facilities Management Ltd. The current estimated capital value of these facilities is £51m.

NHS Lothian

• Royal Infirmary of Edinburgh - Royal Infirmary acute teaching hospital facilities. The period of contract is 1 November 2001 to 30 May 2053. The estimated capital value is £234m.
• Royal Hospital for Children and Young People Edinburgh & Department for Clinical Neurosciences- This is a hospital for children and young people, integrating the department of clinical neurosciences into the same build. The period of contract is 23 February 2019 to 31 July 2042. The estimated capital value is £142m.
• Findlay House - Findlay House service provides a 60 bedded facility for frail elderly and dementia patients in the grounds of the Eastern General Hospital. The period of contract is 1 November 1999 to 12 June 2033. The estimated capital value is £1m.
• Tippethill - Tippethill service provides a 60 bedded facility for frail elderly and dementia patients at Whitburn. The period of contract is 13 June 2003 to 5 September 2025. The estimated capital value is £5m.
• Royal Edinburgh Hospital Phase 1 - This service provides 185 beds for both Mental Health Services and a national acquired brain injury service. The period of contract is 5 December 2016 to 4 December 2041. The estimated capital value is £55m.
• Midlothian Community Hospital - This hospital provides 88 beds for frail elderly and dementia patients, outpatient clinics and a base for Community Health Partnership led activities. The period of contract is 1 September 2010 to 31 August 2040. The estimated capital value is £20m.
• Allermuir Health Centre - An integrated primary care facility, combining general practice and NHS community health services in the Firrhill area of Edinburgh. The period of contract is 25 September 2017 to 24 September 2042. The estimated capital value is £7m.
• Blackburn Partnership Centre - Blackburn Partnership Centre includes health and social care services as well as community services for local residents. The period of contract is 22 September 2017 to 21 September 2042. The estimated capital value is £9m.
• Pennywell All Care Centre - This is a joint development between NHS Lothian and the City of Edinburgh Council, providing health and social care services for the local community. The period of contract is 23 October 2017 to 22 October 2042. The estimated capital value is £12m.
• East Lothian Community Hospital - East Lothian Community Hospital Phases 1 to 3. The project includes all services provided previously in Roodlands and Herdmanflat Hospitals and also supports patients previously in Haddington and Crookston Care Homes, and Midlothian Community Hospital. The phase 1 of the contract started on 10 February 2017, phase 2 on 23 February 2018 and phase 3 on 28 October 2019. Contract ends on 30 August 2044. The estimated capital value is £65m.

NHS Orkney

Balfour Hospital -The accounting treatment reflects the nature of the contract, which is a Non-Profit Distribution scheme with a funding variant. NHS Orkney will make annual service payments over the 25 year period of the contract. Ownership of the new hospital and healthcare facility will pass to NHS Orkney at the end of the 25 year period. The annual service payments made in 2024-25 totalled £2m (2023-24 £2m).

NHS Tayside

Carseview Centre - The Carseview Centre is located on the Ninewells Hospital site in Dundee and provides in-patient facilities for Adult Psychiatry and Learning Disability. The contract start date was 11 June 2001 and the end date is 17 June 2026. The preferred Carseview PFI end of contract option, to acquire the asset, was approved by NHS Tayside on 29 February 2024. The decision was supported by Scottish Government in May 2024, and the contractor appropriately notified within the contractual timescales.

The Susan Carnegie Clinic - The Susan Carnegie Clinic is located on the Stracathro Hospital site by Brechin and provides in-patient facilities and a day hospital for Psychiatry of Old Age. The contract start date was 2 December 2011 and the end date is 17 May 2042 when NHS Tayside will own the facility.

Murray Royal Hospital - The Murray Royal Hospital is located on the Murray Royal Hospital site in Perth and provides in-patient, out-patient, and day patient facilities for NHS Tayside's General Adult Psychiatry, Psychiatry of Old Age, and Low Secure Forensic Services, as well as a regional in-patient unit providing Medium Secure Forensic services for patients from the North of Scotland Health Boards. The contract start date was 1 June 2012 and the end date will be 17 May 2042 when NHS Tayside will become owners of the facility.

Whitehills Community Resource Centre - Whitehills Community Resource Centre covers Forfar, Kirriemuir and the surrounding area in conjunction with the Council and Lippen Care. The contract start date was 21 March 2005 and the end date is 21 March 2030 when NHS Tayside will own the facility.

NHS Scotland Pharmaceuticals 'Specials' Service - The NHS Scotland Pharmaceuticals 'Specials' Service facility is located on the Ninewells Hospital site in Dundee and is an NHS manufacturing facility for the supply of unlicensed medicines. The contract start date was 15 March 2019 and the end date is 14 December 2043 when NHS Tayside will own the facility.

National Services Scotland

Jack Copland Centre - The National Centre for the processing and testing of blood, tissues and cells for patients in Scotland by the Scottish National Blood Transfusion Service. The contract started in 2017 and will end in 2042.

Transport Scotland

Transport Scotland has entered into the following PFI contracts for the design, build, finance and maintenance of assets reflected on the Statement of Financial Position.

M6 (A74M) - the contract covers the design, construction, and financing of 28.3km of new motorway, as well as the operation and maintenance of 90km of existing motorway. Payments are made under a shadow toll regime. The toll period began in July 1997 and expires in July 2027.

M77 - the contract is a Public Private Partnership (PPP) entered into with East Renfrewshire and South Lanarkshire Councils. The project covers the design, construction, financing, and operation of 15km of motorway and 9km local road to the A726 trunk road. Payments are made under a shadow toll regime. The toll period began in April 2005 and expires in April 2035.

M80 - The contract covers the design, build and financing of approximately 18 km of motorway and associated roads, junctions, structures and associated works and their on-going maintenance for a period of 30 years. Unitary charge payments commenced in September 2011 and will cease in September 2041.

Transport Scotland also have the following design, build, finance, operate contracts, under the Non-Profit Distributing model.

M8, M73, M74 Improvements - Project involves upgrades to the A8 Baillieston to Newhouse, completion of the M8 between Glasgow and Edinburgh, and included improvements to the M74 Raith Interchange and the widening of other key sections of the M8, M73 and M74. The NPD contract also incorporates the management, operation and maintenance of this section of the motorway for the 30 years from April 2017. The unitary charge payments are committed and will cease in 2047.

Aberdeen Western Peripheral Road/Balmedie and Tipperty - The AWPR / B-T (Aberdeen Western Peripheral Route/Balmedie-Tipperty) project involved the construction of a new dual carriageway around the City of Aberdeen and upgrading of the road between Balmedie and Tipperty to dual carriageway. The NPD contract also incorporates the management, operation, and maintenance of these roads for the next 30 years. The unitary charge payments became committed in phases from Autumn 2016 and will cease in 2048.

Scottish Prison Service

HMP Addiewell - The SPS has awarded Public Private Partnership (PPP) contract, to design, construct, manage and finance prison at HMP Addiewell. The contract was let for 25 year operating periods, commencing in December 2008. HMP Addiewell continues to be treated as on-balance sheet in accordance with IFRIC 12, Service Concession Arrangements.

19b. Commitments Under Service Concession Arrangements - Included in Statement of Financial Position

Under IFRIC 12 the asset is treated as an asset of the Scottish Government and included in the Scottish Government's accounts as a non current asset. The liability to pay for the property is in substance a finance lease obligation. Contractual payments therefore comprise two elements: imputed finance lease charges and service charges. The imputed finance lease obligation is as follows:

Gross Minimum Lease Payments	NHS Bodies in Scotland (£m)	Scottish Prison Service (£m)	Transport Scotland (£m)	2024-25 Total (£m)	2023-24 Total (£m)
Rentals due within 1 year	263	18	115	396	398
Due within 2 to 5 years	959	66	400	1,425	1,491
Due after 5 years	2,011	65	1,273	3,349	3,701
Total	3,233	149	1,788	5,170	5,590

Interest Element	NHS Bodies in Scotland (£m)	Scottish Prison Service (£m)	Transport Scotland (£m)	2024-25 Total (£m)	2023-24 Total (£m)
Rentals due within 1 year	115	8	74	197	206
Due within 2 to 5 years	393	24	258	675	710
Due after 5 years	627	10	467	1,104	1,278
Total	1,135	42	799	1,976	2,194

Service elements due in future periods	NHS Bodies in Scotland (£m)	Scottish Prison Service (£m)	Transport Scotland (£m)	2024-25 Total (£m)	2023-24 Total (£m)
Rentals due within 1 year	109	42	34	185	171
Due within 2 to 5 years	449	150	185	784	723
Due after 5 years	1,629	165	936	2,730	2,660
Total	2,187	357	1,155	3,699	3,554

Present Value of Minimum Lease Payments	NHS Bodies in Scotland (£m)	Scottish Prison Service (£m)	Transport Scotland (£m)	2024-25 Total (£m)	2023-24 Total (£m)
Rentals due within 1 year	148	10	115	273	192
Due within 2 to 5 years	567	43	400	1,010	781
Due after 5 years	1,384	55	1,273	2,712	2,423
Total	2,099	108	1,788	3,995	3,396

20. Contingent Assets/Liabilities disclosed under IAS 37

20a. Contingent Assets disclosed under IAS 37: Provisions, Contingent Liabilities and Contingent Assets

The definition of a Contingent Asset under IAS 37: Provisions, Contingent Liabilities and Contingent Assets is a possible asset, arising from past events, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the entity's control.

Housing Association Properties

Grants repayable as a result of sales of Housing Association Properties to tenants or as a result of conditions of grant being breached. Grants become repayable when conditions of grant cease to be met. It is not possible to predict the level of activity in future years.

Open Market Shared Equity Scheme

Repayments of grant from the Open Market Shared Equity Scheme which allows people on low income to buy a share in a property, the balance being owned by a housing association and funded by grants from the Scottish Government. If the property is sold or an increased share is purchased by the owner, the grant becomes repayable. It is not possible to estimate the level of future receipts.

Redress Scotland

As part of the Redress Scotland Scheme, the Scottish Government receive funding from contributors to the scheme, in line with legal arrangements in place with these bodies. Both the amounts and timing for receipt of this funding are currently uncertain and in line with IAS 37 this income cannot be recognised until it is certain that the Scottish Government will receive it.

Dental Bursaries

Repayment of grants from the Dental Undergraduate bursary scheme available to students studying for a Bachelor in Dental Surgery attending University of Aberdeen, University of Dundee and University of Glasgow. As part of the bursary agreement each individual is required to work for the NHS for a specific period of time after graduation, however numerous cases of non-compliance have been identified which the Scottish Government are pursuing repayment for. The amount and timing of future receipts is uncertain.

Legal Proceedings

The Scottish Government is currently involved in several commercially sensitive legal proceedings, and whilst the outcome remains uncertain, considers that a favourable resolution is possible. Due to the sensitive nature of the matter, further details are not disclosed to avoid prejudicing the Scottish Government's position.

NHS

The corresponding entitlement to recover the costs of settlement of NHS Employers’ Liability claims.

20b. Contingent Liabilities disclosed under IAS 37: Provisions, Contingent Liabilities and Contingent Assets

The definition of a contingent Liability under IAS 37: Provisions, Contingent Liabilities and Contingent Assets is:

• a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the entity's control; or
• a present obligation that arises from past events but is not recognised because it is not probable that a transfer of economic benefits will be required to settle the obligation; or
• the amount of the obligation cannot be measured with sufficient reliability.

Only contingent liabilities above the threshold of £2.5m, which have to be reported and authorised by the Scottish Parliament in accordance with the Scottish Public Finance Manual, are included in the consolidated annual accounts.

NHS related

Clinical Negligence and Other Risk Indemnity Scheme (CNORIS) compensation payments of £481m (2023-24: £562m).

NHS Employer's Liability estimated at £14m (2023-24: £5m).

The UK Government procured a contract to ensure the four UK nations have access to an influenza vaccine in the event of a pandemic of that type. This has been carried out on behalf of and in partnership with the Scottish Government and the other devolved administrations.

The supplier was unwilling to accept all of the liability for potential damage claims arising from harm caused by the vaccine, therefore damages over and above the agreed cap amount will be paid by each of the devolved administrations based on their agreed share of liability.

Given the inherent lack of information regarding the emergence of an unexpected adverse reaction resulting in damage claims, it is not possible to rule out the possibility of claims exceeding the agreed cap amount hence the recognition of a contingent liability, however we are currently unable to estimate the timing and amounts of any potential future outlay.

NHS Education for Scotland’s contingent liability for fixed-term contract exit payments is estimated at £3m (2023-24: £0m)

Four NHS Boards have a contingent liability relating to the review of the Agenda for Change remuneration system, specifically reviewing Band 5 nursing job profiles and descriptions, and assessing whether the role they are performing is in fact in line with expectations of a Band 6 employee. This is currently estimated at £33m (2023-24 restated: £27m).

Housing related

As part of the Winchburgh Housing Development there is a potential liability in relation to loan repayments for the construction of Winchburgh Primary School. The housing development is due to pay the council as houses are sold. The Scottish Government have entered into an arrangement to cover final costs if the developer cannot pay which can be called upon after 31 March 2026. Current value of potential liability is £15m (2023-24: £15m).

Justice related

Claims against former independent Conveyancing and Executory Practitioners in Scotland. This is a contingent liability relating to an agreement to meet any valid claims arising from the acts or omissions of past independent conveyancing and executory practitioners, as defined by the Law Reform (Miscellaneous Provisions) Scotland Act 1990. The amount and timing of any outlay is uncertain.

Social Security Scotland

Benefit Underpayments

Social Security Scotland acknowledges that administrative errors by its staff (official error) and that of the Department for Work and Pensions under Agency Agreements will sometimes result in the underpayment of benefit. Where underpayments relating to official error are identified, we pay arrears in full at the earliest opportunity.

Due to limitations in data the liability for benefit underpayments cannot currently be quantified and so a contingent liability exists for underpayments not yet identified and corrected.

Legal cases and appeals

Social Security Scotland is aware of ongoing legal cases and appeals in relation to benefit payments which may lead to possible future obligations. It is not possible to assess the timing, likelihood or amount of any financial settlement of these cases at this time. We will continue to monitor the ongoing developments in this area.

Scottish Administrative Exercises

Social Security Scotland acknowledges that administrative errors may occur when making award decisions that affect a group of clients. When such errors are identified through legal challenge or internal processes, a Scottish Administrative Exercise will arise where all affected cases are reviewed and errors corrected. This is similar the Department for Work and Pensions Legal Entitlement and Administrative Practices process.

Decommissioning of offshore renewable energy installations

Functions under the Energy Act 2016 in relation to decommissioning offshore renewable energy installations in Scottish waters transferred to Scottish Ministers on 1st April 2017. This also means that the Scottish Government is now the funder of last resort in cases where the developers/owners cannot meet their decommissioning obligations. As the size of the Scottish portfolio of offshore energy projects grow so does the cumulative value of the decommissioning obligations and contingent liability. The value of the contingent liability to date has been reviewed in line with guidance issued by the Department of Business, Energy and Industrial Strategy entitled ‘Decommissioning of offshore renewable energy installations: guidance notes for industry’ published in March 2019.

The value of the contingent liability to date relates to constructed and operational projects.

Projects with approved decommissioning programmes and approved financial securities:

• Neart na Gaoithe Offshore Wind Farm (NNG) (£98m);
• Orbital O2 (£0.5m);
• Moray West Offshore Wind Farm (£239m);
• Inch Cape Offshore Wind Farm (£393m).
• Seagreen Offshore Windfarm (£675m).

Projects with decommissioning programmes and financial securities still to be approved:

• Beatrice Offshore Wind Farm (£357m);
• Culzean Floating Wind Pilot Project (£8m);
• European Offshore Wind Deployment Centre (Aberdeen Bay Wind Farm) (£25m);
• Hywind Energy Park (£51m);
• Moray East Offshore Wind Farm (£239m);
• Kincardine Offshore Floating Wind Farm (£16m); and
• Orbital O2.2 (£1m).

Other

The Scottish Government occupies a number of leased properties which have dilapidations clauses in the leases. These properties are maintained in excellent order, but there is a potential liability to reinstate the internal layout of these buildings to their original floor plans. These costs will be subject to negotiation and the monetary impact is not reliably estimable. This will exclude consideration of new leases that have been entered into since 1 April 2022, where under IFRS 16 Leases a dilapidation liabilities can be reliably estimated, these will instead be included in the value of the corresponding Right of Use Asset.

The Scottish Government is defending ongoing litigation in relation to the Deposit Return Scheme raised by Biffa Waste Services Limited, who are claiming for damages of up to £51m, plus legal fees and interest. It is not possible to assess the timing or outcome of the case at this time.

As part of Transport Scotland’s normal course of business, the Forestry Commission grants the right to use a forestry track as an emergency diversion route on the A83 Rest and Be Thankful on the understanding that Transport Scotland has the liability for any incidents that may occur whilst the track is being used for this purpose. The potential obligation is estimated at £5m (£2023-24: £5m) and it is considered unlikely that any liability will occur.

21. Related Party Transactions

The Scottish Government is the sole shareholder and sponsor of Caledonian Maritime Assets Ltd, David MacBrayne Ltd, Highland and Islands Airports Ltd, Scottish Futures Trust, Prestwick Airport Holdco Ltd, Scottish Rail Holdings Ltd and Ferguson Marine (Port Glasgow) Holding Ltd; a shareholder in Scottish Health Innovations Ltd and the Student Loans Company; and sponsor of Scottish Water, a number of nonconsolidated Health Bodies, and of a number of executive, advisory and tribunal Non Departmental Public Bodies. These bodies are regarded as related parties with which the Scottish Government has had various transactions during the year. Further details of Scottish Public Bodies are available from the Scottish Government website: Link to 'Public Bodies' section of the Scottish Government website

Transport Scotland had various material transactions in year with Scottish Rail Holdings. ScotRail Trains Limited and SOLR2 are subsidiaries of Scottish Rail Holdings Limited under the statutory Operator of Last Resort arrangements. SOLR2 subsidiary was re-named after 2 March 2023 when it became Caledonian Sleeper Limited. For the operation of ScotRail train services from April 2022, two of the companies were mobilised, Scottish Rail Holdings Limited and ScotRail Trains Limited. Caledonian Sleeper Limited was mobilised on 26 June 2023 as a second subsidiary of Scottish Rail Holdings Limited; the day after the Serco Caledonian Sleeper Rail Franchise terminated.

The Scottish Government is also the sponsor of cross-border public authorities which are listed in The Scotland Act 1998 (Cross-Border Public Authorities) (Specification) Order 1999. These bodies are regarded as related parties with which the Scottish Government has had material transactions during the year.

In addition the Scottish Government has had a number of transactions with other government departments and other central government bodies, primarily the Scotland Office and the Office of the Advocate General, the Rural Payments Agency, the Home Office and the Department for Work and Pensions.

The Scottish Government has material transactions with local government bodies, Regional Transport Partnerships, Community Justice Authorities and Scottish Water.

Information is provided in the performance report in the beginning of these accounts of the register of interests members of the Corporate Board.

All Scottish Ministers are required, as Members of the Scottish Parliament, to register information about certain financial interests. The types of financial interest that must be registered are those that might affect any actions, speeches or votes in the Parliament. This register is available for public inspection at the office of the Standards clerks with a further copy available at the main visitor information desk at the Scottish Parliament building. There are no material transactions to report.

Accounts of the individual Executive Agencies, the Crown Office and Procurator Fiscal Service and Health Bodies contain details of related party transactions specific to those entities.

22. Third Party Assets

Assets held at Statement of Financial Position date to which monetary value can be assigned:

	2023-24 (£m)	Gross Inflows (£m)	Gross Outflows (£m)	2024-25 (£m)
Monetary amounts such as bank balances and monies on deposit	20	23	(25)	18
Unclaimed dividends and unapplied balances	5	-	-	5
Total Monetary Assets	25	23	(25)	23

Accountant in Bankruptcy holds funds of £12m (2023-24: £13m) on behalf of third parties. This mainly comprises realised assets that are held whilst awaiting repayment to the public purse or distribution to creditors with a value of £7m (2023-24: £8m). The balance of £5m (2023-24: £5m) relates to money consigned in respect of unclaimed dividends and unapplied balances.

The NHS Bodies hold money on behalf of patients. This totalled £10m in 2024-25 (2023-24: £10m).

The Scottish Prison Service also holds £2m on behalf of prisoners (2023-24: £2m).

Other Assets held at the Statement of Financial Position date all relate to Accountant in Bankruptcy:

Description	2024-25 Number held	Restated 2023-24 Number held
Residential property	358	339
Motor vehicles, boats and caravans	31	24
Life Policies	-	17
Shares and Investments	9	6
Miscellaneous	82	112

The table above is restated as the column labels were erroneously switched in the prior year accounts.

No third party assets have been included within the Statement of Financial Position.

23. Resource Budget

The resource budget detailed in the outturn statements is the consolidated budget for the Scottish Government.

The following table provides a reconciliation of the budgets shown in the accounts with the total budget for Scotland approved by the Scottish Parliament.

	2024-25 (£m)	2023-24 (£m)
Budget (Scotland) Act 2024	59,322	59,644
Scotland's Autumn Budget Revision - Scottish Statutory Instrument 2024/220	1,127	562
Scotland's Spring Budget Revision - Scottish Statutory Instrument 2025/22	863	(1,747)
Total approved spending	61,312	58,459
Less activities not included in these accounts:
National Records of Scotland	(33)	(33)
Office of the Scottish Charity Regulator	(3)	(3)
Scottish Courts and Tribunals Service	(205)	(198)
Scottish Fiscal Commission	(3)	(3)
Revenue Scotland	(10)	(8)
Registers of Scotland	(10)	(11)
Environmental Standards Scotland	(3)	(4)
Food Standards Scotland	(24)	(23)
Consumer Scotland	(4)	-
Scottish Housing Regulator	(6)	(6)
NHS and Teachers' Pension Schemes	(3,528)	(3,761)
Scottish Parliamentary Corporate Body	(143)	(133)
Audit Scotland	(14)	(19)
Consolidated Accounts approved estimates	57,326	54,257

Portfolio analysis	Budget Act Approval (£m)	2024-25 Capital Budget (£m)	2024-25 Operating Budget (£m)
Health and Social Care	20,586	510	20,076
Social Justice	7,265	32	7,233
Net Zero and Energy	729	251	478
Education and Skills	3,956	1,021	2,935
Justice and Home Affairs	3,600	114	3,486
Transport	3,691	327	3,364
Rural Affairs, Land Reform and Islands	1,085	18	1,067
Constitution, External Affairs and Culture	280	-	280
Finance and Local Government	14,693	12	14,681
Deputy First Minister, Economy and Gaelic	1,207	223	984
Crown Office and Procurator Fiscal Service	234	13	221
Consolidated Accounts approved estimates	57,326	2,521	54,805