Publication - Advice and guidance

Scottish Public Finance Manual

The Scottish Public Finance Manual (SPFM) is issued by the Scottish Ministers to provide guidance on the proper handling and reporting of public funds.

Scottish Public Finance Manual
Expenditure without statutory authority

Expenditure without statutory authority

Scope

1. This section gives guidance on the procedures for undertaking expenditure where there is no statutory power to undertake the activity giving rise to the expenditure.

2. The guidance is aimed primarily at the core Scottish Government (SG) and the other constituent parts of the Scottish Administration (i.e. the Crown Office and Procurator Fiscal Service, SG Executive Agencies and non-ministerial departments). Other organisations funded direct from the Scottish Consolidated Fund (SCF) should also note the need for both statutory powers and parliamentary authority in order to undertake expenditure.

Key points

3. To be able to undertake expenditure both of the following are normally required:

All three elements should be satisfied before commitments or expenditure are authorised.

4. Continuing powers of government should be defined by statute. In the absence of statutory powers to undertake an activity entailing expenditure, Ministers may possess common law powers to do so. These powers can be used in conjunction with the spending authority in a Budget Act where:

  • the expenditure is below £1 million a year; or

  • the expenditure is of a "one-off" nature; or

  • the use of common law powers is temporary pending the seeking of statutory powers.

5. The Parliament should be informed in all cases where the sole statutory authority for the activity giving rise to the expenditure is the Budget Act.

Background

6. The annual Budget Act does not give the SG, or any other organisation funded direct from the Scottish Consolidated Fund (SCF), the power to undertake any action. It provides authorisation for resources to be used and payments to be made out of the SCF for the purpose of undertaking actions for which they should already possess statutory powers. Continuing functions of government should be defined by specific statute and the rules of propriety are such that common law powers cannot be relied upon for continuing functions unless they are de minimis.

Procedures

7. SG business areas undertaking expenditure must satisfy themselves that there is statutory authority for the activity giving rise to the expenditure, and that the expenditure is wholly in line with the relevant enabling statute. It is particularly important to consider this in relation to new expenditure initiatives, including those proposed by Ministers, and in making changes to existing expenditure schemes. This should be done early in the consideration process; and if necessary legal advice should be sought.

8. If there is no statutory power, it may still be possible to undertake the activity (provided any necessary resultant expenditure is authorised by Budget Act for the financial year in question) where:

  • Scottish Ministers possess the necessary common law powers; and

  • the expenditure is not of a continuing nature unless either the sums involved are under £1 million a year or Ministers undertake to seek statutory powers at the first available opportunity.

9. SG business areas contemplating activities giving rise to expenditure for which there are no statutory powers must:

  • satisfy themselves that common law powers exist; and

  • seek the approval of the relevant SG Finance Business Partner (or equivalent) before undertaking such activity.

10. SG business areas should seek legal advice on the existence of common law powers. Scottish Ministers, through the Crown, possess wide common law powers in areas within devolved competence, so far as these are not superseded by statutory powers; but they will have no common law powers in respect of "reserved matters" as set out in the Scotland Act 1998.

Informing the Parliament

11. The Parliament should be informed of reliance on common law powers prior to activity giving rise to expenditure being undertaken. This can be done by suitable notes in the documents accompanying Budget Bills or Revisions, or if this is not possible by the responsible Cabinet Secretary or Minister writing to the Convener of the Finance Committee. The letter should be prepared by the relevant SG business area in consultation with the relevant SG Finance Business Partner (or equivalent).

Absence of powers

12. Ministers cannot undertake any activities giving rise to expenditure for which there are no powers (and for the avoidance of doubt the Budget Act does not confer powers). If, despite advice that there is no power to undertake the activity, Ministers insist that the expenditure be incurred then written authority to that effect should be sought from Ministers by the relevant Accountable Officer - see the section of the SPFM on Accountability.

 

Page updated: May 2019