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.

FGN2019/02 SPFM amendments: April 2019

FGN2019/02 SPFM amendments: April 2019

The purpose of this note is to announce recent amendments to the Scottish Public Finance Manual, (SPFM) specifically the chapters for EU funding, local government finance and procurement. The amendments are as follows:

EU Funding:

This update to the EU Funding section of the SPFM is to highlight that EU related funding is paid to delivery agents and then claimed from the European Commission (EC). It states where funds cannot be claimed from the EC, for example due to audit failure, in which case, they remain on the SG accounts. In certain circumstances, they are recoverable from the delivery agent.

The section also recognises the impact of EU exit: full account must be taken of the closure of funds to UK participants and, of transitional arrangements including the effect of any UK Government guarantees.

Local government finance:

Previous guidance was produced in 2008 shortly after the signing of the Concordat in November 2007 although the relationship between the Scottish government and local government remains much the same, references to the Concordat have mainly been removed due to the time that has passed.

Previous guidance was produced at a time where there was a 3 year settlement in place for local government. In more recent times local government have received a single year funding settlement although it is envisaged that we may return to 3 year settlements from 2020. The current guidance reflects that the term of the settlements can be subject to change.

  1.    Key points

Additional guidance has been provided to explain the process for any Scottish Government changes that may place an additional financial burden on local authorities.

An explanation of the 85% funding floor is now provided as it was added to the settlement in 2012.

The manual has been updated to reflect that the Scottish Government now guarantees each local authority their formula share of the combined General Revenue Grant (GRG) and Non Domestic Rates Income (NDRI) totals.

Capital funding has been updated to reflect that individual local authorities must apply the CIPFA Prudential code of principles of affordability and sustainability when deciding the level of borrowing to finance capital expenditure.

  1.    Responsibilities

Further detail has been provided on the Settlement and Distribution Group (SDG) that provides a forum for officials to discuss future issues and consider any new local government funding and distributions.

  1. Total revenue funding

Detailed descriptions have been added for the three main sources of revenue funding.

  1.    Loan charge support

Guidance has been adjusted to reflect that the Scottish Government no longer supports the revenue cost of borrowing to support capital expenditure. The Scottish Government continues to provide support for historic debt servicing.

  1.    Grant aided expenditure (GAE)

Guidance has been adjusted to reflect the change that came into force in 2008-09, where the total or quantum for each GAE subservice is now fixed and it is only the needs-based indicators that are updated each year.


Some changes have been made to the section on Procurement to ensure accuracy and relevance. The key points section has been removed, deleting the majority of repetition within the chapter and rationalising the information included.  

The opportunity has been taken to add a new section on Contract Management Authority (CMA), which sets out clearly what CMA entails and provides clarification on the difference between contract management and delegated authority. 

Guidance given on the use of consultants has been updated to further highlight the requirement for core Scottish Government staff to follow the formal SG consultancy procedures.

Throughout this document hyper-links have been updated and new links have been added to the further guidance rather than reproduce guidance that is available elsewhere.

Scottish Government Finance Directorate

April 2019



Back to top