Thank you very much. It took a promotion to be allowed back on this committee, so it is great to be here.
As the committee will know, the autumn budget revision provides the first of two opportunities to formally amend the Scottish budget for 2018-19. In order to assist the committee with its scrutiny, I have provided a brief guide to the autumn budget revision, which has been prepared by my officials and which sets out the background to and details of the main changes proposed. I hope that the committee has found that document useful.
As members will know, the First Minister announced a restructuring of the Scottish Administration. Table 1.1 of the autumn budget revision supporting document provides a full reconciliation between the former Scottish Government portfolios and the new Scottish Government structure.
This year’s ABR deals with four different types of amendments to the budget: first, a couple of funding changes; secondly, a couple of technical adjustments that have no impact on spending power; thirdly a small number of Whitehall transfers; and, finally, some budget-neutral transfers of resources between portfolio budgets. The net impact of those changes is an increase in the approved budget of £7.3 million to £40,505.9 million. Table 1.2 on page 5 of the supporting document shows the approved portfolio budgets following the changes sought in the ABR.
The supporting document that officials have prepared provides background on the net changes. I will briefly sketch out those changes. The first set includes the deployment of funding across multiple portfolios to cover European Union exit activity, additional funds for the Scottish Futures Trust for the schools for the future initiative, and further funding for raising attainment. In total, those changes increase the budget by £32.1 million.
The second set of changes comprises a small number of technical adjustments to the budget, with a net impact of £31.2 million on the aggregate position. The adjustments are necessary to ensure the budget is consistent with accounting requirements and with the final outturn that will be reported in our annual accounts. The main technical adjustment is the removal from budgets of £31 million of interest and repayments on capital borrowing. Those should be routed directly through the Scottish consolidated fund, rather than through Scottish Government accounts as per legislation set out in the Scotland Act 1998, which states that amounts required for the repayment of principal and payment of interest on sums borrowed are to be charged on the Scottish consolidated fund.
With regard to Whitehall transfers and allocations from Treasury, there is a net positive impact on the budget of £6.5 million in relation to small transfers, which are all listed in the supporting documents.
The final part of the budget revision concerns the transfer of funds within and between portfolios to better align the budgets with profiled spend. As in past years, there are a number of internal portfolio transfers that have no effect on portfolio totals but which ensure that internal budgets are monitored and managed effectively. The main transfers between portfolios are noted in the ABR supporting document and the guide.
As we move towards the financial year end, we will continue, in line with our normal practice, to monitor forecast outturn against budget and, wherever possible, seek to utilise any emerging underspend to ensure that we make optimum use of the resources available in 2018-19 and to proactively manage the flexibility provided under the fiscal framework agreement between Treasury and the Scottish Government.
I shall provide the committee with a mid-year report on revenue and spending to date alongside the spring budget revision, when published, to improve the transparency of the budget management process and decisions that are taken in year, which is in line with the budget process review group recommendations.