Scottish government underspends budget by £347m

THE Scottish Government underspent its budget by almost £350 million last year, according to a new report.

Auditors have called for consolidated accounts to be published for the whole of the Scottish public sector to provide a fuller picture of public spending. Picture: Andrew Cowan

Scrutiny of the Government’s 2014/15 accounts by Auditor General for Scotland Caroline Gardner revealed total net expenditure during the year was £32,669 million, £347 million less than budget.

The resource budget was underspent by £207 million (0.7%) while the capital budget came in at £140 million under (7.6%).

The social justice budget was left with £51 million, the health budget was underspent by £14 million while justice overspent by £12 million, largely due to an increase in police and fire pension payments.

In education the underspend was £72 million, said to be the result of a “technical accounting adjustment” relating to the value of student loans.

The largest underspend of £221 million in the infrastructure portfolio was attributed to changes in the rail franchise as well as savings in the Forth road crossing and other major capital projects.

An overspend of £16 million in the rural affairs budget was put down to the rising costs of the Futures Programme.

The IT project for implementing the new EU Common Agricultural Policy (CAP) was one of three areas of concern highlighted in the report.

It noted the total estimated cost of the programme is now £178 million, 74% above the amount forecast in the original business case.

The auditor general said there were “significant risks” to the project’s success, with the potential for “significant financial consequences” if payments to farmers are disallowed.

It also raised concerns about the potential reclassification by the Office for National Statistics (ONS) of projects funded through the non-profit distribution (NPD) scheme, which uses private finance but caps the profit that firms can make.

ONS ruled in July that one such project - the Aberdeen western peripheral route (AWPR) - should be reclassified from private sector to public sector, putting it on to the Scottish Government’s balance sheet.

Also under review are Dumfries and Galloway Royal Infirmary and the Edinburgh Royal Hospital for Sick Children.

“There is a risk that these may also be classified as public sector, with further potential implications for capital budgets,” the report said.

“In addition, there is a risk of potential delays to other projects in the capital programme in the short-term.”

The auditor general concluded that if the projects were to be classified as public sector, the Scottish Government “will face a choice of progressing fewer capital projects or finding alternative ways of funding them”.

Another area of concern is the ongoing suspension by the European Commission of payments to Scotland from the European Structural Fund (ESF).

“It is critical that the Scottish Government ensures that its arrangements for ESF and those of the other bodies receiving funds are fully robust,” the report said.

Auditors also called for consolidated accounts to be published for the whole of the Scottish public sector to provide a fuller picture of public spending.

Scottish Liberal Democrat leader Willie Rennie said: “With an eye-watering underspend of £347 million, people would have expected the SNP to be able to get started on new capital projects.

“They are always saying how they have projects which are ‘shovel-ready’ and able to be started at a moment’s notice.

“Instead, because of the SNP’s screw-up on whether the AWPR is public or private, new building projects in Scotland face delays.

“It’s a sorry state of affairs that so many opportunities are being missed.”

Scottish Conservative finance spokesman Murdo Fraser said: “The SNP has to get its story straight when it comes to balancing the books.

“On one hand it constantly complains about budget cuts from Westminster, and on the other it’s not even spending the money it has.

“There’s nothing wrong with running a tight ship and keeping money back for a rainy day.

“But you can’t then point fingers at governments doing the same thing just because they happen to be based in London in a bid to stoke up grievance and hostility.”