The Scottish Government

Budget Revision

Finance and Public Services Minister Andy Kerr made a statement to the Scottish Parliament on June 26, 2002, on the budget revision and End Year Flexibility arrangements.

This is the full text of his statement.

Presiding Officer, I am delighted to have the opportunity to set out how we are successfully managing our resources to ensure that every penny of the Scottish budget is used for maximum impact.

We are already delivering record levels of investment for public services across Scotland. Our investment is focused on our five key priorities: health, education, crime, transport and jobs.

It is delivering results across these priorities and benefiting every community in Scotland. It is underpinned by the prudent and sensible approach the Executive is taking to public finances.

This afternoon's statement is about the way in which we are using this year's Scottish budget to deliver Executive priorities. What I will set out today to Parliament is good news for the people of Scotland. By effectively managing within this years budget, and resources carried forward from last year, we can deliver more.

Parliamentary authority for these changes will be sought in Budget revisions in the autumn. A supporting document is being made available to all MSPs through SPICe.

As you know, this Executive has placed a particular emphasis on ensuring effective use of the Scottish budget in line with our priorities.

Like any household or efficient business, we need to manage our expenditure each year to ensure that the money is spent to best effect. This includes taking advantage of the flexibility open to us at the end of any financial year.

Since 1998 we have been able to carry forward resources from one financial year to the next under End Year Flexibility arrangements, or EYF. We use EYF in a planned way to carry money forward for specific purposes, to handle any slippage in capital projects, and to avoid any last minute pressure to spend at year end.

EYF ensures that available resources are applied to our priorities. It ensures that resources stay in Scotland and don't return to the Treasury.

We have discussed with the Finance Committee the five elements of EYF:

1. Firstly, finance put aside against future, planned, spending commitments - Glasgow Housing Stock Transfer is the biggest example of this.
2. Secondly, slippage in the implementation of some, mainly capital projects, for example delays in expenditure on roads due to the impact of foot and mouth disease.
3. Thirdly, fluctuations in demand led budgets, for example Regional Selective Assistance where demand might dip in any one year.
4. Fourthly, other variances including our modest contingency reserve, delayed project implementation and additional in-year income, for example the money returned to our budget due to the closure of Motorola.
5. Finally, budgets controlled by other bodies such as water authorities and NHS boards.

The total carry forward under our direct control is £443m. Of this over £250m is managed budget provision for future spend and capital slippage. These figures include almost £100 million which was brought forward from the financial year before last for stock transfer - demonstrating clearly how EYF gives us great flexibility in our financial management.

Our practice is that 75% of EYF is retained by departments to deliver on key policy initiatives such as additional support for the further education sector, funding for the care homes settlement, the public transport fund, and energy efficiency projects.

The remainder is returned to Cabinet to allocate against our collective priorities. 100% funding, or more, has been returned to departments in a number of instances including to health, education, social justice and transport.

There is a remaining £73.3m available for allocation to initiatives that are of importance to the people of Scotland.

Presiding Officer, I have more good news to report. Scottish Water was established last year as the single water authority for Scotland. It has reviewed the investment plans it has inherited from its predecessors and made clear to us that by reprofiling their expenditure they can achieve the same results for significantly less money. They are releasing £100m within the current financial year, while still delivering fully on their 5 year plans. This is the sort of performance improvement that Scottish Water was set up to achieve. They are to be congratulated on it.

We therefore have £173.3m to allocate to additional spending that will deliver results for the people of Scotland. In allocating these resources we have taken on board the views of others:

• The Finance Committee and other Committees of this Parliament as part of their consideration of the budget

• Our partners in the delivery of front line services, particularly local authorities

• And most importantly individuals and communities across Scotland who have told us about their concerns and their local priorities.

As a result I have identified three areas for action:

1. Investment for results
2. Scotland's children
3. Our local environment

I am announcing today the allocation of £78m for projects where spending will generate significant benefits - for our frontline services, our economy, and our environment. We will use the resources as follows:

• £14.5m for capital investment in the police, fire and courts services
• £15m for preventing and addressing youth crime
• £17.5m for higher and further education
• £5m for environmental initiatives
• £2.7m for electronic service delivery in justice and agriculture
• £4.75m to further develop Scotland's tourism potential
• And of course, the £18.8m for the widely welcomed purchase of HCI with the balance being provided from Health's own EYF.

Colleagues will be announcing details of their allocations in the near future.

This Parliament and this Executive were established to make a real difference to people's lives. This means identifying and delivering on our national priorities. It also means giving local leaders the means to improve the environment of their local communities. We have done much already - we want to do more.

Since I took up post last November I have spent a lot of time listening to the views of our communities and their leaders and the diverse voices of individuals up and down the country.

People recognise and welcome the investment we are making in the key frontline services. That investment must continue.

But at the same time we must respond to local priorities - improving local roads and pavements, traffic calming measures, removing litter and graffiti, cleaning up the environmental eyesores. We want cleaner and safer communities. These are the things that make a real difference to the quality of life.

I am also keen for us to take action in two key areas:

Firstly, by improving the quality of life for children and young people. In particular by making the healthy choices the easy choices by improving access to sport and leisure activities.

Secondly, by improving our local environment, with particular action on local streets and roads, on crime and community safety, and on environmental improvements.

This might include action for example on:

• Dealing with potholes
• Civic clean ups
• Local litter campaigns
• CCTV
• Safety lighting in parks

However, our local communities and our local authorities are ideally placed to identify the most pressing local needs and to deliver the necessary improvements. We will let the local leaders lead.

I am delighted to announce today the allocation of an additional £95m to local authorities this year to take forward action on the areas I have outlined. I am not going to be prescriptive about how this money is to be used - it has to reflect local circumstances, local needs and local priorities.

I want to see imaginative plans to deliver real impact for our communities. There is both an opportunity and a challenge here to really make a difference.

The package we have put in place reflects the priorities for the people of Scotland.

I commend this statement to you.

Allocation to local authorities as mentioned in the statement is illustrated by the table below.