The Scottish Government

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INTRODUCTION

The Scottish Government's Purpose

When we introduced the Scottish Government's Budget for 2008-11 on 14 November 2007, we set out an over-arching Purpose to which all else in Government is directed and contributes:

To focus the Government and public services on creating a more successful country, with opportunities for all of Scotland to flourish, through increasing and sustainable economic growth.

The Purpose provides a clear focus for all our spending priorities over the term of this Parliament. Our aim is to achieve a sustainable economic growth that will build on a strong and stable Scottish economy, provide prosperity and opportunities for all and ensure that future generations can enjoy a better quality of life. The benefits from delivering this single Purpose will be shared by all of Scotland's people, helping us to realise the considerable potential of our nation and our people by:

• generating greater and more widely shared employment;
• creating more highly skilled and better paid jobs;
• providing better quality goods, services, choice and opportunities;
• improving the quality of public services by stimulating higher government revenues;
• nurturing a self-sustaining and ambitious climate of entrepreneurial advance;
• encouraging a culture of confidence and personal empowerment to Scotland; and
• securing a high quality environment today and a sustainable legacy for future generations.

Central to the delivery of the Government's Purpose is the Government Economic Strategy. The Strategy and the Spending Review were published on successive days in November last year, underlining how our clear focus on this single goal drove - and continues to drive - our spending decisions. The Strategy sets out the approach to delivery of the Purpose by ensuring that all of the Government's resources and policies are focused on its achievement. It has been supported by a set of five Strategic Objectives, to which all policies and resources are aligned:

WEALTHIER & FAIRER - enabling businesses and people to increase their wealth and more people to share fairly in that wealth

SMARTER - expanding opportunities for all in Scotland to succeed from nurture through to life long learning, providing a good foundation to higher and more widely shared achievements

HEALTHIER - helping people to sustain and improve their health, especially in disadvantaged communities, leading to better, local and faster access to health care

SAFER & STRONGER - supporting local communities to flourish, becoming stronger, safer places to live and offering more opportunities and a better quality of life

GREENER - improving Scotland's natural and built environment and the sustainable use and enjoyment of it

These Strategic Objectives will be delivered through five Strategic Priorities, which set out the areas where the Government will concentrate its actions - and its spending - in achieving the Purpose:

• enhancing learning, skills and wellbeing;
• creating a supportive business environment;
• developing infrastructure and place;
• promoting effective government; and
• ensuring equity.

Our progress in delivering the Purpose will be measured by a set of seven targets. This progress can be followed on Scotland Performs ¹, the Government website launched in June 2008 to monitor and communicate how Scotland is doing in pursuit of the Purpose. Over time, Scotland Performs will show how we are making progress on the Purpose, the targets and the wider range of national outcomes and indicators, all part of our National Performance Framework which will allow the people of Scotland to track the changes that this Government's spending plans are focused on creating.

2009-10 Spending Plans

The spending plans for 2009-10 will, subject to Parliamentary consideration, form the basis for the Budget Bill for 2009-10 which will be laid before Parliament in January 2009.

The Scottish Government's Total Managed Expenditure ( TME) amounts to £34.6 billion in 2009-10. The element of this expenditure funded on the basis of the Barnett formula is the Departmental Expenditure Limit ( DEL). Total DEL in 2009-10 amounts to £29.2 billion. That gives a DEL increase of 4.5%, or a real terms an increase of just 1.7% in 2009-10.

Table 1: Total proposed budget for 2009-10

The total proposed budget of £34,760.5 million is £109.4 million greater than the equivalent figure of £34,651.1 million published last year in Scottish Budget: Spending Review 2007. This increase is accounted for by the provision for additional police, climate change measures, bus services operators grant, the acceleration of the small business rates relief scheme and the below parity acceleration of the NHS resource funding formula approved as part of the 2008-09 Budget Act, together with an increase of £40 million in the valuation of capital charges for Scottish Water and of £40 million in funding to local government to reflect the increasing costs arising from the Sutherland Review. The increase in Scottish Water capital charges is funded in full by HM Treasury with the balance of additional expenditure covered by some limited budget consequentials and increased Non Domestic Rate Income based on the latest information provided by local authorities. This leaves a prudent level of budget over-allocation for 2009-10 largely unchanged from the £100 million reported last year.

A more effective government

Underpinning our spending plans is the continuing drive for more effective government through the Efficient Government Programme for 2008-11. Effective Government is one of the five Strategic priorities identified in the Government Economic Strategy for delivering increased sustainable growth. This programme provides a commitment to delivering 2% cash-releasing efficiencies each year over the next three years. The majority of efficiency gains are expected to be delivered by business process improvement, more effective management of public assets and the application of shared services, including improved collaborative procurement.

In monetary terms, this will mean that in 2008-11, £1.6 billion of taxpayers' money will be re-targeted to support programmes and policies which are delivering against our five Strategic Objectives.

We published detailed Efficiency Delivery Plans for the 2008-11 programme in May. This publication contains details of all projects identified to date. In the first year of the programme efficiencies of £601 million have been identified against a target of £534 million. We will publish further delivery plans in the autumn.

Equality

The successful delivery on our Purpose also depends on our ability to promote greater equality and to tackle the barriers which restrict individuals and communities from reaching their potential and flourishing. Indeed, this is one of our five Strategic Priorities shaping our spending plans. We need to ensure that the skills and attributes of all of us are valued and that Scotland can benefit from the diversity of what we have to offer. No-one should be denied opportunities because of their background, gender, race, disability, age, faith or sexual orientation. This principle underpins the work of the Scottish Government and we are integrating this into our activities through the equality impact assessment process. We take our responsibilities under the statutory public sector equality duties seriously, not just because it is a legal requirement but because a more equal Scotland will contribute to a more successful Scotland.

This budget will contribute to the delivery of a fairer Scotland and to improving the life chances of all of people of Scotland.

Introduction of International Financial Reporting Standards ( IFRS)

The 2008 UK Budget announced a delay of one year in respect of the accounting implementation of IFRS, previously announced for 2008-09 at the 2007 UK Budget. All UK Government Departments (including Devolved Administrations) and other public sector bodies will prepare IFRS compliant accounts from financial year 2009-10 and shadow IFRS accounts will be prepared for 2008-09. The budgetary deadlines for IFRS are now fully recognised to allow restatement of the Scottish Budget on an IFRS basis for 2009-10 and we will be required to make appropriate revisions, agree figures with HM Treasury and present to the Scottish Parliament at the 2009-10 Spring Budget Revision. HM Treasury have confirmed that the financial instruments standards ( FRS 25, FRS 26 and FRS 29) will be implemented from 2008-09 and any prospective changes to the Scottish Budget will be reflected at the 2008-09 Spring Budget Revision.

Scottish Variable Rate

In accordance with the agreement between the Scottish Government and the Parliament's Finance Committee on the budget process, the Scottish Government confirms that it will not use the existing tax varying powers in 2009-10.

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