EXPENDITURE WITHOUT PARLIAMENTARY
AUTHORITY
Contents:
Scope
Key Points
Statutory Background
Procedures
Scope
1. This section gives guidance on the procedure to
follow where the Scottish Administration or any other body
funded directly from the Scottish Consolidated Fund (SCF)
proposes to undertake expenditure in any financial year
without the authority of a Budget Act relating to that
year.
Key Points
2. To be able to undertake expenditure
all of the following are normally
required:
the power to undertake the activity giving rise
to the expenditure (see the section on
Expenditure Without Statutory
Authority);
parliamentary approval to the expenditure;
and
appropriate delegated authority. It is the
responsibility of Departments to ensure that all 3
elements are satisfied before commitments or
expenditure are authorised.
3. With certain exceptions, parliamentary approval for
expenditure is given in the annual Budget Act. Without such
authority, expenditure cannot normally take place.
4. If no such authority exists Departments may seek
approval from the Minister for Finance and Public Service
Reform to use contingency powers
provided they have the power to undertake the
underlying activity. They must first, however,
consider with Scottish Executive Finance the possibility of
seeking an urgent Budget Amendment Order. They must also
report Ministerial approval to the Parliament immediately
it is given and should, if possible, make no payment until
14 days have elapsed from the date of the report.
Statutory Background
5. Section 65 of the Scotland Act provides that a sum
may only be paid out of the SCF if:
it has been charged on the SCF by any
enactment;
it is payable out of the SCF without further
approval by virtue of the Scotland Act; or
it is paid out in order to meet expenditure of
the Scottish Administration, or to meet expenditure
payable out of the SCF under any enactment but only
in accordance with rules set out, in practice in
the Public Finance and Accountability (Scotland)
Act 2000.
6. Section 65 also provides that sums paid out of the
SCF shall not be applied for any purpose other than that
for which they were paid out.
7. Section 1 of the Public Finance and Accountability
(Scotland) Act 2000 provides that expenditure by the
Scottish Administration and other bodies funded directly
from the SCF must be authorised on an annual basis by
Budget Act. The Budget Act may specify the purpose for
which resources may be used and the maximum amount of
related expenditure in the particular financial year to
which the Budget Act relates. The annual Budget Act
provides for the amendment, by Order subject to affirmative
resolution, to those parts of the Act specifying Budget
approvals and the purposes for which resources may be
used.
8. Section 3 of the Public Finance and Accountability
(Scotland) Act 2000 sets out contingency arrangements to
allow for the
use of resources in certain circumstances
where the use of resources has not been authorised by
Budget Act. Parallel provisions on
cash expenditure are made in the relevant
Budget Act. This is intended to cover instances where there
is an urgent need, but no time to seek parliamentary
approval.
All use of the power must be reported to the
Parliament and the procedure should only be used
exceptionally when it is not practical to seek a Budget
revision.
9. In addition the
Written Agreement between the Parliament and the Executive covering in
year changes to budgets, sets out the arrangements for the
use of contingency payments.
Procedures
10. Where there is no Budget Act authority Scottish
Ministers may, in any financial year, authorise the
use of resources up to 0.5% of the
aggregate amount authorised by Budget Act at the beginning
of the financial year and
cash expenditure up to an aggregate amount
set out in the Budget Act (£50m in the Budget (Scotland)
Act 2000) if they consider that:
the expenditure is necessary in the public
interest; and
it is not reasonably practicable, for reasons of
urgency, for Budget Act authority to be secured in
advance of expenditure being undertaken.
11. Before any action can be taken Departments should
seek formal approval via Scottish Executive Finance from
Scottish Ministers, including the Minister for Finance and
Public Service Reform, to use contingency powers. Unless
the circumstances are such that extreme urgency makes it
impossible, the Scottish Ministers must lay a report before
the Parliament at least 14 calendar days
before undertaking any expenditure.
12. The report to the Parliament should say what
circumstances have required Ministers to authorise the
exceptional use of contingency powers and
why expenditure cannot wait for the next budget revision.
Further information on laying reports can be found on the
Guidance section of the Intranet.
13. Details of any contingency payments should appear in
the Executive's annual accounts.
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Page Published/ Updated on: 12th November 2002