SCOTLAND OFFICE DEPARTMENTAL REPORT 1999-2000

  When Dr Reid appeared before the Select Committee on 21 June, he was asked two questions arising from the Scotland Office Departmental Report and from the shadow resource accounts for 2000-01, to which he undertook to reply in writing.

  Annex 1 of the Departmental Report provides details of grants made by the Scotland Office to support expenditure by the Scottish Executive. Estimated expenditure under the heading "Other expenditure outside Departmental Expenditure Limits" is shown as £93 million for 1999-2000 and plans for 2000-01 as £271 million. The reason for the difference in these figures arises from changes in certain expenditures in both years. The largest two items both relate to expenditure in relation to student support. The figure for 1999-2000 assumed a receipt of £121 million from the planned sale of student loan debt, which in the event was not realised following postponement of the sale, and expenditure in 2000-01 was further increased by £35 million as a result of the shift from a grant-based system towards student loans. A number of other smaller changes were also effected in 1999-2000. The implications of the additional expenditure for the earlier year was not completed in the figures used for the Departmental Report but will be effected in future financial reports.

  The Committee also asked whether grants from the Scotland Office to the Scottish executive would be treated as outside the Resource Budget. In common with the budgets for other UK government departments, spending plans for the Scotland Office will in future be set in resource, rather than cash terms. Resource budgeting and accounting is intended to allow spending to be more closely related to objectives, notably by providing separate treatment for recurrent and capital expenditure, and by including in the definition of resource expenditure provision to encompass the consumption of fixed assets and the costs of holding them. Under resource budgeting, what counts is resources as and when they are consumed (or accrued) and not when they are paid for.

  Within the Scotland Office budget, the total grant to the Scottish Executive will be paid at the same time as the obligation is accrued, and will be so recorded in the Department's accounts. In practice the resource implications of the expenditure will be a matter for the Scottish Executive. The Executive is also committed to planning its forward expenditure in resource terms and the resource implications, including depreciation of fixed assets and charges representing the cost of capital will be fully reported in the estimates and accounts which the Executive will present to the Scottish Parliament.

Parliamentary and Constitutional Division,
Scotland Office
28 July 2000