The Scottish Government has been spending at unprecedented levels to combat the Covid-19 pandemic, support people’s health, families and livelihoods, and uphold the wider economy.
The Scottish Government has been spending at unprecedented levels to combat the Covid-19 pandemic, support people's health, families and livelihoods, and uphold the wider economy.
Most of this spending has been supported by increased Scottish funding resulting from Covid-19 spending decisions by the UK Government (known as Barnett consequentials). In 2020/21 this totalled £8.6 billion. Scottish Ministers have committed to spending this in full on the Covid-19 response, and have redirected other parts of the Scottish budget, announcing total spending of over £9 billion.
Provisional figures for 2020/21 show the Scottish Government spent £48 billion against a revised budget of £48.5 billion, with a £449 million underspend (around one per cent). We are currently auditing this spending in our annual audit of the Scottish Government’s consolidated accounts and will be reporting our findings at the end of this year.
Importantly, last year's underspend is not lost to the Scottish budget. Instead, the Scottish Government is able to bank it in the Scotland Reserve to carry over and spend in this financial year. This is already reflected in the budget agreed by the Scottish Parliament.
£4.6 billion of Covid funding from the UK Government has been allocated so far to Scotland to spend this year. However, unlike in 2020/21, this funding is not guaranteed, meaning that it can potentially fall as well as rise based on future UK spending decisions.
Financial pressures are both acute and unpredictable. Alongside the costs of an ongoing public health crisis, increased spending is also needed to address backlogs in the NHS and the courts, and help education and the economy recover. The challenges to maintaining the long-term health of the public finances pre-date the pandemic. A continued focus on medium and long-term financial measures, alongside immediate responses, is essential.
Managing volatility in the financial position will continue to be difficult, and pressures on the public purse may accumulate. Having a clear picture of how Scottish Government and UK Government initiatives are working together as the pandemic response changes is needed to properly understand the effectiveness of Covid-19 measures and to identify financial pressures. Effective communication and cooperation between governments will be central to this.
Transparency over public spending also remains vital. Covid-19 has undoubtedly made understanding the flow of public finances more complex than ever.
Through our ongoing Following the Pandemic Pound work programme, we are auditing the Covid-19 spending that has taken place across public bodies. In the short term, we will assess how much has been spent, and on what. And in the longer-term we'll assess what difference that spending has made.
I will continue to promote financial transparency, support scrutiny, and help focus on what difference spending is making to support people through the health and economic impact of the pandemic.