Scotland puts extra £66m aside to protect against financial shocks

25 Jun 18

The Scottish Government has added £66m to the country’s reserves to protect against future budget volatility and constraints in the fiscal framework.

The figure was part of a £453m underspend in the 2017-18 budget, announced by finance secretary Derek Mackay in the Scottish Parliament last week.

Provisional expenditure outturn was £30.9bn, against a fiscal budget of £31.4bn, he said.

Around £335m of the overspend was already committed in spending plans for 2018-19, including £100m received a year earlier than expected from HM Treasury to help meet the costs of setting up a Scottish social security agency.

Income from devolved taxes outstripped forecasts to rise for the second year running.

Total provisional income from Land & Buildings Transactions Tax and Scottish Landfill Tax was £706m, £50m above initial budget forecasts and an increase of £73m, or 12%, from 2016-2017.

The boost to reserves represented just 0.2% of the overall fiscal budget and would be available to support management of future budget volatility, said Mackay.   

He said the results showed the Scottish Government had managed Scotland’s finances “prudently and competently”.

“Under the current devolution settlement, the Scottish Parliament is not permitted to overspend its budget. As a consequence, we have consistently adopted a position of controlling public expenditure to ensure that we live within the budget control limits that apply,” he said.

“These underspends represent a fraction of our overall budget, but will be carried forward to support this year’s budget and increase our reserves to ensure we can respond to future challenges.”

“We will continue to maintain a firm grip on Scotland’s public finances to mitigate the negative impact Brexit will have on Scotland’s economic outlook.”

However, the plan was attacked as inadequate by Conservative shadow finance spokesman Murdo Fraser, who noted that the Scottish Fiscal Commission had earlier this month downgraded its forecast for income tax revenues by £1.7bn in the period to 2022-23.

“In that context, the finance secretary’s decision to transfer £66m to the Scotland reserve against that contingency is prudent, but it comes nowhere near filling the gap that is forecast by the commission,” he said.

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