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Budget underspend of 0.6% shows financial competence, insists minister

Opposition MSPs said the underspend should have gone to capital projects (PA)
Opposition MSPs said the underspend should have gone to capital projects (PA)

The fact the Scottish Government’s underspend was kept to 0.6% of its budget underlines its financial competence, a minister has said.

However some opposition MSPs questioned the £292 million underspend, saying a number of capital projects should have benefited from the money.

Public finance minister Ivan McKee set out the Government’s provisional out-turn for the 2023/24 financial year in a speech at the Scottish Parliament on Thursday.

The Government recorded a provisional out-turn of £49.3 billion against a total budget of £49.6 billion.

Mr McKee noted the Scottish Government is required to balance its budget, while Covid backlogs, high inflation and the impact of the war in Ukraine are continuing to strain public finances.

Ivan McKee wearing a suit jacket and tie
Public finance minister Ivan McKee made a statement to MSPs on Thursday (PA)

He highlighted a number of spending areas, including £160 million for the Ukraine resettlement scheme and £429 million on the Scottish child payment.

The Government received a one-off payment from Abellio due to the end of the ScotRail franchise agreement – but Mr McKee did not state the exact figure.

He told MSPs: “We are required to manage our spend against an annual budget which is not confirmed until the final quarter of the financial year.

“We cannot overspend. Therefore, our financial strategy is to plan a modest underspend to mitigate the risk of post year-end audit adjustments, as have occurred in previous years.

“Managing the position to a 0.6% underspend underlines the financial competence of this Government.”

The “small underspend” will not result in any loss of spending power, he said, as it can be carried forward into the next fiscal year.

Michael Marra speaking, with one hand raised
Michael Marra said the SNP does not understand the fiscal framework (Jane Barlow/PA)

Labour finance spokesman Michael Marra accused the SNP of failing to understand the fiscal framework which underpins the Scottish Government’s finances.

He said the SNP manifesto published on Thursday had a “disastrous” tax policy agenda.

Mr McKee dismissed this as a “tirade”, saying the Scottish Government’s borrowing powers are limited.

Conservative MSP Murdo Fraser said the capital underspend of £130 million was at the highest level in five years and four times as high as last year.

He said: “This is against a backdrop where vital capital projects such as the dualling of the A9 are not being progressed.

“How can the minister have any credibility in complaining about a reduction in the capital budget from the UK Treasury when their capital underspend has quadrupled?”

The minister said Mr Fraser did not appreciate “how these number work”, saying the underspend amounted to around only a week’s worth of capital projects.