Using emergency money to build up reserves is “the equivalent of taking a payday loan and putting it in your current savings account”, Anas Sarwar has said.
The Scottish Labour leader addressed a new report from Audit Scotland on Scotland’s Covid-19 response spending at First Minister’s Questions on Thursday.
The independent body analysed the Scottish Government’s financial response to the pandemic since March 2020, acknowledging that while ministers managed the overall Covid-19 budget “effectively”, some funding still remains unspent.
Some £15.5 billion was allocated for Scotland’s Covid-19 response between 2020 and 2022, of which an estimated £11.8 billion was spent between March 2020 and December 2021.
The report said that at the end of 2020/21, more than £2 billion was added to reserves by the Scottish Government, councils and health and social care integration authorities.
While Audit Scotland said the use of reserves to manage spending between years is “good financial management”, it also identified a risk over clarity on how the Covid funding held in reserves is spent.
Mr Sarwar highlighted this in the chamber, telling Nicola Sturgeon it “isn’t good for Scotland”.
But the First Minister said the reserves were “fully utilised as part of the 2021/22 budget management process”.
She added: “They were transparently allocated within the budget revisions.
“That includes the £134 million of Covid funding specifically ring-fenced for health. No funding currently in the Scottish reserve relates at all to Covid-19 business support funding.”
Mr Sarwar also challenged the First Minister over proposals to cut funding to Audit Scotland, suggesting doing so “makes it harder for them to expose this Government’s failures”.
He said: “Now in the face of uncomfortable truths about their financial mismanagement, SNP figures are openly talking of, I quote, ‘clipping the wings’ of Audit Scotland.
“They’ve already cut their budget by nearly a fifth since they came to power, and the spending review makes clear there are year-on-year cuts to come.
“Is it the case Nicola Sturgeon is cutting Audit Scotland’s budget because it makes it harder for them to do their job, it makes it harder for them to expose this Government’s failures, and it makes it easier for her to get away with it?”
The First Minister replied: “I thought Anas Sarwar might have done some basic homework before coming to this chamber.
“The Scottish Government doesn’t actually set the budget for Audit Scotland.
“The budget for Audit Scotland is independently funded through the Scottish Parliament, and the audit fees that public bodies pay for it.
“The figures in the spending review in relation to Audit Scotland are illustrative, because we have to have illustrative figures, but they don’t replace the independent processes whereby this Parliament scrutinises and determines the budget of Audit Scotland.”
The Scottish Government’s Resource Spending Review shows the budget for Audit Scotland and the Scottish Parliament is to be frozen at £122 million until 2026/27.
The body recommended the Scottish Government evaluates whether its Covid-19 spending delivered the desired outcomes, as well as allowing for greater scrutiny on its decisions.
Collaboration at pace in “difficult circumstances” between the Scottish Government and the UK and local governments is acknowledged in the publication, but it said it is “critical that lessons are learned about what worked well, and what did not” in order to improve responses in the future.
It is “hard to see how some financial decisions were reached”, Audit Scotland said, adding more work is required by the Scottish Government to demonstrate how the wide range of spending measures worked together to address the harms caused by the pandemic.
Recommendations from the independent auditors include improving the transparency of public finances in order to support any scrutiny on funding and spending measures brought in to mitigate the pandemic’s impact, as well as reflecting on the financial decision-making processes.
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