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Office-Of-The-Secretary-Of-State-For Office of the Secretary of State for Scotland and Office of the Advocate General 2018-19 Supplementary Estimates Memorandum Introduction The Office of the Secretary of State for Scotland and Office of the Advocate General Supplementary Estimate for 2018-19 seeks the necessary resources and cash to support the functions of the Office of the Secretary of State for Scotland and Office of the Advocate General. These are continuing functions and no new functions have been added since the 2018-19 Main Estimate. The main purpose of this Memorandum is to provide the Scottish Affairs Committee with an overview of the Office of the Secretary of State for Scotland and Office of the Advocate General 2018-19 Supplementary Estimate, which is part of the supply procedure. It also gives information on the budgetary changes of the Scottish Government and changes to the cash grant payable to the Scottish Consolidated Fund by the Office of the Secretary of State for Scotland and Office of the Advocate General. The Supplementary Estimate seeks approval to a net resource requirement of £30,002,539,000 and a net cash requirement of £30,001,618,000 and for 2018- 19 the Office of the Secretary of State for Scotland and Office of the Advocate General Departmental Expenditure (DEL) limit, net of depreciation and impairments, will increase from £9,500,000 to £10,076,000. The Memorandum is split into sections covering: (1) Summary of the Office of the Secretary of State for Scotland and Office of the Advocate General plans for 2018-19; (2) An overview of the Office’s Administration Costs; (3) An overview of DEL and AME totals; (4) Details of the grant paid to the Scottish Consolidated Fund; (5) Details of Barnett consequentials for 2018-19; (6) Control Totals for the Scottish Government including breakdown by main programme of AME spending; (7) Reconciliation of the SR 2015 settlement for Scottish Government and Control Totals for 2018-19; and (8) Details of the Scottish Block 2015-16 to 2019-20. Section 1: Summary of Office of the Secretary of State for Scotland and Office of the Advocate General Plans for 2018-19 Spending plans for 2018-19 were set in the 2015 Spending Review. From the baseline set in the 2015 Spending Review, the Office of the Secretary of State for Scotland and Office of the Advocate General agreed an overall real terms reduction This is in line with the targets set for the other Territorial Offices (Office of the Secretary State for Wales and the Northern Ireland Office). The Office of the Secretary of State for Scotland and Office of the Advocate General, together with Office of the Secretary State for Wales and Northern Ireland Office, are continuing to assess where services can be shared across the three territorial offices. Currently, the three offices share a single parliamentary service. The Office of the Secretary of State for Scotland and Office of the Advocate General transferred the lease of its London headquarters to the Government Property Agency at the beginning of the financial year as part of the Government’s initiative of centrally the management of Government properties, to make a more efficient use of Government assets. The Office of the Secretary of State for Scotland and Office of the Advocate General are playing an important role in the UK Government’s preparations for EU exit. This involves working closely with departments across the UK Government, the Scottish Government and organisations across Scotland to ensure Scotland’s interests are effectively represented and taken account of in the UK’s preparations for exiting the EU. In order to support this work the offices received funding for an additional five posts in 2018-19. The Office of the Secretary of State for Scotland and Office of the Advocate General do not employ staff directly, instead all staff are seconded or loaned from other Government bodies. During a routine HMRC audit of the Scottish Government in 2014 it was discovered that VAT should be charged on certain seconded posts. Since the Offices had not been funded at the Spending Review, funding is found each year to cover the additional VAT costs. Since the programme funding for the Office of the Secretary of State for Scotland and Office of the Advocate General was higher than required in the current financial year, the offices reduced the amount of funding required to cover VAT on secondments and transferred funding from the programme budget to offset the reduction, thus reducing the claim on the reserve. The Office of the Secretary of State for Scotland and Office of the Advocate General’s receipts were understated at the time of the Spending Review. The increase in receipts and expenditure reflects the revised costs from other government departments. Section 2: Overview of the Office of the Secretary of State for Scotland and Office of the Advocate General’s Administration Costs The key purpose of the Office of the Secretary of State for Scotland and Office of the Advocate General remains to support the Secretary of State for Scotland and the Advocate General to deliver the objectives of strengthening and sustaining the Union, being the voice of Whitehall and championing the UK Government in Scotland, and protecting the UK Governments interests in the courts and providing advice on policy and legislation. This Estimate provides for the administration costs of the Office of the Secretary of State for Scotland and Office of the Advocate General, including the salaries of the Secretary of State, Parliamentary Under Secretary of State and Advocate General and payments to the Scottish Consolidated Fund. Section 3: Overview of Office of the Secretary of State for Scotland and Office of the Advocate General DEL and AME totals for 2018-19 Departmental Expenditure Limit (DEL) The following adjustments have been made to the Control Totals for the Office of the Secretary of State for Scotland and Office of the Advocate General budget for 2018-19 since the publication of the Main Estimate: • A reserve claim of £240,000 for VAT liabilities (Resource DEL admin); • A reserve claim of £336,000 for EU Exit preparations staff costs (Resource DEL admin); and • A budget increase in Resource DEL administration costs of £100,000, offset set by a reduction in Resource DEL programme costs £100,000. The Departmental Expenditure Limit current control totals for the Office of the Secretary of State for Scotland and Office of the Advocate General are set out in the table below: £’000 nominal Main Changes Supp Estimate Estimate Resource DEL (RDEL) 9,480 576 10,056 o/w RDEL excluding depreciation 9,450 0 10,026 o/w depreciation ring fence in RDEL 30 0 30 Administration Budget* 9,050 676 9,726 o/w non-ringfenced RDEL administration budget 9,050 676 9,726 o/w depreciation ringfence administration budget 0 0 0 Capital DEL 50 0 50 * This is part of the RDEL control total and not an addition to it. Annually Managed Expenditure (AME) In addition, the Estimate contains £900,000 of AME provision for the Office of the Secretary of State for Scotland and Office of the Advocate General as a result of lease obligations at the Scotland Office headquarters in Edinburgh caused by the impending move to the UK Government Edinburgh Hub. Section 4: Cash grant payable to the Scottish Consolidated Fund The Estimate also allows for the payment of a cash grant to the Scottish Consolidated Fund. All expenditure by the Scottish Government is charged to the Scottish Consolidated Fund. This expenditure is shown in Sections C & D of the Office of the Secretary of State for Scotland and Office of the Advocate General Estimate. Since the Main Estimate, provision has increased by £522,215,000. The table below reconciles the spending aggregates of the Scottish Government with the cash grant payable to the Scottish Consolidated Fund. Calculation of Cash Grant Payable to Scottish Consolidated Fund 2018-19 2018-19 2018-19 £ million Main Supplementary Estimate Changes Estimate Revised Position Scottish Block Grant 19,392.186 1,334.347 20,726.533 UK Government Funded AME 4,930.021 405.322 5,335.343 Expenditure financed by Scottish taxes 12,801.927 0.000 12,801.927 Expenditure financed by Capital Borrowing 450.000 0.000 450.000 Drawdown from the Scotland Reserve 0.000 250.000 250.000 Non Domestic Rates 2,636.000 0.000 2,636.000 Total Managed Expenditure 40,210.134 1,989.669 42,199.803 add: Repayments of principal to National Loans Fund of pre 1999 loans to former Scottish 46.653 -3.702 42.951 Water Authorities Police Loan Charges 5.404 1.026 6.430 Movement in Creditors / Debtors 100.000 -5.000 95.000 152.057 -7.676 144.381 less: Non Domestic Rates Income 2,636.000 0.000 2,636.000 National Insurance Fund Payments 2,107.480 35.810 2,143.290 towards Scottish National Health Service 4,743.480 35.810 4,779.290 less: Fiscal Framework transactions 0.000 (Scotland Act 2016) Taxes collected by Scottish Government 694.000 0.000 694.000 Repayment of principle of loans -7.073 0.000 -7.073 Scottish Income Tax 12,115.000 0.000 12,115.000 Capital Borrowing 450.000 0.000 450.000 Funding deposited in the Scotland Reserve 0.000 186.983 186.983 13,251.927 186.983 13,438.910 Cash to accruals adjustments Depreciation (SG Funded) 853.991 0.000 853.991 Depreciation (UK Funded AME) 0.000 13.569 13.569 Impairments (SG Funded) 251.215 550.000 801.215 Impairments (UK Funded AME) 100.000 154.524 254.524 Resource to cash adjustments for NHS and 3,879.860 100.840 3,980.700 Teachers Pensions (UK Funded AME) Payments relating to release of provisions -100.000 10.000 -90.000 Other cash to accruals adjustments (UK 57.350 183.300 240.650 Funded AME - Student Loans) Net balance in Scottish Consolidated Fund 0.000 194.752 194.752 5,042.416 1,206.985 6,249.401 Cash Grant payable to Scottish 17,324.368 552.215 17,876.583 Consolidated Fund by OSSS Note All items forming this calculation refer to expenditure incurred by/income received by the Scottish Government Changes to DEL and AME totals for the Scottish Government are detailed elsewhere in this Memorandum.
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