Select Committee on Scottish Affairs Minutes of Evidence

Supplementary memorandum submitted by the Scotland Office (MISC 3)

  When Scotland Office Ministers appeared before the Committee on 7 November it was agreed that a number of matters needed to be disposed of by means of a supplementary memorandum which I enclose. This additional information takes the form of notes on:—

    (a) the financial arrangements for funding devolution in Scotland;

    (b) the operation details of the work of the Legal Secretariat to the Advocate General and the office of the Solicitor to the Advocate General; and

    (c) the complete list of Sewel Motions.

  My apologies for the delay.

E B Miller OBE

Parliamentary Liaison Officer

6 February 2002

Financial Arrangements


  1.  The arrangements for funding devolution in Scotland were a key part of the constitutional settlement made in 1999. It is important that we have a practical and fair system for setting overall expenditure on devolved services in Scotland and a system which leaves the Scottish Parliament with full discretion to decide its delegated spending plans within the overall public expenditure limits set. That the Scottish Executive has full discretion to allocate resources to meet its priorities is a key aspect of the devolved system.

  2.  The arrangements for the financial relationship between the UK Government and the devolved administrations are set out in "Funding the Scottish Parliament, National Assembly for Wales and Northern Ireland Assembly: A Statement of Funding Policy", which is published by the Treasury. The Statement is to a large extent a formalisation of the long-standing conventions that have guided funding in Scotland (together with Wales and Northern Ireland) prior to devolution. It sets out the key principles for allocating expenditure within the UK and describes in detail the operation of the Barnett formula.

  3.  The first edition of the Statement was published in March 1999, in the run-up to devolution. It was reviewed in the course of the 2000 Spending Review and a revised edition was published in July 2000. The changes between the first and second editions were not substantial. The Statement is published by the Treasury with the agreement of the 3 Secretaries of State and following consultation with the 3 devolved administrations.

  4.  The Secretary of State is consulted by the Treasury about the operation of the funding arrangements and about any proposed changes. Scotland Office officials work with the Treasury and the Scottish Executive to ensure that the arrangements are being implemented correctly and that Scotland receives its fair share of spending allocations.

  5.  Once the overall provision is determined, the UK Parliament votes the necessary provision to the Secretary of State. She, in turn, makes grants to the devolved administration, as set out in the Scotland Act 1998. The Secretary of State accounts to the UK Parliament for the provision of the grant but the allocation of money to devolved services is a matter for the Scottish Parliament.


  6.  The Statement of Funding Policy which was published in July 2000 is the current, up-to-date version. It will be reviewed as part of the 2002 Spending Review to make sure that it takes account of the latest population figures, any changes in the comparability factors for Whitehall departments' spending programmes, and any developments in Resource Accounting and Budgeting.


  7.  The Barnett formula determines changes to expenditure within the assigned budgets of the devolved administrations; it does not determine the total allocation. The formula delivers one figure that is the increase in the total of the assigned budget of the Scottish Executive. These resources are unhypothecated and it is for the Scottish Executive to allocate them to meet Scottish priorities. There are 3 factors that determine changes to the assigned budget. These are:—

    1.  the quantity of change in planned spending in UK Government departments;

    2.  the extent to which the relevant UK departmental programme is comparable with the services carried out by the devolved administration; and

    3.  Scotland's population as a proportion of England or England and Wales, as appropriate.

Using these 3 factors, net changes to the assigned budget are derived by adding, for each UK department:

Change to the UK Government department's programme × Comparability percentage × Appropriate population proportion

  8.  Details of the comparable sub-programmes are given at Annex C of the Statement of Funding Policy. These are used to calculate the overall comparability percentages for each department. The population proportions are assessed using mid-year estimates provided by the Office for National Statistics. At the time of the 2000 Spending Review (SR 2000), the estimate of Scotland's population as a proportion of England's was 10.34 per cent; as a proportion of England and Wales it was 9.77 per cent.

  9.  In the July 2000 Spending Review, application of the Barnett formula, produced the following increases in the Departmental Expenditure Limit baseline.
£ million
1999-20002000-01 SR2000Provision followingSR2000
PlannedPlanned Baseline for
ExpenditureExpenditure 2001-022001-02 2002-032003-04
Total DEL13,67015,050 15,43016,23017,370 18,430
Increase over
Baseline +800+1,940 +3,000
Increase over 2000-01
Expenditure +1,180+2,320 +3,380

  Treasury calculated the increase in the Scotland DEL on the basis of the following changes to Government Departments:
SR 2000 Outcome
(Resource + Capital) 1
Department2001-02 2002-032003-04
£m£m £m
Programme Additions
DfEE1,6003,770 5,960
Health2,7607,740 12,310
DETR — Transport1,000 2,4504,100
DETR — other260 1,1301,820
DETR — LG6503,090 5,710
Home Office21,560 2,2402,580
Legal Depts2310 370390
Trade and Industry1,020 710650
Agriculture210300 330
Forestry1010 10
DCMS80130 200
Chancellor's Departments350 550580
Cabinet Office120120 190

  The population proportions and comparability factors are published in the Statement of Funding Policy.


1.  Figures rounded to nearest £10 million.

2.  England and Wales population proportions apply.

  10.  We should be clear that the manner in which Treasury determines the grant to the Secretary of State for Scotland and subsequently to the Scottish Executive is unrelated to the Executive's decisions to allocate resources to meet Scotland's priorities. The allocation of money from the assigned budget to devolved services is a matter for the Scottish Parliament.


  11.  Section 12 of the Statement of Funding Policy provides details of the public expenditure regime for the Scottish Executive and shows those areas covered by Annually Managed Expenditure (AME). The present AME expenditure plans for the period 1999-2000 to 2003-04, are as follows:—



1999-2000  2000-01  2001-02  2002-03  2003-04

CAP  334,775  340,709  373,000  349,471  381,710

Housing Support Grant  10,649  9,054  10,000  9,962  9,962

NHS and Teachers' Pensions  224,560  286,524  272,000  272,000  323,000

Other AME  841,395  979,741  1,089,600  1,130,940  1,202,145

Local Authority Self-Financed Expenditure  1,441,000  1,473,000  1,560,000  1,570,000  1,590,000

Scottish Non-Domestic Rates  1,440,522  1,510,992  1,544,817  1,569,817  1,589,817

Scottish Variable Rate of Income Tax  0  0  0  0  0

Total  4,292,901  4,600,020  4,849,417  4,902,190  5,096,634

Other Expenditure outside DEL        £000

Police Loan Charges  13,346  13,571  13,571  13,571  13,571


The Scottish Executive is currently preparing Budget Documents for 2002-03 and so figures for 2002-03 and 2003-04 are provisional.


  12.  The introduction of resource accounting and budgeting will not entail any fundamental change in the operation of the Barnett formula. Paragraph 5 of the summary to the Statement of Funding Policy says:

    "The introduction of resource budgeting means that this approach is applied to resources and capital budgets, but the principles remain the same."

  13.  In other words, the Barnett formula was applied in SR 2000 to changes in public expenditure plans, even though these changes now apply to plans that were prepared in resource terms rather than the previous cash basis. There will, of course, be some transitional changes to take account of the shift from cash to resource based financial plans and budgets referred to in the Statement of Funding Policy. The Departmental Report will continue to keep the Committee informed about technical accounting changes.

Scotland Office

February 2002


  The Legal Secretariat to the Advocate General comprises 3 qualified lawyers and support staff including the Legal Secretary who is a member of the Senior Civil Service. The Secretariat assists the Advocate General in the preparation of formal legal advice to the Government, in briefing for Cabinet Committees and Parliamentary business, in handling official correspondence and other Ministerial activities.

  The Office of the Solicitor to the Advocate General comprises 16 qualified lawyers, including the Solicitor and 2 other members of the Senior Civil Service. There are also support staff. The Office has an extensive public law litigation practice before the Court of Session, including in particular acting for the Home Office in immigration matters, but also, for example, acting for the Department for Work and Pensions in social security cases, the Department of Trade and Industry, the Department for Environment, Food and Rural Affairs and the Office of Fair Trading as well as a wide range of other United Kingdom Government Department and agencies. It represents the Department for Work and Pensions at hearings in Scotland before the Social Security Commissioners. Where devolution issues arise under the Scotland Act, the office also acts for the Advocate General, who will appear personally or give instructions about the case.

  Apart from litigation, the Office instructs Scottish provisions in Government Bills introduced into the United Kingdom Parliament and prepares subordinate legislation on reserved matters relating to Scotland. It advises the Advocate General and the United Kingdom Departments on matters relating to Bills introduced into the Scottish Parliament and on Scottish subordinate legislation as well as giving legal advice on Scots law to most United Kingdom Government Departments and agencies.

  The Solicitor's Office, and the Legal Secretariat form part of the Government Legal Service for Scotland, which includes also the Office of the Solicitor to the Scottish Executive and the Legal Secretariat to the Lord Advocate, as well as supplying legal staff to a number of other organisations including the Scottish Law Commission and the Scottish Parliament. The Government Legal Service for Scotland was established in 1999 to ensure that a supply of suitably experienced lawyers would continue to be available in Scotland to both the United Kingdom Government and the Scottish Executive and recruitment, training and career development of staff is on a service-wide basis. As at 13 November 2001, the Service as a whole comprised some 126 legally qualified staff, by far the largest component being the Office of the Solicitor to the Scottish Executive which on 13 November had 82 legally qualified staff.

Table of Sewel Motions
BillSewel Motion Approved Royal Assent
Food Standards*23 June 1999 11 Nov 1999
Financial Services and Markets*23 June 1999 14 Jun 2000
Electronic Communications*23 June 1999 25 May 2000
Limited Liability Partnerships*23 June 1999 20 Jul 2000
Sea Fishing Grants (Charges)8 December 1999 28 Jul 2000
Representation of the People13 January 2000 9 Mar 2000
Sexual Offences (Amdt)19 January 2000 30 Nov 2000
Race Relations (Amdt)25 May 2000 30 Nov 2000
Care Standards22 June 2000 20 Jul 2000
Insolvency1 June 2000 30 Nov 2000
Political Parties, Elections and Referendums 9 March 200030 Nov 2000
Political Parties, Elections and Referendums 6 July 200030 Nov 2000
Regulation of Investigatory Powers6 April 2000 28 Jul 2000
Government Resources & Accounts6 July 2000 28 Jul 2000
Criminal Justice and Courts Service5 October 2000 30 Nov 2000
Health and Social Care Modernisation17 January 2001
Tobacco Advertising and Promotion17 January 2001
International Criminal Court18 January 2001
Outworking31 January 2001
Criminal Justice and Police7 February 2001
International Development8 March 2001
Culture and Recreation8 March 2001
Armed Forces29 March 2001 11 May 2001
Adoption and Children4 April 2001
Adoption and Children24 October 2001
Proceeds of Crime24 October 2001
Anti-Terrorism15 November 2001
NHS Reform and Health Care Profession22 November 2001
Adoption and Children Bill30 January 2002
Police Reform Bill30 January 2002

*  Approval of Westminster legislation by the Scottish Parliament before it assumed its full powers on 1 July 1999.

Scotland Office

6 February 2002

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Prepared 21 February 2002