Auditor reveals £350m underspend in Scottish government budget

Social justice, education, infrastructure and health budgets were all underspent

The Scottish government underspent its budget by almost £350m in 2014/15, a new report has revealed.

Auditor General Caroline Gardner found that total net expenditure over the financial year was more than £32bn - but £347m less than budgeted for.

There were underspends in the social justice, education, infrastructure and health budgets, while justice and rural affairs overspent.

The audit noted three particular areas of concern posing "significant risks".

The resource budget was underspent by £207m, 0.7% of the total money available, while the capital budget was £140m under, 7.6% of the total.

Within those figures, social justice was left with £51m to spend, while the health budget was underspent by £14m.

A "technical accounting adjustment" relating to the value of student loans was said to be the reason behind £72m less being spent on education than forecast.

Less money was spent on infrastructure than expected, with savings on the new Forth crossing and other major capital projects highlighted as the reason for a £221m underspend, along with changes to the rail franchise.

'Financial consequences'

An increase in police and fire pension payments was behind an overspend of £12m in the justice budget, while rising costs of the Futures Programme was blamed for rural affairs going £16m over budget.

The IT project for implementing the new EU Common Agricultural Policy was one of three areas of concern highlighted in the report, with estimated costs now sitting at £178m, 74% more than originally forecast.

The auditor general said there were "significant risks" to the project's success, with the potential for "significant financial consequences" if payments to farmers are affected.

Concerns were also raised about the potential reclassification of non-profit projects by the Office for National Statistics.

ONS ruled last year that one such project, the Aberdeen Western Peripheral Route, should be reclassified from private to public sector, putting it on the Scottish government's balance sheet. Other projects including the Dumfries and Galloway Royal Infirmary and the Edinburgh Royal Hospital for Sick Children are also under review.

The auditor general said there was a risk of these projects also being classified as public sector, which could impact on capital budgets and the number of projects taken forward in future.

The third area of concern noted was the ongoing suspension of payments to Scotland from the European Structural Fund.

In August, the Scottish government delayed publication of its spending proposals for 2016-17 by several months.

'Clean audit'

A spokesman for the Scottish government said it was welcome that the accounts had attracted a "clean audit".

"The financial performance reported in the accounts demonstrates the effective stewardship of resources by the Scottish government in again limiting underspend to around 1% of the Scottish government's budget.

"As the finance secretary confirmed to parliament in June this year, as a result of prudent decisions and effective financial management, the 2014-15 underspends are being invested in the current year to support Scotland's economy."

Scottish Conservative finance spokesman Murdo Fraser said the SNP "has to get its story straight" when it comes to balancing the books.

He said: "On one hand it constantly complains about budget cuts from Westminster, and on the other it's not even spending the money it has."

Scottish Labour's public services spokeswoman Jackie Baillie said: "The SNP record of financial management leaves a lot to be desired.

"At a time of austerity for our public services we are seeing millions of pounds not being spent in key areas like health, education and justice."