SNP’S £453m underspend sparks row over budget ‘slush fund’
●Finance minister is accused of ‘gross financial mismanagement’
The Scottish Government underspent its budget by almost half a billion pounds in 2017-18, Finance Secretary Derek Mackay has revealed.
Mr Mackay told Holyrood yesterday the £453 million underspend was a product of prudent budgeting, but his opponents accused him of “gross financial mismanagement” and hoarding cash when councils faced cuts.
He said the government had spent £30.9 billion out of a budget of £31.4bn for the most recent financial year.
Of the £453m unspent cash, £66m is to be added to Scotland’s reserves in case of future budget “volatility”. Mr Mackay also said there were already plans to carry forward £235 m to 201819, emphasising that none would be returned to the Treasury.
The Finance Secretary was accused of “piling up” a slush fund to “bribe” Green support to get his budget through parliament. But he defended himself by saying the £66m destined for Scotland’s reserves amounted to just 0.2 per cent of the overall budget.
Labour’s James Kelly called on Mr Mackay to apologise for failing to spend the cash.
A further £100m will go towards Scotland’s new social security agency and comes from UK government cash given to the Scottish Government for that purpose one year earlier than expected. Another £50m
was the result of higher than forecast tax receipts from the Scottish Government’s new Stamp Duty replacement – the Land and Buildings Transactions Tax (LBTT) – and Scottish Landfill Tax.
The underspend was more than twice the £191m recorded in the previous 2016-17 financial year. The most recent underspend also exceeded the £392m recorded in 201516 and the £200m of 2014-15.
Mr Kelly said: “Labour will always fight to protect Scotland’s vital public services, but SNP Finance Secretary Derek Mackay underspent almost half a billion pounds whilst cutting council budgets by £1.5bn.
“Money is piling up in his slush fund for his annual bribe to win Green votes to get his budgets passed. This is simply a gross mismanagement of Scottish finances by a Finance Secretary that is clearly out of his depth.
“Throughout his tenure as Finance Secretary, Mr Mackay his tinkered on tax instead of ensuring the richest pay their fair share to fund our schools, hospitals and other vital public services.”
Scottish Conservative finance spokesman Murdo Fraser claimed Mr Mackay was having to set money aside to pay for future shortfalls in the tax take.
Mr Fraser said: “Derek Mackay might like to fool us all into thinking this £453m underspend figure is an insignificant sum. But it’s worth noting that it’s higher than what the SNP’S independence blueprint said it would cost to create a separate state. The Finance Secretary is having to put money aside to meet a projected shortfall in tax revenues due to Scottish economic underperformance.
“If the SNP could grow the Scottish economy at least at the same rate as the rest of the UK, there would be hundreds of millions more to spend on public services and reduce the tax burden on hard-working people and businesses.”
New forecasts published by the Scottish Fiscal Commission last month anticipated Scotland’s overall revenue from devolved taxation would be just over £1.7bn lower for 2018-19 to 2022-23 than was forecast in February.
But Mr Mackay said income from devolved taxes had increased for the second year running.
The total provisional income from LBTT and Scottish Landfill Tax is £706m – £50m above initial budget forecasts and an increase of £73m, or 12 per cent, from 2016-17.
Mr Mackay told MSPS: “After taking into account the social security funding, the planned carry forward for the 2018/-19 budget, surplus tax receipts and fees for guarantees, there is then a remaining underspend of £66m not yet committed to expenditure.
“This modest sum represents just 0.2 per cent of the overall fiscal budget and will also be carried through the Scotland reserve and will be available to support management of future budget volatility – a key feature of the new world we live in.”
Boats could be restricted on the Union Canal unless Scottish Canals gets more funding as is struggles to maintain its 250-year-old network.
The warning from the body, which depends on Scottish Government money, comes after it was forced to close four lifting bridges on the Forth & Clyde Canal over safety fears.
Scottish Canals interim chief executive Catherine Topley said: “Without additional investment, we will continue to see asset decline and asset failures – some of which may be substantial. We simply do not have the resources to do all that we would like to do, and this means we will have to make some hard decisions.”
A new asset management strategy published by the organisation stated that without more money, there would be a “restricted operation” on the Union canal and most of the Forth & Clyde canal.
Scottish Canals received £11.6 million for 2018/19 from the Scottish Government. But it said it has needed an extra £6m-£9m a year for several years to help cope with a £70m repair backlog.
The strategy said if funding fell to £10m, parts of both canals, along with the Crinan Canal, would be downgraded to “conserve” status.
That would involve “minimum care and maintenance to keep the canal safe”.
If only £7m was available, parts of the two Central Belt canals would be switched to “preserve” status, where “use of assets is withdrawn”.
Boat traffic on the Forth & Clyde Canal has already been restricted by bridge closures at Twechar and Bonnybridge, and two in Glasgow. Twechar has resumed limited opening.
Pat Bowie, chairman of the Keep Canals Alive group, said: “This highlights how quickly the canals could fall back into disuse.”
Scottish Conservative Central Scotland MSP Alison Harris said: “This is a completely unacceptable state of affairs.
“Scottish Canals has failed to invest in maintaining its core product: the canal itself.”
The Scottish Government’s Transport Scotland agency said: “We recognise the challenges faced by Scottish Canals and will continue to work in partnership to support the organisation in their operations and to explore potential sources of funding.”