[Updated 24 June on budget exchange mechanism] In 2012-13, Scotland’s Finance Secretary and Deputy First Minister, John Swinney, underspent – in cash – by £179 Million.
In 2013-14 Mr Swinney underspent – in cash [amount below DEL – departmental expenditure limit] – by £145 Million.
In 2014 – 15, despite two successive years of starving Scotland;s key and failing public services, Mr Swinney underspent again and by the greatest amount yet – £192 Million.
That amounts to a half a billion pounds [£516Million] cut from Scotland’s spending over three years.
In the past year where the underspend has been the greatest, the near-crisis education system lost £84 Million; and Health £12 Million. The party that really cares is also reported to have underspent by £41 Million on Social Justice.
The recurring excuse has been that it’s prudent to keep funds back to buffer against the cuts that the nasty Westminster is bound to inflict on poor Scotland – so poor in fact, that we can afford to do without half a billion pounds?
There is a cut from Westminster this year – £107 Million – which will hardly be noticed against the flush reserves Mr Swinney has built up- but the cries of ‘unfair’ still come.
The reality is that either Scotland does not need the money the Finance Secretary has underspent in each of the past three years; or it does need that money – which was there to be spent – and has not had it.
Either way, this is not effective financial management.
It is curious to note that Mr Swinney was not always so stingy.
In 2008-09 he underspent by £42 Million.
We have been unable to locate the Financial Outtturn figures for 2009-10 but from an Audit of budgetary performance in that year, there appears to have been a cash underspened of £136 Million..
In 2010-11 the Finance Secretary returned to a better deployment of cash resources, underspending by only £12 Million.
In 2011-12 he underspent by £179 Million – which included a planned £100 Million underspend to be carried over [for what?]; and an additional £79 Million underspend.
Is it cynical to note that the heavier underspends, which have continued steadily since, began to occur in 2o11-12, in the period of the run up to indyref 1? Following the SNP’s achievement of an unprecedented overall majority in the 2011 Scottish Elections, former First Minister, Alex Salmond, immediately announced that an independence referendum would take place within that term of office.
Mr Swinney underspent by £42 Million in his first year as Finance Secretary, 2007-08. If he was at once capable of financial management to underspend as relatively modestly as £42 Million [and throughout his first term his annual underspends were tight], it is curious that in the years from 2011-12 onwards, his second and more experienced term of office, he has been heavily underspending year on year – a total of £695 Million in this term of office to date.
His entire first term – of four years, which allows a direct comparison with his second term performance to date – had a total underspend of £232 Million. This shows that the first four years of this five year term have together seen a three times greater underspend.
In his budget for 2011-12 Mr Swinney announced a three year plan of carryover underspends – which would coincidentally have taken us to 2013-14.
Do we know what happened to each of the underspends?
The Scottish Government initially had the facility to carry forward any unspent budget to future years – through a process known as ‘end-year flexibility’. This facility was abolished as part of the 2010 United Kingdom spending review. However what is knows as the ‘budget exchange mechanism’ for the devolved administrations allows the Scottish Government limited flexibility to carry forward, from one financial year to the next, a cash underspend of up to 0.6 per cent of its resource DEL budget and 1.5 per cent of its capital DEL budget.
From our calculations, Mr Swinney’s annual second term underspends have stayed below that level in each instance, meaning that he has effectively been able to engage in strategic measured stockpiling for political advantage.
In his budget address to the Scottish Parliament on 19th June 2013, Mr Swinney said: ‘In 2011-12, we carried forward £179 million fiscal DEL in the budget exchange mechanism for use in 2012-13. This year, we will carry forward the same amount—£179 million—to be utilised in 2013-14. In our budget for 2013-14, we had factored into our plans a carry-forward from 2012-13 of £158 million, which was made up of £150 million resource DEL and £8 million capital DEL. We have delivered that plan. Accordingly, I am pleased to inform Parliament that the balance of the fiscal DEL underspend—£21 million in capital DEL—will be carried forward in full to augment existing spending plans in 2013-14.’
He has also announced that his recent hefty underspend has been carried over and will be spent in this financial year – which coincidentally takes us up to the Scottish Election in 2016.
Local Labour MSP and Shadow Finance Secretary, Jackie Baillie, points out that, in 2008, Mr Swinney boasted that the days of hundreds of millions in underspends were over. His performance in the past four years gives the lie to that boast. In fact, at that time, Mr Swinney castigated previous adminstrations for underspends of £135 and £139 – each of which he has exceeded in each of the past four years; and exceeded too in 2009-10.