How can we create a world-class approach to public finances?

The Scottish Parliament may have been in recess since my last blog, but you wouldn’t know it from all of the activity that’s been underway at Holyrood over the summer. It’s been a pleasure to be involved in some of this work, including contributing to the business planning days for different parliamentary committees and joining colleagues in the new budget review group, taking a fundamental look at how this important process should develop.

There has also been plenty of work under way at Audit Scotland over the summer. Colleagues have been busy signing off the financial audits of dozens of central and local government bodies, and I’ve reported on a number of different policy areas, including higher education, colleges, and broadband, to name just a few.

And today, I report on the Scottish Government Consolidated Accounts for 2015/16. I’ve set out the Scottish Government’s budget, how it works and how it’s reported, as well as my findings on the Government’s financial and performance management.

The Consolidated Accounts are an integral part of the Scottish Government’s accountability to the Parliament and of course, the public. They cover about 90 per cent of the spending approved by the Parliament, and show what the Scottish Government has spent against the overall Scottish Budget.

This is the second year that I’ve produced a report to accompany the accounts. The new financial powers flowing from the Scotland Acts 2012 and 2016 mean it’s increasingly important that the Parliament and the public have comprehensive, transparent and timely information about public finances. For example, one of the key changes in this year’s consolidated accounts is that they reflect the revenue collected through Scotland’s new devolved taxes – Land and Buildings Transactions Tax and Scottish Landfill Tax – for the first time.

The Scottish Government has made some progress since my last report in improving the transparency of public finances. However, there is still no set of consolidated accounts for the whole of the Scottish public sector – something I have reported on previously. These would give a fuller picture and understanding of public spending and the longer-term implications for public finances. This is especially important considering the uncertainty created by the EU referendum result and the continuing pressures on the public purse, alongside the impact of the new financial powers.

I’ve also highlighted some significant issues and risks to the Scottish Government budget, including management and control of European Funding; an important income stream for the Government.

I look forward to taking the report to the Parliament’s Public Audit Committee later this year, and supporting MSPs to discuss and scrutinise some of the issues highlighted in my report.

As I’ve mentioned before , managing the new financial powers brings both opportunities and risks to Scotland’s public finances and with this in mind, Audit Scotland has pulled together a paper looking at some of the key issues. This paper is accompanied by a high level overview of the new powers, how the funds flow through the system and which organisations are involved. I’ll also be reporting again next spring on how well these powers have been prepared for and managed.

There are undoubtedly hard decisions ahead but I believe we’ve got a rare opportunity to create a world class approach to public finances. Let’s not waste it.


About the author

MM6A8690croppedCaroline Gardner is the Auditor General, and Accountable Officer for Audit Scotland. She started her term in July 2012, and has 30 years’ experience in audit, governance and financial management. Follow her on twitter @AuditorGenScot

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