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FCC/S5/19/29/A
FINANCE AND CONSTITUTION COMMITTEE
AGENDA
29th Meeting, 2019 (Session 5)
Wednesday 18 December 2019
The Committee will meet at 11.00 am in the David Livingstone Room (CR6).
1. Scottish Parliamentary Corporate Body Budget Submission 2020/2021:The Committee will take evidence on the Scottish Parliamentary Corporate Body's Budget Submission 2020/2021 from—
Liam McArthur, MSP, Scottish Parliamentary Corporate Body;
David McGill, Clerk/Chief Executive, Derek Croll, Group Head of Finance Resources, and Michelle Hegarty, Assistant Chief Executive, Scotttish Parliament.
2. Work programme (in private): The Committee will consider its approach todeveloping its work programme.
Jim Johnston Clerk to the Finance and Constitution Committee
Room T3.60 The Scottish Parliament
Edinburgh Tel: 0131 348 5215
Email: [email protected]
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The papers for this meeting are as follows—
Agenda Item 1
Cover note
Agenda Item 2
PRIVATE PAPER (to follow) FCC/S5/19/29/2 (P)
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1
Finance and Constitution Committee
29th Meeting, 2019 (Session 5), Wednesday 18 December 2019
SPCB Budget 2020-21 submission Introduction 1. The Committee will take evidence on the SPCB Budget 2020-21 submission. A range of written material has been provided to support this evidence. The written evidence comprises a letter from Presiding Officer and six supporting schedules detailing aspects of the SPCB budget. These schedules are as follows:
• Schedule 1: Budget Submission 2020-21;
• Schedule 2: SPCB Budget Submission 2020-21 – Summary;
• Schedule 3: SPCB Net Revenue and Capital Budget;
• Schedule 4: Commissioner and Ombudsman Budget Bid 2020-21;
• Schedule 5: SPCB Statement of Financial Position; and
• Schedule 6: Shop Trading Accounts. 2. The letter from the Presiding Officer and schedules are provided below. Finance and Constitution Committee report on the Budget 2019-20 3. Last year, the Committee made recommendations in relation to the SPCB budget submission in its Budget 2019-20 report1 which included, on the Officeholders budget, that—
“..the SPCB provides an update in the next SPCB Budget on any potential efficiencies and savings realised through the shared services agenda.”
4. In relation to the potential impact of Brexit on the Parliament, the Committee said—
“The Committee notes the ongoing uncertainty in relation to Brexit and recommends that the SPCB continues to review the resources available to members.”
1 https://www.parliament.scot/S5_Finance/Reports/Budget_Report_201920_-_FINAL(3).pdf
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2
SPCB response 5. In its response2, the SPCB confirmed that it would provide an update on potential efficiencies and savings in the Officeholders budget in its 2020-21 budget submission. 6. The SPCB also confirmed that it would—
“keep the level of skills and support, provided to Members to meet the emerging legislative and scrutiny demands in relation to Brexit, under review throughout the year.”
SPCB submission 7. The SPCB budget submission includes a £0.5m increase in the Officeholders’ costs for ‘specific changes to their finding requirements’. Schedule 3 of the submission states that—
“The higher than anticipated increase in these budget bids is a result of additional functions for the Scottish Information Commissioner, the Scottish Public Services Ombudsman bid including half rent to August 2020 and full rent from then onwards for Bridgeside House (where the Ombudsman is co-located with the Children’s Commissioner and the Scottish Human Rights Commission), as well as additional staffing costs. The central contingency for 2020-21 is also £100k higher to provide funding headroom for the Scottish Human Rights Commission to participate in the Scottish Government’s National Task Force on Human Rights Leadership. “
8. On the Officeholders’ shared services agenda, the letter from the Presiding Officer on this year’s SPCB budget submission states that—
“We have made some progress on the shared services agenda for Officeholders and will be happy to discuss this, together with further opportunities, when we appear before the Committee.”
9. The Presiding Officer’s letter also states that—
“A great deal of uncertainty remains around the Brexit process and the parliamentary impact. However, the steps which the SPCB took over the past two years, ensure that we have the right level of skills and support available to Members and provide a stable platform from which to cope with the emerging legislative and scrutiny demands.”
Finance and Constitution Committee Clerking Team December 2019
2https://www.parliament.scot/S5_Finance/General%20Documents/2019.2.5_-_Paul_Grice_to_Convener_-_SPCB_response_to_Report_on_2019-20_Budget.pdf
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Scottish Parliamentary Corporate Body Budget Submission 2020-21 Schedule 1
Total Budget Requirement
Original
Budget
2019-20
Adjusted
Budget
2019-20
(Note 1)
Budget
Bid
2020-21
Indicative
Forecast
2021-22
£’000 £’000 £’000 £’000
A) REVENUE
Net Revenue Expenditure ( Schedule 2) 89,117 90,697 93,711 99,813
B) CAPITAL
Capital Expenditure ( Schedule 2) 1,250 1,250 900 2,200
C) TOTAL EXPENDITURE EXCLUDING CAPITAL CHARGES
AND NON CASH ITEMS (A+B)
Net Revenue and Capital Expenditure 90,367 91,947 94,611 102,013
D) CAPITAL CHARGES AND NON CASH ITEMS
Total Capital Charges and non cash items (schedule 3) 12,572 12,572 12,575 12,576
E) TOTAL EXPENDITURE INCLUDING CAPITAL CHARGES AND NON
CASH ITEMS (C+D)
Total Net Expenditure 102,939 104,519 107,186 114,589
Note 1 The SPCB's original 2019-20 budget has been adjusted to reflect the impact of increased employer
pension contibutions as a result of the decisions taken by the UK Government arising from the
quadrennial pension scheme valuations including the Civil Service Pension Scheme. This was largely
adjusted by in-year budget transfers in 2019-20.
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Scottish Parliamentary Corporate Body Budget Submission 2020-21 Schedule 2
Net Revenue and Capital Budget
Original
Budget 2019-
20
Adjusted
Budget
2019-20
(Note 1)
Budget
Bid
2020-21 Indicative Forecast
2021-22
£'000 £'000 £'000
Revenue Expenditure
Recurring Annual Costs
Staff Pay 28,453 29,698 30,617 31,230
Staff Related and General Costs 886 886 755 769
Property Costs 7,543 7,543 7,726 7,881
Running Costs 7,539 7,539 7,647 7,800
44,421 45,666 46,745 47,680
Projects and One-Off Costs
Revenue Projects 3,350 3,350 3,940 4,237
Total Parliamentary Service Costs 47,771 49,016 50,685 51,917
MSPs' and Officeholders' Costs
MSP Pay 12,670 12,670 12,845 13,102
MSP Office, Staff and Accom. Costs etc. 18,000 18,000 18,432 18,801
Commissioners & Ombudsman Costs 9,945 10,280 11,013 12,262
Total MSPs' & Officeholders' Costs 40,615 40,950 42,290 44,165
Contingency 1,000 1,000 1,000 4,000
Total Revenue Expenditure 89,386 90,966 93,975 100,082
Less:- Income (269) (269) (264) (269)
Total Net Revenue Expenditure 89,117 90,697 93,711 99,813
Capital Expenditure
Capital Expenditure 1,250 1,250 900 2,200
Total Capital Expenditure 1,250 1,250 900 2,200
Total Net Revenue and Capital Expenditure 90,367 91,947 94,611 102,013
Memorandum:-
Directly Controllable Parliamentary Service Costs
Total Expenditure less MSPs' and Officeholders' Costs
49,752 50,997 52,321 57,848
Note 1 The SPCB's original 2019-20 budget has been adjusted to reflect the impact of increased
employer pension contibutions as a result of the decisions taken by the UK Government
arising from the quadrennial pension scheme valuations including the Civil Service
Pension Scheme. This was largely adjusted by in-year budget transfers in 2019-20.
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Finance Committee Briefing December 2019 - SPCB Net Revenue and Capital Budget Schedule 3
The net revenue and capital expenditure of the SPCB is forecast to increase from £91.9m in 2019-20 to £94.6m in 2020-21, an increase of £2.7m (2.9%) in cash terms, after adjusting for the impact of increased employer pension contributions.
The main elements of this are:-
Staff Pay Adjusted Budget 2019-20
£’000
Budget Bid 2020-21
£’000
Increase / (decrease) £’000 %
29,698 30,617 919 3.1%
Staff pay including use of contractors is budgeted at £30.6m, a net increase of £0.9m (3.1%) in cash terms from the adjusted 2019-20 budget and a £0.2m (0.7%) increase compared to the adjusted indicative forecast for 2020-21. This principally comprises the cost of extending temporary posts required for Brexit to the end of the Parliamentary session.
The SPCB’s budget submission incorporates an investment in staff resource: -
• Additional 3.5 new operational posts established in a mix of temporary andpermanent resource to allow the SPCB to meet operational pressures andadditional work around the establishment of BSL resources (Human Resources,Chamber and Public Information).
• Extension of 3.8 Brexit Related posts (Committee and Legal).
This has been offset with:
• Removal of 7 temporary posts (3 BIT Office, 1.5 Broadcasting Office, 1.5 CommitteeEngagement Unit and 1 Grow your Own BIT Apprentice).
• Office Restructures (Outreach and Legal) account for a further reduction of 1 FTE.
In respect of SPCB staff salaries, the current one year pay deal for 2019-20 comes to an end before the start of the 2020-21 financial year. For budgetary purposes we have made provision for a percentage increase to be applied to pay scales on 1 April 2019. Discussions with the TUS will take place in due course, once the SPCB has agreed a negotiating remit.
The staff pay budget also reflects the continued investment in the modern apprentices programme of £182k, supporting young people aged 16-24 to work in the Parliament whilst earning a qualification; and makes provision for incremental progression within the agreed pay scales.
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We know from experience that staff turnover reduces the net cost of incremental pay progression. This is reflected in an assumed level of vacancies, which is applied to the staff pay budget as a credit. The vacancy factor is budgeted for 2020-21 at £770k or 2.5% of salaries (2019-20 - £715k, 2.5%).
Staff Related Costs
Budget 2019-20
£’000
Budget Bid 2020-21
£’000
Increase / (Decrease) £’000 %
886 755 (131) (14.8%)
The SPCB continues to invest in its staff development to support our people, adapt to emerging changes in the workplace and continuously improve our services. Staff related costs are budgeted at £755k, a decrease of £131k (14.8%) from the current year’s budget, reflecting continuing improvements in our approach to learning and development through more targeted on-line learning, and substantial moves to improve our sustainability by getting travel and expense costs down. The staff related costs budget also includes provision for Committee travel and associated costs to support the Parliament to extend its work to communities across Scotland via committee engagement activities.
Property Costs
Budget 2019-20
£’000
Budget Bid 2020-21
£’000
Increase / (decrease) £’000 %
7,543 7,726 183 2.4%
Property Costs comprise:- £k
• Rates 3,662
• Maintenance 2,405
• Utilities 943
• Cleaning 600
• Other 116
7,726
Property Costs of £7.7m show a net increase of £183k (2.4%) on the 2019-20 budget.
Rates, at £3.7m, accounts for almost half of total property costs and is projected to be £32k (0.9%) higher than the 2019-20 budget bid. The 2020-21 budget is based on an estimated rate in the pound which is still to be set.
Utility costs of £943k are £20k (2.2%) higher than the 2019-20 budget as we continue to benefit from the use of the competitively priced Scottish Government negotiated contract for electricity and have also continued our efforts to manage energy consumption for gas and electricity through targeted investment in energy efficiency initiatives and by encouraging good practice by all building users.
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Maintenance costs are projected to increase by 4.1% from £2,310k in 2019-20 to £2,405k in 2020-21. The nature of this work is that there will be peaks and troughs over the years in line with FM’s 25 year maintenance plan, though we aim to smooth these as much as possible. Cleaning is also set to increase by £17k or 2.9% from £583k in 2019-20 to £600k in 2020-21.
Running Costs
Budget 2019-20
£’000
Budget Bid 2020-21
£’000
Increase / (decrease) £’000 %
7,539 7,647 108 1.4%
Running Costs comprise:- £k
• IT & Telephony 1,337
• Software Support & Licences 2,161
• Printing & Digital Publications 539
• Postage & Stationery 538
• Service Costs 646
• 8Public Engagement 462
• Research Services & Materials 623
• Restaurant Services 530 • 2
0Other 811
7,647
Running costs of £7.6m mainly consist of the SPCB’s outsourced contracts for the provision of goods and services and are projected to increase by £108k (1.4%) over the 2019-20 budget levels. IT software licences, software support and maintenance, and cloud hosting costs have all increased as we continue to move our IT operating model towards our services being hosted in the cloud rather than via onsite IT provision.
Projects Budget 2019-20
£’000
Budget Bid 2020-21
£’000
Increase / (decrease) £’000 %
Revenue Capital
3,350 1,250
3,940 900
590 (350)
17.6% (28.0)%
Total 4,600 4,840 240 5.2%
The total amount currently incorporated in the draft 2020-21 budget for revenue and capital projects is £4.8m. This is an increase of £130k from the indicative forecast advised to the Finance Committee last year. The project expenditure budget is utilised to fund both the planned replacement of existing infrastructure (e.g. IT, Facilities Management, Security systems and Broadcasting equipment) and
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investment to make improvements to the Parliament’s services and facilities (e.g. the development of better digital services and changes to make better use of the building). The project expenditure budget also contains provision to ensure that the Parliament’s physical and on-line security is maintained to a robust standard, to counter the constantly developing threats in this area.
Projects to be funded in 2020-21 budget:
Capital £000
Revenue £000
Description
Grouped Programmes
Business IT/Digital Services
166 2,084 Information technology/digital change projects include Web & Online systems project, Infrastructure refreshes, Allowances and Expenses system replacement and continuation of the legislative drafting programme.
Facilities Management
184 1,012 Planned expenditure by FM in line with the 25-year maintenance plan including lift modernisation and various lighting replacements.
Security 550 650 Planned replacement and upgrade of the security systems and infrastructure at Holyrood along with estimated project costs.
Other 0 194 Includes projects for 2021 election preparation, Parliament Exhibition and Regional Engagement Programme.
900 3,940
MSP Pay Budget 2019-20
£’000
Budget Bid 2020-21
£’000
Increase / (decrease) £’000 %
12,670 12,845 175 1.4%
The MSP pay budget for 2020-21 is calculated on the basis that pay will be uprated on 1 April 2020 by the mechanism directly linking MSP salaries to public sector pay rises in Scotland. The budget of £12.8m represents an increase of £175k (1.4%) on the 2019-20 budget. The 1.4% salary increase is taken from the Annual Survey of Hours and Earnings (ASHE) index (published in October 2019).
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MSP Staff and Office Costs
Budget 2019-20
£’000
Budget Bid 2020-21
£’000
Increase / (decrease) £’000 %
18,000 18,432 432 2.4%
Members’ Costs are budgeted at £18.4m. This represents an increase of £432k (2.4%) on the 2019-20 budget and is calculated on the following assumptions.
• The budget for Members’ Expenses and the associated limits for provisionswithin the scheme will be uprated on 1 April 2020 from the agreed 2019-20level in line with the uprating provisions of the Members’ Expenses Scheme.
• Not all members will claim the full entitlement, reflecting our experience ofthe scheme to date.
Commissioners & Ombudsman
Adjusted Budget 2019-20
£’000
Budget Bid 2020-21
£’000
Increase / (decrease) £’000 %
10,280 11,013 733 7.1%
Officeholders’ bids for 2020-21 total £11.0m which is a £0.7m (7.1%) increase on the adjusted 2019-20 budget position. The higher than anticipated increase in these budget bids is a result of additional functions for the Scottish Information Commissioner, the Scottish Public Services Ombudsman bid including half rent to August 2020 and full rent from then onwards for Bridgeside House (where the Ombudsman is co-located with the Children’s Commissioner and the Scottish Human Rights Commission), as well as additional staffing costs. The central contingency for 2020-21 is also £100k higher to provide funding headroom for the Scottish Human Rights Commission to participate in the Scottish Government’s National Task Force on Human Rights Leadership.
An analysis of the officeholders’ budget bids is provided in schedules 4a & 4b.
Contingency Budget 2019-20
£’000
Budget Bid 2020-21
£’000
Increase / (decrease) £’000 %
1,000 1,000 0 0.0%
The appropriate level of contingency is a matter of judgement. From a financial control and governance perspective, it is important to ensure that the level of contingency is related to expectations.
The proposed contingency of £1.0m within the overall Corporate Body budget bid is to cover:-
a) a prudent contingency for emergencies
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b) potential operational cost pressures, which are not yet confirmed or certain
Income Budget 2019-20
£’000
Budget Bid 2020-21
£’000
(Increase) / decrease £’000 %
(269) (264) 5 1.9%
The projected income of £264k relates principally to the Parliament shop and shows a £5k (1.9%) decrease against the 2019-20 budget.
The projected income of £264k largely relates to the Parliament shop (£252k) and a projected corporate card rebate of £12k for 2020-21. Shop income, which is shown before any budgeted discount, represents a £13k (4.9%) decrease against the 2019-20 budget Income in the shop as there has been a gradual reduction in numbers visiting the Parliament and there are no large scale events planned for 2020-21.
Total Net Revenue & Capital Expenditure
Adjusted Budget 2019-20
£’000
Budget Bid 2020-21
£’000
Increase / (decrease) £’000 %
91,947 94,611 2,664 2.9%
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Capital Charges (Schedule 1)
Capital charges and non-cash items
Budget 2019-20
£’000
Budget Bid 2020-21
£’000
Increase / (decrease) £’000 %
DEL
Depreciation 10,500 10,500 0 0%
Audit fee 72 75 3 4.2%
Total DEL capital charges and non cash items
10,572 10,575 3 0.03%
AME
Pension finance cost (net)
2,000 2,000 0 0%
Total AME capital charges and non cash items
2,000 2,000 0 0%
Total capital and non cash charges DEL + AME
12,572 12,575 3 0.02%
Depreciation on the Holyrood Building and Fixed Plant is calculated on valuation figures as at 31 March 2015 plus increases to asset values which have been estimated using RICS building valuation indices.
The pension finance AME charge represents provision for the notional funding costs for the Members’ Pension Fund arising from the movement of actuarial factors.
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Scottish Parliamentary Corporate Body Budget Submission 2020-21
Schedule 4aCommissioners and Ombudsman Budget Bid 2020-21
Original
Budget
2019-20
Adjusted
Budget
2019-20
(Note 1)
Budget
Bid
2020-21
2020-21
Increase/(decrease) vs
2019-20 adjusted budget
2020-21
Increase/(decrease) vs
2019-20 adjusted
budget
Office £'000 £'000 £'000 £,000 %
Scottish Public Services Ombudsman 4,205 4,380 4,701 321 7.3%
Co-location accommodation (Note 2) 300 300 468 168 56.0%
Sub total 4,505 4,680 5,169 489 10.4%
Commissioner for Children and Young People in Scotland 1,269 1,306 1,311 5 0.4%
Scottish Commission for Human Rights 974 1,005 1,010 5 0.5%
Scottish Information Commissioner 1,673 1,728 1,903 175 10.1%
Commissioner for Ethical Standards in Public Life in Scotland 957 985 937 (48) (4.9%)
0
Standards Commission for Scotland 267 276 283 7 2.5%
Sub total before central contingency 9,645 9,980 10,613 633 6.3%
Central contingency for legal action, staffing etc 300 300 400 100 33.3%
Total 9,945 10,280 11,013 733 7.1%
Notes:
(1) The Officeholders 2019-20 budget has been adjusted to reflect the impact of increased employer contributions as a result of the decision taken by the UK Government
arising from the quadrennial pension scheme valautions including the Civil Service Pension Scheme. This was largely adjusted by budget transfer in 2019-20.
(2) This accomodation costs line reflects co-location accommodation costs for SPSO, CYPCS and SHRC which includes a reduction for anticipated savings and an initial
rent free period in 2019-20, plus a period of half rent up to August 2020 in 2020-21 before full rental charge for the remainder of the financial year.
These accommodation costs for the co-located property will be accounted for through the SPSO's budget and annual accounts.
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Scottish Parliamentary Corporate Body Budget Submission 2020-21 Schedule 4(b)
Adjusted
Budget £'000 Bid £'000
Adjusted
Budget £'000 Bid £'000
Adjusted
Budget £'000 Bid £'000
2019-20 2020-21 2019-20 2020-21 2019-20 2020-21
Revenue (Note 1) (Note1) (Note 1)
Staff Costs 3,753 4,073 922 959 778 773
Staff Related/General Costs 56 47 55 58 43 32
Property Costs (Note 2) 300 468 0 0 0 0
Professional Fees 389 332 32 35 22 33
Running Costs 262 349 297 257 162 171
Income (80) (100) 0 0 0 0
Capital 0 0 0 2 0 1
Total 4,680 5,169 1,306 1,311 1,005 1,010
Adjusted
Budget £'000 Bid £'000
Adjusted
Budget £'000 Bid £'000
Adjusted
Budget £'000 Bid £'000
2019-20 2020-21 2019-20 2020-21 2019-20 2020-21
Revenue
Staff Costs 1,367 1,498 704 645 232 242
Staff Related/General Costs 20 23 13 8 17 14
Property Costs 111 119 77 85 3 5
Professional Fees 41 61 139 146 4 4
Running Costs 155 168 46 50 20 18
Income 0 0 0 0 0 0
Capital 34 34 6 3 0 0
Total 1,728 1,903 985 937 276 283
Notes:
(1) 2019-20 budgets have been restated for comparative purposes as a result of additional employer pension contributions.
(2) Co-location accommodation costs for SPSO, CCYP and SHRC which include savings as a result of half rent incentives up to August 2020.
The co-location accommodation costs are accounted for through the SPSO's budget and annual accounts.
SPSO - Scottish Public Services Ombudsman
SIC - Scottish Information Commissioner
CCYP - Commissioner for Children and Young People in Scotland
CHR - Scottish Commission for Human Rights
ESC - Commissioner for Ethical Standards in Public Life in Scotland
SC - Standards Commission for Scotland
Analysis of Officeholders 2020-21 budget bids
SC
CHRSPSO
SIC
CCYP
ESC
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SPCB Statement of Financial Position Schedule 5
31 Mar 2019 Actual (£’000)
31 Mar 2020 Projected
(£’000)
31 Mar 2021 Projected
(£’000) Non-current assets Holyrood land and buildings
306,279 306,630 308,933
Other fixed assets 3,683 3,263 2,811
Total non-current assets 309,962 309,893 311,744
Current assets Inventories 163 163 163 Trade and other receivables
1,829 1,829 1,829
Cash and cash equivalents
1,382 1,382 1,382
Total current assets 3,374 3,374 3,374
Total assets 313,336 313,267 315,118
Liabilities (including current and non-current)
(37,018) (36,923) (36,906)
Assets less liabilities 276,318 276,344 278,212
Taxpayers’ equity General fund 213,085 205,754 195,522 Revaluation reserve 92,890 100,247 112,347 Pension reserve (29,657) (29,657) (29,657)
Total taxpayers’ equity 276,318 276,344 278,212
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Scottish Parliamentary Corporate Body Budget Submission 2020-21 Schedule 6
Shop Trading Accounts
Actual Actual Actual
Adjusted
Budget Budget
2016-17 2017-18 2018-19 2019-20 2020-21
£'000 £'000 £'000 £'000 £'000
Sales 226 246 252 254 246
Cost of Sales (1) 132 145 139 145 124
Net Contribution 94 101 113 109 122
Direct Salaries (2) 86 88 91 96 98
Other Direct Costs (3) 6 8 5 5 6
Total Direct Costs 92 96 96 101 104
Net Surplus/(Deficit) after direct costs 2 5 17 8 18
Notes
(1) Cost of sales is the cost of items for sale in the shop less budgeted shop discount
(2) Direct Salaries have been updated to reflect revised retail function staffing (1 Manager, 1.33 G2 plus
allowances and overtime). Budget increase in 2019-20 to reflect increased employer pension contributions.
(3) Other direct costs are expenditure incurred directly in the operation of the shop
such as stationery and credit card and cash uplift charges.
This statement does not include general overhead costs, e.g. for a proportion of business rates,
utility costs and other operational and support costs.
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