Scotland's Financial Response To Covid-19 Spending Update

7th April 2023

Scottish Government spending was funded mainly through £14.4 billion of Barnett consequentials, which come from UK Government spending on the pandemic in the rest of the UK. The rest was funded from elsewhere in the Scottish budget and the Scotland Reserve.

UK Government spending programmes were a key part of the pandemic response, totalling over £321 billion across the UK. In Scotland, UK-wide spending programmes provided more than £11.4 billion of support. These funds were not controlled by the Scottish Government.

Over two years the actual amount spent on Covid-19 was less than budgeted

The actual amount spent was lower than the amount budgeted because:

some Covid-19 Barnett consequentials from the UK Government did not arrive until late in 2020/21. This meant they were budgeted for in 2020/21 but could not be spent in full before the end of the financial year. They were then carried through the Scotland Reserve and used in 2021/22

the uptake of some demand-led schemes, such as business support and self-isolation support grants, was lower than originally anticipated

the Scottish Government moved funding between different parts of the budget during the pandemic to meet emerging need. The gross figure includes the original budget amount and the amount allocated later. If we adjust for this, the net figure is £15.2 billion.

The difference was used to support other areas of Scottish Government spending or was carried through the Scotland Reserve and used in the following year.

The Scottish Government spent less than it budgeted in 2020/21 and 2021/22
Through our reporting on Covid-19 finances we said that the Scottish Government had difficulties tracking its spending on Covid-19 because it is not a budgetary or accounting classification.

What did councils spend the additional funding on?
There were three main ways that the Scottish Government spent money through councils during the pandemic:

£1.8 billion was given to councils through the general revenue grant for purposes such as free school meals, self-isolation support, lost income cover and general Covid funding. Much of this was for a clear purpose decided by the Scottish Government but £764 million was for purposes that the council could control.
£1.7 billion to offset the loss in Non-Domestic Rates (NDR) revenue caused by the rates relief programme
£2.6 billion to deliver specific grants such as business support on behalf of the Scottish Government.

Councils spent Covid-19 funding on a wide range of purposes:
General Covid-19 funding was provided to councils to spend on their local priorities related to Covid-19.

Cover for lost income provided additional funding to councils to cover income which may have been lost due to the pandemic, for example from leisure trusts or parking.

Support for individuals and families funding supported people through the pandemic and includes funding for winter hardship payments, food funds and mental health support.

Support for business was funding to support councils administering grants delivered on behalf of the Scottish Government but does not include those grants. It also includes council-controlled business support grants such as the discretionary fund.

School funding was for additional teachers, improvements to allow for home learning, digital inclusion and recovery funding.
Free school meal funding allowed councils to continue providing free school meals to pupils during lockdowns and holidays.

Council services include additional funding for some services which were needed more through the pandemic such as environmental health and registrars of death, as well as funding for test and protect.

Read the full report HERE