The Scottish government has been warned by a spending watchdog that it is failing to publish enough data on public sector spending and borrowing, including billions of pounds worth of pension liabilities.
Scotland’s auditor general, Caroline Gardner, said Holyrood’s rapidly increasing tax and spending powers means it is increasingly important that the public has the fullest possible picture of how much is spent and owed by public bodies.
“It is becoming increasingly important to also understand the overall position of the devolved Scottish public sector as a whole, but there is currently no single set of accounts that shows the position,” Gardner said in her report on the latest Scottish government accounts, which detail overall spending of nearly £37bn by Holyrood.
“In the absence of easily accessible, aggregate information on what the devolved Scottish public sector owns and owes overall, it is difficult for the Scottish parliament, taxpayers and others to get a full picture and understanding about public spending and the longer-term implications for public finances.”
Gardner also signalled growing alarm about the sharply escalating costs and delays of an IT programme that will help pay out nearly £4bn in EU common agriculture programme cash across Scotland over the next five years.
She warned that the delays could lead to the European commission blocking payments – a fate that has already hit European structural fund payments. The commission is currently withholding about £45m in structural fund payments to Scotland until accounting failures are addressed.
Describing the IT project as carrying a “significant level of risk from the outset”, she disclosed that its budget had jumped 74% over its original estimate to £178m; its capital costs last year had leapt from £18m to £50m - 180% more than budgeted.
“The programme is costing significantly more and taking longer to implement than planned,” Gardner said.
“There remain significant risks to successful delivery. The timescale for implementing the remaining elements of the IT system for direct support payments is now very tight. Any inadequacies in the control system implemented are likely to have significant financial consequences arising from the potential disallowance of European funding.”
Scottish ministers said that complex reforms to CAP had made the system far more difficult to implement. “The EU promised a more simple CAP but this has not materialised,” a spokeswoman said. “Instead, we are having to deal with extremely complex European reforms that were agreed very late in the day, as well as the decisions we have taken here in Scotland in partnership with our stakeholders.”
Opposition parties focused their attention on the auditor general’s confirmation that John Swinney, the Scottish finance secretary and deputy first minister, had underspent for the second year running by £347m. This was a lower underspend than initially predicted but Swinney had also underspent his budget from the Treasury by £444m in 2013/14.
Murdo Fraser, the Scottish Conservatives’ finance spokesman, said: “The SNP has to get its story straight when it comes to balancing the books. On one hand it constantly complains about budget cuts from Westminster, and on the other it’s not even spending the money it has.
“There’s nothing wrong with running a tight ship and keeping money back for a rainy day. But you can’t then point fingers at governments doing the same thing just because they happen to be based in London in a bid to stoke up grievance and hostility.”
Jackie Baillie, Scottish Labour’s public services spokeswoman, said: “It is clear the consolidated accounts do not present a complete picture of the nation’s finances and there are serious questions to be answered about the gaps in data which fail to record the overall level of our debts. We could be in danger of leaving a mountain of debt for future generations.”
A Scottish government spokeswoman said ministers were pleased that the auditor general had given the accounts overall a clean bill of health, and said the underspend was well within acceptable limits and proved that its spending was prudent. The extra money would be invested this year.
“It is welcome that these accounts have attracted a clean audit, as has been the case with every year of this administration,” she said. “As the auditor general’s report highlights, the deputy first minister has asked officials to develop proposals to improve and enhance financial reporting. This will include consideration of consolidated public accounts.”
This article was written by Severin Carrell Scotland editor, for theguardian.com on Friday 2nd October 2015 17.47 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010