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Scottish Budget Spending Review 2007




The Finance and Sustainable Growth portfolio is responsible for managing Scotland's budget effectively and delivering the right mix of policies to ensure increasing, sustainable growth in the Scottish economy.

It contributes substantively to our Purpose - to focus government and public services on creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth - and is a critical driver of our wealthier and fairer Strategic Objective - to enable businesses and people to increase their wealth and more people to share fairly in that wealth. A fairer Scotland will, in turn, help reduce inequalities in areas such as educational attainment and health, helping Scotland become smarter and healthier. By investing to increase growth in Scotland's high-potential renewable energy sector, the portfolio also contributes to a greener Scotland.

The Finance and Sustainable Growth portfolio has responsibility for:

  • delivering better value in the Scottish budget to ensure we get the best possible return for frontline public services and taxpayers;
  • supporting public service reform to deliver better quality, user-focused services and smaller, simpler and more efficient government;
  • delivering and maintaining the right infrastructure for business success - through investment in transport, investment in Scottish Water and modernising the planning system;
  • refocusing the enterprise networks towards a shared goal of delivering increasing, sustainable economic growth and promoting Scotland's tourism industry;
  • contributing to tackling climate change and improving energy efficiency; and
  • further developing an innovative, sustainable and inclusive third sector.


The Finance and Sustainable Growth portfolio is responsible for public spending of around £6 billion annually (excluding local government).

Chapters 17 and 27 set out the local government responsibilities for delivering national priorities and services relevant to this portfolio through an expanding role in driving local economic development, including the business gateway and, in particular:

  • freezing council tax rates in each local authority at 2007-08 levels; and
  • reducing or removing business rates for small businesses.

Excluding local government, the biggest spending element within the portfolio is Transport - investing in Scotland's railways, ferries, air services and maintaining and improving Scotland's motorways and trunk roads as well as providing free travel to over one million people on the bus network. There are significant funds for Scottish Enterprise and Highlands and Islands Enterprise to generate new investment and innovation in Scottish business - enhanced by investment in lower business rates, and to ensure record levels of investment in Scottish Water are committed. Given the importance of addressing climate change in achieving the government's overall Purpose of sustainable economic growth, measures are to be introduced to ensure that investment across government is used to achieve emission reductions (see chapter 7 for more detail).

For the period 2008-09 to 2010-11, the priorities for the Finance and Sustainable Growth portfolio are briefly described below. More detail about spending plans is given in table 10.01 and in chapter 20.

Getting better value from the Scottish budget

Integral to our spending proposals for 2008-11 is the clear commitment to manage public sector resources more effectively and efficiently. Programmes and projects within the Finance and Sustainable Growth portfolio aimed at delivering this include:

  • Efficient Government, for which the portfolio leads on behalf of the Scottish Government. The spending proposals set out in this document take account of a requirement for each portfolio to deliver 2 per cent, cash-releasing efficiencies per annum; and
  • establishing a National Procurement Centre of Expertise to lead collaborative procurement of common goods and services on behalf of the wider Scottish public sector; extending e-procurement; and continuing and accelerating procurement reform in Scotland.

Supporting public service reform

Closely linked to managing public sector resources more effectively and efficiently is reforming our public services. Programmes and projects within the Finance and Sustainable Growth portfolio aimed at delivering this include:

  • simplifying the public service landscape, to achieve a simpler, smaller, more focused and more efficient and effective government in Scotland; and
  • developing a new relationship with local government supported by the implementation of Single Outcome Agreements and a performance measurement framework for local authorities to be delivered in association with Community Planning Partners.

Putting the right infrastructure in place

Scotland needs the right infrastructure to allow the economy more effectively to compete and succeed. Our programmes and policies, which are designed to meet the strategic needs of Scotland's wealth creators as well as improving the quality of life of Scotland's people, include:

  • investing £0.7 billion annually in rail infrastructure through Network Rail and rail services through the rail franchise, including investing in expansion and improvements to services through our major projects programme;
  • delivering a motorway and trunk road network that supports the economy and the people of Scotland by enabling safe and reliable journeys (£932.6m/£1,063.7m/£1,181.4m);
  • investing in the design and development of a replacement Forth crossing (£20.0m/£25.0m/£30.0m);
  • removing tolls on the Forth and Tay Road Bridges;
  • providing the resources to deliver high quality ferry services (£92.4m/£105.1m/£111.0m);
  • providing a substantial resource and capital grant to Highlands and Islands Airports Limited ( HIAL) to sustain the network of ten airports in the Highlands and Islands and take responsibility for Dundee Airport; providing substantially discounted fares to residents of the islands and remote highlands;
  • supporting lower bus fares across Scotland through the Bus Services Operators Grant;
  • supporting British Waterways Scotland to help maintain a thriving canal network as a major regenerator and driver of economic investment in the communities which it serves;
  • providing free travel to over one million people on the bus network (£181.4m/£187.4m/£189.4m) improving quality of life through greater access to vital health and community services, employment and education and leisure facilities;
  • delivering record levels of investment by Scottish Water to improve water quality and ensure connections to the public networks necessary for new developments throughout Scotland (an annual investment of £182 million); and
  • completing the e-enablement of Scotland's planning system with benefits for all users of the system - and put in place a programme to support planning modernisation.

Refocusing the enterprise network and promoting Scotland's tourism industry

As the principal vehicle for enterprise development in Scotland, the enterprise networks play a crucial role in generating new investment and innovation in Scottish businesses. We have already acted to reinvigorate the enterprise networks - refocusing them towards a shared goal of delivering increased and sustainable economic growth. As part of the reforms, responsibility for managing the Business Gateway contracts and for local regeneration activity will transfer to local government. Responsibility for national training and skills programmes will be moved to a new body. The appropriate funding will be transferred when agreement has been reached as to the precise nature of activity to be transferred and, in the case of skills and training, once the new skills body is in place. Tourism is included within the Finance and Sustainable Growth portfolio - alongside enterprise and infrastructure - so that policy as a whole can reflect the needs and interests of the tourism industry. Our programmes and policies are designed to refocus the enterprise networks and promote our tourism industry:

  • Scottish Enterprise will have a grant of £448.6m/£433.8m/£431.4m annually before the transfers outlined above are made. It will now concentrate on supporting innovation and investment in regionally and nationally significant and high potential companies and key sectors (including through providing risk capital), in major economic development projects to ensure Scotland is an attractive place to locate, and to increase trade internationally;
  • innovation and investment through Regional Selective Assistance ( RSA), SMART:Scotland and other direct government innovation support will have a combined budget of £60 million annually; RSA and SMART:Scotland with a combined annual budget of £52 million will be delivered within Scottish Enterprise as a joint venture with the Scottish Government;
  • Highlands and Islands Enterprise will spend £91.8m/£88.8m/£88.3m on supporting innovation and investment across the area to ensure the Highlands and Islands is an attractive place to locate businesses and has strong communities; and
  • the annual £47 million funding to VisitScotland triggers another £25 million of funding from the private sector and local authorities. There will also be a £2 million a year addition to the current £25 million marketing budget to be devoted to costs associated with making a success of bringing the Ryder Cup to Scotland in 2014.

Contributing to tackling climate change and improving energy efficiency

Our Purpose focuses on increasing sustainable economic growth - economic growth which is not at the expense of future generations. To help facilitate this we have ensured that responsibility for tackling climate change and energy efficiency lies within the same portfolio as economic growth, transport and planning - reinforced by strong linkages to other portfolios. The programmes and policies within the Finance and Sustainable Growth portfolio which contribute to tackling climate change and improving energy efficiency include:

  • putting in place a statutory framework through the introduction of a Scottish Climate Change Bill setting a long term target to cut emissions by 80 per cent by 2050; more immediately, reducing emissions in the period to 2011 in line with the pathway towards the longer term target; and preparing a programme of actions across all portfolios to deliver both targets; 1
  • supporting the European Commission to ensure that the EU carbon price continues to be the primary instrument to deliver climate change emission reduction objectives. The EU Emissions Trading Scheme is the central plank of our policy, reducing emissions at least cost;
  • implementing the Carbon Reduction Commitment, a decision on which will be announced before the end of the year;
  • increasing spending on energy and climate change to an annual spend of £33 million by 2010-11. This will provide support for renewable energy, energy efficiency and climate change, allow the budget for microgeneration to triple; and will complement spending in tackling climate change in other portfolios, particularly Rural Affairs and the Environment; and
  • launching the first ever Saltire Prize with a £2 million annual fund to recognise innovation and a £10 million horizon prize - with the first challenge in 2008 focusing on renewable energy.

Developing an innovative, sustainable and inclusive third sector

The third sector has an important part to play in securing sustainable economic growth. We will seek to secure the development of an innovative, sustainable and inclusive third sector, supporting communities to be more cohesive and contributing to high quality public services and increased economic growth. Our programmes and policies include:

  • supporting an enterprising third sector with a development programme of £19.2m/£22.2m/£22.2m and the Scottish Investment Fund (£4.0m/£10.0m/£16.0m) to encourage greater investment in assets, business development and the skills of people working in the sector; and
  • developing strategic partnerships with key national and regional intermediaries to ensure effective infrastructure for the third sector.

Table 10.01 Spending Plans 2008-11

2008-09 Draft Budget £m

2009-10 Plans £m

2010-11 Plans £m

Scottish Public Pensions Agency




Committees, Commissions and Other Expenditure




Rail Services in Scotland




Concessionary Fares




Other Transport Agency Programmes




Motorways and Trunk Roads




Ferry Services in Scotland




Air Services in Scotland




Bus Services in Scotland




Other Transport Directorate Programmes




European Social Fund - 2000-06 Programmes




European Regional Development Fund - 2000-06 Programmes




European Social Fund - 2007-13 Programmes




European Regional Development Fund - 2007-13 Programmes








Enterprise, Energy and Tourism




Water and Climate Change




Third Sector




General Register Office for Scotland




Registers of Scotland