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Scottish Budget Spending Review 2007



Aggregate External Finance ( AEF)
Aggregate External Finance is the name given to the total funding which is centrally distributed to local government. It includes the Revenue Support Grant, specific grants to local government and income from non-domestic rates.

Annually Managed Expenditure ( AME)
Annually Managed Expenditure is set each year and contains those elements of expenditure that are not readily predictable, for example, NHS and teachers' pensions.

Audit Scotland
Audit Scotland was set up in April 2000 to audit the accounts of the Scottish Government and other public sector bodies in Scotland, and to ensure that public funds are used properly, efficiently and effectively.

Barnett Formula
The Barnett Formula allocates Scotland a population share of changes in comparable spending programmes in England. For comparable expenditure, Scotland gets exactly the same £ per head increase as in England. Comparability is the extent to which services delivered by Whitehall departments correspond to services delivered by the devolved administrations. Barnett only applies to expenditure classified within Departmental Expenditure Limits - about 85 per cent of Scotland's total budget.

Best Value
Best Value is about continuous improvement, seeking to change what we do in a way that transforms and sustains the delivery of quality public services in Scotland.

Common Agricultural Policy ( CAP)
The CAP was set up by the European Union to increase agricultural production, provide a fair standard of living for farmers and make sure that food is available at reasonable prices. CAP accounts for more than 40 per cent of EU spending.

Cost of Capital
A cost of capital charge is a notional non-cash item which reflects the cost of holding assets and liabilities. The theory is that if the asset were sold, overall public sector borrowing would be lower by the value of the asset, so the cost of keeping the asset is the same as the interest paid on this higher level of borrowing. Cost of capital charges are currently calculated as being 3.5 per cent of net asset and liability value.

Cross-border public authorities
Cross-border public authorities are government departments and agencies that operate in Scotland and other parts of the UK, such as HM Revenue and Customs and the Forestry Commission.

Departmental Expenditure Limit ( DEL)
The Departmental Expenditure Limit forms the majority of the Scottish Government's budget and is made up of operating and capital expenditure. DEL is set for three years during the Spending Review process, and the annual DEL spend is subject to End Year Flexibility.

A depreciation charge is a non-cash item which measures the wearing out, consumption or other reduction in useful life of a fixed asset.

End Year Flexibility ( EYF)
End Year Flexibility is the mechanism that allows the Scottish Government to carry forward any DEL underspends for use in future financial years.

European Structural Funds
European Structural Funds are the second largest item of EU spending and include the European Regional Development Fund ( ERDF), European Social Fund ( ESF), European Agricultural Guidance and Guarantee Fund ( EAGGF) and Financial Instrument for Fisheries Guidance ( FIFG). They are targeted at three main objectives: Objective 1 to promote the development of regions lagging behind the EU average; Objective 2 to support the economic and social conversion of areas facing structural difficulties; and Objective 3 to support education, training and employment. The Executive is the 'managing authority' for the Funds in Scotland.

Executive Agency
Semi-autonomous executive agencies operate within a framework set by the responsible Minister, which specifies policies, objectives, and available resources. All agencies are set annual performance targets by their Minister, and the Minister accounts to Parliament for the work of the agency.

Non-Departmental Public Body ( NDPB)
A non-departmental public body ( NDPB or 'quango') operates independently of Ministers, although Ministers have ultimate responsibility. There are two main types of NDPB: executive NDPBs, which carry out administrative, regulatory, executive or commercial functions; and advisory NDPBs, which provide independent, expert advice to Ministers.

Prudential Regime
The prudential regime for local authority capital expenditure took full effect on 1 April 2004. It allows local authorities to make their own decisions about how much to borrow or spend, but they are under a duty to determine how much they can afford and to keep that under review.

Total Managed Expenditure ( TME)
Total Managed Expenditure comprises the Departmental Expenditure Limit and Annually Managed Expenditure.