Capital Investment Network Scottish Government Health Update Alan Morrison Health Finance and Infrastructure 4 October 2016

Capital Investment Group Activity General Issues Agenda 2016-17 Financial Position 2017-18 and beyond Fiscal Framework Capital Investment Group Activity General Issues

Capital 2016-17 We are on track to deliver a balanced outturn on the capital budget. An element of the capital budget will be transferred to the revenue budget to support the overall outturn position. Capital Stimulus As part of the £100 million capital stimulus to support the economy, NHS Scotland received £8.5 million: £5.0 million – Golden Jubilee to bring expansion of its elective centre forward from 2018-19 to this year (two additional MRI scanners). £3.5 million – NHS Greater Glasgow and Clyde to assist in the refurbishment of Inverclyde Royal and Glasgow Royal Infirmary.

Spending Review and 2017-18 Draft Budget Cabinet Secretary for Finance and the Constitution is currently in discussion with the Finance Committee about the timetable for this year’s Draft Budget. Proposal to wait until after the Chancellor’s Autumn Statement (23 November), reflecting current economic uncertainty around public spending and taxation following Brexit vote. Scottish Government has called on the Chancellor to “reset UK fiscal policy” in the Autumn Statement to provide further economic stimulus. Unclear whether Chancellor will further reduce public spending, increase some areas of spending (e.g. Capital), adjust UK tax policy, UK borrowing plans or social security policy.

Fraser of Allander: Scotland’s Budget 2016 Key Messages: ‘The Scottish budget has faced unprecedented cuts since 2010.’ Scottish budget could be cut by between 3% – 4% in real terms by 2020-21 and up to 6% – around £1.6 billion – under a worst case scenario. Protection for certain services (including commitment to increase health spending by £500m more than inflation over the parliament) will mean other ‘unprotected’ public services could face an average reduction of between 10% to 17% (2.6% to 4.5% annually) in real terms by 2020-21. Estimate cut of around £1 billion to the local government resource grant over the course of the parliament.

Estimated Scottish Government DEL Expenditure – June 2010 Budget Results (2010/11 Prices)

Scottish Government Budget:1999-00 to 2020-21 Fraser of Allander Institute: Scotland’s Budget 2016, p.31

Scottish Government Budget:1999-00 to 2020-21 Fraser of Allander Institute: Scotland’s Budget 2016, p.55

Fiscal Framework: Overview of Tax Powers Scotland Act 1998 Power to vary basic rate of income tax (“Scottish Variable Rate”) Council Tax and Non-Domestic Rates Scotland Act 2012 Scottish Rate of Income Tax Land & Buildings Transaction Tax Scottish Landfill Tax Power to devolve further tax powers or powers to set new Scottish taxes by Order in Council (with agreement of UK and Scottish Parliaments) Scotland Act 2016 Income Tax – rates and thresholds of tax due on non-savings, non-dividend income Air Passenger Duty Aggregates Levy Assignment of first 10 pence standard rate and 2.5 pence reduced rate VAT receipts

Fiscal Framework – Block Grant Adjustment The Scottish block grant will continue to be determined by Barnett Formula (including new welfare powers). The block grant will then be adjusted to reflect the introduction of devolved and assigned taxes and welfare powers and then indexed in future years with ‘no detriment’ approach. For all other areas of spending UKG to transfer Barnett share of their spending over the SR period. This will be baselined and Barnett applied thereafter. Welfare additions Tax deductions Equal to UKG tax in Scotland in devolved / reserved areas SG Tax Revenue SG budget Barnett- based block grant Net block grant paid to SG Net block grant paid to SG

Fiscal Framework: Devolved Revenue And Expenditure Devolved and Reserved Revenue Source: Government Revenue and Expenditure 2015-16 Much stronger link between policy making and our spending power. Increased accountability with income tax decision affecting over 2.5 million Scottish taxpayers. Greater links between available resources and relative economic growth in Scotland - creating even stronger incentives to develop policies to promote economic growth. Potential need to adapt the draft Budget and Budget Bill process to recognise the increased proportion of budget being funded from tax receipts. Significantly changes the composition of the SG budget with over 50% being funded from devolved and assigned tax receipts.

Capital Investment Group Activity Business Cases Considered since the next CIN NHS Forth Valley – Stirling Care Village - FBC NHS Grampian - Inverurie Health and Care Hub - FBC NHS Grampian - Foresterhill Health Centre - FBC NHS Lothian – Cancer Services – IA NHS Lothian – Telephone Replacement – IA NHS Lothian – East Lothian Community Hospital - FBC NHS Orkney – Balfour Hospital – Final Business Case - FBC NHS Tayside - NHS Scotland Pharmaceuticals Specials - FBC

General Issues Land Registration Implementation required by May 2019 Reporting through Strategic Facilities Group Cabinet Secretary has written to NHS Chief Executives on behalf of Registrars of Scotland asking to ‘submit your plan detailing how you intend to voluntarily register all of your outstanding land and property titles on the land register’. State of The Estate Report 2015 Published in August 2016 Data collection already underway for 2016 report Focus on appropriate classification of ‘High’ risk assets GP Premises Short Life Working Group met 5 times and has drafted their report It will be presented to the Cabinet Secretary shortly and any recommendations will be duly communicated to NHS Boards and GPs

General Issues Edinburgh Schools The Strategic Facilities Group agreed to carry out the risk review, looking both at the risk of the structural position and the risk to patient care Interim report will be prepared by HFS A programme will be developed showing what further inspection and/or remedial works are required The programme will take into account the pressures of patient treatment and the required timescales for implementation of these plans Leases New Accounting Standard will be introduced for 2019-20 Eliminates the distinction between Operating and Finance Leases No progress since last CIN Mortuaries Following press coverage of the service received by one family, Ministers have expressed an interest in the condition of mortuary facilities