Government spent £700m less than budgeted on coronavirus response

The Scottish Government spent £700 million less than expected on its Covid-19 response, figures show.

Audit Scotland said ministers had budgeted £15.2 billion for the response to the pandemic in the financial years 2020/21 and 2021/22, but spent £14.5 billion.

The original report on Scotland’s financial response to the virus was published last June, but the figures were updated on Wednesday with new data.

Audit Scotland said the actual amount spent was lower because, in part, some demand-led schemes like business support and self-isolation support grants cost less than expected.

It also said some Covid-19 Barnett consequentials from the UK Government did not arrive until late in 2020/21, which meant they were budgeted for in that period but could not be spent in full before the end of the financial year.

They were then carried through the Scotland reserve – essentially an account where any underspend in the Scottish budget can be carried over – and used in 2021/22.

Holyrood received £14.4 billion from the Treasury in Barnett consequentials – money awarded to Scotland when the UK Government spends money in England in a devolved policy area – with the rest funded from elsewhere in the Scottish budget.

The Scottish Government said “Covid-19 consequentials were spent in full to support the NHS, local communities and businesses and augmented by additional funding from elsewhere in the Scottish budget”.

A Government spokesman added: “Where funding that had been budgeted for was not spent, it was redeployed. For example, some of the UK Government funding received in late 2020/21 could not be spent before the end of that financial year and was carried forward into 2021-22.

“Take-up of some schemes also had an impact – it was lower for business support and self-isolation support grants than initially forecast so funding was redirected to maximise effective help for businesses and individuals.”

In 2020/21, councils were sent £4.3 billion by the Scottish Government for their Covid-19 response and £2.2 billion the year after.

Sheila Gunn, of Audit Scotland’s accounts committee, said councils had played a “crucial role” during the pandemic but now the response has ended they “must evaluate what impact its spending has had”.

She added: “Learning these lessons is essential to prepare for future crises, and to inform councils’ plans for recovery.

“Not all Covid-19 funding received by councils has been spent, meaning it is available for councils to use in current and future years.

“We know that two out of three councils are using their reserves, which include such funds to meet budget gaps in 2022/23.

“It remains important that councils are clear about how they use remaining Covid-19 funding and what they plan to do once it is all spent.”

With “significant financial challenges ahead for local government”, she said councils are under greater pressure.

“What is clear is that returning to the pre-pandemic status-quo is not an option,” she said.

“Radical thinking is needed to deliver services that councils can afford now and can continue to afford in the future.”