Explainers
Parts of the Scottish Budget
Most of the Scottish Budget is money the Scottish Government decides how to spend. We call this discretionary funding. While its exact share changes each year, on average it is around 90 per cent of the Scottish Budget.
Discretionary funding is divided into three categories based on how each can be spent: resource, capital and financial transactions.
- Resource funding is to pay for day-to-day running costs, such as grants to local government, transfers to households in the form of social security payments, or staff pay. The majority of the Scottish Budget is resource funding.
- Capital funding can be spent only on long-term investments, such as hospitals, roads and research and development.
- Financial transaction funding (FTs) is a subset of capital funding which can only be used to make loans to or equity investments in private sector entities.
The rest of funding is set aside for a specific purpose. Because of this, we call it non‑discretionary funding. As it does not reflect Scottish Government decisions, we do not include it in our publications even though it is part of the Scottish Budget. There are two components to non-discretionary funding:
- UK-funded Annually Managed Expenditure (AME) is demand-led spending which, while devolved, is fully paid by the UK Government. Two such areas are teachers’ pension payments and student loans.
- Non-cash is a subset of resource funding only available to use for accounting adjustments, such as depreciation of assets.
Watch the Government spending in Scotland video in the explainer’s section to find out more.