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Peter A Walker

Audit Scotland warns that clarity on Covid spending 'remains vital'

The Scottish Government moved at pace to respond financially to the pandemic, but public sector leaders need to be clearer about how one-off Covid-19 funding is being spent and what impact it has had.

That is the view of Audit Scotland, which has published its latest report on Scotland's financial response to the coronavirus crisis.

This stated that spending decisions were recorded differently across government departments, and it was not always clear how data was used to inform funding allocations.

Decisions were not centrally collated, making it hard to see how some financial decisions were reached, noted the auditor general, adding that there has been limited evaluation of the difference the financial response to the pandemic has made to people’s lives.

It hailed the government for managing its budget effectively over the last two years, but noted that some Covid-19 funding remains unspent.

At the end of 2020/21 over £2bn was added to reserves by the Scottish Government, councils and integration authorities – although it is not possible to say how much of that is from Covid-19 funding.

Stephen Boyle, auditor general for Scotland, said: “It is vital for transparency and financial planning that the Scottish Government and other public bodies are clear about how one-off Covid-19 funding is being spent, including money in reserves.

“More work is also needed by the Scottish Government to collect the data that will allow it to understand the difference its interventions have made and plan the country's recovery from Covid.”

William Moyes, chair of the Accounts Commission, added: “Pandemic spending largely protected councils and other public bodies over the last two years, but the financial challenges they were facing pre-Covid remain, and council budgets are particularly under pressure.

“Many services relied on one-off Covid-19 funding to remain sustainable, and it’s important that there is clarity about how they will be paid for in the future.”

The report acknowledges that more than £5bn was allocated for health and social care to support infrastructure for testing and vaccinations programmes, while around £4.7bn was allocated to businesses in lifeline support.

Local authorities were allocated £1.8bn to fund vital general and targeted services, including £200m to cover councils’ lost income.

The government allocated £15.5bn in 2020-21 and 2021-22, which was more than the £14.4bn received in consequential funding from the UK Government.

Finance Secretary Kate Forbes said: “The pandemic created challenges on a scale our economy and people have faced in living memory.

“Despite the impacts, many of which are still being acutely felt, we worked collaboratively with all sectors of the economy to identify those most in need and then with local authorities and partners to utilise existing systems to ensure financial support was delivered swiftly and effectively.

“We also set up a number of new support streams, to make sure businesses were being paid as quickly as possible.

“We will now carefully consider the Audit Scotland report and engage with relevant sectors to ensure that future decision making is as informed as possible and best supports the people of Scotland.”

The report states that the Scottish Government has allocated £15.5bn to its Covid‑19 response in 2020/21 and 2021/22. So far, it has reported estimated actual spending of £11.8bn up to December 2021 on measures related to the pandemic.

Andrew McRae, FSB’s Scotland policy chair, suggested that any leftover cash could be reallocated to help firms weather the current energy storm.

“Nine in 10 Scottish businesses are warning their overheads are on the rise, new financial help for firms to tackle rising energy costs could help businesses that survived the Covid crisis thrive in the future.

“The FSB campaigned hard for grant funding to be expanded to include more operators, and for cash to reach local firms more quickly - however, our current economic situation would be far worse without the cash support we saw for local operators.”

Meanwhile, Scottish Liberal Democrat finance spokesperson John Ferry said: “Prudent use of reserves will help local authorities to build back after the pandemic but they cannot rely on one-off windfalls to fund ongoing spending forever.

“The Scottish Government must ensure that councils are properly funded to invest in local services and that Covid spending is properly monitored to ensure that it is being put to good use.”

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