Last updated: January 2026
This glossary contains terms related to public finance and is intended to be used alongside SPICe briefings and blogs. Bold is used to indicate terms defined in their own right elsewhere in the glossary. A table of contents has been added to aid in ease of use.
To use the search function, type your term into the search box and click search. If your term is defined in the glossary, it will be highlighted in yellow.
A
Annually Managed Expenditure (AME)
Spending included in Total Managed Expenditure (TME) that does not fall within Departmental Expenditure Limits (DELs). Spending in AME is generally less predictable and controllable than spending in DEL and therefore needs to be ―annually managed rather than determined on a longer-term basis, like NHS and teachers‘ pensions.
B
Barnett Formula
A population-based formula that allocates a share of changes in planned spending on comparable services by Departments of the United Kingdom Government to the devolved administrations in Scotland, Wales and Northern Ireland. This animation gives you an introduction to the Barnett formula.
Barnett Funding
Financial allocations made to the devolved administrations in Scotland, Wales, and Northern Ireland using the Barnett Formula. This formula adjusts the block grants based on changes in UK government spending on public services in England. The adjustments are proportional to the population and the extent to which the services are devolved. See also non-Bartnett funding.
Block Grant Adjustment
Adjustments to the Scottish Budget to reflect the devolution of tax and social security.
Block Grant Funding
Funding for the Scottish Budget, calculated based on UK Government funding. This funding can be split into Barnett funding and non-Barnett funding.
Bonds
Issuing a bond is a form of borrowing. Bonds have a fixed period and a fixed rate of interest, and can be traded on financial markets. The Scottish Government can issue bonds as part of their capital borrowing powers, subject to the limits set out in the Fiscal Framework.
Budget (Scotland) Act
The budget as passed by the Scottish Parliament following the Budget Bill phase of the annual budget process. It authorises spending for the following financial year. Also referred to as the Budget Act.
Budget Process
Every year the Scottish Parliament considers Scottish Government spending proposals before they become law. This is known as the Scottish Budget Process, a “year round” process of Budget scrutiny, allowing Members of the Scottish Parliament (MSPs) and Committees of the Parliament the opportunity to consider and influence budget setting at different points of the year. This animation explains the year-round Scottish Budget process.
Event | Date expected |
Medium Term Financial Strategy | May |
Fiscal Framework Outturn Report | September |
Parliamentary subject committees submit spending proposals | October |
The UK Government publishes the UK Budget | November |
The Scottish Fiscal Commission publishes Scottish Income Tax Estimates | December |
The Budget Bill is introduced, and the draft spending and tax plans published in a supporting document | December |
The Budget’s tax and spending proposals are scrutinised by Parliament | January |
The Budget Bill is debated by Parliament | January (stage 1) and February (stages 2 and 3) |
The Budget Bill receives Royal Assent and becomes the Budget Act | April |
Autumn Budget revision | September |
Spring Budget revision | February |
Pre Budget Scrutiny Phase
March through to October is the period when Committees undertake “pre Budget scrutiny”, considering budgetary matters within their areas of responsibility. This can involve taking evidence from relevant stakeholders, like Ministers, public bodies and Audit Scotland. In May, the Medium-Term Financial Strategy sets out the Scottish Government’s budgetary priorities for the next five years. This includes estimates for amounts of tax to be collected, and spending in areas like health, education and local government. In September, the Fiscal Outturn report shows the difference between estimates for tax revenues and social security spending made at the time the Budget was set, compared with what was actually collected or spent (the so called “Outturn”). It is considered by the Finance and Public Administration Committee, who question the Scottish Government on how it plans to manage more or less money in their Budget.
Pre-budget scrutiny ends in October when Parliamentary Committees send pre-Budget reports to the Scottish Government. These reports list the concerns and priorities of different committees.
Budget Bill Phase
The Budget is usually published by the Scottish Government in December, alongside responses to Committee pre-budget reports. This sets out the tax and spend plans of the Scottish Government for the coming year. In January and February these plans are debated and voted on by the Parliament in a 3-stage Bill process. At Stage 1 Parliament agrees the general principles of the Bill and MSPs and Committees can make alternative proposals. Stage 2 takes place at the Finance and Public Administration Committee where amendments can be considered and voted on. Income tax rates and bands for the next year are then debated, with MSPs voting on them before Stage 3. At Stage 3 final amendments are considered, and Parliament votes on whether or not to pass the Budget Bill. If agreed, the Bill becomes an Act and public spending for the following year is agreed.
Budget Documents
Accompanying explanatory documentation for the Budget Act – and for budget revisions.
C
Capital
Capital spending is discretionary spending within the Scottish Budget which can only be spent on long-term investments; including physical infrastructure such as roads, hospitals and schools, and other investments such as research and developments. This includes central government capital spending and central government support for local authorities‘ capital spending.
Cash Limits
Limits on the amount of money the Government proposes to spend or authorise on certain services or blocks of services in one year.
Comparability (Barnett Formula)
Comparability in the context of the Barnett Formula refers to the extent to which spending by a UK government department corresponds to services provided by the devolved administrations in Scotland, Wales, and Northern Ireland. It is expressed as a percentage and is used to calculate changes in the block grants allocated to these regions. The higher the comparability percentage, the more closely the services align, and thus, the greater the impact on the block grant.
Current Expenditure
Includes most direct spending on public sector pay and providing services, e.g. health or education, reflecting continuing programmes financed each year. It does not include the purchase of tangible, physical assets.
Current Prices
Spending and income data presented in the cash value of the relevant year.
D
Departmental Expenditure Limits (DEL)
The budget limits set for government departments. These limits are established during Spending Reviews and cover spending that departments can control. DEL is divided into two categories:
Resource DEL (RDEL): This includes day-to-day operational costs like salaries and maintenance.
Capital DEL (CDEL): This covers investment in assets such as buildings and infrastructure.
Devolution
Devolution is the process through which the Scottish Parliament was created, and through which powers have been passed from the UK Parliament to the Scottish Parliament. This means that the Scottish Parliament can make decisions on these things without needing approval from the UK Parliament.
Devolved Powers
A power that is devolved is one that has been passed to the Scottish Government, so it is the opposite of reserved. For instance, health care is devolved so the Scottish Parliament can make decisions about this. A full list of devolved powers can be found on our website.
Devolved Social Security
Financial or other assistance to or in respect of an individual where there is an entitlement to a devolved social security payment. This includes the payment devolved under the Scotland Act 2016, the Scottish Welfare Fund and Employability Services.
Devolved Taxes
Taxes for which control has been transferred to a devolved administration such as the Scottish Parliament. The Scotland Act 2012 gave Scottish Ministers new powers to administer some taxes such as the Land and Buildings Transaction Tax (LBTT) and the Scottish Landfill Tax (SLfT).
Drawdowns
Reductions in the amount of money in reserve for the Scottish Government to allocate in their budgets.
F
Financial Transactions
Financial transactions (FTs) are a subset of capital funding, but comes with additional restrictions. FTs can only be used outside of the public sector to make investments in private sector companies. FTs are used to create financial assets. There are two types of FTs, gross and net. Gross FTs must be repaid to HM Treasury, while net FTs do not require repayment.
Financial Year
The year used in financial accounting, which is also what HMRC use as the tax year. The financial year runs from 1 April to 31 March, and often new policies, charges and rates will apply from 1 April onwards.
Fiscal Drag
Many taxes are progressive, with higher tax rates being applied as you move up through the tax base, for example on higher incomes or larger transactions above certain thresholds. Fiscal drag refers to the general increase in revenues over time that comes from the tax base growing relative to tax thresholds and higher tax rates being applied.
Fiscal Event
UK fiscal events include major announcements like the Budget, Spring Statement, and Spending Reviews. These events are opportunities for the Chancellor of the Exchequer to outline the government’s plans for taxation, spending, and economic policy.
Scotland fiscal events occur when the Cabinet Secretary for Finance and the Economy presents the Scottish Government’s Budget statement or Medium-Term Financial Strategy to Parliament. These events detail the state of the Scottish economy and propose changes to fiscal policy
Fiscal Forecasts
Forecasts of revenue from taxes and spending on all areas.
Fiscal Framework
The updated 2023 Agreement between the Scottish and UK governments that sets the fiscal rules, funding and borrowing powers available to the Scottish Government.
Fiscal Policy
The set of decisions made by any government that determines the levels of taxes and public spending.
Fiscal Resource/ Resource Funding
Resource funding is discretionary funding to pay for day to day running costs, and accounts for the majority of funding in the Scottish Budget. Staff pay is a major component of resource funding, but this also includes grants to other public bodies such as local government and social security payments.
G
GDP Deflator
The GDP deflator is a measure that shows how much prices of goods and services produced in an economy have changed over time due to inflation. It compares the current prices of all domestically produced goods and services to the prices in a base year. This helps to separate the effects of inflation from the actual growth in the economy.
Government Expenditure and Revenue in Scotland (GERS)
Annual report providing an analysis of the public finances in Scotland. Produced by the Scottish Government‘s Office of the Chief Economic Adviser.
Grant In Aid
A payment by a government department to finance all or part of the costs of the body in receipt of the grant in aid. It applies where the Scottish Government has decided, subject to the necessary Parliamentary controls, that the recipient body should operate at arm‘s length from government. Most bodies in receipt of grants are non-departmental public bodies (NDPBs).
Gross Domestic Product (GDP)
The value of goods and services produced in the UK including in that valuation the impact of taxes on products and subsidies. “Gross” means there is no deduction for capital consumption. Economic data are often quoted as a percentage of GDP to give an indication of trends through to time and to make international comparisons easier. This animation gives you an introduction to Gross Domestic Product (GDP), what it is and how it is calculated.
Gross National Income (GNI)
Gross National Income (GNI) adjusts the more common Gross Domestic Product (GDP) to account for financial flows due to ownership. For instance, profits made abroad but brought back to Scotland by Scottish are included in Scottish GNI but not in Scottish GDP. Conversely, profits made but then taken out of Scotland by non-Scottish companies are included in Scottish GDP but not in Scottish GNI.
Gross National Product (GNP)
Includes net property income from abroad, e.g. from investments overseas. There is currently no specifically Scottish figure available.
Gross Value Added (GVA)
GVA is essentially GDP without taxes or subsidies, sometimes known as ―GDP at basic prices.
H
Human Rights Budgeting
Human rights budgeting makes sure there is enough money in the budget to meet everyone’s human rights. It includes looking at how the budget is made and decided on, and what the spending in the budget is. There are three standards that a human rights budget must meet:
- Everyone has information about the budget.
- People can be involved in the budget process.
- Budget decisions must think about the impact on human rights.
I
Identifiable Expenditure
Spending that can be identified as specifically incurred on behalf of the residents of Scotland. It mainly comprises the budget of the Scottish Government together with Social Security payments.
Inflation
An increase in the general price level of goods and services. When there is inflation in an economy, the value of money decreases because a given amount will buy fewer goods and services than before. This animation gives you an introduction to inflation.
In-Year Changes
Changes to spending allocations during the budget year.
In-Year Forecast
A forecast for the current financial year. An in-year forecast may use data available for the current year. It is commonly used as a baseline for subsequent forecasts.
L
Level One/Two/Three/Four
Terms used by the Scottish Government to express spending at different levels:
Level One: Spending recorded at portfolio level. For example, Education and Lifelong Learning or Justice.
Level Two: Spending recorded at sub-portfolio level. For example, Student Awards Agency for Scotland (within Education and Lifelong Learning) or Scottish Prison Service (within Justice).
Level Three: Spending recorded below sub-portfolio level. For example, SAAS administration costs or Offender Services
Level Four: Level 4 figures are simply a breakdown of the budget figures beyond the “level 3” figures published in the draft budget. The Government states that level 4 figures set out the disaggregation of budget information below published level 3 programmes where this exists or is available on a systematic basis. At this level of disaggregation, the information is subject to change without notice during the year and outturn spending at this operational level may not necessarily reflect the disaggregation as recorded in budgets.
M
Marginal Tax Rate
The rate of tax paid on each additional pound earned by a taxpayer. In some contexts the marginal rate may take account of reductions in means-tested benefits as well as direct taxes.
N
National Outcomes
The National Performance Framework currently outlines eleven National Outcomes that articulate the kind of country the Scottish Government would like Scotland to be, with a focus on improving the lives of people in Scotland. These outcomes are measured by a set of 81 National Indicators.
National Performance Framework
The National Performance Framework (NPF) is a strategic tool introduced by the Scottish Government in 2007 that “sets out a vision for the collective wellbeing of Scotland”. It is intended to align with the United Nations Sustainable Development Goals to ensure a balanced approach to economic, environmental, and social progress. The NPF is currently under review.
Non-Cash Funding
Non-cash funding is a non-discretionary part of the budget which is only used for accounting adjustments – such as the depreciation of assets, or to implement changes to accounting standards.
Non-Barnett Funding
Financial allocations that are not determined by the Barnett Formula. These funds are agreed upon separately between the UK Government and the devolved administrations and are not subject to the same automatic adjustments. Non-Barnett funding can cover specific projects or needs that fall outside the usual Barnett arrangements
Non-Identifiable Expenditure
Scotland‘s share of public spending that is incurred on behalf of the UK. It is dominated by defence spending (but also includes overseas services, trade, industry, energy and employment).
O
Objectives
A statement of what the Government plans to achieve. Normally following an underlying policy or strategy.
Outturn/Estimated Outturn
Spending actually incurred or estimates made on the basis of actual spending to date.
P
Parliamentary Authority
The Scottish Parliament’s formal agreement to authorise an activity or spending. Activities giving rise to spending are authorised by the Parliament in specific enabling legislation. Parliamentary authorisation of actual spending is provided in the annual Budget Act, including any Amendment Orders.
Per Capita, Per person, or citizen
When spending is described as a certain amount per capita, that means the amount of spending for each person. This is useful to know because it isn’t just spending that changes over time, it is also the number of people living in an area or country. By understanding changes to per capita figures, we can take account of changes to population.
Plans, Planned Spending
Usually recorded in budget and spending documents for current and future years. Will differ from final amounts spent, which are known as outturn figures and are only confirmed at a later date. This sometimes creates difficulties in comparing spending data between years because a comparison may not be like with like.
Policy Costing
An estimate of the change in revenue or spending resulting from a change in an existing Scottish Government fiscal policy or introduction of a new policy.
Portfolio
The area of spending that the budget and policies are broken down into, as determined by the Scottish Government. Each portfolio will have its own set of Ministers in charge, led by a Cabinet Secretary, as well as its own budget. The way that portfolios are organised can change over time, with different things being grouped together. The committees at the Scottish Parliament broadly match the portfolios of the Scottish Government, but not exactly, and most committees have more than one Minister or Cabinet Secretary that they might ask to hear evidence from.
Progressive Tax
A tax in which the tax rate increases as the taxable amount increases. For example, a tax system where those with higher income or wealth pay higher effective tax rates or in which property transactions with higher values incur a higher rate of tax.
Public Finance And Accountability (Scotland) Act 2000 (Asp 1)
The Act takes forward many of the recommendations of the FIAG (Financial Issues Advisory Group) report. It established the framework for the three-stage annual budget process, and the new audit arrangements for Scotland, including the creation of Audit Scotland.
Public Private Partnerships (PPPs)
Arrangements whereby the public and private sectors form joint ventures to deliver public services. They can be classified in national accounts to either the public or private sectors depending on which party has the larger share.
R
Real Terms Figures
Amounts adjusted for the effect of general price inflation as measured by a deflator. This enables comparisons of spending across years without the distortion caused by price changes. For Government spending plans, the GDP deflator is normally used to convert cash prices to real terms.
Reserved Powers
A power that is reserved is one that has stayed with the UK Government, so it is the opposite of devolved. Foreign affairs is an example of a power which is reserved to the UK Parliament, so the Scottish Parliament cannot make its own decisions on this. A full list of reserved matters can be found on our website. See also Devolved Powers.
Ring-Fenced
Spending that is specific to a particular policy or programme and cannot be used for any other purpose.
S
Scotland Reserve
The Scotland Reserve is an instrument that allows the Scottish Government to transfer funds between financial years. It is split into three separate accounts: resource, capital, and financial transactions (FTs). There was an overall limit of £700 million in 2023-24, which the revised Fiscal Framework agreement increased yearly from 2024-25 with inflation. The Fiscal Framework does not specify how this limit is split between accounts, so the Scottish Government can manage each account within the overall limit. Some one-way transfers are allowed between accounts: funds from the resource reserve can move to the capital reserve, and funds from the capital reserve can move to the FT reserve. The Scottish Government can add any underspends or unallocated funding to the reserve each year and then draw it down in future years.
Scottish Administration
The Scottish Administration comprises the Scottish Ministers (including the Lord Advocate and the Solicitor General for Scotland) and their staff i.e. the core Scottish Government and Executive Agencies – plus junior Scottish Ministers and non-ministerial office holders in the Scottish Administration (i.e. the Registrar General of Births, Deaths and Marriages for Scotland, the Keeper of the Registers of Scotland, the Keeper of the Records of Scotland and others as specified in statute).
Scottish Consolidated Fund
The account into which payments and receipts to the Scottish Government flow. Most of the receipts are paid into the Fund by the Secretary of State for Scotland and are the monies authorised by the Westminster Parliament to fund the Scottish Assigned Budget. Also includes receipts from charges and other income. The spending of the Scottish Parliamentary Corporate Body and its associated bodies, and Audit Scotland, also comes from the Fund.
Spending Review
Conducted by HM Treasury for all UK Departmental objectives, policies and spending that sets out spending plans for the years following its publication. Spending Reviews replaced the previous system of annual Public Expenditure Surveys (PES).
T
Total Managed Expenditure (TME)
TME is the consolidated sum of current and capital spending of central and local government and public corporations. It is the sum of DEL and AME. In effect, it is the budget that the Scottish Parliament authorises.
U
Underspends
Where the cost of goods or services is less than was allowed for in the budget. Subject to some restrictions, the Scottish Government is permitted to deposit underspends in the Scotland Reserve for spending in future years.
United Kingdom Consolidated Fund
In effect, the Government‘s main account. Most of central government‘s spending is financed from this fund, and most taxes and other receipts are paid into it.
United Kingdom Funded AME
UK funded AME is demand led spending. While it is in devolved areas, it is fully paid by the UK Government. Examples of AME spending include teachers pension payments and student loans. This is typically less predictable areas of spending, and so the UK Government manage it on an annual basis rather than over longer periods. The Barnett formula does not apply to AME funding, so changes elsewhere in the UK will not affect the Scottish share of AME, only changes in demand in Scotland.
V
Voted Expenditure
Spending authorised by the Scottish Parliament in the Budget (Scotland) Act, and Spring and Autumn budget revisions. However, some public spending is funded partly or wholly by income which does not come from central government (e.g. money raised by local authorities).
Sources
Scottish Public Finance Manual Glossary
Scottish Fiscal Commission Explainer Glossary
SPICe Public Finance Glossary (2011)
Scottish Budget 2024-25 Annex B
Kelly Eagle, Senior Researcher, Financial Scrutiny Unit