2022-23 financial performance
Annual Report and Accounts 2022-23
2022-23 financial performance
2022-23 financial performance
Financial performance and use of resources
The purpose of this section is to summarise financial performance against budgets for the 2022/23 financial year. Transport Scotland receives the majority of its funding from the Scottish Government. In addition, a small amount of operating income is also generated (Note 5). During 2022-23, total income reported was £12.5 million and funding received was £4.3 billion.
The original budget allocated to Transport Scotland in the 2022-23 Budget Bill was £3.48 billion. Transport Scotland's overall budget includes its Non-Departmental Public Bodies (NDPBs) Highlands and Islands Airports (HIAL), Caledonian Maritime Assets (CMAL), David MacBrayne (DML), Scottish Canals and Scottish Rail Holdings (SRH). The expenditure of NDPBs is reported in Transport Scotland's consolidated HMT budgets in the same way as Transport's Scotland's own spending. Scottish Government funding is accounted for in the Scottish Government accounting system (SEAS) but there are further accounting adjustments in the NDPBs that are reflected in Transport Scotland's overall HMT outturn.
The amounts shown in all of the tables below show all expenditure and accounting adjustments to reflect the total HMT budget envelope that Transport Scotland is accountable for. During the year, budgets are subject to revision and adjustment via the Scottish Government Autumn Budget Revision (ABR) and Spring Budget Revision (SBR) processes.
The table below shows the movement in our overall budget and comparison with realised outturn for 2022-23.
- £12.5 million reported income during 2022-23
- £4.3 billion funding received during 2022-23
| Original Budget 2022-23 £000s | Revised Budget 2022-23 £000s | Outturn 2022-23 £000s | Variance £000s | |
|---|---|---|---|---|
| Rail Services | 1,396,900 | 1,424,447 | 1,393,408 | (31,039) |
| Bus Services | 413,900 | 398,286 | 414,071 | 15,785 |
| Motorway and Trunk Roads | 855,853 | 801,837 | 828,198 | 26,361 |
| Ferries | 296,000 | 314,282 | 322,793 | 8,511 |
| Air | 88,500 | 77,875 | 76,317 | (1,558) |
| Other Transport | 375,900 | 345,464 | 254,170 | (91,294) |
| Local Authority Grants | 58,454 | 83,429 | 82,466 | (963) |
| SG AME | 0 | 0 | 4,916 | 4,916 |
| Total SG Funding | 3,485,507 | 3,445,620 | 3,376,339 | (69,281) |
| HMT Adjustments | 0 | 856,080 | 657,888 | (198,192) |
| HMT TOTAL | 3,485,507 | 4,301,700 | 4,034,227 | (267,473) |
Other Transport includes: Sustainable and Active Travel and Low Carbon expenditure.
Outturn analysis
| Budget Classification | Revised Budget 2022-23 £000s | Outturn 2022-23 £000s | Variance £000s |
|---|---|---|---|
| Resource | 1,369,500 | 1,369,963 | 463 |
| Capital | 2,547,348 | 2,316,501 | (230,847) |
| Non-Cash | 283,552 | 324,510 | 40,958 |
| AME | 101,300 | 23,253 | (78,047) |
| HMT TOTAL | 4,301,700 | 4,034,227 | (267,473) |
Outturn variances – summarised by type
| 2022-23 £000s | |
|---|---|
| Total Outturn Variance | (267,473) |
| of which: | |
| IFRS 16 adjustments | (122,384) |
| Other technical accounting | (78,047) |
| Non-cash variances | 40,958 |
| EBR contribution | (43,200) |
| Other variances | (64,800) |
| Total Outturn Variance | (267,473) |
Overview
As can be seen in the above table, £159.4 million or 60% of the overall underspend related to technical and accounting adjustments in our NDPBs or non-cash lines, the majority of which were in relation to the impact of IFRS 16 and the treatment of Pension Liabilities. These budget lines were restricted for these activities only, did not have a cash element associated with them and could not be used for any other purpose.
Resource expenditure was successfully managed to a near balanced position after making contributions of £37.6 million in support of the Emergency Budget Review (EBR) in September 2022. This was achieved by managing new and emerging pressures as well as new spending commitments by utilising savings made in demand led activities and the net positive impact of Network Rail compensation paid during industrial action.
The remaining outturn variance is on account of £43.2m of contributions to a savings exercise in support of the Emergency Budget Review where a number of uncommitted projects were reprioritised for delivery in future years and £44.8m was a saving due to lower-than-expected third-party demand and ability to deliver on some grant funding activities. We also received £20m of income late in the year from the sale of a Joint Venture in one of our NDPBs.
The total underspend of £267 million (2021-22: £146 million underspend) represents approximately 6.2% (2021-22: 4.1%) of the overall budget. The Statement of Comprehensive Net Expenditure (SoCNE) on page 112 identifies net operating costs of £3.130 billion. Capital expenditure and HMT Adjustments in NDPBs are not recognised as in-year expenditure within the SoCNE, and the table below provides a reconciliation of overall outturn to SoCNE.
| 2022-23 £000s | |
|---|---|
| Net Operating Costs from SoCNE | 3,130,198 |
| Add HMT Adjustments that do not go through the SoCNE | 657,888 |
| Add: Additions to PPE (Note 6) | 169,353 |
| Add: Additions to Right of Use (Note 6a) | 28,409 |
| Add: Additions to Investments (Note 9) | 60,523 |
| Less: Disposals of PPE (Note 6) | (790) |
| Less: Repayments of Investments (Note 9) | (11,352) |
| Outturn | 4,034,227 |
The majority of Transport Scotland's budget is spent, either directly or indirectly, with external suppliers. Only 1% is utilised on the on-going agency running costs, i.e., staff and premises. The chart below shows the percentage spent on each of the main areas of service provision identified in the budget.
Balance sheet analysis
Transport Scotland's asset base is £28 billion, the majority of which relates to the trunk road network (£27.6 billion). Movement in the balance this year primarily relates to additions in the year due to the completion of the A77 Maybole Bypass and the A92/96 Haudagain Improvement Project, in addition to a review of historic roads projects as well as the impact of the revaluation exercise. On 31 March 2023, Transport Scotland did not hold any assets available for sale.
There has been an increase in Financial Assets of £41 million which is mainly driven by an increase in voted loan funding.
There has been an increase in Right of Use Assets of £28 million and this relates to the lease that has been entered into for Bothwell Street which will be the new premises for Transport Scotland in early 2024.
There has been an increase of £21 million within trade and other receivables and a decrease of £100 million within trade and other payables in year. The main reason for this large decrease in payables is due to the level of accruals in year. These have decreased substantially as a result of an in depth review of accruals balances from 2021-22 and 2022-23.
- Increase in Financial Assets of £41 million
- Increase in Right of Use Assets of £28 million
- Increase within trade receivables of £21 million
- Decrease within trade and other payables in year of £100 million