Scottish Canals Framework Document

Specific financial provisions

Delegated authorities

61. SC's specific delegated financial authorities - as agreed in consultation between SC and the SG - are listed in Appendix 1. SC shall obtain the SG's prior written approval before entering into any undertaking to incur any expenditure that falls outside these delegations. SC shall also comply with any requirements for prior SG approval included in the SPFM and/or this document. Prior SG approval must always be obtained before incurring expenditure for any purpose that is or might be considered novel, contentious or repercussive or which has or could have significant future cost implications.

Income generation

62. SC is required to act commercially in relation to its non-navigation commercial activities and shall seek to maximise income - grant in aid does not qualify as income - from all sources, including from the European Union, and ensure that the SG is kept informed. Novel or contentious proposals for new sources of income or methods of fundraising must be approved by the SG. Fees or charges for any services supplied by SC shall be determined in accordance with the Fees & Charges section of the SPFM.

63. Gifts, bequests or donations received by SC score as income and SC should be able to demonstrate that expenditure funded by gifts etc is additional to expenditure normally supported by grant in aid (i.e. SG core funding) or by trading and other income. Before accepting such gifts etc. SC shall consider if there are any associated costs in doing so or any conflicts of interests arising. SC shall keep a written record of any such gifts etc., their estimated value and what happened to them.

Financial investments

64. Unless covered by a specific delegated authority SC shall not make any financial investments without the prior approval of the SG. That would include equity shares in ventures which further the objectives of SC. SC shall not invest in any venture of a speculative nature without agreement of Scottish Ministers.


65. Borrowing cannot be used to increase SC's spending power. All borrowing by SC - excluding agreed overdrafts - shall be from the Scottish Ministers in accordance with guidance in the Borrowing, Lending & Investment section of the SPFM.

Lease arrangements

66. Unless covered by a specific delegated limit or where leases were in place prior to 2nd July 2012, SC shall not, enter into any finance, property or accommodation related lease arrangement - including the extension of an existing lease or the non-exercise of a tenant's lease break - without the SG's prior approval. Before entering/continuing such arrangements SC must be able to demonstrate that the lease offers better value for money than purchase and that all options for sharing existing public sector space have been explored. Non-property / accommodation related operating leases are subject to a specific delegated authority. SC must have budget provision for finance leases and other transactions which are in substance borrowing.

Tax arrangements

67. Non-standard tax management arrangements should always be regarded as novel and/or contentious and must therefore be approved in advance by the SG. Relevant guidance is provided in the Tax Planning and Tax Avoidance section of the SPFM. SC must comply with all relevant rules on taxation, including VAT. All individuals who would qualify as employees for tax purposes should be paid through the payroll system with tax deducted at source. It is the responsibility of SC to observe VAT legislation and recover input tax where it is entitled to do so. SC must also ensure that it accounts properly for any output tax on sales or disposals.

Lending and guarantees

68. Any lending by SC must adhere to the guidance in the Borrowing, Lending & Investment section of the SPFM on undertaking due diligence and seeking to establish a security. Unless covered by a specific delegated limit SC shall not, without the SG's prior approval, lend money, charge any asset or security, give any guarantee or indemnity or letter of comfort, or incur any other contingent liability (as defined in the Contingent Liabilities section of the SPFM or in International Financial Reporting Standards), whether or not in a legally binding form. Guarantees, indemnities and letters of comfort of a standard type given in the normal course of business are excluded from this requirement.

Third party grants

69. Unless covered by a specific delegated authority SC shall not, without the SG's prior agreement, provide grant funding to a third party. Such funding would be subject to the guidance in the State Aid section of the SPFM. Guidance on a framework for the control of third party grants is provided as an annex to the Grant & Grant in Aid section of the SPFM.


70. SC will require commercial insurance, this will be reviewed on a periodic basis by the Risk & Audit Committee and will comply with the Insurance section of the SPFM. SC will not insure the canal infrastructure but in the event of uninsured losses being incurred, which commercial funds cannot cover up to the agreed limit, shall seek additional resources from SG. In the event of uninsured losses being incurred the SG shall consider, on a case by case basis, whether or not it should make any additional resources available to SC.

Procurement and payment

71. SC's procurement policies shall reflect relevant guidance in the Procurement section of the SPFM and relevant guidance issued by the SG's Procurement and Commercial Directorate. Procurement should be undertaken by appropriately trained and authorised staff and treated as a key component of achieving SC's objectives consistent with the principles of Best Value, the highest professional standards and any legal requirements. Unless covered by a specific delegated authority any proposal to award a contract without competition (non-competitive action) must be approved in advance by the SG. Any external consultancy contracts with a value of more than £100,000 must be approved in advance by the Cabinet Secretary for Infrastructure, Investment and Cities and the Cabinet Secretary for Finance, Employment and Sustainable Growth.

72. Any major investment programmes or projects undertaken by SC shall be subject to the guidance in the Major Investment Projects section of the SPFM. The sponsor unit must be kept informed of progress on such programmes and projects and Ministers must be alerted to any developments that could undermine their viability. ICT investment plan must be reported to the SG's Information Services Investment Board.

73. SC shall pay all matured and properly authorised invoices relating to transactions with suppliers in accordance with the Expenditure and Payments section of the SPFM and in doing so shall seek wherever possible and appropriate to meet the SG's target for the payment of invoices within 10 working days of their receipt.

Gifts made, special payments and losses

74. Unless covered by a specific delegated authority SC shall not, without the SG's prior approval, make gifts or special payments or write-off of losses. Special payments and losses are subject to the guidance in the Losses and Special Payments section of the SPFM. Gifts by management to staff are subject to the guidance in the Non-Salary Rewards section of the SPFM.


75. Where SC has financed expenditure on assets by a third party, SC shall make appropriate arrangements to ensure that any such assets above an agreed value are not disposed of by the third party without SC's prior consent. SC shall put in place arrangements sufficient to secure the repayment of its due share of the proceeds - or an appropriate proportion of them if SC contributed less than the whole cost of acquisition or improvement. SC shall also ensure that if assets financed by SC cease to be used by the third party for the intended purpose an appropriate proportion of the value of the asset shall be repaid to SC.

Board expenses

76. Remuneration, allowances and expenses paid to board Members must comply with the SG Pay Policy for Senior Appointments and any specific guidance on such matters issued by the Scottish Ministers.

77. The SG is required by legislation in the Transport Act 1962, paragraph 8(2A) of schedule 1, to lay details before the Scottish Parliament of appointments to the board of SC and changes in their remuneration, as soon as possible. SC is therefore required to provide the SG with accurate details (including dates) of any such changes.

June 2013