The Scottish Government spent £14.5 billion on its pandemic response

Scottish Government spending was funded mainly through £14.4 billion of Barnett consequentials, which come from UK Government spending on the pandemic in the rest of the UK. The rest was funded from elsewhere in the Scottish budget and the Scotland Reserve.

UK Government spending programmes were a key part of the pandemic response, totalling over £321 billion across the UK. In Scotland, UK-wide spending programmes provided more than £11.4 billion of support. These funds were not controlled by the Scottish Government.

Over two years the actual amount spent on Covid-19 was less than budgeted

The actual amount spent was lower than the amount budgeted because:

• some Covid-19 Barnett consequentials from the UK Government did not arrive until late in 2020/21. This meant they were budgeted for in 2020/21 but could not be spent in full before the end of the financial year. They were then carried through the Scotland Reserve and used in 2021/22
• the uptake of some demand-led schemes, such as business support and self-isolation support grants, was lower than originally anticipated
• the Scottish Government moved funding between different parts of the budget during the pandemic to meet emerging need. The gross figure includes the original budget amount and the amount allocated later. If we adjust for this, the net figure is £15.2 billion.

The difference was used to support other areas of Scottish Government spending or was carried through the Scotland Reserve and used in the following year.

The Scottish Government spent less than it budgeted in 2020/21 and 2021/22

Through our reporting on Covid-19 finances we said that the Scottish Government had difficulties tracking its spending on Covid-19 because it is not a budgetary or accounting classification. Read more in our Covid-19 report and tracker papers.

What did the Scottish Government spend the additional Covid-19 funding on?

The largest amounts were budgeted to support for business and for health and social care.

Councils and health and social care received the most Covid-19 funding.

What did councils spend the additional funding on?

There were three main ways that the Scottish Government spent money through councils during the pandemic:

• £1.8 billion was given to councils through the general revenue grant for purposes such as free school meals, self-isolation support, lost income cover and general Covid funding. Much of this was for a clear purpose decided by the Scottish Government but £764 million was for purposes that the council could control.
• £1.7 billion to offset the loss in Non-Domestic Rates (NDR) revenue caused by the rates relief programme
• £2.6 billion to deliver specific grants such as business support on behalf of the Scottish Government.

The graphs below show only the funding distributed through the general revenue grant.

Councils spent Covid-19 funding on a wide range of purposes:

• General Covid-19 funding was provided to councils to spend on their local priorities related to Covid-19.
• Cover for lost income provided additional funding to councils to cover income which may have been lost due to the pandemic, for example from leisure trusts or parking.
• Support for individuals and families funding supported people through the pandemic and includes funding for winter hardship payments, food funds and mental health support.
• Support for business was funding to support councils administering grants delivered on behalf of the Scottish Government but does not include those grants. It also includes council-controlled business support grants such as the discretionary fund.
• School funding was for additional teachers, improvements to allow for home learning, digital inclusion and recovery funding.
• Free school meal funding allowed councils to continue providing free school meals to pupils during lockdowns and holidays.
• Council services include additional funding for some services which were needed more through the pandemic such as environmental health and registrars of death, as well as funding for test and protect.

Read more about business support here: Scotland's economy. Supporting businesses through the Covid-19 pandemic.

Unspent Covid-19 funding increased council and Integrated Joint Board (IJB) reserves during the pandemic

The Scottish Government treats the payments it makes to delivery partners as spending; however, the money may not have reached the end user at that point. This makes it complex to track Covid-19 spending over time.

Councils increased their reserves again in 2021/22

Some funding provided to councils was provided late in the year and not spent in 2020/21 and 2021/22; this was carried into future years in their reserves. Councils have now allocated their Covid-19 reserves to spend over the coming years.

Covid-19 spending is now part of public sector budgets

Specific funding for Covid-19 funding has ended. Covid-19 spending must be managed alongside a range of other challenges such as the cost-of-living crisis and the increase in inflation. For example:

• The NHS in Scotland 2022 report states that the Scottish Government expect to spend £723 million on Covid-19 in 2022/23, including £181 million by IJBs funded from their reserves.
• The 2022/23 budget for rail services in Scotland increased by £57 million partly due to a reduction in passenger numbers and income.

Read more about the financial sustainability challenges facing the Scottish public sector.

Reform is vital to tackle challenges highlighted by Covid-19

Over the last three years, the Auditor General and Accounts Commission have published reports looking at aspects of the public sector's response to the pandemic. The Scottish Government has agreed to a public inquiry to investigate the handling of the pandemic in Scotland. This is likely to cover some of the themes which have emerged from our reporting.

These themes are not new. The public sector is facing a period of sustained financial challenge and the pace of service reform needs to increase. Click below for more information on each theme and links to our reports.