THE Scottish Government underspent its budget by more than a quarter of a billion pounds in the last financial year, which included the onset of the coronavirus pandemic.

Finance Secretary Kate Forbes told MSPs that the provisional outturn figures for 2019/20 showed a provisional fiscal outturn of £34.4bn, against a budget of around £34.6bn.

The resulting “cash variance” was £258m markedly down from £449m in 2018/19 and £453m for 2017/18.  

However the Scottish Tories said it remained a "huge" figure, and questioned why the SNP was now demanding more borrowing powers from Westminster when it was underspending and not using its borrowing powers in full.

The Scottish Parliament is not legally allowed to over-spend its budget.

Ms Forbes said the figure showed “prudent budget management” was enabling the Scottish Government to maximise its response to the coronavirus pandemic.

She said the 2019/20 Provisional Budget Outturn represented a 0.7 per cent underspend on a total budget of £34.6bn – down from 0.9 per cent the previous year.

All of the £258m cash underspend has been carried forward and most already deployed.

She said it included £86m of fiscal resource for day-to-day spending, £76m of fiscal capital, and £96m of financial transactions which can only be used for loans and equity investment outside the public sector. 

She said the fiscal resource was “marginally” less than the £100m anticipated because of a need to divert extra funds money in the early response to the Covid outbreak.

She also that as well as the cash underspend there was a “non-cash” underspend of £130m involving technical accounting adjustments that cannot be spent on services. 

Ms Forbes also said Scottish Government capital borrowing was £45m less than the £450m originally planned last year, while the £717m collected from the Scottish Landfill and Land and Buildings Transactions taxes were the highest since they were were fully devolved.

She said: “The Scottish Government spent more than 99% of our budget in 2019/20 on the delivery of public services and supporting the economy.

“Our sensible financial management has provided us with additional flexibility to deal with the effects of Covid-19 and the sustained and damaging post-Brexit economic uncertainty.

“We will continue to maintain a firm grip on Scotland’s public finances and do all we can to protect Scotland’s economy and ensure that, as a country, we are back on our feet as quickly and as safely as possible.

“We have very limited room for manoeuvre within our budget, which is why I will continue to make the case to the UK Government for both an increase in funding and flexibility to allow the Scottish Government to respond fully to the Covid-19 crisis.”

Scottish Tory finance spokesman Donald Cameron said: "I note that the Scottish Government borrowed £45 million less in 2019-20 than planned and is not therefore using existing borrowing powers to the full.

"With that in mind, can I ask the Cabinet Secretary why she is demanding further borrowing powers at the very moment that her Government is not only underspending to the tune of a quarter of a billion pounds but isn't even spending the existing borrowing capacity it has?"

Ms Forbes said: "I have repeatedly made clear that it is revenue borrowing powers that I am looking for, we have existing borrowing powers for capital."

The Finance Secretary went on to say the impact of some construction projects being shelved in March due to coronavirus led to a decrease in the amount of capital borrowing being used.

She added powers being granted to Scotland to borrow for its resource budget will help to offset the impact of income tax reconciliations - which are caused by forecasting mistakes - in the coming years, expected to cost £270m next year and £500m the following year.

Both Scottish Greens co-leader Patrick Harvie and Scottish Liberal Democrats leader Willie Rennie pressed the Finance Secretary on spending in the transport sector.

She said she was in discussions with Transport Secretary Michael Matheson about funding as Scotland emerges from lockdown, as well as reiterating her support for free bus travel for under-19s, a policy bargained for by the Greens during the budget process.

Mr Rennie asked Ms Forbes what she will do to "effectively deliver" the transport budget, after it was found to have the biggest underspend for the second year in a row.

She committed to reinvest capital underspends because of delays to construction in the economic revival after coronavirus, adding she will "reposition the economy" to ensure it returns in a "more sustainable" and "fairer" way.

Three Labour MSPs asked Ms Forbes if any of the underspend would be used to give schools extra resources for the return of pupils in August, but she refused to say.

Labour finance spokesperson Jackie Baillie said: "Given the underspend is £258m, which is carried forward to this financial year, and Nicola Sturgeon has promised schools will get all the resources they need, the Scottish Government should put its money where its mouth is and allocate a portion of this money to fund the return to schools.

"It is unacceptable for the Finance Secretary to refuse to address this constructive suggestion when it was raised three times by Labour MSPs. 

“Kate Forbes's triple dodge can't hide the fact that Scotland is now facing a triple crisis of public health, education and the economy.

"Once again we are seeing a total lack of joined-up thinking from the SNP government. Nicola Sturgeon claims to be on top of the crisis facing our education system, but her government is still in denial about the urgency of addressing it."