Budget (Scotland) (No 2) Bill: Stage 2
Item 3 on the agenda is consideration of the Budget (Scotland) (No 2) Bill at stage 2. Members have a copy of the bill and a note from the clerk. I draw members' attention to two points in the clerk's note. First, only a member of the Scottish Executive can lodge amendments to the bill. Secondly, as paragraph 6 of the note states,
"it is not possible to leave out a section or schedule of the Bill by disagreeing to it",
because to do so an amendment would have to be lodged.
Before we start the formal proceedings, I will allow the deputy minister to make some explanatory remarks about the bill and then give members an opportunity to ask questions.
I have some detailed points that draw out the more important elements of the changes from the draft budget that are in the bill. The points are fairly technical, for which I apologise to colleagues. Overall, the figures are largely unchanged from those that were in the draft budget, although, as members know—given that we have been through the process several times—they are presented in a rather different form. The usual small changes arise from estimating changes, from the non-departmental public body resource to cash adjustments and from programmes that have moved between portfolios. We are happy to answer any questions on those.
I turn to the significant changes. Again, I apologise for the degree of detail on them. In schedule 1, we have introduced a new item 12, which covers Scottish teachers' and national health service pensions schemes. Those are treated separately in the supporting documents, starting on page 75. The change reflects discussions with Audit Scotland on the accounting for the schemes, which will no longer be covered in the Executive's consolidated accounts. As members will know, the accounts are prepared against the figures that are in the bill and it was therefore felt helpful to split the old item 10 in schedule 1 between the part of the Finance and Central Services Department budget that remains covered by the accounts and the pensions schemes, which will not be covered by the accounts.
Secondly, the provision that portfolios have put in the central unallocated provision for 2005-06 is included in the draft budget but excluded from the numbers in the bill. The provision is set out in that way in table 1.3, on page 4 of the supporting document. I draw members' attention to the negative figure for the Environment and Rural Affairs Department portfolio, which represents a draw-down in the next financial year of resources that have been put into the CUP and which will be carried forward from this financial year.
Thirdly, I would like to explain a convention that is used in the bill that caused some confusion during the stage 1 debate. As members know, for budget purposes, the smallest unit of resource that we use is £1,000. We do not recognise any numbers below £1,000—in accounting terms, I hasten to add—and all figures must be in complete thousands. However, the bill often includes receipts limits of £100. That is an accepted convention to signal that the exact amount of receipts cannot be forecast accurately and that we could not provide a taut and realistic—or robust, as Mr Morgan might put it—figure for the bill. We use the £100 figure to signal clearly that there will be receipts, but that we are as yet uncertain as to their extent. When accurate forecasts become available, we will insert them during the year through the regular budget revisions, to which we all look forward so much.
Similarly, there has been confusion over the income-to-be-surrendered lines that are set out in the supporting document at the bottom of each part of schedule 3. The committee will know that we are allowed to retain almost all receipts up to the limits that are set in the bill, except those that are specified in the designated receipts order, or unless there are good policy reasons why we would not want to use receipts as a main source of funding. Those who are interested can find a good example of that on page 79 of the supporting document. The Crown Office will retain £700,000 in receipts from the categories that are set out in schedules 1 and 2 to the bill, but it will also surrender £12 million of income from fines. I hope that colleagues accept that that is because we do not want to give the impression that it is in any way in the Crown Office's interest to impose more fines. If no figure is set against the income-to-be-surrendered line in the supporting document, that means that there is no income to be surrendered, not that the retained income and capital receipts applied that are set out in the supporting document will be surrendered.
Finally, I am sure that members will have spotted a small mistake in the bill. Table 1.5 on page 7 of the supporting document gives the overall cash authorisation for the Scottish Administration as £23,221,697,000, but the overall cash authorisation that is sought under section 3(a) of the bill is different—it is £53 million more than is required. That is because of a fault in the software that is used to extract non-cash figures from our main budget database, which we discovered before the supporting document was finalised, but after the bill was finished. When the bill was laid, the figure in the supporting document was more accurate.
There are three main reasons why we do not propose to correct the mistake. First, as we cannot use extra cash authorisation without also seeking additional resource allocations, the unneeded cash cannot be used. Secondly, we know that we will introduce at least two revisions to the bill during the year. With the draw-down of extra resources from end-year flexibility and the CUP, we can be 100 per cent certain that, by next year's spring revision, we will need a higher cash authorisation than is currently in the bill. Therefore, there seems to be little point in amending the bill now. Finally, since the production of the supporting document, we have explored the software error further to ensure that it has had no impact on other figures. We found one other error, which led to our understating our cash requirement in the current and the coming financial years. I will explain that further when we take correcting action for the current year in the spring budget revision. However, the error means that the overall cash authorisation that is sought in the bill is closer to the correct figure than the figure in the supporting document is.
I apologise for going into detail, but I hope that I have covered the three or four main points that arise from this year's bill.
The same problem applies to other figures that are given in section 3. The figures for the Scottish Parliamentary Corporate Body, Audit Scotland and, I suspect, the Forestry Commission seem to be at variance. The figures are the same as those in the revised cash authorisation, but I am looking at the figures in schedule 3 to the bill.
I will try to explain that. The final column in table 1.5 in the supporting document gives the revised overall cash authorisations for various bodies—the last five figures in that column are the ones that are taken across into the bill. From a quick look, apart from the figure for the Scottish Administration, the other four figures seem to be exactly the same in the bill. The details in the schedule in the supporting document do not give cash numbers; they give only resource numbers. We take out the non-cash items for the figures at the front.
So there is a variation in the bill between section 3 and schedule 3.
Yes. Schedule 3 to the bill relates to resource control. The Parliament sets a control on the total amount of resources that the bodies can use, as well as on the cash that they can use—one would expect those figures to be different.
Is the software being checked out? Is it a standard product or is it something that you guys have written? What steps will you take to ensure that the software has no other fundamental errors?
I will leave Mr Dennis to answer that.
I see that the experts are listening. The product that we use is Oracle Financial Analyzer, which is well known and is used for many similar purposes.
It might even be robust.
It might. A subprogramme is supposed to wander through our various accounts looking for all non-cash identifiers. It sources data at a number of levels, which, curiously enough, we call parents, children and descendants. In this case, the subprogramme found a parent, but did not find the child, or the other way round.
Given that you use an Oracle system, which can produce read-only files, are there any plans to make the data available to parliamentarians and to the professionals you mentioned to allow us to browse them on a computer, rather than try to do the cross-referencing, which even you guys do not manage to do all the time?
There are no plans to do that, because I suspect that there would be no interest in it, given that we publish the data six times a year.
We might surprise you.
I am happy to think about the matter.
If the committee requested that information formally under the Freedom of Information (Scotland) Act 2002, would you be duty bound to provide it?
I am not sure that we would be duty bound to provide it in anything other than the published form, but I am happy to consider the published form. I will not give a commitment today, but we will consider that matter.
In the absence of any further questions, we now turn to the formal proceedings for stage 2 of the bill. Although no amendments have been lodged, we are obliged under standing orders to agree to each section and schedule of the bill and to the long title. We will consider the sections in order, but we will consider the schedules immediately after the section that introduces them and we will consider the long title last. Fortunately, standing orders allow us to put a single question on groups of sections or schedules that fall consecutively and I propose to do that, unless members disagree.
Section 1 agreed to.
Schedules 1 and 2 agreed to.
Section 2 agreed to.
Schedules 3 and 4 agreed to.
Sections 3 to 5 agreed to.
Schedule 5 agreed to.
Sections 6 to 10 agreed to.
Long title agreed to.
That was painless and it ends our stage 2 consideration of the Budget (Scotland) (No 2) Bill. I thank the minister and his officials for attending.