Budget (Scotland) Bill: Stage 2
Item 3 is stage 2 consideration of the Budget (Scotland) Bill. Members will have received a note from the clerk and, of course, we discussed the matter in our pre-meeting session.
Before we start the formal proceedings, I thought that it might be useful to allow the Cabinet Secretary for Finance, Employment and Sustainable Growth to make some explanatory remarks about the bill and give members the opportunity to ask questions. With that, I welcome the cabinet secretary, who is accompanied by Andrew Watson, head of finance policy, and Terry Holmes, head of finance co-ordination, and invite him to make an opening statement.
11:30
Thank you, convener. First of all, I acknowledge the Finance Committee’s work during this year’s budget process, which is reflected in the scope of its report on the 2012-13 draft budget. I carefully considered the committee’s points and recommendations and submitted my formal response on 18 January.
This session focuses on the content of the budget bill, as approved in principle by the Scottish Parliament. Although, as committee members will be aware, there are a number of differences between the draft budget and the budget bill in the way that budget information is presented, no changes have been made to the spending plans outlined in the draft budget.
To assist the committee, I will explain the main differences with reference to table 1.2 on page 3 of the supporting document. Column A sets out by portfolio the 2012-13 budget as shown in table 6.01 of the draft budget document, which was published last September; column H sets out the draft budget as it needs to be restated for the budget bill; and columns B to G provide details of the adjustments that are necessary to meet the statutory requirements of the parliamentary process.
The major adjustments are, first, the exclusion of £67.4 million of non-departmental public body non-cash costs that do not require parliamentary approval. These relate mainly to charges for depreciation and impairments and include bodies in our NDPB community, including the national institutions, Scottish Enterprise and Scottish Natural Heritage.
Secondly, there is the exclusion of judicial salaries and Scottish Water loan repayments to the national loans fund and the Public Works Loan Board, which again do not require parliamentary approval.
Thirdly, police loan charges have been included for approval in the bill.
Fourthly, international financial reporting standards adjustments of £90.5 million reflect the adoption of IFRS-based accounting across central Government from 1 April 2009. I again remind the committee that conversion to an IFRS basis is spending-power neutral and the adjustment simply reflects differences between HM Treasury’s presentation of how it budgets for these items and our presentation, given how we are required to account for them.
Fifthly, portfolio budgets have been adjusted to reflect the requirement for separate parliamentary approval for a number of direct-funded and external bodies, including National Records of Scotland, the Forestry Commission, teacher and national health service pensions, the Food Standards Agency, the Scottish Court Service and the Office of the Scottish Charity Regulator.
Sixthly, the reduction of £434.8 million in the figure for annually managed expenditure for teachers and NHS pensions that is set out in the draft budget reflects the reduced current service costs as a result of the move to uprate pensions in line with the consumer price index rather than the retail prices index. That adjustment was made following notification by HM Treasury of a change in the interest rate and advice from the Government Actuary’s Department on the current service cost.
Finally, table 1.2 sets out a restatement of specific grants included in the overall 2012-13 local authority settlement that remain under the control of the appropriate cabinet secretary with responsibility for those policies. For example, the police grant remains the responsibility of the Cabinet Secretary for Justice. Full details of all grants that are treated in that way are included in the summary table on page 73 of the supporting document.
I again make it clear that those essentially technical adjustments do not change in any way the budget that has been scrutinised by this and other committees and approved in principle by the Parliament. As I made clear to Parliament last week, I remain committed to an open and constructive approach to the 2012-13 budget process and continue to seek consensus on a budget that will meet the needs of the people of Scotland during these difficult times.
Thank you, cabinet secretary. Do members have any questions?
Cabinet secretary, I have a couple of technical questions about certain differences between the draft budget, which was published in September, and the supporting document to which you have just referred.
With regard to the infrastructure and capital investment portfolio, at the bottom of the “2012-13 Draft Budget” column in the table on page 194 of the draft budget document, the figure for “DEL Resource” is £1,168 million and the figure for “DEL Capital” is £1,057 million. However, the table on page 53 of the supporting document states that, for the same portfolio, total DEL resource is £1,825 million and total DEL capital £483 million. Why are those figures different?
I think that I will need to send Mr Brown a note about that. The reason for the difference does not readily leap out at me from the material but I will get back to him on the matter.
I am grateful for that.
My second and perhaps slightly more straightforward question relates to Scottish Government staff costs. According to the top entry in the second column of the table on page 212 of the draft budget document, those costs are £139.9 million, but on page 69 of the supporting document, they are £156.4 million. Can you reconcile those two figures?
I have been advised that the £156 million is a gross figure that includes income from recharging other bodies for staff arrangements. The net figure is the one set out in table 14.01 of the draft budget document.
As has been pointed out, the Government responded to the committee’s report on 18 January, and on page 24 of that response it mentions the issue of level 4 figures. This committee—and, I think, other committees—would have preferred those figures to have been provided earlier than we actually got them. Although I agree with the Government’s statement that each committee had the figures before the appearance of the relevant cabinet secretary, the fact is that, before such an appearance, a number of committees had taken evidence from a number of Government agencies and others without having the level 4 figures.
For example, when the Economy, Energy and Tourism Committee took evidence from Scottish Enterprise, the figures were not available, but they became available when you appeared before it. The impression that I get from the Government’s response is that it is not minded to provide the level 4 figures earlier than it does at present and that it is sufficient for the figures to be available before the relevant cabinet secretary appears. Nevertheless, will you reflect on my view that it would be beneficial for committees to have such detail before any of the agencies appear?
I am certainly happy to reflect on the suggestion. However, we have to wrestle with the fact that not all level 4 detail will be worked out to the degree of clarity that some committee members would like. Generally, we should provide information on the same basis to all committees. Level 4 numbers are defined earlier in some parts of Government than in others and different considerations need to be taken into account. That said, I will certainly consider the point that the committee has made.
As you know, cabinet secretary, the Labour Party disagreed to the budget at stage 1, and without changes we will take the same view on the stage 2 discussions.
Yesterday, you announced the spring budget revisions for this financial year. When are we likely to get details of your thinking with regard to consequentials for the financial year that is under examination?
I might have some more comments to make on that in advance of stage 3. Obviously, I am discussing the issue with the Cabinet and, depending on when it reaches its conclusions, I will be able to update Parliament on or before next Wednesday.
As there are no further questions, we move to the formal proceedings.
Although there are no amendments to deal with, we are obliged under standing orders to consider and formally agree to each section and schedule and the bill’s long title. We will take the sections in order, with schedules being taken immediately after the section that introduces them, and the long title last. Fortunately, standing orders allow us to put a single question where groups of sections or schedules are to be consecutively considered and, unless members disagree, that is what I propose to do.
The question is, that section 1, schedule 1, section 2, schedule 2, section 3, schedule 3 and sections 4 to 11 be agreed to. Are we agreed?
No.
No.
There is no division on this question, Michael.
Under standing orders, as no amendments have been moved to the bill, the committee does not have the option to disagree to the sections. That is set out in the advice in the clerk’s paper.
Which all members were supplied with. It is a legislative matter; indeed, it has always been the case.
I think that we can put our position on the record.
Indeed. Although we cannot divide on the matter, you can, of course, note your disagreement. Are both of you so minded?
Yes.
Yes.
That will be noted. Other members have indicated their agreement.
Section 1 agreed to.
Schedule 1 agreed to.
Section 2 agreed to.
Schedule 2 agreed to.
Section 3 agreed to.
Schedule 3 agreed to.
Sections 4 to 11 agreed to.
Long title agreed to.
That ends stage 2 consideration of the bill.
At the beginning of the meeting, the committee agreed to take the remaining item in private. I therefore close the public part of the meeting.
11:43
Meeting continued in private until 11:45.