Budget Process 2005-06
The second item on the agenda is consideration of an approach paper on the 2005-06 budget process. Members will see from the paper that the committee must make decisions on three specific matters: on asking our budget adviser to produce a paper that reviews the Executive's budget strategy; on the range of witnesses from whom we want to take evidence; and on holding a meeting outside Edinburgh. I invite comments on the paper from members.
I am happy with the paper. The budget adviser's suggestion that he should prepare a paper on spending trends for next week's meeting in advance of the annual expenditure report is helpful. That will allow the committee to get ahead of the process in a way in which it has sometimes struggled to do in the past and is a welcome development.
The suggestions that relate to evidence giving are also excellent. We should concentrate on getting deep evidence from the four witnesses who are mentioned in the paper rather than on getting broad evidence from a large number of witnesses in the early stages, during which long-term trends should be considered. Such an approach has much to commend it. My instinct would be to stick with the four witnesses and go for depth rather than width.
I will risk being controversial about external meetings. Paragraph 16 of the paper states:
"It is anticipated that the Committee will also need to consider reports from all subject committees"
at an external meeting. I will be blunt: if that is the only occasion on which we will consider what every committee has to say about a spending review it is likely to be the tightest for a decade, I am not sure that gallivanting off to some third location would help our consideration. I will not expand further—members probably realise what I am hinting at. We need to have the opportunity 10 years on, when we are facing such a tight spending review, to do justice to the work that the other committees have done, not least because many of them are now rightly moving to appoint their own budget advisers so that there is an improvement in the quality of what they bring to us.
We have an annual external meeting for stage 2 of the budget process. If members are determined to have another external meeting at that stage, perhaps we could do so, but we should not in any way squeeze the time for consideration of what other committees have said. Throughout the process, one thing that we have tried to do is increase subject committees' willingness to engage with the financial aspects of their programmes. We must match that with the seriousness with which we consider the issues that are raised. Indeed, holding a meeting in Edinburgh would at least allow other members or other subject committee members who have a particular interest to come along.
I tend to agree. There is no particular merit in having an external meeting simply because we feel that we must have an external meeting. The committee has been willing to travel to other areas and so on. If there is to be an external meeting, people from the community who might want to attend should be able to offer their input, which is what happened at the meeting in Motherwell, where we learned something about the area. It would be pretty pointless to sit and discuss meetings of subject committees at an external meeting.
On where the Finance Committee has gone for external meetings in the past, it is obvious and notable that we have not gone to any inner-city environments, to a deprived area in a city or to an urban environment. If we are considering an external meeting, going to such a community and taking evidence on something that is relevant to that community would be appropriate, rather than boring everybody by chatting about committee reports.
In the past at external meetings, there have been workshops in the morning and afternoons have been devoted to the committee's work. However, I take Wendy Alexander's point. If we want to spend a fairly substantial amount of time considering subject committees' responses, it might be worth doing so at a meeting in Edinburgh and perhaps deferring our external evidence gathering until the second stage of the budget process. That might be more relevant for external people anyway because we would be dealing with the level of the budget that would fit in more with local decision making.
I agree with much of what has been said. I do not know whether members share my view, but I thought that the quality of the responses that we received from the subject committees this time round varied. The fact that there was no consistency of approach is probably more worrying. As we are starting a new stage, we should work more to structure our relationship with other committees. Perhaps we should go back and work on the information that we provide in the first place, so that committees have a clear idea of what we want them to feed in. I recollect that even committees with advisers found it quite difficult to understand what we wanted, and we then had difficulty in incorporating things into our process. That could be an important issue, especially given that there will also be a spending review at the time.
I endorse Elaine Murray's views on our meeting outside Edinburgh. It would be best if we met local groups or professionals in the area who can tell us straight about their difficulties and the budget process's impact on them. One issue that we discussed at Motherwell was levels of co-ordination between different agencies, especially under joint commissioning. We have let that issue drop a wee bit. Visits that involve joint agencies and communities that receive funding from the Government for projects would be useful.
My final point is more general. How can we stimulate public debate in relation to the budget process? I am a new member and it was a surprise to me to discover that budget debates in the chamber and in committees attract less public interest than any part of the parliamentary process. The situation should be the reverse, especially given that there will be a spending review. We have an opportunity to take the lead, perhaps by recommending that other parties could lodge amendments to the proposals in the stage 1 and stage 3 debates. I would find it useful if other parties suggested alternatives for the committee or the Parliament to consider. At present, the debates are fairly staid. We may be doing a worthwhile job in relation to the budget process, but our procedures are not open enough to allow people to link in.
I agree entirely with Wendy Alexander that there does not seem to be any demonstrable reason for a trip out of Edinburgh. Such a trip would not offer the prospect of enhancing our work.
I want to ask the wider question of what is the point of the work that we are setting out to do and what can emerge from it. Our work on Scottish Water has a clear focus. The conclusions that we reach will be up to the committee, but the inquiry has exposed an extremely interesting and potentially useful series of arguments and facts. Equally, our work on the Executive's relocation policy has a clear purpose and, at the end of it, we may pursue a different policy, if we wish. However, my experience of the budget process on various committees has left me asking what the point was and how we benefited from it.
Part of the issue is that the task of considering very large numbers does not in itself seem to be purposive. We must get into more detail if we are to recommend, for example, that £100 million should not be spent on a certain thing and that it might be better spent elsewhere. The thrust of the advice that we had from the economists in the initial trawl was that spending does not seem to be focused on the priority of growing the economy or on other priorities, if the Executive has other priorities. I am left asking what the purpose of the process is, and I am afraid to say that I am not convinced that we will necessarily achieve anything through it—I thought that I had better spit that out.
To my mind, it might be better to consider the finances of quangos such as the Scottish Environment Protection Agency, SNH or the Forestry Commission Scotland. Tavish Scott's argument, which is an argument that Wendy Alexander used to use when she wrote to me in another capacity, is that we should not micromanage other people's jobs or tell quangos what to do. That is an answer of a sort and I can see the point, although I do not agree with it. However, given that quangos deal with huge amounts of money, that they do not seem to be subject to a great deal of democratic scrutiny, and that they act independently of Government, it is the Parliament's job to find out what they are doing. As many quangos' spending is extravagant and out of control, we would be better having another inquiry like our inquiry into Scottish Water. We could examine either one quango or a range of them.
I do not expect members to agree to my suggestion as an alternative to the budget process and I am not sure that I am proposing it as such. However, such an examination should be part of the budget process; if it is not, we will miss out on holding to account bodies that account for a huge swathe of Scottish expenditure. We will miss an opportunity if we do not decide to grapple with those issues at an early stage in this session of Parliament. I hope that we can find a way, on which we can all agree, to examine quangos. In the past, the process has overlooked and neglected to deal with that important aspect of Scottish finances.
It would be helpful if the clerks asked the budget adviser to consider, in preparing his paper for next week, the issue that we are all grappling with, which is how we can encourage committees to anticipate the spending review and to offer suggestions about priorities in advance of the budget process. I accept that the adviser may not be able to incorporate all that into the paper and that we might therefore want to return to the issue in our discussion next week. Jeremy Purvis made the helpful point that we should try to impose order on the process by encouraging committees to adopt a slightly more standardised approach to their budget consideration. If committees want to influence what ministers are doing, they must make their views known in advance of the spending review rather than after it; the opportunity to do that arises only once every three years. We should put a little time into thinking about how we can help the committees to do that.
Some of the frustration that Fergus Ewing talked about arises because we scrutinise retrospectively rather than intervene proactively in advance to make suggestions about allocations. For example, I am thinking about the recent controversy over the criminal justice budget, which involved the balance between custodial and non-custodial sentences and the balance of lengths of custodial sentences. We should ask the budget adviser, in addition to what he proposes to do, to suggest how we might offer guidance to other committees about how they give us recommendations on the spending review and—perhaps more important—how they engage with their respective departmental ministers on the reallocation of spending in the run-up to the spending review.
Comments of great wisdom have been made that our meetings outside Edinburgh should be held at stage 2, when communities will have specific proposals on which to comment.
On Fergus Ewing's point, there is a great risk that we scrutinise what is easy and visible and not what is tough. The bottom line is that, if the Cuthberts had not ferreted around in what they thought were internal Government processes, we would not have been aware of those processes. We can compel Alan Alexander and the water industry commissioner for Scotland to come to the committee, but it is much more difficult to scrutinise the opaque parts of the Executive. However, that does not mean that we should not do that.
Our overriding priority between now and the autumn is to try to shape the spending review, although I am not against our considering a quango a year. SEPA is within the Scottish Executive Environment and Rural Affairs Department budget, the overwhelming issue in relation to which is the agriculture spend. I venture to guess that, in order-of-magnitude terms, that spend is 20 times the budget of SEPA; indeed, I am sure that that is a conservative estimate. As a result of the reform of the common agricultural policy, considerable opportunities will arise in relation to how that money is spent.
It would be a great mistake if we chose to cherry pick the parts of the budget that are easy, rather than the parts of the budget that are important but difficult. Considering the SEERAD budget would be immensely tougher but immensely more productive than considering SEPA's budget would be, because of the orders of magnitude that are involved. I hope that some of those issues will emerge from our advance consideration of the spending review in May and June. Perhaps a compromise would be to examine a quango a year, although we can discuss that issue in September. I caution against cherry picking the light, easy and highly visible fruit, given that, as we have demonstrated this year, the tougher issues are in much less visible parts of the budget.
For information, the intention is that our budget adviser will speak to the other committees and seek to co-ordinate with them and their advisers the way in which they consider the review process.
The exchange has been useful. The paper from the clerk suggests that we ask the adviser to produce a paper that reviews the Executive's budget strategy. It would be useful for us to define the context in which we want that to be done. In particular, I mean the context of growing the economy, upgrading Scotland's competitiveness and examining the long-term effectiveness of spending. Within that structure, it will be much easier to encourage committees to approach their budget consideration in a standard, structured way and to give full consideration to those three key issues. We must also factor in promotion of the consideration of other benchmarks and the production of comparative data to allow us to see trends.
On the second point in the paper's conclusion, there is an opportunity for us to ensure that the witnesses are genuinely representative of Scottish society. Including people from the Scottish Trades Union Congress, the Scottish Council for Voluntary Organisations and business organisations is important. In addition, I would be keen to see some continuity figures from what we have done on the budget consideration in the current year. We should speak to people such as Donald MacRae and the gentleman from DTZ Pieda Consulting, whose name I forget for the moment.
Peter Wood.
Yes, Peter Wood. We should speak to such people about examining what quangos and departments are doing. If we had that defined context and could focus on growing the economy and upgrading Scotland's competitiveness, it would be much easier to review quangos and departments at macro level in line with those objectives, especially if we had the right mindset. If we can get everybody working towards those targets as key measurements, we will all be speaking a common language and we will have a common mechanism for measurement.
I agree with that, but I am not sure whether it can be done in the time frame that is required for the exercise. Something like that is what I want to see coming out of the growth review, which is the inquiry that we are committed to working on. We have a relatively restricted time frame in which to be influential in the context of the spending review. I wonder whether, in that context, we need to do as Wendy Alexander suggested—to get focused expert views in the evidence-taking session—so that we can get down to details with people. However, there is nothing to stop us seeking advice in the form of written submissions from other representative agencies so that we can take their views into account.
I have some reflections on the possibility of influencing the spending review. Some of the discussions will already be under way. I know from my recollections of two years ago that civil servants and ministers will already be looking at the spending review and possible proposals, even in advance of knowing what is happening at United Kingdom level, so that they are able to respond. I am therefore not sure how great a possibility there is that we can influence the process now. In a sense, one needs to be involved in that influential process earlier than this. To a certain extent, we have missed the boat, but that has happened for a lot of other reasons, such as the timing of elections.
We tried last time to get the committees to make a structured response on the budget. We put a number of questions to the committees, but they did not respond along the lines of those questions. One of the problems is that the committees feel that scrutiny of the budget is somehow imposed on them by us, or by the process, and they do not take it to their hearts or feel that they have ownership of it. In part, that may be because budget scrutiny does not fit in well with the committees' timetables for legislation or other work, so it can be quite difficult. Perhaps some thought needs to be given to how we engage other committees in wanting to consider budgetary issues. I felt that such work was seen as a bit of an add-on, as far as some committees were concerned.
Other than noting the entertaining experience of listening to Fergus Ewing ask what the point of the budget process is unless we have an inquiry into the Scottish Executive's stated priority to grow the economy—exactly the inquiry that he is saying is a waste of time—my only other observation is that paragraph 5 suggests that we
"concentrate on assessing the Executive's performance in meeting its stated priorities".
We could have a role in examining one of the areas that is slightly opaque, as Wendy Alexander said. I would have thought that the new performance unit was integral to the very process that Elaine Murray has been talking about—how the Executive itself determines whether it has been successful in certain areas. I would like to receive evidence from that unit or to visit it to see how it operates in practice. That would be interesting and could shape our further discussions. If we know the criteria that the Executive uses to judge its success or failings, we will be able to judge whether it is going in the right direction.
We should follow up Fergus Ewing's suggestion about quangos. The public are very aware of quangos and the amount of money that they spend. If we could get a paper drawn up to give us a list of all the quangos in Scotland and the amount of expenditure that they have in their budgets, that would give us an idea of whether it would be worth our while going down that road and of whether we should look at the agricultural budget, which, as Wendy Alexander has said, is 20 times larger than SEPA's budget. We need to know whether it is worth concentrating some of our time on that type of expenditure, which, by the way, is an undemocratic way of spending the country's money.
We are not, at this stage, discussing prospective future inquiries, although the points that have been made could be fed into that debate.
I would like to draw together the strands of our discussion so far. I think that everybody is happy for us to ask the committee's adviser to produce a paper reviewing the Executive's budget strategy, so perhaps we should try to feed into that a couple of the points that Jim Mather made. We will get two papers—a trends paper at next week's meeting and a review of the budget strategy, I hope, on 23 March, which should be helpful.
There was a general view that we need to focus on getting evidence, and the kinds of witnesses that were being suggested were acceptable to the committee. However, we might add to that by seeking written submissions from a number of key audiences, such as business and trade union organisations; we shall try to draw up a list of those.
There was a view that we should not have the meeting outside Edinburgh at this stage in the review process, but that we should defer that until September or October, when we will be at stage 2 of the budget process. We shall look then at where we should go and how we should handle that.
I am quite anxious to get two bites at ministers. We need to take a bite at an early stage by asking ministers questions about the way in which they want to handle the spending review and what their preliminary priorities are, so that we can conduct our scrutiny process. We could then come back at the end of that scrutiny process, when we have taken a wee bit more evidence, and use that evidence as another way to cross-test what ministers are up to. Perhaps we can think about designing the process in that way, if members are agreeable. Are members happy with that general approach?
Members indicated agreement.