Our second item is consideration of the Executive's response to the committee's stage 2 report on the 2007-08 draft budget. I am delighted to welcome to the meeting the Deputy Minister for Finance, Public Service Reform and Parliamentary Business, George Lyon, who will answer any questions that members have on the Executive's response. He will stay on for our stage 2 consideration of the Budget (Scotland) (No 4) Bill. The minister is accompanied by John Williams, who is the head of finance co-ordination at the Scottish Executive, and by John Nicholson from the Executive's finance expenditure policy division.
I have a couple of minutes' worth of comments, if that is okay.
Do they relate to this or the next item?
I am sorry—they relate to the next item.
Indeed—I suspect that you have no introductory remarks to make to your own response. This is, in fact, an opportunity for committee members to come back on various points. Although we have not been able to allocate questions in advance, the budget adviser's paper on the response sets out four questions that members might wish to ask.
The Executive's documents refer to cross-cutting issues sometimes as "themes" and sometimes as "priorities". What is the difference between the two terms? What does it mean in budgetary terms to identify something as a priority?
The Executive has clearly set out its top priorities many times. As far as cross-cutting themes are concerned, different areas of the budget contribute to certain themes that spread across different portfolios such as, for example, tackling environmental issues.
Where do themes and priorities sit in relation to each other? Do priorities come on top of themes? In other words, do you set out general themes and then establish specific priorities?
The priorities sit slightly above themes.
If
The simple answer to your question is that because economic growth is the Executive's number 1 priority, we have concentrated a lot of investment on it. That is the reality of the budget that we have set.
So what does it mean for economic growth to be a theme as well?
In some ways, it is much the same. As I have said, economic growth has always been our number 1 priority. Our budget reflects that.
Has making economic growth a theme as well as a priority made any difference to Government planning? What is the point of stating economic growth as a theme if it is already a priority?
I am not sure about the rationale behind describing economic growth in both terms. I have always believed that the Executive's priorities are those that we have set out and that the budget should reflect them. That is the case.
The Executive response suggests that it might be moving back a bit from its indication at the time of the 2004 spending review, which was that although the process might not be comprehensive, there might be an attempt to put monetary values to the cross-cutting themes. The implication now is that there will be no such attempt. If that is the case, is it really appropriate to focus so much attention on cross-cutting themes? Would not it be better to explore cross-cutting priorities in a strategy document or within the terms of a partnership agreement? After all, it is a little unusual for budget documents to be dominated by a number of cross-cutting themes if there is no intention to attach monetary values to them. How will you approach that issue in the context of the 2007 spending review?
In his previous evidence and, indeed, in his response, the Minister for Finance and Public Service Reform has promised to re-examine that matter, which the committee has raised as an on-going theme at every discussion on the budget. The challenge is how we identify every sum of money that is linked to a particular theme. Obviously that is not easy. Perhaps we need, in the run-up to the 2007 spending review, to reflect on that and to think again about how to lay things out in the budget documents. It has simply not been possible to hang every element of the budget on particular themes in order to enable the committee to scrutinise the contributions that specific sums have made. We might have to review our approach to the matter.
That is helpful, thank you.
In its response to the committee's report, the Executive says:
We will have to reflect on that. It is not for me to commit a future Administration to what it will do in the 2007 spending review, but the concerns that have been expressed will be taken into consideration by whoever sets the themes and priorities for spending post-2007.
Good morning—[Interruption.] Eye contact would be helpful. [Laughter.]
I am glad that I am not the Minister for Transport.
I am not sure that we have got to the nub of the problem. The Executive's approach has been inconsistent: there was a desire to measure spending on cross-cutting issues, but you are not doing so. What is filling the gap? How do you explain your having rolled back on your commitment?
I am not saying that it cannot be done; I am saying that we have found it difficult to identify every piece of spending that is linked to a theme. That is not to say that no attempt will be made to flush out such information in the 2007 spending review. I am giving you a commitment that the matter is still being considered, but I am not in a position to make a commitment on how the next Administration will present its budget.
This Administration has taken us round the houses. You are saying that what the Executive told us it planned to do cannot be done.
No. I am saying that it has proved to be difficult to achieve that objective. That is not to say that we are trying to walk away from it—
Okay. We are being told that it is difficult to identify spending. The committee is also being told—including by our adviser—that identification of outcomes is difficult. Do you share that view?
That depends on the outcome that we are considering. In many areas, we can identify the significant progress that has been made by the Scottish Executive across the policy spectrum. I am sure that over the coming months we will argue about what has or has not been delivered.
In the current circumstances, in which it is proving difficult to identify spending and—some people might argue—in which there is too much focus on spending, should the Executive have a stronger focus on outcomes? In the future, should it ask every budget holder to nominate outcomes that are thought to be in the public interest and monitor those outcomes?
We set targets in the 2004 spending review, which have been reported on. By and large, we have delivered on every target—eleven were set—apart from a small number. We will respond to the committee's questions about particular targets in due course.
I did not use the word "target"—
There has been much discussion about outcome agreements in local government, which represent an approach that I think the committee supports. The model has been developed to ensure that that part of the public sector moves to a more outcomes-based approach, whereby a target is set in relation to what we want to be achieved and we then give local government the money and let it get on with the job in its own way and—we hope—deliver efficiently and provide value for money.
Let me share a thought with you before this discussion concludes: you are conflating targets with outcomes, but many people regard them as being separate. Outcomes are what happen and we try to improve them progressively over time. Targets tend to be arbitrary and short term and there is a risk that budget holders might pervert what they do to meet targets. Rather than set targets, would it be better in the long term to develop outcome agreements in an attempt over time to improve outcomes in ways that are meaningful to Scottish taxpayers?
Targets for reduction in waiting times in the health service have led to outcomes that patients understand well. There is concern when such outcomes are not delivered, as I and other members know from our postbags. We cannot say that targets and outcomes are necessarily different; in many cases they are the same. We say, "This is what the policy is designed to do and here's the money that we're putting behind it to deliver it." Such outcomes are clearly measurable.
Resources are, however, frequently drawn from other areas so that targets can be met, whereas other activity, which might have no effect on the target—
I guess that that depends on how broad the target is. There will always be arguments about targets that are thought to be too narrow. Some people argue that targets on waiting times sometimes distort other aspects of the health service, but I think that patients and the general public want the health service to deliver for them and they want access to doctors and operations in a set time, so it is appropriate to set targets in that regard. That is true in other areas.
How many of your targets genuinely reflect outcomes?
A significant number.
More than 50 per cent?
I cannot give you a figure now, but I am willing to reflect on the matter and get back to you.
Thank you.
I am aware of the time, given members' transport difficulties this morning. If there are no more questions, I thank the minister and his team for their comments on the Executive's response to the Finance Committee's report.