Official Report 142KB pdf
Okay, comrades. The first item on the agenda is the briefing paper on the review of local government finance. Before we go through the paper, I want to say a couple of things. We have written to Jack McConnell, the Minister for Finance, to ask for clarification of the Executive's position on our inquiry and to ask whether it would be able to contribute towards the cost of the inquiry, although I think the answer to that may be negative.
I would like the proposed terms of reference to acknowledge that the inquiry will identify the things that work in the process of local government finance, rather than just saying that we seek to identify the faults and make recommendations on how to improve the system. We want to identify the strengths and weaknesses of the system.
I endorse that. Way back in the mists of time, when we first had the Minister for Finance in front of us on this issue, I said to him that once we have been through it all, we may well want to retain much of the present system. That is why I thought that an independent review might strengthen the Executive's position in some regards.
I support that. I also think that the terms of reference should read, "To examine the current system of local government taxation and finance". There is a risk of getting too bound up in the distribution system, which is algebra and opaque. The system of local government taxation is important and there are issues about different forms of taxation, such as land value tax, local income tax and taxing a decent amount on second homes. Mentioning the word taxation would ensure that we do not concentrate too much on just one side of the picture.
I understood that taxation was inherent in the inquiry.
One might say that that was covered by finance, but some people interpret finance in a slightly narrow way.
We can make it more specific.
I want to give a word of support for Donald Gorrie. We are at the exploratory stage, but the second home issue is a big one in the Highlands. If we address that, we will have to be desperately careful about how we go about it. We would not want to penalise somebody who had a family croft but was forced to work in Aberdeen to make a living. I do not quite know how we would do that in legislation, but if we thought about it, there would be mechanisms. I would value the committee's thoughts at a suitable stage.
At the moment we are making general comments. The specifics will come up as we examine local government finance.
I feel duty bound to support Donald and flag up the issue.
The terms of reference, with the added bits about strengths and weaknesses and taxation, are agreed. Are there any comments on the appointment of an adviser? Members will see that the Parliamentary Bureau has recently approved a revised system for appointing advisers for fewer than 15 days—a fast track.
Does the Parliamentary Bureau set down criteria for advisers, or do we have to identify what we expect?
We set the terms of reference. I believe that Johann Lamont has already done this, have you not?
Yes.
Would you like to say anything about it? [Laughter.]
I will have to remember—it was back in the mists of time. The system was not particularly satisfactory, because we had to mark applications on the basis of whether they had certain information, which we had not asked for. Eugene Windsor and I did it, but I was a bit concerned about how the process worked. The issue is getting the right person. This is a long process. It does not strike me as something we need to do in a terrible rush.
The fast track is a new procedure, which is more straightforward. The bureau has examined some of the criticisms that were made about how advisers are appointed. We must get an adviser, though, to tell us what to do about research and so on.
We need to set out criteria and see who is available who meets them. We need someone who has knowledge of the Treasury rules and the local government finance system, which probably whittles it down pretty severely. We need to set out exactly what we want the person to have knowledge of before we decide what we want them to look at. We could consider how to select an adviser once we have narrowed down the field.
We need someone who can explain what they are talking about in a form of English that we can understand.
Indeed.
We need someone who has some experience of local government finance and—without wishing to patronise anyone—who can explain local government finance to us in a way that we can understand. Is there anything else?
Are the 15 days consecutive, which would allow the person to work for us for a fortnight, or will the 15 days of work be spread out over a longer period?
The 15 days can work any way we want, apparently. Eugene Windsor will come back with a draft paper on the appointment of the adviser, which we can consider and add to, or take away from, as we wish. We have noted the couple of suggestions that have been made.
Will 15 days be adequate for such a wide-ranging inquiry?
I will ask the clerk whether we are able to exceed 15 days. We think that 15 days will probably be enough for this part of the inquiry and we can ask for more later. We will take it one step at a time. Holding the inquiry properly will be a long procedure—it is a big job and we must do it properly.
That was the reason for my question.
We will take it step by step and slowly but surely.
It is important that we do not get too excited about the fact that the inquiry will take more than a year, as we want to ensure that what we come up with is absolutely right. We should not rush into the inquiry; if we do, it is likely that it will be just as flawed as the current system is alleged to be.
I agree.
It is important to have appropriate back-up if we are to have a proper inquiry—that is vital to the entire process.
The bidding process takes place in May and November, so we will bid for research funding in November 2000, which is just after we come back from our recess. We will organise a bid for then.
Where do you envisage taking external evidence?
We will be advised about that. We may not always pull people in—we may go out to take evidence. Is that what you mean?
I mean both.
Where do you suggest we go this time, Kenny?
I was not suggesting anywhere specific. It is important that we consider our schedule over the year, to ensure that we have an opportunity to interview people here and to go out to local authorities to speak to finance directors, chief executives and finance conveners to get their point of view. There are others from whom we should take evidence, such as academics who have a specific interest in local government finance.
I envisage that we will follow the same sort of system as we followed when we considered the McIntosh report. Sometimes we will have witnesses here and on other occasions we will go out.
Is there any indication about the timetable for the bill that arises from the McIntosh report, which, I understand, will appear in the autumn? It would be quite convenient if we could have a chunk—say two or three months—of work on that bill and then three or six months, or whatever, on our inquiry, rather than the two pieces of work overlapping.
I am trying to remember what Wendy Alexander said the other day. The timetable is not definite, but the indications are that it will be the end of next year before the bill is passed—that is, the end of 2001.
Whit?
Kerley will not report until the end of June and MacNish will not report until the end of this year.
That is what people call playing for time, or am I being cynical?
May I have some order, please?
Do you want unanimity?
Yes.
Thank you. We will start to move on that.