Our second item of business is to take evidence on the Scottish Parliamentary Corporate Body’s budget proposal for 2016-17. We are joined for this session by Liam McArthur MSP, who is supported by parliamentary officials Paul Grice and Derek Croll. I welcome our witnesses to the meeting and I invite Mr McArthur to make a short opening statement.
Thank you, convener, and good morning, colleagues. I thank you for the opportunity to present details of our budget submission for 2016-17. The budget covers the first year of the new session of Parliament, and the SPCB considers that it reflects a realistic position for the challenges that we are likely to face. Over the current parliamentary session, the SPCB has successfully delivered a programme of savings that has achieved 10 per cent real-terms budget reductions from the 2010-11 baseline to 2015-16. During that period, staffing in the parliamentary service has reduced by more than 10 per cent. At the same time, we have consistently delivered against our strategic plan and supported demanding programmes of parliamentary business.
The next session, of course, will bring new challenges. In order to meet those, we have set out a total budget submission for 2016-17, which is contained in the letter from the Presiding Officer. The headline figures include an increase of £6.8 million from the 2015-16 budget. The additional cost pressures are largely attributable to the need to address one-off election costs in 2016-17 and to provide the resources for handling the new powers that the Parliament will begin to exercise in the new session. The latter category includes an increase in the staff support provision available to MSPs, which was approved by the Parliament on 10 November. If we exclude MSP and office-holder costs, and the SPCB’s central contingency, the remaining directly controllable budget for parliamentary services shows a modest £318,000 or 0.7 per cent increase on the comparable 2015-16 budget.
In relation to pay, our budget submission is based on a continuation of the prudent pay restraint that we have shown previously. We have not yet commenced negotiations with the trade unions on 2016-17 pay for SPCB staff but, for budgetary purposes, we have assumed a modest increase in line with other public sector pay increases. The salary costs for 2016-17 include the impact of a 2 per cent increase in employers’ national insurance contribution rates relating to the state second pension. For the parliamentary service, that adds approximately £460,000 to the annual pay bill.
As reported to the Finance Committee last year, the Scottish Parliament salaries scheme has been amended to replace the previous link to MPs’ salaries with a direct link to public sector pay rises in Scotland, using the annual survey of hours and earnings published by the Office for National Statistics. That resulted in an increase of 0.7 per cent in April 2015; using the same index, an increase of 2.7 per cent will be applied in April 2016.
In terms of project expenditure, as 2016-17 is an election year—I am sure that colleagues will not need any reminding of that—the budget is strongly focused on projects to set up the required facilities for members at the start of the new parliamentary session. Examples of the projects or programmes planned for 2016-17 are the provision of information technology equipment for newly elected members and the updating of IT systems; and office equipment and associated changes following the election. Work on the service yard project, at this early stage, continues to run to schedule and within budget, and the majority of costs are expected to fall within the current financial year.
Turning to the commissioners and ombudsman office-holders, as members are aware, the SPCB is charged with the oversight of those bodies, and the Finance Committee has always taken a keen interest in that area of our budget. The proposed 2016-17 budget for office-holders amounts to £8.4 million, which represents a modest increase of £75,000 or 0.9 per cent on the approved 2015-16 budget.
We have increased the central contingency for the office-holders by £50,000—to £350,000—to allow flexibility, should it be required, for additional staff for the Scottish Information Commissioner and the Scottish Public Services Ombudsman, both of whom have requested additional staff to meet increased workloads. That is still to be considered by the SPCB. The contingency funding also meets requests due to additional pressures such as legal costs.
We welcome the involvement of other committees in scrutinising aspects of the various office-holders that are not within our remit. For example, over the past year, the Education and Culture Committee, of which I am a member, has been looking at the work and performance of the Children and Young People’s Commissioner Scotland.
Within its bid, the SPCB is proposing a contingency of £4 million, which is an increase of £3 million from the 2015-16 contingency of £1 million, to cover the one-off costs associated with the 2016 election—the actual cost of resettlement and MSP staff redundancies at the May 2011 election amounted to just over £3 million—and also a prudent contingency for emergencies and emerging cost pressures from the additional powers that the Scottish Parliament will assume during the next session.
We believe that the use of contingency to budget for those cost pressures is a realistic and prudent approach, but I point to the fact—perhaps by way of offering some reassurance—that the SPCB has a good track record of handing back resources when it is in a position to do so.
Looking ahead to future challenges, I note that, as we set out in our submission, the SPCB has submitted its budget to the Finance Committee in advance of the publication of the draft Scottish budget on 16 December. The draft budget will tell us more about future years’ budget pressures, and the SPCB will respond accordingly. In a year’s time, in our 2017-18 budget submission, we will ensure that costs continue to be kept under control and that we take into account impacts from, for example, the Scottish budget spending review and the additional powers that are to accrue to the Parliament.
I put on the record the corporate body’s appreciation of the work that the chief executive Paul Grice, Derek Croll and the other members of the team have done in preparing the SPCB’s 2016-17 budget submission. I look forward to answering any questions that the committee has.
Thank you for that opening statement, which was very helpful. As you will be aware, I will start with some opening questions and I will then open out the session to colleagues round the table.
In your opening statement, you said that the increase in the contingency from £1 million to £4 million is to cover
“the one-off costs associated with the 2016 election ... and ... a prudent contingency for emergencies and emerging cost pressures from the additional powers that the Scottish Parliament will assume during the next session.”
Will you talk us through the split between emergencies and the additional cost pressures?
On the additional powers, we are budgeting for about £0.5 million. That is largely taken up by the additional costs that are anticipated from committee and chamber time. There is also an expectation that there will be additional pressure on the research resource as a result of members wanting more information in the areas of the new powers that we will assume.
Also factored into next year’s budget is the increased staff allowance for MSPs, which is in part recognition of the increasing pressure that will come to MSPs as a result of the additional powers.
As I said, the bulk of the contingency is taken up by the anticipated £3 million cost of resettlement, staff redundancies and all the rest of it. It is important not to second-guess what will happen in May but, on the basis of the number of members who have already indicated that they will be standing down, and using the experience from May 2011, we think that the allowance that we have set aside for that in the contingency is a reasonable and prudent amount.
Paul, do you have anything to add?
No.
Thank you for that. You mentioned the change to the members’ expenses scheme from 6 May 2016, as part of which the staff cost provision will be uprated from £62,300 to £85,000. How does that compare with the provision in Wales and at Westminster?
We can certainly provide the details of that. The feeling was that we were out of line with Wales and Westminster on staff provision. As a Parliament, we have decided to separate the link between Westminster and the Scottish Parliament for MSPs’ pay. There has been a period of growing apart in terms of the way in which allowances are structured here and the way in which they are structured at Westminster and in the Welsh Assembly, and we used that to inform some of the discussion that we had on uprating staff allowances. We were conscious that we needed to make a solid case for what we felt MSPs required, which took into account the Parliament’s commitment to being a living wage employer. We also recognised that the Parliament was taking on additional powers, which would be reflected in increased staffing requirements. We felt that asking for the equivalent of three full-time staff was a reasonable request to make, and obviously the Parliament backed that last month.
We can provide the figures for Westminster and the Welsh Assembly, but we would caution the committee that direct comparisons can be a little difficult because of the way in which our allowances and whatnot are structured. We may do better in some areas than our counterparts in Wales and less well in others. Ultimately, we need a set-up that meets the needs of MSPs in discharging their duties as parliamentarians and as constituency and regional representatives.
I understand that Welsh and Westminster members’ allowances schemes will be higher.
In deciding the figure, did you take security into account? Some of my colleagues do not like to have one member of staff on their own in a constituency office. If you have only two members of staff, there is no cover for sickness or holidays. When you looked at whether you could fund three members of staff, was that taken into account?
The calculation was made on the basis of three full-time equivalents. Each member has to take decisions on their staffing complement and where that is based. Across the 129 members I suspect that there will be, if not 129 staff structures, a wide variety of staff structures.
We were conscious of security considerations, but ultimately it is for members to decide how many people they employ, where they employ them and how they manage holiday periods and other periods. If a member is concerned about having a single member of staff in an office, there might be ways of relocating temporarily another member of staff from their Holyrood office to cover a period. That is something that we need to bear in mind, but it is not necessarily something that the corporate body can second-guess.
The revenue projects budget shows a decrease of 23.1 per cent, from £3.9 million to £3 million. Last year, in the indicative forecast for 2016-17, the figure was going to fall from £3.9 million to £2.2 million. Why did it decrease to £3 million and not the £2.2 million that was forecast in the 2015-16 budget?
The closer we get to the point at which the budget will be spent, the clearer the line of sight that we have on what the need will be. There is an element of that. We assessed the projects that will be taken forward under that budget—providing new IT equipment and facilities management equipment for new and returning members—and we felt that sorting that out was better done over the first year of the parliamentary session. Therefore, that is what we factored into this budget, which comes in at £3 million as opposed to £2.2 million.
Derek, do you have anything more specific to say on that?
I think that that covers it, really. The project budget is split over revenue and capital. Part of the thinking was that providing new equipment but not upgrading the software at the same time is an inefficient way of handling it. It is geared towards providing that all in one go.
09:45
We have talked about rates over the years. The SPCB has been very successful at reducing the rates burden on the Parliament. What further scope is there to reduce the rates bill? It is still £3.9 million, which is about half the total property costs.
You are right, convener. We have had a bit of success in the past in getting those figures down, but we would not necessarily want to factor that in as a gift that keeps on giving. They are what they are. Paul Grice is probably closer to the negotiations that take place on that.
You are right, convener. We had one particular success, where we pushed back. We think that there is potential in the current round, but at the more marginal level, where we might just get a smaller reduction. Those negotiations are currently taking place. When we present our budget for next year, we will be able to confirm how those negotiations have gone. Although any reduction will not be of the order of magnitude of the previous reduction, the current negotiations might realise some modest savings. It is something that we look at every year because, as you rightly say, it is such a big chunk of expenditure. If there is news earlier than that, I would be happy to write to the committee with confirmation of that.
That is very helpful. What was the reduction in rates last time?
It was about £900,000.
It was very significant. It was a long process but with a good outcome at the end.
You say in your paper that
“The directly controllable costs of the Parliamentary Service are budgeted at £47.3m”.
As we know, the increase of £3.318 million is more or less taken up by the increased contingency, which we have discussed. The £318,000 represents an increase of only 0.7 per cent. How have you been able to keep to such a low level of increase? What measures have you put in place to ensure that that is kept so tight?
In recent years, I have been able to come to the committee and talk about the way in which, on the back of a thoroughgoing review, we have been able to bring down costs and, in fact, front-load some of that reduction. However, looking ahead, as a result of an election year and increases in the powers that the Parliament is taking on, it was inevitable that the budget would go up. That underscored the need, where possible, to take an even more rigorous look at areas of spend that we could either manage down or at least keep consistently flat.
As Derek Croll indicated, we have looked at some of the project spend. At the start of a parliamentary session, there is certain expenditure on IT and facilities management that it would not make sense to delay, as that would disrupt the work of individual MSPs and the Parliament and would probably end up costing more.
There are a couple of areas in which we have been able to delay expenditure. The phone system in Parliament is due for review at some point but that is not necessarily time critical, and I think that there was a feeling that that could be delayed. We have been able to push back some of the IT roll-out—the roll-out for parliamentary staff, not the roll-out for members—a bit without causing huge disruption. Obviously, there are staff who are currently on the system, unlike new and returning members whose needs in terms of that IT are more pressing. Therefore, we felt as if we could probably delay the IT roll-out for staff without causing too much disruption to the workings of Parliament.
Paul Grice and Derek Croll may be able to point to other examples but, across the board, we have been very conscious of the fact, while maintaining our view that budgets are tight and that we need to play our part in sticking to them, that nobody—neither members nor members of the public or witnesses who access the building—would thank us for making cuts in expenditure that resulted in the Parliament not functioning as it should. As I said in my opening remarks, we believe that we have been able to set a budget for 2016 that accommodates the changes and additional pressures without running the risk of causing that sort of disruption.
I have one final question, after which I will open up the discussion to colleagues around the table.
Utility costs have increased by 2.8 per cent, and there are a number of issues regarding how we can reduce those payments. It has been a hobby-horse of mine how we can overcome some of the technical hurdles and make reductions on the basis of, for want of a better term, bulk buying. Where are we in that process?
I will bring in Paul Grice on the detail of that. Generally speaking, the corporate body has been particularly encouraged by the progress that has been made through our environmental audit. Whether that has involved waste reduction or progress in reducing gas and electricity costs, we have a reasonable story to tell, although we are not helped by increases in energy costs, which go some way to neutralising the benefits that we are seeing. Nevertheless, the Scottish Parliament has performed fairly well in those areas in the past three or four years, and we are on target to meet the targets that we have set ourselves for 2020.
On bulk purchasing—
“Economies of scale” might be a better term.
Indeed. We have reflected on some of the ideas that you have put forward in conversation, convener, and we have been able to take advantage of some of them. We put on record our thanks to you for that.
There is a review under way that is exploring better use of direct debits, which is due to report back to the corporate body early in the new year. We will perhaps be able to offer further thoughts on that issue, and I will be happy to write to the committee on it.
I do not know whether Paul Grice has anything to add to that.
No. You raised the idea of that report with me, convener, and we have been looking at it actively. The technical challenge is in setting up direct debits on the Parliament’s own account. That is a tricky area that Derek Croll and his team have been looking at. As Liam McArthur says, we will be happy to write to you in the new year, once we have reported back to the corporate body.
That would be appreciated. Thank you for that.
I accept the point that there are extra costs in an election year, not least because some offices will close and others will reopen. Do you make efforts to recycle equipment or is there pressure to renew everything just because there are new MSPs?
I would expect every effort to be made in that regard, although I envisage certain problems arising in recycling certain equipment and would question the extent to which such equipment is recyclable.
In my office, most of the computers are five years old, so it is perhaps time to replace them. However, one was replaced quite recently because it got wet, and the new computer would not need to be replaced—it could be used either in my office or in somebody else’s office.
That is a reasonable supposition. Given the context that we are operating in, I would expect that to happen.
New and returning members’ expectations for equipment and the like will not necessarily fit exactly with those of members from the previous parliamentary session. In fact, individual member’s requirements evolve. It may well be that even returning members would take the opportunity to say that they would want to configure things slightly differently and they see the election as a sensible break point.
I do not know whether Paul Grice has any comments on recyclability. I absolutely agree with John Mason’s proposition. I cannot respond to a question suggesting that our record on environmental reporting is moving in the right direction one minute and then in the next answer say that we would ignore that entirely if we end up with a certain level of spend.
We are better able to reuse furniture and we do that wherever we can. Information technology is tricky. We would tend to recycle that—we have a contract for that.
The other problem that we face with elections is the simple one of timing. Outgoing members typically take two or three months to wind up their affairs, but the new members want to get started straight away.
Working within all those constraints, we try to reuse equipment. As I said, it is often the case that furniture is better suited to that. We have to be realistic with IT equipment. We tend to use the recycling contract so that the equipment gets further use elsewhere, but we would tend to supply new equipment to returning members.
Thanks very much. A reason that you gave for increasing costs is that the Parliament is getting more powers. That has been mentioned a few times. How does that increase happen? The Finance Committee will continue to meet for, presumably, three or four hours every Wednesday morning, so there is no extra cost, even though the Parliament has more powers. It just means that we will spend more time looking at income tax and a bit less time looking at land and buildings transaction tax. Why will there be extra costs because we are taking on more powers?
There are a couple of points to make in that regard. It may well be that the Finance Committee has the ability to accommodate the work that it needs to carry out within the timeframe of three-hour weekly meetings. Over recent times, we have seen committees meeting more often and for longer. To some extent, that may be a reflection of the stage that we have reached in this parliamentary session when legislation must be pushed through and inquiries need to be completed. The extra work at that time is inevitable.
From the work that we have done, which, to some extent, has been done on the basis of the best estimates that we can make, the feeling is that there will be additional time pressure for committees. There may even be additional time pressures for sittings in the Parliament. It is those areas that would bring significant additional cost.
As I mentioned, there is also an expectation that additional pressure may be brought to bear on the research facilities of the Scottish Parliament information centre. We have estimated the increase to be about half a million pounds. If we look beyond 2016-17, it is not difficult to imagine that those cost pressures will increase. By that time, we will have a better sense of how the committees will operate and how chamber business will be affected by the new powers.
We think that the half a million pounds that we have budgeted for next year is a reasonable estimation of the additional time pressures on committees and chamber business, as well as the research function to which I referred.
Paul, do you want to add anything else?
No, I think that you have covered the position. We have been through a pretty rigorous process across the organisation to try to establish the cost. We have left funds in contingency because the needs are not clear—there is even some timing uncertainty.
There is a likelihood of more parliamentary time being required to deal with business, which will push up costs in a couple of specialist areas. We have hitherto not needed a lot of specialist support around tax or social security, so there is a modest amount of funding for that, too.
We will have to take stock with members. When we appear before you this time next year, we will be in a much stronger position. At that point, I would hope to be able to provide firmer plans, rather than to put an amount into the contingency fund. To underline Liam McArthur’s point, if it turns out that we do not need that money, it will sit in the contingency fund. It will not be used unless it is necessary to do so and, if it is not used, it will be returned. On balance, that is the prudent approach.
10:00
I understand that our needing more skills so that we can cover a wider range of subjects is an argument for extra costs; I just would not want the principle to be established that every time we get an extra power we add to the costs. Okay, we might need extra time, with committees meeting in the afternoons and that kind of thing, but we might also spend less time on other things, so there would be cost savings elsewhere.
Each committee will make a decision in that respect. Work is on-going on whether the committee structure remains appropriate for the work that we need to carry out. Paul Grice might be here in 12 months’ time—whether I will be here sitting next to him remains to be seen—and in 12 months’ time we will have a clearer picture of the structural change that is likely to be involved and a clearer idea of the cost pressures in that regard.
The same argument has been used for increasing members’ staff and office costs quite dramatically, by a third. Surely most MSPs work full time, so giving the Parliament extra powers does not mean that MSPs will do more work—they will just work differently. Why do they need such a big increase in staff costs?
I would not like people to assume that the increase simply reflects the new powers that are coming to the Parliament. Some of it is to do with decisions that the Parliament has taken about being a living wage employer and ensuring that that is reflected in budgets that have not changed dramatically over a period.
The increase also reflects the feedback that we have been getting from members for some time about their attempts to pull together a staffing complement that enables them to respond to, for example, contact from constituents, which comes in a multitude of fashions, including increased contact through social media and email. We have been aware for some time that the workload pressure on MSPs has not necessarily been adequately reflected in the staffing provision. Some of this is about playing catch-up with demand that has probably been there for some time.
Workloads in the national health service and in colleges are also increasing, but we do not increase NHS and college budgets by a third. Are we saying that there is one rule for MSPs and another for everyone else?
With respect, I think that the corporate body is conscious that we are responsible for ensuring that MSPs have the resources that they need if they are to do the job that they are elected to perform.
But nobody in society has the resources that they need.
With respect, John, each MSP is an individual employer and has to take a decision as to whether they need to use all the resource that is available to them. There is a ceiling on the resource, not a floor, and—as is the case now—MSPs will not be required to spend up to their budget limit. If an MSP feels that they can do the job that they need to do with fewer staff, they are quite at liberty to employ fewer staff.
The corporate body is conscious that for some time MSPs have been telling us that the arrangements for staffing do not reflect the demand on them, whether in the constituency or the parliamentary context. What we have sought to do is ensure that allowances better reflect demand, and the Parliament agreed to that when it voted through the proposals last month.
Continuing on the subject of staff costs, is there evidence of MSPs viring more money? Is there a certain allowance to vire money from office costs into salaries? Is that something that you have used as evidence to show that we do actually need more money for staff? If so, how much is that? What is the percentage?
I am not sure whether we have that information—I will perhaps ask Derek Croll to respond on the detail—but absolutely: the example that you give of people having to vire into staff costs in order to cover the staffing that they feel they need to carry out their job is part of the evidence for suggesting that something needs to be done regarding the overall staffing allowance.
If it were a matter of one-offs to cover particular bits of work that needed to be done in a given year, that would be one thing, but if that is happening consistently over a number of years and in a number of offices, that tends to suggest that there is a wider issue to be addressed.
It might be useful to have that evidence to build a case.
I do not know whether Derek has figures to hand. We can certainly provide more detail if needs be.
I do not have figures to hand, but I know that just over half of MSPs vired from their office cost provision to their staff cost provision over the past two years. The amounts vary from small amounts up to about £8,000 or £9,000. A lot of members have taken advantage of that viring to supplement the staff cost provision.
I want to ask about the net revenue and capital budget and about the contingency in particular. We have spoken about that already, and it is explained with reference to one-off election-year costs. I think that I am right in saying that the same costs as applied five years ago are being carried forward for the coming year. Would the amounts concerned not have increased a bit, five years later?
Some of the costs arising from an election may have gone up and some might actually have reduced. We have taken a look at what we know and what we can sensibly predict at this stage. We think that the £3 million increase is sufficient to cover it.
We are aware that a number of members have already indicated that they are stepping down, which gives us a better visibility of the likely change that will happen next year. However, a lot will probably remain unpredictable until fairly close to election day and what members will need when they come in will change.
We have tried to do a fair bit of fundamental thinking about the sorts of support that we can put in for new members. There has been quite a bit of discussion with individual members over the past couple of years, trying to gauge what worked and what did not work in terms of the induction and the support that was available. I think that we are now in a better place. Some of that support will involve dealing with MSPs in groups as well as individually, which may allow us to do things a bit more efficiently than was perhaps the case back in 2011.
You are right that certain costs will have gone up since last time round, but I hope that by working a bit smarter and a bit more efficiently—and on the basis of the feedback that we have received—we may be able to do some things more cost effectively than we have done in the past.
That is absolutely right. It is obviously a difficult number to calculate and it is a very sensitive thing to calculate. We think that we have made a prudent assumption. We have an emergency contingency, which would be drawn upon if, for example, we have underestimated the amount. We would have to manage our funds in-year in order to cope with that, as we do anyway. If we have overestimated the amount, the money would be returned to the consolidated fund. We think that it is a pretty sensible central estimate.
Last year, you talked about renewing all the lights in the chamber as an energy-saving measure. Did that happen? Can you tell?
That is one of those things that we are conscious need to be done. The technical solution is not simple or straightforward and more work will be required before Paul Grice and his officials will be in a position to bring forward proposals for us as a corporate body to consider. It is probably another thing that, as we look at the 2016-17 spend, we have been able to push back a bit to allow us to accommodate the additional costs that we just cannot avoid next year. However, we are conscious that it needs to be done. The work on that is on-going, but we are not at the stage at which we are looking at firm proposals.
I will ask a question about the shop, which it has become a tradition for me to do. The turnover improved a great deal when we moved the shop site. I notice that we expect to take less this year than last year. I think that that might be to do with last year’s great tapestry of Scotland exhibition and the associated book sales, but I wonder whether that accounts for the difference in takings of £30,000 or thereabouts. Can you explain the difference?
I will ask Paul Grice to step in shortly, but first I want to put on record the corporate body’s gratitude for the work that is done by the staff in the shop. As you say, it has been quite a turnaround. The shop was not helped by its previous location. The new layout and location work much better and allow the shop staff to do more things, and I think that that is reflected in the success of the shop in turning a profit over the past few years.
You are right that a lot of the footfall will be driven by other things that are happening in the Parliament. Obviously, people will not come to the Parliament just to come to the shop. Things such as the tapestry exhibition, the Warhol exhibition and the photography exhibition will all generate footfall and first-time and, potentially, return business. There is likely to be a bit of a fluctuation in that year on year, and we need to help staff to do what they need to do to smooth that out.
I agree with all of that. For me, the most encouraging statistic from the shop is the spend per customer, which has gone up very significantly. As Liam McArthur said, to some extent footfall for the shop is just what it is. As you rightly say, the great tapestry exhibition was the runaway success both in terms of the volume of people and the merchandising—particularly the book—and we also have a Bellany exhibition coming to the Parliament in the new year. There has been a tremendously successful product line around women’s suffrage, the anniversary of which we marked. I think that we have got better at getting merchandise to match what is going on in the Parliament.
As I said, to some extent footfall is what it is and the shop makes the best of it. For me, a key measure that the shop can control and look to promote is spend per customer. The fact that that has gone up very significantly is extremely encouraging. What we generate from the shop is always going to be at the margin, but it is always well worth pursuing. I expect the trend that we have seen to continue in coming years.
The thing that stands out is the fact that the highest turnover resulted in a very small profit. This year, turnover is expected to reduce by £30,000, yet we expect to make six times the profit that we made the year before. Is that a cause for concern? Have you identified something that was being done wrongly?
I do not think so. If you dig down into the figures, you will find that we have reduced the running costs of the shop a lot. As with any commercial enterprise, turnover is critical, but the margins on the products that are sold are very important, too, as is the cost of running the shop. We have improved the margins and reduced the running costs.
The one caveat is that the shop is not a purely commercial venture; I regard it as part of the service to the public. We will sell products there that you would expect to find in a parliament but that you might not expect to find in a purely commercial venture. I think that the shop ought to wash its face and make a small contribution, which it does, but I am also mindful of the fact that it is part of the service that we offer people who visit the Parliament. It is important to strike that balance.
10:15
Paul Grice makes a pertinent point about the products that the shop will stock.
Jean Urquhart will be aware that there are producers of any number of different products in Scotland who would love to have the opportunity to be showcased in the shop. In my own neck of the woods, Sheila Fleet swears by the benefits of being stocked in the shop—not necessarily in terms of the volume that its sells, but of the kudos that its products being in the shop brings. At the same time, we have school groups in and out of the Parliament on a regular basis who are not going to spend huge sums of money but who want a memento of their time in the Parliament.
That kind of range in what we provide is always going to present a challenge, but, as Paul says, over the years we have got smarter about the things that work and about striking that balance.
You stock more of what sells and less of what does not, basically. You are right that we might not make much margin on some things, but it is important that we have mementos available for people.
I welcome the increase in the members’ staff budget, particularly in my area of Scotland where it is often very difficult to recruit or retain on the money that is available. If nothing else, it will allow for a more realistic wage structuring within offices.
I want to ask about the second element of what we voted on when we voted on that part of the budget. I will declare my interest at the outset: I am one of the members who are affected by the decision to remove the ability to rent from political parties.
I want to say, in case the Daily Mail is listening, that I am not opposed to that change, but there are costs associated with it. For example, as a rough guide when I looked at the market in my area, I could find at the very cheapest a 33 per cent increase in rent to obtain a space. Has there been any examination of what is being paid by members who currently rent office space via political parties and how that compares to the more general market price in the areas they represent, in order to get an idea of what uplifts might be required?
Those arrangements are few in number and probably have arisen for a variety of reasons. I do not think that in any of them there was any question that they did not operate appropriately or represent value for money; the decision was taken in response to their being something that could be misrepresented or misconstrued and therefore a potential risk to reputation.
There is certainly a recognition that those arrangements may have delivered office space at rates that are difficult, if not impossible, to secure through other means. That may push up office costs for some members. I would hope and expect those increases to be bearable within the cost structure of the allowances available.
If individual members have particular problems, the corporate body has always been sympathetic to looking at individual cases and providing what support we can. I suspect that the problem that you have identified is specific to the north-east, but there may be other areas where availability of suitable property is an issue. The offer remains to provide assistance where we can, but the rationale for taking the decision is, I think, justified.
Obviously, the other consideration is the capital costs of refurbishment and so on in relation to new offices. There are going to be costs for new members coming in but, on the proviso that those returning members who are affected by the SPCB decision come back and are then in the position of relocating their offices, they will also incur capital costs depending on the condition of the new offices. Has that been factored in to the contingencies that you have put in place in relation to post-election costs, or is that something that will have to be looked at as and when it arises?
That is a fair point. I should point out that the corporate body did not take the decision; the Parliament took the decision when it voted last month. However, the rationale for having the new scheme at the point of election is that it is a natural break point.
As regards the overall costs that we put in the contingency, the relocation element will be factored in with all the other evidence that we have about the likely changes that will arise post-May, whether it is individual members indicating that they are stepping down or anything else that makes it clear at this stage that additional cost pressures will arise. That evidence provides us with a better line of sight on the costs and therefore will be factored in with a degree more certainty than some of the other elements.
Finally, on the pay costs, I will not go into the debate around the MSP staff cost increase because you have given the reasoning behind that. However, if Parliament staff are looking at MSPs receiving a 2.7 per cent salary increase, how will that affect the negotiation that takes place with Parliament staff? Presumably the SPCB will have to bear that in mind when it comes to looking at what offer is made to Parliament staff.
I will ask Paul Grice to speak specifically to the negotiations, which—as I said in my opening remarks—are barely under way at this stage.
Some of the portrayal of the increase in MSP pay through the linkage with the annual survey of hours and earnings—ASHE—has slightly glossed over the fact that the figure in 2014 was 0.6 per cent. If we look at it over the period of five years, the effect is a 1.1 per cent increase over that period. It does seem to fluctuate in that, in 2012, it was 0.1 per cent; in 2013, it was 2.6 per cent; in 2014, as I said, it was 0.6 per cent; and it will be 2.7 per cent next year. There do seem to be fluctuations, but the effect over a period is for the rise to pretty much reflect what has happened across the piece in the public sector.
Therefore, I think that it was right to make the break with the linkage with Westminster. As I said earlier in response to the convener, the way in which pay, allowances and pensions have operated in the Scottish Parliament have been diverging with Westminster anyway, and the break was a sensible recognition of that fact. ASHE is a respected measure so pegging MSP pay to ASHE has provided an outcome over the period that is pretty much consistent with public sector pay.
I will ask Paul to deal with the specific issue of the upcoming negotiations with SPCB staff.
You will understand that I do not want to say too much, given that the negotiations have not even begun yet, but I am very clear that the comparator is with other public sector pay in Scotland and not with members’ pay. We look at the whole terms and conditions package, and parliamentary staff are in a completely different category to members.
I would resist very strongly any notion that we track MSP pay. For me, the comparator is other public sector employees in Scotland, and that is very much my starting point for those negotiations. It is a starting point, and we always negotiate; hitherto, we have always had a successful negotiation with the trade unions, and I would expect that to happen again.
For me, the comparator is other public sector employees in Scotland. That is historically what we have done, and I would not expect it to be any different in the next pay round.
Thank you. That completes the questions from the committee, but I have a few further points.
When the Scottish Parliament was established, the idea was that MPs and MSPs would have the same salary and then the Government decided that MSPs would have 87.5 per cent. Does the new decoupling arrangement not mean that the figure is now 81 per cent of an MP’s salary? There is a relative reduction in terms of MSP to MP.
I will trust your maths, convener. That has been the direction of travel.
I have a couple of points about staff budgets. Is it not the case that one of the reasons why the budget has gone up is because MSPs are no longer competitive and able to attract the best staff? MPs from the same political party get twice as much as MSPs so they have poached staff from a lot of MSPs. I have to say that that has not happened in my case but I know of colleagues that it has happened to. The staff can do more or less the same job with significantly higher pay just by switching to work for the MP’s office, which is often in the same building or a few miles up the road. Is that not one of the issues?
I gently suggest that there are downsides to landslides, convener.
Not if you are one of the staff.
We need to be aware of and informed by the systems that are in place in Westminster, the National Assembly for Wales and, indeed, Northern Ireland, because they are relevant. Ultimately, however, we need to take decisions on the basis of what we feel MSPs and their staff require. I am not sure that we would have found it to be particularly comfortable to peg ourselves to a Westminster system that has come in for criticism. The Independent Parliamentary Standards Authority is entirely independent of MPs, but there has been quite a bit of criticism about some of the decisions that it has taken over which MPs have no control.
As I say, we need to be aware of what is happening in other Parliaments but ultimately we need to take responsibility for what we think is a fair budget and set of allowances for the work that we carry out. We will continue to discuss with members how the new system operates and whether it will require further tweaking in future. Since the Parliament’s establishment, corporate bodies have shown a willingness to learn what works, what does not work and what needs to be changed, and we are happy to continue to do that.
I think that the entire Parliament supported the decoupling. There is nothing worse than people voting on their own salaries. The MSP to MP proportion seems to be entirely fair.
We have not really touched on the flexibility that is needed in the system, and that is the difficulty that the SPCB has. Let us look at the members of the committee: we have three list members and three constituency members, and both Mark McDonald and I have been a list and a constituency member. You are a constituency member, Liam. In my experience, the difference in the workload is colossal. Although we have the same amount of parliamentary work, constituency work for constituency members is infinitely higher. Staff budgets are the same for list members and constituency members.
There are also issues around geography. The Herald printed the list of the five most expensive MSPs and you, Liam, will always be on that list because you have to fly here from Orkney every week. As a constituency member, you have to run an office with staff up there and one down here. Lothian MSPs can be in this building, have no constituency office, use the phones at zero cost to their expenses, and have no heating or lighting costs and very few travel costs. They do not have to do what our Aberdonian colleagues do and rent properties that are expensive relative to those in the east end of Glasgow where, I imagine, John Mason’s costs would not be anything like as high.
How does the SPCB manage to deal with that mélange and try to ensure a fair balance? You want to enable all members to do their jobs, hire an office and have staff and, as you do, travel to the Parliament every week when necessary, but at the same time not to have inflated budgets—let us say—for members who do not have the same kinds of pressure.
10:30
It is an entirely fair point. We are conscious that we need to ensure that there is as much flexibility as we can provide. That may be through an ability to vire or by recognising that budgets for some members will be under more pressure than for others.
In my own instance, there are few league tables in which I am not fairly close to the top when it comes to allowances. That is a reflection of geography. It is not just the flying back and forth but the travel within the constituency as well, which can be more costly and problematic.
Indeed.
I have had to look at the way in which I organise my flights in order to keep those costs as low as I can. However, I am not going to be thanked by my constituents for making myself less accessible to them or less effective in representing them here. All members are in that position.
As I said in my answer to John Mason earlier, the SPCB sets allowances at a level that it thinks is a reasonable maximum, but most members will not spend out that allowance. Some will fall very well short of it but have a much higher spend in other areas. Travel allowances are not capped but paid on the basis of receipts and a demonstration that the travel falls within parliamentary purposes. I think that that is right.
Hold on a second—you said that mileage is capped after 10,000 miles.
Yes, mileage is capped.
MSPs work in different ways. I represent a constituency that is far away from Edinburgh and quite difficult to travel around. However, Jean Urquhart, representing the Highlands and Islands, is probably doing an awful lot more travelling than I am.
There are fewer constituents in my constituency than there are elsewhere. For each MSP, there are things that work in their favour and things that work against. You will know better than most that the way in which MSPs work is not simply a reflection of the constituency and region that they represent—it is a reflection of the fact that the expectations of constituents about how they engage with their MSPs are changing. That probably brings additional pressures and costs, but sometimes it allows an MSP to work more efficiently and smarter as well.
As a corporate body, we think that at the moment we have in place a system that supports the members and the work of the Parliament. However, that will change over time and we need to be ready and constantly willing to look at things that are not felt to be fit for purpose any longer. The corporate body that takes over after the next election will also need to be alive to that fact.
Thank you. As no one has any further points to raise, we will wind up the session. I thank colleagues for their questions, and our witnesses for their answers.
10:34 Meeting suspended.