Finance Committee

Meeting date: Tuesday, January 12, 2010

Official Report 287KB pdf

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Budget Bill (Format)

Item 3 is to consider further correspondence received from the Cabinet Secretary for Finance and Sustainable Growth on the format of the budget bill. Members will recall that we considered an initial letter from the cabinet secretary at our meeting on 15 December. Members have both letters and a note by the clerk in their papers, so we have correspondence on the matter.

The format of the budget documents and the budget bill are subject to an agreement between the Finance Committee and the Scottish Government. Following the additional explanation from the cabinet secretary, is the committee content with the changes, which are set out in the letter, being made with effect from the budget bill for the 2010-11 financial year?

We can see how the proposal works in practice and, if we wish to suggest changes, we can.

I have concerns about the format of what the Government is seeking to do. I understand its position, but I am yet to be convinced about the real rationale for bringing things forward for this year’s budget process. I am similarly concerned about the ability of this committee and, more so, subject committees to carry out scrutiny. I do not think that the change helps with that.

If the Government is able to report to Parliament on a wider basis, with the ability to vire money within departments at any stage, it will be harder to carry out scrutiny. The committee indicated in its previous reports that it wanted closer correlation between the stated Government aims and policies and the documentation that we get.

Why should scrutiny be more difficult?

Are there any other comments? I have difficulty seeing that point.

From what we have been hearing from the committees, I understand that they want more detail at the other end. They have been constantly looking for more detail at level 4, rather than at the top end of the budget. That is where committees are looking for detail and we have encouraged that detail to be provided.

Jeremy Purvis has a legitimate concern, but the change is explainable. As I understand it, the main rationale for the change is to allow the cabinet secretary to drive down the level of underspend. If the Government is reporting an overall total, that is easier to do. However, he has given us a commitment that, if money is moved between portfolios, he will report where and when those movements take place.

If an individual departmental head has an underspend year on year, we can say that there is pressure on that departmental head because there is an underspend—they have not been able to use the resources in the interests of Scotland’s people, whatever their portfolio is. In the same way, if that happens under the proposed system, it will be reported that money has had to be moved from a portfolio and was able to be used in another one, minimising the overall level of underspend. There is still visible management control over the people who head up departments. If there had not been, I would have been concerned, but there is. Nothing changes in that regard.

End-year flexibility has been a bit of a playground football in the Parliament from day one, but it should not have been. Given the climate that we are moving into, it would be in everyone’s interest to minimise the resources that are unused at the end of a financial year.

14:30

In what way?

The committees are scrutinising departmental budgets, which are reported to them in more detail than the draft budget is presented. If the budget bill does not have the level of information on departmental limits that the committees expect as they scrutinise the forward budget, or ministers have greater ability to make changes within the overall Scottish budget, it is harder for the committees to scrutinise what the ministers’ intentions are for the coming budget year.

I understand that and I understand the management tool that the finance minister would have. I also understand that there have been alternative approaches in the past, such as the central unallocated provision mechanism. However, as far as I understand it, the Parliament authorises the budget bill, which contains detail that represents parliamentary authorisation over and above the authorisation that the finance minister has to manage the overall Scottish budget.

Ultimately, departments and ministers know that there is parliamentary authority for their expenditure because it has been scrutinised to that level. If we simply move towards giving the finance minister the responsibility for managing the entire budget at his or her discretion, we should not necessarily scrutinise lines 2, 3 or 4 because we would simply authorise a global sum for Scottish Government ministers, ask them how they would spend it, decide whether they had the right political priorities and then let them do the job. I am more satisfied with the Parliament’s ability to scrutinise the budget under the current mechanisms, but other members may feel differently.

Under the proposed format, we would consider the overall total and the minister would have duties regarding that. Given the current stringencies and circumstances, it is important to watch the overall total of the budget and for the minister to be answerable for that. However, the proposal also allows for scrutiny of the individual portfolios because we would see movements within them. That would give us an overview plus a view of the more focused parts of the budget. The minister has satisfied that requirement because his proposal allows us to scrutinise both aspects.

I am in the committee’s hands. Does it wish to pursue the matter? If committee members want to consider it further, I would appreciate much more detail. We have approached the minister and received a reasonable answer and approach to budgeting.

Is the committee content that the changes that are set out in the minister’s letter be made in the budget bill for the 2010-11 financial year?

Members indicated agreement.