Draft Budget 2012-13
Under item 2, we will take evidence from the Cabinet Secretary for Finance, Employment and Sustainable Growth. This is the first of three evidence sessions that we will have with the cabinet secretary this morning. This session will deal with issues that emerged from a recent consideration of the 2012-13 budget and the national performance framework.
I welcome John Swinney to the meeting. He is accompanied by officials from the Scottish Government: Alyson Stafford, the director-general of finance; Andrew Watson, the head of finance policy; and Roger Halliday, the chief statistician.
I invite the cabinet secretary to make an opening statement.
I do not have an opening statement for this evidence-taking session, although I will make one about the spring budget revisions. I am happy to answer questions on the Government’s response to the Finance Committee report. We issued that prior to the conclusion of the budget process. It sets out, comprehensively, the Government’s response on the various issues.
I associate the Government with your remarks about Mr McMahon, convener, and express our condolences to him and his family.
Thank you, cabinet secretary. In time-honoured fashion, I will open with a few questions before opening up the session to colleagues.
I want to ask about how well the Scottish Government is managing its capital investment programme and the associated risks. One of the recommendations in the Audit Scotland report “Management of the Scottish Government’s capital investment programme” concerned establishing a more active role for the newly formed infrastructure investment board. What is the role of that board and how do you see it developing?
The infrastructure investment board is a significant part of the architecture that the Government has put in place for the management of the capital programme. The board is chaired by the director general of finance and it brings together representation from across the organisation. The purpose of the board is to scrutinise major projects at an early stage so that, when we are embarking on any capital projects, we are doing so on the right basis and the right footing. I suggest that the reason why certain capital projects did not go the way that we would all have liked them to go is that the early preparation was not precise and there was a failure to make the fullest judgments about the issues that had to be resolved.
Essentially, the infrastructure investment board has the ability, mandated by me, through the director general of finance, to require public sector organisations that are taking forward capital projects under the jurisdiction of the Government—not those that are undertaken by local authorities, where councils are clearly in the driving seat—to rectify any concerns that arise when the project is being embarked on, even if it means holding back the project until the concerns are resolved.
The board also considers the progress of projects throughout their delivery. It is not the manager of the project. Members of the board might be managers of individual projects, but the board as a whole essentially performs a challenge function in relation to the managers of projects, ensuring that the governance arrangements are being properly undertaken and that progress is being monitored. Crucially, the board has the opportunity to reflect on lessons that have been learned from evaluations of particular projects.
The board undertakes three principal functions. First, it supervises the implementation of the capital programme to the satisfaction of ministers; secondly, it provides advice to ministers on the relative priority of current projects and projects that aspire to enter the capital programme; and, thirdly, it provides the permanent secretary with briefings for his six-monthly update to the Public Audit Committee, which is now an established part of the reporting on progress on capital projects.
Thank you for that comprehensive answer, which is much appreciated. I want to move on to the Christie commission report. Can you give us any examples of actions that the Scottish Government has taken in response to that report? What impact will those actions have on the preventative spend agenda in community planning partnerships, local authorities and national health service boards?
The Government has published a response to the Christie commission, which has informed and become an integral part of the spending review settlement that I announced in September. That is best illustrated by the four pillars that we set out in the Government’s response to Christie, which are the emphasis on collaboration; the shift to preventative spending; the development of a more active and challenging performance culture; and the development of workforce strategies and workforce utilisation.
You ask what actions have taken place. I would not say that the collaboration agenda is a change of direction for the Government, but it is certainly an intensification of the approach. For example, along with my Cabinet colleagues, I have regularly reinforced with public sector leaders the importance of the collaboration agenda as the main element in how the Government takes forward public service reform. That requires public sector organisations to work more closely together. The collaboration agenda very much informs the work that the Deputy First Minister has been doing on the integration of health and social care, which is being done in partnership with local government.
In addition, Mr Mackay, the Minister for Local Government and Planning, has led a review of community planning infrastructure jointly with Councillor Pat Watters, the president of the Convention of Scottish Local Authorities. In essence, that has been about developing a shared vision between public sector partners of how we take forward the community planning agenda, which is the crucial delivery mechanism for the Government’s collaboration agenda.
In the spending review statement, I set out to Parliament a shift in preventative spending activity. That manifests itself in a headline fashion through the three change funds, which are for the early years, older people and reducing reoffending. The Government’s movement towards greater emphasis on preventative spending is encouraging leadership at local level to think about what more can be done to take forward preventative interventions beyond the three change funds. I am delighted with the progress that local bodies have made in taking up that agenda.
On the performance culture, we have commissioned work through the Accounts Commission to equip ourselves so that, after the local authority elections in May, we are better able to monitor performance in relation to the achievement of outcomes. That is at the level of community planning partnerships, rather than individual bodies, because many of the issues are only ever addressed through the joint work of a number of public sector bodies. The Accounts Commission has been observing the work that Mr Mackay and Councillor Watters have been doing in reviewing community planning, and designing an architecture that reflects that.
We have reviewed the national performance framework. Although many aspects of it remain intact, we have introduced new indicators and additional outcomes in the framework. However, fundamentally, we consider that architecture to be fit for purpose and able to support the direction of Government policy.
The permanent secretary has been leading on many aspects of the work on workforce development through the Scottish leaders forum, which brings together the leaders of most public sector bodies in Scotland. If memory serves me right, the forum met last Thursday. Its workforce development role is important in meeting the general challenges that public services face, given the financial pressures under which the Government is operating.
Thank you for another comprehensive response. The Scottish Government has set out how it will progress the McClelland review’s recommendations. Can you detail the Government’s programme for implementation, and tell us what guidance, if any, it has given or will give to public sector bodies on approaches for maximising the opportunity to achieve the potential savings that the review identified?
I will address that question at a governance level first. A national board has been established to progress that agenda. It is convened by the director general for governance and communities—
Alyson Stafford (Scottish Government)
It is chaired by Alex Neil.
My apologies—it is chaired by Mr Neil and supported by the director general for governance and communities.
There is also an industry engagement board, which is chaired by John McClelland and is trying to marshal some industry input into the exercise. As far as possible, while respecting and fully observing the requirements of the procurement legislation, we will proceed with a collaborative approach to working with private sector players to guarantee that we obtain the best solutions for the public purse and the best approaches to delivering information and communications technology infrastructure.
The key points in the McClelland review included the importance of establishing a clear direction for progressing ICT improvements across the public sector and, in particular, how we establish the closest relationship between that work and the design of public services in Scotland. In a sense, the ICT approach has been very much driven by considering what type of computers we will buy—well, it is not quite as crude as that. We want the discussion to gravitate towards how we will use ICT to improve the delivery of public services and to maximise the efficiency of the process.
The digital strategy, which was published on 3 March 2011, focuses on the needs of our citizens, how we use ICT to support the delivery of public services to those citizens, and how we can deploy common standards and use ICT to improve performance in delivery.
Another key point is that we have made clear to public sector bodies that we consider the aims, objectives, aspirations and ambitions of the McClelland review to be realisable in the public sector in Scotland. We have mandated public sector bodies to use the techniques and approaches that McClelland suggested to deliver on the efficiency agenda, which remains a recurring part of the Government’s activities. We will work with those bodies to ensure that that work is driven forward. We are trying to make McClelland compatible with the digital strategy, which relates to much of the activity in this area.
Thank you. I will open up the discussion to questions from other committee members.
09:45
Cabinet secretary, I want to start with a question about asset management and refer you to your response to paragraph 32 of the committee’s report. If I remember correctly, shortly before September’s draft budget, the Scottish Futures Trust published what struck me as a fairly robust report on asset management. In its response, the Government says that it is “proactively” taking that forward. Given that the Government’s response came out on 18 January, are you able to update the committee on the asset management issue?
Ministers have mandated the SFT to take forward the thinking in the report on asset management that you mentioned, and it will be an active priority for the organisation. In the budget, I allocated further resources to the SFT to begin to take this work forward, because an element of pump priming will be required to advance the agenda. It is essentially a core priority of the SFT, and we will expect it to take it forward in an effective way.
The committee has heard Sir Angus Grossart’s view of the SFT’s role. He is very clear that it is an advantage for the SFT to have a bit of distance from the Government. Sir Angus is mandated to take forward the agenda in an even-handed way—I was going to say “neutral”, but there is nothing terribly neutral about the way in which Sir Angus pursues that agenda—and to deliver the outcome that the Government has requested. I am sure that the committee will receive regular reports on the work that is being done.
I am not expecting you to give the committee a specific month, but could you give a rough indication of timescales for a follow-up report or the implementation of anything in the previous report?
Given that the spending review is predicated on a fair amount of asset rationalisation, certain propositions will have to be taken forward in that respect. If the SFT is able to exceed that process of asset rationalisation, it will get no complaints from me; indeed, that is what it has been empowered to do. I will leave it to the SFT to tell the committee about its approach to the issue; I certainly cannot give you any definitive timescale. All I can do is state again that the budget makes a number of material assumptions about asset rationalisation that will have to be followed.
In that case, I will move on to the collection of non-domestic rates. The Government’s budget over the spending review period relies on very healthy collection rates. In response to paragraph 44 of the committee’s report, which says that
“The Committee supports the LGR Committee’s request for regular reports on ... collection performance”,
the Government seems to suggest that it is not minded to give us anything more than we get at the moment. Is that correct?
My view is that information on the collection of non-domestic rates should be distributed annually.
You disagree with the committee’s conclusion that there ought to be “regular reports”.
“Annually” sounds like “regular” to me.
Reports are already made annually. It would be slightly unusual for the committee to recommend something that is already happening.
The committee took the view that there should be “regular” publication of reports. In my view, an annual publication is a regular publication.
Your view is that the committee has just asked for things to remain as they are.
I am simply saying that the committee asked for a “regular” update. I think that an annual update is a regular update.
That is interesting. What information do you get about collection performance? Are you given monthly reports or quarterly reports? What is your handle on the situation?
I will review the performance of non-domestic rates collection at least six monthly but perhaps more frequently. That process is undertaken to inform any revisions that might be required to be made to the non-domestic rates assumptions that will be made in a future budget settlement.
So the information is there. If you were minded to publish it or furnish the committee with it, that would not be difficult to do.
The question that we have to wrestle with is what the point is of collecting this information. The purpose of gathering the information is to enable the Government to provide Parliament with an informed basis for the identification of the non-domestic rates total that is available for forthcoming budget settlements. The annual publication of statistics gives Parliament a full account of what has been collected in non-domestic rates.
We have to be careful about giving out information at different stages throughout the year, which I assume is what Mr Brown is looking for, because doing that does not provide us with a particularly informed view about what the total collection will be for that year. Even if we publish that information, it does not enable us to do anything with it. Once the non-domestic rates assumption for the budget is set, it is set—that is it. It is guaranteed by the Government and it cannot be revised during the financial year. The arrangements that we have for the publication of non-domestic rates information strike me as being appropriate.
I issued further information on non-domestic rates on 2 March when the Government published the quarterly update on the revaluation appeal statistics. That was provided to give a further update on an issue that had been raised actively with Parliament.
Are you seriously saying that it would not be useful to the committee to have a quarterly or six-monthly update? It would allow the committee to see how collection rates are doing compared to, for example, the previous year or compared to the target. Is it your view that it would not be useful to the committee to see that?
That is my view, Mr Brown, yes.
How do you square that with the fact that the Minister for Local Government and Planning, Derek Mackay, was a member of the committee when it concluded that regular reports would be useful?
Mr Mackay fully explained his response to that point when you challenged him on it during a parliamentary debate.
I did indeed challenge him on that point and the very clear impression was given that a more regular report would be published.
Mr Mackay dealt adequately with the intervention that was made on his speech in the parliamentary debate. As I have said today, it strikes me that an annual update on the performance on non-domestic rates collection is a regular update.
I am slightly astonished to hear that your view is that, although the committee recommended regular reports in paragraph 44 of its report, and although the Local Government and Regeneration Committee suggested that there should be regular reports, those committees are simply asking you to carry on with what you are already doing. Do you honestly believe that?
I have said it a couple of times already, convener. At the risk of repeating myself again, the answer to that is yes.
If I may, I will make a comment on that subject, for the sake of clarity, before I ask my question. You state on page 5 of your response:
“If any adjustments are necessary this will be brought to the attention of the Parliament and its Committees for scrutiny through the Budget process.”
It would therefore not be accurate to say that you are not prepared to give an update if the underlying assumptions have changed. You have made a clear statement that you are willing to update the committee if adjustments are necessary.
I have to make a judgment about whether the non-domestic rates assumption in the budget for future years can be supported and substantiated. As I have told the committee before, and as is clear from the annual statistics, in some years in the past decade the non-domestic rates pool has been in surplus, and in some years it has been in deficit. I have to make judgments based on the condition of the non-domestic rates pool when I formulate the assumptions that are made in the budget for the subsequent years.
I will move in a different direction with some questions on single outcome agreements, the Christie commission and the national performance framework, on which we took evidence from Mr Halliday.
A number of witnesses in recent evidence sessions have highlighted a problem in matching up the health improvement, efficiency, access and treatment targets and the other indicators in the single outcome agreements against which community planning partnerships will be expected to monitor progress. Do you have a view on that? In your response, you state that there is on-going work by the Health and Sport Committee on performance measurement, but do you want to take this opportunity to say where we might go on the matter?
I have heard such observations on a number of occasions. The argument is sometimes advanced that there is something contradictory in pursuing HEAT targets and pursuing the outcomes framework that the Government has set out, with the indicators and approaches in the national performance framework. I do not take that view at all. The HEAT targets are more specific than the outcomes to be achieved—and they are much easier to measure, I have to say—but there is nothing contradictory in the two.
The HEAT targets are about ensuring that commitments that are given to members of the public in relation to their expectations about health treatment and management are fulfilled. In that respect, a clear and specific approach is taken round about the HEAT targets. I do not think that they take us in a different direction from the national performance framework. They just take us to a more precise level of specification, and we should think about them in that context.
That is helpful. In essence, when community planning partnerships are looking at the issue, there should be no barrier to the two things working together. It has been presented to the committee as an excuse, almost, or at least an explanation—
It is sometimes said that the HEAT targets make it difficult to pursue activities in community planning. I do not accept that view.
Thank you. We heard interesting evidence at our previous meeting about the growing up in Scotland study and the evidence that is emerging about the early years. As one of the most important aspects of the shift to preventative spending relates to the early years, I asked our witnesses whether that information should inform the monitoring of progress against outcomes by the community planning partnerships. It was stated that, although the sampling method that was used is not particularly suitable for the purpose, the information could be adapted by the community planning partnerships to supplement other sampling. We were told that the methodology that was used in the growing up in Scotland study could be used to ensure that the partnerships have adequate information at an appropriate geographical level to understand how the outcomes are being met at a local level. Is there any scope for taking that approach further? The growing up in Scotland study has a specific purpose and the information is monitored in a particular way, but could that source of data help to supplement the information sources that are available for the national performance framework and single outcome agreements?
10:00
There is certainly no shortage of information in this area of policy, and all the information points towards the importance of focusing on the needs of the individual child and ensuring that all the steps and measures that we undertake to address the needs and circumstances of each child are appropriate in every case. The national performance framework enables us to give community planning partnerships a clear direction on what we expect. Ensuring that we meet our aspiration for our youngest citizens to start their lives in the best possible way will involve an interplay between different public sector organisations—the health service, the education services, local authorities, the third sector and even, in some of the more acute circumstances, the police service. Our policy frameworks are now perfectly aligned with the performance framework, and the direction that that gives to public sector organisations to follow that line of thinking is particularly appropriate.
I have one further supplementary question. You mentioned exercising leadership in looking at what other prevention measures could be devised locally and nationally and expecting civic Scotland to make proposals. I am a member of the cross-party group on armed forces veterans—indeed, I attended the Officers Association event at the Sheraton hotel last night, when this matter came up. Is there scope for partners to approach Government on a change fund in respect of veterans’ issues, which might address a specific, targeted need?
I signal today that public sector organisations that are looking at public policy and designing preventative interventions to try to avoid some of the more complex and costly problems that the public sector faces will get nothing but encouragement from the Government. There is a lot of evidence of that emerging from different public sector organisations. Many individuals and public sector leaders feel empowered by the possibilities that arise in that respect, and we want to encourage that in every way that we can.
I record my membership of Aberdeen City Council.
Local elections will take place in just a couple of months, after which there will likely be new COSLA leadership, as Councillor Watters has suggested that this is his final term as president. Do you feel that there might, after the elections, be benefit in looking again at the concordat and single outcome agreements in line with the new emphasis on preventative spending to see whether there are ways in which they might be revisited or refreshed?
I am always open to dialogue with local government. In the aftermath of the local authority elections in May, the Government will continue its constructive engagement with local government. We have reaped significant rewards from the co-operative and collaborative framework that we have put in place between national Government and local government, and I readily commit the Government to that approach again.
The nature of the concordat has often been misunderstood. It has often been presented as being either a deal about money, which is certainly part of its composition, or a deal about policy priorities, which is also a fair representation of some parts of it. Essentially, however, it is about progressing a joint agenda between local and national Government in order to focus on shared priorities that we are all committed to addressing. It has served Scotland well that we have involved local government.
Mr Wheelhouse raised issues about the early years strategy. The formulation of the early years strategy in Scotland was not an exclusive activity of the Scottish Government but fully involved local government in joint policy development. Adult social care policy in Scotland today is not exclusively the work of the Scottish Government either, but has, into the bargain, been a joint venture with local government.
The concordat and the process of focusing on joint priorities have to reflect that joint agenda between the two levels of government, through which we commit to acting openly and constructively as equal partners. That is how the Government will wish to pursue the agenda in the years to come and—certainly—in the aftermath of the local authority elections.
One of the major themes that I have asked Mr Mackay and the Accounts Commission to take forward in the community planning review is to ensure that when the local authority elections are completed, authorities focus more than ever on achieving outcomes. Their performance will be assessed on that basis, which will be quite a change in the reporting framework for local government.
Colleagues from across the parties in local government have welcomed how the concordat has operated. I was not suggesting that it is not fit for purpose, but was asking whether it would be worth looking at it again, in line with the change in local government in 2012 and the shift in focus in the recent budget.
The spending review last September was very much a product of dialogue that I, with ministerial colleagues, had developed with local government in the run-up to the review, which made me confident that a joint approach was being taken to preventative spend that would be reflected in the actions of local authority leaderships. We are, therefore, part way through the process already.
That is helpful.
I want to ask about a couple of other things, one of which is the role of third sector organisations. We had John Downie from the Scottish Council for Voluntary Organisations at the committee recently; he talked about his concern that when tough spending decisions have to be taken locally, third sector organisations have problems both with the contracts they have and their access to new contracts, and that it is the services that are provided at arm’s length by such organisations that are often among the first to be trimmed. We saw the recent kerfuffle with the citizens advice bureaux in Glasgow. How do you see a framework being developed in which third sector organisations have parity of esteem with other providers?
Over the past few years, the Government has worked, principally through the development of what I would call the interface mechanism, to create a stronger voice for the third sector in every community planning partnership at local level, which is where true influence has to be exercised. Before that, when I was pressing local government to speak to and involve the third sector in their deliberations and planning, the common complaint would be, “There are so many organisations. Who do we speak to?” Therefore, we have established a much more entrenched role for the third sector in the community planning process and, as a consequence, the sector is able to articulate its perspective much more actively within the community planning arena.
I have been struck by some of the feedback that I have had from areas of the country where that system works well. I will not say that it works well in every part of the country, because the position is still a bit difficult in some parts. However, where it works well, it gives the third sector good and clear influence.
A difficulty is that we cannot protect the third sector from contractual change. Unfortunately, existing providers sometimes lose contracts in tendering exercises because their bid does not fulfil the purpose, is insufficiently robust or is uncompetitive. It is inevitable that contracts will involve individual difficulties. We will get round that by emphasising the interface methodology and mechanism, and by ensuring that we support and encourage the development of capability in the third sector to tender for public sector procurement contracts. I recently put resources into the third sector budget to support exactly that.
I am delighted that third sector consortia won all three tenders that were issued for the just enterprise programme and the two complementary programmes that will support the third sector’s ability to win procurement contracts from the public sector. That has helped to embed the strength in the third sector. The Government will continue to take that approach.
I have pressed on a number of occasions for a focus on consortia arrangements from not just the third sector but from private sector organisations as a way of tendering competitively.
I have experience of priority-based budgeting in Aberdeen City Council, which has embedded that process. The council looks at the budget on the basis of the expenditure priorities and the likely outcomes that can be achieved from the spend. I am aware that use of the approach is patchy—some authorities use priority-based budgeting, but others have not yet made the transition. Does the Government have a role to play—not just directly, but through organisations such as the Accounts Commission—in assisting authorities to see how priority-based budgeting can help them to achieve outcomes and to cope with the difficult circumstances that are likely to be faced as the spending cuts bite in future years?
The Accounts Commission and the Improvement Service undoubtedly have a role in assisting local government in achieving that objective, which the Government certainly supports and which is reflected in the Government’s choices about its policy and financial priorities.
The decision to move to a priority-based approach in Aberdeen was obviously required because of the somewhat cataclysmic report by the Accounts Commission about the authority’s finances between 2002 and 2006. One hopes that other authorities might make that decision without the need for such an intrusion.
I have encountered the mindset that best value is all about the input—the money—and is all about taking the cheapest option. A discussion about a report drove that home to me. We were told that taking a certain decision might not achieve best value, but the report was only about how much money was being spent. Is the understanding of what best value means still an issue? It is not just about the input measure—how much money is put in—but about the service that is delivered across the board. Does work need to be done to engender a mindset change not just in officialdom, but among elected members?
10:15
There will still be a view that “best value” means “cheapest”. Despite the exhortations of the Government, the Auditor General, the Improvement Service and a variety of other people, the view that best value is about delivering the cheapest solution still percolates. However, it should not be about that. Mr McDonald mentioned quality, impact and outcomes, which are strong and material points that should be considered properly as part of a best-value assessment.
My first question is about Will Hutton’s review of public sector pay. We had an interesting discussion with him a few weeks ago. In the Government’s response to the committee’s report on the budget, you said that you were considering Will Hutton’s report. Do you have any further considered remarks on it, for example on the suggestion about an earn-back approach, under which senior civil servants would be required to meet performance criteria in order to receive their entire salary?
Basically, the Hutton report is a welcome and substantial contribution to the debate. It must be considered alongside the actions that the Government has taken in relation to senior pay. For example, I have suspended access to bonus arrangements for a number of years now among the senior echelons of the public services in Scotland. Where I have not had the ability to mandate that, I have asked people not to accept bonuses to which they have been entitled. In almost all the cases that I have seen, senior individuals who have been awarded bonuses as a consequence of exceptional performance have decided not to take them, which I welcome.
When new appointments have been made to existing posts, we have been working to remove bonus entitlements from terms and conditions. We have done that in a number of cases, as a beginning to stripping that approach out of the culture of senior appointments. I am confident that the Government is taking practical steps that will, in essence, implement the spirit and thinking of the Hutton review. We continue to reflect that in our pay policy and in the approach to senior appointments.
Hutton’s suggestion goes a little further than that. It would have to apply only to new appointments, because we could not retrospectively take 10 per cent off somebody’s pay and tell them that they had to earn it. However, with new appointments, perhaps 10 per cent of the salary could be performance related, rather than there being a bonus.
I have rehearsed the arguments around the issue on a number of occasions with the committee. My firm view is that, if a bonus is paid, it should be for only the most exceptional performance and not for turning up and doing the 9 to 5. In the past, there was perhaps an assumption that people just got bonuses, and there was some lazy thinking about that. That is not the culture now and it is certainly not an inference that can be drawn from our pay policy. I can think of a number of cases in which individuals have made truly exceptional contributions and their boards have decided that they merited bonuses—which I understood precisely—but they decided not to accept them. I am grateful to those individuals for that.
The earn-back proposal that Dr Murray mentions is worth considering, although the Government has not considered it specifically. However, the Government will consider it, and I would be happy to feed back to the Finance Committee on it. As Dr Murray correctly said, it could be applied only to new appointments. In a number of recent appointments, bonus arrangement have been removed from contracts.
I move on to the third sector and the issue that Mark McDonald raised about parity of esteem. In your response to the committee’s report, you talk about the public-social partnership model, in which the third sector is involved in designing the service. There is then a pilot period and if the outcomes are achieved, the public sector would consider putting the service out to tender. The expectation is that the third sector would be well placed to win such tenders. You mentioned specifically issues to do with elderly people remaining at home. How long would you anticipate such pilot phases taking? Evidence that we have received suggests that it can take quite a long time to get an indication of whether a project is working properly.
That will vary depending on the subject of the project. Work on short-term issues about how support is provided to elderly people to enable them to remain at home and avoid admission to acute settings can be evidenced quite quickly because of the removal of predictability that there will be a hospital admission. I have been struck by work that I have seen in the health service and local government through which it is possible to predict which elderly members of our community are likely to become more vulnerable and when that is likely to happen. A proactive intervention might not always be welcomed, but it might be beneficial in order to avoid the development of circumstances that could result in referral to an acute hospital setting.
Such decisions will depend to a large extent on the type of project. As we look at the projects that have emerged under the change fund in the current financial year—2011-12—and how those inform the preparations for the change fund for elderly people in 2012-13, there will undoubtedly be lessons to learn about how to deploy such interventions most effectively.
There is a bit of a problem with who pays when it comes to the third stage of the process, when the public sector puts a service out to tender. A local authority may not be willing to pay for or to commission a service that will save money for the health service, for example through elderly people not being admitted to hospital. Where does the change fund and central funding come into that, particularly at times of constraint when certain public authorities may not wish to spend their money to save money for someone else?
I suppose that I am hoping for a more collaborative culture. Dr Murray makes an entirely fair point. A local authority might be going about its business thinking that the savings that come from what it is doing will accrue to the health service, and the health service might be complaining about a local authority not providing community care support, which will result in delayed discharges that the health service will have to pay for, but those are two sides of the same coin.
I am encouraged by the Government’s heavy focus on collaboration throughout its period in office, which is backed up by the Christie commission’s views on the creation of a collaborative environment at local level. That is our way through this. I see a lot of good work at local level in that respect, in which public servants are trying to find ways of delivering better outcomes and of reducing the burden on the public purse—even when their own organisations may not be the beneficiaries financially.
What was crucial in the governance of the change fund for older people was that all the projects that were approved had to be collaborative. That has triggered a lot of good joint working at local level, which is giving us a better approach to the delivery of services.
This is my final question. I was on the Rural Affairs, Climate Change and Environment Committee when it considered the budget. We had some problems in squaring how the report on proposals and policies read across to the budget. Your response says that that is partly because the funding is allocated at level 4 or below, which makes it difficult to read-across what is being spent.
The RACCE Committee was keen that the process should continue year on year and that committees should take responsibility for considering their parts of the climate change agenda. Do you have any thoughts on how the data could be made available for committees that are considering climate change targets?
A budget document can be presented in 101 different ways. We try to follow a format—I hope that it appeals to the Finance Committee—that provides continuity in how we present data for scrutiny.
Equally, the budget could be constructed from the perspective of climate change and we could look at it through that prism. It would also be possible to look at it through the prism of equalities. I have avoided presenting the budget in a variety of different ways—that would confuse the debate—by undertaking an assessment of its carbon impact. The information that I have received from non-governmental organisations suggests that that is a positively regarded exercise. I do not by any means think that it is a final piece of work, but it is delivering positive information. If a committee wishes to see more information presented in a different way about climate change, I would be happy to consider that.
I wrestle often with Elaine Murray’s point about the report on proposals and policies. We clearly need to evidence how we are taking steps to address those questions, but we cannot always enable that to come to the surface of a budget document, which has to be consistent with the Government’s commitments to the Finance Committee on how budget information is presented and monitored. I would be happy, however, to consider propositions in that regard.
First, I want to touch on a couple of things that have already been mentioned by colleagues. On the relationship between local government and the third sector, I liked the phrase “collaborative culture” that you used in a previous answer—I am enthusiastic about that. There has often been a collaborative culture between different groups in the third sector, but is that well understood by local government?
Mark McDonald used the example of Glasgow and the citizens advice bureaux; the council put advice out to tender, thereby setting one part of the third sector against another. Unsurprisingly, one part won and another lost. The winning part then wanted to subcontract to the losing part, which made the situation difficult. It appears that we will have the same service and that the council will pay more next year than it did this year, because it has had to try to keep everybody happy. That suggests that the relationship between local government and the third sector, certainly in Glasgow, is not quite right.
10:30
I am not familiar with all the details, but John Mason’s dispassionate presentation suggests that it is not a good story. As I have said, the third sector’s involvement in, and integration with, public sector decision making in some parts of the country is of high quality and high order, but it is not so good in other parts.
We have tried to support the interfaces, essentially to strengthen that representation, but ultimately it comes down to people and whether they are willing and prepared to work effectively together. There is a lot of very good evidence on joint working at local level, with different aspects of the public sector linking with the private sector and the third sector. That is powerfully encouraged by the Government’s response to the Christie commission and its emphasis on collaboration.
In the dialogue that I have on public sector reform, I advance the argument that people should view the Government’s agenda of collaboration as being a clear policy statement of how we want to proceed. Other models of public sector reform could be considered—a competition model, for example, but the Government is not persuaded by it about that. I would simply marshall the two models in front of anyone who thinks that the Government does not prefer a particular model and say, “You could have a collaborative or a competition model, but we have actively and definitively chosen a collaboration model.” That is a signal to people that we expect them to work together. Through my responsibilities, I—with Mr Mackay—encourage local government to do that and I encourage the third sector to do it. The Deputy First Minister and Cabinet Secretary for Health, Wellbeing and Cities Strategy encourages the health service to do that—indeed, she mandates it to do that, as she has the ability to do so. That should be clearly understood as being how the Government wishes to proceed in the design of public services.
That is helpful. Thank you.
The Hutton report has already been mentioned. I admit that I was a little bit disappointed that Hutton moved away from the idea of the top person in an organisation being paid no more than 20 times what the bottom person is paid, although I completely accept that that is less of an issue in Scotland. The Government talks about the issue in its response to paragraph 37 of the committee’s report.
On inequalities, we are trying to bring people at the bottom up with the living wage, but do we also need to have a cap at the top?
I have spent a lot of my time looking at senior pay, as it has clearly been an issue of considerable political angst. I do not have the key table in front of me that would allow me to give the committee definitive answers, so I will give it safe answers that I will not have to correct afterwards.
If we discount from the numbers hospital consultants, general practitioners and other medical professionals, we find that not many people in the public sector in Scotland earn more than £120,000 a year. For people who earn more than £150,000—we are excepting health, for which there is a UK remuneration framework—we are talking about only a handful of people, so there are not the massive disparities that have been talked about. I should stress that I am talking about those pay remits over which I have control. I do not have control over some pay remits—for example, I cannot set the pay for university principals.
Mr Mason’s point of substance is whether I am concerned about the relationship between average earnings and top people’s pay in general, to which my response is yes, I am. I think that that is the root of many of the current difficulties in our society. It is clear that there must be a differential between average pay and senior pay, but some senior pay is indefensible.
However, I stress that, in Scotland, the number of cases of high-level pay is very small and, as I explained to Dr Murray, even in those areas we are actively taking steps to contain some of the elements of that pay bracket.
My third and final question is about the collaborative culture. Going back to our recommendations concerning the Christie commission, paragraph 62 of our report refers to
“a new set of statutory powers and duties, common to all public service bodies, focused on improving outcomes and which include a presumption in favour of preventative action and tackling inequalities”.
The committee is certainly committed to
“preventative action and tackling inequalities”,
but the question is the balance between how much we do through statute and how much we do through the concordat. Personally, I am very enthusiastic about the concordat and the fact that, instead of the top-down approach that was taken previously, we are now collaborating and working with local government. However, the committee’s fear—which I share—is whether the preventative agenda can move forward without a real kick.
I think that it has had a real kick. The Government has nailed its colours very firmly to the mast on that agenda, which we formulated jointly with local government. I stress that we have not done this to local government; local government is actually queuing up to be active in preventative spending and, in fact, has taken many good approaches before we have even got anywhere near the Government’s agenda.
I think that we have a very good framework for taking the agenda forward, but the proof of the pudding will be in the eating. We will see what it all amounts to—the work will certainly be subject to plenty of evaluation. I am confident about the approaches that have been taken so far and do not think that there is a necessity for statutory action; that said, we should not rule out taking such action if we think that progress is too slow. The creation of that collaborative climate is very important in getting all public sector organisations to focus together on achieving the preventative approach.
That appears to be all the questions that committee members have. However, I have one or two left.
Last week, we took evidence from Jim and Margaret Cuthbert, whom I know you know very well and who expressed a number of concerns about Government policy. Although we all accept that capital investment is key to economic recovery and to maximising employment where possible, Jim and Margaret Cuthbert were concerned that the Scottish Government was not doing all that it could in that area, citing certain policies that were being enacted in Germany and France to ensure that, even under European law, more jobs stay in those countries than would otherwise be the case.
The Cuthberts also expressed concern about the fact that a number of small to medium-sized enterprises classed as Scottish are not Scottish and that, although the European Union definition of an SME is a company with 250 employees or fewer, some larger companies have a number of branches whose workforces come in below that level but, when taken collectively, come to a significantly higher figure. I am sure that the Scottish Government has communicated with the Cuthberts on the issue. Are you thinking about making any changes to ensure that we optimise employment through our capital investment programme and that Scotland-based SMEs have the access to procurement portals that they should have and which we all want them to have?
The best answer that I can give is to point out that Mr Neil has met Jim and Margaret Cuthbert along with Barry White of the SFT and officials from the Scottish Government’s procurement team and has had a very full discussion about the points that the Cuthberts have made. They are now considering steps to address the various issues.
The Government has done a lot to enable SMEs to access public sector work. Perhaps the best—and easiest—intervention has been the creation of the public contracts Scotland portal, which, in marshalling public sector contracts available for tender at one end and expressions of interest from SMEs at the other, saves those companies a massive amount of hassle. I encourage SMEs across the country to register on the portal, which certainly has a very high level of participation. However, it is only one of the initiatives that the Government has introduced to support this area of activity. After all, we have as much interest as Jim and Margaret Cuthbert in using public sector procurement to stimulate the economy.
As I have said, discussions on the issue are under way and I am sure that Mr Neil will report to Parliament on the steps that he is taking. He has also commissioned a review of procurement issues and is working towards the introduction of a sustainable procurement bill, which will be laid before Parliament when the preparatory process is complete.
Thank you, cabinet secretary.
At this point, I suspend the meeting until 10:50 to allow for a changeover of witnesses and to give members and certain witnesses a natural break.
10:42
Meeting suspended.
10:50
On resuming—