Good morning, colleagues. I welcome everyone to the Finance Committee's 28th meeting of 2006. I also welcome the press, the public and our witnesses. I remind people, as I normally do, to switch off all pagers and mobile phones. We have received no apologies.
I thank the committee for allowing us to make some introductory remarks on the SPCB's budget submission for 2007-08. I will comment on the overall SPCB budget. John Scott has portfolio responsibility within the corporate body for commissioners and ombudsman. You will come to him later.
Thank you. Do members have questions on the SPCB's budgets?
The letter from the Presiding Officer says that the SPCB is exerting considerable pressure to keep budgetary increases below the level of inflation. It also says that difficult decisions have had to be taken. Will you say a little more about the decisions that you had to take to achieve the below-inflation increase?
Each department had to produce a zero-based budget, which the management team went through with a red pen, stripping out everything that was not absolutely essential or, if it was not certain that it would happen in the current financial year, which could be put into contingency. With the Finance Committee's support, we did significant work on the commissioners and ombudsman budget, which we will discuss later. We have also kept a tight rein on our staffing numbers and have put any uncommitted and unquantified expenditure proposals into contingency. The total cost of such proposals, which referred to anything that might happen or that people might have wanted to do in the next financial year, was halved when placed in contingency, which has allowed us to keep a tight lid both on actual spend and on expectations.
Does that mean that only the aspirational aspects of the budget have been put into contingency, or has anything that was done this year been cut out of next year's budget?
The aspirational elements have been placed in contingency, because I do not think that we are doing anything unnecessary. We have simply looked closely at things that we might have done or improvements that we might have made.
The events budget has increased by almost 18 per cent. Events in the Parliament are very popular, and this venue is more popular than our previous venue. In your opening statement, you said that the costs of catering equipment and hire and staff overtime are passed on to those who host the events. That made me wonder about the additional costs that the Parliament has to bear.
Much of it comes down to volume. We are holding five times the number of events that we held in our interim accommodation, and the number increases year on year.
But where is the Parliament making a loss on this? If, for example, the cost of staff overtime is passed on to those who host the events, is the Parliament meeting the cost of fuel or something else?
I would describe it not as a loss, but as the cost of support such as lighting and heating the public areas and keeping the building open in the evenings. Such expenditure is legitimate, because it supports the Parliament's ethos of involving people in what we do and how we do it.
So the expenditure meets the physical running costs of the building, not the costs of personnel.
Pretty much.
It must have been quite difficult to estimate the proportion of the running costs that are attributable to, among other things, keeping the building open later.
In the early days, we did not quantify such matters. Since then, we have refined our approach more and more and we now extrapolate those costs from the general running costs to find out exactly how much events cost. As I said, some of the obvious extra costs are passed on, but we see these underlying costs as legitimate support to allow the Parliament to carry out its business.
You explained that the contingency fund has increased because certain aspirational elements that might not happen have been put into it. Obviously, the £1.2 million contingency to cover winding-up costs for members who are not re-elected is quite a sensitive issue for many of us. You said that the estimate is reasonable, but what is it based on? How many of us might not be here in 2007?
The figure is based on turnover at the last election. We felt that it provided a reasonable starting point—although I say that with the proviso that the figure might be more or less. After all, that is what a contingency is for.
Surely if, in the 2007 election, there is more churn in the system than you expect, the rest of the winding-up costs will be funded out of contingency. Will that not remove the capability to fund some of the more aspirational elements that we have been talking about?
It depends on the scale of the turnover. If it is massive, we will have to come back with a revised bid. However, we do not expect that to happen—touch wood; I imagine that that feeling is common around the room. If the turnover is the same as in the previous election, the contingency fund should cover it.
On the events budget, is there a separate charging regime for events involving the voluntary sector and those that involve a private company?
It depends on the different sorts of event—
You might want to pass the question on to Mr Leitch.
Events include the things that we do on Tuesday, Wednesday and Thursday evenings. If a group of people come in for an event that is sponsored by an MSP and there are fairly modest catering requirements, that is different from a large event, such as the business in the Parliament conference, for which we would look for external sponsorship. The answer depends on the scale and type of event.
It would be interesting to know what regime is in place. You talked about the allocation of heating costs and staff overtime costs. Is there a cost allocation mechanism that assigns a percentage of the overhead costs to specific events? That would be a complex exercise.
I do not think that we charge that out, but it is useful for us to have a grasp of it. My colleagues might like to add to that.
We are trying to find a more sophisticated method of costing our operations. Although the Parliament is, by its nature, political with a small p, it is nevertheless a business, and we are considering how we can cost our various activities, as distinct from the subsidy that goes in to support them.
The next financial year will include the month of April, in which I suspect there will be fewer receptions and other events than usual because of the election. Has that been factored in?
It is a judgment call, is it not? You might say that, because people will come back in May refreshed and eager to go, they will hold even more receptions. Perhaps new members will want to invite people in even more assiduously than existing members do towards the end of the four-year session. We might all be getting a little tired.
It is certainly the case that, when we came to the new building, many members who had stridently opposed it conducted great masses of people around it. Some of us reflected on that with some interest. However, I would like to see some clearer information on the criteria against which events are put forward, on any differentiation between different types of organisations and the charging regime that applies to them, and on the costs that are taken into account in holding particular events. Those are legitimate questions and we hope that the SPCB might be able to give us greater clarity on them.
We will write to you about that and set out a bit more clearly the criteria that we employ in considering what events should be hosted here.
We would welcome that.
It depends on how the budget is broken down. I think that the increase is slightly above inflation for the staff budget and slightly below in other budgets. That is the result of incremental pay increases and the fact that posts that were not 100 per cent accounted for in the previous year have been accounted for in this year. Such pressures have slightly increased the staff budget.
Last year, you argued that the net increase in staff pay was below inflation as a result of a reduction in the number of fixed-term posts. This year, the number of full-time equivalent posts is unchanged. What are the main features on staff numbers and complements that emerged from the efficiency reviews that you have done?
The main feature is that the proportion of agency and fixed-term posts has decreased. There were transitional elements to do with moving into the Holyrood building, settling down and establishing what complement we needed, but we now know much more clearly how many staff are needed to run this place. Transitional arrangements to do with the move and its implications have ended. For example, much of the work to do with the project team and the building is finished.
I have been a member of the Finance Committee for a long time, so I remember arguments that were made in the past. It was argued that there would be a bulge in staff numbers because of the project's requirements and the move into this building, but it was expected that at the end of the process there would be no need for the same number of staff. However, your budget suggests that after that period there will be no reduction in staff numbers. Is that right? If it is, what is the explanation?
There has been a shift in emphasis. The profile has changed: staff numbers have gone down in relation to the transitional arrangements and they have gone up to enable us to deal with the number of visitors who come to the Parliament. I think that the increases have been mainly to do with dealing with visitors and security around visitors, as well as work with school parties and community outreach. The level is flat, but the profile has changed.
It is assumed that an efficiency review will lead to a reduction in staff numbers. However, there is an issue about the quality of information that is required and the quality of service that is expected, which must be paid for. For example, the information that we received from the finance office did not allow for effective decision making and costing—I mentioned costing earlier. An efficiency review of the finance office that was carried out by independent consultants a couple of years ago indicated a need for a higher professional level and more qualified accountants to do the job, to enable us to understand how to cost this place. That meant a net increase in the professional element in the finance office, the purpose of which was to provide a service to the business areas, so that they can know what their costs are. For example, the convener asked for information about differential costs and how they apply. We need people to work out such costs. That is an example of how the efficiency review dictated a higher level of staff need.
I was not making that assumption. The SPCB told us previously that there was a bulge in staff numbers on account of the requirement to establish the Parliament and project manage the transition process to Holyrood, and that this year's budget would reflect more clearly the longer-term requirements of the Parliament. I presume that that is the basis on which you have presented the budget submission.
The move from fixed-term and agency posts to permanent posts shows the shedding of the people who were here for the transition and the complement that is required as we learn how many people we need to run the business and the building properly.
It would be helpful to have greater transparency on those numbers.
I want to ask about the ability of the various parliamentary services to meet demand. We are talking about the cost of providing various services. Has the Scottish Parliamentary Corporate Body estimated where, within the financial envelope that it is working in, there is difficulty in meeting demand for services from members, the public or external agencies?
The main area of unmet need is probably school visits. The programme for those visits is booked up within days of being opened every six months, or whatever the period is. The SPCB is concerned to find ways of expanding the provision of that service, because it is the one in which there is most unmet need. Is that the sort of thing you are asking about?
That is exactly the type of thing I am wondering about. Are there any other examples?
That is the main one, but there are other things and we can always do more. That is the issue that stands out.
Dr Murray asked about the events budget, in which there has been a reasonably significant increase in cash expenditure. Has that been used to address the problem about the capacity for handling school visits?
Part of the problem in handling school visits relates to the physical space in which to do that. The review of the use of public space—the public foyer, the crèche and the room that is used for school outreach work—includes that aspect. All that is under consideration—indeed, I should have included the shop and cafeteria in the list of spaces on the ground floor that are under review. We are considering whether we can expand the physical space that is used for school outreach work, in order to bring more schools into the Parliament on the school visits programme.
Another issue that members have raised is the capacity to handle non-Executive bills. A number of members have raised points on that subject. Is there a sense within the SPCB that, in its approach to the budget, that area of activity needs to be strengthened? Have you reached any conclusions in that regard?
In some ways, we are the servants of our political masters on that one. The way in which parliamentary time is allocated is always a judgment call. Obviously, the resources that are allocated to the non-Executive bills unit are impacted directly by the pressure of Executive business. There is a political call, to which the SPCB will respond, on the extent to which the Parliament exists to deliver the business of an Executive that has been elected to put a manifesto in place and the extent to which it exists to promote members' business.
I think that that is sufficient on the SPCB budget. We will move on to our consideration of the budgets for commissioners. I invite John Scott to make an opening statement.
In approaching the budgets for the ombudsman and commissioners, the Scottish Parliamentary Corporate Body has been mindful of three things in particular: our statutory duty with regard to funding; the need to respect the operational independence of the ombudsman and commissioners; and the need to ensure that expenditure is prudent and reasonable. I add that, when I speak about the budget holders, I will describe them as "office-holders".
The committee appreciates the clarity in the documents that we have received, including the letter from the Presiding Officer, which puts over a number of issues very clearly. The committee has been examining some of the issues around commissioners and their accountability. We have perhaps moved the goalposts part-way through the budget process but, judging from your comments, there is some concurrence between the SPCB's view and that of the Finance Committee. That has been reflected in the SPCB's response to our inquiry, which has been circulated to members this week.
The third was the commissioner for children and young people. On the basis of our challenge, she has effectively reduced her budget bid by 1 per cent. We also challenged the initial budget bids from the public services ombudsman and from Kevin Dunion, the information commissioner. We felt that it was unacceptable that a budget bid could be 30 per cent over the previous year's budget. In Kevin Dunion's case, the budget was 19 per cent over the previous year's. In the first instance, we wanted to ensure value for money for the public purse. As you would expect, the commissioners and ombudsman made robust cases—which I have outlined—essentially relating to their need for more staff. That has been a matter of detailed discussion between us.
You have given us some explanations for the increases in staffing for the public services ombudsman and the information commissioner. In the course of your deliberations, were they asked how they might be expected to manage and handle differently the complaints that come to them?
We invited them first to ask themselves whether they were as efficient as possible in respect of their staff. The committee would expect us to ask that. Kevin Dunion made a very good case for an increased number of staff for the information commissioner. He has cut costs in every other element of his budget to allow him to have more staff, which we feel is an utterly focused approach.
As I understand it, the projected increase in the staff costs for the Scottish public services ombudsman is 18.8 per cent, and that for the Scottish information commissioner is 30.6 per cent. If I understood what you said correctly, that is because of increases in applications and complaints and the backlog that has built up.
The public services ombudsman and information commissioner have limited ability to influence the number of complaints that come before them and I do not see how we could limit that further. The offices exist as public services so that people can complain. The information commissioner has a significant and clearly defined workload in addition to dealing with complaints and inquiries in terms of reviewing Scottish public authorities, and I think that it is about 10,000 every four years. We have suggested to the ombudsman that she might wish to reduce her advertising budget because she already has such a backlog of cases. It would be wise for her not to seek more work when she is unable to cope with the amount of work that she has.
I wish to follow up some of the convener's questions. It is clear from what has been said so far that the staffing budgets of the Scottish public services ombudsman and the Scottish information commissioner have had to increase because of a sizeable increase in their case loads. If that is so, will you explain why the staff costs budget for the commissioner for children and young people in Scotland has increased by 18 per cent if that office-holder does not deal with individual cases?
You will appreciate that the commissioner for children and young people sometimes plays more of an advocacy and promotional role. She has, notwithstanding that, kept her budget increases within the rate of inflation. She has made considerable sacrifices, although more might be able to be made on her behalf. We believe that she has endeavoured to deliver a reasonable budget. To be honest, I need to pass that difficult question to someone else, because I am not entirely sure where the increased staffing cost comes from.
I presume that the question is being handed to Mr Leitch.
It seems so. There is a fine line between setting a budget and telling people what to do with their budgets. In examining the two main budgets—for the Scottish information commissioner and the Scottish public services ombudsman—we were concerned that they should make to us the representations that they required to make. We have justified that, subject to further questions from the committee.
I say with the greatest respect that those two answers take me to the nub of my concern. We can all look at the numbers for each budget, from which it is clear that staff costs are by far the predominant factor. That is understandable and is the situation in any organisation.
You appreciate where we are coming from. This year, you have given us the opportunity to be much more robust with regard to inviting people to reduce their costs than we have hitherto been able to be. As I said at the outset, we asked the Scottish public services ombudsman to reduce her budget request of 30 per cent over last year's costs. We do not want to interfere with her operational capability, but she has come back with a reduced figure which, as John Swinney noted, is down from £406,000 to £309,000. How she has achieved that is a matter for her; we are just very pleased that she has.
My point is that if it is possible to absorb that kind of reduction, we need to ask how money was being spent in the first place.
Quite—although it is a process with which I have only recently become involved. We will continue to take a more robust view on the matter. Ian Leitch will say something about that.
The convener will recollect that some thought was given to trying to expand the use of shared services. One suggestion for the ombudsman was that she could operate out of a Glasgow office in conjunction with other public services. Taking account of the constraints that we have imposed on the budgets, that suggestion is clearly not a runner this financial year, so any cost elements that are associated with such a move would be removed.
I am not sure about that, but I will move on to my final question. Schedule 4a in your submission gives a summary of the whole SPCB budget bid for 2007-08 and includes the commissioner and ombudsman budgets of £6,301,000 as well as a central contingency fund of £250,000 for legal action and so on. Who controls that central contingency fund?
The SPCB does. It is a centrally held contingency fund for the obvious reason that the commissioners and ombudsmen would have to apply to us should they wish to access it.
If I understand the process correctly, the zero-budget basis indicated a 30 per cent increase in the budget of the Scottish public services ombudsman and a 19 per cent increase for the Scottish information commissioner. As you said, those increases were argued for strongly on the basis that there had been a 49 per cent increase in complaints to the Scottish public services ombudsman and 725 new cases for the Scottish information commissioner—more than double the upper estimate of the number of expected cases.
We believe that that number of staff should be sufficient to reduce the backlog to an acceptable level. It is a judgment call on our part, but I reiterate that we have had assurances from the public services ombudsman and the information commissioner that they will be able to carry out their statutory functions. That said, the public services ombudsman has expressed concerns about her ability to investigate complaints within reasonable timescales and to reduce her backlog, given what she perceives to be the toughness of the regime that has been agreed. The information commissioner has expressed similar concerns.
Can you clarify what you mean by
The public services ombudsman feels that a very tough regime has been put in place. There have been robust discussions, but a balance must be struck between what we feel is value for the public purse and her expressed concerns about her ability to carry out her functions. We have real concerns, which is why we have arrived at what we hope is a reasonable figure. I reiterate that we have sought and been given assurances from those people that they will be able to carry out their statutory functions.
I think that, in your opening remarks, you mentioned a target of 90 per cent for the number of cases that the Scottish public services ombudsman would deal with within a specific timescale. Can you remind me what that figure was?
The public services ombudsman will deal with 90 per cent of cases within nine months.
Is that a statutory duty or self-imposed target?
I think that it is a self-imposed target, although I stand to be corrected on that.
So, it would be possible for the public services ombudsman to continue to meet her statutory duties but to fall below the 90 per cent self-imposed target.
Yes.
You said that
Those are concerns that she has expressed to us, which is why we also have concerns. We would not be doing our job seriously unless we informed the committee of those concerns. We want to discuss the matter with the public services ombudsman to see whether the corporate body can help her in making efficiencies and in respect of how her office deals with inquiries and complaints.
In discussing another part of the budget, Ian Leitch suggested eloquently that an efficiency review may not lead to a reduction in staff. If an efficiency review was carried out with, in particular, the two demand-led ombudsmen and commissioner and it was found that efficiency gains would be realised by employing additional staff, would you consider that in future budgets?
We would have to consider that if there was a case to be made for it. We have taken the reasoned position that seven extra staff—which will increase the number from 38 to 45—should help the public services ombudsman to reduce her backlog. That is a significant increase in the number of staff. Combined with that, we sincerely hope to help her in any way we can, given the moral authority that the Finance Committee has provided us with and the will of Parliament to ensure that she delivers her functions as well as she can within a reasonable budget. We are optimistic that she can achieve that with the increased number of staff. There is an element of risk, but that is the balanced judgment that the corporate body has come to. Time will tell whether we are right.
Let us draw the discussion to a conclusion. I commend the corporate body for the efforts to which it has gone in reducing some of the other costs. Some significant savings have been achieved through co-operation between the various bodies and the corporate body. That is warmly to be welcomed and represents a proper system of control.
I welcome your clear sense of direction, which is, in effect, the will of Parliament. That certainly enables us to pursue further the matters that members have raised. I hold my hands up if I over-egged the pudding about there being a robust discussion and I take the criticism on the chin. All I can say is that the discussion was a great deal more robust than it had been in previous years.
We need by 23 November to get the additional specific information that we have requested for this budget round. We will perhaps discuss offline when it might be appropriate for either the Scottish Parliamentary Corporate Body or the commissioners to come back before the committee to reflect on progress on the longer-term management issues that we have raised. I thank you for coming along.
Meeting suspended.
On resuming—
We have two matters to deal with before we come to the next set of witnesses.
We will invite Margaret Jamieson, who is the convener of the SCPA, to come along and speak to us at our meeting next Tuesday.
I thought that the evidence that we took from the minister in Dumfries was illuminating in a number of respects—that is the most charitable way of putting it. A number of issues arose in relation to the transfers out of Scottish Water's budget. I simply cannot get my head round how what was said about that is consistent with the rest of what the Government is telling us about what it hopes to achieve with Scottish Water. In addition, concern was expressed about the strategic waste fund and where specific items of expenditure are going. We need to probe that further in our report, although we may receive a reply from the minister before we conclude our considerations.
As regards the stage 2 report on the budget and what it is germane for us to report to Parliament about the evidence that we took on the budget revision—which obviously relates to the present financial year—I am sure that we will seek further clarification on some of the issues that John Swinney has raised.
I am particularly keen for us to focus on the efficient government review. I cannot state often enough that the answers that we got from the minister on that were wholly unsatisfactory. He told us that the savings are gross, but could not then go on to give us the net number or the cost of spend to save. The whole proposition is weakened by the fact that the costs might totally extinguish the savings. The matter is likely to bring the Executive into disrepute, especially when it has compounded the situation by having no baseline data against which to show movement in performance over the period. The proposition is risible; it plays very badly with the business community, given the reality under which it has to work.
Efficiency was a major element of our report last year, when we did a substantial amount of work on the issue. I do not think that this year's report can place the same weight on efficiency because the committee has not done the same volume of work on it this year, but we can nevertheless make some points about the progress that we were expecting.
To have had the minister fess up to the extent that he did about the total ineptness of the process and for us not to comment on it would be an own goal.
Although we have not done as much detailed work as we did last year, we can observe from a cursory glance that none of the architecture of the Executive's efficient government approach has changed in any significant material respect since we produced our voluminous report on efficient government. I think that Jim Mather's points were well made. As he has said to ministers before, we are asked to believe in the savings because the minister tells us what they are. Pardon me for being a bit sceptical, but I am not likely to accept that.
I am not arguing that the matter should not be in the report. I am simply saying that we do not have the same volume of information to add in.
I agree entirely with what Jim Mather said about efficiency, although I take your point, convener, about the balance of our report.
Are there any other points that members would like to flag up that arise from the evidence session with the minister?
John Swinney talked about the architecture of efficient government not changing. The architecture has not changed in terms of cross-cutting themes either, particularly for the relationship between cross-cutting themes as set out in the budget and the priorities as set out in the foreword. It is worth commenting that we still do not have detail on how the cross-cutting themes relate to spending decisions or to changes in spending decisions. I am aware that that is not something that we have majored on, but it is worth reflecting that it is a continuing issue.
There is one presentational point that I thought might be worth mentioning, as this will be the committee's final report on the budget. I wonder whether we could look at how the presentational and informational issues have changed over the period, so that we can have a benchmark against which to measure where we have got to and where we feel further work needs to be done. Mark Ballard has highlighted the cross-cutting themes, and I think that there has been some progress in that area, but not to the point that we wanted to reach. We could draw up a checklist of where we have made progress and where we might need to go. Arthur Midwinter might be able to consider that possibility as he has been involved throughout our scrutiny of the budget documents. We might include a longer version of such a checklist in our legacy paper, but our report on the draft budget could flag up some of the issues relatively briefly.
The only issue that has not been mentioned on which I feel almost obliged to include a section in our report is the performance report on spending review targets, which was published as a supplementary to the draft budget. In particular, our report should highlight the fact that several targets have been revised with new targets that seem less tough than the previous indicators. Also, as with cross-cutting spending, we should highlight the problem getting information on cross-cutting targets.
We have not seen those as yet.
I am conscious that free personal care is funded through grant-aided expenditure, which never sees the light of day in the budget exercise. Therefore, I am not sure to what extent we are aware that problems are happening now as opposed to being anticipated after the spending review. Similarly, most of the publicity about university funding has been expectation of a problem that might arise if university funding from the Scottish budget does not keep up with the extra income that English universities receive through fees and charges.
Technically, we agreed to the revision, but I am sure that we would have been lambasted if we had not endorsed the changes that the Government wanted to make. However, there must be a consequence of transferring £161 million from Scottish Water. The transfer says something about the effectiveness of the programme.
With respect, there is a difference between the capital programme and the financing of it. Nothing has been transferred from the capital programme. The Executive has said that Scottish Water can finance the programme without the borrowing. Those are two separate things. That misunderstanding has been an on-going difficulty.
Perhaps folk are fed up with the analysis that the Cuthberts provided, but their argument needs to be played out. At a practical level, the substantial point is that in communities that I and other members represent people cannot put an extra bathroom in their house because of Scottish Water's water and sewerage constraints. I refuse to accept that there is no relationship between that problem and the financing of Scottish Water. If the Cuthberts have not got it wrong, I want to understand who—I suspect that the answer is Mr McCabe or one of his colleagues—has got it wrong. There is a problem in tackling the issue.
Scottish Water releasing £161 million into the central unallocated provision also has an impact. At last week's meeting, Tom McCabe said that he would write to me to confirm the balance available to Scottish Water. The accumulated balance must now be in excess of £500 million, which is a significant amount.
The minister cannot have it both ways. He told us that that money was taken out of Scottish Water's capital expenditure and put into the CUP so that it would be available to Scottish Water in the future. If that is the case, then the proposition that Scottish Water can fund its programme without that money—
At this time. It does not need to borrow the money at the moment, as I understand it.
Ah, but that gets to the nub of the problem, which is that people in my constituency cannot put an extra bathroom in their house because Scottish Water says that it does not have the capacity—
That is about the inadequacy of the programme, not the financing of it.
Well, then we get into politics. The Government tells me that economic growth is a top priority, but there are communities in my constituency where industrial and economic development cannot happen because of water and sewerage constraints; housing developments cannot go ahead for the same reason, and ministers are still saying that they can fund the programme adequately. That says to me that something is fundamentally wrong with the programme, and I want to pursue that as a political issue with the ministers.
It also says that there is prima facie evidence that water charging has become a stealth tax in Scotland, if the Executive can release that level of capital. If the Finance Committee cannot talk about a stealth tax, I do not know who can.
There is an issue here, but we are talking about the 2007-08 budget report and we can take such issues forward to only a limited extent. We have held an extensive inquiry into the subject. If members want to conduct a further mini-inquiry, the committee will have to consider that as part of its forward work programme. There are limits to what we can do on the subject in the context of taking evidence on and writing the budget report.
I have no information about Scottish Water in the context of the budget report, apart from what is in the budget document. The revision is to this year's budget and not an adjustment to the draft 2007-08 budget. We have received no evidence on Scottish Water's budget for the budget that the committee is being asked to approve.
We are being more than a little bit cautious. Every day of the week ministers lecture me about how we are in this great three-year budget cycle that ensures that there are no obstacles in individual budgets. A £161 million capital financing opportunity is going out of Scottish Water and I am not supposed to say that that might have consequences in 2007-08. We need a pretty vigorous inquiry to get to the bottom of what is going on here.
There is an alternative analysis. I know that the SNP particularly wants the Cuthberts to be proved right, but there is another analysis of the situation that worries me. The money is being put back into the CUP and Tom McCabe has said that it will be available in future years should Scottish Water require it. Because my constituency has been badly affected by planning blight and constraints, I want to know whether Scottish Water's investment programme—the one that quality and standards III promised and that was supposed to address all those constraints—is falling behind schedule, in the same way as Q and S II fell behind schedule.
It is worth bearing it in mind that the Scottish Water issues are not just about the cross-cutting theme of economic growth; they are also very much about sustainable development. This situation exemplifies what Derek Brownlee was saying earlier about the budget documents still not providing us with the information that would allow us, the Parliament and the public to trace through some of the questions that Elaine Murray raised. When we are dealing with large amounts of money, we should be able to follow them through the budget documents. We should reiterate that process issue and give Scottish Water as an example of where the budget documents are not transparent.
We need to move on. There are limits to what we can do in the context of the budget document. From what members are saying, it may be appropriate for us to hold a one-off evidence session in the new year on Q and S III. That would allow us to probe the matter properly and have a decent discussion on the issues that have been raised, including those of development constraints and Scottish Water's capacity to deliver the programme. Before we do that, we need to speak to the Environment and Rural Development Committee to ensure that we are not getting in its way, although the Finance Committee's involvement is legitimate.
We must not ignore either the pattern of capital release or the fact that it is happening at a time at which it is widely recognised that Scottish Water is spending as much as it can in terms of the contractor resource that is out there, but that it is doing so neither particularly wisely nor in the right places. The situation in this financial year is that, after the adjustment was made, Scottish Water's net new borrowing is a mere £21 million—that is about 4 per cent of its total capital expenditure, by my calculation. Not to mention that in our report would be to invite the combined personification of the three wise monkeys to be brought on all committee members.
We have gone through the stuff on the Cuthberts. At the time, the majority of committee members believed that their findings were based on a fundamental error of interpretation of public finance and that remains the continuing problem with that analysis. One of the issues that emerges is that any comparison between Scottish Water and other water companies such as Thames Water or Severn Water shows that the finance in those companies comes from customer charges. It is only in the Scottish context that additional Government investment is made—whether that is £21 million or £170 million. That additional factor in Scotland marks it off from what happens south of the border.
I am prepared to agree to that today, but without prejudicing my position on the committee's stage 2 report. Major issues are involved. We would be found to be almost in denial if we did not refer to and explore those issues in our report. I am quite happy to go along with the proposal for an evidence session, subject to it being clearly understood that my agreement to that does not mean that the issue should not be explored in our consideration of the text of our stage 2 report.
Okay. Is that sufficient, Arthur?
I have a final point to make on the basis of your presentation, convener; it is about the local government settlement. It is correct to say that that normally happens around December, but any announcement would be made on the basis of figures that have been before the committee in the draft budget. Surely it would be wholly unusual for additional moneys to be announced at the very last minute. I do not know the protocol in this case. Normally, the committee deals with the budget as a whole and portfolio ministers deal with their areas afterwards, within the framework that is agreed in the document that the Finance Committee has been asked to scrutinise. I think that you were suggesting that an announcement might be made at the very last minute about additional moneys that are not in the budget document and were not announced in advance to the Finance Committee.
I agree that that would not be an ideal arrangement.
I wonder whether that is in order.
It is in order. The Executive can make announcements outside the budget cycle. That might not be logically ideal, but we will probably find ourselves in that situation. I just wanted to flag up that, whatever we say now about local government, we might have to modify it in the context of any future announcements.
Do you want me to mention in the draft report that there are rumours of such a deal or shall I just ignore that?
No, I do not think that you need to mention that. We should deal just with the facts because in the end, the Parliament can still scrutinise the budget bill before final agreement is reached.
I am keen for the committee report to reflect at this stage what the committee said clearly last year, which was that we asked the minister to address the funding problem in 2006-07.
That is essential.
That is clear enough.