Budget Process 2005-06
We return to agenda item 2. This morning we had the benefit of a fairly lively exchange of views with groups who represent a number of agencies in Fife. Members might want to raise with the minister some of the issues that arose from local circumstances. This is the right moment for Ted Brocklebank to make his point.
I apologise for jumping the gun slightly.
Transport was a key ingredient of this morning's discussions in the workshops. People said that many rural communities in Fife have difficulty in communicating directly with one another and Fife Enterprise made the point that problems in Fife impinge on the situation in Edinburgh. Edinburgh hopes to release its full potential and a strategic approach to transport in Fife, whereby transport systems worked better and were interlinked, would help to release that potential.
There are two sides to issue. The problems in Fife mean that Edinburgh cannot fulfil its strategic role, given that it is only 20 or 25 miles from Fife, whereas in Fife individual villages that might be only three miles apart have great difficulty in making their transport links work. We heard claims that parts of the county that are economically successful have trouble attracting workers because transport problems are so difficult—people simply cannot travel to overheated districts such as north-east Fife, where we are today.
Although some of those issues should probably be dealt with directly by Fife Council, there was a feeling among some of the people to whom we spoke that there has not been joined-up thinking on the Executive's part and that we need more of a strategic overview to make transport in Fife work specifically in relation to Edinburgh.
I have a couple of observations to make on what Mr Brocklebank has said. First, the forthcoming Transport (Scotland) Bill, which will undergo financial scrutiny by the committee as well as the normal process of parliamentary scrutiny, will create transport partnerships. It strikes me that that proposal might address—although not fully, I concede—the central point about the need for strategic co-ordination across different areas of Scotland, whether we call them city regions or approach the issue from another perspective. After all, the whole purpose of the Minister for Transport's legislative proposals is to make strategic connections between different areas. I am sure that Mr Brocklebank would expect no less of the Transport (Scotland) Bill and, more to the point, of the actions that arise out of the bill than that they should lead to Edinburgh, the surrounding local authority areas and the appropriate public sector agencies, such as Scottish Enterprise Fife, drawing the partnership together to ensure that it meets the strategic needs of the area.
On the second point, on the local level, I do not want to bore Mr Brocklebank—I know that he is slightly taken with the number of times that ministers trot out the statistic of how much more money we are putting into public transport as a percentage of the overall Scottish Executive budget, which has moved forward considerably. However, it is right that decisions on local bus services—to which I assume he refers—are devised at a local level so that those services connect in a way that allows workers to move round the area. I cannot conceive of circumstances in which any central transport agency covering Scotland could ever be close enough to judging local needs to make such calls. It is for Fife Council to devise the best mechanisms and connections between different modes of transport to fulfil the need. However, if specific examples were raised in the discussions this morning, I am happy to take them back to the office and to bring them to the attention of the Minister for Transport.
My other point is on industrial development. In the Levenmouth area, there is potential for major industrial expansion, particularly in relation to the next generation of renewables technology: wind turbines at sea. The area contains a fine site—on which oil rigs were built previously—for that kind of work. The problem is that the roads infrastructure is not up to sustaining such a major industrial complex. There is a feeling that, with more strategic planning, perhaps through Scottish Enterprise Fife, the roads network could be improved to give the area, which is going through a great depression at the moment, a chance to be revitalised.
I would be happy to examine the specifics of taking a central approach to economic development, to promote and enhance regeneration opportunities in communities in Scotland, with colleagues in the Enterprise, Transport and Lifelong Learning Department. I suspect that it would be helpful if the considered and settled will of the enterprise agency and the local authority was that they would pull together their transport priorities for the area. It always helps central Government in assessing projects if there is a strong feeling across the local agencies that are involved. However, I would be more than happy to pursue the issue back in Edinburgh.
I want to pursue that further. One of the concerns, not just in Fife but throughout the country, is that in identifying development opportunities, the enterprise agencies have to wait for the Executive's spending plans. That is an issue on the Clyde, for example, which has been identified as a potential economic growth area. There is a lag in making decisions on the transport infrastructure. It has been said in Fife that, although there is good communication between the enterprise agency, the council, the health board and other bodies, the process by which that group identifies key priorities and then gets the Executive to respond could be improved.
A further point on links with Edinburgh came out of the workshop with which Jim Mather and I were involved. Transport planning in Edinburgh, which is crucial to Fife, is being undertaken from an Edinburgh perspective, rather than a regional perspective. That manifests itself in a number of ways—I refer, for example, to the tram lines and the lack of prioritisation for the A8000, although I acknowledge that that issue is now being dealt with.
The new version of "A Smart, Successful Scotland" begins to talk about conurbation planning, which is obviously a direction in which we need to go. However, that requires the Executive, as well as local and national agencies, to respond in order to ensure that transport investment in particular—which is crucial to Fife—takes account of the needs of Fife, West Lothian and other areas and is made in a more rational way.
For example, how is the relative priority that is given to different kinds of projects in the greater Lothian area arrived at? I am thinking of trams against a Borders rail link against another Forth crossing against road improvements. Such things are not being assessed as systematically and rationally as we would like them to be. That was certainly a point of view from the Fife community, which would prefer greater transparency and rationality and would like a greater sense of decisions being made on the basis of a calculation of economic gain.
I will make a couple of financial points at the outset. We now have three-year budgeting, of course, which those of us who were in local government before we were elected to the Parliament and who sat through a number of years of having settlements imposed on us at the last possible moment must clearly see as a step forward. That it is a step forward is certainly recognised not only by local government, but by the other agencies that are part of the process. I would argue that that assists longer-term planning.
We also have a 10-year transport plan, which by any measure is surely a strategic overview of the country's needs across our range of transport mechanisms and systems. On the systematic nature of transport planning and project assessment, a capital investment plan must go through for every transport project. The Scottish transport appraisal guidance process puts a heavy emphasis on the economic benefits that would accrue from a project. Economic benefits and sustainability arguments must be balanced, as I am sure members would expect. Therefore, a number of mechanisms ensure that capital investment plans are properly assessed, that they are accountable in delivering outputs and—more to the point—that they ensure value for money. Those mechanisms also ensure that the financial planning that underpins capital investment is set against the background of a 10-year transport plan, which was first announced by Wendy Alexander when she was the minister with responsibility for such matters.
A lot is going on, but I accept the argument about, and the need for, better co-ordination between the local and national levels, which is what I was trying to suggest. Legislation will not always solve such problems, which is why I said in response to Mr Brocklebank's question that the transport partnerships are very much designed to take forward such issues where there is legitimate criticism.
I want to pursue the point a wee bit. The configuration of the transport partnerships is always going to be an inexact science, as boundaries must be drawn somewhere. The problem with transport is that interests go beyond boundaries.
You mentioned STAG assessments. I have been asking for STAG assessments to be made public for three years. We have no information, for example, on the relative economic benefits of the Aberdeen ring road against the M74, the Borders rail link or any other transport project. That information is wholly internal to the Executive. Until you are prepared to publish STAG assessments—which you say are done on a rational basis—and to show how they fit in with economic growth planning, we have no basis for analysing the sums.
When projects are proposed that are politically colourful and interesting but have no economic basis for continuation, the biggest test is not what is included but what is excluded. I am sure that Jim Mather will hate me for saying this, but the Ballycastle ferry is probably the most obvious example of that. I do not believe that it stacks up economically, but it remains in the planning process. We could disagree about that, but the problem is that we have no evidence.
Jim Mather and I would probably agree that that ferry route has an economic benefit. Any assessment by Highlands and Islands Enterprise and others would show that.
The STAG system adopts a tried-and-tested mechanism that the Treasury uses for English and reserved transport plans. I guess that the assessment mechanism has always been internal—to the Scottish Office and now to the Scottish Executive. All transport projects and all capital investment throughout the Executive are certainly subject to rigorous analysis, which is as it should be.
If rigorous analysis is undertaken, can we please be told the criteria on which the analysis is conducted and the assessment method? Will that be made more transparent? Those are the obvious questions to ask.
Indeed. I see no problem in discussing with the committee the criteria, which should be the same for any capital investment proposal and would be subject to parliamentary scrutiny. The other side is the economic analysis and the analysis against sustainability and other appropriate criteria, which are always subject to parliamentary scrutiny. The Minister for Transport appears regularly before the Local Government and Transport Committee to answer questions about those issues.
You say that STAG analysis comes with the Treasury seal of approval—or whatever words you used. That is the last thing that would fill us with confidence. Railways throughout the United Kingdom are in their present state because hardly any rail project has ever met the Treasury criteria for investment. We need the clarity and transparency for which Des McNulty asks.
It is difficult for me to go into detail. The task of bringing rail projects through the process in a positive way is demanding. We have laid out in a 10-year transport plan what we are doing with rail and other forms of transport. I will write to describe the criteria as best I can.
The workshop in which I was involved this morning felt that a bit of a silo mentality remained in the Executive and that people did not think sufficiently across departmental boundaries. For example, investment in transport helps tourism and may help other aspects of local economies, but that read-across does not seem to happen and the workshop did not see it reflected in the budget documents. Even if initiatives belong to one department, many have cross-cutting effects, but people felt that that did not come across in the presentation of the budget. That is part of the same argument as has been made.
In my workshop, somebody who is involved in tourism talked about investment in air routes. He said that aircraft take Scots out of Scotland to holidays elsewhere and take more people away from Scotland than they bring in, whereas the Superfast Ferries service has succeeded at bringing people into Scotland, yet there is no suggestion that we will invest more in ferry routes. Where does that type of argument and analysis of economic benefit take place?
The member raises two issues. There are cross-cutting themes, which we have discussed ad nauseam.
Issues that are not cross-cutting themes are also cross-cutting. Cross-cutting issues are not limited to themes such as closing the opportunity gap. Transport is also cross-cutting.
I accept that point entirely. I will not bore you with my transport problems, but because of where I come from I know all about them from various cross-cutting perspectives. In the annual bilateral discussions that finance ministers have on all portfolios, we concentrate on areas and themes that cut across departments and provide coherent themes for Executive strategic analysis. I take the point that Dr Murray makes about transport, which has an impact on almost every aspect of policy—certainly on most portfolios. Transport is picked up in the overarching Scottish Executive theme of growing the economy. We seek to ensure that issues are connected and—more to the point—that they are understood and developed by each department in the area where it has responsibility.
The second issue is how cross-cutting themes impact on ferries and the air route development fund. The development of policies in those areas is tied into other portfolios. For example, the enterprise and lifelong learning portfolio has a close interest in both policies. Freight facilities grants were awarded to ensure that there was investment in developing the Superfast Ferries service. There has also been investment in air route development. The enterprise and lifelong learning portfolio and other departments are centrally involved in the development of those policies and in the thinking that takes place about them.
For as long as I can remember, the Confederation of British Industry, the Federation of Small Businesses and the other representative organisations of the business community have lobbied successive Governments about the need for direct air routes from Scotland to other parts of Europe, to North America and to other parts of the world. There is a strong evidence base that suggests that the business community and our tourism industry are seeking direct air routes. I accept that it is a challenge to tie in air route development to VisitScotland and other agencies, so that when we open up a new route to Frankfurt or Prague they are doing work in those cities to ensure that planes return with visitors, business travellers and people from the other markets that we want to pursue. The central tenet of Dr Murray's question is entirely fair. We must ensure that there is no silo mentality that holds back development.
I am keen to reflect back to you the feedback that we received from one senior individual who came here from the commercial world—a major local employer. He welcomed moves that we have made on education, lifelong learning and transport, but he was worried about the long-term sustainability of the spending. That was a key concern for him. In addition, he was worried about whether we were being aggressive enough in achieving efficiencies in the public services. Can you address those concerns, which are, in essence, two sides of the same coin? At the end of the day, he was asking what we are doing as Scotland plc to bolster our competitiveness, which would produce growth both generically across Scotland and within the confines of his business.
Without dodging the question, I will duck slightly the issue of public sector efficiency. That is part of the efficient government agenda, about which Tom McCabe will make an announcement to Parliament. A document will accompany the announcement and it will be subject to parliamentary scrutiny. Members will have the opportunity to examine it closely. However, I take Jim Mather's central point: we should always strive for a more efficient, effective public sector at all levels of government and in all agencies for which Government is responsible.
One could argue that sustainability of spend is always the challenge for finance ministers or for those who are involved with such matters at whatever level of Government. I remember that Mr McNulty had responsibility for sustainability of spend at a big local level and I had similar responsibility when I was a councillor in Shetland.
The sustainability argument is important and that is why we have spending reviews. Just as we have three-year settlements for local government, I am sure that Mr Mather recognises that it is better to seek to plan central Government in a more coherent manner over time and therefore not only to seek to have those spending reviews every couple of years, but to link them to ensure that we tackle the central point—the sustainability of spend.
We have made a big investment in, for example, higher and further education for the future. That was done in response to the business community and arguments from the educational sector about investment for the future. I accept that it is the responsibility of ministers to ensure that spend is sustained, but we will do so through the coherent and rigorous mechanism of the spending review process. We will also use feedback mechanisms such as the budget roadshows that Tom McCabe and I are doing to pick up where problems arise and, more to the point, where spending needs to be realigned. The process exists to allow us to tackle the entirely legitimate question of the sustainability of spend.
It would also be negligent of me not to reflect back to you what was said to me during this morning's workshops by a gentleman who I assume is a major opinion former in Fife and perhaps in wider Scotland. Without any prompting from me, he suggested that we do not take an aggressive enough stance on policy that could give us a competitive edge. He was looking to push the barriers to reserved powers and he spoke about energy policy in particular. He and others made an important point towards the end of the workshop—a cri de coeur suggestion that more could be done to reinforce the message about economic growth. I think that what he was really saying was that he felt that the Executive and individual ministers were not quite obsessed enough about competitiveness, getting incremental investment from outwith or within Scotland, or espousing, voicing and making real a positive vision of what Scotland would be like with a better, stronger, growing economy.
It would be easier for us all if the press would write exactly what we wanted it to write. The First Minister has just returned from China and the Deputy First Minister has just returned from the west coast of America. Both visits were trade-delegation oriented and very concerned, as Mr Mather mentioned, with the external element of inward investment and the continuing links between international and Scottish businesses that are developing overseas.
I would have liked, as I am sure Mr Mather would, more recognition of those visits. We tend, do we not, to take the attitude that when a trade minister, an enterprise minister or a First Minister goes overseas, it is not the best use of their time—I will not use the more colourful language that would be printed in our tabloids. However, those visits are intensely beneficial. Time and again, organisations such as the Scottish Council for Development and Industry ask us all to put more effort into leading trade delegations, for example. That is what we seek to do as much as we can within the confines of attending to parliamentary duties and, indeed, being in Parliament. There is no lack of commitment in that area.
We are ensuring that the business community and Scotland in a wider sense are aware of our agenda. In recent weeks, we launched the framework for economic development in Scotland, led by the First Minister and the Deputy First Minister. The refreshed "A Smart, Successful Scotland" was published on Thursday last week; although that was somewhat overshadowed by what happened in Parliament on Wednesday, it was, nevertheless, an important development. There is no lack of commitment to developing economic growth and I would like that to be understood and publicised more widely. We believe strongly in that agenda and we seek to take it forward as aggressively as we can.
Given the events of the past few days, a week is a long time in politics.
I return to the need for a strategic overview. This morning, one or two people expressed worries that the Executive, Fife Enterprise and Fife Council are not working in tandem as well as they might on issues such as the proposed ferry service from Kirkcaldy to Leith to link with the tram system. As you know, the situation on the Forth road bridge is becoming intolerable; 60,000 movements from Fife go over the bridge each morning. We are looking at the requirement not for either a ferry or a bridge, but for a combination of both. People in Fife are throwing up their hands and saying that decisions must be taken and the problem must be resolved soon, but no strategic overview of the way ahead is apparent. That is symptomatic of some of the other things that we heard about transport.
I do not want to repeat everything that I said when Mr Brocklebank asked his earlier question, but I would be genuinely disappointed if the local agencies were not working together. Fife has a geographical advantage that not all parts of Scotland have—I am sure that the committee considers that from time to time—in relation to community planning partnerships. The bodies are tied together by geography and that is hugely helpful as it allows lots of difficult barriers to be broken down. If that local work was not happening, I would be interested in understanding more about that process.
I do not think that I can say more on the transport issues. I hear what is said and I will do my best to take the issues back to the office.
I have a follow-up question on another disappointment, in relation to relocation, which is another hat that the minister wears. Kirkcaldy meets all the criteria for a place that should have relocations: it has office space, plenty of workers and good transport links, in that there is a railway. I understand that Kirkcaldy applied for nine of the relocations but did not make the short leet for any of them. I remember that in a previous amicable discussion like this one, you claimed that, ultimately, such decisions were made politically. Has that had something to do with Kirkcaldy not coming through?
Dare I get into politics? Last week, some of your colleagues accused me of taking a political decision in relocating what I think is an important unit to Dumfries. I do not notice a hotbed of liberalism in that particular seat at the moment, so I take your political charge with a pinch of salt.
I will not bore you with the usual montage on relocation. I hear what you say about Kirkcaldy, but no area of Scotland is ruled out. I will look into the specific example of the recent shortlists and ask my officials to investigate the matter, but we are due to discuss relocation in January—very much in response to the Finance Committee's report—and I am sure that we can have another go at the matter then.
On your response to Ted Brocklebank's first question, one of the things that came through from the witnesses to whom we spoke this morning was the degree of coherence that exists in Fife, with different agencies talking to each other and identifying the best solutions for Fife. Having done that, their concern was more about how to take forward the things that they could not deal with internally and how to rank themselves up the planning process in the Executive. The issue is about the fit between national planning and local co-ordination and identification of a route forward. That problem is not confined to Fife—as you say, Fife has some advantages in relation to that. However—I say this to you with your public service reform hat on—there is a sense in which, five years on from devolution, we need to look again at the boundaries and structures beneath the Parliament and the Executive to see how we can strengthen links and eliminate wasteful duplication, lack of overlap or other problems that arise from structures that have not been modernised.
That is an entirely fair point. My only observation is that, as we have discussed before in relation to community planning—I have certainly discussed the matter with the Local Government and Transport Committee—individual members of the Scottish Executive management group, under the permanent secretary, have been allocated particular areas of Scotland in the context of community planning partnerships. They have a specific remit, in relation to public sector reform, to examine the connections to ensure that areas are not dropping out of one portfolio and featuring only in a particular different portfolio.
I will look into the example that you mentioned and check which management group member has been allocated Fife. I will see whether he or she can pursue those issues to ensure that we have a connection across the Executive. That is a fair point.
I would be interested to know which management group member takes account of Clydebank.
I will let you know.
I agree with what the convener and Tavish Scott have said about the benefits of coterminosity of boundaries. I am sure that Elaine Murray would agree that we very much benefit from that in Dumfries and Galloway.
I will go back to longer-term planning. I agree that the length of time that the budget spans is much better than the previous situation, but that did not prevent me from getting a lot of flak in the group that I was in about the shortness of the timescales to which the bodies operate. The health board in particular was concerned that it was not sure what next year's allocation would be and several local authorities were in the same situation. A huge proportion of the expenditure of such bodies goes on salaries, yet still nobody knows what the costs of agenda for change will be and nobody in the local authorities knows when the single status agreements will be implemented and what their costs will be. In the short term, people struggle to know what is happening.
Another point was that we need to try to get even longer-term planning than that which is covered in the budget document. We need to have planning over 10, 15 or 20 years. The point was made that, in relation to the demographic changes that are happening in the country and the related changes to health services, we are making decisions, particularly on capital investment in hospitals and schools, which may turn out to be inappropriate well within the lifetime of the investment. Is there any way in which we can try to have such a look ahead?
Mr Morgan has made a series of points on health that reflect previous discussions that we have had at the committee. I hear all that he says on the issue. Health allocations and the system of allocations are matters that we have sought to consider carefully in the context of the spending review for the very reason that he states. The balance between the central allocation and the number of individual items needs to be looked at and is being looked at. External factors, such as the impact of pay deals and the agenda for change proposals on health board finances, must also be considered.
Those points are all well made. If I may say so, one of the advantages of the new Minister for Health and Community Care is that he was previously the Minister for Finance and Public Services. He therefore brings all those central finance thoughts to the health budget process. I am sure that we will discuss those issues in the usual run of ministerial bilaterals in the month or so before Christmas.
I take Alasdair Morgan's point about long-term planning and I am attracted to his argument. The capital investment plan is an attempt, again in response to the Finance Committee's recommendation, to deal with the issue. We hope to be able to publish the capital investment plan as soon as possible.
There is considerable logic to the 10, 15 or 20-year planning horizon, but what gets in the way of that logic is politics and changes that happen because of new Governments. I suppose that those are part of the cost of democracy. We can sometimes have reason to change our priorities. I appreciate that we have not adopted 15 or 20-year planning horizons, but the measures that we have sought to put in place—such as three-year budgeting, a 10-year transport plan, a long-term overall capital investment plan and a spending review process that seeks to achieve continuity over a period of time—are all part of the overall trend to look forward and take a longer-term perspective.
We will continue to strive to do that, but it is not necessarily straightforward to do so in the context of day-to-day events and, in particular, the four-year cycle of the political process. That stops long-term planning to some extent.
As there are no further questions, I thank the minister and his officials for attending the meeting and for responding to our questions.
We have dealt with all the items on the agenda, so I close the meeting. I look forward to meeting colleagues again a week on Tuesday.
Meeting closed at 15:55.