Finance Committee, 15 Dec 2009

Meeting date: Tuesday, December 15, 2009

Official Report 235KB pdf

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Pre-budget Report 2009 and Scotland Performs

Item 2 is to take evidence on the pre-budget report and the Scotland performs website. I welcome John Swinney, the Cabinet Secretary for Finance and Sustainable Growth, who is accompanied by three Scottish Government officials. They are Alyson Stafford, director of finance; Gary Gillespie, deputy director, office of the chief economic adviser; and Trudi Sharp, deputy director, performance division. I invite the cabinet secretary to make an opening statement.

I will first comment on the pre-budget report, which the Chancellor of the Exchequer delivered to the House of Commons on 9 December 2009 and which provided an updated forecast for the United Kingdom economy and public finances. The Treasury expects UK gross domestic product to contract by 4.75 per cent in 2009, which is a sharp downward revision from the forecast of a fall of 3.5 per cent that was made in April's budget. The UK economy is predicted to recover in 2010, with the PBR forecasting growth of between 1 and 1.5 per cent. The recovery is expected to accelerate in 2011, with growth of 3.25 to 3.75 per cent. The forecasts for 2011 are significantly more optimistic than those of independent forecasters, including the Organisation for Economic Co-operation and Development and the International Monetary Fund. The consensus is that growth of about 2 per cent is more likely. Should Her Majesty's Treasury's forecast prove to be overoptimistic, that will have implications for the outlook for the public finances.

Within those forecasts for the public finances, the Treasury now estimates that net borrowing will rise to £178 billion in 2009-10 and £176 billion in 2010-11. The figure for 2009-10 is £83 billion higher than in the previous year. The forecasts exclude the financial support to the banking sector. In the PBR, the chancellor indicated that he expects that the losses that have been incurred from the various interventions might ultimately amount to about £10 billion, which is down significantly on the forecast loss of between £20 billion and £50 billion that was made at the April budget.

It is clear that the severity of the UK fiscal position will have significant implications for fiscal policy in the years ahead. At a UK level, tax rises and spending cuts are set out in the chancellor's pre-budget report. Reductions in spending will bring consequent reductions in future Scottish budgets. That is why it is so important that, in the 2010-11 budget, we make real progress towards ensuring the sustainability of capital and revenue budgets over the medium term.

The PBR contained a number of specific policy announcements, including those on the raising of employee, self-employed and employer national insurance contributions by a further 0.5 per cent on top of the 0.5 per cent that was announced in April's budget, and the introduction of a temporary tax on bank bonuses. There was also confirmation that the headline VAT rate will return to 17.5 per cent from 1 January 2010. As a result of the announcements in the chancellor's statement, the Scottish Government will receive consequentials totalling £23 million in 2010-11. Of that, £11 million is capital and £12 million is resource. Those consequentials should be viewed in the context of the earlier reductions in the Scottish budget from initial plans, as highlighted in a recent Scottish Parliament information centre report.

Perhaps the most significant implication of the PBR for Scotland was the chancellor's decision not to announce further acceleration of capital expenditure into 2010-11. As the committee will know, I wrote to the chancellor in October requesting that he announce provision for a further stimulus of accelerated capital investment. Although we see tentative signs of growth returning to certain sectors of the Scottish economy, recovery is at an early but critical stage. That is why I was disappointed that the chancellor did not announce a further acceleration of capital expenditure into 2010-11.

In concluding my remarks, I turn to the outlook for the Scottish Government budget as a consequence of the pre-budget report. On the basis of the detailed projections for the expenditure components that are contained in the report, it is estimated that total managed expenditure will fall by between 0.1 and 0.2 per cent in real terms between 2011-12 and 2013-14. In comparison, between 2000-01 and 2007-08, the UK TME grew by an average of 4.3 per cent per annum in real terms. Using those figures, the Institute for Fiscal Studies has forecast that total UK departmental expenditure limit expenditure will fall by approximately 4 per cent in 2011-12, by 2 per cent in 2012-13 and by 3.6 per cent in 2013-14. That will be an average real-terms reduction of 3.2 per cent per annum—significantly more than the reduction that we face in 2010-11 and sustained over a three-year period.

The PBR did not contain detailed outlines for departmental budgets over the next spending review, and the precise effect on spending in Scotland will depend on how such a departmental expenditure limit reduction is shared across Whitehall departmental spending programmes. It is, therefore, not possible at this stage to be precise about the impact on the Scottish Government budget. Nevertheless, the assessment by the IFS appears to be in the correct range.

The PBR revealed that the UK Government intends a significant part of the burden of the adjustment to public expenditure in the period ahead to focus on public investment. UK Government net investment is scheduled to fall from £49.5 billion in 2009-10 to £22 billion in 2013-14. The implication for gross investment is a projected cut of around 12 per cent per year in real terms in UK investment spending. It is clear that we can expect a significant squeeze on public spending in Scotland in the years ahead that is likely to be unprecedented in its severity and duration. It will present major challenges to our Parliament and our Government, and the Government is determined to work with the committee and our partners to address the challenges that it will raise for Scotland.

Thank you, cabinet secretary. In inviting questions from committee members, I will allow around half an hour for questions on the PBR, then we will move to questions specifically on Scotland performs.

Cabinet secretary, you mentioned the uncertainty around the implications for the Scottish Government budget. That uncertainty will exist until we have a spending review that sets out the allocation of future budgets between departments. You have been explicit in accepting the IFS figures as reasonable. Are your planning scenarios for Scottish Government spending based on roughly a 3.2 per cent real-terms reduction each year for the foreseeable future?

As I said, there is uncertainty about the precise nature of the changes that will be made to public spending over the next few years. Those will depend significantly on the way in which the UK Government decides to restrict departmental expenditure limits in some areas of expenditure. In some departmental expenditure limits, there is close to 100 per cent comparability between the Scottish Government and the UK Government. In those circumstances, we will simply take a proportionate share of those amounts, which would ordinarily be of the order of 10.05 per cent of any change. In other areas of public expenditure, the comparability is closer to zero, so there will be no implication for the calculation of our departmental expenditure limits. That is why I said that it was difficult to be precise about such factors—there is a level of uncertainty.

The IFS's assessment appears to be in the correct range, and the Government will consider the implications of such a range in its future planning. The type of information that we require for future planning could be set out in a budget in the spring of 2010, although I suspect that the rationale that underpins the pre-budget report militates against that. The much more likely scenario is that we will be given the precise data as the output of a comprehensive review that I imagine is unlikely to be with us earlier than October 2010, although it could be with us by the end of the Westminster parliamentary term in July 2010. However, that has to be at the unlikely end of the spectrum.

On the Scottish Government as an employer, it was suggested at the weekend that the impact of the proposed change to employers' national insurance contributions would cost the national health service about £44 million a year. Has the Scottish Government quantified the impact of that change across the wage bill in the Scottish budget?

The entire implications across the Scottish budget have not been calculated. However, I can confirm that we estimate that the increased cost for the NHS as a consequence of the national insurance increase will be £22 million.

Page 62 of the pre-budget report refers to European Investment Bank funding that has been made available to other regions and nations in the UK. In relation to that, there was a piece in The Herald over the weekend on the Scottish Investment Bank. Can you clarify the situation with the European funding? With regard to the joint European resources for micro to medium enterprises programme, is Scotland going to be a JEREMIE-free zone?

The Government, working with Scottish Enterprise, has been exploring the opportunities to advance the possibility of securing EIB funding through the JEREMIE programme. However, we run up against the significant obstacle of the Treasury's funding arrangements. A bit of flexibility would undoubtedly help us to advance. We must be assured that we can deliver increased spending capability and power as a consequence of having those resources. The Government continues to pursue that issue with the Treasury.

Why, then, are other parts of the UK able to access the scheme when the Scottish Government is unable to do so? I presume that the same rules apply across the UK.

Different mechanisms are being used in other parts of the UK. For example, in north-east England, the mechanism essentially takes the resource outwith the public sector, but that would not enable us to deliver the type of investment decision-making capability that would come from operating the fund—like a number of investment funds that are operated by other organisations—under the auspices of the Scottish Government's departmental expenditure limit. The Government has engaged in dialogue with the Treasury to try to secure the type of arrangements that have been delivered in Wales. We are continuing with those discussions.

It is right that you have generally accepted the way that the Government has borrowed money in recent times, and in fact have asked for more of it in terms of accelerated capital expenditure. Given that level of borrowing, do you think that the timescale that the Government has outlined to cut back the deficit and repay debt is reasonable?

My difficulty with that gets to the nub of the practical issue of capital acceleration and the chancellor's growth forecast. The model that he has marshalled for the future of public finances over the next four to five years is predicated on securing 3.25 to 3.75 per cent growth in 2011. I contend that, if we are to achieve that level of growth, we will have to move a significant distance from where we are today. Therefore, if we do not have a sustained and dynamic economic recovery throughout 2010 at the predicted level of 1 to 1.5 per cent, and then a significant rise to 3.25 to 3.75 per cent in 2011, we will not generate the revenue flows that will enable the debt to be repaid.

By removing the fiscal stimulus in 2010, the chancellor runs a risk of interrupting, holding back and restricting recovery so that the economy does not motor at the level that we need. We require 4 per cent growth from the private sector, and although the outlook is more optimistic than it was 12 months ago, it is still challenging. My concern is that, if the fiscal stimulus is removed in 2010, we may not be able to generate the economic conditions that will result in the growth that the chancellor envisages. As a consequence, it is difficult to see how the debt could be repaid according to his suggested schedule.

From that, I take it that you see no problem with increasing the levels of borrowing in the short term. You can confirm that point in a moment. If it is so vital to stimulate the economy and you require that accelerated capital, that leads to the question—which takes us back to our previous evidence-taking session—why have you not targeted that economic area more directly within the resources that you control in your budget for next year?

On the increased borrowing that I am talking about, I have made clear publicly that the capital acceleration programme of £300 million to £350 million that has been at our disposal over the past couple of years would assist in 2010-11. If we built that up on a UK basis, we would be looking at something like £3 billion, which is the increase in expected borrowing that the chancellor has undertaken between his assessment in the April budget and the pre-budget report in December. Therefore, that is not particularly different from the expected pattern of borrowing.

On Mr Chisholm's second point, I assure him that the Government is working to ensure that all the resources that are its disposal for capital investment are fully and effectively deployed to support and stimulate such investment in Scotland. We will do that through the 2010-11 budget. If I am fearful of any element of the budget that lies ahead, it is the perspective that the chancellor set out on the future of capital investment, which looks like a reduction of about 12 per cent over a number of years. That will be a really significant constraint on capital spending in the years to come.

You have emphasised the bad news, as you see it, and have used the figures from the Institute for Fiscal Studies, although I am not entirely sure that we can rely on them, because I am not sure how the institute can estimate with any confidence the level of annually managed expenditure.

I will focus on the other side: the departmental expenditure limits, which are our primary concern. In the pre-budget report, health expenditure, which amounts to almost a third of our budget, was protected; a real-terms increase was announced for education, for which we will get the consequentials; and there was protection for policing, from which we will also get consequentials. Do you not welcome that and agree that it is good news for the Scottish budget, notwithstanding the other difficulties that we face?

I tried hard to be as dispassionate as possible in setting out the information to the committee. We cannot be precise about such questions, and I do not claim that the estimates that I have put before the committee are precise—they are in a range that it is not unreasonable to deduce from the information that is at our disposal.

Mr Chisholm has suggested that we do not have any interest in annually managed expenditure, but we certainly do have an interest in it; it is a crucial factor in calculating the size of the departmental expenditure limit resource that is available to us. Any observation of annually managed expenditure suggests that it will occupy a greater proportion of total managed expenditure in the next three years than it has done in the last three years, which puts pressure on departmental expenditure limits.

Returning to my answer to Derek Brownlee, I say that if the chancellor's detailed decisions about departmental expenditure limits in the United Kingdom protect health, education and some elements of justice, that will provide some encouraging comparability factors for the future. However, we need to see the numbers in detail to be clear about the implications.

The other thing that we need to be clear about is the re-examination of baselines in spending reviews—there is some history to that. We found a change in the baselines for the Department of Health's budget for 2008-09. Such changes have a material impact, as our own baseline changes correspondingly and directly.

I am trying to establish the extent to which you disagree with what the UK Government is doing. Accelerated capital expenditure aside, I am not sure that you are that far away from the economic judgments that the Treasury is making. Do you welcome the rebalancing of public expenditure cuts and tax increases in the Government's approach to dealing with the fiscal deficit? It is said that there will be a 2:1 ratio, which rebalances the original proposed ratio. Do you welcome that new balance between public expenditure reductions and tax increases in order to deal with the deficit, which you recognise must be dealt with in due course?

I accept without reservation the need for the deficit to be tackled. It is a significant factor for us and we acknowledge that that has to be done. However, there is part of the rationale for the pre-budget report that I do not follow. The headline statements say that we must be careful to encourage growth and not to remove fiscal stimulus too quickly. However, in my view, we do see fiscal stimulus being removed too quickly. I do not follow that rationale at all. For the chancellor to be confident of getting 1 to 1.5 per cent growth in 2010, and 3.25 to 3.75 per cent growth in 2011, real momentum is required in the economy, but that is hindered by the lack of accelerated capital expenditure in 2010.

You have strongly emphasised the accelerated capital element, which has been the subject of much comment on the part of the Government, in clear terms, in response to the PBR. The First Minister said in the chamber last Thursday that the Government

"had calculated that 5,000 jobs had been generated by the use of accelerated capital spending."—[Official Report, 10 December 2009; c 22094.]

That was to do with the accelerated money this year. That figure is correct, I assume.

The figure was generated by the Government's input-output model and produced by our statisticians so, yes, the figure will be correct.

Those are actual jobs that have been generated.

That is our assessment of the economic impact of that capital expenditure.

They can be either real jobs or not real jobs; they cannot be an assessment. Can I assume that those are real jobs that have been generated as a result of the increased capital spending?

If we had not spent that money in that fashion, we would not have had as many people in employment. That is the very simple point that the First Minister made.

The First Minister's point was that the Government

"had calculated that 5,000 jobs had been generated".

Will the Government publish the details of where those jobs are and in which sectors they are located? Either those jobs have been generated or they have not been generated. The First Minister said clearly that failure to provide accelerated capital spending in the coming year would come

"at a cost of 5,000 jobs".—[Official Report, 10 December 2009; c 22094, 22095.]

Will the Government publish the information on where those 5,000 jobs are?

The Government publishes employment data on a regular basis so that people can examine the pattern of employment growth and contraction within the Scottish economy, which is undoubtedly driven by the way in which we deploy public expenditure. Essentially, that is the point that the First Minister made to Parliament.

Will information be released to show the 5,000 jobs that have been generated as a result of the capital expenditure that has been brought forward to this year?

As I said—convener, I am probably in danger of repeating myself—the assessment was calculated using the Government's input-output model. If we had not invested that money in the Scottish economy, we would not have the 5,000 jobs that the First Minister said have been assessed as the economic impact of that public expenditure.

I will pursue this line of questioning, because I presume that the input-output model simply takes the total amount put in and gives an equivalent number of jobs out. Those are not necessarily actual jobs, but the First Minister was clear about the number of jobs that have been generated. If we are to have a proper debate about the implications of the PBR, we need to use proper information.

The cabinet secretary has not been able to say that the Government has information about which projects and schemes have generated those new jobs. The First Minister was very clear last week that the shovel-ready schemes include 25 transport projects and that a number of health projects could be scheduled if the money was accelerated into 2010-11 from 2011-12, but we have not been given any equivalent information about the projects from 2009-10. All that we have been given is an assessment that the accelerated capital expenditure was broadly equivalent to 5,000 jobs in the economy. That is not the same as saying that 5,000 jobs have been generated.

With respect, I think that that is exactly the same as saying that 5,000 jobs have been created because, if we had not spent that money, we would not have had 5,000 jobs—

Why does the Government not publish the information about where those jobs are?

We publish incredibly detailed employment statistics about different sectors, different areas of the country and different age groups on a monthly basis. All of that information is available for any member of the public to interrogate. The detailed information that is published probably could not be more comprehensive about employment statistics. We publish a colossal amount of information.

Within the information that is published—

I think that this line of questioning has been taken as far as it can go. Do you have a final question?

I do. Within the figures that have been published in this financial year, in the quarters up to now, would you be able to identify employment associated with the capital works that have been accelerated?

I reiterate the point that I have made to the committee: we publish comprehensive data across sectors, geographies and age groups. I am trying to think whether there are any other differentiating factors—those are the three principal ones. The figures are published monthly, so clearly it is possible to compare different data sets.

Seek and ye shall find.

I will continue on the general theme of accelerated capital expenditure. A lot of my constituents and constituents throughout Scotland would be keen to know the sort of projects that could have been undertaken sooner had we received that accelerated capital expenditure. If those projects had gone ahead sooner, they would have protected existing jobs for another year, after which the private sector may have had more confidence. What sort of projects might have been supported?

The First Minister cited a number of possible projects at First Minister's question time last week, including projects around Dundee waterfront, to which the Government is already making a significant financial contribution through Scottish Enterprise. We see the evidence from projects around the country where capital expenditure has been accelerated. Major developments are under way at the Scottish exhibition and conference centre; work is going ahead to upgrade junctions on stretches of the A9; work has begun on the A96 at Fochabers; and work continues at the Fife energy park. Accelerated capital expenditure has also allowed the start of some site preparation works for the Borders railway. There are various other such projects, all of which illustrate the character of what can be drawn forward to stimulate economic activity.

I take it from your remarks that you see growth of 3.25 or 3.75 per cent as being optimistic. Let us assume that you are right and that such growth does not materialise. Can you give us some examples of the kind of scenario planning that the Scottish Government is doing for growth of less than those percentages, and the impact that that will have on the money that is available to the Scottish Government?

That work is well under way as we prepare for the UK Government's spending review, which will take place in summer 2010. We will receive the outputs from that. Our assessment of the impact must be based on different levels of expectation of public expenditure. The figures that I cited for 2011 will be part of the assessment of the impact on public expenditure that is made by the Chancellor of the Exchequer at the time. We will identify a number of possible scenarios to determine what resources we might have at our disposal. Mr McCabe will know that those numbers are subject to a range of variables, not the least of which is the level of economic growth that is delivered. There are also the comparability factors between departmental expenditure limits in the UK.

What we can take from any analysis is the fact that the profile of public expenditure in the years to come will be dramatically different from the profile of public expenditure for most of the past decade. As I said, on average, between 2000-01 and 2007-08, UK total managed expenditure grew by an average of 4.3 per cent per annum in real terms. That will contrast with a fall in TME of between 0.1 and 0.2 per cent between 2011-12 and 2013-14. There will be a great difference in the profile of public expenditure—we are looking at a much more constrained public spending environment in the years to come.

We should move on to Scotland performs. I am sorry; I call Linda Fabiani first.

Is the argument about capital acceleration well and truly over? Does any scope exist for continuing to discuss it?

We will certainly continue to pursue the point. To be frank, any change of position will depend on whether there is a budget in spring 2010, which is more than a little uncertain. We depend on the UK Government taking a more favourable decision in that respect.

Will the cabinet secretary confirm that the budget figure for next year is the highest that Scotland has ever had?

In cash terms, that will undoubtedly be the case. However, as Mr Whitton knows, the world does not stand still—costs increase and inflation applies. He also knows that, for the first time since devolution, we are dealing with a real-terms cut in public expenditure in Scotland. That is the focus that the Government has brought to the difficult choices that underpin the 2010-11 budget.

I have taken time today to marshal before the committee my public expenditure expectations beyond 2010-11 as a best estimate using the information that is at our disposal, because members of Parliament must be thoughtful about the choices that are made about our financial commitments in 2010-11. If we make in that year financial commitments on which several further years' expenditure depend, we must find the money to support those commitments. As I have set out to the committee and said to Mr McCabe a moment ago, the spending environment will be significantly more challenging than might have been expected.

It would therefore be useful if the First Minister were, perhaps, a bit more thoughtful about the language that he uses about the size of cuts that he claims the Scottish Government has suffered—a figure of £800 million has appeared out of the air, which in fact includes £347 million of accelerated capital that had been accounted for.

First, I should say that the First Minister is always thoughtful—I must put that on the record. I know that Mr Whitton will agree with that.

It is clear that you know the First Minister better than I do.

I do not have with me last Thursday's Official Report, but I am pretty sure that the First Minister cited the source of his remark at question time as the briefing from the Scottish Parliament information centre's financial scrutiny unit on the pre-budget report, which was published on 9 December. That shows a reduction of £814 million in planned expenditure in 2010-11. As ever, the First Minister was being thoughtful and accurate.

The First Minister forgot to mention that he included in the figure that he gave £347 million of accelerated capital.

At the risk of playing a game of ping-pong—

I am just making a point.

The First Minister was, of course, quoting a SPICe briefing paper.

The same SPICe briefing paper has you with £943 million more in your budget next year, but never mind.

It also has me with £814 million less than we expected.

The ping-pong must end at this point. Jeremy Purvis has a quick question.

I can help the cabinet secretary. The First Minister said:

"SPICe published a financial scrutiny unit briefing that gives the exact figure for the change to the Scottish budget since publication of the draft budget for 2009-10".

That is correct. He continued:

"there has been a reduction of £814.4 million."

That is what the briefing says. He goes on to say that that

"is the exact figure caused by Labour's spending squeeze in Scotland as a result of the Labour recession in Westminster."—[Official Report, 10 December 2009; c 22097.]

However, he does not indicate that, just before the table from which he quotes, the SPICe briefing simply says that

"Changes to the Scottish Government Budget as a result of the UK and Scottish Government decisions are presented in table 2."

I am sure that the cabinet secretary will agree that part of the table from which the First Minister quoted is a result of decisions by the UK and Scottish Governments. Is that correct?

I did not realise that part of Mr Purvis's role was to help the Labour Government in London—

I am simply seeking the truth. The statement is either correct or not correct.

Oh—I always seek the truth.

I think that we are moving into different territory, but I give the cabinet secretary the opportunity to respond.

All I can say is that the First Minister was quoting from the SPICe briefing paper that we all have in front of us and which makes the position absolutely clear.

Just to be absolutely clear, do you agree that the figures in the SPICe table are a result of decisions by the Scottish and UK Governments?

The accelerated capital expenditure that was available to us in 2010-11 was a consequence of decisions that were made by the UK Government. I would have loved that Government to have provided us with a similar opportunity to sustain economic activity in Scotland in 2010.

We are where we are.

You said that work on preparing for next year's spending review is well under way. Will you share that work with the Parliament to support our strategic budget scrutiny phase in the spring?

I will, as always, be delighted to work with the committee on providing any information that it might find helpful about the Government's processes. However, I add the caveat that I do not expect to have clarity about the numbers that we will be dealing with until about October 2010. As I said, I will be able to share with the committee some of the Government's processes for examining certain spending review issues, but some of the detail will have to wait until I have clear financial information on which to build our thinking.

We well understand the complexities. Your answer is appreciated.

We will move on to the Scotland performs website. I invite the cabinet secretary to make some initial comments before I open the matter up to questions.

I will make a few brief remarks. Scotland performs is the public website that shows the Government's progress in delivering its purpose and national outcomes, and which draws together in one place some of the detailed information that underpins progress on the Government's agenda to deliver the long-term sustainable improvement that will develop our economy and tackle some of the entrenched problems in Scottish society.

Secondly, the website, which is regularly updated, reports against seven high-level purpose targets, 15 national outcomes and 45 national indicators. Two years in, it is showing clear progress in many areas. That progress is incremental; for example, on the national outcome to "live longer, healthier lives", life expectancy and healthy life expectancy in Scotland are increasing and there have been reductions in premature mortality rates from Scotland's big three killer diseases: death rates from cancer, coronary heart disease and strokes are all down.

Thirdly, Scotland performs gives an up-to-date and transparent account of how our country is performing, and we are continuing to develop it. From the end of January, NHS Scotland will report its performance through the website and we are also exploring how other key partners' contributions to national outcomes can be reflected through it.

In the absence of annual evaluation reports, which were available for the former stage 1 of the budget process, how will measurement of forward performance be formally reported to Parliament?

As the database of the assessment of performance across a range of indicators, Scotland performs is publicly and easily accessible and can be interrogated by committees and Parliament without their having to wait for an evaluation report to be undertaken. If my memory serves me correctly, the last time an evaluation report was produced was in 2005, by the then Scottish Executive. That was essentially a one-off book that assessed a number of different priorities. Scotland performs gives us the ability to interrogate the available information regularly.

As the cabinet secretary will understand, the committee is always in search of accurate information to help us in our deliberations.

You helpfully wrote to us on 5 November about progress on budgeting for outcomes, which is the idea of linking expenditure to outcomes. I have some questions about that, which I will roll together. To what extent does the performance information in Scotland performs influence short-term budgetary decisions? To what extent will it influence preparations for the next spending review? Retrospectively, how did it influence the Government's economic recovery plan?

I will take the last question first. With the economic recovery plan, we have tried to look at the different outcomes that we want to achieve, which include the creation of economic opportunity for individuals in Scotland and which are governed by our desire to pursue the Government's purpose of increasing sustainable economic growth. We made a number of judgments about practical policy interventions that we believed would assist in supporting those outcomes.

Scotland performs has less of a role to play when it comes to short-term budget decisions; it carries much more weight in influencing the approach that we take to spending reviews because—as Mr Chisholm will appreciate in the context of the example that I cited on health performance—many of the indicators are influenced not by overnight activity but by sustained activity over a number of years. If we saw ourselves making but little progress on a key policy outcome over the duration of a spending review period, that would certainly drive policy initiatives that would involve designing other interventions to improve performance.

In the past, I have raised with you the time lag between the data that underpin Scotland performs and publication of the indicators. The example that I used was the indicator on increasing the business start-up rate. Everyone accepts that Scotland has had a long and deep-seated problem with business start-ups—the rate is lower than it is in the rest of the UK. Until very recently, Scotland performs indicated that progress was being made on that front on the basis of statistics that predated the current Scottish Government's entry into office, although the position now seems to have been updated.

You have just developed the point that poor performance on an indicator in Scotland performs drives spending decisions, but is it not a bit late if, two and a half years into a Government's term of office, it finds out that it is not making progress on an indicator, particularly one that is as important as improving the business start-up rate? That must be an issue. If Scotland performs is not what drives Government spending decisions, are the right indicators being used? You indicated that that is not the case. If the indicators do not show a lack of progress for, say, two years, does that suggest that perhaps the Government should not be using them to direct spending decisions?

First, if I created the impression in my answer to Malcolm Chisholm that Scotland performs does not inform budget decisions, I created the wrong impression. I thought that I had said to Mr Chisholm that it has more of an impact on spending review decisions than it has on short-term decisions. The example that I cited about living longer and healthier lives is largely driven by our experience of the three major killers in Scottish society—alcohol consumption, smoking and lack of exercise. On those factors, we would all like bigger and bolder changes to happen swiftly, but I think we all accept that changes take time. Much of what the Government has done in its agenda is to build on the foundations that our predecessors put in place for the direction of policy on those matters.

If, within Scotland performs, we identify a pattern of performance that gives us cause for concern, we can undoubtedly consider different policy interventions. Scotland performs does not capture all the data that ministers see. Ministers and the Parliament see a huge amount of data on a range of different questions and factors in society. Any one of those pieces of data could lead the Government to think, "Actually, we're not doing enough in this area. We're not making enough of an impact. We need to change course on some of these questions." Routine policy-making activity will allow us to form some of those judgments.

There is certainly a time lag in some of the information's coming to hand, but there have been more than 100 updates to Scotland performs since the system was established in 2007. That shows the usefulness of being able to see assembled in one place a range of data that can be used to make judgments about performance.

To return to the convener's question, if we were to wait until an evaluation report was published, the delay would be even greater, because we would have to wait for a range of different indicators to settle at a given time. The indicators are updated very regularly. Notes come to me to advise me of the statistical information that is coming in and that the data are going to be changed on Scotland performs. I stress that the notes merely advise me that that is going to happen—they do not ask for my view about it. That happens on a fairly routine basis.

It would be helpful if you could write to us and detail when the data on indicator 2, on the business start-up rate, has been changed since Scotland performs started. I do not have the precise figures in front of me, but I think that until very recently it was still showing data from 2007. My point is not about the selection process for the data that underpin Scotland performs, which I appreciate has a degree of independence; it is simply that, if we have to wait for two years to find out that we are not making progress on a key indicator, that strikes me as a rather long wait for an important area of public policy.

If you will forgive me, convener, I will write to you about the detail that underpins that indicator, because I know that it has been updated since Scotland performs was established. I do not have full enough information in front of me to give that detail now, but I will write to the committee to explain how that has been handled.

Another point that is material in that respect is that, of course, we made a choice about what the national outcomes and indicators would be. I stress that there are 45 national indicators. I could not begin to calculate how many data sources we could have chosen to include from a host of different areas, but a choice was exercised about that information. Of course, all the other sources are still readily available to interested parties.

Time is wearing on, so we need short sharp questions, please.

As the cabinet secretary said, the Scotland performs website gives seven top-level purpose targets, which are further broken down into 11 targets. In his opening remarks, he said that clear progress is being made, but performance against eight of those 11 targets is shown as either worsening or at a standstill. If that is clear progress, how will the Government define failure?

Much more helpfully than was ever done in the past, the Scotland performs website essentially identifies a range of different indicators that can provide judgments on the performance of policy in particular areas and across the board. In some areas, we will make progress at particular times. Obviously, we are currently making progress on reducing emissions and on participation rates, but we are clearly not making progress on economic growth. That is hardly surprising when we remember that we are in the biggest recession for many years. Clearly, the high-level purpose targets will be affected by economic circumstances, so we must just accept that the targets contain challenges. The Government is focused on trying to address those, which is why we are so determined to make as much of an impact as we can on economic recovery.

Can the cabinet secretary confirm that the data sets or definitions of the purpose targets will not be changed during this term?

They will not be changed.

I also want to ask about the information that the Government publishes. Understandably, the Scotland performs website seeks to present information in an open and transparent way to allow people to make their own decisions. However, is it the Government's practice to remove information from its website if it is simply not helpful to the Government for people to see it? I ask because, following recent questions that have been asked about senior pay in the public sector, information on senior executive pay has been removed from the Government's directory of non-departmental public bodies. The directory now simply provides links to the respective organisations. How does that fit in with the principle behind Scotland performs, which is that people should have access to information that allows them to understand what is going on?

On the question of access to information on what is going on, the Scotland performs website is focused on identifying a range of different indicators that give a clear sense of what progress the Government is making. For example, on the public bodies to which Mr Purvis referred, the Scotland performs website includes an indicator against which the Government's performance can be judged.

On the specific point about public sector pay, if my information is correct—I will check this and get back to the committee if need be—the information to which Mr Purvis referred contained certain inaccuracies. I am not sure that there would be any point in having inaccurate information on the Government's website. If we have incorrect information, we should remove it. Crucially, as Mr Purvis pointed out, the Government website gives links to all the websites that would give Mr Purvis the exact information that he is looking for.

With respect, cabinet secretary, I said that the directory of NDPBs gives links to the organisations, but the information that was previously given in the directory is not necessarily available. I understand the point about correcting inaccurate information, but if the information on the salaries of chairmen and chief executives of public bodies that was on the directory until First Minister's questions a couple of weeks ago was inaccurate, it is surely incumbent on the Government to correct that information rather than to remove it. It has been replaced purely with a link to the respective organisations and there is nothing on the pay of the chief executives.

I will perhaps give the committee a letter with as much information as I can provide on the issue, because I want to be as helpful as possible. Mr Purvis knows that I am concerned about issues in relation to senior salaries. It is important that good quality information is available on that. I understand that the information that he talked about was incorrect. I will establish exactly where we have reached on that and then I will write to the convener to provide that information.

Thank you, cabinet secretary. We look forward to that reply.

For my clarity as much as anything else, who is actually accountable for each of the indicators on the Scotland performs website?

Ministers are accountable for the performance in relation to Scotland performs. Ministers are responsible for delivering the performance, which is captured by Scotland performs. If I understand Mr Whitton's question, he is asking who is responsible for the indicators. The calculation of data and determination whether the performance is improving, maintaining or worsening are undertaken by a professional statistical group in the Scottish Government over which ministers have no influence.

On Mr Brownlee's point about the length of time it takes to assess whether a milestone has been reached, are there proposals to speed up the process, for example by having interim targets, so that we can get a quicker look at whether we are performing on key economic indicators?

I return to the point that lots of information is available periodically. The quarterly gross domestic product statistics tell us about performance on GDP. We have an absolute target to raise by 2011 Scotland's GDP growth rate to the UK level, but we can see the relative performance on a quarterly basis. From time to time, the performance on other indicators will be assessed to be improving, worsening or maintaining. That is all driven by the data.

There will be other examples in which we try to put into the public domain information that gives a more comprehensive assessment of performance. For example, last Friday, the chief economist, Dr Goudie, published his sixth update on the Scottish economy, which is available on the Government's website and which provides comprehensive information on the relationship between the global economy, the United Kingdom economy and the Scottish economy. That gives significant insight into some of the issues in which Mr Whitton is interested.

You mentioned your target of economic growth, which is ambitious in the current economic circumstances. In general, is it better to be overambitious and to try to hit high targets, than to have mediocre targets so that you can hit them and say that you have performed?

The Government would certainly never wish to be perceived as mediocre in any way—we will always be ambitious for Scotland.

The Scotland performs structure and the national performance framework that underpins it essentially provide a picture of the type of modern progressive society that we all wish to be part of. If the awful moment were to come and this Administration was to be replaced, I would like to think that many of the outcomes in the national performance framework would be shared by an incoming Administration. That would mean—to return to my answer to Mr Chisholm—that there would be an opportunity to retain our focus on problems in Scottish society that will not be sorted out in one parliamentary term but will require deeper and more sustained work, and to see some of that flow through the system.

Linda Fabiani has the final question.

That is nice. On ambition, I was interested to note indicator 1, which is to

"At least halve the gap in total research and development spending compared with EU average by 2011."

I am pleased to see that that spending is going up. Indicator 1, of course, ties in with indicator 9, which is to

"Improve knowledge transfer from research activity in universities."

Improving knowledge transfer from universities is an on-going issue, and I note that there are no figures for that yet. When are you likely to be able to give such figures? In the current economic climate, and for future economic growth, indicators 1 and 9 are crucial.

I accept that. We are working on the indicator for knowledge transfer with the Scottish Further and Higher Education Funding Council, although we are finding it particularly challenging to put in place a robust measurement of that approach. Obviously, we will update that information as soon as we have made progress.

I thank the cabinet secretary and his officials for their evidence. There will be a short suspension to allow the cabinet secretary's officials to change over for the next agenda item.

Meeting suspended.

On resuming—