Scottish Parliamentary Corporate Body (Budget 2010-11)
Good afternoon and welcome to the 26th meeting of the Finance Committee in 2009, in the third session of the Scottish Parliament.
I have received apologies from Malcolm Chisholm. Lewis Macdonald will attend as the Labour Party substitute. I ask all members of the committee and of the public to turn off any mobile phones or pagers, which interfere with the broadcasting system.
Agenda item 1 is evidence taking on the Scottish Parliamentary Corporate Body's budget proposal for the financial year 2010-11. I welcome to the committee Tom McCabe MSP, who is a member of the SPCB, Paul Grice, who is clerk and chief executive of the Parliament, and Derek Croll, who is head of financial resources. I invite Tom McCabe to make an opening statement.
Tom McCabe MSP (Scottish Parliamentary Corporate Body):
Thank you very much, convener, and good afternoon, everyone. Thank you for the opportunity to present details of the SPCB's budget, on this occasion for 2010-11.
With the convener's indulgence, I will take a few brief moments to explain the principles that have underpinned the approach that we have taken to the budgets for this and previous years. The SPCB is very aware, especially in these difficult financial times, that every pound that we spend must be justified and must be put to the best possible use. As people in the room know, that is often easier to say than it is to do, but that is what we strive for.
We are determined that the Parliament should continuously examine what it spends its money on and how it does so. We are aware that every pound that we take from the Scottish consolidated fund means that less money will be left for other much-needed projects. The main principle that underlies our approach is that we should minimise our call on the consolidated fund. I hope the fact that, in 2008-09, we returned £1.5 million to that fund demonstrates through actions rather than just words that we are trying to put that principle into practice.
Our total budget submission for 2010-11, including capital charges, is set out in the letter that the committee received from the Presiding Officer, which shows a reduction of 1.4 per cent compared to the current year. Excluding capital charges, our budget submission for revenue and capital expenditure shows a 0.5 per cent increase in cash terms compared to the current year. As members will be aware, that represents a reduction in real terms. The consumer prices index for October was announced to be 1.5 per cent. The committee will be aware that current forecasts are that the rate of inflation will increase during 2010. That said, as members know only too well, economic forecasting is hardly an exact science.
Our proposed capital expenditure is £3 million, which is £0.4 million higher than last year. As members will again be aware, capital expenditure can vary significantly from year to year. The bulk of the expenditure that is planned for 2010-11 relates to the replacement of information technology equipment and systems. In particular, the 2010-11 budget includes provision for the completion of a major technology refresh programme for desktop personal computers and software at the Holyrood complex and in members' local offices. Such an exercise was last undertaken in 2003, so we have passed the usual industry standard of replacing IT every three to four years. If the technology refresh were discounted from the capital budget, the underlying increase in capital expenditure would reduce significantly, to around 5.6 per cent.
Excluding capital expenditure, the year-on-year trend for revenue expenditure shows a reduction of £50,000 in cash terms against our current-year budget. We have allowed a contingency of £1.2 million, which previous experience tells us is a reasonable amount.
Members are well aware that the SPCB is charged with oversight of the commissioners and the Scottish Public Services Ombudsman. Those bodies' budget submissions amount to £7.9 million, which is just over 10 per cent of the overall SPCB budget. The SPCB is acutely aware of the fine balance that it needs to strike between robust scrutiny of those bodies and the operational independence that they were given when Parliament first established them. We are extremely grateful for the strong support that the Finance Committee has given us in recent years for the adoption of a robust approach to our scrutiny of the budget bids. I am pleased to be able to report that there has been an overall decrease of 0.5 per cent in cash terms in the proposed budget for the commissioners and the ombudsman, which I believe is a result of the clear signals that have been sent to office-holders in the budget rounds for previous years.
The compilation of the SPCB's budget is a complex affair that goes on for most of the year. It involves finance officials in the Parliament and officials in the chief executive's office, and a great deal of interaction takes place with members of the SPCB. I put on record our appreciation of members' involvement and of the amount of effort that has gone into producing a budget that I think suits the present financial times and those of the very near future.
I hope that I have managed to convey a sense of the approach that we have taken and the principles that lie behind it. We are extremely conscious of the need for robust scrutiny and continuous improvement. If I or my two colleagues can answer the committee's questions, we will do our best to do so.
Thank you very much. I now invite questions.
I want to pick up on the point that Tom McCabe made about the commissioners and the ombudsman. It is a fair point that there is a significant element of the SPCB's budget over which the SPCB has no direct control. That is an issue that the SPCB has to wrestle with. Obviously, there are sensitivities around the extent to which budgetary restraint can be imposed on commissioners and an ombudsman who have a degree of independence from Government and, to some extent, from the Parliament.
However, if we look at the corporate body budget proposal, we see that the parliamentary staff pay bill is frozen in the current year. Although there is a headline decrease in the cost of the commissioners and ombudsman, if we look underneath that, the Scottish Public Sector Ombudsman, which is probably the largest and most complex of the commissioner and ombudsman offices, is able to reduce slightly its staff pay bill, and the Scottish Information Commissioner, whose work is also significantly demand led, has a fractional increase in its staff pay bill. However, there is an increase in the pay bill for Scotland's Commissioner for Children and Young People and the Scottish Human Rights Commission of more than 10 per cent. How does that square with the straitened financial times that we are in and the messages that the corporate body is passing to the ombudsman and commissioners?
That is a good point. The main thing to bear in mind is that there has been considerable change in nearly all those offices in the recent past. New individuals are in post who are looking at their operational capacity, and they have taken some decisions—as they are entitled to do—about how they can strengthen the capacity and performance of their respective offices. Our view is that we have to respect those decisions.
In the past few years, we have pursued a strategy that presses down on the overall cost of those bodies, but we need to respect the views of new commissioners who, in some instances, are taking over organisations that in the past perhaps did not—I am trying to choose my words carefully—always command the greatest confidence. Our view is that there is a new broom. People have made a judgment about what will give them the opportunity to produce better outcomes, and although we are watching that, they must be given the opportunity to prove themselves.
You were right to mention independence—but not just "a degree of" independence, as the bodies have independence. That is a pretty difficult line to walk, as you know. It would be easy to tread over it, which would raise all sorts of issues. We bear in mind the operational independence that those bodies have. The assurance that we can give is that we will continue to look at the performance of each and every office and assess whether we are achieving the improved outcomes that the new individuals expect following the changes that you rightly pointed out.
Part of my concern, as you will well understand, is that it is much more difficult to take cost reductions out of pay bills in future years once people are in post; it is much easier simply not to incur the expenditure in the first place. We all know the direction of public spending in future years and are well aware that the corporate body's budget is top-sliced—it is taken away from public services in Scotland before we even get to front-line services.
If the SPSO's office is able to make a contribution and turn around expenditure, why cannot the others? The Scottish Human Rights Commission, for example, is increasing expenditure on property costs. The committee has raised the point in previous years about the need to reduce expenditure on property costs and bring organisations together. It seems that they are not getting the message, and the extent to which such organisations are independent has been exploited for what one might regard as empire building. How can we have confidence that the corporate body will be able to manage those costs down in future years?
Your point is well made, and the area is one that the SPCB must continue to monitor.
The Scottish Human Rights Commission is pretty new and in many respects is still establishing itself.
But is now not a key time to intervene to ensure that costs do not spiral out of control before final decisions are taken?
To be fair, that has been done. We learned lessons from the legislation that established other organisations and applied them to the way in which the legislation on the SHRC was framed in the Parliament. A lot of core savings were achieved because the legislation stipulated considerations such as where the body would be located, its say over that and its obligation to share support services. We were already mindful of some of those costs; Parliament itself was mindful of them, given the way in which it framed the legislation.
I return to the point that, when we are talking about relatively new organisations and new individuals, we perhaps have to allow them to take their view—to a degree—of what the organisation needs. It is not for me to second-guess commissioners, but our impression is that there is something of a root-and-branch review going on in at least three of those organisations. Although the pay bill might increase at the moment, it may well be that, over time, other judgments are made about the overall needs of those organisations, which might be reflected more positively than they are this year in the pay bill.
The submission that you have provided is transparent, which makes it easy for us to pick things out, so thank you for that. However, that also makes it easy for us to look at some of the big figures and think, "Gosh, that's a huge amount." In schedule 3 to the paper, the "Other Projects" line has gone up by 39.4 per cent, on the face of it. The detail shows that the increase is accounted for almost exclusively by the decision to redesign the website. I am not questioning the figure; I just wonder about the decision-making process. How did you reach the decision that it was time now to redesign the website and to spend that money?
I ask the chief executive to answer that question. However, I preface his answer by saying that the website is a very important access point for people not only in Scotland but around the world. We are 10 years on from when the Parliament was established, and that focused the thinking. The chief executive will provide a bit more detail.
Paul Grice (Scottish Parliament Clerk and Chief Executive):
Mr FitzPatrick is right to identify that key investment. We are going about that project in the same way as we would go about any major project. First, we picked up clear evidence from users, such as members of the Parliament, about, for example, the relatively inadequate search facility—that has been drawn to my attention by a number of members over time. Secondly, in areas such as the web, where technology moves on, we observe what other organisations, especially other Parliaments, are doing. We brought those two points together and took the view that it was time to have a look to see what the issue was. We normally put together a multiskilled team. We do not carry permanently with us web design expertise, because that would not be good value for money, so we brought in external expertise. On the basis of that advice and our knowledge of our customers, we took the view that now was the right time to invest. It is quite a number of years since the current website was put up.
To pick up Mr McCabe's important point, the website is quite obviously our major access point. We have had millions of visitors and hundreds of millions of hits over the piece, so the website is a hugely important part of our engagement and access strategy, and it needed to be overhauled.
A point that is sometimes lost is that the migration of data from the current set-up to the new set-up is one of the reasons why this will be a major project. I am absolutely determined that we do that properly. It would be cheap and easy just to load all the current data on to the new website, but by doing that we would not reap the benefits, however good the new search facility is. My aim is that every department of the Parliament will take a long, hard look at the current data that it holds and will migrate only what it needs to migrate. There is no escaping the fact that that is a difficult process, but, at the far end, you do not just get a more powerful search facility and a better design but, just as when you move house, you leave behind a lot of stuff that you do not need.
The time is right. I am conscious that it is a major investment, but I am absolutely certain that it will result in a lot of improvements for the people who use the Parliament and for members and their staff who rely on the website's search facility. We will improve our intranet facility at the same time, so we will get a major benefit there, too. I hope that, subject to agreement, we will be able to make good progress and complete the project next year.
Can you give us a bit more information on the actual staff cost for the Parliament? You are budgeting for a standstill in that area. What is the number of staff now, and what is it projected to be? I note that the SPCB has just entered into a two-year staff pay agreement, which took effect in August this year. What was the level of that agreement? Does it apply to senior staff as well as to other staff?
In 2008-09, the staff complement was 547; in 2009-10 it is 531; and next year it will be 528—it is on a slowly and steadily declining curve. The two-year deal that Mr Brownlee referred to in passing focuses on freezing the total pay budget for two years, beginning in August this year and taking us to the summer of 2011. It absolutely applies to every single person—the pay deal is the same for me as it is for everyone else in the organisation, which I think is very important.
So do I.
Well, it would not be credible to do something for oneself but to expect others to accept something different—that is an important principle. The deal that we did with the unions was for a 1.5 per cent basic uplift in staff pay, regardless of what inflation will be in those two years. The challenge for me and my team, working with the corporate body, is to live within the commitment to keep the pay bill frozen. There will be a significant decline in real terms over the two years. That is the basic shape of the pay deal, as we negotiated it with the unions. I put it on record that the unions were very constructive and responsible in their negotiations with us.
The other commitment is that, before the end of the two-year deal, we will take a long, hard look at how we structure pay deals in future. I have followed the committee's deliberations, and no one expects us to be out of the current difficulties in two years. This is just a start, but I think that it is a positive start. Before the end of the period, I hope that we will be able to reconsider how we will contain pay costs in the foreseeable future. As Mr Brownlee pointed out, those are a major part of any organisation's costs—including ours.
I will pick up on Mr Brownlee's point. You have been able to do that with your staff; why can you not impose the same financial discipline on commissioners' staff?
I attempted to answer that a few moments ago. To be fair, if you spoke to previous commissioners, you would find that they feel strongly that we applied stringent financial discipline to them over time. As we have said, thankfully there is an overall reduction in commissioners' budgets this year, although there will always be differences within that. I hope that the explanation that I gave a few moments ago gives you some reassurance that we are watching the situation with interest and will continue to do so. We will not throw out the work that we have done over the past two years easily. We will keep that robust scrutiny alive, and we will continue to apply downward pressure on those budgets.
Mr Brownlee mentioned the Scottish Human Rights Commission, whose staff costs have gone up by almost £70,000. Either the number of staff at the commission has increased by an awful lot or somebody has had a hell of a big pay rise. The SHRC's budget was established as £1 million, and it is still £1 million, yet you said that you were going to review that. What has happened to the review of the SHRC's budget?
You should bear it in mind that the SHRC is in its very early stages, and that it is still recruiting its complement of staff. We definitely do not expect that to be a year-on-year trend. The commission is the newest of the bodies, and it is still establishing the complement of people who are felt to be required for it to do its job.
So its budget could go up still further, once it has recruited more staff.
There is no current indication that the Scottish Human Rights Commission foresees a substantial increase in staff numbers. However, if any such submissions were made, we would be as robust in our examination of them as you rightly are with us.
We know from evidence on the Public Services Reform (Scotland) Bill that the Scottish Public Services Ombudsman's office expects an increase in its workload, yet the ombudsman has managed to bring down his pay bill. If he is expecting an increase in his workload and he is bringing down his pay bill, I fail to see how we can allow the Scottish Human Rights Commission to continue merrily on its way increasing staff numbers—I would not say empire building—without any recourse to you as to whether it has the right complement.
Because the ombudsman's office has been established for several years, he has a degree of empirical evidence on outputs from individuals in the past. Obviously, the ombudsman has judged that the same or more outputs can be achieved with a different staff complement. The Scottish Human Rights Commission is not yet in that position so, to be fair, you are not necessarily comparing apples with apples.
As members have no further questions, do you have any final comments?
I again express our thanks to the committee. You have been extremely helpful in the past few years, particularly in relation to the work that we have done with the commissioners. We will take a strong note of the questions and concerns that have been raised and do our best to act on them in the coming year.
I know from my time on the corporate body that you have a balancing act between the need for tight financial control and the need to support public institutions and individual organisations on which the public depend. We wish you well in that. I thank you all for attending and for your evidence.
I suspend the meeting for a few moments to allow our next panel of witnesses to take their places.
Meeting suspended.
On resuming—