Finance Committee, 22 Feb 2005

Meeting date: Tuesday, February 22, 2005

Official Report 285KB pdf

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Cross-cutting Review of Expenditure on Deprivation

Item 4 is the cross-cutting review of expenditure on deprivation. We have quite a detailed paper, paper FI/S2/05/6/4, which sets out a potential remit for the review methodology and timetable. We had agreed that we would not take oral evidence until June, because of our current work commitments, but that allows us the time to do the necessary preparatory work to gear up for the review. The proposal is that we take evidence in September to ensure that the review can be completed. It is suggested that there should be at least two significant pieces of research, one by Arthur Midwinter and one done in a different way.

First of all, I offer Arthur Midwinter the opportunity to say anything that he would like to say about the paper, although I hope that it is reasonably self-explanatory.

In the past week, I have been rereading some of the pronouncements that the Executive has made on deprivation since 1999. The key thing for this exercise is that we develop a clear view of what the Executive means by deprivation and of what we are examining, because phrases are used interchangeably all the time. In 2004, we had a new document that said that the Executive's strategy was to tackle poverty, disadvantage and deprivation—all in one breath—and they are slightly different things in definitional terms.

I looked at the review of local government finance that was conducted when Frank McAveety was the minister with responsibility for such issues. In that review, the Executive considered poverty and deprivation, but there were few deprivation measures in the review. Nearly all of the measures were straightforwardly to do with poverty. Deprivation is a much more complex and difficult problem than poverty per se. The committee's inquiry has the capacity to grow like Topsy, and we need to keep it focused on deprivation as a bigger problem than poverty.

In reorienting the social justice strategy towards closing the opportunity gap, the Executive has placed much greater emphasis on deprived areas than on the broad definition of poverty. I have also discovered that the social justice annual report is no more. I do not know whether the committee was aware of that, but I was not.

In fairness, most of the data are still available online, but it is a sad demise.

Are there any other questions or comments?

On the research, I am comfortable dealing with the background, the policy, the spending and the definitions that are used but, as members will see, there is a new, sophisticated multiple deprivation index, with something like 18 indicators. The last time I looked at the index there were only six, so it is a big change. We need a statistician to assess the validity of the index, rather than someone like me, who is a social scientist who knows about statistics, which is not the same thing. We really need somebody who understands the technicalities of the weightings and so on to give us a view. A team in Wales has produced evaluations of the Welsh, Northern Irish and English new indices, which it might be useful to get, but I would not feel comfortable if members relied on me to perform the exercise. The index is central to where the money goes in the end, because moneys are shifted according to the new index. Knowing that the index is sound is an important part of the exercise.

There is also the issue of whether we would like the index to be amended.

Do members agree to commission research along the lines that Arthur Midwinter suggests? It makes sense to do so. If the cost is more than £5,000, we will need to go out to tender and a formal proposal will need to come back to the committee. If members agree in principle, we will take that forward through the appropriate parliamentary mechanism and come back to the committee with a more detailed research proposal.

The objectives should include a critique of the index of multiple deprivation because, looking at it from a Highlands and Islands perspective, I can see how it would skew against the Highlands and Islands, which would score well on pupil performance at Scottish Qualifications Authority stage 4 and the proportion of the 17-plus population that has acquired higher education. Those things would show the Highlands in a positive light, but most of the children would likely be exported from the Highlands.

At one time, the Executive explored whether it ought to have different measures for urban and rural areas. The index is an attempt to get over that in part, because all the access measures are new. There are now measures on low pay, as opposed to benefit claimants, as was the case in the past, because the argument from the Highlands and other rural areas such as Alasdair Morgan's was that the problem was low pay, rather than benefits. The Executive's view is that it can use the index throughout Scotland. However, we need somebody from outside to cast an eye over it and to state how they feel about that.

There is a bigger philosophical question, which is how the Executive uses deprivation indicators and other indicators as proxies for assessing need. It is questionable to talk about some of the sparsity indicators as measures of deprivation. I am not sure that the Highlands are deprived, although one might argue that they need to be funded differently on the basis of sparsity. There is a broader issue within that, which is the need to strike the right balance between considering deprivation, which is predominantly urban, and considering some of the sparsity issues, which require a different order of funding. That could be part of the critique.

This is not just about constituency interests. Deprivation is not simply a matter of poverty; indeed, the definition before us refers to

"the ability to participate in social life".

People who live in very remote communities experience a certain aspect of deprivation because they are not able to access certain facilities or services. As a result, I do not think that what has been suggested is outwith the definition of deprivation.

Although we have been given all the indicators, Professor Midwinter seems to be suggesting that there is a weighting factor. It would be quite interesting to see how they have all been weighted.

Yes. Doing so would test the matter statistically, which is why the committee needs a statistician.

I suppose that we could commission research that would at least provide us with factual background. Committee members would then be able to interpret and make political judgments based on that information.

I see that, under the heading "Employment deprivation", the final "e" has been dropped from the word "severe" in "Severe disablement allowance" so that it now reads "Sever disablement allowance". Surely that indicator is more severe than it should be.

We should perhaps add two dimensions. First, the current system, particularly for local government, is geared towards population, which means that deprivation indicators are relatively weak compared with population indicators.

Population is the best indicator.

We should make more explicit the fact that we are considering not the principle, but its application in budgetary decisions.

The other crucial issue is the way in which the Executive goes about identifying new needs that are linked in some way to deprivation. Indeed, the supporting people programme is a classic example in that respect, because it was carried out on a bid basis and then the allocation was frozen. There appeared to be no mechanism for redistributing money—although there was a rather rudimentary and arbitrary means of redistribution. Perhaps we need to pursue the question whether, when it identifies a new need or a pattern of existing need linked to deprivation, the Executive might be better at anticipating the ways in which such a mechanism could be put in place to provide greater clarity.

I am not on top of the programme that you mentioned, but I would guess that Gordon Brown found the money and people were told that it was available. Bidding would have been the quickest way of dealing with the matter. Once that funding is mainstreamed, the Executive faces the question whether to continue to fund those who have already bid or whether to base funding on a formula.

That is one example. We also need to remember that, in associating certain physical or social problems with deprivation, a number of people with sometimes quite expensive additional needs might reside in a local authority area that already has a high degree of deprivation and that such demand will begin to skew the allocation even more. We need to find out how the Executive identifies need that is linked to deprivation.

Traditionally, the Executive has asked local authorities about how deprivation might manifest itself in a certain programme, tested their suggestions and then submitted recommendations to them. However, more recently, some matters are being raised directly with Whitehall after the event. Consultation on the distribution of funds is not the same as it used to be.

Perhaps, in the interests of completeness, we should ensure that the matter is addressed as part of the process.

Do members agree to the broad thrust of the suggestions in the paper and the timetable involved? We will then have to agree to commission research. Obviously, if we have to undergo a tendering process, we will bring back a more detailed proposal to the committee. Are members agreed?

Members indicated agreement.