Item 3 is consideration of our budget adviser's paper on the Scottish Executive's budget strategy. I think that the paper is the third in a series of papers that the adviser has produced to help us with the budgetary scrutiny process. I invite Arthur Midwinter to comment on the paper, when he is ready.
I produced the paper first, because some members of the committee are new to the Parliament and others are new to the Finance Committee and I thought that, as we are about to start the spending review process, it would be useful to provide members with a short review of how priorities have changed since the Parliament was established. Secondly, I will from tomorrow be officially reviewing the new annual evaluation report on the committee's behalf as the start of the process, so I thought that it would be useful to have a steer on the committee's view on some of the priorities and the extent to which we should adopt a reactive or a proactive approach.
Thank you for that outline, which highlighted the issues that we have to take on board as we go through the spending review process and the next annual budget round. Do members want to comment or offer guidance on the way in which we might want to take forward some of the issues that are under debate?
I have some guidance as to how we should proceed. In the work that we have been doing up until now, we have been trying to get greater transparency in the budget figures and in the breakdown of capital spend. I have asked a number of parliamentary questions on the proportion of proposed budget headings that will go on staff costs. Now we will have information on performance indicators and performance over the previous year, which I know we have had in previous years.
Do you mean in cash terms?
Yes.
Quite a few issues arise there. The questions that you asked assume that the process is integrated and that Andy Kerr's rhetoric about there being a link between the grand objectives, the allocation of resources and results happens in the real world. We have seen no sign that it is. We are still working up a paper on capital expenditure, which Wendy Alexander asked for. My understanding is that this week the Executive will deliver to me data on capital expenditure, which will allow us to complete that paper. There will be a table on capital expenditure, as there always is, but it will be in another document.
I presume that it will not include the trend data for the past 10 years, which is what we asked for.
No. The paper that we produce will try to outline the trends using the data that the Executive gives us. The trends will not be set out in the document that is produced tomorrow.
I am not a member of another committee, but I would have thought that it would be useful for other committees to get a broader picture of the relevant department, which would tell them not only the budget forecast but the elements that are already committed, performance in those areas and the performance and outputs of the department. We should be pressing for that kind of information. We can confer later about the response that I got to my parliamentary question, which did break down staff costs for each department. That sort of information might be useful, even as an indicator, as it would let the other committees see what makes up a particular section of the budget. I was just hoping that the information could be more co-ordinated.
When we were trying at official level to work out how the revised format might appear, we discussed financial and performance reporting. Remember that the documents were set in 2002 for the budget of 2003-04, which has just ended. The view was that it would be two years hence before we could get any robust financial output data. For that reason, the Executive officials felt that it was premature to include any kind of output data in the document, but they will announce it in June or July when they calculate end-year flexibility.
Will it be possible for Arthur Midwinter or the clerks to provide us with a note that states the recommendations that we made in the second stage budget report in the first week of December—the recommendations to the Executive on what it was to produce—and which also states the Executive's response? I think that we had a discussion in the middle of February during which I asked for clarity on what we are spending in terms of long-term trends and capital. I also asked how our figures compare with United Kingdom figures. I do not know whether the Executive was written to—that information will obviously be in the Official Report, but what I said was a third attempt to pursue the same matter. Other committee members must be as perplexed as I am.
We did have a paper on the recommendations that we made and the responses from the Executive. We can reissue it if you like.
A wide variety of issues arose from that. What we did not get was what we asked for in December. Arthur Midwinter is telling us that the Executive will publish the AER tomorrow, but I do not want to be coming up with alternative priorities for the Executive. I want the committee to have one focus. Why do we have to go to Peter Wood to provide six-year trend data for what the Executive spends? Those data should properly be the basis for any consideration of alternative priorities.
The minister has indicated that the Executive will produce trend data. I am not sure what point it has reached.
The Executive will produce two papers separately. They are not part of the budget. One is the time-series data on spending which, as far as I am aware, the Executive is still working on. That paper will be with us soon.
We started discussing the issue in September last year and we wrote to the Executive in December. We need clarity on what is being delivered and when. We returned to the issue in February. I am aware that subject committees are now embarking on their considerations of the spending review; however, we are asking them to do that in the absence of those data.
Production of those data is imminent. It is a fortnight since I spoke to the Executive and the paper was still being worked on. When we had our first discussion, the Executive was concerned because there were three different phases of RAB. That turned out not to be problematic, because it is easy to de-RAB things. What did prove problematic was the frequency with which components of budgets are transferred to other budgets. That involved a lot of recalculation, which was time consuming.
It is important for the committee to try to keep a record of what we asked for in December and where we are now. It may be that we will have all the information that we need by June: if so, that will be great. However, if the committee is not to mirror the chaos of constantly changing priorities, we need to be consistent in what we request.
I suggest that the Scottish Parliament information centre look into that with Arthur Midwinter.
We can supply the factual part of Wendy's request. We will chase up Executive staff to see what the timetable is. I have been told that I will get the capital figures this week. We can provide for the committee a note that says where we are.
I think that the timetable has probably also slipped in relation to providing comparisons between what is available in the United Kingdom and what is available in Scotland. We must check that we have the same kind of trend data and capital spend data that are available for the UK.
Andy Kerr will make a statement tomorrow. When the media contacted me yesterday and asked me to comment on the document, I assumed that it would be the annual evaluation report because that is the date that we were given for that.
That makes it impossible for the committee convener to state that we would like progress to be made on the issue of there being five official and two unofficial priorities.
Standing orders say that the document must be published by a certain date.
In that case, we are on the eve of publication. There is a case to be made for our raising the fact that there are five official and two unofficial priorities and that we hope that something is said about that tomorrow.
That is right. However, the problem is that we will be driven by what is in the new document as soon as it comes out.
I want to echo some of the things that Wendy Alexander said. Our job is not about determining other spending priorities; it is about seeing how well the Executive is doing the job that it claims to be doing. Equally, although I know that there might be directions about what the subject committees are supposed to do in relation to the budget, I do not think that the role of the subject committees is to state what the spending priorities should be in the portfolio that is relevant to them. Most committees will not be at a stage at which that can be done. The Education Committee, on which Wendy Alexander and I serve, has spent a great deal of time on the Education (Additional Support for Learning) (Scotland) Bill and a small amount of time on its child protection inquiry. It is not in a position to overview the education budget and to decide where the priorities should be. I imagine that, at the moment, the views of the members of the committee would be coloured by their experience of the Education (Additional Support for Learning) (Scotland) Bill.
On the first point, we are talking about something quite fundamental. Both Wendy Alexander and Dr Murray have spoken against the agreement that was reached between Parliament and the Executive on what the role of committees would be. Under the financial issues advisory group, the view was that there needed to be a more consultative system in which the committees were consulted about priorities.
I want to return briefly to the point that Wendy Alexander and I were making. I appreciate the fact—and I tried to allude to it—that the question is being asked because that is what the committees were expected to do back in 1999. However, over the past five years, how often have committees suggested alternative priorities and how often has the Executive taken any heed of what the committees have suggested? Is it an empty exercise?
It has happened only in recent years, since the committees were driven towards it. We geared the information around getting the committees to make recommendations. In the first year in which we tried that, we got 16 recommendations, of which 12 were accepted. However, before that, there was only one spending recommendation in three years.
Some of the recommendations were not about how the money was spent; they were about how the expenditure could be reported to make the process more transparent.
There have been different kinds of recommendations, and many of them have been about the budget process. However, in the last year of the previous Finance Committee, we produced a list of spending recommendations that were culled from the subject committees, as well as recommendations on how the Executive should report the expenditure and what information the committees need. Before that, one or two spending recommendations were made in three years. The last year of the previous session was the first year in which we got a series of spending recommendations.
In a sense, both arguments are correct. If we do not have the transparency to aid scrutiny, it is hard for us to make recommendations. We have to focus quite a lot of attention on getting transparency into the scrutiny process. At the same time, if a consensual view is emerging in committees about how the resources should be allocated in their areas, we should encourage them to express that view. Ultimately, that would help us to deal with some of the issues that Peter Wood has raised.
In the document, there is a scant reference to my generation in paragraph 5.
Scant?
You say that the Executive aims to promote social justice
The target will be in the new budget document and there will be a report on progress. You will have the ideal opportunity to comment at that stage.
Professor Midwinter's paper shows clearly that the Executive is not addressing its stated priorities—although its priorities constantly change and fluctuate, rather like the line between the seashore and the sea. Children were the top priority, but they have been demoted and the top priority is now economic growth. It is, "Goodbye, kids—hello, growth."
And, "Hello, big bucks."
I am interested in the comments that Wendy Alexander and Elaine Murray made about the role of the committees. It is difficult for a committee to come up with specific costed proposals; however, it is plainly less difficult for it to come up with and justify a proposal that funding for a particular budget area should be increased or reduced. It is also possible for a committee simply to argue that specific policy initiatives should be included or, indeed, excluded from the budget. All those things legitimately fall within the committees' purview and responsibility.
Currently there is an agreement that if subject committees want a proposal to be costed precisely, Executive finance officials will carry out that costing. One or two proposals have been costed in the past; for example, figures were produced for some of the health initiatives and a cost was added.
When would we expect the lead committees to complete their work on this matter? Are we talking about mid-May?
Yes, although some have started work on their reports. For the past month, I have been issuing briefing papers to committees and having sessions with conveners.
So if a committee wants to take evidence on any issue that it wants to pursue, it will have to get its skates on immediately after we come back from recess on 19 April.
Some committees and I have had preliminary discussions. They might well have decided who they want to give evidence and will be sending out letters now.
I see that Jeremy Purvis and Jim Mather want to speak. I am anxious to get on, because I want to draw some conclusions from the discussion.
I will be brief, but it is worth stressing that the role of the Finance Committee in interacting with other committees is a two-way process. They help us to fulfil our scrutiny role. I do not agree that we should be reactive and only scrutinise what the Executive has done or is doing. The committees could have information in table form or another form that shows the budget priority area, the budget figures, the percentage that is capital, the EYF, slippage in the previous year, the percentage of staff, the percentage increase on the previous year, and the stated progress on targets. That would help them to fulfil their role and would give us a role in enabling them to understand the situation with the budgets.
I find the priorities to be woolly. They are in the land of declaration of intent and, as has accurately been pointed out, sometimes are not worth a lot. In the corporate world, there is a tendency to try to manage towards certain outcomes—turnover, market share, margin, cash position, balance-sheet strength, the dividend, the share price and so on. Even in the national UK Government, there is management towards certain concrete targets, whether it is achieving surplus or deficit to plan, making the borrowing target, achieving growth, getting a certain exchange rate, holding a certain interest rate or whatever. Why are we sitting here with woolly priorities and not a small subset of concrete outcomes?
That is not a question for Arthur Midwinter; it is a question for the Executive.
There was no requirement on the devolved Administrations to sign up to the public service agreements—which may be what are being referred to—between the Treasury and Whitehall departments. We have targets that are a Scottish version of those agreements, but they are not as systematically developed as Gordon Brown's regime in Whitehall. However, you will get conflicting views on how effective they are. As I understand it, the conventional wisdom in Whitehall is that there are too many targets and they should be reduced.
The point is that as we move forward and get time-series data on, for example, growth figures over the period, population movement figures over the period, and economically inactive figures over the period, it will not require high-grade journalists to start to draw conclusions.
I will draw us towards where we need to go. First, we should pick up Wendy Alexander's point and quickly pursue the Executive for the information that we asked for before, and ensure that it is filtered into our scrutiny and, ideally, to that of the subject committees.
Can it be circulated by e-mail?
If people respond to it.
I promise to respond.
The point is that that can take time. We will circulate it quickly, but I am not sure that it will be ready before Friday.
It might be. It depends whether there are any major changes to the AER from the version that I have seen. I will be going over it on Thursday morning. If there are no major changes, I could probably have a first stab by Friday.
My intention would be to sign it off on Friday, if that is possible. There might be a relatively short period for members to look at it.