Correspondence
The second item on our agenda concerns consideration of our approach to post-legislative scrutiny and policy and financial management reviews in the light of previous discussions that we have had and correspondence, in the form of a response that we have received from the Scottish Executive, which is detailed in the approach paper from the clerk. You will see that we need to agree whether, in the light of the Executive's response, we want to have an evidence-taking session to compare the estimated costs with the actual costs of a specific act. The suggested legislation is the Education (Additional Support for Learning) (Scotland) Act 2004. It is proposed that the clerk will have initial discussions with Executive officials. The proposition is quite straightforward. I invite comments from members.
The proposal is sound and we ought to proceed with it.
I was taken aback by the comments that were sent by John Elvidge and appear in annex A to the clerk's approach paper. The comments suggest that it is not possible to review figures for the "actual costs of legislation". The response says:
"we recognise the attractions to Committees of being able to review figures for the ‘actual' costs of legislation which they have scrutinised".
I would have thought that the Government would also have been attracted to the idea of being able to identify the costs of the legislation that it has introduced. I am surprised that it cannot do so.
I am entirely supportive of what is proposed in the clerk's paper. However, I must say that I share Derek Brownlee's concern about the poor nature of the response from the permanent secretary.
With regard to this committee's concern about financial memoranda, the third paragraph in annex A says:
"There is a continuing issue with regard to uncosted elements as a result of uncompleted or planned consultations and politically or commercially sensitive negotiations with stakeholders, but such occurrences are relatively rare."
I have never heard a more ridiculous reflection of the debate that goes on in this committee. We have repeatedly expressed concern about the fact that we see financial memoranda that are not complete because a consultation is under way or because something has to be done by regulation as a result of the legislation. For the permanent secretary to say that almost all the factors that we complain about are the responsibility of the Executive and then to say that they arise relatively rarely is to miss the point of what the committee has been going on about for a considerable time.
Derek Brownlee mentioned the paragraph that deals with the ability of committees to scrutinise the "actual costs of legislation". I have to say that I find the permanent secretary's remarks about the financial implications of passing legislation and about the question whether anyone has a clue as to whether the information in any financial memorandum was in any way correct to be rather casual.
Recently, the committee has taken a stance on the financial implications of the legislation that Parliament has passed on the various commissioners and the ombudsman. One of the lines of defence that has been used by the commissioners and the ombudsman—perhaps to their credit—is that they have spent within the guidelines in the relevant financial memoranda. However, the permanent secretary appears to be saying, "We do not really know or pay attention to whether we have spent within the guidelines in the financial memoranda. In any case, most of the civil servants have moved on by the time any of us want to investigate any of these propositions."
In my view, it is completely irrelevant whether a civil servant has moved from department A to department B, leaving behind some legislation. The civil service and the Executive have an obligation to give us some assurance that there are processes and protocols that guarantee that, if the Scottish Parliament authorises a financial memorandum, viewing it as a reasonable best guess of what is to come, there is an expectation that the expenditure will be in line with that best guess.
I am deeply dissatisfied with the permanent secretary's response and wholly supportive of the clerk's proposals. In my view, the Education (Additional Support for Learning) (Scotland) Act 2004 is a good choice if we are looking to test this area.
Like others, I was surprised by the communication from the permanent secretary. Do we have any idea of when the internal guidance was issued with regard to financial memoranda? The permanent secretary makes great play of the fact that—
I think that we approved it in 2003 and updated it in 2004.
The permanent secretary talks about
"the putting in place of our internal guidance",
as if the guidance had come from the civil service.
The guidance is internal guidance for the civil service. However, it comes from our dissatisfaction with the practices that had been in operation. The Finance Committee in the first session of the Parliament started to examine the issue of financial memoranda because it felt that there was a serious issue to do with matters not being properly addressed. That committee's legacy paper suggested that there should be a systematic way of dealing with these things. The present committee adopted that approach and refined our view in 2004, putting more stringent requirements on the process.
I have to say that, at least once since then, I have been to the Minister for Parliamentary Business to highlight complaints about financial memoranda that have not been properly drawn.
With regard to the issue of bill teams coming and going, I suggest that we should require accountable officers or departmental heads—rather than the head of a bill team—to sign off financial memoranda. That would give the documents a higher status and would imply a greater degree of ownership within the civil service.
I agree whole-heartedly with that.
In paragraph 16 of the clerk's paper, two recommendations relate to the issue of financial memoranda. I have no objection to the first, which is to do with holding an evidence-taking session on the cost of the implementation of the Education (Additional Support for Learning) (Scotland) Act 2004. However, the issues that emerge in the paper are sufficiently systemic that we should add a few other conclusions, one of which is the suggestion that the convener just made. I agree that having accountable officers sign off financial memoranda would be a quick and effective mechanism.
Further, we should write to the Audit Committee. As we have said before, there is a fluidity to the issues, when considered in retrospect, which means that they cross the boundaries between this committee and the Audit Committee. That will become more significant after May, when there will be a more stringent financial climate with regard to the question of which committee's job it is to look back at matters. We should alert the Audit Committee at an official level—clerk to clerk—that there should be a discussion about respective responsibilities.
We should also write to Audit Scotland, which considers many areas, and ask it whether the proposals represent best practice and, if not, what might. The complacency is extraordinary. The financial memoranda scrutiny process was originally proposed to the Parliament by the financial issues advisory group. A couple of people in Scotland who specialise in that area—I am thinking particularly of Irvine Lapsley—have testified to the committee. We could write to them with the same questions that we ask Audit Scotland.
The paper's suggestion that this is an area in which we might want to commission further work after May is wholly appropriate. However, prior to May, as I said, we ought to alert the Audit Committee, ask Audit Scotland whether the proposals represent best practice and what suggestions it might have, and perhaps invite the views of one or two experts in this field in Scotland. That would give the committee a better basis for establishing what research work might be appropriate post-May 2007.
I return to the point that I was trying to make earlier. If the guidance came in in 2004, the permanent secretary is, in a sense, saying that there is no point in any post-legislative scrutiny of anything at the moment because an act has to have been in force for at least two years for a proper comparison to be made. According to him, there is no way in which we can consider anything.
No. Anything before 2004—
Yes, but for comparison purposes, an act has to have been in force for at least two years. We are saying that we would like to use an act that has been in force for two years so that we can properly track how it has been implemented.
The Education (Additional Support for Learning) (Scotland) Act 2004 has been chosen because it meets the criteria.
But it does not meet the permanent secretary's criteria. He argues:
"Almost all of the FMs suggested to the Committee for the comparing of estimated and actual costs predate our first Finance Guidance Note".
But the 2004 act does not. It is within the existing—
It was passed in 2004, but presumably the financial memorandum was drawn up before 2004. It took up the best part of the first year of this session to get it through the Education Committee, which started considering it in 2003.
Perhaps Susan Duffy can clarify the position.
I do not accept the permanent secretary's statement anyway.
As far as we are aware, the Executive's internal guidance—albeit that it is not the updated version—was in place at the time that the Education (Additional Support for Learning) (Scotland) Bill was being considered by the Finance Committee.
So it ought to have been. The financial memorandum ought to have been drawn up under that guidance.
We will double-check the position, but that is my understanding. That is the basis on which the Education (Additional Support for Learning) (Scotland) Act 2004 was chosen.
This is not acceptable. The implication is that nothing was in place and that financial memoranda came out of a hat before the guidance was in place. I still think that it is relevant for us to consider that point.
In addition—with my other hat on—the Education Committee wanted to do some post-legislative scrutiny of the 2004 act, but that has not been possible so far because we have had a great deal of other legislation to consider. It might be quite helpful for the Finance Committee to do some work on it.
To pick up that point and to return to Wendy Alexander's point, in 2001 the previous Finance Committee started to look at financial memoranda and requested that they be prepared much more systematically. In 2002, we had a session with Irvine Lapsley, Bob Black and others to talk about how we would take forward financial memoranda. Rather than write to those people as a one-off exercise, it might be sensible to consider involving some of them in another informal seminar, to take a snapshot three or four years on from our previous consideration of the issue and to establish whether we can force the procedure to be tightened up. The argument about pushing the issue up to accountable officers is probably the best way of taking it forward and ensuring that we do not get responses like the one that we have received from the permanent secretary.
It is profoundly unsatisfactory to be told that financial assessments from more than two years ago cannot be considered. That is not acceptable. On big issues and major policy initiatives, such as free personal care, we must be able to consider whether the financial projections were realistic. That should be part of our job and the Audit Committee's job.
It would be sensible to introduce a standard post-implementation process, which in essence would repeat the process for the production of the financial memorandum but would describe reality. A report should be produced in every case and signed off by the accountable officer who triggered the process. The Finance Committee or the Audit Committee would consider a random sample of such reports every year. Such an approach would oblige people to do the job more thoroughly—if they did not do so, they would risk exposure.
I suggest that we take up the recommendations in the briefing paper to hold an evidence session on the Education (Additional Support for Learning) (Scotland) Act 2004 and to write to the convener of the Education Committee to alert that committee to the evidence session. In addition, we should write to the Minister for Finance and Public Service Reform and the permanent secretary to suggest that financial memoranda should be signed off by accountable officers or senior officials and that we enter into exploratory discussions with Executive officials about the scrutiny of public body reviews.
I float another idea: we could suggest to the Audit Committee that we hold a joint seminar at which we address the issues. We could invite people such as Robert Black, Irvine Lapsley and others who have been involved. Members of both committees need a proper system and we should aim to include the matter in our legacy paper, so that future committees can operate the new system.
I support the approach that you have set out, but we should also convey to the permanent secretary our dissatisfaction with his response. I do not know whether my suggestion puts members in a difficult position, but the response does not give me much confidence in the process over which the permanent secretary presides.
Elaine Murray said that if we follow the logic of the permanent secretary's response we cannot have a clue about whether costs are on target for legislation that predated the internal guidance on financial memoranda. We should consider that in the context of free personal care for the elderly, which the convener mentioned. The Health Committee's care inquiry was based on post-legislative scrutiny of the Community Care and Health (Scotland) Act 2002, estimates of the cost of implementation of which were in the financial memorandum to the Community Care and Health (Scotland) Bill. During the debate in the Parliament on the Health Committee's inquiry, ministers told us that the policy is on track and that the financial commitments have been delivered. However, the permanent secretary's response suggests that the financial memorandum was produced at a time when the standard of financial information provided was not particularly high. What on earth are we supposed to make of that?
I take it that the committee agrees to follow the recommendations that I set out.
I agree with the recommendations that have been made, but on a small, practical point in relation to the first recommendation in the clerk's paper, would it be productive to call witnesses from a health board and a local education authority in the same area, or should we call witnesses from different parts of the country, which operate different systems? If the witnesses come from the same area we will be able to ascertain whether there are gaps or common understandings and how costs are shared—we would have something against which to compare the evidence.
I suggest that we let the clerks consider issues to do with the selection of witnesses. The clerks will come back to us.
Under agenda item 3, we are to consider correspondence from the Procedures Committee on a proposed change to standing orders with regard to Scottish statutory instruments. The clerks have produced a note for us on that. As members can see from that note, it is likely
"that this change would have little or no impact on the Committee."
Unless anyone has any comments to make, I propose that we do not need to submit any views to the Procedures Committee, and that we simply note the correspondence. Do members agree to that?
Members indicated agreement.