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Chamber and committees

Finance Committee, 01 Feb 2000

Meeting date: Tuesday, February 1, 2000


Contents


Accounting Policies

The Convener:

The first item is the determination of accounting policies. Members will have before them the letter from Jack McConnell and a memorandum. Despite the fact that the letter says that comments had to be in by last Friday, Sarah Davidson, the clerk team leader, has assured me that the date has been extended and is flexible. Any comments that we make will be taken into consideration.

As Jack McConnell says, the Audit Committee has also received a copy of the letter. I am told that the Audit Committee has not taken a decision—Andrew Wilson will know about this—and has asked for some matters to be clarified by the National Audit Office and Scottish Executive officials before making a considered response. It is now up to us to consider our response to the memorandum. I invite comments.

I see that nobody is rushing to pick up that challenge. The choice before us is which of the three possibilities that are laid out in the memorandum to accept. Do we want to support the recommendation that an internal body, an extension of the financial reporting advisory board to the Treasury or an independent and separate body be responsible for resource accounting? The recommendation at the foot of the last page is that

"officials should negotiate a suitable extension to the remit of the FRAB together with Scottish representation on the FRAB."

Paragraph 23 says that the FRAB would submit its annual report to Westminster and the Scottish Parliament. What thoughts does the committee have on dispute resolution, should the two Parliaments have differing views?

The Convener:

That is a fair point. I tend to support the third of the recommendations: the establishment of a new body. I did not understand the part of paragraph 29 that says that such a body might have difficulty establishing its credentials. That might be the case initially, but any problems could be overcome.

Mr Kenneth Macintosh (Eastwood) (Lab):

My understanding of paragraph 23 is that although an annual report would be submitted to Westminster and the Scottish Parliament, we would consider matters that were within our areas of responsibility. I did not think that there would be arguments. I also understand that there are rules for resolving disputes.

Dr Richard Simpson (Ochil) (Lab):

If this committee is giving advice to Parliament, it is important that we establish what the system for resolving such disputes should be. I am not saying that there will be disputes, but any agreement of this type needs to have an arbitration stage laid out so that we are agreeing a package to put before the Parliament, not just two or three good ideas.

That is certainly the sort of question that we should ask before we make a decision.

Dr Simpson:

There is no need for a mechanism to resolve disputes. If we choose a different route, we choose a different route. There is no requirement on us to follow the Treasury rules if we do not wish to do so. The Treasury can require a Scottish minister to provide information but we do not have to follow the same rules. There is a suggestion that it would be cost efficient and sensible for us to have the same procedures, but we are able to choose a different route, even after recommendations by the FRAB.

I am quite happy with that. I am pointing out that that question will be asked in a meeting of the Parliament and we should have a definitive answer.

Mr Macintosh:

We should ask the Executive to clarify the matter. Either disputes do not need to be settled or arrangements for settling them are already in place.

I do not think that the choice before us is particularly difficult. The internal committee option is not good. The choice between the FRAB and a new body comes down to a matter of saving money. There is no point duplicating a committee if one already exists and we could benefit from the wisdom—if that is the right word—of this committee.

The key point is made in paragraphs 13 and 14. The Finance Committee and the Audit Committee are the bodies to which the Executive has to present its figures and which must agree those figures, although the Executive also has to account to the Treasury.

Sarah Davidson has informed me that the Audit Committee has already raised the questions that we are discussing.

Paragraph 24 suggests that the title of the FRAB could be changed so it is clear that it does not deal only with Treasury matters, but with Scottish Parliament matters too. I wonder whether the FRAB has been asked about changing its name.

Andrew Wilson (Central Scotland) (SNP):

The Audit Committee had a lengthy talk about these issues. Kenneth's argument is appealing in one respect: we do not want to duplicate work. Of course, that is a convincing argument against devolution per se. The question is really whether we want to have a devolved set-up. There has to be clarification of some issues. Changing the board's title is less important than what its role would be. Richard identified the fact that the Scottish Parliament has to report to the Treasury and will have to produce a set of accounts that matches the Treasury's own accounts.

We cannot answer the question before us until we see the detail of the information that the Audit Committee and this committee ask for. We might want to have a joint meeting to digest the information together.

Mr Keith Raffan (Mid Scotland and Fife) (LD):

I think that the memorandum contains a contradiction. Paragraph 20 says that

"the FRAB, although a creation of the Treasury, operates as an independent body"

but paragraph 29 says that

"Extending the remit of the FRAB has many attractions with the only drawback being continued reference to the Treasury."

Presumably that means that we have to go through the Treasury to communicate with the FRAB. Does it mean that? The two sentences do not seem to support each other. Was that discussed by the Audit Committee?

Andrew Wilson:

There was a general concern about the all-pervasive influence of one UK department. It provides the staffing and support but the body would have civil servants and outside people in. The memorandum suggests that Scotland should be represented by officials from the finance department.

I think it just says the principal finance officer or a nominee. Only one person, anyway.

Do we know what is going on with the Wales and Northern Ireland arrangements?

The Convener:

We can find out. A phone call will tell us whether there is anything useful to be learned from that. The Audit Committee has asked similar questions. Sarah, being the clerk team leader to both committees, will ensure that the procedure does not duplicate work.

We do not want to reinvent the wheel, but we have to come up with something that works and is acceptable to the public.

Shall we ask Sarah to collect our points together and ask the relevant questions of whatever body can provide the answers? We will consider the matter again at the next appropriate opportunity.

If it is being dealt with over the telephone, could an e-mail containing the information be sent to committee members during the week?

We will deal with the question relating to the Wales and Northern Ireland arrangements by telephone. The other points might be dealt with another way.