Finance Committee, 01 Feb 2000

Meeting date: Tuesday, February 1, 2000

Official Report 238KB pdf

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Subordinate Legislation

We now move to the draft Scotland Act 1998 (Transitory and Transitional Provisions) (Appropriations) Amendment Order 2000, otherwise known as supplementary estimates. It is my pleasure to invite the Minister for Finance to move the motion.

As I am mindful of the time and presume that the committee has some questions about the estimates, I will make two comments and then formally move the motion.

It is worth noting that although many of the changes reflected in the estimates are technical, two changes—one of which is also quite technical—might be described as policy related. Mr Lyon mentioned the first of those changes. In vote 1, the change of around £23.7 million for the rural affairs department refers mainly to additional provision for the hill livestock compensatory allowance, but includes extra money for meat hygiene services. The total is slightly larger than that, but there are some estimated savings for this year. That is good additional money, which was promised and has been delivered. When I last appeared at this committee, we said that we would bring it back in January or February and we have done so.

The second change to which I draw the committee's attention is the provision for the costs of the Lockerbie trial—for want of a better description—that is taking place on the European mainland. The sum involved is some £30.8 million, spread over votes 5, 9 and 11; £18.1 million for police and prison costs; £11.2 million for court and Camp Zeist site costs; and £1.5 million for Crown Office prosecution costs. The good news is that, by agreement with the Treasury, all the capital costs and 80 per cent of the current costs will be met from the UK reserve; in addition, the UK Treasury is negotiating with the American Government, with a view to the latter providing substantial compensation towards those costs. Although a substantial sum of money is involved, a relatively small amount will fall on the Scottish criminal justice system budget. The amount of money involved is significant, and it is important that we continue with the trial, but we have done well out of the special arrangement with the UK Treasury. The circumstances are exceptional and the national reserve has been willing to pick up almost all the tab.

I move,

That the Finance Committee, in consideration of the Scotland Act 1998 (Transitory and Transitional Provisions) (Appropriations) Amendment Order 2000, recommends that the order be approved.

Thank you. I propose to proceed with the supplementary estimates as before; that is, we will consider each vote separately, starting with vote 1 on agriculture, fisheries and environmental services. Does any member wish to raise a point or question the minister on vote 1?

I would like clarification on page 2 of the vote, on items C2, C4 and C5, which concern fisheries. The sums of money involved do not seem huge, but what exactly is being reduced?

It is mainly, I think, reduced demand for harbour grants in this particular financial year. That is not entirely demand led, because there is always a budget limit on the overall number of grants that can be given. However, where grant applications decrease, the money will no longer be required. Other elements are involved, but that is the most substantial.

What we are doing now? What will be the result of our deliberations?

The minister moved the motion at the end of his opening statement. We are now proceeding vote by vote. At the end of that process, we will vote on the motion.

We now move to vote 2 on local government, housing, transport, other environment services and European funds.

Can you explain what is happening with the net change of £98 million in AZ?

As a result of the end of the previous European programme on 31 December and of our valiant efforts to speed up grant payments and improve the payment of European structural fund grant money, there has been a substantial increase in the number of payments required in this financial year, which has far exceeded the budget. That does not mean that the overall amount of money spent on European structural fund grants in Scotland will increase. The amount remains exactly the same, but the pattern of expenditure has changed dramatically. Under the funding rules, we had to apply to the Treasury to bring forward expenditure from next year to allow us to make payments in this financial year. We received an affirmative response to that application. We may have to do the same again next year for the year after.

Having improved the system and speeded up payments, it would have been wrong of us to tell organisations that we could not implement the new system, even if the system caused a temporary cash flow problem, which has now been dealt with.

There is some confusion about the timing of the Executive's application. Is there any connection between your having to draw moneys down and the Executive's application going in late?

None whatever.

Under D4, provision for roads and transport will decrease by £34.6 million. Is there a technical reason for that?

Yes. That is the money paid under the bus fuel duty rebate scheme; it is transferred back to the Department of the Environment, Transport and the Regions, which makes the payments on our behalf.

Under nationalised industries' external finance, Caledonian MacBrayne will get increases of £3.6 million on P4 and £791,000 on P5, while there will be a shortfall on PZ. Will the minister clarify what those figures mean?

Those are amounts of money that were budgeted for originally in the non-voted provisions for this year, but that were not included in the voted amounts, for which we have permission to spend. It has now been clarified that those amounts will be required and we are therefore moving them from the non-voted figures to the voted figures to ensure that the payments can be made.

Is the money for capital investment in boats?

I believe that it relates to the repayment of loans to the ship mortgage fund.

I want to go back to Richard Simpson's point on D4. Does the £34.6 million cover the total sum of the bus fuel duty rebate scheme? If so, why is it changing under supplementary estimates, rather than being simply a budgeted sum?

I do not think that the total is changing. The money was in our budget. If my memory serves me well—I remember answering a question on the subject at the time—we increased the amount of money in the last round of supplementary estimates. The scheme is administered nationally by the DETR, so although the money comes out of our budget and we make the payment, we then transfer the money back to the DETR to pay on our behalf.

So why does the money show up under supplementary estimates?

Because it is a transfer.

If there is nothing else on vote 2, we will move to vote 3—education, industry, arts and libraries.

Will the minister clarify the decrease of £9,307,000 under A4?

Mr Raffan may regret that question, as I have a full page of notes on that point.

The decrease of just over £9 million is in respect of a number of transfers both in and out of the heading, all of them technical. They include, for example, transfers from the Northern Ireland education department for student tuition fees in Scotland. In the other direction, the transfers include one of £100,000 to sub-heading A2 in respect of teacher recruitment publicity.

I would be happy to go through the full list, but I suspect that you might not want that. Probably the most substantial element is a transfer to cover the establishment of a separate budget for the administration costs of the Scottish Further Education Funding Council, as a result of the changes in the departments over the past nine months.

That is a good illustration of the problem that we discussed earlier in the year, that these netted figures may be the balance of some quite large sums. When we get around to dealing with full budgets, and when we get the estimates next year, I hope that there will be supplementary addenda, saying that this £9 million represents £40 million this way and £31 million the other way. Then we will not have to ask you for these explanations, although we have cut you short on them today.

That would take all the fun out of not knowing what I am going to be asked.

The committee will be aware that this is the last time that we will operate under the old system. We need to discuss—and I am sure that the committee and I will do so—how to handle this in the next financial year.

We move on to vote 4, on health.

The possible overspend in some of the hospital trusts amounts to £50 million odd. Is that identified anywhere in here?

That is the figure that you and Mr Wilson like to quote.

The trusts present us with those figures.

Perhaps I was thinking of another figure of £50 million that has been quoted.

I said £50 million plus.

Oh, it has gone up in the past 20 minutes.

The general estimates that are bandied around are not included in these figures.

Can you identify figure E5, the removal of £21 million?

The vast bulk of that money relates to the capital costs of providing teaching facilities, as a result of the relocation of the Edinburgh Medical School. As Dr Simpson was saying, if we could find a better way of explaining these things in the documents, it would not appear quite so strange. It is not a reduction of budgets of any sort; it is an internal transfer.

As there are no other comments on vote 4, let us move on to vote 5, on law and order. There are no questions on that, or on votes 6 to 9, so we will move to vote 10, on the Forestry Commission.

At a previous meeting on supplementary estimates, you told us that the commercial side of the Forestry Commission was not doing terribly well and required some assistance. Will that assistance come to an end?

In the detail of the budget bill figures that we discussed earlier, you will find that we have had to continue to make additional provision for the Forestry Commission into the next financial year. We are anticipating that some of the difficulties that it has faced this year will continue—timber price problems and so on.

So the answer is, yes, it will go on.

"Go on" is a bit open-ended. However, for the next financial year we have continued to make provision for the difficulties that the commission was facing as a result of timber prices.

Having set your targets and accepted the bad news, what action is your department recommending to the Forestry Commission?

I have agreed with the minister responsible that the matter will be kept under review. There is a downward pressure on costs, but we must be sensitive to the current market conditions. In next year's budgeted provisions we will need to consider whether the situation has changed. There are no specific initiatives in the offing that would alter the current demand for additional resources to keep the Forestry Commission at its present levels of activity.

I appreciate that this is an investment in the rural economy, but I wonder whether there is not a better way of spending the same money to generate jobs in the rural economy.

At the moment it is a short-term problem, and we need to be conscious of that. Longer-term opportunities may be opening up for the forestry industry. The canal improvement, for example, will create opportunities to move timber from west to east in a cost-efficient manner. There could be significant improvements, but we need to keep a close eye on the situation.

We move to vote 12, on the Scottish Parliament.

I have a general question. Everything in this document, apart from administration, is on the up, with increased funding in each vote. Where does the funding come from, and how does that fit in with the announcements made in the budget of a recycling fund from previous years? Basically, how does it work?

The situation that you have described can be explained in a number of ways. First, allocations may be moved from non-voted to voted provisions—from budgeted but not yet available to spend, to authorised to spend. Secondly, there is the take-up of end-year flexibility, most of which we did last time but some of which comes through here. Thirdly, there are additional allocations such as the agriculture money that comes from the UK Treasury during the year. We have to make allowances for that so that ministers and departments can spend it.

Those are the three main areas. Unless there was an economic crisis in the middle of the year and budgets across the UK were suddenly retracted, those are the situations that we would face when amending budgets during the year.

During the next week or so, can we have a wee note on sources of funding, broken down into the categories that you have just set out?

For these figures, or in general terms?

For these figures and for the budget itself, showing what comes from end-year flexibility, what comes from money budgeted but not yet released for spend and what comes from elsewhere. That would be useful.

I seek your guidance, convener, on whether that would be a sensible use of time, given that we are approving these supplementary estimates today. I would be happy to provide examples from either this or the next set of estimates, if members of the committee would find that helpful, but I do not want to commit myself to doing it over the next week.

The Budget (Scotland) Bill has to complete its passage over the next 10 days, and I am conscious that I have not yet signed off the response to you and to the convener of the Audit Committee on the written agreements. I am also conscious that we have an outstanding commitment to the committees to produce in-year monitoring figures, which I have on my desk and hope to provide shortly.

Over the next 10 days, I would rather concentrate on dealing with those issues, before we ask Parliament to vote finally on the budget for next year. I would be happy to provide members of the committee with the information that Andrew Wilson has requested over the next few weeks, if that would be helpful.

I did not realise that it would take time.

If it is not time consuming, we will do it very quickly, but I am assuming that it will be. If it is, we will do it as quickly as is practical.

The question is,

That the Finance Committee, in consideration of the Scotland Act 1998 (Transitory and Transitional Provisions) (Appropriations) Amendment Order 2000, recommends that the order be approved.

Motion agreed to.

I thank the minister and his officials for their attendance.

Meeting closed at 12:39.