Draft Budget 2012-13
Agenda item 3 is scrutiny of the draft budget 2012-13.
I welcome back the cabinet secretary to our second evidence session. I also welcome the new official, Heather Jones, who is the deputy director of the Scottish Government’s international division. I believe that the cabinet secretary has a brief opening statement.
Yes. Thank you for inviting me to set out the Scottish Government’s spending plans for 2012-13 in the Europe and external affairs aspect of my portfolio. The spending plans cover Scotland’s role in Europe and support for our major events programmes and international relations work overseas, but they do not reflect the Scottish Government’s indirect support for those activities through organisations such as VisitScotland, EventScotland the Scottish Qualifications Authority, Highlands and Islands Enterprise, the Scottish Council for Development and Industry and many others. Many of those organisations have substantial budgets to support international work. For example, VisitScotland’s international marketing budget for this year is £4.3 million, and the SQA’s international work generated income of £0.5 million in 2009-10.
The committee will be aware that, in global terms, the real-terms reduction in the Scottish budget for 2012-13 has required tough decisions to be made across Government, while we have continued to focus on accelerating economic growth and on our commitment to renewables and growing businesses. Our proposed activities in Europe and external affairs strongly reflect that focus.
In the face of the challenge of significant real-terms cuts to Scotland’s budget by Westminster, the culture and external affairs portfolio will spend £232.4 million in 2012-13, which is £13.2 million, or 5.4 per cent, less than in 2011-12. Of that, £15.9 million will be spent on Europe and external affairs, which represents a budget cut of 1.2 per cent compared with 2011-12. Overall, the Europe and external affairs budget will continue to promote Scotland’s interests and identity at home and abroad, while delivering our economic ambition.
Our budget reduction reflects the economic environment in which we are all operating. Only one budget line—the line for North America—shows an increased allocation. The increase, from £455,000 to £530,000, is to support the newly established office in Toronto.
I have also introduced a new budget line to support Scotland’s role as the standing secretariat to the British-Irish Council next year. The British-Irish Council is an international intergovernmental institution that is made up of representatives of the UK Government, the Irish Government, the Scottish Government, the Welsh Government, the Northern Ireland Executive, the States of Guernsey and Jersey and the Isle of Man Government. Following discussions in the early summer, Scotland was successful in attracting the standing secretariat, and the budget will support that.
The budgets for the fresh talent initiative, Scotland’s international image and major events are all reduced. That has been achieved largely through efficiencies and shared services. However, the major events budget will be reinstated to support preparations for homecoming in 2014.
Three of the budget lines remain unchanged: international strategy, international development and European strategy. The international development budget is the largest of those at £9 million. That reflects our continued commitment to work in partnership with the developing world and to work against poverty. Since 2007-08, the international development budget has increased by 100 per cent under this Administration.
Scotland has always been an outward-looking nation and the Scottish Government will continue to build on work that is related to Europe and external affairs, despite difficult economic times. We will continue to focus our activity where we have particular expertise to influence the higher ambitions of Scotland, the UK and other member states and to support developing countries.
I am happy to expand on any of those or other themes during the question session.
Thank you very much. Before I invite members to ask questions, I will start with a quick one myself.
We got three pieces of evidence from three organisations: the Network of International Development Organisations in Scotland, which is known as NIDOS; the Scottish Catholic International Aid Fund, which is known as SCIAF; and VisitScotland. That was very helpful written evidence to the committee. One key theme of the Scottish Government’s budget and of some of the submissions was preventative spending and how it could be articulated through budget headings across the portfolios that you deal with. Will you expand slightly on that?
Yes. I think that we have to see all budgets in the context of the economic pressures that we have with the cuts from Westminster and the tough times that we face trying to realign priorities in order to identify preventative spending.
The bulk of our expenditure is obviously on international development. As much as possible of that is about preventative spending. I am not talking about preventative spending for the children of our country in terms of our health education budget, but preventative spending to support many children in other countries. Everybody accepts that in difficult times the selfish thing is to cut international spending. As a country and across the parties in this Parliament, we have to recognise that international spending is important. We are putting preventative spending into action on a global scale through international development funding—I do not know whether I need to explain that further.
In a lot of our international relations, discussion about Scotland always turns to renewables, because of our strength in that area. On the climate change agenda, there is obviously a prevention issue there as well as the adaptation issue that we are trying to tackle.
There is a reason why we have such a strong early years and preventative spending agenda. The previous Education Committee of this Parliament had an early years inquiry—I was a member of that committee, as were Wendy Alexander, Ken Macintosh and Adam Ingram. We travelled to look at work in Sweden and Finland, for example, on early intervention and the importance of the early years. When we were elected to government in 2007, we took that work into our early years framework.
A lot of international relations work might not be obviously preventative, but when items of policy development arise—when you have experience you can share, or, indeed, when you can learn from other countries—our international relations become about not just diplomatic relations around traditional thinking about industry, which is clearly important, but the social dimension, which is probably not heard of as much.
Yes. I think that some of the work that gets done in Scotland’s schools around citizenship and Scotland’s place in the world takes advantage of those key themes.
We have a very short time left—about 13 minutes—so I open up the discussion to questions. Jamie McGrigor was first to catch my eye.
The budget seems to be falling, in real terms, by about 5 per cent, although it is technically frozen. Is that correct?
I have responsibility for both culture and external affairs, and you have to look at the budget in the round. The cultural aspects of my budget are taking a bigger hit by far than the international relations aspects. In that context, Historic Scotland and the National Records of Scotland are shouldering a lot of the burden of the overall reductions in the budget for culture and external affairs. In my work with the committee, I am focusing on external affairs.
The fresh talent initiative, which is down by nearly 16 per cent in real terms, seems to have taken an extra big hit. Is there any particular reason for that?
Part of that is to do with reduced marketing, a possible merger of services with the relocation advisory service and more efficiencies. The operation of the UK Government’s immigration policy means that some of the fresh talent initiative has been restricted. For example, some of our policy, which aimed to ensure that we could have the brightest and best coming to, living in, working in and staying in Scotland and which was supported on a cross-party basis, has been restricted because of UK Government policies. We might want to spend to attract people to come to live in this country, but the messages that the UK Government is putting out, the policies on visas and the reduction in numbers obviously have a mitigating effect on what we can do with the fresh talent initiative. We have also tried to seek efficiencies on the administrative side.
I have a quick supplementary to Jamie McGrigor’s question before I move on to my main question. In the past week, I have learned from a case that I have been dealing with that the Home Office has a six-month waiting list for clearing work permits. Were you aware of that?
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The issue is currently reserved to the UK Government. I had a meeting recently with the Minister of State for Immigration, Damian Green, and we discussed a number of immigration issues. We want talented workers to contribute to the Scottish economy, but there are some real challenges. We have a different demographic in Scotland and our population is ageing at a much faster rate than the population in the rest of the United Kingdom. We are working hard to persuade him of the differences and he will be sending some of his senior officials to Scotland shortly to find out more about the practical difficulties that Scottish businesses are facing.
I am sure that the committee will return to the matter, which has brought together universities, colleges, the Institute of Directors, the Confederation of British Industry and the Convention of Scottish Local Authorities, all of which are united in agreeing that there are real, practical difficulties. Practical examples will help to influence the UK Government. I know that it is not a budget issue, convener, but I reassure Helen Eadie that we are pursuing the matter.
I apologise for the distraction, but I congratulate you on the important work that you are doing. When we have highly skilled, talented young people who want to be in Scotland, it is not good enough to have a six-month waiting list.
In your statement, you commented on your funding strategy and said that you have decided to give more money to work in North America. I heard what you had to say about that approach, but will you expand on it? It means that work in China and India will not get an increase. I am not being critical; I am just asking you to expand on the North America dimension.
It is a small element—tens of thousands—rather than a large amount. It might look big in percentage terms, but we should remember that the budgets are relatively small in the first place.
We launched our Canada plan on St Andrew’s day last year. Your predecessors on the previous European and External Relations Committee were keen that we looked at doing more work with countries that have a Scottish diaspora, which leads to lots of opportunities for tourism but also for business. The model, with the office and operation in Toronto, has brought together Scottish Development International, VisitScotland and the Scottish Government, and you will be interested to hear that we now have a more integrated approach to the way in which Scotland is presented. The additional money is to allow us to have that presence in Toronto. As I said in my opening remarks, the budget is not large, but it will deliver an improvement and it carries forward our commitments in the Canada plan.
We will ensure that we support other areas, too. The issue is that we need the budgetary capacity to do what we want to do. We have the connections with China, which the First Minister will shortly visit again. I have had meetings with senior officials who have come to Scotland, and Vice-Premier Li has also come to Scotland for activities. Although we need to ensure that we have in-country presence, we should not underestimate the capacity to influence by having people come to Scotland as well, and of course inward and outward visits have different costs.
Thank you.
Turning to the international development budget, we are all delighted to see that it has at least been maintained at £9 million, notwithstanding the significant cuts that we are facing in our budget from Westminster—some 12.6 per cent over the period of the spending review. It is a credit to the Government that it has put its money where its mouth is in relation to the important contribution that Scotland can make to international development.
I raise an issue that NIDOS mentions in the briefing paper that it has supplied to us. Are any efficiency savings assumed in the international development budget for 2012-13? In 2010, NIDOS told the previous committee about the efficiencies that it thought could be taken on board. What thinking has been done on the issue?
Clearly NIDOS, which we support, is important in terms of how we can improve the capability and capacity of our international development work on both an organisational basis—by working with individual organisations—and a national basis. We are always open to finding efficiencies. The more efficiencies we can get from administration or bureaucracy by any means, the more we can allocate to front-line services. I am not familiar with anything that NIDOS has approached us with so far, but I am happy to hear about that. I suspect that part of it might be about how we administer grant systems. We are moving towards a more regularised system in order to have a bigger lead-in time, which might be a more efficient way of getting grants through the door for everybody. Having a longer lead-in time, rather than a rush for grants later in the year, might be what it is thinking about.
On administration of the international development fund, your question is a bit like Helen Eadie’s earlier question about staffing in the civil service, and your own follow-up question. There will not be a staffing resource cost in terms of the international development fund; our whole focus is to ensure that the money goes out the door. I would probably have to hear more from NIDOS, and I am happy to take the issue up with it. If I can respond promptly to you about what it is trying to pursue, I will do so.
One of the issues that NIDOS mentioned in its paper was the issue that you have touched on: the efficacy of the funding rounds. It is helpful to know that there are different ideas. NIDOS mentioned that it had submitted a paper to this committee’s predecessor committee, which I guess is still floating around.
I met NIDOS not long after I was appointed as cabinet secretary. We discussed these issues, we have taken on board its advice and we are acting on it. We will speak to NIDOS separately to make sure that it is satisfied with the response.
I am concerned about the support that we are lending to small and medium-sized companies in Scotland. One of the issues that was brought to my attention recently relates to students. Currently just under 13 per cent of all UK-bound students come to Scotland. I am not sure what the British Council is doing to encourage people to come to Scotland for further education, which would obviously support our universities and colleges. That is clearly an immigration issue. In one case that has been brought to my attention, a student was refused a visa on the ground that they had not shopped around. I would probably have shot the officer if I had been there at the time because we do not want people shopping around; we want them to come here. The fact that the fresh talent initiative is no longer in place means that we are competing against Australia, Canada and America, which are now running such schemes. We are disadvantaged to kick off with and we also have the UK Border Agency working against us. The British Council is not assisting us to the level that it perhaps ought to be. How can we support the sector?
That is a key area. It is becoming harder to attract students to come here because of the current UK Government’s policies. The message is going out that we are not as welcoming as we once were. That is a challenge. Having said that, I met Damian Green precisely to discuss education issues and student issues and I tried to reflect some of our concerns. Universities Scotland has provided a very good briefing, which it gave Damian Green recently. That briefing made it quite clear that a disproportionate number of the students who are coming to Scotland to study are studying science, technology, engineering and mathematics, and that many of them are postgraduates. Those are the inventors of the future; they are the scientists who will help to shape the small and medium-sized enterprises and companies that we need. I think that the connection you are making is to ask how we make sure those students can then provide start-up companies. We will provide some evidence on that to Damian Green’s officials when they come to Scotland shortly.
Mike Russell, the Cabinet Secretary for Education and Lifelong Learning, is about to go to India, where he will meet higher education ministers. There is to be a big conference or convention to try to attract students to Scotland. However, it is a challenge. Some of the spend on international relations helps to support that work, and Mike Russell’s department will provide some of the funding for the visit.
That is part of the agenda of encouraging people to do business in Scotland, which is not without its challenges. Many of the issues are policy ones. I know that there are strong views across the political parties on the Home Office and the UKBA. We are trying to work constructively. We have provided proposals and suggestions to try to ensure that, for example, the inventors of the future can work across universities in India—where the opportunities are immense—China and Scotland.
Some of the budget helps to support that work. On scrutiny, there are the usual questions about how much we spend in the area, but a lot of the issues are to do with policy.
I returned from Pakistan last week. One issue that university managers have raised with me is the extreme difficulties with visa applications to the UK Border Agency. I am beginning to get seriously concerned, because the sector needs the most support right now, yet the UK Border Agency consistently fails us and does not allow us to attract students. We are losing students to other countries.
Australia is a good example of that. It is capitalising on the issue and does aggressive marketing to attract international students. To consider purely the economic aspects, attracting students is an earner for us not only through the income from students, but through the money spent by families who visit. I urge MSPs to share any concrete evidence or case studies with me and Damian Green. We are trying to build up a set of practical examples to make the situation clear.
There is an economic agenda. We can disagree with the UK Government on various issues, but this one is about economic growth. We do not want measures that hamper our economic growth. I emphasise that my recent meeting with Damian Green was the most positive that I have had to date. However, at the end of the day, we do not have the power to make decisions on these issues. The committee might want to do further work on that, separately from its budget scrutiny.
The cabinet secretary is pushed for time and we have only a few minutes left, but Bill Kidd and Aileen McLeod both want to ask questions. If we have 30-second questions and answers, the cabinet secretary can be out of here by quarter past 3.
This seems to happen to me quite a lot.
I welcome the fact that the majority of the money in the budget is going to international development, but the budget for Scotland’s international image seems slightly heftier than the budget for other sectors. I am particularly concerned that the budget for the North America strategy and that for the China and India plans are about a third of the size of Scotland’s international image budget. Although Glasgow Anniesland is a great place for people to come to on holiday, it seems that VisitScotland receives more money than we spend on attracting other forms of industry to Scotland.
Do not underestimate the importance of tourism to the Scottish economy. I am very supportive of VisitScotland’s work, not least in relation to 2012 and 2014, which will bring fantastic opportunities for Scotland. The international image budget also helps to fund the plans for different countries, such as the China plan. That budget covers a wide area. It might be helpful if I followed up this session with an explanation of the international image fund. This is not a value judgment about different countries; much of the important work that we do with countries is funded through that budget.
Aileen McLeod is going to give up her question to allow you to get away, cabinet secretary. There are probably a few things that we have not covered because of the tight timescale, so the committee might write to you to get some answers, if you do not mind.
I would be more than happy to answer any questions.
Thank you for coming to the committee. It has been a pleasure to have you here and we hope to have you back in the future.
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Meeting suspended.
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On resuming—