Children in Poverty
Agenda item 4 is consideration of the Executive's response to our "Report on Cross-Cutting Expenditure in relation to Children in Poverty". As members will recall, the work on the report was carried out by our predecessor committee, which presented a draft report for us to adopt and publish. The Executive has now issued a response.
Arthur Midwinter, who was involved in the research that was associated with the review, has read the Executive's response and prepared a paper for us. When he has arranged his papers, perhaps he can speak briefly to us about that.
Professor Arthur Midwinter (Adviser):
I was not the lead adviser on the report but became involved late in the day to strengthen the rigour of the arguments in the document—that was how it was put to me. I was involved very early on in doing some of the background work and in briefing the reporters group on the questions that they should ask of ministers—including Des McNulty, as he will remember. Therefore, when the response came in, it was passed to me to have a look at on behalf of the predecessor committee.
For those who are new to the committee, the first thing that I should say is that the Executive's approach to tackling the problem of children in poverty is ambitious. The definitions that are used are very wide. The aim is not just to tackle poverty in the absolute sense but to tackle poverty and inequality over a range of indicators, such as education and health.
I am content with most of the Executive's response. On the whole, I found that the dozen or so points in which the Executive responded were constructive and positive. The response has certainly taken time—it is now running late—but I want to thank publicly the corporate team that worked on the response for the effort that it has put in. However, I will concentrate my comments on the problems that I see in the responses. The committee can then decide whether it wishes to take the issue any further. I will make comments about recommendations 1, 2 and 4. If members have any other queries, they can raise them with me.
There is a particular problem with the response to recommendation 1, which I regard as a wholly inadequate response. That stems from my concerns about the poverty indicator. I was very surprised to see the Executive respond that the indicator used for measuring poverty is not robust—I do not know whether Wendy Alexander was involved in the selection of the indicators, but she could perhaps comment later—so I went back to the original source document. We told the Executive that we were happy that it was making progress in reducing poverty in absolute terms. However, the data that the Executive provided to us suggested that relative poverty, in terms of inequality, showed an initial improvement when the benefit system was changed but then stabilised. I quoted directly in my report what the Executive said in its report, which was that the poverty indicator
"has remained fairly constant since 1997-98."
Therefore, I found it surprising that the Executive said that the indicator is not robust and that we should not assume that it was correct. In my view, the same fact holds for probably five of the inequality milestones in the social justice document, which is that after initial progress there was a levelling out. Therefore, I was somewhat unhappy about that Executive response.
The Executive has set ambitious targets—for example, to eliminate poverty by 2020, or whenever. I suspect that we would all like that target to be achieved. However, my concern is that, given the current relative indicators, the Executive will not be able to do that. I think that the Executive ought to revisit the issue. Simply saying that the indicator is not statistically robust is not an adequate response.
My second comment is on the Executive's response to recommendation 2. The Executive's reworking of the relevant data will bring to the committee's attention some of the recurring problems with resource accounting and budgeting, of which members heard a glowing defence at the Dunkeld away day. I do not have an abstract mind and so have always found RAB problematic. I like to measure things that can be measured. In our exercise, we compared trends over two annual expenditure reviews. The first document that we considered was the "Investing in You" report. We discovered that there was a lengthy discussion of RAB in that report, but that RAB was not used until later in the same year, so the comparisons were invalid.
There have been four or five reports and I think that there are now four different accounting bases for RAB—from straight cash measurement to full RAB. That situation is about to change again, as the committee will hear next week when we discuss the draft budget. Such changes make it difficult to do any kind of time-series comparisons, which are fundamental to the kind of exercise in which we are involved. David McGill and I want to discuss with the Executive how we can get a time-series set of data that is consistent over four or five years.
The Executive has reworked the data in the light of the committee's particular concern about housing. We felt that the social justice budget was the one that was most central to the poverty agenda because almost all of it is targeted on low-income households. We were concerned about data in the annual reports that appeared to show that although there was an increase in housing expenditure in real terms, the increase was much lower than the average for the Scottish budget as a whole. However, I think that the committee should be reassured by the Executive's response. I would add only that, at the moment, there appears to be a fall in the expenditure in real terms in that it seems to be below the Scottish average for the next few years. However, the Executive's explanation is fine for the period about which we were concerned.
The problem is an accounting one that we keep coming up against. Neither David McGill nor I was involved when the first AERs came out. I spoke to the people who were involved at the time and they said that there was only one person in finance co-ordination who knew exactly what was happening with RAB. That is part of the problem.
Thirdly, I want to talk about the Executive's response to recommendation 4, which the committee touched on in the previous discussion. The issue is the Executive's notion that, when measuring outcomes, there is no need to know how the money arrived in the first place. Again, I feel that that is an inadequate response. What we said—which I think Des McNulty will remember from the question sessions when he was on the other side of the argument—was that the committee could not be sure that, in the major spending programmes, money was getting through to the targets for children in poverty.
The response that was provided to us is a kind of standard response that declares that inputs do not matter as long as outcomes are measured. That would be fine if the outcomes were at a stage of development that allowed us to have complete faith in them. However, they are at only an early stage of development. I plucked out a couple of Andy Kerr's statements just to recall what he said to us previously. He said:
"We will concentrate our efforts in making sure that Scotland's health, education and care services focus their resources on those children"
who are most in need.
Nothing in the documents that we considered could assure us that that was happening. I think that the response to recommendation 4 is inadequate.
In last year's end-year funding announcement, Andy Kerr said:
"the Executive has placed particular emphasis on ensuring effective use of the Scottish budget in line with its priorities."—[Official Report, 26 June 2002; c 13040.]
Again, the reporters group was unable to say, hand on heart, that the money was getting through. On those two particular items, we should encourage the Executive to think again.
Thanks for giving us such a comprehensive overview and for preparing it in such a short time. As you said, there are some positive things in the response, which we should acknowledge and welcome, but there are one or two areas in which there are continuing concerns.
Professor Midwinter's excellent follow-up was an example of the kind of work that there should be more of. Too often, committees do not revisit a matter once the Executive has produced a response.
Arthur Midwinter raises two points, essentially. Recommendation 1 relates to inadequacy of data and the policy implications of that and recommendation 4 is about spending. Those two points go to the heart of what committees should be doing as they concern matters that are difficult to raise in the chamber. Therefore, we should follow up both those issues.
The first point deals with a critical issue. I will touch on it briefly just now and talk to Arthur about it offline. During the process by which the social justice framework was arrived at, there was a lively discussion about whether there should be both absolute and relative poverty measures. On the issue of absolute poverty measures, the question has to be whether there is a difference north and south of the border. Our understanding of that will be helped by the fact that the Executive will now be in possession of not only the data for the UK annual social justice report, which is usually published in September, but the provisional data for Scotland, which are usually published in November. Certainly, we expect the UK data this year to show evidence of a significant decline in absolute poverty.
On the second point, relative poverty, it is possible to control incomes at the bottom, through benefits, but it is impossible to control incomes at the top. During the past four years, the Department for Work and Pensions has changed its attitudes towards its own data and there has been a moving away from using those measures on a UK basis. Whether we do it through the joint ministerial committee or not, we need to have absolute clarity about whether the relative measures are still those that are used by the Department for Work and Pensions or whether there is now a difference between the Department for Work and Pensions and Scotland. In the past couple of years, there has been a long dialogue with the Department for Work and Pensions about whether, because of changing European definitions of poverty, the UK should move in line with European definitions and that, therefore, Scotland should move away from the stake in the ground that was put in place in 1999. Absolute clarity on that point is important if the integrity of the social justice report is to be preserved. The issues that I have raised are best dealt with in correspondence.
On recommendation 4, which is about spending, we know the difficulties of disaggregating health and education spend but, given their significance in the Scottish budget, it is not possible to state that we know that we are closing the opportunity gap as we are incapable of specifying the amount of expenditure and the trend in that expenditure against that heading. We have to nail that some time in the second session of the Parliament. The sooner we start, the better.
I agree with the thrust of what Arthur Midwinter says about returning to the Executive on some issues. It is a bit trite to say that the data are uncertain because the sample size is too small if those data are then going to be used. When one is confronted with criticism, it is not acceptable simply to say that the standard of sampling was incorrect.
With regard to recommendation 4, part of the problem relates to the fact that the moneys have been given to other bodies to disburse and that those bodies have local control of the spending, which means that it will be hard to secure data. However, it is important that the Executive gets some feedback from local government and the health boards on the issue of what they are doing to target funds on national priorities. I do not know how that can be done.
When we ask questions about that—particularly written questions—we quite often get the answer that the data are not held centrally. I wonder whether this is yet another example of data not being held centrally. There might be an argument for the Executive at least to ask the other authorities how the money is targeted. Although the minister is right to say that outcomes are extremely important, we do not really know whether our spending is appropriately targeted to produce outcomes unless we also know what the inputs are.
That is a fundamental point, as 60 to 70 per cent of the budget is allocated in that way. The committee could spend all its time scrutinising 30 per cent of the budget while the other 70 per cent was handled as a block. That might have been okay 10 years ago, when hardly any scrutiny was taking place, but it is not okay today.
I agree strongly with that point.
In your introduction, you did not mention in relation to recommendation 5 the issue of accounting for unmet need. There are definite issues of unmet need in relation to health and local government. Is that a matter that we can pursue more strategically than this narrow context allows?
That relates to a previous discussion. I was one of the technical advisers to the first Arbuthnott report before ill health overtook me and I needed to lower my cholesterol level—I am now taking statins. Although colleagues from the department were talking about the formula needing to be evidence based, the evidence base was current usage. There were no data to show unmet need because all the information related to those people who used the service. Because of that, the chapter on unmet needs was written.
The two geographic areas of Scotland with unmet needs were identified as the remote and the rural. There are definitions of remote and rural areas—somebody asked about that. Particularly in small island communities, where there are problems of access, people use the service less than they ought to according to their health need. That was fairly widely accepted by health professionals in the discussions at the time of the writing of the first Arbuthnott report. The new model was introduced for hospital and community health services on the understanding that work on unmet need would go on.
Thereafter, it became complicated, as Sir John Arbuthnott was appointed the chairman of Greater Glasgow NHS Board. His report on unmet need was submitted prior to that but, to my knowledge, it has not seen the light of day, although, from discussions with those involved, I understand that there remain concerns about the degree of unmet need in remote and rural areas, in greater Glasgow and the urban parts of the West of Scotland, and in Dundee.
Recommendation 5 was based partly on the expectation that the Arbuthnott report on unmet need would be published. It was also expected that we would be able to see whether that report had implications for the local government formula, which is similarly based on current expenditure as opposed to current usage.
I am happy enough for you to put that back to the minister. It relates to recommendation 4 as well, because the defence for only a small proportion of the money's being allocated on the basis of poverty and deprivation was that only the relativities were being dealt with, not the whole package, and the assumption was that more of the money was actually being spent in those areas. Again, we had to say that we did not know.
We could draft a response that takes the response to recommendation 5 into account, if that is agreeable.
I think that we should take it into account in our response but, as you indicated, there is also the broader issue, which needs to come out.
The committee adviser's work should be incorporated in our report to the Executive requesting a response to what are plainly a number of pertinent criticisms. I say that—as the convener said it—as one of all of us here who was not part of the original inquiry. It is sensible to say that it is difficult to comment in any substantive way as we did not hear the evidence directly. However, I would like to make one or two points that have emerged from the discussion.
First, paragraph 4 of Professor Midwinter's comments, which relates to recommendation 1 of the committee's report, raises a matter of great concern. The Executive states that it is proud to have achieved its target of raising 60,000 children out of poverty by 2002, but in fact the social justice report data show that the reduction was almost wholly achieved by 1997, prior to the establishment of the Parliament. Indeed, the proportion grew in the first year after the Parliament's establishment, which tends to suggest—unless I am missing something—that the Parliament has not achieved very much, if anything, in relation to child poverty. Without being party political, that comes as a bit of a shock and a surprise to me. Whatever party we are in, I hope that we all share the aim of reducing child poverty, and certainly of doing so before children are adults, which will not be the case with the current target of 2020. I hope that that point is put to the Executive. Have I understood that particular point correctly?
I think you have. There is a difference between the progress on absolute poverty and that on relative poverty. Wendy Alexander raised questions about the measure. There is a report in The Guardian today about the same measure being used in England, and questions are being asked about whether the targets will be met. Performance on the relative measure is more uneven. That is quite central to the definition. You have fully understood the point.
That said, as Wendy Alexander said, it is extremely difficult to measure the outcomes of Government policy. Anyone who aspires to be part of a Government must recognise that. Rural poverty is often hidden and is not identifiable. There is an element of pride, which I am sure applies everywhere, not just in rural Scotland; people are not keen to talk about how poor they are. It is extremely difficult to measure the outcome of the policy, but it is important.
As has been pointed out, if the Executive is asking for more money in "Closing the Opportunity Gap", it has to say, "This is the amount of money we want to spend. This is what we think it is going to achieve." We are due that, and if we are not getting that, there is a fundamental and principal flaw in the Executive's approach. It is not just about getting a reply for the next committee meeting at which we consider the matter; it is about getting a reply before the debate on Thursday. It is a reply to a simple but important point, which would inform the debate on Thursday.
I have a final general point, which arises from having studied—although, sadly for me, not having attended—the away day, and that is the general process of resource accounting, which seems to be even more arcane than the Schleswig-Holstein question, as far as I could understand it, which I could not. I am not surprised to hear that only one person understands the system. In fact, I am surprised that there is that single digit.
He has gone on leave somewhere else.
Well, there we are. It is a bit like the Schleswig-Holstein question after all.
I have a concern about the Finance Committee's approach and I do not know the answer, so now is the time to raise it. Outcomes are difficult to measure, but we try to measure them. How do we measure the efficacy of the expenditure, in other words whether the money could have been used more effectively to achieve the same outcome or whether we could have achieved a better outcome had the money been used more effectively?
From my understanding of the away-day papers, the advice from Professor Midwinter was that we are considering a pot of money that is for salaries and fixed costs and so we are considering only a small part of the expenditure. That is not necessarily a fruitful activity. I would like to examine the whole expenditure to find out whether money could be spent more effectively on social inclusion partnerships, to take a controversial example. Such consideration must be part of the committee's key role.
That argument must have been aired before, because we cannot possibly spend all our time examining 1 per cent of the expenditure.
I think that Fergus Ewing is probably misinterpreting what Professor Midwinter said. Nobody is suggesting that we consider only a small part of the budget. It might be that, in terms of seismic shifts, it becomes difficult to shift more than a small percentage of the budget in any one financial period, but that is not to say that we will not monitor and scrutinise the expenditure of the whole budget.
I advocate only one policy that could be described as "seismic" in any way and that is the independence policy, although I would not use the word seismic. Other than that, I would not adopt a policy of implementing seismic changes.
I agree with the Liberals' argument at a UK level that quango budgets could be constrained—they argue that quango budgets are about 5 per cent too high. As part of our core function, I would like the committee to discover whether there is a case for constraining quango expenditure and whether that applies to the matter of poverty.
I will be interested in Professor Midwinter's response to those points about the general approach.
I agree with most of what Fergus Ewing says. We have to distinguish between the role of scrutinising the budget, which is about managing the margins because of the limits on change in the short term, and exercises such as the cross-cutting reviews or inquiries that members wanted to have in which we could consider a big topic in depth and ask the kinds of questions that Fergus Ewing mentioned.
As the budget process takes place in such a short time, we have tried to ensure that we focus on the real choices rather than spending time examining money that could not be moved in the short term anyway. By carrying out that exercise, we can take the more in-depth approach that Fergus Ewing seeks. It will not necessarily be a cross-cutting review; the committee could conduct an inquiry into any field it likes. I am encouraging other committees to do the same thing when I am let loose before them.
Such as Scottish Water's finances, for example.
Yes. One committee considered Scottish Enterprise in some depth during the budget process. I would like committees to do that outside the budget process—to get to the point on the budget, but also to conduct those in-depth reviews that, of necessity, take longer than the rush in which the budget process takes place.
We should focus on the report in front of us.
The relativity of poverty is an important issue. There is no doubt that poor children today have a better diet, better clothing, live in warmer houses and have more entertainment and transport options than did middle-class kids 100 years ago. However, relativity is the issue. A lot of good work exists that demonstrates that that relativity affects children and their parents. Where the gap opens up, we find motivation, health and life-expectancy problems—the fundamental matters that brought me into politics.
It is reasonable to speak about the positive way in which the Executive responded to the majority of the recommendations.
On the other hand, Alison Davies of Save the Children Scotland, who was speaking on "Good Morning Scotland" this morning, made a pointed and poignant critique of the current situation. I would like us to pass muster with her on what she spoke about. I suggest that the committee get her to audit the recommendations that have been made and the responses to them. It would be good to get her up-to-date comments, which would help us move forward in a concrete way.
My comments are just generalities, but when I read the document that is before us I see things that I would expect to see in the poor law of 1834. We are talking about children in poverty. We have learned gentlemen telling us about absolute poverty and relative poverty. If you are poor, you are poor, Professor Midwinter. It is immaterial whether people are relatively poor or absolutely poor: they are poor. To differentiate using terms like that is to dance on the head of a pin. It is the year 2003, but we have not yet moved on from the poor law of 1834. Absolute poverty? Children? Let us get our act together and get things rectified somehow. We should at least sort out the wording: we should use just one word: "poverty"—never mind "relative" or "absolute". Let us get down to cases.
I am sorry, convener, but it is my job to respond to the documents that come from the Executive, which use the terms "absolute poverty" and "relative poverty", which the Parliament has agreed in the past. I am not going to carry the can for documents that use other peoples' words. I think, however, that there is an important issue around the notion of relative poverty—it is another expression for inequality.
The seminal work on poverty is by Peter Townsend, who developed definitions of absolute and relative poverty. I do not think that anyone who knows his work would question his commitment to the cause of tackling poverty.
As for how we deal with the matter, Arthur Midwinter has provided us with the basis for how we might proceed with the Executive.
Before we discuss that, I would like to make a specific point about the Executive's response. I endorse everything that our adviser has said about the way forward and about how we respond to the Executive, but it might be useful to ask the Executive to get back to us on the concerns that it is raising and how it is raising them with the Westminster Government. In particular, I refer to the statistics in paragraph 1 of the Executive response.
I do not know how the mechanism that is used operates. It is the obvious formal mechanism, but there may be other ways in which things could be done. As I understand it, the Chancellor of the Exchequer is in charge of the exercise. Some of the concerns that have been raised are to do with the differences between people on benefits and people on rising incomes. Those differences provide some of the reasons for the lack of progress on relative poverty.
I suggest that, notwithstanding Fergus Ewing's desire to get a response from the Executive in time for the debate this Thursday which, in my view, is unlikely—
Why is that, convener? Why do not we just ask the Executive? It can do a lot in 24 hours, you know.
It can, but I think that we would want a considered response to what is a considered piece of work by our adviser. It is obviously open to Fergus Ewing to ask the Executive about the matter if he so wishes. I suggest, based on the work that Arthur Midwinter has done and on members' comments, that we ask the clerks to prepare in conjunction with Arthur a paper to send to the Executive. We could seek clarity, taking on board in particular some of the points that were made by Wendy Alexander and Jim Mather on the comments by the director of Save the Children Scotland this morning. When we get a response to that letter, we can decide how we want to proceed with the issues. That seems to me to be a sensible way in which to proceed. Do members agree to that?
I seek clarification. Professor Midwinter's note is marked "PRIVATE PAPER – FINANCE COMMITTEE ONLY". I presume that that does not apply to the forthcoming debate on Thursday, and that we are quite open to refer to the paper, flourish it, quote from it, brandish it about and do whatever we want to do with it.
It is open to the committee to adopt the paper. It was written by Arthur Midwinter and reflects his opinion, but there is no reason why the committee should not adopt it.
I have no objection to members quoting from the paper—I never write anything that I am not prepared to say publicly. I am happy for the paper to be used to inform the debate, if people wish to use it.
It may be worth while for us to establish whether we are setting a precedent for papers. Will all advisers' papers be published and referred to ad hoc in the chamber? Are there private papers that will remain private or will private papers be private only for specific meetings?
The convention is that we should consider papers line by line and paragraph by paragraph before we adopt them. We are not being asked to do that at this point. The adviser has given us a paper that sets out his analysis of the situation and that is intended to inform our judgment. We are not being asked to adopt or to publish the paper as a report.
I take the point that Jeremy Purvis makes—as the convener indicated, there are different types of private paper. It is proper for members to seek the advice of the committee in dealing with private papers, as Fergus Ewing has done. Of course he can report what an expert adviser has said to us. That is qualitatively different from a member quoting from a draft committee report before it is completed.
Fergus Ewing has observed all the proprieties and indicated that he wishes to draw on the factual information in Professor Midwinter's report. No doubt he will attribute that information to Professor Midwinter and state that the paper was submitted to the Finance Committee, without commenting further on the attitude of committee members. I hope that he will also make the point that we are seeking further clarification. It would be inappropriate to try to restrict the use of factual information that has been provided by a third party.
Fergus Ewing may attribute advice to Arthur Midwinter if Arthur is willing for him to do so. Our adviser has indicated that he has no problem with that.
Can I say something off the record?
Not yet.
Are there journalists present?
The official report is still here.
At an early meeting of the previous Finance Committee, I mentioned to the clerk that when one of my reports is debated in public there is a tendency for the media to see it as a case of "Arthur Midwinter versus Whomever". I would much prefer to discuss reports in private. If members want to use the arguments that appear there, that is fine. However, the emphasis should be on the committee's concerns, rather than on mine. I am happy for the paper to be used, but it was submitted as a private paper because on one occasion in the early days of the Parliament it was reported that I had attacked the Executive—God forbid.
That is a fair point. The committee must receive information from its advisers in private. Do we agree that we will adopt that procedure?
To do what?
When our adviser produces a private paper for us, it will be customary for us to discuss that advice in private and to consider whether to adopt it.
No. We are not doing that at the moment.
No.
If we were to make such a revolutionary change in procedure, we would have to debate that properly. The proposal goes against the principle of openness and transparency, and against the desire that the Presiding Officer and others have expressed that fewer meetings be held in private. We should not debate the matter now, as it is nearly lunch time.
However, if we are to make the major change that has been suggested, the proposal should appear on the agenda of a future meeting. Before that, we should have the benefit of advice from the clerks on current practice. Let us not rush into something right now.
We can certainly consider the issue.
I am simply trying to account for the fact that the paper is submitted as a private paper, because of a decision that the previous Finance Committee took.
We have agreed how to proceed.
Item 5 on the agenda will be taken in private.
Meeting continued in private until 12:59.