Finance Committee, 07 Dec 1999

Meeting date: Tuesday, December 7, 1999

Official Report 216KB pdf

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Annual Budget Process

We have had two briefing papers on items 4 and 5. We will begin with item 4, on the annual budget process. Members will have seen the paper, which sets out a proposal for a framework to involve the subject committees. It seems to be fairly clear and logical. Do members wish to make any comments? What about the proposal that the committee might want to consider appointing reporters at stage 1? That would be a burden to us as individuals, but it is an important part of the process.

I am happy with the idea of reporters, although I am worried about other aspects of the paper. At stage 1, when the subject committees are considering the broad strategic approach, they will be operating at level 1 figures. As the paper makes clear, it will be difficult for them to give anything other than a broad direction as to where they think spending priorities should lie. They can refer to the previous year's figures and those will be detailed, but they will still be using large, level 1 figures.

That process runs from 31 March to June. That first period is quite lengthy, considering the amount of information that is available to the committees. However, during stage 2, from 20 September to the end of November, the committees will be less in the dark, using more detailed, level 2 figures. The committees will have only two months to work on that. Parliament will have just returned from the summer recess and the conference season intrudes when Parliament's timetable tends to be lighter, yet an awful lot of work is to be done in less time than is allowed for stage 1. Andrew Wilson is frowning—perhaps he disagrees.

It is just the light.

I do not know what other members think, but I am concerned about the strategic approach being decided on the basis of level 1 figures.

I agree. I do not think that members of other committees expect to get only level 1 figures at the early stage. Many of them will have been working at another level anyway, on various subsets of the activities of the relevant committee. Is there a particular difficulty for the Executive in producing level 2 figures for this exercise?

What exercise?

Stage 1.

We do not know whether those figures will be available.

We need to consider the committees' role in the process. If, as Keith Raffan said, the other committees already have detailed figures for the previous year, they can tell us whether they think that the level of funding in each specific area was adequate and where changes would be required. At that stage, we do not need the Executive's plans, although that would be helpful—we just need to say what the parliamentary committees' views are. Once we get the Executive's plans, we can see where they meet, if at all.

That would be a helpful way for the committees to feed into the process. They could say what they would like and what is happening. The debate would then be about constraints and priorities. Early indications about what committees think would be helpful in their subject areas could be based on the previous year's figures.

That involves a pretty big assumption about the information that will be available to subject committees. Frankly, a level 1 or 2 debate on a previous year's figures is verging on the meaningless. Year on year, subject committees have to acquire a working knowledge of the balance of expenditure, to understand fully the balance of commitments. Committees must be able to understand what underlies the level 1 and level 2 figures in order to be able to recommend to the Executive and to the Finance Committee how those allocations should be shifted.

The time scales suggested in the paper seem to be fine, providing that the subject committees have a thorough understanding of how expenditure applies to those broad areas. That will allow the committees to have an informed debate on the issues that they wrestle with on an on-going basis. We need some clarification from the Executive of the information that will be available.

I have two points. I know that the Minister for Finance makes it clear that he will try to get the more detailed draft expenditure proposals out before 20 September. It is important that we encourage him to do so, because the earlier that the proposals are available, the better. It might be asking too much for them to be out by late August.

July and August are fallow months—nothing will happen in that period. Stage 1 will have been completed and stage 2 will not have started. There is no reason why committees cannot undertake some preparatory work in advance of stage 2, but it is important to get the more detailed expenditure proposals as soon as possible.

My second point is that we have to give the committees some guidance on what we want. I am not saying that I am necessarily qualified to do that, but we must give some guidance so that the information that we receive from the committees arrives in the same format. We must also consider the pressures on the subject committees. It has become increasingly apparent that some committees are hugely overburdened. That is why I am worried about the stage 2 time scale. Whether they can find time to consider the more detailed proposals in sufficient depth might depend on what other work they are engaged in at that time.

Part of what we are suggesting is that we tell the committees to plan ahead and make time available.

That is a matter for the committees. I sit on the Parliamentary Bureau, and one of the things that has become apparent is that even if time is set aside, bills will suddenly be dropped on committees. Certain committees, such as the Justice and Home Affairs Committee, have a huge queue of legislation—it is difficult for them to plan ahead.

With respect, there cannot be many things more important than the budget. If the budget is set in a committee's programme, I would expect it to stick. Perhaps in very exceptional circumstances it would be difficult, but I am sure that those will be few and far between.

I agree with Andrew Wilson. One way round the problem would be for committees to be briefed by their associated departments. The Rural Affairs Committee, of which I am a member, was given a breakdown of the budget by the finance officers, who told us which parts we could change and which parts they had a say in changing. They had to stick with some parts of their budget, but others they could change.

That meeting was helpful, and I am sure that other departments would do the same thing for other committees. We could tell other committees about that as soon as possible, before they started considering the budget.

That could be part of the framework that we supply to all committees.

As the lead committee on the budget, are we in a position to take a proposal for action to the conveners committee? That would seem to be efficient.

I expect to convene a meeting of conveners early next year to discuss the framework.

On that basis, should we set a date by which our committee should produce proposals for you to discuss at that meeting?

Yes. That should be part of our discussion today. We want to know early in the new year that we are in a position to get the conveners together.

I think that I am right in summarising the discussion so far as being Keith Raffan arguing for detailed figures to be provided as soon as possible and for the minister to be encouraged by letter to do that. John Swinney said that we should get the previous year's figures out to the committees as soon as possible. That can be done without too much difficulty.

Keith made a point about templates. We have to think about how to ask the other committees about the sort of information that we want back. We might want to take external advice on that.

We do not need to worry too much about dates, but we should ask committees to report to us soon on the current year's figures and on where they think that changes should be made. The Government's plans are set out. It would not be difficult for a committee to tell us what would happen to its policy area if there were a 3 per cent increase in the overall block.

We should consider civic participation: what public role should the committee take in the process? We touched on that briefly at the previous meeting. The committee broadly agreed—I did not—that the Executive should lead the consultation process, but this committee might want to engage in some form of civic participation, given the importance of the budget.

As Keith Raffan said, we must remember that we have to receive information back from the committees. If the information is in many different formats, it will be extremely difficult for us to distil it. We should ask them to reply in a specific form, although perhaps the use of a template would be going too far.

Andrew's summary was very good. His suggestion that we find someone to advise us on the issue of the templates is useful. Our job will be made harder if we get information back in different forms, especially as we might not get the information back as early as we would like.

Subject committees are required to complete their consideration of stage 1 by early June, and the debate must take place before the summer recess, which is the end of June. That means that there could be less than three weeks between our receiving the information and having the debate. We must make matters as simple as possible for this committee.

We are not bound by the date of early June. We could ask to have the information earlier. If we set an early deadline, perhaps we will get the information by the end of May.

We could bring the date forward if the committees are to set dates in their programmes to discuss the matter.

Would it be wise for us to divide into sub-groups to deal with particular committees? That would allow us to work in parallel and share our findings in this committee.

That impacts on the question whether we want reporters.

Whether we have reporters or not, if every committee bombs us with information in a three-week period, we will not be able to cover the work.

That sounds sensible. My problem with it, however, is the same as my concern about the structure of committees generally: it follows budget lines rather than policy outcomes. That is a weakness in any committee system. The role of the Finance Committee is to look across the whole range of policy areas and to make a judgment on that basis. If I were involved in two areas and David Davidson were involved in two others, we might end up arguing over our patches.

Our role could be to highlight points that the committee might want to deal with. I do not think that we as individuals should make recommendations.

That is a useful point.

I am not keen on compartmentalising ourselves. We have to consider issues across the board.

We want to have a feel for the discussions that the committees are having, however.

Would it be appropriate for members of this committee to feed in the opinions of other committees?

It would be useful to have reporters to begin with, so that we have an idea of how different committees are addressing the matter. The edges will be rough to begin with; it might take three or four years before a routine develops.

I take John Swinney's point about compartmentalisation. We have access to each committee's Official Report, but we might not have time to read it—we will have a huge amount of information coming in at once. The sooner that we can get the committees to consider the matter, the better. Most of the committee stages of bills will be over by 31 March, so they might have time then. Bills will not come to the committees for stage 2 consideration until early November. The sooner we start and the sooner we get information from the minister, the better.

I agree with what John Swinney said. One way round the problem would be to turn it on its head and ask the committees to provide a reporter. We could ask them about their priorities and the thinking behind their figures.

I agree with that.

That is a good idea.

It is an excellent idea: I, too, am against compartmentalising this committee. It is important that we get the headline information fairly succinctly. The information from each committee should be comparable, so we should make a decision about the format in which we want the figures to be presented to us.

On another point, page 2 of the briefing document says that

"members indicated that they did not think that subject committees should be required to operate within ‘zero sum' restrictions and it would therefore be open to them to propose areas where total departmental spending should be increased."

That is not how I remember that discussion concluding. I thought that we decided that, although we did not expect committees to operate within zero sum restrictions in their budgets, they should be asked to identify other areas where savings might be made. We did not want a wish list.

I am sorry that I do not have the Official Report with me, but I remember that we wanted committees to point out where they thought more money was needed and to suggest areas where they thought that money could be found.

There might be a confusion here. There is a distinction to be made with regard to amendments to the written understandings.

We must bear it in mind that if the budget is set to increase by 3 per cent, there can be bids for anything between 10 per cent and 1 per cent within that. Perhaps Kenneth's recollection is to do with the written understanding, which requires any proposal for a change to show where spending should be cut.

You are right to say that committees cannot operate within zero sum restrictions, but I do not think that you are right about my recollection. I believe that we did not want committees to come up with wish lists. I cannot remember how we concluded it exactly, but I do not think that it was as it appears in the briefing document.

I am afraid that I do not have that Official Report to hand either. I recall that the committee felt that it did not want to encourage subject committees to come up with wish lists and that, in any framework that it gave to the committees, it would encourage them to think constructively about the organisation of their budgets.

Having said that, I recall that the committee did not want to constrain committees by saying that every increase must be balanced by an equivalent decrease.

The production of the guidelines will involve much toil. Perhaps we should discuss them in January, so that we can have firm guidelines as early as possible, if we are to ask the committees to start to examine their budgets in early April.

I understand that the clerks are already preparing a basic framework for us to examine in our first meeting after the recess.

Rhoda's point about having reporters from the subject committees is important and seems to have wide acceptance in the committee. We cannot force other committees to send reporters, but we can invite them to do it. It will be especially important if the committee wants to extend its budget beyond that which is proposed.

Are we agreed that we should do that?

Members indicated agreement.

I want to return to the subject of the zero sum restriction. Do we have something in our guidance notes that suggests to committees that they should look for areas in their budgets where savings can be made? Perhaps I am living in dreamland to think that they might suggest that, but we want to avoid empire building by committees.

We will probably find that, if a committee believes that savings can be made, it will also have an idea for an alternative use for the resources. Time will tell.

Page 2 of the briefing document talks about advisers.

The suggestions seem sensible, although we might want them to be more specific.

I had initial reservations about having a former civil servant or Government adviser but, on reflection, it might be useful to have the insight of a creature of the civil service, as long as that was balanced by the view of an external cynic. I would like to see some specific examples of advisers.

We will get that early in the new year.

I agree that the suggestions are fine. We will probably be able to decide between several people after having considered their curricula vitae.

Researchers have already begun to consider the matter, and we hope to have a paper ready for the first or second meeting after the new year.

Is there anything else on that paper?

To return to an issue that was raised a few moments ago, a budget is available for civic participation. At the first meeting, convener, you expressed a desire for the committee to be seen outwith the confines of this fair city. That is something that we might wish to return to.

I think that two budgets are available: one for travel and one for civic participation. Given the importance of the budget process to everything that the Executive and the Parliament does, we may wish to take advantage of that.

We have to move fairly quickly in deciding how we will do that. As I understand it, it is up to us to take the initiative. Will we receive a paper on how we might proceed?

Why do we not feed ideas into the centre and draw together a short note on that?

As I understand it, this would supplement the consultation that the Scottish Executive is doing—or has done—anyway.

The Minister for Finance said that to us, did he not?

I am sure that there was some mention of that. It would be nice to know exactly what has been done in terms of consultation. We would—

To ensure that we complement it.

Absolutely. We should ensure that there is no duplication and be clear that there is real value in anything that we choose to do.

We might want to consult with different people or organisations. It is important that we know what the Executive is doing.

If the committees are drawing up their budgets, should they not be consulting those organisations? We should tell them to go out and consult too, because they are dealing with the most basic figures. We might take evidence from outside organisations that are at odds with what the committees are doing. Surely they should make that connection rather than us.

First, the minister has already published a glossy consultation document, of which I have several copies. I do not know who it has gone to, but it would be helpful to find out.

Secondly, we should decide how long the consultation period should be. Thirdly, we should decide to what level we carry out consultation, because we could be absolutely inundated. Do we go to all voluntary organisations or to the umbrella organisations? That kind of point is tremendously important. It should be a pyramid form of consultation, so that we consult bodies who are consulting their own member organisations or organisations under them. Otherwise, especially if it is advertised, we will be snowed under.

There should be some balance between the points raised by Rhoda Grant and Andrew Wilson. Rhoda makes a fair point. If we are saying to the subject committees that they should look at their policy area and be satisfied that the £500 million is being spent in the optimum way, the obligation is on them to be comfortable with their area of policy and to have consulted adequately within it. I have a lot of sympathy with that.

As a committee, however, we should consider the purpose of going outwith our traditional meeting structure to consult further, when—and I do not have a fixed opinion about this—it may be our job to encourage committees to come here with views about their budget allocations. Such views may be more in line with community opinion than, for example, the Executive's budget choices.

We could encourage a debate about whether the Executive's priorities are in line with the committees' view of what the external community might demand. This committee could facilitate such a creative debate, but we should come to some conclusions on how we do that, other than having meetings at which we hear from the subject committees.

I agree with Rhoda Grant and John Swinney. The consultation should be done through the committees. They can start to do that in the autumn for the following financial year. They could start going out with that year's figures and asking for general indications.

Would it be in the framework that we put to them that that would be part of the whole process?

If the Minister for Finance believes that what he has published is a consultation exercise, we have to educate him. The document is nice and colourful, but it is not very informative. It does not have information in real terms and does not provide a degree of debate; it is like a statement of the current position, rather than posing searching questions, challenging any particular thoughts or leading the debate in any way. It is eight pie charts dumped on Scotland, and not even in real terms. That is my only caveat about Rhoda's comments: if that is consultation, I do not think that it is adequate.

I am keen to draw this to a conclusion.

I agree with John's points in global terms. As I said in the chamber the other day, to go out with just level 1 figures, presented in a particular style, does nothing whatsoever for the public debate. People are better off reading newspaper criticism of what has gone on in the committees. This is our first year and we are only feeling our way.

I appreciate that we are under pressure to get things done. However, if we were running a large organisation, either in the public sector or the private sector, those responsible for finance, whether it was a finance committee or an individual, would want other departments to come to them with a range of options rather than a final decision. If we were conducting that process publicly anyway, that is perhaps where we should start.

If, at the end of the process, we feel that there is a message to put out to national organisations such as the Convention of Scottish Local Authorities, the association of health trusts and, as Keith Raffan rightly says, other organisations at that level, to get their views on whether the options are up to their expectations, that is fine. However, we should not go on a roadshow just for the sake of it but should have a purpose.

We are saying that in stage 1, the committees should go out and consult, while stage 2 involves the figures from the Executive and the committees—and we know where there will be conflict. At that stage, we could go and consult, because we are the ones who may be trying to bring the two together and consider the merit of the committees' arguments as opposed to those of the Executive.

The so-called alternative budget.

We could be telling a committee that it is wrong. If it has not carried out the consultation correctly, it would show up at that point.

It will be difficult for us to do any extensive consultation between 20 September and the end of November. It is an continuing process, and once the committees get into it, they may be able to start in the autumn for the following financial year.

Is that the case, Keith? On 20 September, there will be the Executive's view of level 2 figures and, as a result of the consultation exercise in stage 1, there will be the subject committees' view of level 2 figures. Rhoda raises an interesting issue, which is that we, as a committee, may be able to facilitate a debate about who has the best priorities: the subject committees or the Executive. That is a legitimate debate for us to encourage.

The time scale will constrain that.

The time scale means that it has to be done on a tight basis, but that is nearly 10 months away. We have an opportunity to begin to plan what shape that process might take.

We do not have to make final decisions today. The form of civic—or external, if you like—consultation that takes place in 2000-01 does not have to endure after that period. We can see how it goes in that first year. We will expect the committees themselves to consult. Rhoda's suggestion that we should do it in stage 2 is interesting. I am not sure how we should take that forward at this stage. We may have to revisit it when we look at the process again early in the new year. Can we leave it like that just now? Are you happy with that for the moment?

Members indicated agreement.

Thank you. That was a lengthy discussion but an important one. We will return to that issue.