I open the 12th meeting of the Finance Committee in 2003—at least, I open the formal part of this morning's proceedings. I will repeat on the record one or two of the things that I said at 10 o'clock. I am delighted to be in Motherwell civic centre in North Lanarkshire. The Finance Committee has had a practice of going out to different areas of Scotland at stage 2 of the budget process to give itself the opportunity to examine local issues that arise out of the budget. In the past, we have mainly been to rural areas of Scotland, but this time we are in the industrial heartlands of the west of Scotland. We are particularly pleased to be here.
I preface my summary by saying that the workshop was useful. I was struck by how many of the issues that were raised as local issues for Lanarkshire were similar to those that have been raised with me about Dumfries and Galloway. That was a surprise to me, as somebody from the south of Scotland, because, in the more remote, rural areas of Scotland, we tend to think that our problems are different, when in fact many of them are similar. There were pointers to issues that are Scotland-wide as well as local and I found that valuable.
Elaine Murray covered every point that I can think of. The whole area is strangled as a result of the fact that the road structure at various interchanges has not been properly considered. It is all right to say that people could come to the area and open up businesses, but if people cannot get in and out of the area, businesses will go elsewhere. That is such an important problem in the area that it must be addressed sooner rather than later. The other point that was stressed was apprenticeships. Not everybody wants to go to university and the issue of apprenticeships should be examined carefully. I think that all the salient points have been covered.
One point that slipped my mind was spatial prioritisation. Lanarkshire is part of the Glasgow conurbation; it does not stand alone. The Executive needs to have a policy for the development of the west of Scotland. It is not sufficient to develop Edinburgh so that it is successful economically and booming. Work must be done on how to develop the economies of other urban areas in Scotland and their associated rural areas.
The only other point is that business crime, which is a matter that I had not thought about, was highlighted. Premises are broken into at night, but there are not the police resources to deal with that that there were years ago. It is not only yobs out on the street who are the problem; business crime at night must also be attended to.
Do any participants in workshop 1 feel that any points have been missed out or should be highlighted? If all participants are content that their views have been appropriately summarised, we will deal with each of the other two sessions and then have a general discussion. I was volunteered to be the feedback person for workshop 2. Sorry, let me get that right—I will give the feedback on workshop 3. Jim Mather will give the feedback on workshop 2 and I will go last.
It is fair to say that our session came alive and developed focus when Wendy Alexander steamed in and laid down some very useful markers that were thematic of several previous Finance Committee discussions—in essence asking how much we are spending, how much of the spending is for now and how much of it is for the future, and how our spending compares with that of competitor nations and regions. Clear markers were put down that there is a need for 10-year comparative consistent data, there needs to be a clearer, more understandable split between capital and revenue and we need to understand more clearly what is happening in the five big areas of higher education, further education, enterprise, transport and tourism. The data should be enough to give us a clear comparison of one of those areas against another and against what has happened in the past, and they should enable us to monitor that against what has happened elsewhere.
Do Wendy Alexander or Ted Brocklebank have any supplementary points?
Jim Mather has done an admirable job of summing up most of what was said. I add that one minor criticism, which was mentioned consistently by all those who participated, was that, although the draft budget is full of figures, statistics and other facts, it does not, as somebody said eloquently, tell the story. The draft budget does not illuminate what is being attempted, where we are going economically and where the Executive plans to go. The draft budget contains lots of targets and other information, but not a sense that the budget is joined up or an explanation of what will ultimately come out of it.
I have nothing to add to that.
As the other participants in the session have nothing to add, I assume that they are happy with the account that has been given.
The main thread that ran through the discussion was the tension or conflict between local needs assessment and national targets and the feeling that there should be a common approach in that respect. The public hear about big increases in the budget, but so much of the money is committed or ring fenced that boards have very little flexibility on what they need to deliver locally.
Thank you very much. I say to the participants in the workshops, who are present, that if you think that we have missed anything out or would like to make any additional comments on the summaries that we have given, please say so.
I listened intently to what was said about workshop 3 on health and performance targets. I am amazed that the Executive does not seem to be able to set up an effective alternative to agency nursing. The problem with agency nursing is that if a hospital hires an agency nurse during a holiday period, for example, that can cost up to £58 per hour, of which the nurse gets £14 and the agency gets £44. We are pouring millions of pounds down an agency drain when that money should be being concentrated on patient care. It would be a simple and effective measure for the national health service to have its own agency nurses. Such a system exists for schoolteachers—there are pool teachers who fill in vacancies. It is beyond my comprehension why the same approach is not used in the NHS.
I invite participants in the workshops to comment. Perhaps they could introduce themselves before commenting.
I am the chair of South Coatbridge social inclusion partnership and I also represent NHS Lanarkshire. We have recognised the issue that John Swinburne mentioned. Initially, the difficulties that we had were with labour supply—we could not attract and retain staff in the health service. The development of that situation has a long history.
How far away is the agency that is being set up in your area from being viable to the extent that it excludes the private sector?
I do not think that the agency will exclude the private sector absolutely, because there are labour supply shortages. We may find, for instance, that an intensive treatment unit nurse will be required when we do not have any cover, so occasionally we may still have to look elsewhere. However, we will generate savings over and above the existing budget, so it will be cost effective.
Two issues that we have struggled with in looking at the picture nationally were raised in Kate Maclean's report. The first is health inequalities, which was not mentioned in the convener's report back. We have great difficulty at national level in squaring the rhetoric of the strategy with the information that we have. The Minister for Health and Community Care made it clear that it is difficult to monitor moneys that go into tackling inequality. Do you have any monitoring arrangements at the more local level to help us with that? Basically, we have a series of outcome indicators that the Executive would like to achieve, and a statement that it wishes to target additional resources to reducing inequality, but finding where the resources are is difficult because—as you will see from the budget—at a global level resources go to the boards as a lump sum.
Information on that breakdown is available, because we have to provide estimates for the Health Department. I do not have the figures with me—I am not an accountant, so I do not have them at my fingertips—but the productivity conundrum for the health service is that because of the working time directive in particular we have had to recruit additional staff. However, in a sense, there has been no productivity gain because we have had to limit people's hours and the number of procedures that they undertake.
I want to raise a health-related issue. One of the points that was raised in our workshop—I do not know whether it is a reflection of the whole of Scotland or a particular problem in Lanarkshire—related to the number of people, particularly older men, who are not economically active because of health problems. Is that about cure or prevention, or is it about making employment more accessible to people who have health difficulties?
It is a complicated issue. Such situations arise in places such as North Lanarkshire because of the decline of the industrial base. You will remember that when that was happening, people were actively encouraged to define themselves as being ill because they got additional benefit. There was a benefits trap and there was also a psychological element: it was easier for an unemployed person to cope if they could say that they were not working because they were not fit to work. The situation has almost developed into an illness culture and although the economy is now more vibrant and jobs and roles could be available, people are locked into that psychology. It has become their career and several complicated interventions are required to break that. Colleagues in other sectors have done a lot of work to try to get people back into the work force and to get around some of the poverty traps that are caused by the fact that people have a benefit cushion.
From the other workshops we have heard a lot about there being a sense that although the Scottish Parliament has brought accountability, it has also reinforced the top-down mentality around how issues are solved on the ground. Are there any discretionary powers available to English regional health authorities that are not available in Scotland and which would make it easier for you to manage on a daily basis? Have other parts of the United Kingdom gone for a more decentralised approach that we in Scotland should be thinking about? Is the balance between central control and local discretion right?
I do not want to give an off-the-cuff answer to that question; I will have to go away and think about it.
I am sure all the politicians hear what you say about the potential distortion of the view of the overall spend caused by the focus on waiting lists. Arguably, that distorted view can be seen north and south of the border.
That intervention would be a partial solution. In my view—this is not the board's view—it would be wrong to take a primary care-led approach, especially using a medical model. That misses the point that most ill health is created by poverty and deprivation. We should seek good, strong, local partnerships that involve all partners. Community planning partnerships could be empowered to devise proper solutions to the problems, as we will not solve them simply by continuing to pour money into primary health care. That intervention at primary care level does not address the fundamental problems of poverty and deprivation with which we need to deal.
I want to tie together the results of the three workshops. Our workshop highlighted the potential of community partnerships to develop from talking to pooling resources, sharing facilities or integrating the way in which they develop strategies to suit the needs of local areas. Elaine Murray appeared to be arguing for something similar at local level. Is that a fair summary?
Yes. A number of barriers prevent partners from working together as well as they would like and as well as they have the potential to work. One such barrier is the way in which funding comes to the various partners. The timelines for funding are not properly aligned to allow people to work together as effectively as they might wish. Sometimes too many strings are attached and there is too much of a top-down approach. The time scale within which money is available is too short. We need to feed back those issues to the Executive, as they are preventing one solution from being as effective as it could be.
In Lanarkshire or, perhaps, in Glasgow.
It is probably a more general problem.
If partners agree on a strategy for their area, they experience difficulties in developing it because they must line up every duck in the Scottish Executive to acquire the resources that they need. Sometimes departments pull in different directions or have different approaches. Perhaps there needs to be a better fit between local co-ordination of investment needs and national priorities. That supports what Jim Mather said about the conclusions of the workshop that discussed broader issues.
That is true. I was taken by what Iain Hair had to say. For me, his recognition that poverty and deprivation cause the health problem squared the circle to a large extent. No matter how well we do in primary care, that addresses only a symptom, rather than the core problem. Even when we address the symptom, too much time and money is spent on intervention and not enough on prevention. I am keen to see how we can break out of that cycle and effect a transformation, especially when an emphasis on alcohol, smoking and so on offers such material rewards. Are there are any role model countries or regions that have managed to effect such a transformation? Are there any road maps that we could copy to short-circuit the process of establishing a more balanced approach?
Iain Hair is allowed to say that he does not know.
Charge him a fee.
We are doing good work in North Lanarkshire—if I may get in an advert for the community planning and social inclusion partnerships here. Those provide good models, because we are focusing on working with young people to change their behaviours fundamentally. There are issues of self-esteem, and saying to people that they can strive to do things differently and can achieve much more than their peers or the system have told them they can achieve.
I agree with Jim Mather that that was a valuable contribution. I do not think that it is too fanciful to link the health of individuals in a community to the health of the economy in the area. In our workshop, it was pointed out that, two decades ago, around 26,000 people in this community worked in manufacturing and now only around 1,000 do. A representative said that some of them had moved out of employment and others had retired, but what does "moved out of employment" mean? Are there a massive number of people who are trapped in a situation, who cannot afford to get back into work and have lost their confidence and so on? We should consider that issue.
Perhaps the biggest impact on the health of the Finns can be attributed to their anti-drinking campaigns.
The Executive should bite the bullet in relation to alcohol. Tobacco advertising is not allowed and I think that, if the same rules were applied to alcohol advertising, it would cut the problems that we are talking about by about 30 per cent.
We must take a balanced approach and reduce both the demand for and the supply of alcohol. Often, the demand comes from peer pressure and people's inner selves. Advertising influences people to an extent, but I think that the real solution is to change people's behaviour by giving them hope in their lives and enabling them to develop better objectives for what they want out of their lives.
On the two groups considering local and national economic issues, I was struck by the comment about the problems with road infrastructure. Nationally, over the period that we are considering, there has been a significant increase in roads and transport spending of 17.5 per cent, which is way above the average increase in the Scottish budget. However, as table 2 of the paper that I produced for our workshop shows, local authorities' roads budgets have risen by only 7.5 per cent. Different types of roads are covered by different budgets and I wonder whether anyone can tell us whether the problems that were commented on earlier relate to the national budget or the local budget. Last year, the Transport and the Environment Committee said that, at national level, there has been a tendency for councils to spend significantly below the amount allocated for roads in grant-aided expenditure. I do not know whether that applies in this context as well.
It is gratifying that the national transportation budget has gone up by as much as you say it has. However, the local authority share of that spending is worrying. The council has spent its GAE on roads and, although I am not sure where we are at the moment, in the past couple of years, we have hugely increased the amount of roads investment that we are making. We are now keeping pace with the deterioration of the network, but we are not catching up with the backlog of work that requires to be done.
In my previous experience in Strathclyde Regional Council, David Montgomery, who was the assistant director of education, talked about the fact that we were expecting every school in Strathclyde to last for an average of 400 years and how unsustainable that was. We have begun to address that issue through public-private partnerships. Are you saying that the same problem exists in a series of other forms of local government investment and that we need perhaps not a PPP solution, but a planned maintenance solution for roads, lighting and perhaps some other forms of infrastructure?
It would be helpful to have that. Local authorities are trying to do that themselves, but the problem is huge. Roads and transport infrastructure generally look much the same whether they are brand new or 20 years old. On the route between Bellshill and Coatbridge, we recently resurfaced about a quarter of a mile of road, which probably cost more than £1 million, and it looks exactly the same as it did before. That is not exactly a vote winner, but the road was at the end of its life and was disintegrating.
My constituents in East Dunbartonshire point to North Lanarkshire roads as an example of what they aspire to, so somebody is noticing what you are doing.
Perhaps we should pursue the matter a bit with the Executive. Arthur Midwinter is pointing out that the minister has said that 70 per cent of the 17.5 per cent increase in the transport budget will be directed towards public transport. Many of us would consider that to be desirable from an environmental point of view, but there are environmental issues with bottlenecks, for example. Also, transportation problems have an influence on the economy and its success in Lanarkshire and many other areas as well.
We are not arguing for more roads. There is a requirement for more strategic road capacity, particularly on the A8 and the A80, both of which have major problems. Work is being done to try to resolve those problems but the solutions are a long way away—it will be 2010 before those schemes are completed. The problems at the moment are primarily ones of junction capacity, which are compounded by the lack of capacity in the network itself, so even when we fix the junctions, there is too much traffic on the roads for the system to work properly.
I think that in workshop 1 you referred to water infrastructure investment. Would you like to comment on that, since we are now in a formal meeting?
Like the rest of the country, we have a problem with new investment in water infrastructure and with the maintenance of the existing system, which is generally very old. New investment funding has changed. I am not an expert, but I know from my contact with the water company, and with water authorities in the past, that it has become more difficult to fund large-scale investment. For instance, we have an industrial estate that requires 2.5km of off-site works to connect it to the trunk sewer system. In the past, Strathclyde Regional Council, as the water authority, would have paid for that up front and recovered the cost from water users through water rates. Some contribution would have been required from developers, but the cost would have been offset by the hope value of water rate income. However, the balance has shifted, so that developers are having to fund much more of the up-front costs, which is creating a difficulty. As I said, I am no expert, but looking at it from the point of view of trying to get sites developed, I can see that that is another factor that is making it difficult to release new land and to get maximum capacity out of existing sites.
I have two supplementaries on that. Going back to the days of Strathclyde Regional Council—you are fortunate that there are two ex-members of Strathclyde Regional Council at the table—when it was planning new roads investment, it thought about infrastructure investment, such as water investment, at the same time. Also, it was in a position to apply for European funding, for example, to underpin that new investment.
To answer the second question first, I do not think that investment is not being made; it is just proving to be more difficult and taking longer to organise than before. I know from experience of the previous local government regime, when roads and water and sewerage were under the same authority, that there was much closer co-operation between the departments, and things were probably easier to deal with.
That is a useful point to add to our water discussion.
I have one observation that relates to the point that Jim Mather raised about his workshop. I do not know whether colleagues have had a chance to look at the eight reports that they have to read for tomorrow, but I managed to squeeze them in between cheering the three Celtic nations to defeat in the world cup over the weekend. In my depression, I found a statement from the Deputy First Minister—I do not know whether members have seen it—that says that the Executive cannot isolate spending that stimulates economic growth from spending that directly targets economic development, because of the current accounting system. That is just an observation. We will have a chance to quiz the minister about that.
I have one supplementary on the water issue. I was interested in David Porch's comment that investment is now more difficult and takes longer—we all understand that point and sympathise—but I am concerned that there might be another hidden inhibitor. Might the type and extent of infrastructure that developers put in be, in essence, a long-term inhibitor for further development of those areas? Are you seeing any sign of that?
I have not seen any signs of that, but that is a real danger. It is a possibility that people will invest only in what they can afford, rather than in what the development needs. However, I have not seen that happening on the ground.
I thank committee members and the participants who came along this morning for a successful session. It has given us food for thought which, where appropriate, will feed back into the questioning of the minister this afternoon. His representatives are at the back of the room. They will have to guess which awkward questions we might ask their master this afternoon. More important, the discussions will help us to frame some of the issues that we want to present in the report that we must produce at the end of this second stage of the budget process. Thank you for coming along and giving us the benefit of your advice and information. We will try to process that in our work.
Meeting suspended.
On resuming—
Good afternoon. I reconvene this 12th meeting of the Finance Committee. Agenda item 2 is further formal consideration of the budget process. I welcome the Deputy Minister for Finance and Public Services, Tavish Scott, who is accompanied by Richard Dennis and Richard Wilkins from the Executive's Finance and Central Services Department. Members have a copy of a letter from the deputy minister on the budget process. We might deal with one or two issues that arise from that letter at the latter end of the questioning. Fergus Ewing and Kate Maclean have sent their apologies, but we expect Jeremy Purvis to come along in due course. I invite the minister to make an opening statement.
It is a pleasure to be in Motherwell on a nice sunny day—it was not nice and sunny this morning when I left home. As someone who used to sit on committees, I share the desire to hold committee meetings throughout Scotland. I notice that the committee met in Skye last year—I read the Official Report of that meeting on the plane this morning. We should follow that principle when we have the opportunity to do so, not least because it allows us to take into account the views of people from throughout Scotland. It is a useful exercise to be in Motherwell today and I understand from Richard Dennis that this morning's workshops were enlightening on both local and national issues, some of which I am sure will arise later.
Thank you. On the committee's response to the issues that you raised in your letter of last week, I hope that we can provide a more formal response in our report at stage 2 of the process. However, it might be useful in the course of today's discussion and questioning for us to discuss some of the themes that were contained in the letter. There are a number of issues that members will want to raise, and which we anticipated raising in advance of your comments. I invite Wendy Alexander to start us off.
The minister's letter is fascinating, although committee members saw it only this afternoon and have therefore not really had a chance to reflect on it. I am taken by the wisdom of trying to build into the process at some stage an attempt to review past performance, using committee meetings such as this or other means. That seems to be an encouraging step forward on which we will come back to you.
I suppose that the short answer is that there has been an election and we have to fund a partnership agreement. The commitments in the agreement are a matter of record and I observe gently that not too many spending ministers have come back and said, "Oh, we'd rather not spend any money". They all seem to have very strong arguments about why they should receive additional resources. Andy Kerr and I are engaged in a process—with which Wendy Alexander will be entirely familiar—that involves ministers in the coming spending round considering where they wish to sharpen up or reprioritise their expenditure.
What is the financial logic, if any, behind the Skye bridge issue? You said that the commitment is in the partnership agreement. I suppose that the Finance Committee is interested in why anyone would want to do anything about the Skye bridge.
I am but a humble finance minister, not the Minister for Transport.
I am just interested in the logic behind the matter.
As you know, Andy Kerr and I have to deal with the requirements of spending departments. As the Minister for Transport is progressing that issue with other colleagues, the Finance Department must make certain provision if it is required to do so.
How would you progress a matter like that? After all, an appraisal under the Scottish transport appraisal guidance is usually undertaken to examine the various economic benefits of most new transport projects. Given that the Skye bridge has already been built, one would need to modify any assessment of the economic logic behind that expenditure as opposed to other transport-based expenditure. How would you make such an assessment?
Let us be honest: we are engaged in a political process. Every form of expenditure is rigorously examined and any spending minister has to produce spending proposals and priorities that are financially acceptable and meet the Cabinet's political priorities. The Skye bridge project falls into such a category. I simply used the example of the Skye bridge to show that we have to make an overall balance available to deal with requirements that arise from partnership agreement commitments. Members would hardly expect me not to make contingencies in circumstances in which there is a political priority to do something.
I understand that the detail of the partnership agreement is to look at bridge issues generally—it is not to consider a specific bridge proposal. In the context of examining bridge issues in general, if specific proposals were to come forward, what mechanism would be used for analysing the advantages of progressing one rather than another? I am not necessarily saying that it should not be done, although I might do so in a different context. The question that I am trying to ask is: what mechanisms exist for making that assessment?
There are the same mechanisms as exist for any transport project or any other project that is subject to value-for-money tests. The Scottish Executive would follow the same procedure in any case. That is what would happen if a transport minister brought forward such proposals.
However, there are concerns—I speak as a former member of the Transport and the Environment Committee, of which you were also a member at one point—that big projects have been suggested and apparently agreed to without any explicit or transparent explanation of why they, as opposed to other projects, have been taken forward. I remember asking such questions about the Aberdeen ring road—we asked repeatedly for a Scottish transport appraisal guidance assessment, but we were never given one.
It is not for me to get into what happened in the previous Administration. However, I share your view—I can think of a number of big transport expenditures that are now, as it were, committed. I was not a minister at that time, but I assume that the process of analysis of expenditure of those big sums was rigorous. I am sure that Richard Wilkins could comment on that. The general point is that we will go through as rigorous a process as we seek to go through on every occasion.
Part of the reason for the expenditure figures' being in the contingency fund rather than in the budget is that not only are we still appraising options, but negotiations are going on to work out how much it would cost to end the tolling regime. We would start to skew the negotiations if we were to publish figures that state how much money we are provisionally allocating to that. That is one reason why that money is in the contingency fund rather than in the budget. Until we know how much it will cost to end the tolls, it is more difficult to put forward the value-for-money case for the different options that you mentioned. To a certain extent, the negotiations must go on before, rather than after, we present options on value for money. That factor must also be taken into account.
In the context of the very large sums that are in the contingency fund—those are not necessarily allocated against named projects but they may end up being used for such projects—is there a process by which the Finance Committee or the Local Government and Transport Committee could consider the value-for-money issues that are raised when a particular decision is taken?
I imagine that it is open to this committee or to the Local Government and Transport Committee to examine any Scottish Executive expenditure in that sense and to call ministers and officials to account as to why decisions were taken. That option always exists.
I am not sure whether that works, which is the point that I am making. The Aberdeen ring road is a case in point. I would be concerned if there were no mechanism for examining such issues in the context of future decisions.
Over the piece, the committee, economists and business organisations have questioned the consistency of allocating a significantly lower rate of real growth to the enterprise and lifelong learning budget in comparison with the generality and in comparison with some specific areas of Government activity. The increase in that budget is 3.7 per cent as against an overall average increase of 7.3 per cent. Given that growing the economy is the Executive's top priority, what signal is that meant to convey to investors and to the rest of Scotland?
I am sure that Mr Mather would accept that moneys that help to grow our economy do not come from only the enterprise and lifelong learning budget. I would argue strongly that investment that we make in education in the round, for example, is a significant element in the formative years for growing our economy.
I want to build on what you are saying. Are economic development and growth issues reflected in the targets of other departments that you involve in increased cross-cutting spend as part of the push towards achieving your targets?
Work is on-going. We have much more to do in that area—I would not try to disguise that in any way. We can do a lot, but doing so is not easy. Andy Kerr and I are committed to taking such work forward and to ensuring that the process is as transparent as possible. If a Government of whatever persuasion says, "These are the issues on which we will be judged," an important principle for those of us in that Government and those who support it is that we should be able to illustrate what moneys are being made available and what they are delivering. I take Mr Mather's point; however, we are determined to progress matters and we hope to come back to the committee in future on the issue that he raises.
I would like to deal with a specific point about targets. Several other portfolios are quite explicit in having aims or objectives that relate to supporting the growing of the economy. One of the stated aims of the finance and public services portfolio, for example, is to support growing Scotland's economy. I cannot remember verbatim the aim of the transport portfolio in the budget document, but it supports growing the economy. I am fairly sure that the tourism, culture and sport portfolio also has an aim or objective that is specifically concerned with promoting jobs and the economy. There are fewer directly linked targets in other portfolios, but the aims and objectives of several portfolios are directly linked to growing the economy.
That might be useful for us in proceeding with our growth inquiry.
I agree that the ELL budget is not the only budget that supports growth. If many budgets make contributions towards supporting growth, can we in principle start to identify the expenditure of other budgets that support growth?
In principle and for the reasons that I outlined to Mr Mather, I strongly support being able to identify budgets that support growth. I will not repeat the difficulties that are involved, but I strongly support that general theme.
First, I will make an observation; I might then ask a question.
I am tempted to give a certain answer to that, but I will not do so. [Laughter].
I hope that you had a peaceful and conciliatory weekend, minister.
No thanks to you, Mr Brocklebank. [Laughter].
The other half of my question was about being bombarded with facts and statistics with no real explanation of where we are going. You say that investment in, and improvement of, transport infrastructure is for the long term and that it will develop, but people cannot see that in a joined-up way. They do not think that you have explained how those things link together.
Do you mean in terms of the budget document?
Yes.
I am with you now. We can certainly consider and reflect on the narrative, the introductory paragraphs and the phraseology that is used. I am interested to know which facts, numbers and statistics people do not find helpful. It would be hugely interesting to me, convener, if you could point out exactly what people criticise because we do not learn unless you guys tell us what ideas you pick up and where. I am happy to take that evidence, Mr Brocklebank.
People said that there are lots of fiddly little initiatives but that there is no great strategic framework.
Show me the fiddly little initiative that causes them the problem and I will find you 50 people who think that it is a pretty important fiddly little initiative—that is the nature of government, I am afraid. If there are initiatives or statistics that you think are unnecessary, I am sure that Richard Wilkins will be delighted to consider them. If the concerns relate to slimming down the document and creating more transparency, I am entirely in favour of that, but I have sat on committees that have asked for more information and more detail, so a balance is required.
On the shape of the document, the committee welcomes the additional information that was provided this year on equality commitments. That allowed us to identify those commitments more effectively.
Many departments, not just the Enterprise, Transport and Lifelong Learning Department, have a role to play in the promotion of economic growth. That presents problems if we are to track what has been successful. As you said, minister, the budget sets out aims, which contain a number of lesser objectives and targets relating to economic growth. If we cannot attach figures to those, how can we track expenditure to find out which drivers have been more successful in promoting economic growth?
The key to that is focused and co-ordinated expenditure.
Elaine Murray asked a fair and perceptive question which, in essence, illustrates what we are trying to achieve. As someone who is new to the process, I am wrestling with the issue, so that I can be clear in my mind about the best way of proceeding.
The local government increase is 7 per cent, whereas the transport department gets a 17.5 per cent increase, so local authorities might argue that they will not get the major hit from the increased expenditure on transport. Perhaps that is because the Executive—in some ways, quite rightly—wants to encourage the use of public transport.
Yes. The question is whether we should ring fence money to go directly into road repair and maintenance, be it for trunk roads or for local roads. If we were to do that, we would come under pressure from the Convention of Scottish Local Authorities not to increase in the round the amount of money that is ring fenced. The issue is genuinely difficult. You are right to say that local people feel strongly about the general level of road maintenance—councillors' surgeries abound with queries on such matters. We want to—and we do—focus on that. It strikes me as right in principle that decisions about local roads should be taken locally and that we should not impose solutions from the centre.
I agree with what Dr Murray was saying because I listened to the same witnesses as she did. Investing an additional £44 million in transport is great but, unless something radical is done to deal with the bottlenecks in the system, such as the Shawhead and Raith interchanges in this area, we are wasting our time. Transport can be improved as much as we like, but nothing will be achieved if there are bottlenecks up and down the country.
We will take your points back to the Minister for Transport and ensure that he is well aware of them. However, you will be aware that there are many competing priorities and that, just like any local council, the Minister for Transport has to make judgments on what the most pressing ones are. All ministers try to make such calls as best they can.
As I said before, it would be nice if there were a consistent application of a set of principles when such judgment calls are made, instead of the confusion that has been evident up to now.
We have all been asking for the impossible, to an extent, in that we have been asking for a much slimmer document that contains much more detail. However, some of the detail that we want relates to the ability to track new money for new initiatives. We know that we have limited scope to affect the budget—I believe that our adviser tells us that we might be able to affect between 3 per cent and 5 per cent of the budget—but, even within those limits, we are after more information about the new initiatives that have been set up since the elections in May. Likewise, many of the witnesses from whom we have heard would like a bit more clarity as to how the uncommitted money will be spent and how the new initiatives are explained in the budget documents.
Richard Wilkins might correct me on this, but it seems to me that the new resources section of each chapter of the budget would allow for that. We might be able to have a discussion about the level of detail within the new resources section and we would be open to the committee's suggestions about what the level of detail should be.
I do not have a huge amount to add to that. On the education example, it is clear from the document that an extra £29 million is allocated next year and £49 million the year after that and that that money goes towards the Spark project and the reduction of class sizes through the provision of extra teachers. However, I take the member's point that the document does not contain a clear breakdown of resources between the Spark project and the cost of additional teachers. We could provide more information on that.
I take that point on board entirely. We need to make the connection between the new partnership agreement and the subsequent budget. The Executive does a great deal of work to promote the partnership agreement. The public and outside bodies have indicated in evidence to us that they are looking for the partnership agreement in the budget. To an extent, they are looking for something that they may never find, because the budget does not start from the election—the period covered by the current budget both precedes and follows the election. However, there should be greater clarity about partnership agreement commitments.
As you probably know, the targets are basically the spending review targets, which accord closely with the spending decisions that were taken last autumn. Alongside those are new targets that have been added to take account of the partnership agreement. The targets are a blend of the spending priorities that we set out last year and any changes that have been made as a result of the partnership agreement. We hope that those targets fit in reasonably well with our priorities, because they set out much that we intend to do over the next four years. If that is not feeding through to people who read the document, we need to devise better ways of setting out the information. We take on board the point that you make and will consider it further.
I want to pursue the issue that Richard Wilkins has raised. We are happy with the principle and the general approach of the new resources section, which is a big advance on the information that was available to us previously. However, the vagueness in one or two areas relating to the partnership moneys has caused us difficulty. The section is not consistent throughout.
I take Professor Midwinter's point about vagueness. However, I would be surprised if the Minister for Health and Community Care and the Deputy Minister for Health and Community Care were not very clear about what they are trying to achieve on the basis of the partnership agreement. If we have not expressed that properly or got the terminology right in the budget document, we will want very much to clarify it.
This year during the budget process, the Finance Committee has taken evidence specifically on performance measurement and assessment in the health sector. That dovetailed into an interesting workshop this morning, in which we spoke to representatives of Lanarkshire NHS Board and the various agencies associated with it about expenditure issues as they experience them.
Indeed, and I am genuinely interested to hear them. It is difficult for me to take a flyer at that, convener, but we certainly want to discuss those observations with colleagues and examine your evidence on the matter closely to see whether we can improve the situation. It strikes me that prevention as an overarching theme, rather than treating illness, is a strong element of the partnership agreement section on health, which gels with your point about medical intervention versus health gains. I am happy to take that issue back and discuss it. It is difficult for me to start second-guessing the Minister for Health and Community Care's reaction to the fundamental points that you have raised, but I assure you that we will take them back and discuss them.
There are two particular issues. One is that, although you have said that the focus in the partnership agreement is on prevention, there is little in the budget allocations to reflect that. Most of the money has gone to interventions—often high-tech interventions—rather than to prevention-based activity that might be geared towards community planning or primary care.
I am all for more effective and transparent targets and I will therefore reflect on what you have said and on the evidence that you will present and take the matter up with colleagues. The same point has been put to me directly in a number of forums, not least on my own patch. I take what you say, convener, but I do not think that it is right for me to take a runner at that question. We will take the point back and discuss it with colleagues.
The issue is how aggressive the Minister for Finance—the next part of the title is crucial—and Public Services will be with the departments in determining their budgets, questioning and pushing them and scrutinising the work that they do in delivering better outcomes for the money. If more good money is going after bad, how do you know? What kind of relationship do you have with the large spending departments if, year after year, they receive more money and the public see no equivalent improvements in services? Do you simply hand over the cheque if it is requested? Do you ask the departments why they want it? I understand that the approach is a gentlemanly series of discussions, but, for the scrutiny of public finances, it might be more appropriate to haul the departments over coals.
You could draw me on that question.
I am drawing you only slightly, minister.
The question is a fair one, Mr Purvis. I assure you that the process is robust. I am new to it—I will be open about that—but I am pleasantly surprised by how robust a process it is. Richard Wilkins can reflect on what happens at official level, because a lot of work obviously goes on at that level before it gets to Mr Kerr and colleagues.
There are several issues, which are linked to what happens at ministerial level. One key factor is that, in the previous spending review, we set targets for all the spending departments, which the departments were expected to achieve with the money that we allocated to them. We tracked progress against the spending review targets. One of the reasons behind the suggested possible changes to the budget process was that it would be useful—both for us and to allow for better scrutiny—for there to be external scrutiny of the departments' achievements against the money that is allocated to them. We are tracking how portfolios perform with the money that we allocated to them to see whether issues arise. In the 2004 spending review, the portfolios will have to justify why they need the level of resources that they need. The performance information that we have will play a part in how we question them on whether they need that level of resources and what they are likely to be able to do with those resources.
I have a brief follow-up question that gets to the nub of the issue. I want a much clearer idea of where in the Executive there is a grip not necessarily on performance in relation to targets but on the delivery of better public services. I appreciate that that is a lot harder to quantify, but that is the issue that I want to explore. One can judge departments against the targets that are set in the budget, but public services will not necessarily improve. Given that Tavish Scott is a minister for public services, my question is who within the Executive determines whether people who leave school are more educated or whether people in Scotland are healthier. Those issues are hard to quantify, but what work is being done in the Finance and Central Services Department on them? Without such information, spending departments could meet their targets but not necessarily improve public services.
The closest internal equivalent in the Executive would probably be the policy and delivery units, which are closely linked with the permanent secretary's office. Those units are responsible for ensuring that all portfolios have strategic plans and can deliver their objectives, not only by reaching targets, but ultimately by securing better outcomes for people. Their work is connected with our work, as the finance expenditure policy division, and also with the office of the chief economic adviser, which obviously has quite a lot of responsibility for looking at broader economic issues. So the policy and delivery units would be the chief groups, but they work quite closely with the office of the chief economic adviser and the finance expenditure policy division.
On that general point, it might be worth noting that the announcement made by the permanent secretary when he came into office recently, which is on the public record, dealt with some of the points that Jeremy Purvis made. That is an important component in driving forward the strong theme of looking from the centre at the delivery of the spending portfolios.
It might be helpful if you could write to us about the performance side of things. I hear what Richard Wilkins says about the performance and delivery unit and looking across the board at performance outcomes, which is a role that the unit did not historically perform. As it appears that it performs such a role now, I wonder whether the changing responsibilities vis-à-vis the Finance and Central Services Department have been put in the public domain. It would be helpful if you could write to us and lay out where responsibilities now lie and how they align with analogous organisations south of the border, in advance of the committee's report on the budget in December.
I am happy to do that.
Especially if that helps us to reinforce the scrutiny process.
Indeed.
I refer you to some of the reports of the Public Accounts Committee at Westminster on whether performance and targeting regimes work as well as intended down there, before we get too much breast-beating up here.
I would like to examine capital spend. One of the concerns raised by witnesses was that they perceived a shift of resources from capital into revenue budgeting. We do not feel that the way in which the budget is structured indicates the entirety of capital spend. In particular, table 0.05 of the budget, on departmental expenditure limit capital budgets, does not include the spend that goes through PPP.
That is an important question. I welcome the committee's interest in this matter. Following committees' requests of finance ministers, there is a table that includes information on PPP and private finance initiative commitments. It would be good to give more detailed information on capital investment and a table—or an impression or overview—showing infrastructure investment generally, based on your or my understanding of capital investment, rather than a strict accounting definition of the term.
We will take that up in the report, but anything that you want to give us on that would be helpful.
I would like to see the detail of their arguments in support of that position and would want to know whether it relates to Executive expenditure overall or to specific portfolios. What split would they suggest? I am open to such considerations, and I am sure that that applies to all ministers. However, it would have to be borne in mind that, if the Executive were to make significant switches between revenue and capital spend, that would invariably have significant implications as it would influence our overall judgment of our priorities. It is a little easy to generalise on the subject but, as I said, I would like to see the detail of the argument.
I ask Arthur Midwinter to put a bit of flesh on those bones.
The matter was raised with us by a number of economists when we were in Dunkeld for our away day. Part of the difficulty is the absence of the comprehensive table that had previously been available. Changes were made to the definition of capital expenditure and various accounting terms about two years ago. That means that, if we look at the documents over the years, we might think that we are spending less on capital expenditure than before; in fact, that is not the case although it seems to be so because of those accounting changes. If we had a table with the DEL capital expenditure plus capital grants to other organisations and the capital components of PPPs, I suspect that that general point about capital expenditure might not be true.
Indeed.
In the initial years following devolution, there was a big increase in capital expenditure. At the moment, however, we do not have the necessary accurate information to respond to those economists on that point. The issue is to do with the changes that have taken place. If I am right, only expenditure that creates a public asset, rather than just capital expenditure, now appears in the relevant table.
We welcome that kind of push, and it is helpful that that point has been made.
Notwithstanding such issues of classification, the economic arguments that were put to us were that, given the balance between public expenditure and gross national product and the growth in public expenditure, this point in the cycle was the time to take on more large capital projects. It was felt that that would have a multiplier effect on the economy, so it might serve the growth agenda.
That is an interesting argument. I would observe that, as this and other committees know, it is the large and the extremely large capital investment projects that take many years to come to fruition, given the lengthy design stage, public inquiries and all the rest of it. I do not believe that any Government has succeeded in turning round such projects quickly. We take that point, and we can only reflect on it. We also strongly take on board the points made by Professor Midwinter and Elaine Murray about the clarity of information.
This question is also about data, I am afraid. Could the deputy minister confirm that it would be useful for us to have 10-year time series data on spending by the Executive? I will pre-empt the answer by adding, if I might, a few words. I took the minister, in his opening remarks, to concede that there are a lot of definitional difficulties and issues—I have no doubt that officials will bring him many. Suffice to say that I am unpersuadable that nothing is better than something. I might just leave you to reflect on that.
Richard Wilkins is already hugely looking forward to Christmas. All I can say to that request today is that we will reflect on it.
Thank you.
You are right in one respect: I have been given a lot of reading that suggests that the matter is immensely complicated.
I will simply leave my GERS analogy with you, because it will be widely used. As the GERS documents are used to estimate things that are beyond our control, it will be difficult to sustain the argument that we are incapable of making even the broadest estimates about things that are clearly within our control.
I want to build on that point. The argument that it is difficult to provide comparable data would not wash in the private sector. Corporations manage to do so day after day; after all, they cope with change with regard to takeovers, mergers and demergers. Without such data, one could not manage things. As Peter Drucker has said, "If you can't measure it, you can't manage it". However, in a climate in which there is new spend, particularly new capital spend, that is what you are asking the committee to do. From our position of relative impotence, it begins to look like there is one-way traffic of escalating budgets without any real evidence of improved productivity, throughput or outcomes. As a result, comparable data would be a very important start; certainly there would be an important market, if you genuinely want detailed external scrutiny, real-world justification of resources and proper benchmarking against what is happening in other countries.
Those comments are very fair. As Wendy Alexander pointed out, some gallant assumptions have to be made on this matter. However, as a political observation, I point out that, instead of playing too much with those assumptions, we might simply have to take them.
Let us not use GERS as an example of the process. Dr Goudie has said that GERS tells us a hell of a lot about the current settlement, but nothing about independence.
I think that the minister mentioned this issue in his opening remarks. Although it is particularly difficult to monitor spending and performance on cross-cutting priorities, the information provided on equality identifies and costs the relevant activities in a transparent way. Will you undertake to provide similar information for "Closing the Opportunity Gap" and sustainable development priorities to ensure that a consistent picture is available next year?
Mr Swinburne has raised a very fair question. Indeed, we are trying to do what he suggests. For example, the figures that he has just described would be hugely helpful to ministers in the Cabinet subcommittee on sustainable development in assessing the whole budget and any priorities that might emerge from that subcommittee's discussions. We are progressing the matter.
I have a brief point on a similar issue.
I take that point. That is a good example of the definitional issues that we face in trying to pull together this kind of analysis, which I hope is readily transparent and understandable to members of the public, never mind learned members of the Finance Committee. That is a serious issue and we are doing our best to make progress. A lot of interdepartmental co-operation is required. Officials have to be pulled off doing things that they think are more important so that we ensure that we get such things as definitions right and ensure that we are not producing tables that replicate another table in another part of the document. It takes a lot of work and a lot of commitment to drive that forward, but we are determined to illustrate that as best we can.
This is a straightforward question for the committee's information. The committee has noticed the retention of funding capacity in a reserve for later years in the Parliament. Is it intended to allocate that funding in the 2004 spending review or to retain it in a contingency fund for unforeseen circumstances further down the road?
There are always contingency funds. It is important that we retain that flexibility. The spending review next year will take into account the requirements of spending ministers and there will be a rigorous exercise around those requirements.
One of the things that came out of the workshops that we held this morning was that there is a degree of frustration among people who work in Lanarkshire about the complexity of putting together funding packages when the sources of funding have different requirements and funding cycles. There was a degree of optimism, which I have not heard elsewhere, that community planning might provide a focus for drawing together the requirements of a particular area, identifying priorities at a local level and making allocation decisions that better suit the needs of the local area. That is working at the local level.
We would need to consider some specific examples. An example that was raised with me at our budget roadshow in Perth last week illustrated that we are not doing all that we might on that particular matter.
One specific example that was given concerned the creation of multi-agency facilities, bringing together health, education and perhaps other services. Those might include job creation and job search services that are not under the Executive's control. It seems to be very difficult to assemble appropriate funding packages—not just on the capital side, where that may be relatively possible, but on the revenue side—to allow such initiatives to become sustainable, even though they represent what local people consider to be the most effective use of resources. Does the Executive recognise that the management regime across Scotland, with targets set centrally, sometimes acts as a disincentive for people to exercise appropriate discretion at local level about the best use of resources in a particular context? How might you begin to simplify the process of issuing consents to decisions, so that we can shorten the chain of decision making and allow projects to run?
You raise a big philosophical issue. You seem to be questioning how much control the centre has of the allocation of finance through the two main spending delivery agents—local government and local health boards. As colleagues know, they have a huge impact locally and a huge take from the overall budget. How much should the Executive dictate to other agencies, through one mechanism or another, and how much should it loosen up and give them the flexibility that they argue they should have to take and account for local decisions? It is clear that in local government we have tried to move forward over the piece to ensure that ring fencing is reduced and that local government has more flexibility in decision making. However, the difficulty for all ministers and for any Administration is the requirement to be seen always to be making progress on the key political priorities of people whom we meet in our surgeries day in, day out. We cannot avoid that. People want better health care—they want hip replacement times to come down and so on. How we make such progress is an important philosophical question for government as a whole.
My perception—which is not just fuelled by today's evidence but which I have had for some time—is that the current institutional arrangements are serving to inhibit local flexibility and the freedom to make effective decisions at local level. The Scottish Executive is imposed on local government, health boards and the many other agencies, and the focus is on management of the budget at Scotland-wide level.
I agree. There is a strong argument for a good-going debate on where the checks and balances should be. Wearing my local government hat, I have tried to take forward the slimming down of what community planners regard as the endless number of audits that we require of different elements of the community planning boards in the different parts of Scotland. Because they argue persuasively that they are under immense pressure to fill in numerous forms and returns for central Government, we have, with community planning partners, begun to try to simplify the process and make it much more efficient and, to be frank, much more meaningful. If we could achieve that, it would drive a lot and might provide the kind of example that we would want to implement in other areas.
What relationship will you have with national bodies and agencies with regard to their understanding how local community planning works? An example from my constituency of which you will be aware is the problem with the sheriff court building in Peebles, because of which the Scottish Court Service in effect wanted to pull out of the town. A number of months down the line, community planning with the local police force and the local authority got under way. The matter has been resolved with a satisfactory conclusion that might provide a model of different agencies working together but, at the outset, there was a total lack of understanding that community planning could resolve it. My question is on your relationship with the national organisations, not only the relationship between local authorities and health services, but relationships across the board between all agencies and those agencies' relationships with local authorities. Do you have, as part of the process about which the convener talked, a relationship with national agencies other than the health service?
There is a lot in that argument to do with the number of separate allocations that we make across different departments to local agencies, funding bodies and delivery partners. That is an issue to which we have regard and which will feature strongly in the spending review and on-going work.
Perhaps you could convince your colleague Mr Finnie of that.
Minister, you raise a number of points in the letter, and somewhere in it, you ask how the budget process worked without the annual expenditure report. I made some quick notes on that this morning, but first, I welcome the positive relationship that we have with your officials. I speak to one of the Richards almost every week, and the way in which that relationship works helps to take the budget scrutiny forward. The suggestion that was made today about the documentation and some sort of introductory narrative on the rationale for the choices, which you discussed with the convener, would provide the direction for which people are asking.
We will chase that.
The Health Committee said that it had difficulty making sense of the block allocation to the boards and that it could not tell what the underpinning assumptions were, whereas the local government settlement spelled that out.
Thank you very much. That is very helpful.