The draft Budget Scotland Act 2000 (Amendment) Order 2000 is required to increase the budget for Audit Scotland by £1,785,000 from £1,700,000 to £3,485,000. The change is needed to meet the costs of National Audit Office activities that became Audit Scotland's responsibility from 1 June 2000. The additional funds will come from the UK reserve.
Will the minister outline the mechanism by which the UK reserve is formally accessed?
Does Andrew Wilson mean in this matter or more generally?
In this specific case and more generally.
We make an application to the Treasury. If the application is straightforward, it is approved. If it needs to be the subject of negotiation, there is further discussion, which leads to a result.
Paragraph (c) in the explanatory note that is attached to the order states that the order amends the Budget (Scotland) Act 2000 to
I am grateful for that strategic insight into the views of the member for North Tayside on our budgeting process. It would be wrong to read general policy development into the aspect of the order to which the member refers. This is a tidying-up exercise that should have been carried out during the passage of the Budget (Scotland) Act 2000, to allow the accountant in bankruptcy to use money from sequestration in the way that is described. That would not be a new development and we should not have overlooked it during the passage of the Budget (Scotland) Act 2000.
I understand the point that you are making, but is not paragraph (c) of the explanatory note logically inconsistent with that argument?
Not in my view.
You said at the beginning of your statement that this was a one-off measure to amend the budget to allow for the funding of Audit Scotland. How will that money be forthcoming in future years?
The budget of Audit Scotland is one of those unusual budgets that is the responsibility more of Parliament than of the Executive, because—quite rightly—Audit Scotland is independent of the Executive. The budget for Audit Scotland will need to be estimated by the new Auditor General and his staff and, I imagine, by the Commission for Public Audit, which is responsible for overseeing the work of Audit Scotland. In due course, they will make a recommendation to Parliament, as part of this year's budget deliberations. We will need to include that provision in the budget act. The order would allow Audit Scotland to spend the money that we have received from the UK reserve to cover the activities previously done by the National Audit Office. There has been no unexpected increase in the estimate of the cost of Audit Scotland. The order is the result of discussions that we had with the National Audit Office about how much money should be transferred from its budget to ours to pay for the transfer in staff that took place.
That is the mechanism that has been used this year to fund an existing facility that has been given a new role. How will that be funded in future? Will the money be top-sliced from the Barnett formula, or will there be an additional central donation from Westminster?
This is a permanent transfer from the National Audit Office budget to the budget of Audit Scotland, which comes to Audit Scotland through our budget. It is not a one-off provision, but will be part of our budget each year.
So there will be an increase in funding from Westminster on an annual basis.
Yes.
As the minister will be aware, the Scottish Commission for Public Audit has taken evidence from the Auditor General on those specific points. Part of the substantial increase in the allocation is to cover setting-up costs of information technology systems and so on and is, therefore, a one-off payment.
As I understand it, part of this year's budget for Audit Scotland covers the setting-up costs of Audit Scotland, but I am not directly involved with that, as it is a matter for another body. The sum that appears in the order relates to the transfer of money that we have negotiated from the National Audit Office and the Treasury to cover the costs that were incurred previously by the National Audit Office and that it will no longer incur because some of its staff and responsibilities have transferred to Audit Scotland.
I would like to clarify one point about process. I am a member of the Scottish Commission for Public Audit, which takes evidence from the Auditor General on issues such as this—in particular, on his budget and programme for each year. Do you accept automatically the recommendations of the commission, or do you enter into negotiations with the Auditor General?
As I understand it, the Commission for Public Audit would notify us of the amount that it believed was required to cover the costs of Audit Scotland for inclusion in budget papers. If we had any concerns about that sum in relation to the overall provision that is made in the Scottish assigned budget, we would, I presume, make representations to the commission, in an effort to adjust the sum up or down. If we thought that the sum was not enough to cover all the duties of Audit Scotland we would express that view; if we thought that the sum was too much compared with sums under other headings, we would express that view. Ultimately, the matter is for the Parliament to decide. Parliament will vote on the budget for Audit Scotland in the same way as it votes on other budgets. Although the Executive could express a view to the commission on the sum that the commission proposed to Parliament through the Executive, we would be bound to include the commission's request in the budget documentation.
I have a quick question on the negotiations with the National Audit Office. What proportion of its overall budget has been agreed on for transfer?
I do not know, but the amount that was calculated by the NAO and agreed to by the Executive is the sum that the NAO will no longer spend in its offices as a result of the transfer of staff and responsibilities to Audit Scotland. Clearly, some of the National Audit Office's overheads will remain. For example, the offices in London where some of the activity that is being transferred took place will still belong to the NAO and will not be carved up. The amount that was calculated relates to the cost of the staff and duties that have been transferred. That amount has been passed to us.
That is clear, but we would like more information on how the budget that has been transferred relates to the overall budget of the National Audit Office. The duties of Audit Scotland are probably greater than the previous Scottish share of the duties of the NAO, because under the devolved settlement there is greater interest in audit. If insufficient money has been transferred to cover those duties, might not that result in a greater than expected call on the Scottish budget?
I want to say two things about that. Many of the additional costs that have been incurred automatically by the Parliament, the Executive and other bodies as a result of devolution were catered for in the comprehensive spending review. It was recognised that the creation of the Parliament, Audit Scotland and a number of other institutions, bodies and systems would involve additional costs.
That is relatively clear. Will you undertake to provide us with the detail of how the comprehensive spending review allocated funds to Scotland to accommodate devolution outwith the usual block and formula arrangements?
The comprehensive spending review amounts are published. I am happy to send you the published documents. The amounts have been debated from time to time in the chamber.
Obviously, I have read the CSR, but I do not have a note of how the allocation comes external to the block and formula arrangements, which is what you implied. If the CSR allocates money specifically to accommodate the costs of devolution, should that not occur outwith the block and formula?
I apologise if I was not clear about this, convener. I was trying to say that when the CSR was carried out, the Scotland Act 1998 had been passed, so as part of the agreed outcome of the comprehensive spending review of Scotland a number of financial provisions were made to finance different aspects of the devolution settlement. Any additional costs lie with the Parliament and the Executive, because we decide on changes to those arrangements.
We have gone wider than the item on the agenda. I have been benign, but I will now return to the order. I think that this will be the last point that we make to you.
There are three elements. The base budget that was included in the Budget (Scotland) Act 2000 was £1.7 million, as is shown in subsection 2(5). The addition that I hope that we will agree today is the transfer from the UK Treasury, which Audit Scotland will be given authority to spend. If we need to increase that amount, as I suspect we will as a result of the discussions to which Mr Raffan referred earlier, we will have to introduce additional supplementary estimates in the autumn programme of supplementary estimates. Those are on-going matters, as Audit Scotland is currently being established and is identifying its staffing levels and other provisions.
So this is likely to be an interim figure for the financial year 2000-01.
The sole purpose of today's amendment is specifically to give us the authority to give Audit Scotland the money that has been transferred from the National Audit Office and the authority to spend that money.
Motion agreed to,
That the Finance Committee, in consideration of the draft Budget (Scotland) Act 2000 (Amendment) Order 2000, recommends that the Order be approved.