Finance Committee, 16 Apr 2002
Meeting date: Tuesday, April 16, 2002
Official Report
174KB pdf
Financial Scrutiny Review
Item 3 is on the financial scrutiny review. The committee requested a more focused version of the paper on the review of financial scrutiny arrangements. Professor Midwinter has now produced a concise paper in four sections, with recommendations. Arthur, do you want to speak to the paper?
I was grateful to David Davidson for suggesting that I should, during the Easter break, write a new version of the paper. I have tried to focus the original paper. I have defined the four categories as terminology, budgetary procedures, accounting issues and research support.
The committee has made progress in its attempts to have documents provided in plain English. The Scottish Parliament information centre glossary of public finance is a good short paper. If you wish to pursue the issue further, you should consider the production of a plain person's guide to the Scottish budget. It should not be written by accountants or specialists; it should be written for lay people or members of the public.
On budgetary procedures, the paper was drafted before I realised that there was a delay in implementing the changes. The scoping report mentioned strategy, which had already been raised in discussion with the Auditor General. I confess that I am not sure what is meant by a strategic approach to scrutiny; I am pursuing that in correspondence with the Auditor General. At this stage, it would be preferable for the committee to consider the budget strategy for spending priorities rather than a strategic approach to scrutiny. However, that could not just be agreed between the Finance Committee and the Audit Committee, as it involves all the committees of the Parliament, particularly the subject committees. We need clarification about that, which is why I have asked for the issue to be referred to David McGill and me to pursue through the year—we can then come back to the committee with ideas about strategic matters.
That leaves a number of straightforward accounting issues. I have grouped those together and suggest that it could be useful to focus on them in an inquiry. The committee might want to consider an appropriate adviser with an accounting background—either an academic or someone who has retired from practice and might be available to help the committee.
The fourth matter is the research support that you were seeking to draw comparisons with scrutiny arrangements elsewhere. It was said at one of the meetings that I attended that we might not learn a lot from looking elsewhere. If the committee wishes to pursue that course of action, we could conduct a comparative study in scrutiny practice, but it is important to make sensible comparisons and not to examine systems in which the bulk of the budget is spent on subjects that are not within the Executive's power. Different approaches are required for considering proposals for taxation, welfare spending or social security benefits than are required for considering the spending on public services that the committee can consider. I have suggested examining comparisons with devolved and regional Governments elsewhere. The committee can consider funding that research and the production of the general guide, for which some research support might be needed.
Are members happy enough with that?
I noticed from reading one of the papers for the Audit Committee's meeting this afternoon that the convener of that committee has been in conversation with other audit committees in the United Kingdom and is looking to go to Europe to examine some of the ways in which scrutiny is carried out there. In some countries, there is a combined audit and finance function. I wonder whether the clerk, wearing his other hat, might co-ordinate that research if we ever get that far. Members of the Norwegian audit committee visited four of us in the first year of the Parliament. They wore both hats at the same time and were questioning whether it was right to do that. If we are going to go down that research route, it would be interesting to hear how finance and audit committees operate, particularly as the Finance Committee and Audit Committee have the same support system within the clerking team.
David McGill can certainly take that on board and liaise with Andrew Welsh.
I am happy with the idea that we seek research support for the development of a guide to the Scottish budget, which would be useful for members and for people outside the system. That could be combined with streamlining, which we discussed previously, and reconsidering stages 1, 2 and 3. The guide would not just give a description of what happens; it would be linked to streamlining the budget process. That would be useful.
On Professor Midwinter's third point, I do not think that the issues that he identified are simply accounting issues, because there are also accountability issues. We have to bear in mind that dimension as well. For example, we considered financial memoranda, which are not simply an accounting issue. When the Executive, or anyone else, introduces legislation, we have to scrutinise the assumptions on which estimates of the financial implications are based and whether they are sound or can be contested.
Do we agree broadly to proceed along the lines of Professor Midwinter's recommendations?
Members indicated agreement.