Item 2 on the agenda is on the annual budget process. Members will have received a copy of the paper, "Framework for Subject Committees' Stage 1 Reports". For illustrative purposes, a copy of an extract of the health department's report of last year is attached. I invite members to comment on the content of the paper, which contains two sections on questions that each committee may be asked.
Would we be asking about departmental aims? Why would we do that? What is the thinking behind that?
Each committee has responsibility for the corresponding department of the Scottish Executive. The committees are being asked to comment on their remit in the context of each department's role.
But why is that part of the budget process? I know this sounds arcane, but are we missing the point by following department routes rather than focusing on such issues as policy outcome?
I am surprised that you are asking, Andrew. It seems fairly clear that each subject committee has a remit for its part of the budget as proposed. Perhaps I am missing something. If so, Sarah Davidson will point it out.
This approach has its origins in the recommendations of the financial issues advisory group report: it is the role that FIAG envisaged the Parliament playing at stage 1. It was proposed that departments should set out their aims clearly and that the subject committees should comment on them and on the finances that they felt should be available to support them.
Matters are, perhaps, clearer if we refer to aims and objectives—objectives are involved in targeting. Paragraph 5 17 of the health department document talks about objectives and performance. That is the type of information we want: we want to know what departments are setting up—and that is what the questions in the budget process paper are about.
I am in favour of asking about aims, because they can affect spending priorities. I am worried about the wording of some of the questions. I would be grateful if Sarah could clarify question 4, on whether the aims "support accountability". It seems a bit confusing.
It is important to remember that the questions were drafted following our report on level 2 figures in December. They are not set in stone in any sense.
Could I have clarification on question 4?
It reflects the idea that if a department sets out aims and objectives, there should be a clear audit trail of those aims and objectives so that at the end of the year a committee, or anyone else, can hold the department accountable to them. The extent to which the setting out of the aims and objectives enables that line of accountability to be followed is important.
The questions need to be clear, perhaps at the risk of being slightly longer.
On question 4, on whether the aims support accountability, it might be better for the subject committees if the question were, "Are these targets appropriate?" The subject committees are examining the meat and bones of what the department is trying to achieve. Committee members with an in-depth knowledge of whatever matter it might be—how many teeth are pulled in a year or whatever else—will look at the data and outcomes from the various departments. The appropriateness of the target is then married in financial terms to a budget. That is for those committee members to deal with, on the qualitative side a bit more than on the quantitative side.
It occurred to me that we might have some discussion about whether committees might want to vary the planned expenditure within their departmental remit. There is not a question that invites them to do that, although I suppose that one may be stretched from question 1 of section two, on planned current and capital expenditure. If we do not ask a specific question on that, would we just expect committees to add thoughts on certain areas of the budget being reduced or extended to their response?
One difficulty for the committees is that their last level 2 figures will be expected outturn figures for the previous year. While we think that that is a good place for committees to start, it could be better for them to propose actual variations later in the year, when the figures come out in September. It is up to individual subject committees to take a view on that.
We will not specifically invite subject committees to comment on variations in planned expenditure. If they want to do so, they will. I assume that we are inviting the committees to answer certain questions, but that is not proscriptive: if they want to add further comment, they are at full liberty to do so.
I am not sure whether we want to go into the questions in detail but, putting my subject committee hat on, I would like to suggest, for question 6—
You have made some substantial points—there is quite a lot of meat in what you have said. I hope that the clerks have managed to note those points down. Is anyone uncomfortable with any of Richard Simpson's suggestions?
Richard has started to go into an area that we and the subject committees need to think more about. I think that committees should examine the top-slicing of ring-fenced money. A huge amount of that is going on. The fact that it goes on on a short-term basis upsets long-term planning for hospital trusts, academic institutions and others. All of a sudden, the money that they assumed was available—the Scottish Council Foundation's paper touched on this—is not available.
David has raised an important point about cross-cutting. The budget to tackle drug misuse illustrates that: a ministerial group involving ministers from communities, education and children and health and community care, and convened by the Deputy Minister for Justice, has been set up. Four departments are involved, but no parliamentary committee matches that cross-cutting ministerial group. How do we deal with that?
In the light of events.
The earlier we get that information, the better.
You are perhaps running a bit ahead, Keith, as that is not on today's agenda, but I think that we will have to consider your questions, which cover important matters, once we complete our present consideration.
I think we should contact the Equal Opportunities Committee; I do not know whether any other non-subject committees want to be part of the process.
My general concern is that we are seeking to do too much and are heading into the realms of policy issues that may or may not be of interest to members of this committee. When we look again at the list, after Sarah Davidson has revised it, we might want to keep control of that aspect.
It is not just that. If there are proposed alterations, it must be clear where the money will come from.
Yes, but there is a wider question about how much the committees think is required—the debate on health is a case in point.
Section two refers to capital expenditure, but capital release is also important. I know that that matter is partially reserved because capital release tends to go back to the Treasury. Nevertheless, the release of capital should be seen as part of the department's plans so that we can question the Executive on the relevant negotiations with the Treasury.
I agree with Richard that the roll-over expenditure is crucial and that we should identify alternative income streams, but research and development and pilot projects are policy areas, rather than financial areas.
The issues that Richard has raised are enormously significant. We must recognise that there must be some reconfiguration of services to adapt to changing requirements and financial pressures. Unless we begin to structure the debate across all service areas and investigate how those changes will happen, it is hard to see how some of the enormous issues with which we are wrestling—as a member of the Health and Community Care Committee, Richard will be familiar with the situation in Tayside—can be addressed within the current policy framework, because of the scale of the financial pressures involved.
Are there any further points?
The question about whether committees are satisfied about inflationary pressures should be more specific. It should ask whether the committee is satisfied that the inflationary indices that are used are appropriate to the function. It is clear that the standard gross domestic product deflator cannot be applied across everything—it is a composite figure. If that is the figure that is delivered for the committee's activities, many public service organisations will find it impossible to meet the political demands laid upon them. That is an area on which each committee should focus specifically.
The question is asked whether a committee is
I would like it to be firmer.
Yes, that is important.
I was going to mention the deflator. We have just had an announcement by the nurses pay review body which has a huge effect on the health budget. That is announced in January, to be applied in April, to a budget that we have already decided. We must talk about changing the way in which we do things in Scotland—perhaps we need separate review bodies or mechanisms.
If we take the example of Tayside, this year's problem is driven by the hangover from the previous year's pay settlement and there are even greater pressures for next year.
Following the announcements that have been made on a range of topics over the past few days, I am unclear about what is being decided. Is it appropriate for the convener of the Finance Committee to ask for some feedback about what is happening in terms of health finance?
Did you not watch "Breakfast with Frost"?
I did, but I am still unclear about our budget. I would be very surprised if our budget increased by 5 per cent in real terms next year.
That is an important point, but is not for discussion just now.
Can we do something on that?
It raises an interesting point about the Finance Committee's ability to scrutinise budget developments properly. Where is the money coming from? That is a taunt that is frequently thrown at me from several quarters; perhaps it is appropriate for the Finance Committee to throw it back at the Executive.
The Minister for Finance will represent the Executive at the committee two weeks from today.
On what?
On the budget. I am sure that there will be an opportunity for such questions at that point. I want to come back to the questions under discussion.
I strongly support what Andrew and John have just said. The committee must be nimble. When things come up suddenly—whether on "Breakfast with Frost" on a Sunday or anywhere else—it is important that we act rapidly and ask for clarity. That is what we are here to do. I do not want to talk about taunting the Executive—John used an unfortunate phrase—but I want to seek clarity about how the figures that are being tossed around impact on the Executive's spending.
We will have that opportunity in a couple of weeks' time.
I apologise for talking about taunting the Executive—that is something that I would never do. Indeed, I have to restrain my colleagues from doing that.
That will be reflected in the Official Report. We have given wide consideration to the questions; we will expand and amend some of them. I thank members for their suggestions. It will be important to evaluate the effectiveness of the questions in the first full year of the budget.