Budget Process 2002-03
Item 4 on the agenda is consideration of the draft budget for 2002-03. I welcome the Minister for Education, Europe and External Affairs, Jack McConnell, and officials from the Scottish Executive who will answer questions or provide advice, as required. Minister, do you wish to make any introductory remarks?
Without complicating matters even further?
The draft budget for next year reinforces our commitment to increased investment in education and children's services, taken with the significant increase in local authority resources for next year. That investment is very important. This is the first time that I have appeared before the committee to discuss the education department budget and I have one or two things to say on the subject. I thought about offering the prize of a direct grant to a school in the constituency of the member who could ask a question that made some sense of the collection of figures in the document, but that might have been too much of a challenge at this stage.
The department's budget is by no means the total expenditure on either education or children's services—it pertains to a specific part of those services. I am sure that the committee will find it as difficult as I sometimes do to get an overview of the way in which the expenditure fits into the overall budget and how the figures add up. As a former Minister for Finance, I am also conscious of the difficulty in our budget process in matching the objectives and the text of the budget documentation to the tables and figures that are contained therein. The fact that they change every time that we produce a new document does not help anybody, but that is part of the system. Budgets obviously change as extra resources become available or as priorities develop. I am conscious of the fact that the figures are not easy for anybody to follow.
Nevertheless, the budget process is a very important part of Parliament's work and between now and next April or May, when the totality of the budget and the strategic priorities are considered—rather than the individual details of a year's budget, which is the focus of today's discussion—I am keen to discuss with the committee ways in which we can improve the presentation of the figures and the text and provide the sort of information that would be of assistance to the committee. Even in today's discussion, we will be talking about headline figures for 2002-03 and detail that relates to each division's budget for 2001-02, and I understand that that may not be easy for members to follow. However, I am happy to provide as much information as I can to explain things further.
The committee will be aware that end-year flexibility resources were announced by the Minister for Finance and Local Government in September. Clearly, that information is not included in these figures, either for this year or for any carry-over into next year. I would be happy to provide the committee with a letter—perhaps next week or the week after—outlining how the £100 million that has been allocated to the education department from that fund will be distributed across the financial years and in which divisions it will be spent.
That is a helpful suggestion, minister. The suggestion about the layout of the information is also helpful. Each year that this committee has examined the budget, it has been difficult to follow where the money comes in, goes out and gets to points X, Y or Z. It would be useful for us to have a discussion about how the budget can become more meaningful to ourselves, the public and the education establishment.
As the person who had the responsibility for making sense of last year's budget on behalf of the committee—I did not do particularly well—I welcome what has just been said and am interested in what will be done to ensure that the money for the Executive's policy targets, such as community schools and poverty, gets where it is supposed to go. It is easy to put figures on targets, but if the money is not being used in the way in which it is supposed to be used, we are left only with numbers on pieces of paper. What is being done to ensure that the money is going where it is supposed to go and doing what it is supposed to do?
We need to express the objective of the targets more clearly. At times, there has been a tendency to express a commitment to a policy priority in terms of the amount of money that is being spent, rather than what the money is being spent on. I have been keen to ensure that, as we allocate new money—such as the new money that was announced yesterday for looked-after children—we express where the money is going rather than concerning ourselves with the amount of money that is being made available. The committee will notice in the objectives that are being described for the department for the next financial year a more thematic direction, rather than a list of specific allocations. Trying to get an output base is important.
We need to get as accurate as possible a flow of information between the Executive and the local authorities. That involves obligations on both sides. The Executive will have to be clearer about what money is available and where it is going and avoid exaggerating the position or putting burdens on local authorities that are not properly resourced. In turn, local authorities will also have to be clear about where the money is going and will have to be consistent and accurate in reporting that back for parliamentary scrutiny and other monitoring purposes. A key role of our new information and analysis division, which is reflected in the changed structure to next year's budget, is to find ways of collecting information in a general sense about progress in our schools.
We must also monitor and review individual programmes. Some of the minor changes that have been made to the budget since April reflect the reprioritisation exercise that we undertook in the summer. It was designed to ensure that the targets that we had set were properly resourced. After Nicol Stephen and I had been in our positions for six months, we sat down with representatives of the education department, matched the budgets to the targets that we had set and ensured that, where a budget might fall short of achieving a target, money could be moved from areas where there was more money than was required.
Will you ensure that the indicators for those targets are realistic? Some of the issues that are being dealt with are complex and throwing money at them is perhaps not the only way of dealing with them. Will you consider the qualitative indicators that are used? What role will Her Majesty's Inspectorate of Education play in the monitoring and evaluation?
HMI performs a very useful function in two respects. First, it collects particular information about subjects of a priority interest at a particular moment in time. A number of the significant developments in Scottish education over the past two years have resulted from HMI reports, which pull information from across Scotland. Secondly, the inspectorate helps us monitor particular priority areas. When it carries out school or local authority inspections, it can, for example, check out drug education programmes, which are an Executive priority, or find out how the new community schools are operating. To summarise, it has an on-going monitoring function for individual instances, as well as an overall function of collecting data.
Members will notice that the budget provisionally allocated under the HMI heading back in April has been changed. One reason for that was that we were sorting out the exact division of responsibilities between the agency and the education department, and were ensuring that the agency had the right level of resources for the tasks that we were asking it to carry out. Although the department has taken on the policy development functions of the old inspectorate, HMI has retained a capacity to carry out statistical work and so on, which is important for the surveys. It was important for us to have got that right, and for the inspectorate effectively to perform that function, because it is the inspectors who are out and about in schools on our behalf.
I wish to raise one or two specific points and one general one. I will start with the specifics. Last year, minister, you allocated an additional £11 million under the SQA heading. Your allocation under "Qualifications Assessment and Curriculum" for the coming year shows £33.3 million, compared to an allocation of only £22.4 million last year. Do you anticipate continued increasing costs for the SQA? If not, where is that money going to?
On the new community schools pilots and the £12 million that is allocated to them under the excellence fund, is there an on-going commitment to build and develop the community schools, which have enjoyed a broad support from the committee? How does that tie in with other, wider excellence funding, with regard to alternatives to exclusion, equal opportunities, bullying and pupil welfare? There are general concerns that community schools, as well as other schools, must address.
On Gaelic funding in the education department, the Gaelic and education moneys for 2001-02, 2002-03 and 2003-04 appear to be static, at £2.8 million. If that is so, there must be a decreasing provision, because materials wear out and the costs of Gaelic-medium education will increase. It is regrettable that there is no commitment to expanding that, but why will there be an actual decrease in that budget over three years?
I will come to my general question now. Would you like it now, minister, or shall I hold on to it?
I noted down three specifics there, convener.
I will allow Mike Russell one further question—you will not get back in later, Mike.
If the minister answers my specific points, I will then ask my general question.
Carry on, minister.
On the provision for Gaelic-medium education, the budget has clearly increased substantially over the past three or four years. We believe that the existing provision is not just sufficient, but more than adequate to meet the demands that will be placed on us by the local authorities that are providing those education services. In the initial period, some of the investment that would be required to establish the Gaelic-medium schools and courses will not necessarily be repeated. We require the amount of money required to maintain and further improve and extend the services across Scotland to be included in the budget, and we believe that the amount of money shown will be more than sufficient to do that.
It is my interpretation that the problem in Gaelic-medium education is not the allocation of central resources from the budget and pressure on that; the current problem is the provision of teachers, which is an entirely different matter. We are addressing that in other ways. It is not addressed by the particular financial allocation in question. I do not have any concerns about that situation as far as the budget is concerned, although I have a general concern about the number of teachers who are coming forward and staying in the system. We are addressing that through initial teacher education improvements.
We are certainly committed to continue funding new community schools. We must clarify the extent to which that money would come through the excellence fund or through general funding provision, but the additional resources for that, which we are committed to providing, are important.
As part of the settlement of teachers' pay and contracts, we agreed to review the excellence fund with the Convention of Scottish Local Authorities. We are in discussion with COSLA and the Association of Directors of Education in Scotland about that review. My intention in that review is to focus on our key policy priorities, but perhaps to have fewer strands in the excellence funds to ensure that we focus on those priorities, but give the local authorities more flexibility in how they use the resources.
On the community schools, I asked how that initiative tied together with other initiatives such as the alternatives to exclusion ethos.
That was the point that I was making about the different strands. Clearly, the different elements to which you refer are pulled together locally, particularly in a community school. Part of the challenge that faces us in reviewing the excellence fund is to ensure that local authorities can pull those resources together without having to apply to specific pots that are held centrally. We will have to make a judgment at some stage to get the right balance on that and we are a bit away from finalising next year's provision.
The budget documents contain a mistake in the line for the qualifications, assessment and curriculum division—I think that I managed to get that name right. There is a specific grant figure for continuous professional development for teachers, which should be in the teachers and schools division's line rather than the QAC line. That accounts for the significant increase in the QAC division's budget. The figure is £14 million next year.
Is that for the SQA?
No. That £14 million should be in the line above—the teachers and schools division's line. That money is for continuous professional development for teachers. I regret that error. The QAC budget for next year is actually £25.2 million rather than £39.2 million.
We have not yet agreed with the SQA its budget for next year. Although we anticipate that a level of additional investment in the work of the SQA will continue for at least the next couple of years to ensure that it is able to deliver the new national qualifications certification and other duties, we are keen to ensure that the SQA has only what it requires and no unnecessary additional investment. We will be happy to report to Parliament whenever that figure is agreed, but we are still in discussions with the SQA about that.
What page or table are you referring to? We are getting a bit confused.
I am sorry. I am referring to page 52, table 3.3. I did not mention the table because I was answering Mr Russell's question.
That implies that the £11 million increase in the SQA budget last year will continue.
That is not necessarily the case. Some of that money was spent on new technology which does not need to be bought again.
That was not my question, just in case you thought that I was using up my one question. It was a statement on which you commented.
The general question that I will ask concerns end-year flexibility. Last year, you managed to underspend by approximately £85 million—
No, we did not.
Can I finish my question? You can comment on that point, as you already have done. I want to know the procedures that are in place in your department to monitor the week-by-week and month-by-month spending on all the matters that we are considering today. To consider budget lines is one thing, but when we get to the end of the year we do not get a clear statement of what has not been spent.
I would like to know how you monitor it and, when you come back next year, whether you will report to us in the same detail on the budget lines that have not been spent. In other words, if we say that you only spend £2.4 million of the £2.8 million budget for Gaelic in education, will you tell us that so that we can compare year-on-year not just what you say that you will do, but how you have spent the money?
I will be clear with the committee that there was not such a significant level of underspend in the department's budget last year.
As part of the three-year spending review that was conducted in 2000, for which I had responsibility as Minister for Finance at that time, significant resources were spread across the three years for the implementation of the outcome of the teachers' pay negotiations. It would have been improper for the Executive to declare its hand half-way through the past financial year when the negotiations were at an early stage. Quite prudently, we made an allocation to cover the outcome of those negotiations, but it was always anticipated that that money would be carried over into the next financial year.
A large part of last year's so-called underspend in the education budget—I think something like £67 million—was always earmarked to be used this year, next year and the year after for part of the outcome of the teachers' pay and contract negotiations. A planned carry over in a financial year's expenditure programme is not the same as an underspend. I apologise for interrupting the member so ungraciously during his question, but it is important that that is clear.
A small amount of money in the department was not spent in the allocation for the year 2000-01. That can happen for a number of reasons. A grant scheme may not have been applied for fully—not just not allocated fully. Expenditure on equipment might need to be drawn down over two years rather than just the year in which it was allocated. I do not have any problem with answering detailed questions on that at another time. I am always happy to explain matters in detail.
As a department, along with all the other Executive departments, we have a job to do on the budget. We must clarify which elements are planned over more than one financial year and when it would therefore be sensible for the money to be moved from one financial year to the next. We must clarify in which areas there is an underspend and how that money can best be used. I will always be happy to provide such explanations to the committee.
I will ask three straightforward questions. The first follows up on a point that Michael Russell raised. I seek clarification on the matter of new community schools. Is the budget that you have allocated there to fund additional schools—to roll out the programme throughout Scotland—is it there to sustain and support the existing schools or is it there to do a combination of both?
Secondly, the Scottish Executive education department's contribution to the changing children's services fund in the draft budget will be £50.5 million, starting next year. Will that still be provided, given that I do not see it mentioned in the notes that we have in front of us? Will the same amount of funding be contributed?
Thirdly, in the £1.3 million that is allocated for teacher education and recruitment, is there sufficient funding to ensure that mature students who are undertaking teacher training will, if necessary, receive remuneration that takes account of their age and experience when they started, as they were led to expect?
I suggest that we take questions from other members now, given the time that we have left.
I have a general question. When the Parliament changes or adds to the statutory responsibilities of a local authority, how does that show up in the budget? I am thinking of two particular matters. One is the recommendation of the report of the deferrals working group that youngsters who are aged four-and-a-half should be paid for when they need an extra year in nursery education. At what point is that taken into account and factored into the budget?
The other matter is that we have changed the basis on which local authorities are expected to deal with youngsters with special educational needs. However, there are still relics of the previous system and individual authorities deal with youngsters who have heavy residential fees to be paid. We need analysis of that. At the previous meeting at which we discussed the draft budget, I asked how the special educational needs budget is determined. Is it determined on the basis of allocating as much money as the department has, or does the department figure out how high costs are before putting that money into the pot?
Is there a difference between the term "specific grants" and what people at local authority level would sometimes claim is ring fencing? What is the distinction between those terms? What percentage of the education budget is comprised of specific grants? We will consider the Borders issue shortly. In the correspondence that we have received, some folk have asked whether the local authority has enough flexibility to address the shortfall arising from the nature of specific grants.
Secondly, do you have an overall figure for the capital required for school buildings and the diverse approaches needed to achieve some movement on that issue? The funding packages will have to combine local authority capital allocation and other partnership approaches.
Finally, on special educational needs, is there a financial allocation for grant-aided schools? I have been searching for it, but there is a large volume of paperwork. If there is such an allocation, for how many years will it be maintained before it is changed?
I will take the last question first, because it allows me to make another point. The allocation for grant-aided schools remains in the budget. If financial responsibility for those schools were transferred to local authorities, that money would be transferred to local authorities. Part of the problem is what the allocations would be and to which local authorities they would be made. That is partly why discussions on the issue have been prolonged.
I will use the specific example of grant-aided schools. Line 5 of table 3.7 in the draft budget document refers to the funding of grant-aided schools for this financial year. In the Scottish Parliament information centre document that the committee will have seen, the tables for each division in our chapter highlight examples of programme expenditure that we thought would be of most interest to the committee. The tables are not an attempt to explain every piece of programme expenditure.
The SPICe paper rightly points out that there is an amount of money in each division that is not explained in the table. If we had explained every piece of expenditure, the tables would have filled the whole document. We have tried to highlight the areas of most interest. If any areas that would have been of interest to the committee are missing, perhaps they will be identified in my discussions with the convener over the next few months, so that we can include them in future years.
On Irene McGugan's questions, there is money in the budget for an extension and a roll-out of the community schools approach. The amount of money has not been finalised, because the committee that is considering the new community schools is discussing how best to deliver the roll-out. We hope to come to some conclusions on that within the next three or four weeks.
On the changing children's services fund, I must explain to the committee that there is a typographical error on page 19. Sorry, that is now page 68—there is a typographical error in my notes as well as in the document. The figure should be £56.5 million from the education department budget, rather than £50.5 million. What the money will be spent on is the issue, rather than what the great totals sound like.
Next week, I hope to issue guidelines to local authorities, the voluntary sector and health boards that will outline how that money will be allocated— at least for the initial period—how those bodies can apply for the money and on what criteria judgments about the allocations will be made. We are much closer than we have been for some time on the changing children's services fund. I will certainly provide information on the guidelines to the committee—in fact, I believe that the convener has been invited to attend the event next Tuesday at which the guidelines will be published.
Since January, we have said consistently that the allocations from the agreement on the new contracts for teachers and the other arrangements that fall from that will be financed in full by the budgets that we have provided for the next three years. All the arrangements in the new contracts for teachers and other conditions are included.
I think Ian Jenkins's main point was how we ensure adequate budget provision for policy areas that develop. I know that the committee may find my next point frustrating—other committees have found it so—but one reason why the figures in the budget reports are a little vague is that, as policy develops, we often make an allocation to handle the expected outcome, but following discussions with the vested interests in particular policy topics, we do not always make public that allocation in advance. We take that approach because it is important to get the maximum value for the allocation and to make the right policy, rather than simply making the policy fit the money.
Additional budget provision was certainly allocated to meet the commitment from the deferrals working group and a calculation was made of the ability of local authorities to fulfil that commitment. The announcement made by Nicol Stephen at the time referred to that. The budget for special educational needs has increased substantially over the period. We all know that, although the budget at local level is not entirely demand-led, it is largely demand-led, which creates difficulties for local authorities and the Executive. We are constantly trying to assess whether that budget has been set at the right level. Matching resources to demand, especially at a local level, is part of the review of special educational needs provision, which is part and parcel of the current consultation and work of the advisory groups. We will have to keep that issue under review. We want to ensure that we always make the right provision and, by flagging up significant increases in provision in advance, one can sometimes create expenditure that might not be justified otherwise. Part of the challenge is getting the policy right and trying to match resources to the policy.
I now turn to Frank McAveety's questions. The excellence fund and education and children-specific grants provide a good example of the strength of the different views on ring-fencing local authority expenditure. For every letter that I receive demanding more flexibility for local authorities, I probably receive at least 10 that demand that we ring-fence, or specify in greater detail, our expenditure on local authorities. Both the Executive and the Parliament have a principled commitment to the maximum amount of flexibility for local authorities, so that they can determine their local circumstances and allocate resources to meet demand.
There are always specific areas. The excellence fund is a small part of overall expenditure on the Scottish education service—which includes all the money spent by local authorities. We have a responsibility to say from time to time that we want to kick-start certain priority areas through the allocation of specific grants. Although the excellence fund is one of the areas that is cited as a ring-fenced fund by local authority representatives when they raise the issue of ring fencing, it is also an area that other people in local authorities defend most strongly when they are thinking about the sort of money that is available for new educational developments. It is important that we strike the right balance and I hope that we will retain an excellence fund that is specifically reserved for the development of top-priority areas of educational provision. At the same time, there will be more flexibility within the excellence fund for authorities to use that money to best effect at local level, on the basis of a guarantee from them that they will provide the Executive with information on where the money goes.
On school buildings—this is a nice point on which to finish—the overall budget in the draft budget document includes a significant increase in resources for investment in the school estate at local level. By the end of the period, there will be a 40 per cent increase in local authority capital allocations, which should involve a significant priority for education. Local authorities should allocate appropriate resources to education and children's services within that capital programme.
The budget contains an addition for revenue support from the Executive for school repairs and school buildings improvement, some of which was announced over the summer, and covers our continuing commitment to the new deal for schools and other funding to support both renovation construction work on school buildings and public-private partnerships. Furthermore, it contains an amount of money to support new public-private partnerships following the current round of bidding. That specific amount has not yet been agreed, and during my discussion with local authority leaders next Wednesday, I will discuss the amount and how best to use it.