I hope that members have with them their copies of the complete and the abbreviated versions of the annual expenditure report. Murray McVicar, from the Scottish Parliament information centre, has provided a copy of his paper on the AER, which it would be helpful if he would talk us through.
In the absence of poor Brian Ashcroft, who has been stricken, I have done some fairly basic analysis on the AER, which was published in March.
Thank you. It is helpful to have the comparison with "Making a Difference for Scotland", although if the Executive had known that you were going to make the name of the document into an acronym—"MaD"—it might have chosen a different title. Nonetheless, your paper is helpful and will make such comparisons easier in future. Do members have specific points about what Murray McVicar has said? Do we think that further comparisons are necessary?
In the early days of the Parliament, SPICe kindly assisted me by producing a spreadsheet of the Scottish budget. Is SPICe upgrading that as announcements are made?
No. That was done by my predecessor, who dealt with finance in the early days of the Parliament. I cannot remember what was involved in the project, but it is not on-going. We could perhaps do something similar, but I would have to investigate what that would involve.
The working spreadsheet of the whole of the Scottish budget was created because all the departments were doing their own thing in their own way. We will presumably get uniformity with the move to RAB, but it would be helpful if such a device existed. I found it especially difficult, not having enough research capacity of my own, to find out the figures in that way. I wondered whether SPICe would care to consider—obviously you have to consider what would be involved in costs and in time—making a running estimation. Such a statistical comparison would be helpful, especially when additional moneys are granted in part-year announcements from Westminster and within the Executive.
I would plan to do something on end-year flexibilities and additional money announcements. I will discuss the spreadsheet with Simon Wakefield, who created the original one, and see whether we can produce an update.
The points that the committee raised about end-year flexibility and capital charging have been taken on board. I think that it was Elaine Thomson who mentioned graphics. The secondary report, as it were, meets many of the points that we made.
May I ask your advice on what form you want this discussion to take? Are we just making general comments at this point?
Yes. We must decide how we develop our scrutiny. We might want to consider preparing for our roles as reporters to the various committees. At the moment, we are making general comments rather than specific points. The figures do not add up in one or two cases, but I expect individual subject committees to address those points in their reports; if they do not, we could sweep them up into ours. The anomalies might be typographical errors; there does not seem to be anything major.
There are a number of points that we might want to put into our report into the overall budget process. The way the budget document is set out this year is a step forward. That has to be recognised. There is more information in it, which is good, and the summary tables at the front are much better, although I still find it difficult to piece them all together. We can return to that point, even if not in this context.
Yes, we will do so on 8 June.
I have two questions that will reveal the angle of my learning curve. What exactly are the associated departments? They seem to be getting less money. Should I be worried or are they wicked quangos that should not have any money anyway?
The associated departments are Registers of Scotland, which is an executive agency, and the general register office for Scotland and the national archives of Scotland, which are departments of the Scottish Administration.
As a sort of would-be historian, I would have thought that cutting the funding for such bodies was rather bad.
The problem with local government expenditure is that local authorities are free to spend as they want. Although aggregate external finance is allocated on the basis of grant-aided expenditure, that is done as a guideline and not as a fixed requirement of central Government as to what local authorities should be spending on different services. It would be possible to identify GAE for the services that local authorities provide.
That would be helpful, but the Executive or the Parliament should make a particular effort to discover from councils how the money is being spent.
That is done, but there is a considerable backlog. It takes quite a while for it to be audited and finalised. I think that there is a two-year backlog, as the most up-to-date figures that are available are for 1999-2000.
That may be something we should ask the reporter with the Local Government Committee to take an interest in. I agree with Mr Gorrie's point and I understand that that committee will conduct a review of local government finance.
The Convention of Scottish Local Authorities has already done a lot of work on the matter.
We should ask the reporter to consider the matter when reporting back to us so that it appears in the budget debates. It is a point of substantial import.
The Executive has promised money to help the rural community, which has been affected by the present disasters, and will, no doubt, produce more money. Would such money come from the rural development department budget or from a general reserve of the sort that Andrew Wilson referred to? How are such shipwrecks dealt with financially?
The press had estimates of £100 million a few days ago. Some of that money will presumably come from the UK reserve, but that is only a guess as I do not know.
Other members have covered many of the points that I wanted to make.
No. Some of the discrepancies are small and are probably as much to do with rounding off as anything else. Also, there can be a confusion between plans and outturns. Most of the figures are plans, but there might be some outturns in there as well. In that way, finalised figures would creep into the numbers. It is sometimes difficult to track with confidence whether you are comparing like with like, but in a document such as this, which was produced quickly and which gathers information from many departments, some discrepancies might be expected. When you are dealing with many departments, it is difficult to get them to present their figures in the same way.
In the interests of transparency, it is important that such problems be sorted out. If there is a problem within the departments, they should be asked to examine it.
In those terms, this document is an improvement on "Investing in You".
It is not clear which numbers are the real-terms numbers. The real-terms table does not work with the cash tables. Also, it is not clear how tables 1 to 6 add up to arrive at their totals. Those might be minor, pedantic points, but it would be nice to have some guidance on them.
When we sit down to study the document, such points throw us off track.
That is a general point that we should put in our review of the process. However, if there are specific points, they would be included in our stage 1 report.
It would be useful if an e-mail could be sent to the committee explaining how the first six tables hang together and what figures add up to make the total.
Convener, you mentioned the work that must be done with the various committees to which we have been allocated as reporters. I have to start this afternoon with the Enterprise and Lifelong Learning Committee. I have just got off a train—I apologise for being a little late—to find that I have a message from Alex Neil, the convener of the Enterprise and Lifelong Learning Committee, asking for a chat in advance of the meeting about what he should be doing in relation to our role and seeking clarification of what our role is. I am not sure what that committee has been told about what we are doing. I thought that we intended to listen to how committees go about their consideration and to give advice if they head off into cul de sacs.
Written advice is sent to all the committees. That happened last year and I assume that such advice has been sent out this year. I do not know why the convener of the Enterprise and Lifelong Learning Committee has not seen that advice. The clerk to the committee will have seen it.
I am not saying that he has not seen it. I do not know what he has seen.
Was he clarifying your role as a reporter?
His message asked me to meet him before that committee's meeting started this afternoon, to go through my role and what I am able to do for the committee.
So it did not concern specifically what the committee should be doing.
No, not the general documents that were circulated. I do not know what guidance has been given.
I am not sure whether any guidance has been given.
Bearing in mind the tight time scale to which they are working, the intention is that reporters work primarily for the Finance Committee, not for the subject committees. Clerks have been advised of that. Reporters' reports are due by 31 May and the committee will consider them on 4 June. It would help if members were up to speed on the various issues that have emerged during the subject committees' consideration of the budget process so that discussion of those issues may be rehearsed in the Finance Committee before it receives those reports. I told clerks that members of the Finance Committee would be able to advise their colleagues on the subject committees on matters of procedure and terminology as a result of their greater expertise in those areas.
That information should be available, but it would be helpful to clarify things. Have any other members had similar discussions with the conveners of subject committees?
What else do we need to do?
I presume that the areas that are solely the concern of this committee are Executive administration, Scottish Executive associated departments and the Scottish Public Pensions Agency, and the Scottish Parliament and Audit Scotland, which we have already talked about.
From what Jack McConnell told us last year, I understood that that was policy and not just the position for one year. Unless we hear otherwise, that will continue. However, we can add your broader point about end-year flexibility when we write to the Minister for Finance and Local Government to ask whether he considers payments in respect of foot-and-mouth disease as coming from our reserve or the UK reserve. We need that to be clarified.
We are talking about not just foot-and-mouth. That just helps to illustrate the point.
That is the sort of emergency for which we have a reserve.
People will say intuitively that money should be put aside for emergencies, but we are dealing with a special situation of a fixed budget with comparators to spend. Funds are being taken from spending departments, which need not be done in this context. If we had fuller powers, I would be in favour of the reserve.
I am not convinced that we should ask about PFI. We can deal with that when the minister gives evidence. However, the reserve relates to the current situation and end-year flexibility. We will refer to Jack McConnell's comments to us and ask whether the intention is for the situation to continue. We need clarification on that point urgently.
I would like to amplify the point about end-year flexibility. It would have been helpful to know what each department's end-year savings or underspends were, as against the end-year flexibility outgoings. That cannot be done in advance, because we do not know what the amounts are. Table 0.5 gives figures, but does not say whether, for example, Audit Scotland underspent by £3 million in 1999, but spent that last year. If only £1 million of that £3 million was returned, it would be interesting to know how the 25 per cent retention is being used. Do you follow me?
No.
According to the agreement of which we were advised, if a department saves £100 or underspends by £100, at the end of the year it will retain £75. That is fine and we know that the department will use it, but the other £25 is retained by the finance department, presumably to give it—the central element—some redistribution ability. I would like to know how the retained money will be redistributed. Otherwise, why bother?
As opposed to something disappearing into a black hole.
We have only one set of figures; table 0.5 should have two sets of figures. One set would be the end-of-year underspend by departments in 1999 that was carried forward into 2000, giving the change.
While we are clarifying points on reserves, I ask that when we write to the minister, we request clarification of the AME aspect.
The AME reserve?
Yes. The other outstanding question is whether the reserve will be £124 million by 2003-04. That looks like an expenditure point. If that is the amount, where are the funds and what are they doing? Are they earning money?
In fairness, we have raised that point twice with ministers, who have said that that is not a roll-over figure.
To be fair, we received three different answers to the same question.
The figure is not a roll-over, but it is included in the totals.
Exactly. Where are the funds sitting? Are they earning money? That is a lot of cash to be sitting doing nothing.
We are asking a specific question on reserves, so it is appropriate to go into such detail, not least because we raised that issue before. However, we should not cut across the process whereby we obtain information through questioning the minister.
My guess is that the AME reserve will go into the end-year flexibility if it is not used. Otherwise, the answer that we received—that the money would not be rolled over or accumulated—would be invalid.
That guess cannot be right because the end-year flexibility is on DEL and the AME is different from that. That is why we need clarification. I have no idea what the figure comprises precisely.
We will obtain clarification. The reserve has troubled us since it first appeared. We need to get the matter clear in our minds.
When you write to the minister—
It will be a long letter.
It will, but it will all be on the same subject. There have been rumours, shall I say, that some of the programmes that are only being worked out will be funded out of the reserve because they have not been budgeted for yet, but it is intended that they be delivered. Off the top of my head, I can think of, for example, the Sutherland settlement and the decommissioning scheme for fishermen. Some money may come from Europe and some may come through Westminster, but it would be helpful to the committee if the minister could be asked specifically if, in the thinking behind the reserve, the Executive sought to produce a fund to which it could apply to fund policies that are currently being worked up and that have not yet been put in a budget.
I understand what you are driving at. That is, with respect, the sort of point we should ask the Minister for Finance and Local Government when he comes to the committee. In the letter, we can ask him about the specific points that we have dealt with, but that is a general policy point. I do not doubt that it should and will be covered when the minister is in front of the committee, but putting it in the letter would be less appropriate in the context in which we are writing to him. We are writing to him about the function of the reserve.
I suggested that we put that point in a letter so that we can get a specific response for which the minister can be held to account. I do not blame ministers for this, but when they come to committees they often do not know everything. They cannot have everything at their fingertips. Often, their officials have to go away and think about matters. We eventually get a partial answer that sometimes requires clarification. Why not ask a written question at the beginning?
David Davidson's point might be answered by the point in the letter about the rules that govern access to the reserve. If the reserve exists, we will ask the Executive what rules govern it. Mr MacKay mentioned one or two points in his budget speech.
We will ask the minister to cover the rules that govern the reserve. If we need to ask further questions on that, we will do so on 8 June.
Okay.
It will be helpful to have some points clarified now, before we begin to question the minister. If we simply ask the minister, I suspect that, because of the detail, the minister will reply that he will write to us. We can cut the process short.
I want to line up with Richard Simpson in his interest in pensions. He is concerned about funded pensions and whether they make sense. The police and fire unfunded pensions are a ticking timebomb that we should consider. Would the clerk make a note that consideration of pensions might be a possible issue next time the committee is thinking about its work programme?
Does any member have anything else to say on the report or on our role as reporters? It seems not.
Meeting continued in private until 11:57.