External Research Budget
Item 3 on the agenda relates to the external research budget, which we discussed at our final meeting before the recess. It was decided that members would be invited to indicate areas in which it might be appropriate for us to commission external research within the parameters of the document that was agreed by the conveners liaison group, which was circulated to everyone with the papers for this meeting.
Members are aware of the time scale. Any suggestions must be in by the end of May to be considered in this tranche. Nobody has indicated subject areas to the clerk. Does anybody want to make a suggestion now?
I am sorry that I have not spoken to the clerk about this before today. However, having discussed the matter with her before and at the previous meeting, I suggest that we do research on the budget process, given that that exercise will account for much of our time in the coming period. That would be more useful than examining any one pet issue that any of us has.
We should pick up on the concerns raised by Richard Simpson at the start about costs in public service. Research that examined not the money going in, but what that money buys—including inflation, labour costs, procurement, drugs and other areas—would be helpful. Subject committees would then be able to say that a 5 per cent increase in such a budget chases, for example, costs that have risen by 3 per cent, which would give us a better handle on the real improvement in resources.
Such research would not be difficult, although it would be reasonably substantial and very helpful. As far as I know, such research has not yet been done, so it would be new and there would be interest in applying for the contract.
My second suggestion, which is similar, is to get an idea of the room for manoeuvre within the budget in any one year. Again, that would give the subject committees an idea of the scope for spending movement. Professor Bell made that point when the Executive's report was published. We need to know more; we cannot just speculate on the room for manoeuvre within the Scottish budget. The same applies to end-year flexibility—we could get a quantified idea of the scope for such flexibility.
I certainly support Andrew Wilson's first suggestion. I am sure that we all find when we go into different sectors of public activity that, apart from rage and concern, there is general disdain at the Parliament talking all the time from the centre with a standard deflator for everything. That is not sensible and people are loth to engage seriously in the different aspects of the Parliament unless we take seriously the problems that different sectors face. In some sectors there are no real problems, but in others there definitely are.
I support Andrew Wilson's suggestion. I do not think that such research could be done within the current parliamentary staff system.
Do you mean by the Scottish Parliament information centre?
Yes. I do not think that SPICe could cope.
I just wanted to clarify what you meant.
I agree with Andrew Wilson. My only concern with his first suggestion is that, if we examine value for money, we should not duplicate the work of the Accounts Commission, whose role it is to examine different areas such as drugs and so on. There is a possibility of overlap, which would not be sensible. I am more interested, therefore, in the second suggestion about examining the room for manoeuvre.
A third suggestion, which I am surprised that Andrew Wilson did not mention, is that something on which we would like to conduct research might arise out of the briefings that we are about to start on the Barnett formula. That might be before the end of May.
I would like to see more on paper about Andrew Wilson's suggestions, perhaps before the next meeting, because I am not sure what he means. Is he saying that he wants there to be deflators across every section of the budget? He can answer me in a second. I have no problem with his suggestion—the information would be useful—but it needs to be written down and thought out a bit more. Do we want deflators across every section of the budget? Would this be a static piece of research? The whole point of deflators is that they change constantly. If we do the research now, it would be applicable to data to date and deflators could be forecast up to a point. The situation with end-year flexibility is the same; we are not measuring a static situation.
Andrew Wilson's suggestion would be valuable as a one-off piece of research, but I am trying to work out how it would work. It is all a question of information. Perhaps if we had more to discuss, we could analyse the suggestion in greater detail. I see problems with it.
Ken Macintosh raises a helpful point. The brief for the research would have to include a requirement to give a nod as to how we could take that point on board. Perhaps we would have to ask for information from the Executive annually, if that were feasible.
I did not anticipate producing deflators; I just want to get an indication of how costs rise over the period in question across a range of specific cost measurements. Whoever produces the research will have to see what is feasible.
Ken Macintosh's second point about whether the research would be static is important. I am sure that the people who allocate budgets would like the research to have on-going and meaningful input into our processes. We would therefore have to find a way of taking that on board. I am sure that once the structure for measurement was set up, it would not be difficult to repeat it.
To some extent, Andrew Wilson has made the point that I wanted to make. We need to understand the structure of each of the level 2 budgets, so that we understand the elements that make them up. When we talk about health, which is the budget that I know most about, we need to understand what percentage goes on, for example, wages or pharmaceuticals. On top of that, we need to build in trends, so that we can see what has happened over a period of time.
If the research constructed a model—which would not be fixed, but could be applied annually—it would allow us to say what the elements of a 3 per cent increase in the health budget were and how much weight they had, taking into account the structure of the health budget as well as aging and other demographic features. We could then say that to produce more money, annual inflation needed to be X, disregarding national inflation.
That would give us more of a feeling for the situation than we have at the moment. I genuinely feel that, without that, the public will not engage with us and will not regard increases as new or see development. The figures are meaningless. They are just more of the mass of the figures that come out and which nobody understands.
I support Andrew Wilson's other suggestion on re-engineering. I would like us to examine what we mean by efficiency savings and how they are applied. The higher education sector, for example, is supposed to make 1 per cent efficiency savings. What does that mean? For most people, it means re-engineering—cutting some things and increasing others.
It would be good to examine that in greater detail, if that has not been done already, to see how much flexibility we are demanding of those who operate budgets. At the moment, we have an incredibly blunt instrument, which produces an enormous amount of resentment among those who have to operate budgets in local government or in health. The people out there are required to produce 3 per cent efficiency savings. Some sectors say that that means real cuts, although the budget has increased. It is not about cuts, but about changing things around. Research into that would be helpful.
There seems to be general agreement on those two points. Any proposal from the committee has to be related directly to our work programme and, clearly, both those suggestions fall within that category. The construction of a model, which Richard Simpson touched on, would be particularly helpful—and all academics love to construct models anyway. If it were helpful in making the information that is in the public domain more understandable, it would be a real service, particularly in view of the remarks made earlier about the departmental report.
The clerks will take that away and will perhaps have a word with Murray McVicar in SPICe to get his advice on how we should frame such an application. We will then be able to apply well within the time frame.