Finance Committee, 25 Apr 2000

Meeting date: Tuesday, April 25, 2000

Official Report 224KB pdf

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Correspondence

The next item on the agenda is on the written agreements with the Scottish Executive. Members will have received a copy of the Minister for Finance's letter to me, to which Richard Simpson referred earlier. As I indicated then, I find the wording of the third and fourth paragraphs ambiguous. It is not clear from what the minister says whether the real-terms annexe will be made available now or in mid-March 2001, once the budget bill has received royal assent. I am inclined to believe that the wording means the latter, but it is not absolutely clear. That was the clerk's understanding as well, but we need clarification.

We referred two points back to the minister. We have got what we were looking for on public-private partnership and private finance initiative expenditure. However, I suspect that the committee will feel that it has not got precisely what it was looking for on cash tables, real-terms numbers and so on.

That is right. We need to make it clear that we expect cash and real-terms figures to be made available to us at an early stage. The minister is right that we must approve the budget bill in cash terms. That is understood. It cannot be done in real terms. However, if we are to engage the public, we need to understand what the minister regards as real terms. What is his predicted deflator for the various bits of the budget for the next year? That information must be made available to us at an early stage, otherwise the process becomes, if not quite meaningless, less meaningful and it is less easy for the subject committees and the public to engage in the discussion.

My other point may not be permissible, because I might be going over old ground. Income does not appear anywhere in the document, although some income elements are the responsibility of the Scottish Executive. In section 2 of the accompanying document, under the heading "Background", we are told that the financial issues advisory group recommended that budget bills cover all expenditure and all income that is determined by the Executive. I know that we are not talking about a huge amount, but we are responsible for areas of income and I could not find reference to that anywhere in the document.

What did you have in mind—the sale of land or buildings?

The sale of land and whether agreement for that goes back to the Treasury.

That is covered in paragraph 5 of the document.

It is covered by bullet point 3 in paragraph 5.

The bullet point refers to

"statements setting out the amount of expected income and its proposed treatment".

Yes. I missed that. Sorry—that is fine.

That issue is not mentioned in the letter, which is perhaps what you were taking as your reference point.

I withdraw my remark.

Andrew?

I am happy.

That is one for the record.

Nevertheless, I endorse Richard Simpson's point. The inclusion of PPP plans is a step forward and should be recorded as such. However, I cannot understand why we would want to receive the plans after the bill had gone to the palace for royal assent. It would be fine for them to appear in an annexe, but they should be made available at the start of the process rather than at the end of it. We need to change the fourth paragraph of the document, to clarify its meaning.

We need to clarify its meaning. Although we cannot discuss the budget, the developmental report or the figures that are contained in it with the Minister for Finance today, we can deal with the point that you raise. We can ask for clarification, to find out exactly what he means.

Has the document been agreed to? It contains three points of contention, which are printed in bold italics. The third of those points, on the inclusion of PPP and PFI plans, is obviously accepted. The other two seem to be accepted, although the minister makes no mention of the percentage changes table. He uses the phrase "real terms", although there is a lack of clarity concerning the date of publication. Is the document that we are going to agree to complete?

Yes. It is here for our agreement. If we can receive clarification from the minister on the third and fourth paragraphs of his letter, we will be able to agree to the document.

In paragraph 6, a word is missing from bullet point 2. The bullet point refers to

"projected Balance Sheets of those assets and liabilities directly related to and controlled by for whom funding is being sought".

I assume that a word is missing after "by".

The words "the Executive" must be missing.

Does the Executive agree with the document? That is really what I am asking.

Yes. Its agreement is signified by the letter from the Minister for Finance. However, we need further clarification and will pursue the matter with the minister. The committee's view is that it is not acceptable to receive the annexe with the real-terms figures in mid-March 2001, and in mid-Marches thereafter. We want to be presented with those figures at the start of the process. We can ask the minister to clarify his statement in the letter about

"real terms numbers over which there is no Parliamentary control."

To ensure that there is no scope for difficulties, I suggest that the phrase

"in both cash terms and real terms",

from the first italicised bullet point in paragraph 5 of the document, be added to the second italicised bullet point in that paragraph. That second italicised bullet point refers to

"the percentage changes in individual figures from the previous year".

The same qualification should apply to both sets of figures.

You are suggesting that the second italicised bullet point should refer to percentage changes in both cash terms and real terms.

Exactly.

Okay.

That concludes discussion on items 1 to 5 on the agenda. At the start of the meeting, I should have asked the committee whether it agreed to take item 6—preparation for our evidence session—in private. Are we agreed to do so?

Members indicated agreement.

Thank you. We now move into private session.

Meeting continued in private.

Meeting resumed in public.