We have a full and important agenda, which has been circulated. All members have received copies of the written agreements that the Scottish Executive submitted as a result of our discussions with the Minister for Finance earlier this year. As we want to consider those documents, I hope that everyone has had an opportunity to go through them.
Hear, hear.
Although Sarah Davidson and her colleagues did their best and sent out the papers as soon as they received them, I understand that they were not received by the clerks until midday on Friday. However, they were circulated as soon as possible. Perhaps we should simply note the point instead of labouring it, as most members will have had an opportunity to go through the documents in some detail. As we are probably talking about only a day or a day and a half, it would not have made a huge difference. Nevertheless, the Official Report will show that we would rather have had the papers a little earlier.
I am sorry, but this is important. It is becoming a habit. Last week, I was at the European Committee, at which the Minister for Finance gave evidence, and the papers were late then as well. That simply does not allow us to do our job effectively. We must receive the papers in time. I have not had the opportunity to have more than a glance at the documents, because they were not here by the time I left for my constituency on Thursday. We have to sort this out, as it is becoming a habit not just with the Minister for Finance, but with other ministers.
Sarah Davidson certainly made that point clear to Mr McLeod, who sent the papers; it is now on the record.
I want to make the same point, but more positively. Someone kindly tried to e-mail the documents to me. Unfortunately, the documents were not in the right format and the file was too large. Luckily, a colleague saw the e-mail and translated the file into a series of attachments that I received yesterday. If we are to be e-mailed such documents, may we receive them in a form that can be transferred?
That point has been noted.
The issue has implications for the deadline for amendments to the Public Finance and Accountability (Scotland) Bill. When is that deadline?
Friday.
That is not on. The process of putting an amendment together is tortuous enough for Sarah and the clerks.
We are not discussing amendments to the bill as such today.
I know, but the point is that this could have implications for potential amendments to the bill.
I accept that.
Do we have any flexibility with Friday's deadline? We should not just sit back and allow this to affect our work. If I had had a chance to go through the documents in greater detail before the deadline, I might have been able to produce more detailed amendments to save the clerks time. We might now have to put undue pressure on the committee clerks to produce amendments, which is neither fair nor logistically possible.
I want to check the details. The papers were sent out on Friday. Did most members receive them on Saturday morning? I understand that such documents are sent to home or weekend addresses.
I have had the papers since the beginning of the weekend, so I must have received them on Saturday morning.
I got them on Saturday.
So did I.
I want to raise an issue that follows on from the points made by Andrew Wilson, Keith Raffan and David Davidson, about the agenda. What is the status of the documents? Through no fault of our clerks, we are being asked to consider within a short time scale documents that are effectively an alternative to sections in the bill. We are being asked to say, "Let's not have a detailed section in the bill about the budgeting process; let's have written understandings between the committee and the Executive instead." The first paragraph of the document entitled "The Budgeting Process—Agreement of Principles and Procedures" reads:
I will take that as a general statement. We still need to go through the documents. The committee will propose any amendments that need to be made to them. If the committee decides not to proceed with any amendments to the agreements, individual members have the right to propose those amendments for the bill.
My point is that we have to decide today whether the documents are absolutely satisfactory in protecting the rights of the Parliament, which is the committee's primary duty, or whether to lodge amendments to the bill to structure the budgeting process. I am concerned that we have only this morning's meeting in which to do that. If we do not have comfort at the end of the meeting, we have no alternative but to take the second option.
May we move on and examine the documents one by one? If there are issues that cannot be adequately dealt with by amending the documents, we can consider whether it is necessary to lodge amendments to the bill.
Mike—
Just a second, Andrew. I take John's point about the opening paragraph of the first document. I think that all the documents contain that, or a similar text. I assume that that will be the same for the documents that will go to the Audit Committee.
If we are dealing generally with the status of the documents, I accept that the issue of legal rights and status might be a technical point. However, we should insert a provision in the documents saying that no amendment can be made to the documents without the agreement of the Finance Committee of the Scottish Parliament.
Absolutely. I take that as read.
I have not seen such a provision mentioned in the documents.
Such a provision should be inserted.
A written understanding requires agreement on both sides. If we propose amendments to the documents today, we might not—given the Executive's record so far—receive a response from it until after Friday, by which time the deadline for lodging amendments to the bill will have passed. How can the committee function in such a way? The timing is inadequate.
The timing is not ideal.
It is more than not ideal—it is inadequate.
We are caught in a position where the time scale is shorter than we would like. However, we are stuck with that.
Are we? Is there nothing that we can do to extend it?
I believe that we are stuck with what we have, because of the time scale for consideration of stage 2 of the bill. Is that correct?
It is correct that the Parliament agreed to the business motion proposed by the Parliamentary Bureau, that stage 2 should be completed by 17 November.
Can that date be changed?
It can be changed by another motion from the bureau.
If the committee wanted to amend certain points in the agreements, there might have to be a belt-and-braces job so that any amendments to the bill could be withdrawn if changes to agreements were subsequently agreed. Amendments to the bill could be lodged on that basis.
I do not want to detract from our discussion of the time constraints for the committee. However, paragraph 15 in the first document contains detailed provision for change:
I want to move on to consideration of the agreements, beginning with "The Budgeting Process—Agreement of Principles and Procedures". I propose to move through the document paragraph by paragraph. Any member who has changes to propose will no doubt say so. I will give members time to read through paragraph 1.
Do you mean the sentence about legal rights and obligations?
Yes. My understanding of the earlier discussion is that we would want to insert a sentence that said that, although we accepted that the agreements were not legally binding, they detailed how things would operate.
There should be a statement about the obligation to enforce the agreements. What we have mentions neither the status nor the enforceability of the documents.
I am sorry—I keep coming back to this point. Perhaps we are splitting hairs. If the Minister for Finance starts to act outside the agreements, he can be called in front of the committee, and if we do not like what he is doing, we can call him in front of the Parliament.
You are absolutely right. However, it might be helpful to amend the first paragraph to say that the agreements represent the way in which things will operate and that that is the understanding on both sides. It is not intended to create any legal rights.
We should find a form of words.
We should find a form of words to convey that view.
I agree with Richard about flexibility. The fact that the agreement does not tie procedures down too tightly is probably a good thing, at least initially. There should be a review of how the procedures have worked after the first full year.
That is an important point, to which we will return when we discuss the budgeting process.
There was a case in which a document went out for public consultation before it came to this committee. There is a reference in lines 3 and 4 of paragraph 3.1 to
The difference is that this refers to stage 1 of the budget process rather than to stage 1 of a bill. Because of the date of the elections here, we have not yet gone through a proper stage 1 of a budget process with the minister. What happened earlier was a different situation. The financial issues advisory group always envisaged that stage 1 of the budget process would be a matter for the Finance Committee alone, and this is intended to give effect to that.
It is a reinforcement of what will happen in future.
Are there any comments on paragraph 3.2? Paragraph 3.3? Paragraph 4? Paragraph 5?
I know that we will return to this when we discuss format, but on the last point in paragraph 5, it would be desirable to specify the detail that we would require in a provisional spending plan—whether it is level 1 information such as we received recently or something more detailed. What advice can we get on that?
We can talk about the level that the committee wants and insert appropriate wording.
Does not that link to the first part of paragraph 6, which refers to aggregate figures? Presumably that means level 1. As I understand it, the level of detail is defined in the next paragraph, but I was going to ask whether we should say "as specified in paragraph 6" in paragraph 5, or whether we should specify level 1, or whatever.
My reading was that paragraph 6 was the explanation and that information would be received at level 1 unless, as it says later in the paragraph, further information was requested.
Does that cover your point, Andrew?
It would be desirable to make it explicit. At that early stage I am not fussed about information being at level 1.
The level should be specified.
We should also specify that all detailed information should be provided timeously, as that is not happening.
Paragraph 6 refers to "all reasonable requests".
Can we remove "reasonable", as that is a value judgment? Who defines what is a reasonable request?
I am not sure that all requests will be accepted.
From the Parliament? Why not? If the Parliament makes a request, it deserves an answer. Using the word "reasonable" inserts an unnecessary value judgment—I am not being pedantic.
Should we leave out "all reasonable"?
Yes.
Paragraph 6 refers to "general expenditure". Will receipts—I know that there are not many—be included at that point?
We do not have the answer to that, but we can ask.
Paragraph 6 talks about requests for information. We need to set up a protocol such as there is elsewhere. Is there a standing order that defines the time by which information must be received by a committee? If we do not sort that out quickly, it will be a major issue of contention.
I am not sure that that is covered by the standing orders. Sarah goes to bed every night with the standing orders, so she will tell us.
Standing orders do not cover that. This is meant to be the agreement that puts dates in place.
If there is a standing order, we should mirror it in the document, or we should produce a time scale.
I think that Sarah is saying that there is no parliamentary rule that requires answers to be given within a particular time after a request. This is a separate understanding between this committee and other subject committees, and the Executive. We are back where we started: how can we consider the next stage of the process without having exhausted the collection of information that is required to enable us to go on? The time scale must be specified in the document, as it is not specified anywhere else.
Sarah has just told me that only the budget bill is covered by the standing orders.
In that case, I firm up what I said: we ought to suggest something, which will have to be agreed by the other side.
We will make a proposal. I was going to ask what we think is a reasonable time scale, but Andrew would say that that is a value judgment.
As, presumably, aggregate figures would be available at that stage, it should be possible to go down to the level that we wanted within two weeks—it is not as if we would start from scratch.
Does 14 days seem reasonable? Is that what you suggest?
Yes.
That seems reasonable to me.
I am slightly confused by the statement at the bottom of page 2, that
Over the past 10 years, there has not been a predictable pattern of spending reviews in the UK. We have moved between spending announcements in November, combined budgets in March, and a comprehensive spending review as a one-off—although that will become the norm next year. Paragraph 7 reflects that unpredictability.
Is there scope to get the ministers to report on their consultations at UK level? It would be worth sticking something in to say that notice would be given. There is considerable notice for any spending review—for example, we would know now when the announcements for next year would be, so I do not think that this will be a major problem.
The paragraph says that ministers will consult the committee.
I see no connection there between ministers and the UK level. I assume that that happens.
I, too, assume that it happens, but it is our relationship with the Scottish ministers that is important. As it stands, the paragraph covers that.
If spending reviews are announced in November, our budget might be affected, although we already have it. Our detailed budget would be affected by anything that the Chancellor of the Exchequer announced in late October or November. There is a problem of timing, but I do not know what we could do about it.
That relates to your point that Westminster is in recess.
Exactly.
We are talking about stage 2 of the process. We will have moved ahead of that by October or November. There would have to be a recall of the Westminster Parliament during the recess for that to impact on us, so the chances are slim that it would impact on us.
The point is that if spending reviews are in late November, by which time we will have virtually agreed a budget, they might have an impact.
In that case, the process will not be at stage 2.
If that happens, it happens.
It might happen, but it is not what is being referred to.
It raises a wider structural case for more fiscal autonomy.
A wider case for federal co-ordination.
Keith can call it what he likes.
We will move on to paragraph 8.
Presumably, if we are to produce a report in consultation with other committees of the Parliament, the agreement with the ministers is merely that we will do that. The pace at which such reports are produced will be decided at the conveners committee.
The paragraph deals only with the relationship between the committee and the ministers.
Implications arise from the last sentence, which seems intuitively sensible. All Governments make spending announcements on the basis of suggested "efficiency savings" or recycled expenditure and so on. Given that we do not have the financial detail that the Executive has, how much does that tie the Parliament in a way in which the Executive is not tied?
Perhaps there are some other issues of competence. If the Government proposed a budget that was based on 1 per cent efficiency savings in the health service, for example, and the committee said that we were quite sure that the Executive could get that to 2 per cent and that the extra money could go to Keith's drug agency projects or whatever, there would be issues of competence as to how far our proposals could go. The last line of the paragraph might be a bit restrictive. All that we are competently allowed to do is to say that, for example, instead of spending £550 million on X, £500 million should be spent, and £50 million should be spent on Y.
Surely, if we have to stick within the zero sum game, we will have to dig to the level of detail at which we can demonstrate how the efficiency savings that we recommend are to be achieved.
The comprehensive spending review said that the health service should make 2.5 per cent year-on-year efficiency savings without saying how that should be achieved. John makes the point that there is no reason to include this sentence. An amendment that did not contain a well thought out costing would fall because of its lack of merit.
The previous sentence states:
That covers it.
We all accept that if there is £15.7 billion to be spent, there is £15.7 billion to be spent.
In other words, the last sentence of that paragraph is tautologous.
The final sentence of paragraph 10 reads:
If there is £15.7 billion to be spent, there can be no debate about that. However, I am concerned that that line might be used as a restriction on the competence of proposals about efficiency savings, for example.
I read that sentence as a reminder, particularly to other committees, and that is something that we will come to at a later stage.
That sentence is tautological and gratuitous, so let us just take it out.
Do members think that we should take it out?
I agree with Ken. It makes it clear.
We have a member of the Audit Committee with us this morning who wants to voice his opinion on the matter.
I wonder whether paragraphs 8, 9 and 10, taken together, would restrict the ability of the Finance Committee to recommend the use of the tax-varying powers. My reading of paragraph 8 is that the Scottish ministers would have the sole right to make a recommendation on the use of tax-varying powers. According to paragraph 10, the only thing that the committee can do is produce an amendment that recommends more spending in one area and less in another. What scope is there for the Finance Committee to say that it wants more money in a particular area and that it wants to raise the funds by using the tax-varying powers?
I did not think that it was the role of this committee to make such recommendations, so I am not surprised that the document is not explicit on that point. You are asking whether those paragraphs would restrict us, but I did not think that the committee had that role. If members have any different views, please say so, but that was not my understanding of our remit. It is for the Government to make such a recommendation.
It is an Executive decision.
The wording does not depart from what I understood the role of the committee to be.
No. I want to argue against its being deleted. That sentence makes it specific that there must be a balance. We cannot simply say that we will spend more and save the money in the budget; we must make a specific amendment. The word "Therefore" links that in. I accept John Swinney's point that the word "decrease" has to be broad enough to allow us a range of options, but it should not be taken out.
I hear what Richard says but, if the Finance Committee adopts that point of view, the committee cannot endorse any budget proposed by the Government that is predicated, as the comprehensive spending review was, on making efficiency savings of X per cent. For example, when the Minister for Enterprise and Lifelong Learning says that his department can cope with a real-terms decrease in the enterprise budget because there will be efficiency savings, we will have to tell him that such a tool is no longer available and that money must be taken away from one department and given to another if the books are to be balanced. That would be the consequence of such a restrictive line.
I do not think that anything in this document would restrict us from doing that.
That line in paragraph 10 says that
Are you saying that you would like the freedom to propose an increase without saying where it would come from?
I am talking about how that would be realised. The mechanism might be to propose an allocation of £50 million to a particular area that would be realised by efficiency savings elsewhere.
That is too specific, quite frankly, because it could let the Executive off the hook. We could recommend an increase in one area and the Executive could say that it is absolutely not possible. The document's aim is to instil in us a sense of responsibility in proposing amendments that recommend an increase. What it should say is that we should indicate possible options where a decrease could take place. The sentence that says that amendments must recommend a specific decrease elsewhere is too tightly worded. It would be fairer to indicate a range of options so that the Executive would not be let off the hook if it did not like the specific option that we recommended.
There should be options for balanced savings.
As Keith says, there could be more flexibility in the wording of that paragraph. However, if one is advocating greater efficiency savings and better value for money, one still has to specify exactly what that figure is. If the executive is to save 1 per cent instead of 2 per cent, one must still specify what that saving will be.
But not necessarily where it comes from.
Why do not we simply say "full costings" instead of "a decrease"?
That is a possibility, Andrew. We shall come back to that point.
I think that that line is there for greater clarity, and I do not think that any of the changes that we are discussing would increase clarity. We are actually muddying the waters. The wording is quite specific. We can say that the efficiency savings in a budget will be changed from 1 per cent to 2 per cent. That is a specific decrease and I do not think that there is a problem with that. Any person or committee making an amendment has a duty to address such matters. Finding money for budgets involves making difficult decisions in other areas and this paragraph forces all committees to address such decisions.
May I move a specific amendment?
Yes.
I suggest that the final sentence be revised to read, "Therefore, amendments proposing any change in one area must recommend how this change will be financed."
Within the total.
We could add "within the total", if that would help.
That would cover your point about forecasting, would it not, Andrew?
That would certainly give it greater scope.
Yes. That widens the scope.
Why say "any change in one area"? Why not say "any increase in one area"? That would be better and more specific. A change is obviously an increase, so let us use the English language. A change could be an increase or a decrease, so let us say " an increase".
Let us say "a change".
There may be something in the budget that we did not think it worth while to spend money on and we might want to decrease that and use the money in other places. We could be decreasing one part of the budget and increasing several other parts.
Exactly.
Shall we leave it at "change" then?
I want to pick up on something that Ken Macintosh said. He was leading into something that I thought we had agreed—that we must sort out a protocol between our committee and other committees. This document concerns the relationship between us and the minister. How we deal with other committees is for us to decide and not for the minister to tell us.
That is right. We will have bilateral agreements with other committees.
You have missed out paragraph 11, convener.
Sorry. I jumped ahead, but that was not deliberate.
Is not the fact that the views of the Scottish Parliament are not binding on Scottish ministers already in the legislation? It strikes me as unusual that it should be included here.
You may recall that this matter came up a couple of weeks ago in another context.
Does it need to be repeated here?
It is difficult to envisage a position in which a decision taken by the Parliament would not be regarded by the Executive as binding even if, legally, that was the position. It would lead to difficulties and would probably be followed by a no-confidence vote if the situation ever arose. Regardless of whether or not it is necessary to include it here, it is probably de jure the position. Are you suggesting that we should delete it, Andrew?
I am not fussy about it.
I think that the Executive would take a fairly strong line on leaving that paragraph in. We are all experienced enough to understand what the position would be.
I may be arguing from a point of ignorance but it strikes me that the only reason for that paragraph to be here would be if it is not in existing legislation. If it is already in legislation, there would be no point in including it here, and that worries me.
I am not sufficiently conversant with the Scotland Act 1998 to be precise about that.
Andrew's point is that it would not be in the Public Finance and Accountability (Scotland) Bill but that it is implicit in the Scotland Act 1998.
Did you say "implicit"?
I think that it would be implicit. I do not think that it would be explicit. I suspect that there could be a debate as to whether it is implicit or explicit, but I am not sure whether it is necessary to duplicate it everywhere. As an argument for efficiency, perhaps we should remove two lines that are duplicated everywhere.
Why should we endorse something that, in principle, we do not agree with?
I cannot answer the question of whether it is implicit or explicit.
Paragraph 11 makes it explicit.
If it is in the Scotland Act 1998, it is explicit, in which case this is simply a restatement.
So there is no reason for it to be here. If it is not explicit in the Scotland Act 1998, why are we as a committee and as a Parliament agreeing to it in this document? I propose that we remove it.
At the top of the next page it says that the report on 20 January will set out how the Executive
I recognise Andrew's point. Either it is explicit in the Scotland Act 1998, in which case we do not need it here, or it is implicit and we do not want to encourage it.
That is why we should remove it.
Sarah Davidson is of the view that legal advice was taken in the earlier case that was mentioned. That should be clarified before we delete the sentence.
I suggest that, irrespective of that, there is no case for it to be here. If the legal advice suggests that it is explicit, we do not need it. If it suggests that it is not explicit, we do not want it. Why should we have it, unless any members feel strongly about binding ourselves?
Is anybody of a different mind on that point? I shall ask Sarah to clarify that point.
And then delete it?
We shall decide that once the point has been clarified.
My only comment on paragraph 12 is about the final sentence. Presumably the words
No. We would not.
I assume that the UK Government could just say how the money is to be spent and that would be that.
As I understand it, yes.
There needs to be better co-ordination.
Are there any comments on paragraph 13?
Is the last sentence of that paragraph—beginning with the words "None-the-less"—the precursor to flagging up the fact that we may have to consider moving our own formal procedures if we are to start new accountancy procedures? If that is the case, are we as a committee being asked to agree that we will be party to that process?
That is not my reading of it, David? It says that the
Paragraph 15 covers points of amendment. I think that there may be a contradiction in the final sentence, which says:
Remember that the agreement is between the Parliament and the ministers.
The amendments will go to the Parliament for agreement then?
That is my understanding.
We have not yet discussed how the next stage will be taken forward, but that would be a perfectly valid way in which to do it.
It is not just this committee but the Parliament as a whole that is reaching the agreement, so at some stage the amendments will have to be agreed, although I am not quite sure what the process will be.
Does that reinforce the discussion that we had on paragraph 1 about the legal rights and obligations?
Yes, it does.
So it reinforces the fact that if the Parliament approves this agreement, any changes on which we cannot agree among ourselves will have to be debated and approved again. However, if the minister proposes a change to which we agree, we would presumably still have to report back to Parliament.
That impacts on paragraph 11 as well.
That is what I was just about to say. These bits are all linked together.
We therefore need clarification.
That is one of the points that I was going to raise. The other one is on the Parliament's budget. Is it purely a matter for the Scottish Parliamentary Corporate Body, or do we have a say?
That is yet to be agreed with the corporate body, but I would expect that the Finance Committee would have an interest in the corporate body's plans.
The subject committees would presumably also have an interest in how it would affect their budgets.
That is a bit of an anomaly. It is the same issue as with the Scotland Office, but closer to home. If the Parliament alters its budget—which it is entitled to do, as it is under its control—it has implications for the wider assigned budget. There is no requirement here for the Parliament to suggest where cuts should be made in the Executive's plans. The Parliament's budget, therefore, must be decided in advance of the Executive's budget, which strikes me as anomalous.
It does not say that, but I accept that that is the implication.
It is a bit of a mess.
It is a mess.
There is no time limit by which a decision must be made. The implication is that if there is to be an increase, even within a year, the Parliament can make the decision.
Working assumptions have not been terribly accurate so far.
They were, however, drawn up 18 months ago.
This is a potentially difficult structural issue. We therefore need through you, convener, to make representations to the Minister for Finance to try to change the structure.
This is an important issue. We know that questions have been raised about whether the Parliament is adequately staffed and whether the resources for committees to move around the country and so on are adequate. We need clarification on the issue. Should we ask the SPCB to produce a paper to give us its view?
My suggestion is that the Parliament's budget should be decided in advance of the Executive's expenditure plans. If it is not, it will lead to a fight between Parliament and the Executive, which would be a rather ugly mess.
That may be the implication in this paragraph, but it is only that. It has not been stated.
It is all happening at the same stage of the bill. My point is that we—or I—may have missed something in the bill. Perhaps it would make sense to have a separate process.
Should we insert a sentence to the effect that we would anticipate that being done in advance?
That would change the FIAG proposals and everything, which has big implications. We need some advice.
Shall we ask the SPCB to provide such advice?
Yes. I think that it is important.
Are we simply agreeing with the minister that there should be a mechanism and that we require the SPCB to contribute to the debate?
The time scale involved in getting an SPCB report will take us beyond the time within which we can amend the document. We would have to use paragraph 15 if we wanted to seek a subsequent amendment.
Can we do a belt-and-braces amendment to the bill, for which the deadline is Friday, which would insert something to say that the Parliament's budget should be decided in advance of the Executive's plans? Is that doable, as this is the last chance that we will have to do it?
It is doable on an individual basis. Are you saying that you want it to be the view of the committee?
Yes. If we are doing it, it should be as a committee.
May I clarify this? Paragraph 16 says:
The figures are not final though.
It is not a proposal.
"Working assumptions" is such a vague phrase.
We need hard figures.
We need a report on where we have been and where we think we can get to.
Rhoda's point is a fair one, but the working assumptions put forward on the Parliament's budget change radically from one year to the next due to the recycle point that we have learned about. I am therefore not comfortable with the term "working assumptions".
Could not we put "proposals" on the parliamentary budget rather than "working assumptions"? That would be something on which we could take a view.
As you said, convener, the original budget for the Parliament was set 18 months ago. It was, we hope, a bit better than a guesstimate, but that is pretty much what it was. As time goes on, we will know much more accurately what the parliamentary budget in any year should be. I would have thought it was quite adequate to have "working assumptions"—or equivalent wording—at the appropriate stages, which are stages 1 and 2.
Unless there is a special change, for example, the move to the new Parliament building, the working assumptions will probably be the existing budget plus the increase in the cost of living—1 per cent or whatever. The costs at the new building will presumably be different at first than what they are here. Thereafter, however, there will be a general continuation in the budget with an annual increase.
Convener, you have already raised the issues of staffing—the fact that committees are sharing clerks—and of visits outside Edinburgh. We should have some indication as soon as possible of what the corporate body is thinking.
I have suggested that we ask for a report, but we could also bring the corporate body before us to give evidence so that we can ask about its plans. Should we go that stage further? We could ask them to present a paper and then quiz them on it.
That is a good idea.
It would also be interesting if the corporate body could give us some indication of how it envisages outlay over the next couple of years, given that we will be moving to a new building. Will it take that in its stride? The move has big implications.
I take Andrew's point that the timetabling of this process is important. We need to agree with the corporate body that it will produce its budget proposals and submit them to us, so that we can scrutinise them on the Parliament's behalf. That needs to be timetabled; it does not need to go into this document, which deals with where that would fit into the budgeting process. We need to change the wording. If we have an agreement with the corporate body that it will produce its proposals, which we will discuss, so that it can produce its budget early on, that can be submitted and, as Andrew says, taken out of the lump sum before we start to discuss the detailed budget.
That would be sensible.
That would remove the need for an amendment to the bill.
We would need an amendment to this paragraph, however.
The discussion seems to hinge on the term "working assumptions". We have agreed where the change is needed. Why can we not put in the word "proposals", which would bring in more formality? We would then be able to take a view on something, rather than just noting something. We cannot go through the rest of the process without having something to which to say yea or nay.
Linking that into stages 1 and 2 sets a specific time scale.
It does.
Is that change acceptable?
The term "working assumptions" is vague, but it gives flexibility. If we say that there must be specific proposals at that stage, we may be tied to them.
Such proposals would presumably come up annually anyway, because of the change to the structure of the Parliament.
Does that answer the point that you were making about the need for an amendment, Andrew?
I am not sure. The issue now is whether the SPCB's budget will require amendment or scrutiny by us. I think that our view is that it will, which has implications for the Executive's budget. If that is done as part of the bill procedure, it leads to the anomalous mess that I pointed out earlier. It would be desirable for the SPCB's budget to have been sorted out before stage 1 of the bill so that the Executive is clear about what its desired budget is. The Executive can set what it likes, which is another anomaly.
So, if we say that the SPCB's budget must be sorted out by stage 1 or 2, we will have not working assumptions, but proposals?
Exactly. I am a bit confused about it just now, but we must ensure, as an amendment to the bill, that the SPCB is required to have gone through the process via the Parliament before the Executive starts to put together its budget, so that there are no implications for the Executive's budget. Do you see what I mean?
I do, but how do we do that?
Perhaps it needs an amendment to the bill. That is really in the clerk's hands.
Stage 1 of the budget process begins in March, which is nearly a full year before the final budget will be agreed by the Parliament. I do not know how realistic it is to expect the SPCB to have clear budget proposals, in effect, a full year before they are passed by the Parliament. The matter may be dealt with better through an agreement between the committee and the SPCB, rather than through this document. The SPCB could be part of the consultation process right through stages 1 and 2, to keep the committee informed, as surely the Executive will be kept informed, of any changes in the period between the publication of the annual report and the middle of stage 2. If the SPCB made changes, the Finance Committee would be able to adjust its assumptions in exactly the same way as the Executive. We would need to seek a separate agreement with the SPCB, of which the Executive would, of course, need to be made aware. [Interruption.]
Mr Lyon, I am not impressed that you have ignored my earlier treatise. Will everybody please check their mobile phones now to ensure that they are off? That goes for members of the committee and people on the public benches. I am not amused.
You are right, Sarah, to say that we are bound by the logistics. It will not be easy to insert something into a bill. However, there is a potential public relations problem for the Parliament if it makes an amendment to its budget at stage 1 of the bill, for which the Executive has to find money from somewhere else. It is nightmarish. We may be left with a written agreement, but is it not feasible to find another solution?
We have been considering the matter for about 10 minutes and have not got very far, so the answer may be no. We are also up against the clock if we want to find a competent amendment within three days. If we find that there is a need for an amendment to the agreement, we may have to utilise paragraph 15.
I do not think that that is possible. We are talking about the issue of where the SPCB fits into the whole process, not the relationship between the committee and the ministers, which is what this document covers. The document is fine; the issue is what happens to the SPCB. If we can agree a separate document with the SPCB that is satisfactory to us and allows the process to proceed correctly and logically without requiring an amendment to the bill, that is great, but Andrew's point is valid—if the SPCB, which has to abide by the same rules as us, comes to us and says that it wants an extra £5 million, it will have to say where that money will be taken from. If it is taken out of the budget for health or drugs, it will look rather bad.
Richard touches on an important procedural point about the contents of this document. This document is about the relationship between the Parliament, on whose behalf the Finance Committee acts, and the Scottish ministers.
This is a difficult matter to resolve.
It points up the timing question for Friday, which is nightmarish.
This is a matter of procedure.
There is a bigger issue than just the timing. What Richard Simpson said latterly made me think that the paragraph is in the wrong place. The corporate body's relationship with the Parliament is important, as is when it sets its plans, how they are acted on and what note the Executive takes of that. I am not sure what our locus is.
That is the point that was raised by the clerk. It is crucial that we are able to bring the corporate body before the committee.
Surely we must have a role in scrutinising its proposals.
Yes, but the document is about our relationship with the Executive during the budgetary process. I think that we are getting the corporate body caught up in that relationship.
We need a separate agreement with the corporate body on how the committee relates to it.
We have already agreed to ask the corporate body for a report and, if necessary, to question its members. In the meantime, are we suggesting that paragraph 16 be taken out? We need to have an agreement that we should be able to look at the effect of stage 1 and 2 expenditure proposals. I am not happy about dropping the paragraph entirely.
Nor am I. The first sentence states that the document sets out an understanding between the Scottish Parliament and the Scottish ministers. The corporate body is part of the Parliament.
I know that this is difficult. If the point about where the Parliament's budget sits is included in the bill, which means that the budget must come before the Parliament before the Executive begins its process, there is no need for a paragraph in the document. The legislation provides for parliamentary scrutiny of the parliamentary budget. Given that this is important and that there is an anomaly in the paragraph—I had not spotted it; I do not know whether anyone else did—perhaps we should go down that route. Perhaps that means that we should propose a belt-and-braces amendment now as well as approaching the SPCB for a written understanding of the relationship between us and it.
We have agreed that latter point. The question of the amendment remains.
My suggestion is to agree to delete the paragraph. I understand why you would want to keep it, but if we can amend the bill, the point will be covered. Perhaps we need belt and braces and to amend the paragraph and the bill.
Sarah, how do you feel about that?
I cannot give you a view here and now as to whether it would be competent to lodge such an amendment to the bill. I would have to discuss that. I would be happy to do that and to get back to members.
I think that there is agreement that if it is competent for us to do that, we should.
I wanted to pick up on the point from which Andrew has backed off slightly because of what is going on. The fact is that the Executive cannot produce a general expenditure budget if it does not know what will happen to the Parliament's block. The second sentence of paragraph 16 says that expenditure proposals should include working assumptions. Should not it simply say that the expenditure proposals must account for the parliamentary budget?
Must take account of.
Or must take account of.
Those are two quite different things. "Must account for" is not the same as "must take account of". I think the latter.
The sense of the paragraph is that the Parliament requires the opportunity to vote on its budget, and it will be given that opportunity as part of the vote on the Executive's expenditure proposals. I think that we are reaching agreement that that is less desirable than having the Parliament's budget agreed separately and in advance. The function of the paragraph is to ensure that the Parliament gets a chance to vote on its own budget. I do not think that we need that assurance at that stage.
There are larger implications than we initially thought. We must be sure that we will not do something that will disadvantage us. It is important that the Parliament has the ability to work on its own budget. Can we leave it that we will look at the means of amending it, as Sarah has suggested, and hope to deal with it in that way? Also, are we agreed that we should adopt David's suggestion of alternative wording in the second sentence and replace "include working assumptions on" with "take account of"?
No. To "take account of" means that it is up to the Executive whether it allows the full amount. Paragraph 16 as it stands clearly states that once the Parliament has voted on its budget, the Executive must allow for that in the budgeting process. David's change weakens the corporate body's stance and the control that it has over the budget.
We cannot, as a committee, weaken the stance of the corporate body.
The suggestion is to use the words "take account of". What the paragraph says is that the spending assumptions are drawn up by the corporate body and voted on by the Parliament. The Executive is then bound by that vote to incorporate the Parliament's budget into its own. If we say that the Executive must make allowances for the parliamentary budget, it can deal with that as and how it likes.
We are returning to Andrew's point that the Executive's spending plans are net of the parliamentary budget.
Yes.
That is where Andrew is coming from. We are trying to agree that that is what the Executive's expenditure plans should be. We are agreeing that within the document. The fact that the ministers say elsewhere that they are prepared to accept that position reinforces my proposal. There is a clear break and the Executive budget comes to us net of the parliamentary budget.
To clarify the point that we are getting at, we could delete the first sentence of paragraph 16. The second sentence can stay, with David's amendment, because it simply points out the fact that the Parliament's budget is in there. Then we could delete everything following "Scottish Ministers" at the end of the third sentence.
The word "assumptions" is also in the third sentence.
I would amend that, too.
We are going deeper and deeper into this and not getting very far forward at all. Perhaps we should delay a decision until we see which amendment we can propose and whether that will meet what we are trying to do. We are going round and round, so I propose that we leave the discussion there until we have taken advice on what we can do on the amendment.
Fair enough.
Is that acceptable? Thank you for your contributions. This is an important point, and I do not think that any of us understood it when we first read it. We could, however, go round and round again for another half hour and we would not get anywhere. I would like to leave it there on that basis.
A final question, which has nothing to do with the detail: must this be completed by Friday?
The drafts are completely separate. It is entirely in our hands when we choose to go back to ministers. There is no particular hurry.
Thank you.
I have a comment on this point. I have been trying to scan the bill and I am not sure that an amendment is needed. Part 1, section 1(1)(a) and (b) of the bill mentions the Scottish Administration and each body or office holder. Presumably that covers everyone, including the corporate body. It does not say anything about timing, merely that everything will be in the budget bill.
I thought that that was what the committee was looking for.
I think that that is what we want. The convener's suggestion stands. We should wait and see what Sarah comes up with.
We spent a considerable amount of time on that, although it is obviously the most important document.
Are we agreed on the wording of paragraph 2?
Are we agreed on the wording of paragraph 3?
I think that I am right in saying that the same issue applies to Audit Scotland and to judges' salaries. If it is not formally for the Executive to propose Audit Scotland's budget and likewise judges' salaries, the principle that we have just discussed applies, although it is less of an issue. Who controls judges' salaries?
The Senior Salaries Review Body, I would think.
Are we agreed on the wording of paragraph 4?
Are we agreed on the wording of paragraph 5?
I have a couple of points, which basically are requests for more information. If you remember, we received the level 1 data 40 minutes in advance of the budget—which is better than what happens with the UK budget. There is nothing to stop us amending the paragraph by adding a couple of other bits of information to the list to say what we are after.
Does that fit into a couple of lines?
It would be another couple of bullet points.
Are we all agreed on the wording of paragraph 6?
I have a question about what constitutes "large". Is there a definition of that? The paragraph refers to
Where is that?
It is the third bullet point of paragraph 6. Until we know what is meant by large, we cannot comment on that point.
Are there any other points under paragraph 6?
I have one on the final bullet point: "considered necessary" by whom and on what basis?
By either party, I should have thought. At the start of the paragraph, Scottish ministers and the Parliament are mentioned. I think that that is implicit.
Richard has raised an important point about large and small.
We have dealt with that. The parameters will be set.
Are we agreed on the wording of paragraph 7?
The paragraph reads:
That is what the next sentence says, is it not?
We could stiffen that next sentence a little by deleting:
But why does that first part say that the format will be a matter for the Scottish ministers when, further on, we read that the format will be developed "in consultation"?
It is expected that it will be developed "in consultation".
It would be possible to amalgamate the two sentences.
In which case, the sentence would read: "The exact format of these supporting documents is a matter for the Scottish Ministers and the format will be developed in consultation with the Finance Committee."
We will also take out the words:
In the middle of the paragraph, it says:
That is a different point. You are talking about the content of the document, not the format.
The format includes not just what the document will look like, but, for guidance, the current spending plans on the basis of that format, so that if the format changes, we can see—in advance of the budget—what the previous position was.
I see what you mean.
The last sentence reads:
I do not regard that sentence as a constraint. We can have the minister here whenever we think it appropriate. If there was an impasse, we would expect the minister to come to the committee and to try to resolve the situation.
Might this be an appropriate moment to raise again the suggestion that was made at the previous meeting, that you should write to the Scottish Executive with respect to the Scotland Office issue?
A draft of that letter is ready to be sent.
The matter is in hand.
Can we assume that the last phrase,
Are you asking whether details will come to us before the Parliament?
Yes.
The standard procedure will be followed. A lead committee will be nominated and the details will come to us first.
Are we agreed on the wording of paragraph 2?
Are we agreed on the wording of paragraph 3?
I have slight concerns about this. The paragraph suggests that we could consider level 2, then the Executive could decide that it will change that radically. I know that the next paragraph sets a limit of 15 per cent or £50 million—whichever is less—on how much a budget for a section can be increased, but a movement of 15 per cent in a budget is not insignificant and it can be done only with a report to the Parliament. Nothing in the paragraph suggests that such a movement should be discussed in this committee. We are out of the loop.
The point that David raised was about transfers between departments. You are talking about transfers within departments. The same principle should apply.
Parliamentary approval is not required for movements within departments.
The Executive can do what it likes, subject to that limitation. We can make a retrospective comment, but the decision will have been made.
Paragraph 3 states that
I think that that refers to internal departmental controls.
We have to consider the point in the context of paragraphs 3, 4 and 5. Paragraph 5 sets out the Parliament's opportunities for budget revision. I think that Richard is saying that the threshold for changes is too high.
I do not have a feel for it. I do not have enough experience to know whether it is reasonable.
In the enterprise budget, £50 million is about 10 per cent.
We do not have a locus in terms of the internal transfers. Our interest should be to decide whether 15 per cent and £50 million are appropriate figures.
Could the wording be changed from:
That would make a huge difference.
Those are fundamental points. We might want to discuss them with the minister.
I suspect that we will be trading information at level 1 and level 2. There is the possibility for a 10 per cent movement in the enterprise budget, so I would expect the Enterprise and Lifelong Learning Committee to consider levels 3 and 4 of the budget. It would be unimaginable for this committee to do that for all budgets.
The various committees will do that for themselves.
We are talking about sections, which are a level below departments.
Why do you make that assumption?
Because the paragraph says:
We have had a suggestion that the committee should be advised of proposals for transfers. We will ask for that.
If we do that, it will allow us to recommend whether a subject committee should consider the transfer. It does not mean that we have to handle all the work, but it ensures that we will have a debate with the Executive about substantive transfers.
We will make that point.
I have an inherent antipathy about putting figures into an agreement. If inflation were to take off again—God help us—£50 million might look like today's £20 million and the agreement would have to be revised regularly. It would be helpful to work on a percentage basis.
We could say, "£50 million, at 1999 values".
That would be okay.
Paragraph 6 suggests that a review of the budget procedure be carried out in 2002.
Richard is right: it is far better to put in percentages rather than figures. That figure of £50 million rears its ugly head in the bill, too.
We will insert the words, "at 1999 values".
Again, it includes the figure of £50 million.
I do not know the correct procedure, but I think that we need an amendment to the bill in relation to the figure.
We discussed the matter with Peter Collings and his colleagues. They might come back to us with an amendment.
Richard is correct: the bill will have to be amended.
The proposal to insert the words, "at 1999 values" would seem to be the simplest solution, if it is technically acceptable.
It would be better as a percentage—£50 million must be a percentage of a budget currently, so the percentage should be whatever that is.
Yes, a percentage applies here in a way that it did not in paragraph 5, because within a section or department it would be meaningful. We can find out what £50 million equates to at the moment and say that that should be the percentage.
Are we as a committee going to move this as an amendment to the bill?
If we agree to do that.
It would have to be done in someone's name.
It would be stated that it was on behalf of the committee. I would be happy for it to be in my name, which would reinforce the point that it was on behalf of the committee as a whole.
I would like some examples of what such indemnities are as it is not clear what this is about.
We need some clarification.
Page 63 of the FIAG report gives some of the background information but it does not give specific examples. I am sure we could ask ministers for that.
Is there anything else on contingent liabilities?
There is no paragraph 11 in the draft. Does contingent liability include consents to borrow for local authorities, etc?
We do not know but that should be made clear in the clarification that we are seeking. I assume that paragraph 12 should be paragraph 11 and that no paragraph has disappeared, but we will check that.
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