Finance Committee, 29 Jan 2002

Meeting date: Tuesday, January 29, 2002

Official Report 145KB pdf

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Financial Scrutiny

We agreed at the previous meeting to identify issues that the committee could consider in its review of financial scrutiny arrangements. The clerks have produced a paper that sets the review in the context of the committee's previous and continuing work. We need to keep the review as strongly focused as possible. I would welcome any comments from members about the content of the paper and whether it describes the direction in which we want to go.

It is important that we try to conduct the review in as focused and coherent a way as possible and that we do not try to bring everything including the kitchen sink into it. After discussions with the clerks and the Scottish Parliament information centre, and once I have heard from members how they would like the review to go, I want to be able to come back to the committee with a remit and timetable. Are there any comments on the paper?

I agree with what is said in the paper. The only other thing that should perhaps be mentioned specifically is that we should try to tie the review in with our review of the legislative timetable for budget bills. It became obvious last week—when we were having yet another debate on a subject that we had basically debated previously—that we are not necessarily making the most fruitful use of parliamentary time. There might be scope for merging the committee's stage 2 report with the stage 1 debate on the budget bill.

I accept that point. It is implicit in the paper, but we can make it more explicit. We should try to make more meaningful use of the committee's time.

The stage 2 procedure that we just went through just now seems to be rather superfluous. I do not refer to our discussions with the minister, but rather to what followed. We cannot amend the bill.

Technically, if we ever had the stage 2 report and stage 1 of the bill at the same time, we would have to leave open the possibility that, as a result of that process, the minister would want to amend the bill. The committee's consideration of the bill at stage 2 would be the only occasion on which that could happen.

I would want to focus the committee's attention much more on the earlier part of the budget process. What happened today is just a safety valve. We want the earlier part of the process to be more transparent and we want committees to be given more opportunities to engage with the budget-setting process.

The budget process could do with being truncated. It could also be made more meaningful, particularly at the earlier stages. Past and present members of the committee have all said that the effectiveness of the process has much to do with how the information is gathered and how it is reported and presented.

The paper by Brian Ashcroft makes it clear that the Executive accounts for its money by department, but reports on it by portfolio. That makes it difficult to see what is going on. There are areas in which we look for how much is spent across a number of different departments, but on the same thing, such as free care for the elderly. It would be useful to ensure that discussions with the minister and his officials at that stage are high on the agenda. Until that problem is resolved, we will not get much further with some of the issues that concern us. I am aware that the Executive has a nice new financial system called Oracle Financials, which should allow it to make a quantum leap in reporting.

The general feeling seems to be that the Finance Committee must deal with the dissatisfactions that it and the subject committees have felt about the level of transparency and comprehensibility of the budget process. We need also to give the committees of the Parliament greater purchase on the budget-setting process, so that they understand better what is going on and have an opportunity to change budget allocations in the light of policy considerations.

Another issue that concerns us is whether we should consider matters at a more strategic level, rather than being tied up with the annual budget round, which has dominated heavily the way in which the committee has had to work. We should move to a process that ties in with the comprehensive spending review and so on.

There is insufficient differentiation in practice between stage 1 and stage 2 of the process. Stage 1 has veered away from the original objective of the financial issues advisory group, which recommended that the committee examine the strategic balance of the spend and that it deal with the political decisions between the allocations at level 1 and key areas in level 2. In the natural desire for information and transparency, the committees are being bombarded with information at stage 1, which has become a very detailed process.

However, in June, particularly in the year of a comprehensive spending review, there are significant changes at stage 2. That tends to change much of what was decided at stage 1 and so qualifies—I will not say makes redundant—what the subject committees said at stage 1. There is much focus on detail, but the committee might want to consider the major political issues, such as the balance of spend between particular areas, which are perhaps not considered because of the detailed process that is gone through.

It might be better if stage 1 were slimmed down so that the committee could accommodate the budget consequentials and the larger changes in the year of the comprehensive spending review in detail at stage 2. The annual expenditure report is almost redundant if there is a significant change through the budget consequentials. Last year, that amounted to £489 million—it is not that much out of a £20 billion budget, but in a CSR year it could amount to more than a billion pounds.

Has the Finance Committee been asking the right questions, particularly in relation to what we ask ministers to present to us at different stages? Is that something that we can change or do we need to reach agreement with the Executive about what the procedure should be?

Elaine Thomson is right to say that the Finance Committee has spent much time trying to clarify the information and the presentation of information. That diverts the committee from the more substantive issues about whether the spend is being allocated appropriately between the different budget heads at level 1.

There is a proposal to involve a couple of subject committees in the review process. That would help us and might be helpful for them. We could focus on particular areas of the budget as part of that process. Do members agree that that is reasonable?

Members indicated agreement.

The concerns that are identified in the paper have been expressed in the past.

On that basis, do members agree that the committee should undertake a review of the financial scrutiny arrangements, paying particular regard to the financial issues advisory group? I acknowledge that such a review will have an impact on our work programme, but it is probably the most important work that we can do. Are we agreed?

Members indicated agreement.

Good.