Budget Process (Correspondence)
Members will be aware that I received a letter from the convener of the Finance Committee to inform us about the review that that committee is undertaking into the way in which the budget process works. The clerks helpfully provided us with a briefing paper on the subject in advance of today's meeting. I seek an indication of matters that members feel it would be important to raise with the Finance Committee based on our deliberations and consideration of the budget at the end of last year.
Such opportunities to review our processes are welcome and I welcome this one in particular, given how central it is to all our work. How the Finance Committee lays out its questions and direction is for it to decide, but the issues that I had with the budget were slightly different from those that the paper addresses, so I suggest that we feed back our views on what the difficulties were, rather than divide up our consideration in the way that is set out. I will describe what I felt the difficulties were.
If we look at budgets from the past, we see that a repeat complaint over successive years, as well as an issue that we have tried to address, has been about the need to clarify the information with which we are dealing to make the process more open, transparent and accountable. It has been an iterative process between us and the Executive—sometimes a frustrating one—but I thought that we were making progress. However, the most recent budget has been the most opaque of any budget with which I have been involved in nine years. It is unbelievable, but we have gone backwards as regards tracking expenditure and holding ministers to account for the money that they are expending on taxpayers' behalf. Linking that expenditure to the outcomes has become more difficult than ever.
Members of this committee have always had difficulty because of the contrast in size between the specific budget for education that the Executive controls and the budget that it allocates to local authorities. The budget for education in Scotland is huge, but most of it is spent by local authorities. It has always been frustrating and difficult for us to compare the efficiency of one local authority with that of another in delivering on outcomes because they are elected bodies with their own mandates, over which we have no power.
Now that difficulty has got worse. The one device that we had before was that at least we worked within the grant-aided expenditure allocation formula, so we could see the nominal amounts. We could also see the calculation that the Government made to deploy resources, so that if it announced a policy initiative to give more money for additional support needs, for example, we could track that and see that there was specific money in the GAE. Whether the local authority spent the money in that form, we do not know, and I do not want to get into the ring-fencing argument. Ultimately, however, we could see that the Government had taken its decision and could see where the money had gone. That is no longer the case in any area.
I find the current arrangements exasperating. I am sure that we are not the only committee in this situation, but it makes a bit of a nonsense of our budget process. A lot of the Government's spending decisions have been justified by post hoc outcome agreements that we have not even seen yet, although they will be in place next year. I cannot tell members how frustrated I was by this year's process. If it were to be repeated, it would not be satisfactory. If the Finance Committee can find a way to address the situation, it would have my wholehearted support.
Although we had issues about the time that we had to consider each stage of the budget process, that was not the whole problem. The Government has to work together with us, provide information in a transparent manner and allow decisions to be scrutinised properly. That did not happen in the recent budget process.
I am new to the budget process and, although I am not as steamed up about it as Ken Macintosh, I share a little of his concern about accountability and our scrutiny purpose. We are dealing with taxpayers' money so it is important that we look at the procedures.
I think that we should recall that from year to year over the past eight years, it has been nearly impossible to follow budgets such as that for the Scottish Executive Environment and Rural Affairs Department, with which I was involved. Because of the way in which such budgets were presented, many aspects of government seemed opaque.
It is not as though things were white before and are now black. Although we have to find ways of making the system more transparent, we should not necessarily think that everything has become all the more difficult because there has been such a step-change this year. Mr Macintosh might say that he does not want to get into the issue of ring fencing, but the fact that the Government is taking a different approach is bound to alter our scrutiny of these matters. We should give things a year so that we can compare what has happened in one year with what has happened in the next.
Rob Gibson makes a very valid point that the process has never been perfect. Indeed, a survey of subject committees' deliberations on the budget process over the past nine years will show that they were concerned about its openness and transparency and the difficulty in tracking expenditure.
That said, we should recognise that previous Executives accepted the Finance Committee's various recommendations and changes. Indeed, after the 2004 spending review, it was accepted that subject committees should be able to formally track GAE in the area of expenditure that they were scrutinising. The current Government has chosen to remove that from the budget. That makes it impossible for a subject committee such as ours, which is responsible for scrutinising education policy, to see and to track where education money is being spent. This is not necessarily a party-political point; we are simply saying that such a retrograde step is unacceptable, particularly given that a previous Finance Committee asked for the change in the first place. Perhaps we should ask the Finance Committee to reflect on whether the Government was right to alter the way in which GAE is recorded, given that the move undermines transparency and the ability of subject committees to track these matters. I certainly want that point to be made in our submission to the Finance Committee. After all, not only our committee but other subject committees have encountered this problem.
Moreover, as far as the outcome agreements are concerned, if the Government is making certain things a priority, it must show that in its budget. Given that we have found it simply impossible to track such matters, I think that it is legitimate to ask the Finance Committee to reflect on the point and to discuss it with the Government. We need to know what the Government means when it makes something a priority and to be able to track whether there is money to make it an outcome.
The budget process has never been perfect; indeed, I have always struggled with it. However, we have all had to do our best.
Rob Gibson is absolutely right to say that in 12 months' time we will see the outcomes of local authority spend. However, because we will have had none of the initial detail about what was invested in those services, it will be impossible for us to say whether the public has received value for money. That is what we are here for. We do not want to tell local authorities what to do but, in representing the public purse, we want to see what they are doing and to be able to comment on it. This move has been unhelpful and we should try to find out whether the situation can be improved.
Is the committee content that our discussion be reflected in a letter? The letter will stress that this is not a new issue and that committees have been frustrated with the process from day one. I certainly do not think that we will be unique in feeling that.
Members indicated agreement.
We will write to Andrew Welsh in those terms.
Meeting closed at 13:20.