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I congratulate the minister on his birthday. His appearance before the committees might not be the greatest of birthday treats, but we hope it is not too unpleasant an experience.
The Government's conclusion seems to be that it broadly accepts the FIAG report, but we have an interest to know what the Government does not accept—that has not been made clear. There is perhaps an ancillary issue, which Mr Swinney may wish to address: the minister's interpretation of what the FIAG report raises. Will the minister answer the first question: what parts of FIAG does the Government not accept?
There are two principal matters that we would wish to discuss over the summer, rather than accept at this stage. The first is the issue of primary and secondary legislation for budget bills and budget adjustments or revisions. I have laid before the committees my reasons for raising that issue. From the point of view of parliamentary scrutiny and accountability, secondary legislation might be more democratic and suitable for adjustments or revisions. That is a matter that we wish to discuss with the committees, and I hope that we will deal with it in a constructive and positive manner.
We will return to those substantive points later.
Some of the FIAG's recommendations relate particularly to audit. I accept what the minister said about there being something of a question mark over the direction of some of the audit arrangements. It seems that FIAG recommends a broad sweep of audit throughout the Government community in Scotland.
Our response was quite consistent, particularly on the thrust of the FIAG proposals on the audit of other bodies. Both in last week's statement and in the memorandum, we recommend adjusting the audit arrangements quickly for specific bodies. The audit of companies presents a particular legal problem: it is the responsibility of the Auditor General. That is why we are not making a specific proposal to change the audit arrangements of local enterprise companies at this stage. I can give Mr Swinney an absolute assurance that it would be my view, as Minister for Finance, that such arrangements should be kept under constant review, and that it is a specific matter which I would want to raise in the summer in consultation with the ministers responsible and with officials. It cannot perhaps be dealt with under the legislation that is before us, but we should constantly review auditing arrangements for bodies that spend a considerable amount of public money, and how their spending is reported to the Parliament and beyond.
Is the minister considering at the back of his mind whether the Finance Committee, in approving spending patterns, might consider ways in which money that is spent can be traced and accounted for in a form which would be recognised in commercial practice—before the audit stage, which is more an investigation of outcomes? In other words, is he expecting the Finance Committee to be involved at an early stage in clarifying and controlling, through its recommendations? Is that where the minister is coming from?
The parliamentary scrutiny process will, of necessity and in principle—quite rightly—allow for more detailed scrutiny and clarity in advance of specific budget lines, proposals and decisions. I imagine that there will also be considerable discussion, in the Finance Committee and, I suspect, in some other committees, as the budget is compiled during the nine or 10 month three-stage process, about the details that lie below budget lines, about what ministers propose spending money on and about committee members' proposals that ministers want to consider.
If there are no more points on that subject, let us turn to point 31.3.2 of the memorandum:
I wish to clarify how meaningful consultation will be. Everyone accepts the principle, but what plans are there to structure consultation? Will it be a matter of approaching the general public with three fire engines or four? Such questions were brought up earlier, in the private part of the meeting.
I would welcome a discussion with the committees on the matter after the summer. Some of the other committees involved in public consultation and in similar relationships could also be involved. What I have presented today is a principle. It is vital that we inform the public of the detail of our budget deliberations and that we consult the wider public of Scotland, beyond the representative organisations that would normally be involved and which, under the procedures of the new Parliament, will be involved in formal consultation in committees and elsewhere. How we do that is open to discussion. There is and will be very good practice on consulting the public in the local authority sector and among other private and public bodies. I would like to take examples of best practice from them when considering how to proceed.
I agree with all that. Does the minister see the Executive leading that process, or would it be more usefully conducted by the Finance Committee?
There are two processes. The FIAG proposals allow for consultation—quite correctly—by the Finance Committee, and possibly by other committees, on budget proposals. The first stage of the annual budget round is largely about consultation with bodies outwith the Parliament and, perhaps, with individuals who come to committees and comment on the Executive's overall strategic plans, which will form the budget that is to appear in the autumn.
I do not want to prolong this point, but I share the concern that has already been expressed that this might turn out to be a fairly gigantic and expensive PR exercise that might come under the Audit Committee's gaze. An effective consultation process relates to the layout and format of the accounts—they must be easily accessible to everyone. A schools pack is one thing, and as a communications exercise in education that is fine, but if consultation is to be effective, it must be informed. That is my first point.
I largely agree with what Mr Raffan has said, although I do not share his pessimism about consultation not being possible. There are some very good examples of both public and private bodies that consult. There are also—I am certain of this, although I do not have details with me today—examples from other countries of governments and levels of government that consult the public on their budgets. In American cities the directly elected mayors have a statutory responsibility to consult the public about their budgets. They do it in many different and innovative ways. When I was in America two years ago, I experienced occasions when widespread public consultation produced ideas that no public official or politician had thought of or had had the will to implement and good budget revisions were produced. I am an optimist about these things. If we set the principle and are clear about it, we can find a way of doing it. I hope that we can learn from other examples.
These are very useful questions and answers, but I am anxious to cover all the topics. Please can we have snappier questions.
I share some the concerns that other members have expressed. I am delighted to hear that the minister is optimistic about the future, but I am afraid that I am a little cynical about the consultation process. I am concerned that it should take place prior to any decisions being made. My experience elsewhere is that consultation has occurred once the principal decisions have been taken. Can the minister give us any idea whether he intends to start the consultation process having set the overall sum and trend of the budget, or prior to that?
Minister to tackle cynicism. [Laughter.]
I do not want to overstate the significance or extent of this part of the document. There is a large number of technical and political—with a small p—matters that committees and the Parliament have to look at. I do not want this one small paragraph to detract attention from those other matters. I would like to give Mr Adam two very firm assurances. First, I have never mentioned the words "focus group" in relation to this particular proposal, although if we are telling local authorities to look at citizens' juries or panels and similar mechanisms without doing that ourselves in some areas of expenditure or services, then perhaps we are being inconsistent. I do not like the idea of private focus groups, but public citizens' panels could be the bodies to take an interest in our annual budget deliberations. That is one possible option.
I want to follow the same point. I am sorry to sound cynical, but I have seen many of these exercises in operation elsewhere, as Mr Adam kindly put it without fingering any political party. We must ensure that consultations are validly run, and the number of people participating is part of that. I am also concerned about the transfer of accountability from an Executive body to the public whom it consulted. The Executive body can turn round and say "That was what you wanted. You chose to have a fire engine instead of an ambulance." We must do away with that. We have had many bad experiences in Scotland, and we are looking for the minister and his team to come up with crystal clear methods that cannot be used cynically against the Parliament. That is what will happen if these systems are not run properly.
Agreed.
Never has a minister been subject to such close questioning in terms of proximity.
It is very comfortable.
The third set of questions is on the section regarding written understandings not covered in the proposed bill or in the interim standing orders.
First, when does the minister anticipate producing these understandings? A specific date would be useful. Secondly, what is the status of the written understandings, and how enforceable are they? More generally, what is the role of this committee in feeding into the budget process? The minister is not legally bound to act on anything that we suggest, even if it is a consensus view from the committee. Can we have a written understanding that he will act on our suggestions?
The question of when is up for discussion. I plan to meet the conveners of the appropriate committees over the summer to set a timetable for written understandings to be produced and agreed. How enforceable they will be is a matter for ourselves, collectively. I would not want to say—partly because I do not know the answer—whose would be the ultimate responsibility. I presume that in some cases it would be the Executive and in some cases the Scottish Parliamentary Corporate Body. Given the constructive way that this discussion has gone, it would be a tragedy if we got to a stage in the autumn where either the SPCB or the bureau were making some decisions about financial decision making, the Executive was making others, and the two were at loggerheads. It would be much better if I, on behalf of the Executive, and the committees, on behalf of the Parliament, could make those agreements, and agree on how they would be enforced. We have a corporate responsibility to make that work in practice.
So the answer to the request for a written agreement to take on board the views of the committee is no.
On that same point, there was discussion as to the status of the written understandings. I take it that Mr McConnell is looking for an agreement with the conveners of these two committees, acting on behalf of Parliament, on the points that are not covered by standing orders or by this bill?
That is my intention. I would like to sit down with Mr Watson and Mr Welsh over the summer months and agree a way of handling this matter. My intention is that where the written understandings cover Audit Committee and Finance Committee responsibilities, we will have individual discussions with each committee to try to secure agreement.
The memorandum refers to written understandings about areas not covered in the bill or the interim standing orders. Where does Mr McConnell see the written understanding going? As a Parliament, we will have agreed, firmer standing orders. Does he envisage some entrenchment of the written understandings to give them more status and clarity within the parliamentary process?
The proposal for written understandings is put forward in a positive way. It is an attempt to avoid a situation in which I, as Minister for Finance, or the Executive, or perhaps the Parliamentary Bureau or the Scottish Parliamentary Corporate Body, decide things without discussion and an understanding. We can use the understandings for positive purposes. Rather than restrict our discussions, they can help us to have better discussions and better decision making.
Will the concordats be presented as a block or individually?
That is entirely a matter for the Parliamentary Bureau and nothing to do with me as the Minister for Finance.
We now move on to areas of substantial importance. The first one concerns the use of primary or secondary legislation for approving budgets and/or budget amendments.
Mr McConnell suggested in the memorandum that he wants the views of the joint committee on the question of primary versus secondary legislation. He outlined the reasons for that in the memorandum: there could be a four-week delay before the bills could receive royal assent, for the reasons stated.
This is an appropriate point in the meeting to introduce Dr Peter Collings, who is the principal finance officer. I should have done that at the beginning and I apologise for not doing so.
The minister's last point was perhaps the most interesting. He is looking quite a bit down the road. Of course, there is the possibility of Governments of different political hues in London and Edinburgh. If that were to happen, or if the system that we adopted was not seen to be working as effectively and efficiently as we thought, it might be appropriate to review the matter then, rather than anticipating problems now. Like the minister, we have also found that the spirit of optimism exists. We should be more optimistic, and act on the basis of getting business through, with as much transparency as possible. I take the point about considering matters over the intervening weeks, but that was the view of the committee when we considered these matters before this formal meeting.
I take that point. Both points can be turned the other way. The FIAG report stated, with the best of intentions, that primary legislation should be used at all stages, which reflects the group's view of the importance of making budget decisions in Parliament. While there may not be concrete, firm, absolute, 100 per cent secure reasons for changing that recommendation, no concrete, logical case has been set out for why that recommendation benefits the Parliament, the Executive or the people of Scotland.
From what the minister says, I understand that he applauds the prospect of flexibility. That seems to be the gist of his attitude. It is a purely technical point that primary legislation can be amended, whereas subordinate legislation can only be accepted or rejected. Does not the latter risk the rigidity of which he seems to be fearful?
I shall answer that technical point about how secondary legislation proposals could be changed.
Will not Mr McConnell answer it?
The proposals can be changed during the passage of a bill if the Executive withdraws the original statutory instrument and puts forward a new statutory instrument that includes the amendment. That does not reflect rigidity in secondary legislation; it is just a different process for amending the original proposal. At Westminster an amendment is not taken; the statutory instrument is withdrawn and replaced with a revised one. I understand that that model will be adapted for this Parliament.
Both processes are based on similar principles. The budget bills, as proposed by the FIAG report, and budget amendment bills, or whatever we would call them, cannot be amended by Parliament. Amendments to them can be proposed only by the Executive. Exactly the same principle lies behind both procedures.
The withdrawal of statutory instruments—something that I have seldom seen done at Westminster—is a cumbersome and time-consuming process. The Executive would have to propose another statutory instrument and the whole process would start again. However, if statutory instruments could be amended, that would be more flexible.
From conversations with officials and political colleagues over the past few weeks, I have had the impression that the use of statutory instruments for budget matters works quite well at Westminster. I take Mr Raffan's point, which is an argument for my own point of view.
Statutory instrument debates at Westminster are appallingly badly attended.
Mike Watson and I have sat through quite a few of them in our time.
The point that Mike Watson made at the outset summarises several other views. With regard to time scale, no compelling argument has been made on why secondary legislation is imperative. We want the minister to reflect carefully on that point again. The system of primary legislation would give us a transparency and openness that accords with the language that the minister is using; it is only fair to recognise that. It would be appropriate to the approach that we want to take to financial issues within the Parliament to provide that primary legislation forum. That would set an appropriate standard for the scrutiny of other financial issues.
I am happy to reflect on that. As I said today, and in my statement last week, I will open up the discussion to see how members feel about it over the next eight weeks. It is important that we take on board the points that have been made today, and that we re-examine timetabling and procedure so that we can return with a considered proposal. I am quite happy to do that, and would be willing to continue the discussion informally with individual committee members over the summer as part of the consultation process.
I ask the minister to consider FIAG's recommendation in paragraph 3.50 on page 41 of its report. Does he feel that FIAG was wrong to say that this
It is possible that FIAG's recommendation would provide more such opportunities. It is also possible that Parliament might find it easier and more acceptable to scrutinise decisions on financial legislation through secondary legislation. I do not have a strong view one way or the other, but I believe that discussion needs to take place. We should not wander into the use of primary legislation at all stages of the budget, and the amendment of the budget during the year, without thinking through whether that is the road that we want to go down. The FIAG report expresses that point of view, but does not back it up with lots of detailed evidence and information.
I think that the minister has a clear view of the committee's feelings. I am anxious to move on to the next item, but two members still want to speak.
I welcome the minister's assurance that he will consider the matter further. It has not been made clear in the discussion that there is a major difference between the two procedures that are being considered, in respect of either transparency or the ability of Parliament to make amendments. It is important that a principle should be established at the beginning, and I welcome the minister's commitment to that.
Thank you.
I shall be brief, as we have had a fair session. I cannot detect huge differences between the two systems except for one thing: the perceived ownership of the process in its early stages by the Parliament, although I accept that there could be flexibility in the future. That is something in which the public would be interested. I say that not from a nasty point of view. In the early stages, when we know that we can change things, we should follow the FIAG report, which seems to have the committee's support. We should maintain that course and if, for good reason, there is change, it should be up to the Executive to ask the committees and the Parliament to endorse that change.
I am perfectly comfortable with the views that have been expressed in the committee. Perceptions can sometimes be created by what we all say and do. It is in the interests of the Parliament that we should have a discussion on the matter over the summer, so that we can make the best recommendation in the autumn. I hope that that discussion will show that the committees of the Parliament and its ministers can have a sensible debate about an issue or procedures and can come to a decision that benefits Scotland. That would be a useful perception for us all to create.
The minister clearly has received the impression, from both committees, that the preference for primary legislation is an on-going matter.
The minister's memorandum talks about the powers of direction as a mechanism that is needed to ensure that accounts are laid out effectively. Ministerial direction is suggested and another possibility is mentioned. We are concerned that whoever was the personification of that ministerial direction—whether the First Minister or the Minister for Finance—would have considerable powers.
I am happy to respond positively to that point. It was always my intention to attend the committee to discuss the matter before any decision on direction was made. I agree entirely that there should be discussion on how that subject can be scrutinised by Parliament without too rigid a system constraining us all in the making of those decisions and taking up valuable parliamentary time. It might be appropriate for Mr Collings to say one or two words about that, as it is quite a technical matter and it would be helpful if the committee were aware of some of the issues.
Annexe E of the FIAG report sets out some early thoughts about how the accounts might look. At the moment, that is what we intend to follow. Mr Davidson referred to making the Parliament's accounts look more like commercial accounts. We are in the process of doing so. We are producing such accounts for the financial year 1998-99, which will be reviewed by the National Audit Office but will not be subject to a full audit because some of the accounting guidance from the Treasury, on accounting standards in that area, has not been finalised. We will produce accounts on that basis for 1999-2000, which will be audited.
I realise that this is early in the programme of changing over the systems. Can I make an early appeal for it to be possible for us to compare previous forms of accounts so that we can make like-for-like comparisons? We must be able to do that in our deliberations—I am talking about converting previous forms of accounts, not about redoing standard industrial classifications.
That is one of the reasons for doing a parallel run of the two systems. Our ability to go back is limited because we do not hold the data in that form.
My second point is on departmentalisation. The Scottish Executive has a different make-up from the Scottish Office. My concern is about direct accountability for each of the ministers and what can be done about that, given that there is no obvious line of accountability as the budgets do not relate directly to a specific minister.
We might have been overtaken by events, because I believe that the First Minister made an announcement either yesterday or the day before on the new structure of the Scottish Office. It is now to be termed the Scottish Executive in line with the new procedures and our new standing as from tomorrow. The vast majority of the departments have been reorganised to fit in with ministerial responsibilities, although the committee might wish to note that the one set of ministerial responsibilities that still crosses over four or five departments is my own. There is now a department of justice—
Where was this announced?
It was announced by the Scottish Office information department, either yesterday or the day before, in advance of Thursday. It is a managerial shift that was resolved by the management group, but it was endorsed by the Cabinet last week and announced yesterday or the day before. That is helpful from the point of view of parliamentary scrutiny because the individual departments in the main translate to ministerial responsibilities. I will be happy to ensure that Mr Wilson gets a copy of whatever has been issued so that he can pursue any further questions.
It might be nice if the minister could do that and let the information unit know, so that we can see it in the bulletin.
I want to ensure that I have a clear understanding of what the minister said earlier about direction on the form of accounts. The memorandum states at the top of page 6:
That will depend on the final legislative decisions of the Parliament on the bill. If the powers of direction of accounts lie either with the Scottish ministers collectively or with an individual minister, be that the First Minister or the Minister for Finance, it is clearly that person's executive responsibility to agree the direction of accounts. What I am saying—and I am certain that I say this on behalf of the whole Executive—is that that is not a power that would be exercised without full discussion in the Finance Committee in advance.
We are up against a time constraint. We might continue, but the official report probably will not, which would not be terribly good. I ask for quick questions so that we can move to the last area.
Andy raised the important point about comparison. Let me put it tactfully: the minister's alter ego, the Chancellor of the Exchequer in the British Government, has shown extraordinarily creative powers on the presentation of figures, particularly on increases in expenditure so that it is not clear whether the figures take inflation into account, which period they cover, which years they cover, which year they are being compared with or which Government they are being compared with. I am sure that Mr McConnell will not go down that route because there is a happy atmosphere in the committee, and I am sure that he will do nothing to disturb it.
What a suggestion; as if I would ever do anything of the sort.
That was the minister's coalition partner talking.
If there are no further questions, we will move swiftly on to the last section, about Audit Scotland. I say to the minister that we recognise that the Executive is giving careful thought to those issues, some of which have emerged since the end of the FIAG process. On this occasion, we do not want to pre-empt any further thought by the Executive or its consultees. I am sure that the committee looks forward to hearing the outcome of that consultation. I impress it upon the minister that, whatever the outcome, both committees expect to see good value for money in whatever structures are set up; regard should be given to the constitutional position of the Accounts Commission as the reporting body in respect to local authority audit.
To follow on from what the convener said, we recognise that there has been a great deal of dialogue among ministers, the Executive, the Accounts Commission and others. We can take it from the terminology and style of this section of the memorandum that there is no entrenched position. We welcome that, because the various options in that section require a great deal more thought and agreement as to what is appropriate. The committees sympathise with the genuine and technical difficulties that arise from the FIAG recommendations.
Those are good, deep questions, and I hate to have to remind the minister that we are pressed for time.
I want to have significant discussions during the summer. The independence of the Auditor General is enshrined in the Scotland Act 1998, and there are ways in which any attempt—witting or unwitting—to threaten that can be challenged and stopped.
All that I said referred to unwittingly constraining the Auditor General's independence.
Audit arrangements for the public sector in Scotland and the managerial arrangements and options that are outlined can be discussed during the summer. I hope that we will have serious discussions with the Audit Committee and others in the autumn about the way in which that process will be taken forward by those who are responsible under the new arrangements.
What does the minister expect to be able to bring forward in September when we come back from the recess? Will that be the end of the consultation period? Will there be a clear design of the audit arrangements, or will that issue still require further consultation and discussion?
To some extent, that depends on the outcome of the consultation. If by the end of the summer we have a firm view on what might be the only way ahead—never mind the way ahead—I would look to include that in the draft bill, which would come to the committee as part of the normal process of parliamentary scrutiny. If we face difficult choices or if other issues require further discussion before the presentation of a bill to Parliament, I will talk to the convener about how the committee would be involved.
I will be as brief as possible. This is a complex issue and we all recognise that, particularly those of us on the Audit Committee. The establishment of Audit Scotland is a significant task and I am slightly concerned about FIAG's recommendation that we develop it at the earliest opportunity. Is there a facility for interim briefings to the members of the two committees on what the Government's thinking is?
I have already agreed with the officials that they will organise briefings for both committees in the immediate future. I hope that those briefings will include information on that matter.
I am afraid that time has now beaten us. We have considered a wide range of important subjects and received detailed replies from the minister. I thank him and Peter Collings for their comments; the minister agreed that these are on-going issues, which will be subject to further consultation and deliberation.
Meeting closed at 11:30.
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