Meeting of the Parliament

Meeting date: Thursday, March 10, 2016

Official Report 1058KB pdf

---

Scottish Fiscal Commission Bill: Stage 3

The next item of business is stage 3 of the Scottish Fiscal Commission Bill. [Interruption.] Is there a problem? Thank you, Ms Baillie.

In dealing with the amendments, members should have the bill as amended at stage 2, the marshalled list and the groupings. The division bell will sound and proceedings will be suspended for five minutes for the first division. The period of voting for the first division will be 30 seconds. Thereafter, I will allow a voting period of one minute for the first division after a debate. Members who wish to speak in the debate on a group of amendments should press their request-to-speak buttons as soon as possible after I call the group. Members should now refer to the marshalled list of amendments.

Section 2—Functions

Group 1 is on forecasting. Amendment 1, in the name of the Deputy First Minister, is grouped with amendments 2 to 6, 8, 9, 12, 15 to 18, 20, 21 and 22.

I am grateful for the opportunity to speak to the amendments. The fiscal framework requires the Scottish Fiscal Commission to prepare forecasts of tax revenues, demand-led social security expenditure and Scottish gross domestic product. We currently have competence to legislate for commission functions based on the fiscal powers that are devolved to the Scottish Parliament under the Scotland Act 1998 and the Scotland Act 2012. We have lodged the amendments to provide that the Scottish Fiscal Commission should prepare rolling five-year forecasts of receipts of fully devolved taxes, which will initially cover land and buildings transaction tax and Scottish landfill tax and, in due course, other taxes that are to be wholly devolved to the Scottish Parliament, including air passenger duty, the aggregates levy, receipts from non-domestic rates and receipts from the Scottish rate of income tax.

The non-statutory commission currently has a role in scrutinising the economic determinants of the Scottish Government’s forecast of non-domestic rate receipts. The agreement that has been reached in the fiscal framework covers the entirety of the NDR forecast: amendment 1 caters for that change in function.

Amendment 22 will ensure that the commission will have direct statutory rights of access to the data that are held by the Scottish assessors and by local authorities, which it will require in order to prepare NDR forecasts.

The commission’s current function in relation to borrowing has been retained. The commission will continue to be required to prepare reports setting out its assessment of the reasonableness of Scottish ministers’ projections of borrowing requirements. We further propose that the commission should retain the general function that is currently provided for in section 2(3) of the bill, which enables it to undertake work on other fiscal matters, in addition to its specific functions. Amendments 2 and 3 are intended to ensure that that flexibility reflects the commission’s new statutory functions.

The purpose of amendment 8 is to require the commission to provide the Scottish ministers with forecasts in sufficient time to support finalisation of the Scottish budget.

At this stage, does the Deputy First Minister have a view on what is meant by “sufficient time”? Does it mean a day, a week or a month?

In reality, I suspect that the time would probably be less than two weeks before the date of the budget. That will not be specified. We can probably shed more detail on that in the memorandum of understanding, which I suspect will be deployed to inform relationships between the Government and the Fiscal Commission on working practices. The commission would be fully empowered to determine what it thought to be reasonable in that context.

The prior notification is essential to the Scottish budget process because the commission’s forecast will determine the overall resources that will be available to deploy in that budget. The timing of that advance access to forecasts will be specified in the protocol, as I have indicated to Mr Brown, and as provided for in section 4A.

Amendment 9 will adjust the process for laying reports before Parliament as a consequence of the change to the forecasting model. The purpose of amendment 12 is to dispense with the requirement for the commission to provide Scottish ministers with a copy of a report that is prepared under section 2(1), where it has already been sent by virtue of the changes that will be introduced by amendment 8.

Amendments 15 to 18 are technical consequential amendments that reflect the shift in the forecasting functions in amendment 1.

The purpose of amendments 20 and 21 is to protect the core forecasting function as set out in proposed new section 2(A1) from being removed through regulations. That means that primary legislation would be required to remove the general forecasting function from the Scottish Fiscal Commission. The amendments will create a statutory framework that could be added to by regulations as the competence of the Scottish Parliament is expanded by the Scotland Bill. We have undertaken to consult on the scope of the commission’s expanded powers, and we will bring forward a timetable for doing so after the bill has been passed.

I invite members to agree to amendment 1 and the other amendments in the group.

I move amendment 1.

I support and very much welcome amendment 1 and all the other amendments in the group.

Scottish Labour first argued in January 2015 that the Fiscal Commission should produce the official forecasts. We supported the Finance Committee’s view, which was reached after about two years of deliberation, that the Fiscal Commission should do the official forecasts. The committee’s report is one of the best that it has produced, and I commend those who were involved in it. In particular, I commend the convener of the committee, who said:

“we are strongly of the view that not only should the Scottish Fiscal Commission be independent, but it is vital that it is perceived to be independent. That is why we are calling for the Bill to be amended to strengthen the Commission’s role and to give it responsibility for producing the official forecasts.”

I think that we were all surprised when the bill was introduced. The cabinet secretary appeared to have ignored the Finance Committee and to have ignored his colleagues, and the bill was a pale imitation of what was required. The Government was intent on keeping control, and the Fiscal Commission was not to do the official forecasts.

At stage 1, the committee, with one exception, maintained its position and rejected the Government’s attempt to make the Fiscal Commission a less powerful body, so John Swinney was sent away tae think again. We were clear that in order to secure the Fiscal Commission’s independence and robustness in forecasts, it should be responsible for the official forecasts.

A few days later, that all changed. Scottish National Party members, including the convener of the committee, had somehow become converted. Some who are less generous than I might say that they had been nobbled, because they were suddenly convinced of John Swinney’s arguments. Was that a case of thumbscrews being applied, or did the convener of the committee believe that he had been wrong all along? I cannot ask Kenny Gibson that question, because he and Mark McDonald, who was one of the Finance Committee’s SNP members, are not in the chamber.

I am disappointed that it appeared that all that work was just being thrown away. However, having marched them up to the top of the hill, the cabinet secretary abandoned them there as he made a deal with the Chief Secretary to the Treasury that the Fiscal Commission would, contrary to his own view, do the official forecasting. Mr Swinney must be positively dizzy with all the about-turns that he is making, but I very much welcome them.

It is right that the Fiscal Commission should do the official forecasting. As a consequence, it will demonstrate its independence from Government. With new powers and new responsibilities coming to the Parliament, we must ensure that the institutions that we put in place are robust and transparent. John Swinney’s amendments will help us to do just that.

The journey on fiscal forecasts has indeed been a rich tapestry, but I am delighted to say that we are getting there in the end.

The change is probably the most important change that needed to be made to the bill. It is quite right that official forecasts should be carried out by the Fiscal Commission and not by the Scottish Government. There are a number of reasons for that. Most important, the forecasts have to be independent and have to be seen to be independent.

The amendments will also get rid of a rather weak reasonableness test that would not offer much scrutiny. They will get rid of the messing about with economic determinants for non-domestic rates and look at the non-domestic rates themselves, and they will avoid, or at least weaken, the built-in optimism bias that any Government that produces forecasts is at risk of producing.

For all those reasons, I support all John Swinney’s amendments in the group.

As I said, we got there in the end. I hoped that we would get there at stage 2, but I failed to convince the cabinet secretary. I was just not quite up to the mark in convincing Mr Swinney, but I am glad to say that George Osborne was up to the mark: he managed to convince John Swinney about the right way to go. Thank goodness for the persuasive powers of George Osborne.

16:45  

It is no secret that, as one of the members of the Finance Committee, I have at no point been convinced that the SFC should do the forecasting. My main reasons for that are that, first, it is fundamentally better to have one organisation to do the work—in this case forecasting—and a separate organisation to check it. That is what happens with audits; both auditors and the SFC look to the future and the past.

Secondly, it will be more resource intensive and therefore more expensive to have such duplication of work. Thirdly, I am not convinced that the Office for Budget Responsibility model is that great—it is certainly in a minority internationally. Finally, the issue of independence and the issue of who does the forecasting are completely separate and should not be conflated.

However, I accept that the bargaining with Westminster over the fiscal framework has meant that we do not have the ideal situation in every case—this being one in which we do not. Although I will vote for amendment 1, if after the election I am returned here and it all goes belly up, I will be standing here to say that I said it would.

In her initial comments, Jackie Baillie said that she was rising to support the amendments. If that was a speech of support, I would hate to hear a speech that was not supportive. Maybe that is how the Labour Party goes about its business. With Jackie Baillie delivering speeches of support of that nature, maybe the Labour Party operates constantly in such a ferrets-in-a-sack-like mode.

I accept that it has been a long and winding journey. I record my acknowledgement that Mr Mason has been absolutely and totally consistent in his arguments throughout the process. However, if the Finance Committee had not voted against the provisions at stage 2, I would have had nothing to give away in the fiscal framework negotiations.

If it comes down to a bargain—saving the Scottish budget from a Tory attack of £7 billion of cuts to public expenditure by my compromising to put these plans in place—I think that it is a price worth paying.

In that case, did the minister encourage or attempt to persuade SNP members on the committee to change their view at stage 2?

I would make absolutely no attempt to try to persuade members of the committee to do anything other than what they thought was the right thing to do, in the circumstances, in a parliamentary process.

Did the cabinet secretary perhaps share with them the negotiations that were going on on the fiscal framework?

As Jackie Baillie knows, I have maintained absolute confidentiality around negotiations with the Treasury, which was the proper approach for me to take to ensure that the issues were resolved.

I am glad that the amendments seem to command support in Parliament. They are part of the fiscal framework agreement that we are putting in place. We want to ensure that all details of the fiscal framework are put into practice in the fashion that is envisaged by the fiscal framework agreement. That is precisely what the Scottish Government has placed on the record in the amendments. I invite Parliament to support amendment 1 and, at the appropriate moments, the other amendments in the group.

Amendment 1 agreed to.

Group 2 is on review of performance against fiscal rules and sustainability of public finances. Amendment 29, in the name of Jackie Baillie, is the only amendment in the group.

Amendment 29 seeks to give the Fiscal Commission responsibility for, first, scrutinising the Government’s performance against fiscal rules and, secondly, considering the sustainability of our public finances. In lodging the amendment, I have reflected on the cabinet secretary’s comments at stage 2 and the original intentions of the Finance Committee, both in its report on fiscal institutions and in its stage 1 report on the bill.

Across the world, fiscal institutions have a role in looking at fiscal rules and the future sustainability of public finances, so that role is nothing new. In the 17 Organisation of Economic Co-operation and Development countries that have been researched on the issue, 15 have institutions that have a responsibility for looking at the long-term sustainability of public finances and 11 have institutions that have a role in monitoring compliance with fiscal rules: Austria, Belgium, Denmark, Finland, Portugal, Sweden and the United Kingdom, to name but a few. It is normal for fiscal institutions to do those things.

Mr Swinney asked at stage 1, and has asked since, what the fiscal rules are. I would expect him, as finance secretary, to know that, but I will help him. There are the fiscal rules that are set out in the Public Finance and Accountability (Scotland) Act 2000. There are also the fiscal rules in relation to capital borrowing, revenue borrowing and the budget exchange mechanism, all three of which will change when the new Scotland Bill is enacted. There is also the fiscal rule that is set by the Scottish Government itself: the 5 per cent revenue-financed projects cap. In addition, there are the rules that are set out in the fiscal framework agreement, including on the Scotland reserve. We should be interested in making sure that those are scrutinised and reported on to Parliament.

I turn to the sustainability of public finances. When we consider the International Monetary Fund fiscal council data set, we can see that the second most important function of the emerging new generation of fiscal councils is to judge the long-term sustainability of public finances. I do not see why we should not want that to be done. The majority of expert witnesses to the committee agreed that it was important to look at both the fiscal rules and the long-term sustainability of public finances.

The Scottish Fiscal Commission said in a letter to the committee that it

“believes it should have responsibility for assessing the Scottish Government’s forecast on the sustainability of Scotland’s public finances, such as adherence to fiscal rules ... and it would welcome the Bill being amended now to anticipate this additional responsibility”.

Indeed, Professor Andrew Hughes Hallett, a member of the Scottish Fiscal Commission, said in evidence to the Finance Committee that the bill should be amended to make explicit that the commission has a role in assessing fiscal sustainability.

Professor Campbell Leith, another member of the commission—we should remember that the members of the commission are appointed by the cabinet secretary himself—said:

“One of the main objectives of creating a fiscal commission is to ensure fiscal sustainability.”—[Official Report, Finance Committee, 25 November 2015; c 47.]

The committee convener, Kenny Gibson, in reflecting the committee’s unanimous view on the role of the commission, said:

“We believe it should assess the Scottish Government’s adherence to its fiscal rules and assess the long-term sustainability of the public finances. This will further strengthen the independent scrutiny role of the Commission and reflects the view of many witnesses who have appeared before the Committee.”

Those are not my words; they are Kenny Gibson’s words. The IMF, the OECD, SFC members, the Finance Committee and numerous expert witnesses say that it is a good thing, so I hope that the cabinet secretary is listening and will indeed support my amendment 29.

I move amendment 29.

I rise to support amendment 29, on fiscal rules and sustainability of public finances. As Jackie Baillie said, the Finance Committee agreed in its entirety on the matter for our report—there was no dissent whatsoever. I therefore look forward to hearing John Mason’s comments to see whether he is as keen on consistency for amendment 29 as he was for the previous group of amendments.

The committee’s agreement in January backed up its previous report on the fiscal framework in June of last year, when we made exactly the same recommendation. A day after stage 2, the Scottish Affairs Committee at Westminster seemed to support our view as well, because it said:

“An enhanced Scottish Fiscal Commission should monitor and report on the Scottish Government’s performance against those targets”—

namely, the fiscal targets that will be set out.

The fiscal framework itself, at paragraph 101, talks about relying, if there is a dispute, on the “technical input” of the Scottish Fiscal Commission. If the SFC is going to be of use in a dispute, it has to have as wide a remit as possible, rather than only producing the official forecast, as it is destined to do at the moment.

In lodging amendment 29, Jackie Baillie has made a number of changes to the amendment that she lodged at stage 2. She has removed any reference to policy objectives, which I think is the right thing to do. She has sought expert advice, and I know—as a matter of fact—that she shared it with all members of the committee at least a week ago to ensure that there were no technical objections and that we could debate purely the principle.

I note previous arguments that it is the job of Parliament to assess and scrutinise the long-term forecast of public finances. Yes, it is, but Parliament would certainly be aided in doing that job by having access to work that has been done by the Scottish Fiscal Commission.

Jackie Baillie read out two quotes from the Scottish Fiscal Commission, and I repeat what it said in its written submission to the Finance Committee:

“The SFC believes it should have responsibility for assessing the Scottish Government’s forecasts on the sustainability of Scotland’s public finances, such as adherence to fiscal rules as an example, and it would welcome the Bill being amended now to anticipate this additional responsibility when it arises.”

For all those reasons I support amendment 29. I genuinely hope that the Government will back it, so that we can have a Fiscal Commission that really is worth shouting about.

I welcome the opportunity to debate Jackie Baillie’s amendment, which, as she and Gavin Brown indicated, was debated at stage 2 in a different form, although the principle was largely similar.

I remain unclear of the added value or enhanced scrutiny that would be provided by way of the commission assessing Scottish ministers’ performance against fiscal rules. The Scottish Government is subject to budgetary rules, which Jackie Baillie includes in her definition of fiscal rules, and performance against them is already effectively assessed by the Auditor General as part of the annual audit of the Scottish Government’s annual financial statements. We are also subject to statutory aggregate borrowing limits and annual borrowing limits that are set administratively by the United Kingdom Government. There are already established mechanisms for reporting to Parliament on those issues. Whether the Scottish Government operates within the limits is a matter of fact, so it remains unclear what public value the commission could add in carrying out assessments against the limits.

Should the Scottish Government gain borrowing flexibilities that would enable us to set further, more flexible fiscal rules, I would suggest that we revisit the issue and consider whether the commission could add value in reporting on the Government’s adherence to such rules.

On the analysis of fiscal sustainability, I remain of the view that that is primarily a role for elected members of the Scottish Parliament, who hold ministers directly to account for the robustness of our financial judgments.

Would it not be difficult for members to hold the Government to account on that issue if they did not have a level of analysis from the Fiscal Commission or suchlike that gave them the necessary information?

My judgment is that there is no lack of financial information that circulates around in relation to the budget-setting process. Malcolm Chisholm and I are both former members of the House of Commons. The degree of scrutiny around financial provisions in this Parliament is significantly stronger and more detailed than anything that I experienced in the House of Commons. There are spring and autumn budget revisions, there is all the information that is set out, and there is the scrutiny that we are subjected to by the Auditor General and by the wider role that the Auditor General undertakes. Members have very strong access to data and information to enable them to undertake that task.

I was struck by the cabinet secretary’s comment that if further borrowing powers emerge, he might be prepared to look at this issue again. Is that not to concede in principle that Jackie Baillie’s amendment 29 is sensible? The whole point about the Fiscal Commission is that we are creating a very important body that we have never had before. For many onlookers, the attraction is that it is the first time that we have had that composite umbrella body with an important job and important duties to perform. I would have thought that, far from seeing the provisions in amendment 29 as in some way tiresome, restricting or distracting, the cabinet secretary would have seen them as a support to the important job that he is charged with doing.

At no stage did I use any of the language that Baroness Goldie used when she suggested the reasons why I do not support amendment 29. At no stage did I use the word “tiresome” about financial scrutiny. I have said that I believe that the financial scrutiny is there, by virtue of the current exercise of its functions by Audit Scotland and the fact that I am obliged to operate under fiscal rules, such as the revenue limit, the capital departmental expenditure limits requirement and the fixed borrowing limit, which will be set at £450 million per annum. In fact, we cannot borrow £450 million: we would be prevented from doing so as that would breach our administrative limits.

My point is that I do not see the added value of the proposal in Jackie Baillie’s amendment. I do not think that it is an appropriate role for the Scottish Fiscal Commission and, as I indicated in my responses to interventions, the amendment risks duplicating the roles that are already fulfilled by the Parliament and the Auditor General. Therefore, I ask Jackie Baillie not to press her amendment, failing which I recommend that Parliament does not support it.

17:00  

I intend to press the amendment.

The cabinet secretary has deployed some of those arguments previously, so let me take them in turn. First, he says that this is a role for Audit Scotland. The role of the Auditor General is to

“appoint auditors to Scotland’s central government and NHS bodies ... examine how public bodies spend public money ... help them to manage their finances to the highest standards”,

and to

“check whether they achieve value for money.”

I do not see mention of fiscal rules or sustainability of finances in the definition of the role.

Audit Scotland has published—

Will the member give way?

I will give way in a second.

Audit Scotland has published a number of reports on developing financial reporting in Scotland, and it recently wrote to the Finance Committee about the fiscal framework. It very strongly expresses the fact that it wants reporting of Scotland’s public finances to be

“comprehensive, transparent, reliable and timely”,

and that the

“overall account of revenues, expenditure, assets and liabilities of the Scottish public sector as a whole”

are

“key”

to achieving that.

Audit Scotland agrees about the need to scrutinise the sustainability of public finances. The measure complements Audit Scotland’s work, and I am sure that, as with other bodies that the cabinet secretary referred to when we debated the bill at stages 1 and 2, the facility of a memorandum of understanding could be put in place to ensure co-operation between the bodies.

I will take an intervention now.

I am grateful to Jackie Baillie for giving way.

I wanted to intervene when Jackie Baillie set out Audit Scotland’s functions. Essentially, those functions are about assessing the quality of the judgments that are made about the financial decision making that is undertaken. That is already part of Audit Scotland’s remit, and that is why I think that the provision in the amendment would duplicate that essential role.

I do not think that the amendment is unnecessary, or that it provides duplication. Nevertheless, I suggested to the cabinet secretary a way of ensuring that duplication does not happen—through a memorandum of understanding. That approach is quite commonly used by other bodies.

I turn to the role of Parliament. Ultimately, the role of Parliament is to hold the Executive to account. Parliament can and should be assisted in that task. Currently, we benefit hugely from information from the Scottish Parliament information centre and its financial scrutiny unit, and others besides. I expect that, in future, the Finance Committee and the Parliament will benefit hugely from the work of the Fiscal Commission. Malcolm Chisholm is absolutely right: we should be equipped with the financial and factual information on which we can make informed judgments. I would have thought that that is something that the Parliament aspires to.

My final word is a reflection on the committee’s consideration of the bill. This measure was supported by every single member of the Finance Committee in its report on fiscal institutions and subsequently in its stage 1 report on the bill. I will be hugely disappointed if those members change their minds today. I cannot ask the convener or Mark McDonald about that, because they are not here. I would genuinely be hugely disappointed if the man who has been consistent throughout the process—John Mason—changed his mind.

I will take an intervention from John Mason.

I make my intervention for the sake of completeness, seeing as Jackie Baillie mentioned me.

I do not think that this issue is absolutely central. I felt very strongly about the forecasting and, as John Swinney said, I have been consistent on that matter. I struggle to understand the difference that this amendment would make.

John Mason says that he struggles to understand what difference my amendment would make. I simply observe that, for two years, he has nevertheless supported the proposal. He supported it in the committee’s original report and in its stage 1 report. I have much more respect for people if they are consistent. That is particularly so because, as Gavin Brown said, I consulted each and every member of the Finance Committee to ensure that I properly reflected the committee’s view. Needless to say, I did not get a response to my email from any of the Scottish National Party members, which again is disappointing.

This is what fiscal institutions do. If we want to be in line with what the rest of the world does, we should support amendment 29. It is clear, however, based on what the cabinet secretary has said, that I am unlikely to be happy when the amendment is voted on.

The question is, that amendment 29 be agreed to. Are we agreed?

Members: No.

There will be a division. As this is the first division, I suspend the meeting for five minutes.

17:05 Meeting suspended.  

17:10 On resuming—  

We proceed to the division on amendment 29.

For

Baillie, Jackie (Dumbarton) (Lab)
Beamish, Claudia (South Scotland) (Lab)
Bibby, Neil (West Scotland) (Lab)
Brennan, Lesley (North East Scotland) (Lab)
Brown, Gavin (Lothian) (Con)
Buchanan, Cameron (Lothian) (Con)
Carlaw, Jackson (West Scotland) (Con)
Chisholm, Malcolm (Edinburgh Northern and Leith) (Lab)
Fee, Mary (West Scotland) (Lab)
Ferguson, Patricia (Glasgow Maryhill and Springburn) (Lab)
Fergusson, Alex (Galloway and West Dumfries) (Con)
Findlay, Neil (Lothian) (Lab)
Finnie, John (Highlands and Islands) (Ind)
Goldie, Annabel (West Scotland) (Con)
Grant, Rhoda (Highlands and Islands) (Lab)
Gray, Iain (East Lothian) (Lab)
Henry, Hugh (Renfrewshire South) (Lab)
Hilton, Cara (Dunfermline) (Lab)
Hume, Jim (South Scotland) (LD)
Johnstone, Alex (North East Scotland) (Con)
Johnstone, Alison (Lothian) (Green)
Kelly, James (Rutherglen) (Lab)
Lamont, Johann (Glasgow Pollok) (Lab)
Lamont, John (Ettrick, Roxburgh and Berwickshire) (Con)
Macintosh, Ken (Eastwood) (Lab)
Malik, Hanzala (Glasgow) (Lab)
McArthur, Liam (Orkney Islands) (LD)
McCulloch, Margaret (Central Scotland) (Lab)
McDougall, Margaret (West Scotland) (Lab)
McGrigor, Jamie (Highlands and Islands) (Con)
McInnes, Alison (North East Scotland) (LD)
McMahon, Michael (Uddingston and Bellshill) (Lab)
McNeil, Duncan (Greenock and Inverclyde) (Lab)
Milne, Nanette (North East Scotland) (Con)
Pearson, Graeme (South Scotland) (Lab)
Pentland, John (Motherwell and Wishaw) (Lab)
Scanlon, Mary (Highlands and Islands) (Con)
Scott, John (Ayr) (Con)
Simpson, Dr Richard (Mid Scotland and Fife) (Lab)
Smith, Drew (Glasgow) (Lab)
Smith, Liz (Mid Scotland and Fife) (Con)
Stewart, David (Highlands and Islands) (Lab)
Wilson, John (Central Scotland) (Ind)

Against

Adam, George (Paisley) (SNP)
Adamson, Clare (Central Scotland) (SNP)
Allan, Dr Alasdair (Na h-Eileanan an Iar) (SNP)
Allard, Christian (North East Scotland) (SNP)
Beattie, Colin (Midlothian North and Musselburgh) (SNP)
Biagi, Marco (Edinburgh Central) (SNP)
Brodie, Chic (South Scotland) (SNP)
Brown, Keith (Clackmannanshire and Dunblane) (SNP)
Burgess, Margaret (Cunninghame South) (SNP)
Campbell, Aileen (Clydesdale) (SNP)
Campbell, Roderick (North East Fife) (SNP)
Coffey, Willie (Kilmarnock and Irvine Valley) (SNP)
Constance, Angela (Almond Valley) (SNP)
Crawford, Bruce (Stirling) (SNP)
Cunningham, Roseanna (Perthshire South and Kinross-shire) (SNP)
Dey, Graeme (Angus South) (SNP)
Don, Nigel (Angus North and Mearns) (SNP)
Doris, Bob (Glasgow) (SNP)
Dornan, James (Glasgow Cathcart) (SNP)
Eadie, Jim (Edinburgh Southern) (SNP)
Ewing, Annabelle (Mid Scotland and Fife) (SNP)
Ewing, Fergus (Inverness and Nairn) (SNP)
Fabiani, Linda (East Kilbride) (SNP)
FitzPatrick, Joe (Dundee City West) (SNP)
Gibson, Kenneth (Cunninghame North) (SNP)
Gibson, Rob (Caithness, Sutherland and Ross) (SNP)
Grahame, Christine (Midlothian South, Tweeddale and Lauderdale) (SNP)
Hepburn, Jamie (Cumbernauld and Kilsyth) (SNP)
Hyslop, Fiona (Linlithgow) (SNP)
Ingram, Adam (Carrick, Cumnock and Doon Valley) (SNP)
Keir, Colin (Edinburgh Western) (SNP)
Kidd, Bill (Glasgow Anniesland) (SNP)
Lochhead, Richard (Moray) (SNP)
Lyle, Richard (Central Scotland) (SNP)
MacAskill, Kenny (Edinburgh Eastern) (SNP)
MacDonald, Angus (Falkirk East) (SNP)
MacDonald, Gordon (Edinburgh Pentlands) (SNP)
Mackay, Derek (Renfrewshire North and West) (SNP)
MacKenzie, Mike (Highlands and Islands) (SNP)
Mason, John (Glasgow Shettleston) (SNP)
Matheson, Michael (Falkirk West) (SNP)
Maxwell, Stewart (West Scotland) (SNP)
McAlpine, Joan (South Scotland) (SNP)
McDonald, Mark (Aberdeen Donside) (SNP)
McKelvie, Christina (Hamilton, Larkhall and Stonehouse) (SNP)
McLeod, Fiona (Strathkelvin and Bearsden) (SNP)
McMillan, Stuart (West Scotland) (SNP)
Neil, Alex (Airdrie and Shotts) (SNP)
Robertson, Dennis (Aberdeenshire West) (SNP)
Robison, Shona (Dundee City East) (SNP)
Russell, Michael (Argyll and Bute) (SNP)
Salmond, Alex (Aberdeenshire East) (SNP)
Stevenson, Stewart (Banffshire and Buchan Coast) (SNP)
Stewart, Kevin (Aberdeen Central) (SNP)
Sturgeon, Nicola (Glasgow Southside) (SNP)
Swinney, John (Perthshire North) (SNP)
Thompson, Dave (Skye, Lochaber and Badenoch) (SNP)
Torrance, David (Kirkcaldy) (SNP)
Urquhart, Jean (Highlands and Islands) (Ind)
Watt, Maureen (Aberdeen South and North Kincardine) (SNP)
Wheelhouse, Paul (South Scotland) (SNP)
White, Sandra (Glasgow Kelvin) (SNP)
Yousaf, Humza (Glasgow) (SNP)

The result of the division is: For 43, Against 63, Abstentions 0.

Amendment 29 disagreed to.

Amendments 2 to 4 moved—[John Swinney]—and agreed to.

Section 3—Meaning of terms used in section 2

Amendments 5 and 6 moved—[John Swinney]—and agreed to.

After section 3

Group 3 is on review of accuracy of forecasts. Amendment 7, in the name of the Deputy First Minister, is grouped with amendments 10, 11, 13 and 14.

The purpose of amendment 7 is to provide a basis for scrutiny by and accountability to the Scottish Parliament in relation to the commission’s previous forecasts. It is important that the forecasts that underpin the Scottish budget process are as robust as possible and informed by previous experience. [Interruption.]

Can we have some order in the chamber, please?

Therefore, the commission will conduct a self-evaluation of its previous forecasts for each financial year. It is for the commission to determine the content of its reports, which might include comparisons of the assumptions, risks and projections that were used by the commission against the actual outturn and results.

Amendments 10, 11, 13 and 14 are consequential amendments, which will ensure that reports on the accuracy of previous forecasts are laid before the Parliament and published by the commission. I ask members to support all the amendments in the group.

I move amendment 7.

Amendment 7 agreed to.

Section 4—Reports

Amendments 8 to 14 moved—[John Swinney]—and agreed to.

Section 4A—Protocol between the Commission and the Scottish Ministers

Amendments 15 to 18 moved—[John Swinney]—and agreed to.

After section 4A

Group 4 is on Scottish ministers’ statement. Amendment 19, in the name of the Deputy First Minister, is the only amendment in the group.

The fiscal framework agreement specifies that the commission should prepare the tax and GDP forecasts that support the framework’s operation. I consider it to be equally important that we legislate to ensure that the commission’s forecasts have official status and to create a presumption that those forecasts will inform the Scottish budget.

The intention of amendment 19 is to ensure that the Scottish ministers are required to account to the Scottish Parliament if they do not use the forecasts that the commission prepares in the Scottish budget. In such an instance, which I would expect to arise only in truly exceptional circumstances, the Scottish ministers must make a statement to the Parliament to explain the basis of any disagreement. The statement must be laid before the Parliament at the same time as the budget documentation.

That requirement, read together with amendments 1 and 8, will create a presumption that the Scottish ministers will use the forecasts that are prepared by the commission in the Scottish budget and requires them to report to Parliament so that the basis of the decisions that are made by ministers is transparent and can be appropriately scrutinised.

I move amendment 19.

Amendment 19 agreed to.

Section 5—Power to modify the Commission’s functions

17:15  

Amendments 20 and 21 moved—[John Swinney]—and agreed to.

Section 7—Access to information

Amendment 22 moved—[John Swinney]—and agreed to.

After section 7

Group 5 is on the duty to co-operate with the Office for Budget Responsibility. Amendment 23, in the name of the Deputy First Minister, is the only amendment in the group.

The purpose of amendment 23 is to implement a requirement in the fiscal framework agreement that the Scottish and United Kingdom Governments will introduce a reciprocal statutory duty of co-operation between the commission and the Office for Budget Responsibility. The amendment will support the two independent bodies in discharging their statutory functions, both as they exist now and as they will be amended once the Smith proposals are fully implemented.

Although the amendment places a duty on the Scottish Fiscal Commission only, we expect the United Kingdom Government to introduce a reciprocal arrangement through a section 104 order under the Scotland Act 1998 in due course.

The fiscal framework anticipates that the statutory duty will be underpinned by a memorandum of understanding between the two bodies that will set out more detailed practical working arrangements.

I move amendment 23.

Amendment 23 agreed to.

Section 9—Review of Commission’s performance

Group 6 is on review of commission’s performance: review period. Amendment 24, in the name of the Deputy First Minister, is grouped with amendments 25 to 28.

The amendments bring forward the timing of the first external review of the commission’s performance, so that the first review will occur after two years have passed since the commencement of the statutory functions. After that, a review will be required at least once every five years. Those measures will help to ensure an early review of how the commission is performing its functions and will provide assurance that the forecasting arrangements are robust and working well. That will be particularly relevant in the early phases of the commission’s work, when there will not be the same legacy of reporting on forecasts for the commission to build on.

The commission itself will determine the scope of the first—and, indeed, every—review. That means that it can ensure that the scope of the first review is proportionate to the status and situation of the commission at that time.

There is a clear public interest in ensuring that there is an early check on the commission’s work and emerging operational and governance arrangements. By requiring the first external review after two years, we are taking additional steps to ensure that the Parliament and the people of Scotland can have confidence that the commission’s forecasts, which will underpin the Scottish budget, are robust.

I move amendment 24.

Amendment 24 agreed to.

Amendments 25 to 28 moved—[John Swinney]—and agreed to.

That ends the consideration of amendments. I will allow a few moments for the chamber to clear before we move on to the next item of business.