Meeting of the Parliament

Meeting date: Thursday, March 10, 2016

Official Report 1058KB pdf

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Scottish Fiscal Commission Bill

The next item of business is a debate on motion S4M-15869, in the name of John Swinney, on the Scottish Fiscal Commission Bill.

17:20  

The Scottish Fiscal Commission Bill will ensure that there is an independent fiscal institution operating at the heart of Scotland’s devolved fiscal framework. The bill safeguards the Scottish Fiscal Commission’s independence, transparency and accountability to Parliament and the public, and I commend it to Parliament.

The Finance Committee devoted many hours to scrutiny of the Government’s proposals for the Fiscal Commission prior to and during the legislative process. I am grateful to the convener and members of the committee for the thoughtful consideration that they have given to the issues and the challenge that they have brought to bear. That challenge has helped us to test and refine our proposals so that we can all be satisfied that the bill delivers the strongest possible arrangements to safeguard the forecasts that support the Scottish budget.

I would also like to put on record my thanks to the individuals and organisations that took time to respond to the Government’s consultation on our legislative proposals last year and to the various calls for evidence on the topic that the Finance Committee has issued since 2013. Those contributions have provided fresh perspectives, which have guided and helped us to shape our policy.

Parliament is aware that, in order to secure a fair deal for Scotland on the block grant adjustment that ensured that there was no detriment to Scotland’s budget, I agreed to compromise on the production of forecasts in the fiscal framework agreement. I have previously expressed significant reservations about the proposed forecasting model, but I am confident that the arrangements in the bill will ensure that the commission is equipped to produce robust forecasts to underpin the Scottish budget, and that Parliament can appropriately hold the commission to account for its work.

The amendments that Parliament has agreed to mean that the commission will prepare five-year forecasts of receipts from the fully devolved taxes, from non-domestic rates and from the Scottish rate of income tax, and that those forecasts will be prepared in time to meet the needs of the Scottish budget process.

The commission will be required to publish an explanation of the methodology and assumptions that it applied in preparing its forecasts so that those can be scrutinised by Parliament, academic commentators and others. Furthermore, our amendments will ensure that the commission’s forecasts are the official forecasts that support the Scottish budget. The commission’s core statutory function is to prepare forecasts and assessments that inform the Scottish budget.

I have gone further than the equivalent obligations on the United Kingdom Government by providing in statute that the Scottish ministers must make a statement to Parliament if they depart from the commission’s forecasts in preparing the Scottish budget. That will ensure that Parliament can properly hold ministers to account for choosing such a course of action. I anticipate that the Scottish ministers would not take such a decision lightly and that alternative forecasts would be used in a Scottish budget only in truly exceptional circumstances.

What resources will the Scottish Government have? The cabinet secretary is talking about the possibility of the Government rejecting a commission forecast. Will the Scottish Government have the same resources for forecasting or will it have fewer resources? It is not clear to me what the case will be.

I intend to maintain the resources within Government to ensure that we can satisfy ourselves that we have a forecast from the Fiscal Commission that we believe to be credible and deliverable to underpin the Scottish budget.

The timing of commencement of forecasting responsibilities is still to be discussed and agreed with the Fiscal Commission. I want us to be in a position whereby the commission can exercise its full forecasting responsibilities as early as possible, but it is important to allow the commission time to put robust resourcing and operational arrangements in place, so that the Government and Parliament can be assured of the integrity of the forecasts that underpin the Scottish budget. I have every confidence that the chair and members of the commission will do just that as they oversee the transition to a statutory body, but I put on record the need to agree the transition arrangements with the commission to ensure that we have robust forecasts to underpin the Scottish budget.

The Parliament currently has competence to legislate for a fiscal commission with functions that relate to the tax and borrowing powers that were devolved by the Scotland Act 1998 and the Scotland Act 2012. Once the current Scotland Bill has been enacted, we will be able to move quickly to expand the functions of the commission in accordance with the fiscal framework agreement. We plan to use the regulation-making powers in the bill to require the commission to also produce forecasts of devolved demand-led social security expenditure and Scottish gross domestic product, and the existing function in relation to income tax will be modified to reflect the wider powers that are due for devolution in 2017.

The Government has lodged amendments that not only deliver the changes to statutory functions necessary to fulfil my obligations under the fiscal framework agreement but build in additional safeguards that strengthen the scrutiny and accountability arrangements underpinning a forecast preparation model. I have already referred to the requirement on the commission to publish details of its forecasting methodology, as the Scottish Government has done for the past two years. In addition, the commission will be required to prepare a report evaluating the accuracy of its previous forecasts to provide transparency on the past precision and accuracy of its technical analysis.

The commission will also be subject to an external review of its performance two years after the commencement of its statutory functions. That recognises the strong public interest in ensuring that the forecasting arrangements that underpin the Scottish budget and our new fiscal framework are operating effectively and are supported by robust institutional and governance arrangements. All of the reviews and reports must be laid before Parliament to provide additional tools by which Parliament can hold the commission to account.

I also want to ensure that we retain a form of the challenge function that is currently carried out by the non-statutory commission and which I believe has greatly enhanced the Government’s forecasting abilities. I envisage that, in future, forecasts will be prepared by a professional group of staff appointed by the commission and that those forecasts will in turn be scrutinised by the commission members. I have shared that view with members of the commission, who will determine how forecasts will be produced and what quality assurance processes are required to vouchsafe the integrity of the forecasts.

At its introduction, the bill delivered a Scottish Fiscal Commission that was structurally, operationally and visibly independent of Government. Independence has been a key feature of our proposals for the commission, with Audit Scotland commenting that the consultation paper that we published almost a year ago on 26 March 2015

“rightly identifies the independence and impartiality of the Commission as being of paramount importance and sets out proposals to achieve this.”

The bill expressly provides that in performing its functions the commission will not be subject to direction or control by any member of the Scottish Government, thus guaranteeing its operational independence. Moreover, the amendment that I lodged at stage 2 requiring the commission and the Government to agree and publish a protocol delivers greater transparency on the interaction between the commission and Scottish ministers. The commission will retain the flexibility to determine its own work programme within the scope of devolved fiscal powers, and that will enhance its operational independence.

The commission will rightly be directly accountable to Parliament for the discharge of its functions, and Parliament will play a key role in approving the appointment of commission members. In light of issues raised by the Finance Committee in its stage 1 report, I lodged amendments at stage 2 that allow members of the commission to be appointed to serve a second consecutive term of office and which specify that an appointment term will be a maximum of five years.

Everybody across the chamber should welcome the creation of the Scottish Fiscal Commission, because it demonstrates how seriously we are committed to establishing robust forecasting arrangements to support the operation of new tax and borrowing powers. The continuation of the Scottish Fiscal Commission but as a statutory body is another important milestone in the journey to enhance Scotland’s fiscal powers. The commission already plays a key role in supporting the exercise of the tax powers devolved under the Scotland acts of 1998 and 2012 and the bill provides for an institutional and operational framework that enhances that role, protects the commission's independence and creates a solid basis for the commission to expand its functions over time in line with the fiscal powers of this Parliament.

I move,

That the Parliament agrees that the Scottish Fiscal Commission Bill be passed.

17:28  

I very much welcome the opportunity to participate in this stage 3 debate on the Scottish Fiscal Commission Bill. At the outset, I thank my colleagues on the Finance Committee, the clerks and all those who gave evidence, and I also acknowledge the role of the Tory chancellor, George Osborne, who apparently convinced the cabinet secretary to make the Fiscal Commission more robust.

It was in January 2015 that Scottish Labour set out our plans for a Scottish office for budget responsibility—a truly independent body with teeth that would ensure greater transparency and scrutiny of Scotland’s public finances. Its importance cannot be overstated given the substantial new taxation and welfare powers that are coming. No longer will we just be spending money that someone else has given us; we will now be responsible for raising some of it, too. As a result, being honest and open with the Scottish people about what the economic future holds and placing forecasting in the hands of experts free of political manipulation are absolutely the right things for us to do. Of course, that applies to all Governments, of whatever political colour.

Let us look at the context. During stage 1, I noted that, for the first time in a decade, the price of oil was below $30 a barrel. Gross domestic product figures have clearly been affected in a negative way. Growth in Scotland—onshore and offshore—is not good, and Scotland is certainly not performing as well as the rest of the UK.

Just yesterday, the “Government Expenditure and Revenue Scotland” figures were published. I understand from James Kelly that they were published not once, not twice but three times because the figures that were provided by the Scottish Government were incorrect. I am sure that the cabinet secretary regrets that, but he will also acknowledge that that does not fill people with confidence. GERS, which is the Scottish Government’s balance sheet, tells us that there is a staggering £15 billion gap in our public finances. That is more than the funding for the entirety of the national health service.

When Labour called for a Scottish office for budget responsibility, the existing Fiscal Commission had a limited role—the fact that it had no forecasting responsibility and that its members were appointed by the cabinet secretary, serving as advisers at the same time as providing scrutiny, did not provide reassurance about the independence of the body. I am pleased that that has changed. The Fiscal Commission is now to be on a statutory footing and responsible for the official forecast and for assessing expenditure and income across the Scottish Government’s responsibilities, with better governance arrangements than we had before.

I confess that I am disappointed that the cabinet secretary has rejected my amendment on scrutiny of fiscal rules and the sustainability of public finances. I regret that he and his party have turned their face against ensuring that the Fiscal Commission is truly robust. Having those responsibilities is the normal stuff of fiscal institutions across the world but, hey, it is not to be that way in Scotland—yet it is, or was, something that SNP members of the Finance Committee agreed with. I was delighted to see Kenny Gibson and Mark McDonald make their way to the chamber for a couple of seconds to vote against my amendment, which concerned something that they believed in for more than two years but, of course, they have left again. I do not know why that is. Maybe it is to hide their embarrassment.

The Finance Committee produced a much-welcomed report on the need for a robust fiscal institution. That was followed by an equally thoughtful and robust stage 1 report. In both reports, only one member dissented from the idea that the Fiscal Commission should produce the official forecasts. As I said earlier, that was John Mason. I respect his consistency on that issue, even if I disagree with him. However, I regret his subsequent lack of consistency on other areas of the committee’s thinking.

What genuinely disappoints me is that other members and the convener changed their minds at the 11th hour, just before stage 2. Lo and behold, days later—before the fiscal framework was announced—they changed their minds again: official forecasting was now to be the responsibility of the Fiscal Commission. When it comes to the Fiscal Commission scrutinising fiscal rules or considering fiscal sustainability, they all agreed, but now they have changed their minds. The cabinet secretary had clearly marched his SNP members up to the top of the hill and promptly abandoned them there.

The cabinet secretary says that he did not influence those members and that he did not tell them about the fiscal framework negotiations. I ask people to think about it. Those members of the committee held a strongly expressed view consistently for two years and then, remarkably, they changed their minds at the 11th hour. I do not know what happened. It is a matter for individual members to determine how they protect their own credibility as politicians, but I care about the credibility of the committee. The flip-flopping was embarrassing. It did no credit to the committee or the Parliament, and I hope that we can all reflect on that.

Scotland is on the verge of gaining substantial new powers. With those new powers come new responsibilities. We need openness and transparency in the stewardship of the nation’s finances, and the Scottish Fiscal Commission will be a welcome addition to that process.

We support the bill at stage 3.

17:34  

I will begin on a positive note. The bill that we now have—the bill that I hope will pass at decision time today—is considerably better than the bill that was originally drafted. The bill as introduced had a number of flaws. First, it allowed only the Scottish Government to do the forecasts; it did not really encourage any alternative forecasts to be published, and the cabinet secretary made clear his view that there ought not to be any alternative forecasts.

The position was that the Scottish Fiscal Commission was simply to assess the “reasonableness” of the Scottish Government forecasts. In looking through that over the course of the budget process, I note that the reasonableness test was such a low bar that it was difficult to foresee a situation where the commission would do anything other than pass the Government’s forecasts as reasonable. When quizzed on whether it could suggest any numbers at all that would be deemed to be unreasonable, the commission was unable to say so. It stated bluntly that it did not look at the numbers. It did not look at the outputs at all; it looked at the models underpinning those numbers.

I hugely welcome the amendments that were passed in group 1 earlier today. They were fundamental. I genuinely think that, without them, we would not have had a Fiscal Commission worthy of the name. Without them, we would have had a series of educated, useful, intelligent advisers who would make the budget process better than it would be without them but would be nowhere close to being what is known internationally as an independent fiscal institution. That change to the bill rescued the commission from being something that would still have been a little helpful, perhaps, but would have been of almost no real regard in terms of scrutiny, particularly concerning the powers that will be introduced in the years to come. That makes a huge improvement and, for that reason, we will continue to support the bill and will vote for it at stage 3.

However, having worked on the matter for well over two years now, I have to say that I am left with a bit of a feeling of dissatisfaction at the end of the process, for a number of the reasons that Jackie Baillie outlined in her speech. I guess that I have been working on the Finance Committee for a couple of years extra as it has taken into account a huge amount of evidence over the course of the process.

I am disappointed that we do not have an amendment to ensure that the commission addresses the sustainability of the finances and the adherence to the fiscal rules. That seems to happen throughout the Organisation for Economic Co-operation and Development countries. We have looked at the materials from the Scottish Parliament information centre, which got a document from the OECD, and we have been examining practice in 17 countries. All 17 of them consider at least one or the other. All 17 consider the long-term sustainability or the monitoring of fiscal rules, and nine of the 17 do both. The fact that we will do neither here makes us a bit of an outlier.

I was dissatisfied, too, with the Finance Committee at stage 2. I will return to that in closing. In attempting to be helpful by answering a question from me, the cabinet secretary has just opened up more questions. At stage 1, we all agreed in relation to fiscal rules, without anyone going away from it, and we all thought that that was the way we had to go. We had held that position for well over a year. Then, all of a sudden, at stage 2, four members of the Finance Committee voted against the relevant amendment, which failed. If the cabinet secretary did not attempt to put any pressure on those committee members at all, and if confidentiality was maintained—I have no reason whatever to doubt that—what was it that made those members change their minds? What was the intervening evidence between the report being published in the middle of January and the vote being taken in early February that made them vote the way that they did? As a committee member and a member of the Parliament, I think that we are entitled to an explanation of why that was the case. I hope that we get that over the course of the debate.

17:39  

I am happy to speak in today’s debate. I very much welcome the fact that we have a Fiscal Commission in place. We are now going to have a strengthened Fiscal Commission that will, through the bill, be put on a statutory footing. As other members have said, we have spent a fair bit of time in the Finance Committee examining and discussing such commissions and how they work; we were also the lead committee for the bill.

Although Scotland aspires to be an independent country at some point, with all the extra powers and responsibilities that that would involve, we are clearly not at that point yet. Internationally, there are not that many examples of devolved administrations, or states in federal systems, that have their own independent fiscal institutions. Some of the states in the USA do, Ontario does, and Catalonia does, but not many others do. We have tended to look at smaller independent countries for models. Some of the committee visited Sweden and a couple of us went to Ireland.

Scotland has the opportunity to set an example and to lead the way for devolved Governments and Parliaments, with the commission. As we studied more international examples, and as we thought through how a commission would work, I became increasingly convinced that the normal international model of an independent commission commenting on or endorsing forecasts is the best model. That is the norm internationally; the UK model is an exception. In that respect, I agreed with the Scottish Government and disagreed with the majority of the committee. In fact, the commission’s members were not convinced by the OBR model, either. I must say that I have a great respect for all three commission members, and I hope that they will be willing to take on a role that is different to the one that they had expected. However, as part of the negotiations over the fiscal framework, I accept that Westminster was keen to have us adopt its OBR model and I accept that the Scottish Government agreed to that as part of the bargaining process. That was the main area of disagreement at committee.

Mention has already been made of one amendment today. I must say that there was a bit of tokenism going on: Labour, as the Opposition, in fighting off the Tories, was trying to show that there was something that it must oppose. It hunted through the bill, found a little thing and created an amendment on it.

John Mason has believed in the measure for more than two years. It was not about hunting for something to disagree with; it was about making sure that we have a robust Fiscal Commission that is worthy of this Parliament.

We have that. As I have said, a major issue is who does the forecasting. Jackie Baillie’s amendment was on a peripheral issue. I find it hard to get excited about it and I do not believe that Jackie Baillie is excited about it. She is just making a mountain out of a molehill.

We all agree that the independence of the Scottish Fiscal Commission is essential. That independence comes about partly by its having appropriate structures, but I remain convinced that other essential elements are the integrity and independence of the individuals involved. In that regard, forecasting and independence are two distinct concepts, and whether the Fiscal Commission does the forecasting does not affect its independence. We have the good example of Audit Scotland, which checks other people’s work and comments on it. It is hugely respected. I found amendment 7 strange in that regard, although I voted for it. It talks about the commission preparing reports

“containing an assessment of the accuracy of the forecasts prepared by it”.

We have been forced into a slightly odd position in which the commission will have to comment on its own forecasts.

Draw to a close, please.

Right. We have been very generous so far with the Fiscal Commission. It costs £850,000, which is more than the Irish or the Swedes get, and we should not throw more money at it without a lot of caution.

I very much welcome that we have an expanded Scottish Fiscal Commission, and I hope that members will support the motion at decision time.

17:43  

As members have explained, this has been a long and twisting road. I am afraid that I have not been able to follow every turn—I am not on the Finance Committee—but I am pleased at the destination at which we have arrived.

When the original model was proposed, I had two worries about it. First, although the theory was that we would have Government forecasts on which the commission would then comment, it seemed as though SFC members were to act more as advisers to the Government, and there was to be constant interaction during the process. That may have meant that it had influence, but it also reduced its independence. That was a flaw in the model.

The more fundamental flaw was the commission not being involved in the forecasts. We were told that there is not a single fiscal commission anywhere that looks only at official Government forecasts, so that needed to be sorted out.

David Bell made an interesting comment about why that was necessary:

“I think it is essential that the forecasting is done outside Government, then you will know if they are wrong, which is probably going to be true, they will be honestly wrong rather than dishonestly wrong.”

I suppose that a more neutral way of putting that is that Governments tend to indulge in optimism bias. Therefore, I am pleased that the commission will now have an enhanced role. It is going to be reviewed—that is good—and that there can also be external evaluation of the commission’s work. Perhaps we can have a mechanism to do evaluation through local or international experts, as the Organisation for Economic Co-operation and Development recommends.

Beyond that, I am slightly worried about the overemphasis on checking, which we still hear from the cabinet secretary. I may have it wrong, but it appears that forecasters will be appointed and the SFC members will check them, which seems to me to be rather overengineered. I was also slightly surprised to hear that the Scottish Government will have its current forecasting capacity checking the SFC. That departs from the OBR model, so we need to keep an eye on it. One reason for that is that there will be increased expenditure; if all that capacity still exists in the Scottish Government and there is now to be extra capacity in the SFC, that will have financial implications.

Tax will be critical, but the commission will also have a role in relation to the new social security powers. The main issue that could be controversial between the two Governments in the next five years relates to spillover effects. The cabinet secretary pointed out in one or another of his committee appearances that information from the OBR and SFC would be helpful in resolving any controversies on those.

John Mason said that he is not excited by Jackie Baillie’s amendment and claimed that none of us is, but it is an important amendment. I hope that it will be revisited in due course. Many European countries have one or another of the responsibilities that are referred to in it.

I am particularly interested in an assessment of the long-term sustainability of the public finances. It is not one of Audit Scotland’s functions to project five years ahead what we know about policies and tax. The cabinet secretary says that I and everyone else can hold him to account on that, but we cannot. We do not have that information unless we have experts projecting over five years, as the OBR does. One of the problems is that there is almost a prejudice against the OBR among some members of the Parliament. The OBR produces good reports on financial sustainability five years ahead; I do not see why the Scottish Fiscal Commission should not perform the same function.

Although I welcome the changes that have been made in the bill, I hope that it is not the end of the process. I am sure that members who are coming back after the election will keep a close watch from inside the Parliament. I—and, no doubt, Gavin Brown—will keep a close watch from outside.

We come to the closing speeches. I understand that this will be Gavin Brown’s last speech so, on behalf of the Presiding Officers, I thank him for his contribution to the Parliament and wish him all the best for the future. [Applause.]

17:48  

Presiding Officer, I did not realise until now that this would be my last speech. You obviously know something that I do not. The whip in this Parliament must move in very mysterious ways. I hope that I do not get dragged into anything next week or the week after.

This has been a short debate. It is always a difficult job to sum up only a handful of speeches since I last spoke. However, the starting point must be that we all want the bill to pass. As I said in my opening speech, the bill is considerably better than it was at the start. For that reason alone, it deserves the support of the entire Parliament.

If we examine the genesis of fiscal commissions throughout the world—why they came about and come about—we find that, in almost all cases, the reason that a fiscal commission came about was that there was a big recession, a downturn that was not predicted or a downturn that turned out to be demonstrably worse than anyone predicted and that it was all driven by optimism bias from Government. Therefore, Government after Government has set up a fiscal commission to ensure that the pence and the pounds are managed, to ensure that optimism bias is minimised or, indeed, eradicated and to get independent expertise along with a set of checks and balances. That is one of the reasons why we are doing it now, coupled with the fact that we already have some financial powers and we are getting considerably more.

If we have financial powers only over, for example, LBTT, if we get it slightly wrong, we could find a way to accommodate that change to ensure that it does not impact on the services that we can provide. However, once we move into income tax, non-domestic rates and a portion of VAT, with the greater number of powers that we have, the greater is the risk that we get it wrong. If we got it wrong at the forecast stage, particularly in predicting that we will get more than we actually do, we would have serious problems in the Scottish budget and difficulties in correcting those errors going forward. For that reason, the Fiscal Commission becomes even more important. That is why we should all back it today.

I want to pick up on the one key point of the debate. John Mason—a man I respect hugely, who has done a very good job as deputy convener of the Finance Committee—is simply wrong to say that the issue was tokenism. Jackie Baillie’s amendment reflected the second most important thing that the committee reviewed and considered. Issue number 1, far above the rest, was forecasting, but issue number 2 was having a responsibility for the long-term sustainability of the finances and ensuring that the fiscal rules were adhered to.

It is incorrect to suggest that that responsibility is tokenism. OECD principle 3.3 outlines the functions that fiscal commissions ought to have:

“economic and fiscal projections ... baseline projections ... analysis of the executive’s budget proposals”

and

“monitoring compliance with fiscal rules or official targets”.

Monitoring compliance is one of the key things that have to be done by any fiscal commission, anywhere on the planet.

The committee thought all the way through that the commission had to do that. In rejecting that today, I hope that Mr Swinney can at least keep the door open. As our powers increase and we become a stronger fiscal Parliament, it is critical that we get that right. We need somebody other than Government to keep control. That will not just be better for the country, but will help Mr Swinney or his successor to do their job even better. For that reason, I hope that we ultimately get that responsibility for the Scottish Fiscal Commission.

17:52  

I have come late to the topic. I have not served on the Finance Committee, although I have watched some of its ambulations over the period. We have reached a point that is good on the whole. The bill will be supported unanimously tonight.

There is now international recognition that independent fiscal institutions play a vital role in supporting the operation of a country’s fiscal framework and there has been rapid growth in the number of such institutions over the past decade—particularly, as Gavin Brown said, since the 2008 financial crisis. Prediction is a difficult game. Who would have known that the oil price today would have been what it is? Certainly the Government was not able to predict that and I do not altogether blame it for that, although the comments that have been made today on the GERS not being relevant seem extraordinary.

We have no argument with placing the Fiscal Commission on a statutory footing. That is a significant improvement on its previous basis, which was to be helpful and useful, but essentially an adviser to the Government.

The vexed questions that we have faced today have been only half resolved. First, there is the question of the commission producing the macroeconomic forecasts. The Deputy First Minister called it a winding road and it certainly has been. The resolution is in line with the committee’s original view on the issue, although as we have heard, the Scottish National Party members have latterly followed the Deputy First Minister up and down the hills like the Duke of York—although as Jackie Baillie said, the Deputy First Minister abandoned them at the top.

In evidence, the International Monetary Fund said:

“The Scottish Fiscal Commission could contribute to the credibility of the government’s fiscal policy by: assessing the realism of the Scottish government’s forecasts”.

However, having independent forecasts is a much better way of doing it. The SFC is to have its own forecasts, so we will watch with interest—in my case, from afar—to see whether those forecasts match. We welcome the amendment that provides that if they do not match, the Government will have to give Parliament an explanation.

The important thing is that the forecasts are five-year rolling forecasts. That is critical because, in the whole period since the Parliament was established, we have not really looked far ahead. Perhaps we have not had the necessity for that. Audit Scotland has repeatedly said that all our institutions fail to look ahead. They look ahead on an annual basis, and they still try to balance the books at the end of the year. That is not the way to run the country, particularly when we are going through huge changes, as we are with health and social integration. That will take five to 10 years, and balancing the books on an annual basis will be difficult.

The OECD talks about nine principles:

“local ownership ... independence and non-partisanship ... mandate ... resources ... relationship with the legislature ... access to information ... transparency ... communications; and ... external evaluation.”

Gavin Brown gave us some of the additional wealth of information behind those principles. Many of them have been met, but the principle that has not been met as a result of the rejection of what John Mason quite extraordinarily described as “tokenism”—I do not understand that, as there has been consistency on the issue over time—is that of measuring performance against fiscal rules and sustainability. That seems to me to be the bit that is now missing, and it is a great pity that we will not have it. To say that Audit Scotland would do that is quite inappropriate. That is not its role. I have a great amount of time for Audit Scotland, which has been hugely valuable, as Mary Scanlon and I said in committee the other day. It has made an enormously important contribution, but that is not the contribution that it should make.

Despite the contortions of SNP members on the issue, which have been quite revealing of how our committee structure has worked in the Parliament, at least the Deputy First Minister—if I understand him correctly—has agreed to re-examine it, particularly if we get greater flexibility in setting our own fiscal rules. That at least is to be welcomed.

I very much welcome the changes to the appointments system. Some might want to go further and have hearings for the chair before the chair is appointed. I would certainly favour that. At least the Finance Committee will be able to call members for evidence.

The reciprocal arrangements for co-operation between the commission and the OBR are welcome, and the external evaluation is important, although there is a lack of detail on that.

I make a final plea. Ever since the Parliament started, there has been a lack of strategic clarity and transparency in the budget process. I do not deny that the books have been balanced—that is great—but nevertheless it is a matter of looking ahead, as Audit Scotland has said and as I mentioned earlier. The long-term view of where we are going to go is really important. I hope that some of our discussions in the opening session about Oregon and how well it worked are reflected in where we go in future.

Seventeen years on, there are many issues on which there has been no progress, such as health inequality. There was initial progress on child poverty—in fact, the OECD said that that was among the fastest that it had ever seen—but that is going backwards, and the homelessness target has not been met. There are many social objectives that we need to meet, and that has to be done within an overall framework. We will have that partially tonight, and I hope that we will eventually have it in full measure.

My party and I support the bill.

17:58  

I begin with a comment that Malcolm Chisholm made. He was concerned about the Government maintaining its capacity to undertake the tax-forecasting function to enable us to be informed about whether we could come to the view that we accept the Scottish Fiscal Commission’s estimates. That is an elementary proposition. Would not the Government be in dereliction of its duty if it did not undertake such an assessment to satisfy itself that a body that is not accountable to it—I concede that it is accountable to Parliament—is able to formulate a set of numbers that will be significantly influential on the public finances of Scotland? Would it not want to be assured that the commission has come to the correct judgment and proposition—or range of propositions? After all, members are absolutely right: there is no precision about these points. However, we certainly need to satisfy ourselves that the estimates and forecasts that have been put forward are appropriate and dependable for the purposes of the Scottish budget process.

If the Government decides that the forecasts do not command its confidence, a mechanism is in place. That is part of the OBR framework, as well—the OBR can be challenged by the United Kingdom Government if it does not believe its forecasts, and we have put arrangements in place to enable us to take the same approach. It is absolutely correct to enable the Scottish Government to properly exercise its financial management responsibilities for the people of Scotland.

Richard Simpson set out some arguments about the international evidence on external forecasting. If Dr Simpson was to look at the analysis undertaken by the Scottish Parliament information centre, he would find that the OBR model is the outlier. When Robert Chote gave evidence to the Finance Committee, he made the point that the OBR model was not the norm. Of course, as part of the negotiations on the fiscal framework, I have accepted a proposition that is closer to that model. I am prepared to accept it if it is necessary to get the United Kingdom Government to agree to a reasonable fiscal framework. However, when we are coming to a considered judgment about this, we should bear in mind the fact that the Scottish Government’s position in the debate, to begin with, was founded on a strong body of international evidence that indicated that the approach that we were taking was robust and would allow the Scottish Fiscal Commission to fulfil the function that was envisaged for it.

In the course of the debate, there has been a lot of discussion about Jackie Baillie’s amendment 29. Gavin Brown observed that the amendment would have had two functions: first, to enable us to have clarity about responsibility for the long-term sustainability of the public finances; and, secondly, to enable us to see whether the Government was observing its financial rules. On the latter, my problem with a lot of what was said in the debate on the amendment was that the question of whether the Government is observing its financial rules is entirely black and white. As I explained to Baroness Goldie, in response to her intervention, it is a matter of fact.

On the question of where responsibility lies for judging the long-term sustainability of the public finances, in my view that rests ultimately with members of Parliament—informed, yes, by the consideration of the Finance Committee and, significantly, by the judgments of the finance secretary. Ultimately, it is the responsibility of members of the Parliament to determine whether they believe the public finances to be undertaken sustainably.

Of course that responsibility falls to Parliament but, as we have heard time and time again, members of Parliament will be aided by the SFC’s analysis. As parliamentarians, we will do our job of looking at the public finances better if we have the analysis from the SFC.

That is a matter of opinion on which Mr Brown and I are going to have to disagree. There is plenty of information and analysis available that will enable Parliament to form that judgment. Ultimately, it is a judgment for elected members of Parliament; it is not a judgment for people appointed by Parliament on its behalf. It is a responsibility that all elected members of Parliament should take seriously.

I hate to close my speech tonight on a discordant note, as the Presiding Officer has informed us that it is Mr Brown’s final speech to Parliament. Mr Brown seemed to be surprised that it was his final speech, but I can advise him that the source of that information was in fact the Conservative chief whip. Maybe Mr Brown will take a message from that revelation.

I want to share with Parliament a little story about Mr Brown. I was on my summer holidays last year, escaping from it all, and was waiting in the queue to get on the ferry at Oban for my summer retreat to the Argyll island so magnificently represented in this Parliament by Mr Russell. As I pulled up in my car to join the queue for the ferry to Mull, who was in the car next door but Mr Gavin Brown and his family? It was a real get-away-from-it-all break for the Swinney family.

Mr Brown has been a creditable and commendable adversary for me in this Parliament but also a friend. I commend him for his distinguished contribution to Parliament, which will be the poorer for his not being a member of it after the election. If I may give some private advice to the Conservative Party, it is that it will be significantly weaker for not having Mr Brown in its ranks. However, I thank Mr Brown for his contribution. [Applause.]

Jamie McGrigor (Highlands and Islands) (Con) rose—

If Jamie McGrigor will forgive me, I am going to have to bring my remarks to a close.

Mr Brown has not always been my strongest ally on what I have brought to Parliament, but I thank him for his distinguished contribution to Parliament. [Applause.]

That concludes the debate on the Scottish Fiscal Commission Bill.

Before we move to the next item of business, I am minded at this stage to accept a motion without notice from Joe FitzPatrick, on behalf of the Parliamentary Bureau, to bring forward decision time to 18.05.

Motion moved,

That, under Rule 11.2.4 of Standing Orders, Decision Time be brought forward to 18.05.—[Joe FitzPatrick.]

Motion agreed to.