Budget Process 2002-03: Stage 2
We now proceed to the Finance Committee debate. Des McNulty, the convener, is introducing the committee's report on stage 2 of the budget process.
I thank the Parliament for this opportunity to open the debate on the Finance Committee's stage 2 report on the 2002-03 budget process. Since the commencement of stage 2 of the process, my predecessor as convener of the Finance Committee, Mike Watson, has been appointed Minister for Tourism, Culture and Sport, and I congratulate him on that. I also thank him for the energy and effort that he put in as convener of the Finance Committee and for working to establish in it a robust culture of examination and analysis.
My colleague, Andy Kerr, was recently appointed as Minister for Finance and Public Services, and I look forward to working closely with him as the committee finalises the budget process, together with the other work to be undertaken by the committee as we move into the new year.
It is fair to say that we are engaged in an experiment in the evolution of our procedures here in the Parliament. No elected representatives in the UK have ever before had the chance to participate in a process of budget development as pioneering as that which we are undertaking. This is the second full year in which the three-stage framework for setting out the Executive's expenditure plans has been followed. I have no doubt that there is room to improve the mechanics of the process, and I will highlight one or two points about that.
The result of the process will be a budget (Scotland) bill that will have been subject to considerable parliamentary scrutiny before its introduction. The eventual act will authorise expenditure from the Scottish consolidated fund for the forthcoming year. The process is in stark contrast to the situation that pertains in Westminster, where very little pre-legislative scrutiny is undertaken.
I intend to concentrate my remarks on the process concerning the 2002-03 budget, but it is worth bearing in mind the fact that the content of the Executive's budget proposals continues to build on the achievements of previous budgets. The numbers are striking. In 2002-03, there is again an increase in the total budget for Scotland, of around 3.5 per cent in real terms. I see that as further evidence of the Executive's continued commitment to the improved delivery of public services in bread-and-butter areas such as health, transport and education. As such, it is to be commended.
Detailed scrutiny of the Executive's spending plan is now an established part of the parliamentary calendar, and there has been a substantial improvement in transparency and accountability as a result of the mechanisms that we now have. The draft budget this year was a considerable improvement over last year's in its layout and its tabular display of relevant information made the document much superior in terms of readability and clarity.
That improvement was acknowledged by a number of the subject committees. However, it is fair to highlight the fact that they also pointed out that further clarification and improvement is required. I want to work with committee members to consider how such improvements might be made. One thing that we might consider in the course of the next year is the development of a set of rules of the road for subject committees, so that they can better carry out their function of scrutinising budgets.
As emerged from the debate at stage 1 of the process, we need to consider how better to link budget allocations to policy priorities and, more importantly, to performance targets. The Finance Committee has recommended that information about the past performance of departments be included in the draft budget so as to allow an assessment of their performance by committees. I commend that suggestion.
We must move towards greater transparency, so that members can carry out their scrutineering role more effectively. I note that, in its response to the committee's stage 1 report, the Executive has also stated its commitment
"to improve the Annual Expenditure Report in terms of its content and presentation and in shifting the emphasis more towards what we achieve with expenditure rather than the amount that we spend."
I am grateful to the Executive for the commitment that it has made and look forward to working with the Minister for Finance and Public Services to deliver that important improvement.
Scrutinising budgets valued at around £20 billion is not a task that should be undertaken lightly. There must be a partnership between the parliamentary committees and the Executive. We require demonstrated and demonstrable commitments by the Executive, the Parliament and the public. We should always be considering how we can involve the public more effectively in the scrutiny and decision-making process.
The previous minister responsible for finance, Angus MacKay, showed a welcome willingness to consider the Finance Committee's suggestions. Together, he and the committee were able to realise tangible results, as shown by the 2002-03 spending proposals. The committee has now appointed a standing adviser to liaise at a technical level with the Executive on the budget documents, to structure guidance for subject committees and, when required, to assist the subject committees with recommending alternative spending priorities. We hope that the standing adviser's work will enhance significantly, not just the work of the Finance Committee, but also that of the subject committees.
The Finance Committee has also commissioned external research to investigate the feasibility of outcome budgeting for the Scottish budget and thereafter to develop practical proposals to help the committees measure outcomes in the Scottish budget. Both measures will undoubtedly facilitate the task of scrutinising the Executive's spending proposals. They reflect the seriousness that members of the Finance Committee attach to that role.
It is important that we involve Scottish Executive officials in the committee's work. I would like us to take up the suggestion of the financial issues advisory group that the scrutiny system should encourage accountable officers to share good practice, instead of focusing on errors that have been made, as is perhaps the case at Westminster.
Finally, and most important, the public must be involved if we are to make public consultation work. The Scottish Parliament has made a strong commitment to public consultation and made considerable efforts to ensure that its workings are open and accessible to the public of Scotland. Because of that openness and ease of access, the Finance Committee has benefited throughout stage 2 of the budget process from the advice of experts as diverse as Dumfries and Galloway Tourist Board and the National Farmers Union of Scotland, as well as from that of Scottish Executive staff.
The Finance Committee met in Perth at the end of stage 1 of the budget process, and in Kirkcudbright during stage 2, to obtain a local perspective on national spending plans. It is all too easy for us to sit here in the capital and to return to our constituencies at weekends without gaining a broad appreciation of people's feelings about the variety of issues that interest them. It is important that committees meet local organisations to hear their views at first hand. The Finance Committee must involve itself in that work when scrutinising public expenditure.
Although committees can be made accessible to organisations in areas as remote as the Highlands and Islands, organisations throughout the country need to work co-operatively with the Parliament to ensure that their concerns are raised with decision makers. This is a two-way street: we must make ourselves accessible, but we must also encourage a perception among the public that their views are listened to.
I thought that Des McNulty would appreciate a break in his 20-minute marathon. Does the member agree that one problem with taking evidence around the country is that, although the people who appear before the Finance Committee may feel able to talk about the generality of Government policy, it is very difficult for them to address themselves to the specifics of the budget that is in front of them—or at least, in front of us?
Alasdair Morgan is absolutely right. We must improve members' awareness of the budget to help them to perform their role more effectively. That can be done by training and by improving the layout of information, for example. We must also find more effective ways of making the budget accessible to members of the general public. Local councils have taken some interesting initiatives in that regard, providing information about budget options and where the money goes. Perhaps the Finance Committee could consider that in relation to increasing our public accessibility and accountability.
It was helpful that the Minister for Finance and Local Government participated in public meetings throughout Scotland and took the opportunity to hear the voices of local communities from outside the central belt. It is important that not only committees are involved in that work but that ministers get out and about to explain what they are up to.
The report contains 14 recommendations and encompasses the recommendations of other committees, which were considered by the Finance Committee. The committee recommends that proposals are drawn up for mechanisms to ensure that spending by non-departmental public bodies, such as health boards, local government and other NDPBs, is in line with Executive priorities and programmes. Although that is easy to say, it is hard to do—we should aspire to that.
The committee heard evidence about the lack of transparency in expenditure on health and local government. There is no doubt that we must examine that, particularly given the fact that health and local government are the two largest areas of expenditure in the budget. Lack of transparency is detrimental to ensuring high levels of accountability to the taxpayers of Scotland. Measures such as those recommended by the committee will enhance the accountability of Scottish agencies to the Scottish Parliament and I hope that they will reassure the public that they are getting value for money.
The committee also recommended that the electronic provision of information should be expedited in order to allow interested parties to drill down from the top level funding figures that are shown in the budget documents to local expenditure on local programmes. During stage 1, the committee heard first-hand evidence that suggested that initiative, which was reinforced by evidence that we heard in Kirkcudbright.
The committee concurred with the premise that it is difficult for individuals to relate weighty budget documentation to their own affairs and local communities. It is up to us to do something about that. The committee believes that we might not assist people if we were to provide further detail in large documents—in fact, it might be detrimental if we were to do so. Accordingly, the committee believes that the electronic provision of such information would aid the retrieval and handling of information and would make it readily accessible throughout Scotland.
The subject committees' reports to the Finance Committee raised numerous matters. The Rural Development Committee noted its desire to be advised of methods by which an estimate might be made of the amount and impact of expenditure on rural areas by Executive departments. If the Finance Committee's recommendation on the electronic provision of information about local expenditure on local programmes were to be implemented, the record level of spending in rural areas by the Executive would become more apparent.
The committee's consideration of the budget highlighted concerns about underspending by departments. The committee identified some of those concerns in its stage 2 report, primarily because the level of underspend is on a par with the total spending plans in the draft budget for social justice, exceeds the spending plans for justice and rural affairs and represents more than four times the spending plans for sport and culture. Therefore, the committee was pleased to receive advice from the Executive that a process of quarterly reports back to ministers has been implemented. I hope that that will reduce the possibility of continuing underspending on such a scale. The measure that the Executive is taking should assist the monitoring of the degree of underspend, with a view to identifying reasons for spending allocated moneys and, if necessary, revising the way in which policy objectives and priorities are delivered.
I have already made the point that presentation of the budget documentation has been a concern of the committee since its inception. I think that all members recognise that significant improvements have been made, albeit that other modifications are required to enhance the usefulness of the documentation. As presentation of the information contained in the documentation develops, the committee will be able to devote more time and resources to scrutiny of the Executive's proposals. As we near the finalisation of the budget process in the Parliament's second budget, the Finance Committee is better placed to use the skills that it has developed through its previous inquiries.
There remains much scope for the committee to take the degree of scrutiny of the Executive's spending proposals to a higher level and, with that, to give the people of Scotland the reassurance that they want that their taxes are being spent effectively and judiciously.
Every member of the Parliament is aware of the findings of the recent Scottish social attitudes survey; it is incumbent on us all to work to reverse the negative perceptions of many Scots of the political process. I believe that the Finance Committee has a considerable role to play in that process and in the whole framework of financial scrutiny.
The initial FIAG report highlighted that there is a lot of virgin territory in which scrutiny and accountability can be developed. Within the scope of its constitution, the Parliament will be able to take that work forward. We are beginning to go down that route, but there is a considerable way to go. Members of the Finance Committee are entrusted with overseeing expenditure plans. We will continue to monitor them, but we will also want to monitor the way in which things are done so that we can secure real improvements.
I will conclude by saying some words about the future work of the Finance Committee. Next year, the committee will seek to judge departmental performance against the priorities that have been set by the Executive. We will consider the extent to which the spending plans reflect what the Executive has said that it will do. However, the committee will be able to measure whether public expenditure achieves its goals and how effectively departments perform only if priorities are clearly identified. The committee has been pleased that the Executive has shown itself to be genuinely enthusiastic to switch the focus of attention from what is spent to what is gained for that expenditure.
We are also pleased that the Minister for Finance and Public Services is promoting a move to priority-based budgeting among his departmental colleagues as a first step towards measuring outputs and outcomes in relation to spending. We hope that the departments will accept that that move is a necessary tool in performance management, not an additional burden. That move will improve the process for everybody. The minister can be commended for his effort and commitment on that subject. We can make good progress.
For our part, we accept that that process will take some time to come to fruition. It will not come in a single step, but as part of an evolving process. We are trying to move forward. We are getting the process right and we are beginning to get it more and more right. As the process develops, I hope that the Finance Committee will play an increasingly important role in the way in which the Parliament operates. I am delighted to commend the motion.
I move,
That the Parliament notes the 13th Report, 2001 of the Finance Committee on Stage 2 of the 2002-03 Budget Process (SP Paper 468) and notes the recommendations made by the Committee.
The next speaker is Alasdair Morgan. The time limit on speeches from the back benches will be five minutes.
I am sorry that Des McNulty sat down ahead of his allotted time, as I thought that he was just getting into his stride.
I welcome to their new posts the convener of the Finance Committee and the Minister for Finance and Public Services in their first budget debate in those capacities. It is never an easy task to inherit work that has been done by others, then to be put, almost immediately, into the public arena to defend and explain that work.
Alasdair Morgan has been there.
Indeed, although I did not have anything to defend. [Laughter.] That comment can be taken in two ways.
For Mr McNulty, the post of Finance Committee convener holds the added attraction that it has proved to be a springboard to higher things for his predecessor, Mike Watson, and for another former member of the committee, Richard Simpson. Given the rapidity with which such events seem to happen, who knows how long Des McNulty will be with us in his current guise?
I congratulate the previous Finance Committee convener who, with the committee, visited Kirkcudbright in my constituency. I invite him to come back to my constituency in his new capacity as Minister for Tourism, Culture and Sport to see the problems that the tourism industry in Dumfries and Galloway faces. I repeat Des McNulty's thanks to the clerks, advisers and researchers for the excellent work that they have done to prepare the report on stage 2 of the budget process. I also thank the various subject committees.
Given the amount of detail in both volumes of the report, which contain a large number of comments from the Finance Committee and from the subject committees, it is difficult to cover all the ground, so I will focus on one or two issues.
The first is the Finance Committee's recommendation on the problems surrounding the allocation of end-year flexibility and the difficulty of incorporating those sums in the current budget cycle. Clearly, we will always have end-year flexibility—or, at least, we will always have the underspend or overspend that gives rise to it. As Des McNulty said, it would be helpful if advance notice of underspends was given to committees as soon as possible, because the current arrangements offer no opportunity for the allocation of those sums to be discussed by the subject committees. We must suppose that the ministers concerned receive monitoring reports and know of the existence of potential underspends. If they do not know, that is even more of a reason for that area to be tightened up.
Reports should be seen by subject committees and the Finance Committee, to ensure that they have a chance to say how the money might, or should, be spent. Unless that happens, there will always be somebody with mischief on their mind who will suggest that the money might be diverted from essential and agreed budgets into uncosted or novel projects—especially in the year immediately preceding a Holyrood election. If we are to have a full budget process, it must apply to all the money that the Parliament agrees the Executive should spend.
Regardless of how insignificant the ministers may argue the underspend was as a percentage of the total budget, the fact remains that, this year, it would have bought two and a fair bit new Holyrood parliaments—even at the wildest cost estimates of the project's detractors. As the Finance Committee noted in volume 1 of its report, the
"underspend is on a par with the total spending plans set out in the draft budget for Social Justice, exceeds those for Justice and Rural Affairs and represents more than four times the amount allocated to sport and culture."
Mike Watson may be interested to note that.
For members of the Parliament and members of the public who are interested in specific areas and who are concerned that those areas are not receiving attention, sufficient funding or any funding, there is room for considerable concern that the amount of money washing around in the budget far exceeds the modest amount that they seek—often in vain.
I note that the Transport and the Environment Committee was especially concerned that an underspend of 8 per cent was forecast. That is a concern when almost every MSP in the chamber today—and all those who are not here—has his or her pet scheme for road or rail improvement. That scheme is not less worthy for being a pet scheme, but the Executive cannot find the funding for it.
In the same vein, the Transport and the Environment Committee asked for further clarification of the £289 million that the then minister, Angus MacKay, announced in June as being available for reallocation between departments. That money was included in the draft budget so how it will be spent, in its new guise, was within the purview of the subject committees. We all felt that clarity on where savings in spend had been made or on where spend had been abandoned or deferred in order to achieve the total of £289 million would have been helpful, both in understanding the process and in helping to assess, on future occasions, how precisely departments manage their budgets and are able to spend those budgets.
It will be interesting to see the extent to which the many interesting recommendations of the Transport and the Environment Committee are effected, given that the convener of that committee was, of course, the present Minister for Finance and Public Services. We assume—at present anyway—that his views will not have changed because of his elevation.
The second Finance Committee recommendation that I want to address is our enthusiasm for progress towards priority-based budgeting and measuring outputs and outcomes. We have to know what the budget inputs are meant to achieve and we must be able to assess whether the spend from the previous year's budget has achieved the objectives that were set when the budget was approved. Several subject committees commented on the lack of information on outputs and outcomes—whether future or past. For example, the Transport and the Environment Committee commented that outcome information on how the department had performed in previous years against objectives and targets would have been helpful.
In fairness, I have to say that a recent research paper that the Finance Committee received left the members of that committee in no doubt that there would be considerable challenges in moving to outcome-based budgeting—even apart from the considerable problems that the Executive might have in providing the information.
Some of our desired outcomes have planning horizons that are far further than the usual horizon of politicians, who tend to work to the electoral cycle, rather than to any economic or other cycle. Some outcomes may be difficult to measure and frequently there will be difficulty in being sure of the causal relationship between inputs and outcomes. However, we must begin to make the effort.
The point about more information being available has been made in many places and was raised with the minister at the Finance Committee. We all understand the difficulties of providing enough information while staying within the bounds of what is manageable for those in receipt of the information. We appreciate the amount of information that has been provided so far—it is a very good start. We do not wish to receive the equivalent of 24 volumes of Encyclopaedia Britannica, even if it is on CD-ROM, but it is worrying that the Transport and the Environment Committee, for example, conceded that it still had not reached the stage where it understood how its departmental budget is constructed. That is a major inhibitor to any sensible scrutiny of the budget by that committee.
I want to turn briefly to the report of the Rural Development Committee. It made a point, which echoes a subject that I brought up at the debate on stage 1 of the budget process—Des McNulty alluded to a similar point. We are unable to see within the budget the effectiveness of the money that is spent on the increasing number of cross-cutting initiatives—rural development being one. That is particularly important in the case of rural development, as the bulk of the Scottish Executive rural affairs department's budget is taken up by direct support and analogous payments to the agricultural sector. Other moneys that are spent more broadly on rural development are hidden in the budgets of the enterprise network, the health boards and so on. At a time when the fox hunting lobby is trying to put together a case based on everything but fox hunting and to imply that every evil known to man—or to man living in rural areas—started in the Parliament chamber in May 1999, it would be useful if the budget contained hard facts, rather than simply the myths on the other side of the argument.
Finally, I want to turn to an issue that I am sure the Liberal Democrats would be disappointed if I did not raise. We are considering only half a budget. Indeed, it is not even half a budget—it is far less than that. We do not consider all Government expenditure in Scotland.
The member says that we are discussing only half a budget. Will it ever be possible for the SNP to make proposals about how it would spend that half before discussing the other half?
There are two ways to respond to George Lyon's point. I could respond in a party-political knockabout way—the spirit in which the point was made. In that response, I would say that if an Executive finds difficulty in spending £719 million of a budget that it has agreed and is fully behind, there is precious little point in the Opposition trying to change the budget. Why hope that the Executive will be successful in implementing the Opposition budget when it cannot even implement its own budget?
However, as someone who is here to have a serious debate, rather than a political knockabout, I make a different response. Alluding to some of the things I mentioned earlier, I point out that the subject committees find it very difficult—I gave the example of the Transport and the Environment Committee—to understand how their budget is structured. It is difficult to ask any subject committee to begin to consider how to change the budget if it does not understand the underlying structure.
We are not considering half a budget—it is far less than that. We do not consider the vast majority of revenue that is raised by the people and businesses of Scotland and through the various forms of taxation that are available to the Chancellor of the Exchequer and, to a limited extent, the Minister for Finance and Public Services. The variety and number of forms of taxation increase every year, as Gordon Brown seeks more ways to tax without appearing to do so.
If there is to be a debate on the nature of taxation, as some sources in the Cabinet south of the border seem to have suggested, surely we should be involved in it. There is a key debate to be had about the nature of taxation and about the honesty of politicians putting forward their proposals. That debate must involve—to name a few subjects—not only the total amount raised in tax, but the balance between direct and indirect taxation, the extent to which we want the system to be progressive in relation to income and the extent to which we want greater incentive to be given to business and industry. There is at least the possibility that the answers may not be the same on both sides of the border, yet the current constitutional settlement leaves us on the sidelines of the debate.
To the extent that the Minister for Finance and Public Services can be said to be in control of the budget, or to the extent that the Parliament or any of its committees can be said to be in control of their budgets, such control is narrow and is limited by the decisions that Mr Gordon Brown has made in London for the UK as a whole. At best we can tinker at the margins, especially given the significant commitments that have already been entered into—commitments that seem to grow by the day as each new public-private partnership initiative is forced on reluctant local authorities. It betrays a poverty of ambition on the Parliament's part that in our budget scrutiny we do not express a desire to be in control of the whole budget. Even the treasurer of the smallest local club or organisation would wish to be in that position. Scotland's national Parliament should wish no less.
First, in common with other members who have spoken, I have thanks and plaudits to give out. I will start with the clerking team and the adviser to the Finance Committee, because without their constant work and support, none of the budget process would happen in the form that it does. I congratulate them on that. Of course, we have had a change of clerk. I also congratulate Des McNulty on stepping into the breach so quickly and upping his game so admirably to chair the committee.
I note that Mike Watson is present. I found him an easy convener to work with; he moved business along well. He is now the spokesman on tourism. In the light of his new brief, I would like to book an appointment with him, so that we can discuss what he is going to do next. We welcome the Minister for Finance and Public Services. This is the third debate of the series and the third minister, yet we have the same problems as before.
At least they are consistent.
If Mr Wilson says so.
We have to ask ourselves, what is the budget process supposed to do? What is it supposed to deliver? The budget process is the Parliament's opportunity to scrutinise the Executive's spending plans and priorities and their delivery. In theory, the subject committees have an opportunity to dissect those plans, to offer suggestions for modification, or even to make alternative proposals. The plain fact is that the committees do little of that due to a lack of appropriate detail from ministers and civil service departments. One year of that would have been acceptable if the correct amendments to the process had taken place the following year, but here we are with committees that are frustrated and which are becoming unwilling to spend valuable time on the budget process. The adage "third time lucky" apparently does not apply to the Scottish Parliament budget process. I wonder whether it applies to ministers.
This debate is likely to be a rerun of last year's debate. In fact, I spoke to a deputy minister earlier today who asked whether I was merely going to recycle—although I think that the modern terminology is to realign—last year's speech. If the Finance Committee reports are compared, it can be seen that there is little evidence of change over two years. Committees still tell us that their questions are not answered and that they do not have outturn information from previous years to allow scrutiny of the result of spending, which is the point that Alasdair Morgan made a couple of minutes ago. They cannot obtain progress reports on spending on specific projects during their roll-out, so they have difficulty in holding their ministers to account. Last year, the Finance Committee's report attacked the process for lacking accountability and transparency, but nothing has altered sufficiently in the subsequent year.
The principal conclusions are in the report, but I will touch on one or two of them. Alasdair Morgan has already mentioned EYF and the size of the underspend. It is quite frightening that the Minister for Health and Community Care can turn up in the chamber at the end of the year to apply a sticking plaster and that health boards, who have been put through hell trying to hold to their agreed overspends and deficits, can have them wiped out just like that. Surely we need more creative use of money earlier in the year. I welcome the fact that we will get a form of quarterly report on the outturn of programmes and the likely development of underspends.
Another problem that we have with the budget process, which has been mentioned in previous years, is that there is no clarity about the source of the money that comes through the various programmes. When ministers put out information through their civil servants, they must ensure that that is flagged up all the way through, so that there is proper scrutiny and people outside can have a look.
A further problem is modernising government, which—to be frank—is a bit of a midden at the moment, because it is very hard to follow anything through and to identify the outcomes from the money that is spent. Last year, I asked for the budget process to be suspended because, patently, it was not working for the committees. This year, I will go further. I believe that FIAG's intentions to develop a new, open and participative budget process were correct, but we have evidence that the current process just does not work.
Committees tell us that they wish to spend time considering policy and the delivery of our public services; they wish to look at real outcomes, not to play with figures; they wish to consider whether Executive plans are appropriate, sufficient and focused; they wish to examine priorities and how they are chosen; and they wish to scrutinise delivery of and access to services. Committees complain about the lack of information and the difficulties they experience in getting at the spending of NDPBs and councils and at how those bodies prioritise and how they deliver. Committees' frustration is rising and I believe that it is time to take action.
The Finance Committee has considered outcome budgeting and, although that would allow scrutiny of outcomes and service delivery, it would not address all the Finance Committee's areas of responsibility.
Would not the focus on outcomes be enhanced if the Parliament and the Executive had control of not just some expenditure, but all expenditure and of not no taxation, but all taxation? Will the member clarify the Conservative party's position on that, given that at least one in four of the Conservative members in the chamber are in favour—on the record—of full financial independence? Is the Conservative party split 25 per cent to 75 per cent or is the ratio even greater than that?
I thought the member was giving his speech later. I was hoping that he might entertain us by pursuing the stuck-record approach to what goes on. If the Parliament cannot cope with what it has to deal with at the moment, I do not think that it is equipped to deal with the rest of the budget that comes to Scotland. Perhaps we should ask the Scottish National Party whether it supports the continuation of the Barnett formula.
I will stick to the subject. Outcome budgeting offers a lot to the subject committees. I ask that the Parliament scraps the current budget process and investigates with some urgency how to enable the subject committees to scrutinise priorities, the delivery of outcomes, how underspending develops during the financial year and the roll-out of programmes. I believe that the current process wastes committee time and produces little of value in the way of seeking to amend Executive spending.
I do not believe that we require to take up two and a half hours of chamber time on the debate when people in the world outside tell us that they want us to discuss service delivery as opposed to the mechanical processes that the chamber goes through. We have a new minister and I hope that he will acknowledge that the current process is not working. I hope that he will consult the Finance Committee on improving the situation and that he encourages his Cabinet colleagues to do the same with the subject committees.
I turn to broader issues, especially now that we have a new administrative team. For example, will the minister assure the chamber that free personal care will apply to those in residential care? Will the minister tell us whether the £86 million consequential payment from Gordon Brown, which is based on health spending in England and Wales, will be spent on health, or will it be realigned to other areas? Those questions—and they are genuine questions—are typical examples of issues that should be covered as the budget process continues throughout the year.
End-year flexibility is unresolved. I ask the minister to give us a pledge that, as underspends develop, the subject committees will be informed early, not merely in the quarterly report, but as soon as an issue is flagged up.
The budget process has insufficient transparency on health and local government. I have no doubt that ministers will claim that resources are flooding into councils but, despite the minister's fine words on the local government settlement, too much ring fencing and direction from the centre remain. Local public services should be designed and facilitated locally and accountability should be local. The outdated one-size-fits-all approach is too prescriptive and often inappropriate. It can lead to realignment away from local priorities, just to suit Executive dogma, which is rolled out in waves of initiatives and pilot schemes. We never seem to have full reporting in the chamber or through the subject committees on what happens to those pilots.
I am grateful to the member for giving way twice. I concur with his position on the one-size-fits-all policy for Scotland. Why is he so keen to apply a one-size-fits-all policy to the United Kingdom, when he is so much against it in Scotland?
I say to Mr Wilson that such comments become a bit tedious. I do not doubt that we will have a full-blown debate on that the next time he initiates a debate. I leave that to him.
Perhaps the minister will assure us that councils will not be forced to increase council tax to fund Executive priorities and new burdens. It would help if the minister covered that—I see him nodding. While he is at it, will he make adjustments for the additional cost of running and maintaining country schools, which he has failed to recognise?
On transparency and accountability in relation to money that is distributed through other bodies, will the minister give his view on whether health boards and councils should fall within the Audit Committee's remit? It is important that any amount of money that goes out from the Parliament can be scrutinised fully—not only where it goes, but what is delivered for it. Many people out there are unhappy that money disappears into a pot and they have no knowledge of what it becomes in the end.
The Scottish economy is coming under great pressure and redundancies are announced all too regularly. Our rural economy is on its knees, tourist numbers are down—and showing little sign of recovering—and health boards, universities and further education colleges have deficit problems. We must ask the minister where the Government's priorities lie.
I am nearing the end of my speech. Do I have time to take an intervention?
Yes.
I hear the member's comments and to some extent I agree with them, but how do they fit with the comments of his leader, Mr McLetchie, who said when the underspend was first announced that it should be given away in tax reductions?
I think that Mr McLetchie's full comment was that if the Executive could not decide what to do with the underspend, it should give the money back until it made up its mind. Members should not take comments out of context, but that is the privilege of the SNP.
Surely a budget is about the country's infrastructure, creating opportunity by encouraging enterprise, training and education, and safety in our communities, rather than about merely spending on the machinery of government at all levels. The budget concerns priorities for action, and committees must be at the heart of that.
The present system has failed. It is time to learn from and act on the Finance Committee's work. We need positive suggestions from the Executive about how it thinks it should be accountable. It should offer members suggestions. As I am sure some of my colleagues will say, it is difficult for many committees to have a hope—in the short time that they are allocated—of understanding the construction of their budgets, what has gone wrong and what has been good, because that information is not handled.
Andy Kerr is the third minister to be responsible for finance and I make the same request of him as I made of the other two ministers: when will we have a central statistical unit? The Parliament is becoming fed up with the fact that written question after question receives the reply that the information is not held centrally. Members and committees receive that answer.
Andy Kerr is the minister at the centre of all the manipulation of spending priorities. I gather that he has the new role of supervising the outturn of all our public services. Does that mean that he is responsible for the outturn of all services, including local government and the health service? If not, will he delegate those areas to other ministers?
The committees find that ministers turn up and say that they will have to ask the minister, meaning the Minister for Finance and Public Services. It would be helpful if, in his speech this afternoon, the minister would explain his new, developed role. Will he engage in the budget process revisions that I have asked for and leave the committees to do what they do best? I ask the minister to look after the outturns and priorities and to leave the Finance Committee to deal with the numbers.
David Davidson has shown why he thinks that two and a half hours to debate £21 billion of spending is a waste of time. He has wasted the past 13 or 14 minutes of chamber time by not giving us any indication of how the Conservatives would spend £21 billion of public money in Scotland to improve public services. The debate should be about how we spend money to improve public services but, so far, it has been rather dry and has not addressed the issue.
I pass on apologies from my colleague Donald Gorrie, who should have made this speech. No doubt he would have made a better job of it than I will, but he is unwell. That has nothing to do with our party last night, as he was unwell then and unable to attend. I hope that he makes a speedy recovery and that he can participate in the next debate on the budget.
This debate is about the Scottish budget and how we spend £21 billion on Scotland's public services. I am disappointed that we have heard nothing so far from the SNP or the Conservatives about how they want public spending to develop. The Liberal Democrat-Labour coalition Executive is achieving things for Scotland. It is spending money better.
I realise that we will get the answer in the next 10 minutes, but will the member put forward any different ideas or are the Liberal Democrats joined symbiotically to their coalition partners?
Does the member mean that I should look in the dictionary to find out the meaning of "coalition"? When one is in a coalition, one shares priorities and works together on the same budget. It is difficult to imagine coalition partners introducing different policies. I would like Opposition parties to come up with some ideas and new policies, but we get nothing from them.
The Executive is delivering on the priorities of the partnership Government. We have funding in the budget for the abolition of student tuition fees and the reintroduction of student grants. The budget for next year includes free personal care for the elderly—
The member seems confused. He seems to think that we are here to lay out our manifestos for the next election. Des McNulty's motion says:
"That the Parliament notes the 13th Report, 2001 of the Finance Committee on Stage 2 of the 2002-03 Budget Process".
Rather than fighting over whether we need an independent Scotland or making points about whichever party's manifesto, the member should direct his energies to that report.
In due course I will make some comments about the report's recommendations. The Finance Committee is charged with looking at the Scottish Parliament's budget. The report is part of the process of producing the Scottish budget. Surely the Parliament should be debating what is in the Scottish budget. That is the purpose of today's debate. We have two and a half hours in which to put forward our ideas and priorities for what should be in that budget. However, we have not heard a word from the Conservatives or the SNP about what they would do.
As I said, the Liberal Democrat-Labour coalition Executive has funding in the budget to pay for tuition fees, for student grants to be reintroduced and for free personal care for the elderly. We have more money for—
Has the member read the report?
Yes. I have read the report.
We have more money for rural communities. We have improved public services through schemes such as the promotion fund to deal with Scotland's poor health record. We have made a commitment to reduce waiting times for patients and we have found extra funds for drug and alcohol rehabilitation. We have major additional resources for schools, pre-school education for three and four-year-olds and a boost for teachers' pay—a rise of more than 23 per cent, following the McCrone report recommendations. All those are funded in the budget.
We also have free concessionary travel for pensioners, funding for extra police officers and a new strategy for victims that offers real improvements for the treatment and status of victims of crime. We have made significant improvements in funding for local government. That is what the budget is about. Those are the things that the partnership Government is delivering.
I will take Andrew Wilson first.
As long as the member takes Alex Neil second, because the issue is important. Which of the priorities that Iain Smith listed were Liberal priorities with which the Labour party disagreed?
Quite a number. I do not think that the member will find the abolition of tuition fees or free personal care for the elderly in the Labour party's manifesto. We are a coalition and together we have built up priorities for the Executive. We are delivering for Scotland on those priorities.
Does the member agree that it should now be a top priority to make funds available to open the six closed waiting lists in the national health service?
The priority of the Liberal Democrats in the Executive is to cut waiting times. If people are waiting to get on to waiting lists, that has to be addressed. We have to consider the whole process of the health service.
Will the member give way?
I have to make some progress.
The debate should be about considering the priorities of the budget. As we move into the third year of using our budget process, it is disappointing that none of the Parliament's committees has made alternative proposals for spending in their areas. Similarly, none of the Opposition parties has made suggestions for changes.
Will the member give way?
No, not at the moment. I want to talk a bit about—
I am merely trying to help the member make a speech, as he has clearly not prepared one.
That was the kind of unnecessarily offensive remark that we expect from the SNP.
There are important aspects to the Finance Committee's report. End-year funding, which members have mentioned, is important. I am concerned that £700 million was not spent last year; how that occurred is yet to be explained. I am also concerned about the way in which money was reallocated, as that reallocation was not properly scrutinised. As the Finance Committee report rightly points out, we need proper monitoring throughout the year—as would happen, for example, in any local authority—to identify where underspends or overspends are occurring so that early action can be taken to address them. I welcome the committee's proposals in that respect.
The Local Government Committee raised a number of concerns about the transparency of the budget process. Other members have mentioned those concerns. The Local Government Committee wanted to know how the Executive's priorities—and whether they are being delivered—can be determined from the local government budget. We must address how we present information.
The Local Government Committee understood that its role was to consider the overall allocation for local government. It was not our responsibility to consider the detailed spending in the subject areas. When the Education, Culture and Sport Committee considered the education budget, for example, it considered only the departmental spending, which is £350 million; it did not consider the money that local government spends in providing education services, which is 10 times that amount. The issue of how the Parliament as a whole considers local government spending, which is a large part of the overall spending, must be addressed.
The member may consider this a party-political point if he wishes but, after the ministerial statement on the local government budget, it was interesting to read the press releases from members of his party, which most certainly objected to the Executive's policy. Will he clarify whether there is a diverse range of views in his party on the local government settlement? Who is attached to the wing that supports the Government?
I am not sure that I understand the question. The Liberal Democrat-Labour Executive has put significant resources into local government over the past two years as part of the three-year funding settlement. We welcome those additional resources. Of course more can be spent—local government needs more money to do even better in improving services. However, there is a limit to what is available. We welcome the fact that local government is a major priority.
The Health and Community Care Committee raised significant concerns about transparency. It has experienced some difficulty in assessing whether priority areas are being properly funded, as most of the spending is done by health boards. The budget process does not give the committee an opportunity to scrutinise properly the way in which that money is spent. That must be addressed.
Earlier, I raised my concern that other parties do not seem to have come forward with any promises—
Promises?
I mean proposals. I was going to use the word "promises" in a moment. SNP members are always making spending promises and pledges, but when it comes to the crunch they never tell us how they are going to pay for them. There appears to have been a bit of a bonfire of promises—on cancer care, the Scottish Prison Service, £800 million for the roads review, Grampian police, public transport and Inverness College. The SNP proposed spending £119 million on shares in Railtrack, which would have been a really good investment. There were also promises on scallop compensation, the Borders rail link, firefighters' pay, the abolition of Forth bridge tolls, national concessionary fares and Glasgow health trusts. All those spending promises were made by SNP members in debates in this chamber, but the SNP has not yet told us how it would fund them. The SNP manifesto for the UK Parliament elections did not suggest any additional funding for Scotland. According to the manifesto, all the additional funding for Scotland would come from the Executive's underspend. Under its general election proposals, the SNP would not spend a single extra penny in Scotland.
As Iain Smith has mentioned Railtrack, will he clarify the Scottish Liberal Democrats' position on Railtrack's being put into administration? Did he agree with that action?
Our position is that Railtrack should be wound up and that the functions of health and safety and the running of the tracks should be separate. That was in our manifesto at the general election. It is clearly Liberal Democrat policy, at Scottish and UK levels.
SNP members have major problems, because their sums just do not add up. They accept Chantry Vellacott's proposals when those are in their favour, but oppose them when they are not. They have decided that they do not agree with the Government expenditure figures that were published on Monday because those figures do not suit their argument. Of course, if the figures suited their argument, they would agree with them, but they disagree with them this time because they do not. SNP members cannot tell us anything about managing the budget. They cannot even get their election expenses in on time. We cannot trust the SNP on budgets.
I conclude by saying that the budget is a very good budget for Scotland. The budget delivers on the pledges of the Liberal Democrat-Labour Executive. I would love to hear from the SNP and the Conservatives what they would do differently from what the Executive proposes.
I begin by thanking all those who have welcomed me to my new role. I very much appreciate that. As a former committee convener, I fully understand the work that has gone into the report.
As Des McNulty said in his opening remarks, the report is part of a process. We are developing a scheme. We are trying to develop best practice that we can use throughout the years. The sea changes that we all want in the process will come eventually. This is all about getting things right, rather than making short, sharp decisions that may cause us problems further down the line.
I hope to address many of the issues that members have raised. I am grateful for this opportunity to give the Executive's response to the Finance Committee's report. I commend the committee for co-ordinating the work of other subject committees as well as expressing its own views. It took the evidence that is produced in the document in a short time scale. I also acknowledge the role of those who do not always get recognised—staff behind the scenes such as clerks, researchers and committee advisers. As convener of the Transport and the Environment Committee, I saw the key role that those people play in the preparation of such reports. A lot of effort has gone into the report. I hope that it was not too onerous and that the improvements to the budget process that the Executive has made so far have been useful to the committee.
The budget process highlights the success of devolution. Its successes can actually be measured. Today, we are discussing the Scottish Executive's draft budget for 2002-03, taking in Scotland decisions that affect Scotland. The Executive's productive relationship with the Finance Committee should be celebrated. The budget process seeks not only to include members of the Parliament in a meaningful way, but to go wider, to consult generally and to involve as many Scots as possible. The way in which we go about our business in the budget process is a microcosm of the new politics that devolution offers and has brought to Scotland. The changes reflect the success of devolution and the Executive's desire to produce Scottish solutions for Scottish problems.
The draft budget document highlights our ambitious spending programme, which continues to reflect the needs of all citizens. As a result of the 2000 spending review, we have an extra £2 billion over and above our original planned spending for this year, which represents an average increase of 4.4 per cent in real terms each year or almost 14 per cent over the three-year period. Those increases reflect the success of the Barnett formula, which delivers the same pound per head increase in Scotland as in England. This year, our record levels of spending have increased as a result of the Chancellor of the Exchequer's prudent management of the UK economy and my predecessor's careful scrutiny of Scotland's budget, as set out in his statement on 28 June.
Can we once and for all kill the bogey of the Barnett formula? Helen Liddell stated:
"The Barnett formula operates in relation to changes that take place in expenditure in England and Wales, and it does come down over time."
The world and his granny and the dogs on the street accept that the Barnett formula is producing a squeeze in spending per head between England and Scotland. Will the Government recognise that at last and agree that we have to do something about it?
The Barnett formula offers a simple, straightforward and objective way of delivering resources for Scotland and it serves Scotland well. The most recent Treasury figures suggest that overall public spending is about 23 per cent higher per head in Scotland than in England and spending on the main devolved programmes is around 40 per cent higher. Such spending provides real solutions for real problems in our communities. There is real spending to deliver services, yet we have heard no constructive suggestions from the SNP about the budget process.
There have been record levels of expenditure and the chancellor has managed the economy prudently. Who would have Andrew Wilson or whomever else the SNP might choose in charge of our economy rather than Gordon Brown? Most people in Scotland and the UK would prefer a Labour chancellor, in the shape of Gordon Brown.
Not only was an extra £200 million allocated from the chancellor's budget statement, but there was an extra £289 million as a result of realignment within the Scottish budget. Almost 90 per cent of that £489 million has gone to the Executive's top priorities of health and education.
Will the minister give way?
I will give way shortly.
Some £231 million has gone to health to boost services and to pay for free personal care, for example; £99 million has gone to education and children; and £9 million has gone to further and higher education. We have also received £88 million from the chancellor's pre-budget statement, which we will allocate in due course.
I thank the minister for giving way. I am sure that he did not mean to say "an extra £289 million", as that money was already there. The money is not new; it is merely being redistributed and respent.
It is new money for departments that go out to spend that money and I said exactly what I meant.
The Finance Committee rightly raised issues about EYF, which members have discussed at length in this debate. EYF was designed and introduced to improve the effectiveness of public spending and to stop the wasteful end-of-year spending spree that took place before devolution. When I worked in local government, I saw the same tragedy of spending to budget at the end of the year. Salesmen drove in and went away with orders bulging out of their pockets. That is not the way to run public services. EYF is designed to get us out of that trap.
Devolution has brought about scrutiny and is making the system work better. Money is not lost; it is carried forward into the next year. We recognise that there was a large underspend this year, but that reflects the large increases in resources. Real money is going into the Scottish finance system. The underspend also reflects a range of other factors—£250 million of capital slippage, which we have considered and continue to consider, and £210 million of planned underspend, of which £90 million was planned carry-forward for the Glasgow housing stock transfer, £65 million was planned for McCrone and £55 million was planned for health board flexibility. Nearly 65 per cent of the underspend was managed and planned.
We have continued to commit EYF to deliver our key priorities. This year, EYF provided a flexible and focused response to our funding priorities. In health, for example, £75 million went to wipe out trust deficits and £11 million was taken up to meet the pressure on winter beds. In education, £102 million of the EYF award included £48.6 million as part of the McCrone settlement to improve teachers' pay and £30 million for sports, ethos and social justice programmes in schools.
At what stage in the planning process do moneys that move from the budget settlement and are therefore planned to be spent become planned underspend?
That money is constantly monitored through the monitoring reports that we receive. We decide the whole matter through co-ordination and consultation with the budget holders. However, I am glad that Alasdair Morgan intervened. He talked earlier about half a budget. I prefer half a budget to the full black hole of the SNP's spending priorities.
Will the minister give way?
I will take the member's intervention in a minute; I need to make some progress.
As well as our continued extra spending, we have introduced a series of improvements to the financial system that should address some of the issues that the committee report raises. We have also taken steps to improve our monitoring procedure for departmental underspends. The Deputy Minister for Finance and Public Services and I receive monitoring reports, which will allow us to identify underspends early in the financial year, and Peter Peacock will assume new and specific responsibilities for monitoring the budget spend.
When the minister was examining his monitoring reports, did he realise that, as an Audit Scotland report has just pointed out, the deficits in NHS trusts in Scotland are £24 million higher this year than at the same time last year? Is that not a black hole?
I see that Mr Neil's jacket is not going to fasten one of these days—he will need to get a bigger one.
I have read the Auditor General's report. The Executive acknowledges and is concerned about such matters, which is why we are receiving monitoring reports and why Peter Peacock will have specific responsibilities in that area.
Will so-called planned deficits feature as a form of Government control in the near future or is the Executive considering the introduction of planned distribution of money instead of using planned sticking-plaster methods?
The term is "planned underspend". Just because that money is part of EYF does not mean that the way in which it is spent is not subject to rigorous accountability procedures. It is spent on real priorities to help real people and to achieve real results. It is not dished out willy-nilly with no cognisance given to its effects.
We are now finalising our plans for the spending review 2002, the key features of which should be welcomed by the committee. We want a system that clearly reflects Executive policy and that will examine existing baseline budgets. As members have said, we want to develop an appropriate system of linking spend to policy through targets that reflect the required outputs and outcomes. We must also focus on our priorities to ensure that we deliver the maximum benefit for the people of Scotland and we must carry out a full analysis of our achievements. We share a common goal and I wish to deliver improvements in the system for the committee. That is all part of an overall process.
I am committed to developing targets that accurately reflect our spending priorities and to putting in place systems that effectively monitor the Executive's performance. The process is neither easy nor straightforward. It takes time to specify outputs and spending fully and to agree sensible definitions with departments. When I was in local government, I was involved with many issues to do with output-related specification and contracts for local government services. I am under no illusion that achieving our aim will be easy, but the Executive wants to achieve it after a period of time. That will be useful for the Parliament, the Executive and those who receive money from the Executive.
To improve our allocation process, I plan to develop a system of rigorous scrutiny based on developing and costing a range of priorities across portfolios. That will help colleagues with the rigorous examination of their spending priorities that the spending review requires. Thorough scrutiny of our priorities will allow us to identify areas where we can spend more wisely and where additional spending will produce good results.
We must also improve our system for monitoring what spend achieves. It is essential that, as well as specifying what we want to achieve, we measure what is actually achieved. We will revisit that issue over the years. Rigour in the spending review will bring its own reward and we must ensure that we reap that reward by monitoring delivery.
I will now outline my response to the committee's recommendations in the order that they appear in the report. On the first recommendation, I am happy that the committee endorses our move towards greater scrutiny based on clear identification of priorities and detailed investigation of what will ultimately be delivered. Such a priority-based budgeting system is essential if we are to secure the best results that we can for the Scottish people. I welcome the committee's interest on the matter and would be happy either to provide it with a separate statement on how the new system will work and how it has evolved or to discuss the issue at one of our regular meetings.
I have already indicated my desire to move forward on identifying outputs and outcomes. We must specify objectives that include measurable activity and ally the output and outcome of those activities. As I have said, that is not easy. Setting objectives in terms of measurable activity can be difficult. I acknowledge that progress may be slow in some areas. Nonetheless, we must make progress.
On the committee's second recommendation, as former convener of the Transport and the Environment Committee, I fully appreciate the difficulties and frustrations that the financial process can cause, but we must all be realistic. As I indicated, a large proportion of EYF is capital slippage or planned underspend. Such amounts will stay in the projects to which they were initially allocated. In effect, we set out our plans to spend a certain quantity of money on a capital budget and, because of events that are outwith our control, the spend is slower than expected and simply falls into the next year. That, I argue, is a good use of resources.
I am not sure that procedures allow any committee except the finance committee to consider in-year revisions. The EYF allocations are already clearly identified in the autumn budget revision that is laid before the Finance Committee and the Parliament. Indeed, I will give oral evidence on them in due course.
Although I welcome the fact that the minister is willing to discuss in-year revisions with the Finance Committee, surely any significant change in the budget is a matter of interest to subject committees, which should be able to discuss and scrutinise it. The minister responsible should appear before the relevant subject committee with information on any change in priority that takes place during the year. Any such change ought to receive parliamentary scrutiny.
I said that we must be realistic about that. My first stop will be the Finance Committee; that is where we will discuss the matter.
On the committee's third recommendation, when my colleague Mr MacKay made his statement on 28 June, he provided a table that set out the proposed allocations, savings and final position fully. I am happy to commit myself to continuing to do that.
On the fourth recommendation, the finance and central services department is in constant contact with other departments to discuss spending.
The committee's fifth recommendation contains two points, both of which have been raised by members. It is essential that spending by health boards, local government and non-departmental public bodies is in line with the Executive's priorities. We have systems in place to ensure that that is the case.
We are developing a comprehensive performance assessment framework for the national health service in Scotland, which fulfils a commitment that was set out in the document "Our National Health: A plan for action, a plan for change", which was published in December 2000. The development of the performance assessment framework and the introduction of improved accountability arrangements for NHS Scotland are key commitments in that document. The aim of the performance assessment framework is to provide a consistent, comprehensive and systematic approach to measuring performance throughout NHS Scotland with a view to stimulating continuous performance improvement in the NHS and to reinforcing the accountability of the service to local communities, to the department and to the Parliament.
Local government has been mentioned. Local government has a vital role to play in delivering our agenda for improved public services. Earlier this month, I announced record support for local government—more than £7 billion per year by 2003-04. We must ensure that the use of those resources reflects national priorities, local priorities and the commitment that people will receive local services.
In the past, discussion has focused on specific resource and service inputs and not enough on what we, as service users, really want. We have discussed that matter. The outcomes that are being achieved in terms of additional and improved services must be measured. We are piloting, with the Convention of Scottish Local Authorities, local outcome agreements for education attainment and for children's services, linking national policy priorities with specific local targets for service outcomes. Those agreements are not intended to be just another layer of planning, but will link to the outcome measures that have been set out in the national priorities for education and local integrated children's services plans. Specific agreements are also being developed on homelessness, adult literacy, community care and the better neighbourhood services fund for deprived communities. Local outcome agreements offer great potential for a new partnership with local government to deliver our priorities for improved service outcomes.
"Public Bodies: Proposals for Change", which was published in June 2001, made clear the importance that we attach to ensuring that all NDPBs work to the Executive's priorities and programmes. It is right and proper that those organisations have a degree of freedom and flexibility in their day-to-day operations. However, that should be in the context of a clear policy and strategic framework, as set out by ministers. A number of mechanisms to bring that about are already in place. Ministers are responsible for improving key management and financial documents for each organisation, including a management structure and plan.
Although it is crucial that spends meet our priorities, that is not the same as saying that we will direct those bodies' expenditure. That goes back to David Davidson's point about our having control but no control over resources. We set the framework; those involved must allow the bodies the freedom with which to determine the agreed targets.
Will the minister take an intervention?
No, the minister has been very generous.
With respect, I wanted to clear off the recommendations, so that everyone knows what we are saying about them, before I let others in on the debate.
On the sixth recommendation, I am happy to consider breaking down further the Executive's administrative costs to include any additional information that is available on pay, information technology and special advisers.
I am happy to accept the committee's seventh recommendation, which is to improve the targets in the annual expenditure review and draft budget document. Indeed, in a previous life I might have made such a suggestion—perhaps I did. Targets must be more focused on the core business of the Executive. We all agree on that.
On the eighth recommendation, the full joining-up of information on the high level figures that we publish to the amounts that organisations actually spend on the ground must be a long-term aim for any Government in this electronically driven age. However, it will take time to join up those systems and processes to ensure that the information is consistent.
On the ninth recommendation, my predecessor agreed that we would provide a separate section on the modernising government fund in next year's annual expenditure review. As allocations are based on a bidding process, we might not be able to provide all the information that the committee seeks. Nonetheless, I am happy to provide it with what is available.
I agree with the committee's 10th recommendation, which is that we must continue to make progress on equality. We have engaged with a number of groups, such as Engender, in an attempt to work our way through the difficulties of linking policy development and resource statements. I am happy to continue to listen to what any group has to offer in this field, but I believe that progress will remain slow for some time.
On the 11th recommendation, I am happy in principle to provide information on past performance, but I doubt whether the draft budget document is the proper place for such information. That document is already large and the inclusion of additional material will make it bigger and more complex.
On the 12th recommendation, I am happy to review the Executive's co-ordination of responses to subject committees. On the 13th and 14th recommendations, I note the committee's suggestion on budgets for the Scottish Parliamentary Corporate Body and Audit Scotland.
For the future, I intend to build on the themes of both my predecessors. In the Finance Committee report, I want to see a finance process that is inclusive, open and effective. The process must involve close working with the Finance Committee, the subject committees, local authorities and other Government agencies. Local authorities are key partners in delivering a change in Government services and they are essential for delivering the Executive's priorities. However, if the processes include only those bodies, the administration of Parliament and other parts of government will have failed. We must continue to strive to include the wider Scottish public to ensure that their views on how the budget should be spent are heard. Like my predecessors, the deputy minister and I will undertake a series of budget roadshows that will explain the Scottish budget to the Scottish people and will seek their views on priorities and budget allocations.
However, being inclusive is not an end in itself. I want everyone to be able to contribute. To ensure that that can happen, we need to improve the type of information that we produce. The draft budget document gives us the basic information from which we can make improvements. We must move collectively towards the target of measured outcomes. As I said, that will not be easy, but in the short run we might be able to produce output measures. However, we should be in no doubt that our target is to produce more meaningful documentation and information to allow the outcomes to be measured. By doing that, we can ensure that we are spending the Scottish public's money wisely.
This has been my first speech as the Minister for Finance and Public Services. Perhaps I took too many interventions. I apologise for running over time. It has been most enjoyable and most educative—that is a new word for "Roget's Thesaurus"—to learn more about the Finance Committee and how it works. I have enjoyed this experience immensely. I continue to enjoy my role as Minister for Finance and Public Services and I look forward to meeting Finance Committee members frequently.
We now move to open debate. I will allow speeches of about five minutes.
I begin by commending Mr Kerr. I think that new words are excellent in this new Parliament of ours, and I thought that he gave a very instructional speech. We should defend my colleague Alex Neil, to whom I always defer. While his jacket may not fasten, that is because he is a good Jacobite republican and, in inverse proportion to the gates of Traquair, his jacket will never fasten until there is a Stuart monarch on the throne again.
It is always with a due sense of élan and vigour, and a degree of optimism, that I spring from my bed on budget debate days. It is a bit like match days to that extent. Indeed, during the debate, that vigour usually subsides, and it has done so today.
I say to Mr Davidson that we are allowed to have debates about bigger issues. I am reminded of many branch meetings at which people will say, "You're not debating anything except the jumble sale." If Mr Davidson will forgive me for saying so, it is perhaps the case as far as what he said is concerned that too much information is not held centrally. I think that we should have bigger debates. We cannot debate a budget properly if we are not able to debate the terms and grounds on which it is set. That is the duty, as well as the detail, that we now bring to the chamber. Members take part in very detailed discussion in committee over budget bills, and I hope that we have made a positive contribution to the process.
This is my first such debate not as a member of the Finance Committee, so I bring, I hope, a freshness that I did not bring to previous debates. My core point is that the bigger questions cannot be discussed, but we have to discuss the core questions of the Scottish budget.
Let me ask some of the core questions. How would the SNP pay for the existing level of public services in an independent Scotland? What would the exchange rate policy be? What would the different tax rates and benefit levels be?
I will answer that just for the sake of good debate. We would pay for services out of taxation, the same way that every other country on the planet does. On the question of exchange rate, we would hope to be part of the euro zone. I cannot remember the last question. What was it?
It was on tax rates.
The tax rates would be set by an independent Parliament, democratically decided. That is in fact the point. This Parliament has no control over tax, and I think that the core debate that we should be having is on how we tax ourselves, on what the fair rate of taxation is and on how we deliver proper public services.
It is key to the construction of a proper budget debate that we are allowed to tackle the core questions of what the role of Government is, what the size of Government is in society and how we deal with it. Devolution was meant to be divergence. It was meant to be about allowing different parts of the United Kingdom or this nation of Scotland to have a different view about public services.
As the Minister for Finance and Public Services, like all others who have been in his position, fails to recognise, the Barnett formula is about managing the decline of Scotland's public services. We have to examine how we can replace the Barnett formula, because it is on its last legs. Either we can determine how it will be replaced or it will be determined for us. If other people determine it, that will be to our disadvantage.
There is no serious person analysing the question of the Barnett formula left who does not disagree with it. Everyone, with the possible exception of Government back benchers and front benchers, and the occasional tame academic, agrees that the Barnett formula is producing a squeeze on Scottish public spending. That cannot be allowed to stand. There is no logic to the idea of a spending squeeze.
The formula assumes three things. First, it assumes that need for public services in Scotland is identical to the average for the rest of the United Kingdom. We know that that need is not identical.
Will Andrew Wilson give way?
I will take Elaine Thomson in a few moments.
Secondly, the formula assumes that the cost of service delivery in Scotland is identical to the average cost in the rest of the UK. We know that that is not the case. Thirdly, and most important, it assumes that the level of public choice and democratic choice about the role of Government and of the public sector is identical in Scotland to that, on average, in the rest of the United Kingdom.
We know that those points are not accurate, yet the financial underpinning of devolution is designed with them in mind. There is an absolute, incontrovertible contradiction at the heart of devolution.
The member is in his last minute.
That is a blow.
I am sure that it was unintentional, but I assure Andrew Wilson that he is.
The previous occupant of the chair had signalled a much more expansive period.
No, I think that the previous occupant said five minutes. The clock shows that you have had four and a half minutes.
I will, with a due sense of respect, defer to the occupant of the chair.
I will turn to my summation. The key point is that we cannot allow the idea of a needs assessment to enter the debate. There can be no needs assessment of Scottish public services. That assumes that the man from the ministry in London knows best, and that public services are merely to be administered, not decided upon, in Scotland. That is a pre-devolution idea. Even those members who do not agree with our ideas about moving the constitution on must resist the idea of having a needs assessment.
A needs assessment takes no account of public choice or democratic choice. Is it our need to have a four-year degree, a publicly owned water system or a publicly delivered health service? It is not: it is our democratic choice. We must equip this Parliament with the power to make choices and to deliver on those. At present we do not have that power. Members from the SNP, some members from the Conservative party and the occasional Liberal Democrat back bencher—who knows what is happening on the back benches of the Labour party—want to move this Parliament on and to deliver a better future for everyone.
I am pleased to say that I am not here today to debate the Barnett formula, taxation or fiscal autonomy. My contribution to this debate is based on my experience as a member of the Health and Community Care Committee. For all the worthiness of the Finance Committee, it is very important that members of subject committees are listened to. Like the minister and Des McNulty, I believe that we must move towards having measurable outcomes.
"Investing in You: The Annual Report of the Scottish Executive" outlined the Executive's spending plans up to 2002. In the foreword to that document, Donald Dewar stated:
"We are committed to a more open inclusive budgeting process which actively seeks to inform and involve those outside the immediate political process of budget setting."
Donald Dewar's commitment is an excellent starting point for today's debate and I make my comments against that background.
The health section of the budget document states that health boards will
"continue to develop and improve services in line with declared priorities"
and "meet increases in demand". There is an increased demand for services for people with diabetes. How is the demand for that service measured, and how do we know whether it is being met?
One of the aims of the health plan is
"to develop and deliver modern, person-centred, primary care and community care services".
All of us want that. Another aim of the plan is
"to improve, protect and monitor the health of the people of Scotland".
We would all sign up to that. Often—deliberately or otherwise—the Executive's aims or objectives are very vague and their achievement is impossible to measure. We know that more money is being spent, but it is incredibly difficult to track that money. We need to know whether the additional money benefits patients. However, the openness, transparency and subsequent accountability that was promised—or aspired to—has not been realised to the extent that we are able to know that.
We are told that in 2002-03 new money will be available to the NHS. As has already been said, most of that money will go to the unified trusts—into the melting pot. When people in Scotland hear about increases in spending, naturally their expectations rise. They cannot understand why health care benefits are not visible. Instead of constantly announcing moneys, we should be more open and honest with people. For example, we should tell them that 70 per cent of national health service spending is allocated to salaries. A substantial sum goes to cover price inflation, as year on year the drugs budget rises at a rate well above the rate of inflation. Many trusts also face considerable financial deficits.
All members of the Health and Community Care Committee are seeking measurable outcomes, particularly outcomes that are in line with clinical priorities. However, this is our third year of questioning the Executive and its officials, and we are no further forward. We cannot audit-trail the spending of the community care pound. When the committee asked the former Minister for Health and Community Care about that, her response was that councillors are democratically elected and accountable. If the Health and Community Care Committee cannot get information about community care spending, how can the average Joe Punter decide whether his councillor is spending wisely and effectively and endorsing best practice? The Local Government Committee has expressed similar concerns.
I welcome the minister's commitment to outcomes for care in the community and the planned road shows, but those must be understandable not just to us but to everyone out there so that people can be engaged in the budget process. Mr Aldridge, the top financial official at the health department, stated that he was not the only person responsible for monitoring health care and that
"As far as other issues, such as clinical governance and management issues, are concerned, other colleagues in the Executive are responsible."—[Official Report, Health and Community Care Committee, 25 April 2001; c 1746.]
That is further evidence of a blurring of the lines of responsibility, which leaves issues vague and unmeasurable.
The top three clinical priorities are cancer, heart disease and mental health. While pursuing mental health outcomes, I found that recent community care statistics confirm that local authorities reduced spending on adult mental health services by £8 million in 2000, in comparison with spending in 1997. The minister might say that those patients are receiving care elsewhere, but we do not know that that is the case, as we do not have the information.
Will the member—
I will skip the next part of my speech, Presiding Officer.
Please do so.
I will try to sum up.
If we look at spending on nurse training, for example, we note that one health board allocates £5 per nurse per year, while another allocates £100 per nurse per year. When I was looking for measurable outcomes, I found that even Florence Nightingale classified her patients as "relieved", "not relieved" or "dead". Despite great advances in time, knowledge and technology, we do not have a measurement that is as sophisticated as that used by Florence Nightingale.
I realise that I am running over my time, Presiding Officer.
Yes, you are a full minute over time.
Most members of the Parliament are seriously concerned about drugs and alcohol. We cannot measure spending on detoxification and rehabilitation facilities for people with drug and alcohol problems through a minister, as local drug action teams make that expenditure. Will that spending be closely monitored and accounted for by the minister and the Executive?
Members should understand that we are trying to finish this debate at 4.53 pm, to allow time for a short debate at the end of the afternoon. I must be strict about five-minute speeches.
I begin with a word or two about the Enterprise and Lifelong Learning Committee, which I have the pleasure of convening. We welcome the minister's response to the Finance Committee's recommendations. In particular, we are keen for an indication to be given of the estimated outturn for the previous financial year before we are asked to consider figures for the following and subsequent financial years. We realise that we are all learning from the process and that these are early days in the life of the Parliament. However, the quicker we get there, the better it will be for everyone.
I will also say a word or two about the budgets of Scottish Enterprise and Highlands and Islands Enterprise. Those organisations—particularly Scottish Enterprise—have suffered fairly significant real-terms cuts in their budgets in recent years. Given the crisis in the electronics industry and the fact that unemployment is rising again, I hope that whoever sums up the debate for the Executive—either the minister or the deputy minister—will reassure me that there will be no further raids on the budgets of SE or HIE. We need to spend every penny that we can get on job creation in Scotland in the period that lies ahead.
I will concentrate on three areas this afternoon. I hope that the Finance Committee will consider doing some work on "Government Expenditure & Revenue in Scotland 1999-2000", which is commonly referred to as GERS. Personally, I do not attach a great deal of credibility to that document. On page 1, the first disclaimer says:
"The calculations required to derive NB"—
that is, net borrowing—
"for Scotland are subject to imprecision due to the need to estimate a number of elements of both expenditure and revenue. The NB estimates presented in this report should therefore be regarded as indicative rather than precise."
In other words, the estimates are rubbish.
On page 2, the document says:
"This work does, for example, need to draw on surveys that have been devised specifically to meet a particular UK policy requirement and do not necessarily, therefore, provide appropriately robust data at a Scottish level."
GERS should be renamed "garbage"—garbage in, garbage out.
I will also deal with figure 1 on page 11 of GERS, which gives the lie to the so-called argument against independence and alleged budget deficits. Figure 1 contains the UK figures for income and expenditure for the past 30 years and shows that more income went into the UK Treasury than came out of it in only four of those 30 years. If the UK was running a deficit for 26 of the past 30 years, does that mean that it should not have been an independent state or have had an independent Government or an independent Parliament? Where is the logic of the unionists, who try to argue that it is okay for the UK to have a deficit and be independent but, on their fiddled figures, Scotland is not capable of independence because of Scotland's alleged deficit? I have never heard so much nonsense in all my life—or at least since the Minister for Finance and Public Services sat down.
Will the member give way?
Unfortunately, I do not have time. Normally I would give way, but such is the balance that the front benchers get 21 minutes whereas I get only five minutes.
I draw to members' attention an article in The Scotsman—a worthwhile newspaper, which I would recommend to everybody—which had the headline "The all-hype economy that's going nowhere?" Can ministers, who boast about the impact of expenditure in Scotland, explain why the latest available figures up to June 2001 show: Scottish gross domestic product rose by 0.3 per cent when UK GDP rose by 2.5 per cent; production in Scotland was down by 5.3 per cent when it was up by 0.2 per cent for the UK; Scottish manufacturing was down by 4.8 per cent when it was up by 4.6 per cent for the UK; services were up by 2.4 per cent in Scotland but up 3.5 per cent in the UK; and tourism, hotels and catering were down by 1.5 per cent in Scotland but up 3.4 per cent in the UK? That is what the Minister for Finance and Public Services described as Gordon Brown's prudent running of the Scottish economy. By any standard, that is a disaster area.
I hope that we will get some sort of explanation for the continuing failure of the economic union with the rest of the United Kingdom. Unfortunately, I do not have time to prescribe the answer because I have only five seconds left. Wait for my next speech.
A superb piece of timing. I call John Young.
I want to touch on the Local Government Committee's report on the relevant aspect of the budget. Des McNulty had long experience in Glasgow City Council. Even in those days, financial matters were his main interest, which has followed through into his time in the Parliament.
When we debated proportional representation in local government the other day, Mike Russell stood up at one point and said that Andrew Welsh had had a long and honourable career in local government. That was quite correct and no one would disagree with that. Mr Russell then squinted across the chamber at me and said that I had had an even longer spell in local government in the last century and perhaps even the century before that, by which he meant the 19th century. Later, Sylvia Jackson said, "That was a bit cheeky, but you look quite well for 124."
That made me think about the 19th century local government set-up. In many ways, at that time people in local government found less central Government interference than people in local government do today. For example, in one part of the 19th century Glasgow councillors—who come in for a lot of criticism today—acquired Loch Katrine, which gave Glasgow clean water and, by doing so, largely did away with the cholera epidemic that had afflicted the city throughout the centuries. Those councillors also brought into being the first environmental health measures in Europe—they dealt with overcrowding by fixing metal plates on the entrances of houses that showed the maximum number of residents that would be allowed. Finally—if they could come back, they should be running the Holyrood project—they built the glorious Glasgow City Chambers by importing marble from Italy and by using Italian master craftsmen.
The Local Government Committee report on stage 2 of the budget process says that the committee took oral evidence from a fairly wide range of witnesses during stage 1 of the budget process. However, the report states:
"Invitations to CIPFA Directors of Finance Section, Dumfries and Galloway Council, and the STUC were not accepted."
Perhaps someone could tell us if there were any reasons given why the invitations were refused.
The Local Government Committee report also states:
"The Committee notes the Executive's view that the £440 million referred to by COSLA is not a ‘funding gap'. It is, in the view of the Committee, however, a spending gap … The Committee welcomes the Minister's commitment to consider the mismatch problem with COSLA."
The committee also noted that there was a distribution problem in a certain area but that the minister would discuss the matter with COSLA. The outcome of that will make interesting reading.
The committee took the view that
"the existing information in the departmental report does not provide the degree of transparency necessary to permit robust scrutiny of the budget proposals"
and went on to
"welcome a more systematic approach, which strategically sets out the underlying policy and financial assumptions in the Executive's spending plans".
The committee made various other suggestions, one of which was that we should take the general public along with us. There is a problem with that. Although the general public are not fools, the complexities of local government finance, especially in large cities such as Glasgow and Edinburgh, are such that even some councillors do not understand them. The general public would probably not understand 90 per cent of what was presented to them. However, we all know what they do understand. When they get their council tax bill and look at the amount, they ask, "Are we getting value for money? Are we getting the services that we are being charged for?" Many people do not think that they are.
The Local Government Committee states:
"Overall, the Committee recognises that some progress has been made over consultation in the budget process but would welcome further progress with regard to the following recommendations in time for next year's budget process."
The committee then gives three recommendations. First, it recommends:
"Given that local government was responsible for only £28.6m of the £680.3m underspend, that local government will receive more equitable treatment in future".
Secondly, it recommends that:
"The Minister further considers the mismatch problem with COSLA".
Thirdly, it recommends:
"To enable proper assessment of the adequacy of local funding proposals that the Executive set out in the Departmental Report the underlying policy and financial assumptions in the spending plans and what outputs are expected at a national level."
Presiding Officer, I know that I am probably teetering on the brink, but I will end by saying that Anne Robinson would say, to some, that the exit is first left.
I was entertained by John Young's description of finance in local government. It reminded that me that someone once said that there are three kinds of people in local government—those who can count and those who cannot.
Following Alasdair Morgan's remarks about Des McNulty, I shall be watching the latter's future with interest—although, right at the moment, it is elsewhere. Clearly an interest in money is the route to preferment. On the other hand, Mr Davidson suggested that we should take less interest in money. I suppose that a Tory can afford to say that. I wish David well on the back benches, and perhaps even further back at a later date.
I want to bring a seasonal note to the debate and to wish all members here, and all those who may be watching on the monitors, a very merry Christmas. Something quite important in relation to Christmas has just happened: I have made an exciting discovery. Previously, we had accountancy and economics; now we have brand spanking new Liddellomics. It will be a popular event at children's parties everywhere this Christmas as it is one very impressive trick. We have heard Helen Liddell talking about how she can make £1 million disappear from our pockets, apparently without effort. Read GERS, see the show. However, as in magicians' performances everywhere, we will not see how the trick is done unless we stop looking where the performer wants us to look and instead see the hidden hand behind her back. It is Gordon Brown's.
I have a few things to say that are a little less frivolous. First, on capital, it is not at all clear from the Executive's figures how capital is deployed in the service of the Scottish Executive. When the Rural Development Committee was looking at its numbers, I found a mysterious £56 million, of which £42 million was cost of capital. No explanation was given as to what that was or where it had come from. I speculated that it represented an asset of perhaps half a billion pounds. Three weeks later, lo and behold, I was told that that was true. The point is that no assets and liabilities were expressed as they would have been on a public company's balance sheet. There was nothing to enable me to see from what assets and liabilities the capital charge that was expressed in the revenue part of the budget had come. That is not universal throughout the numbers that are presented to us, but it is all too common.
Public-private partnerships and private finance initiatives are another way of avoiding expressing what has happened to the figures and the way in which accounts are translated from capital into revenue. That is hard to track, harder to understand and impossible to justify. It goes slightly against the grain for me to praise the Scottish Prison Service, whose report came to hand today. However, the SPS is at least open and honest in relation to the PFI at Kilmarnock. Unfortunately, the running costs are expressed as £12,363,000, whereas in another part of the budget the same costs are some £40,000 less. The SPS maintains its record of being unable to provide accurate information, but at least the layout and expression of information in its report is useful.
I want to say a little about indirect taxation. The Scottish Parliament has no direct influence on indirect taxation. Nonetheless, the effects of the many indirect taxes introduced by Westminster are pervasive in the Scottish economy.
Will the member give way?
I am sorry, but I am in my final minute.
Those effects are also pervasive in the budget. For example, the aggregates tax will increase the cost of building projects by 5 per cent, yet there is nothing in the budget that mentions that effect in the future. The document is already incomplete. The increase will come into effect in April if it is implemented. Fuel tax is another example. It fluctuates and rises, and there is no mention of it in the budget.
At the core of the debate is the fact that although we do not have direct influence on matters such as indirect or Westminster-led direct taxation, it is possible to influence those matters. The Northern Ireland Assembly unanimously agreed to make representations to Westminster on that subject and was successful in obtaining a derogation for Northern Ireland for the aggregates tax. Some people in some devolved administrations can stand up for the people. It is time that Labour and the Liberal Democrats stood up for the people of Scotland.
I will begin by dealing with one or two points on the content of the budget before moving on to address issues raised about the process in the debate. It is important to restate our welcome for a budget that shows real growth for the second year in succession. In 2001-02, the budget in cash terms was some £18 billion. Over the next two to three years, that will rise to £22 billion in cash terms. That is a significant improvement in anyone's language. It represents a 14.5 per cent growth in real terms. Everyone in every party should welcome that and recognise that it is a substantial improvement on the situation before devolution.
The budget reflects the priorities of the Liberal-Labour coalition in health, education and the rebuilding of our public services. I am delighted to welcome the funding of key priorities such as tuition fees, student grants, free personal care, the central heating programme, the decommissioning scheme for the fishing industry—that has been widely welcomed—agrimonetary compensation for the hard-pressed crofting and farming industry and extra funding to maintain less favoured area status payments through the difficult transitional period. I could list many more examples. Everyone should welcome the significant and sustained growth that we expect to see over the lifetime of the Parliament. I hope that that will continue in the future.
I want to deal with points of concern that were raised in the Finance Committee's report and in today's debate. The first issue is end-year flexibility, which most speakers have raised as a concern. We must keep EYF in context—3 per cent of a £21 billion budget is not a huge discrepancy one way or another. If one speaks to managers on the front line, who are busy with capital projects and staff recruitment, it is not hard to see how there can be slippage in a budget—perhaps because of the weather or being unable to start a contract on time. That is particularly true in major capital programmes, which can easily slip three or four months the wrong way. We have to bear that in mind with a budget of this size. Three per cent may be at the top end of the scale and we have to manage it better, but we have to keep it in perspective.
If we have a greater end-year flexibility next year, what comment will George Lyon make? As I understand it, that is likely to occur.
I am coming to that point.
There has to be better management of the process, but I do not think that anyone can guarantee that the budget will be hit bang on. The Executive and the coalition parties would have faced greater criticism if the budget had been overspent by 3 per cent rather than underspent by 3 per cent. At least the process of six-monthly reviews has enabled us to allocate that money to other spending priorities and to reallocate within existing budgets to ensure that the money is spent by the end of the year.
One issue that is not covered by the Finance Committee's report, but which I would like to highlight, is three-year settlements for councils. We have all welcomed those new settlements but, unfortunately, due to the UK Government's comprehensive spending review, instead of a three-year settlement this year there is only a two-year settlement and, depending on how quickly a conclusion is reached on the CSR, next year there might be only a one-year settlement. I ask the minister to comment on that and to tell us whether discussions are taking place with Westminster on how we can review that. If we are committed to three-year spending plans for councils, the budget must be a three-year rolling budget—it cannot be three, two and one.
As has been suggested, we also need better mechanisms to ensure that national health service boards and local authorities, which spend huge amounts of the Scottish Executive's money, spend in line with our priorities. However, as the minister rightly pointed out, we have to get the balance right between ensuring that they spend in line with our priorities and allowing local flexibility. That is a difficult balance to get right.
I have a couple of further points, one of which is significant. When I intervened on Alasdair Morgan, he took me to task for indulging in political knockabout. I tell him that I was not doing that and that my question was genuine. If the SNP wants to be taken seriously as a party of Opposition, SNP members cannot criticise the Executive parties in the chamber week after week for what they are doing without suggesting what the SNP would do, how that would be funded, and which budgets would be cut to fund the changes. If SNP members did that, they might be taken seriously as an Opposition but, until they do so, they will not be regarded as a serious Opposition.
This has been an interesting debate, which has proved that there is cross-party agreement that the current budget process does not allow the committees adequate access to information in a timely manner and in a form with which they can work. One way or another, all speakers have hinted at good things and bad things, but there is much work to be done. I repeat my call that as soon as possible we should discuss how best to frame the budget framework to suit the work of the committees, because the committees do the work of the Parliament. People outside the Parliament do not understand the importance of the committees' role, in particular in scrutinising the budget process.
I was interested in some of Andy Kerr's comments. Obviously, he will talk up the game, which he inherited from his predecessors, but it will be interesting to see how he implements some of the things that he has suggested he will introduce. I welcome many of the comments that he made about the process.
Iain Smith got very agitated about the fact that we are supposed to be talking about the actual spending, but in fact the Parliament cannot properly do that if the information does not come out in a form that is usable, particularly by the committees. The Finance Committee's role is to co-ordinate what comes from the committees. That is the purpose of the debate. However, I was interested to notice that, in answering questions, Mr Smith apparently gave an assurance that the Liberal Democrats are totally behind all that the Labour party puts forward in its spending plans and priorities.
Unfortunately, particularly in the north-east of Scotland, that is not the case in the weekly columns of the local press and the press releases that come from Liberal Democrat members of the Parliament. Perhaps it would be interesting to obtain some firm views from the Liberal Democrats about what they are buying into and what they are buying out of. However, I am afraid that it is the usual story—here they are enthralled by what the Labour front bench produces, but out in the parishes they pretend to inhabit the philosophical high ground and to fight for the locals.
Mr Smith made a fair comment about Tory priorities. If he had listened to what I said, he would have understood that our priorities are different from those of the Executive. The questions that I asked the minister were about examining the infrastructure and about the opportunities for encouraging enterprise, training and education. My colleague Mary Scanlon talked about health. I asked about all levels of education and its appropriateness to the needs of the child. We have never altered our principled stance on all those issues.
Some members raised the issue of end-year flexibility. I think that the minister has got the message. However, I am still puzzled about planned deficits in health boards and the minister did not answer that point. Surely we do not want to plan for deficits; we want to plan to deliver the required service properly and effectively and ensure that it is achieving value for money.
It is not right to say to health boards that they must spend their energy coping with those deficits and, at the end of that year, when it is out of their control, they will get a shell-out or a divvy or whatever you want to call it. If that is going to happen, the money must be focused and prioritised throughout the year. The people who work for the health boards should not be doing things that they do not exist to do. They should be delivering health care and not playing about on the fringes of accountancy, as happens far too often.
In talking about our priorities, I said that we want to have more local decision making. We want smaller government, not larger. The purpose of the devolution settlement was to bring some of the decision making closer to the lives of the Scottish people. We would like that to be taken a stage further—there should be less ring-fencing of priorities and fewer new burdens.
For example, the minister mentioned the McCrone report. Rural councils in Scotland are struggling to deal with McCrone because the formula that is used does not meet the needs of rural councils. They have smaller schools with more teachers and fewer pupils. That serious issue must be grasped in the near future and a solution must be found.
On the funding of agencies, serious questions must be asked about the money spent by those agencies and what we get for that money. There have been tremendous problems with VisitScotland. Wendy Alexander claimed that she had given VisitScotland its remit. She then claimed that it was VisitScotland's fault that tourism had gone down the pan. Similarly, we have to consider how the enterprise network is working. We would like to debate those areas and not just be told how much money the agencies receive.
It is important that Parliament has access to the right information and that the process works. At the moment, the process is not working suitably. There is no change from last year's report card. If Parliament is going to move forward, we need to ensure that the Executive is on board and makes sure that its information comes out when it is asked for.
I acknowledge the hard work that was done by Mr Kerr's two predecessors. I also acknowledge their willingness to come before the Finance Committee and accept some changes to the process.
The financial issues advisory group helped to produce the budget process in advance of the opening of Parliament. In spite of making an interesting effort to produce a budget process, the group clearly did not understand all the things that could happen and that could lead to weaknesses in the process.
Initially, the process was refined through the Public Finance and Accountability (Scotland) Bill and each of the budget processes has brought further refinements, but we have a considerable way to go.
Surely the purpose of any budget process is to allow detailed scrutiny of the Government's budget plans as they develop. My understanding of the intention was that before the Government's budget was set in stone, the public and their representatives would have an opportunity to influence it. The process should provide sufficient information for subject committees to have an informed debate about the Government's policies and its priorities and for reasoned argument about alternatives. The present system does not allow that, for various reasons, including the fact that insufficient detail is provided, especially on bodies that are not under direct Government control.
The non-departmental public bodies are not as directly accountable as they should be. We do not see sufficient detail of their budgets or of what is planned. Those bodies are not sufficiently accountable. Others have talked about public bodies such as VisitScotland and the health boards. We have a significant conundrum over how we deal with local government, because it has its own mandate. Nevertheless, the spend is the Parliament's responsibility. We must produce a creative mechanism for proper parliamentary scrutiny of all the budgets that do not have that.
Our system is failing. We need the information to be available on time. That is important. At present, we do not receive the monitoring reports to which the Minister for Finance and Public Services referred and for which Peter Peacock will be responsible. Those reports should be made available timeously to committees, because they might have a view that the Parliament should be involved in that process regularly throughout the year. That is not happening. Committees need that information not only on time, but in detail. At present, the detail on which to base reasoned, alternative proposals is not available.
Although the format is significantly improved over the original version, it does not allow proper scrutiny, especially of non-departmental public bodies and others. A series of financial events occurs throughout the year. The big bulk of the budget is set in train early, not from here, but from elsewhere. We must also deal with end-year flexibility. Others have talked about that in great detail. We do not object to the principle of end-year flexibility. We ask for consideration to be given to how the redistribution of that money is scrutinised when the information becomes available to committees and for committees to be able to have a reasoned input.
The same applies to the comprehensive spending review consequentials and to the autumn statement consequentials. Gordon Brown announced that the NHS in the UK would receive £1 billion. There is a Barnett formula consequential to that. When will that enter the parliamentary scrutiny process? I do not think that that exists.
We have had some interesting comments—particularly from my colleague Alex Neil—about GERS, its relevance and its efficiency. It is about as efficient as its namesake in Glasgow, which is not doing too well either.
How about the Dons?
That was below the belt.
It is essential in any open democracy—I think that we all hope for that—that financial monitoring reports are available on time. We need to have the reports, which are not just for ministers. All those with financial responsibilities—that means the subject committees and the Finance Committee—should have access to the reports.
All that we are doing is examining the process, not the detail of the budget. We must make progress towards that. Members who have not participated in the process criticise the Opposition for not producing detailed plans, but they are wide of the mark. That is not what the debate is about. We need to have more detail.
This is a new experience for me and I might need some assistance from the Presiding Officer. I was under the naive impression that we were here to discuss the budget, until I heard some of the SNP's spokespersons. Much as I always enjoy Mr Neil's speeches—they are always informative—I thought for a minute that we were on an election husting. When I heard Mr Wilson, I had much the same reaction. He reminds me that it is Christmas—the season of good will and a time for the very young.
Does that include me?
No—not at all. As I said, I always enjoy Alex Neil's contributions—I especially enjoyed his election broadcast.
The report on the budget process was informed by three strands: the evidence that was taken by the Parliament's subject committees; the evidence that the Finance Committee took from outside bodies such as Scottish Enterprise, the chambers of commerce and voluntary sector bodies, to name but a few; and the evidence that the Finance Committee took from the Scottish Executive civil service. We can be satisfied that a robust process of examining the Scottish Executive's budget was undertaken. After all, that is what the Finance Committee does and the debate is about that process.
As has been mentioned by Des McNulty, the new convener of the Finance Committee, both of us have come to the process late. It is nonetheless possible to understand and appreciate the recommendations that are contained in the Finance Committee's stage 2 report. It was right that Des McNulty recognised the considerable work that was done on the report before both of us came to the Finance Committee. It is right and proper that that work is acknowledged and that due regard is given to those who spent a long time scrutinising the budget.
As has been said, the Scottish Parliament budget process is very much in evolution. That will be the case for many years to come. There is still plenty of scope for better presentation and understanding of the information that is contained in the budget. Issues such as the way in which we treat end-year flexibility and give a better breakdown of figures have justifiably been mentioned. Those are areas in which the Executive can make improvements. To do so would help those who try to understand more fully the work of the Executive and the Parliament.
Real progress and genuine transparency will be achieved when we make progress towards outcome measurement. The Scottish Parliament should be seeking to make a proper judgment on what we do with the money that is to hand. That would be the best judgment of how much progress is being made, but that will take time. However, we need to bear in mind that what we seek to achieve in the budget process is improvement not difference.
It is all too easy for politicians to trawl line by line through a budget. It is more useful and, I suggest, more challenging for the Executive to have the money that is to hand scrutinised properly.
One of the committee's recommendations is that NDPBs, health boards and so forth should spend more of the money that is made available to them in line with Executive priorities. It is important to stress that that recommendation is not a constraint, but an attempt to ensure that the money that is directed to the services is allocated for the reason that it is so directed. That would allow users to see tangible differences in the services that the Executive and, more important, the Parliament claim that they seek to improve. If that is achieved, it will be no mean feat, but we should all be clear that to do so would make a significant contribution to more consistent and better understood public services.
On a similar vein, it is critical that individuals and organisations can track spending on programmes in which they have an interest—the Finance Committee made a recommendation in that respect. At the moment, that is difficult and, on occasions, near impossible to do. The committee has asked for information to be supplied in electronic form so that it is easier to track spending. That should happen.
One area of concern is the severe dissatisfaction over the lack of mainstreamed equality issues. The Equal Opportunities Committee expressed disquiet on that subject and that is reflected in the Finance Committee report. Close attention must be paid to ensure that that situation is rectified. There is no doubt that that is a budgetary issue, but it is also a policy issue. If we ignore it, we will be hard pushed to see anything other than marginal improvements.
I commend the Finance Committee report to the Parliament. A proper examination has taken place and the report contains useful recommendations. I look forward to the year-on-year process that will assist in the evolution of improvements and not just changes.
I call Elaine Thomson to close the debate on behalf of the committee. We are grateful for her offer to do that in five minutes.
Will you hold me to that, Presiding Officer?
This brings us to the end of stage 2 of the budget process for this year. I welcome the new minister and the new convener of the Finance Committee to their posts, and wish Mike Watson all the best in his new role. I thank the clerks and the adviser to the Finance Committee for all their assistance to the committee during stage 2 of the budget process.
Important issues have been raised this afternoon. It is crucial that the budget process allows significant comment on the budget proposals. Many members have discussed different ways in which they think that the budget process could be improved. As Brian Adam mentioned, the focus this afternoon continues to be on process and presentation rather than content. However, the subject committees and the Finance Committee have recognised that significant improvements have been made in the presentation of budgetary information. I have no doubt that that will continue. It has been said that we need not so much more information as better information. I cannot agree—and I do not think that the Finance Committee as a whole would agree—that the process has failed. It can and will be improved as time goes on.
No subject committee proposed any changes to the budget proposals. Given the significant growth in the Scottish budget year on year, that indicates support for the Scottish Executive budget, with its priorities of health, education and rebuilding public services. The current budget process and the information that is made available through it are considerably more advanced than, for example, the scrutiny that was given to the Scottish budget pre-devolution. Considerable effort has been made by ministers past and present, and by the Finance Committee, to make the budget process even more open and inclusive.
I welcome the minister's commitment to continue budget roadshows as part of stage 1 of the budget process. This year, as part of stage 2, the Finance Committee met in Kirkcudbright to take evidence from local organisations and the previous finance minister. The determination of those local organisations to move forward from the negative impact of foot-and-mouth on the local economy and to rebuild the agricultural and tourist sectors was evident. Making the Scottish budget widely available and as straightforward as possible to understand is important. The Finance Committee is committed to that. We want to continue to try to engage as wide a cross-section of Scottish society as possible. Taking the Finance Committee out to local communities twice a year is one way of achieving that.
Another way of achieving that, which the committee has discussed, would be to reinstate a summary leaflet of budgetary information. However, we need more research by the Scottish Executive on how best to communicate information and in what format. The Finance Committee looks forward to some feedback, should that go ahead. I do not agree with John Young that finance, whether at Scottish Parliament or local government level, is too complicated for the ordinary person. Information can be communicated well and simply so that people understand it.
The Finance Committee looks forward to continued improvement in areas that show sources of income. We need to show more effectively where we have CSR consequentials, UK budget additions and EYF. While those considerable additions to the Scottish budget are always welcome, the result of those changes to the Scottish budget, made mid-year, is to increase the difficulty of following the additional moneys in the budget documentation.
Another area that has been given much attention by the committee is the proposal to move to outcome-based budgeting. Various ministers have supported that proposal over the past two years, and I was pleased to hear the new minister commit to continuing to work with the committee in developing it. The committee accepts that that is a long-term project, but—in order to improve objectives and clearly identify spending priorities—it believes strongly that development in that area would be of considerable benefit. As Alasdair Morgan and other members said, specifying and identifying outcomes may be difficult. It is for that reason that the Finance Committee has commissioned external research to develop that proposal.
I was pleased that the minister accepted, for the large part, many of the committee's other conclusions. We look forward to more and better information next year. I welcome the minister's commitment and willingness to continue to work with the committee in developing many areas, particularly outcome-based budgeting. If we can get that right, it will put the Scottish budget process at the leading edge in global terms.