Budget Process 2007-08
The next item of business is a debate on motion S2M-5319, in the name of Wendy Alexander, on behalf of the Finance Committee, on its report on stage 2 of the 2007-08 budget process.
Karen Gillon thinks that she has a tough job, but we can perhaps all speculate on why the Finance Committee has been given the final slot in the parliamentary calendar before Christmas. One of the more benign explanations is that the business managers hope that, if tomorrow's press is full of headlines on prudence, efficiency and economy in public finances, they will rub off on all those Scots who are heading to the shops for a last-minute shopping spree.
I fear that we will not be headline news tomorrow morning, but this debate is nonetheless important because it is about the budget that will allocate £25 billion to Scottish public services. I simply note that the budget is larger than that of most member nations of the United Nations. The Finance Committee, at least, is convinced that this debate matters.
As is customary on such occasions, I begin by thanking those who contributed to the Finance Committee's report. In particular, I single out my predecessor as convener of the committee, Des McNulty, who, on this and many other matters, steered the committee ably throughout most of the current four-year session of Parliament and oversaw much of the development of the report. On the committee's behalf, I also thank our budget adviser, Arthur Midwinter, for the expert advice that he gave the committee for almost four years. He worked very conscientiously for a very economical reward and is an asset that will be sadly missed in the future. Thirdly, I thank our clerks, ably led by Susan Duffy, for their tireless work on behalf of the committee.
Last, but not least, I thank the Executive's finance co-ordination team for its efficient responses to our inquiries. The committee wishes to record its appreciation for the team's support during its deliberations.
I turn now to the committee report itself. One area in which the Finance Committee might have already been influential since the publication of the report in the middle of December is that of local government funding. I believe that the committee will wish to welcome the fact that the Executive has heeded our advice and has found resources to rectify some of the challenges in local government funding in the coming year, thereby exerting downward pressure on council tax levels in 2007-08.
I turn to the matters that are still outstanding. I have only a limited amount of time, so I will dwell on three big issues to emerge from the committee's report: first, overall budget priorities; secondly, the future use of targets; and, thirdly, the draw-down of resources from Her Majesty's Treasury.
Starting with overall budget priorities, the committee recommends that the Executive should take the opportunity provided by the forthcoming spending review to make a clear statement of its overall priorities and to specify how individual programmes contribute to the cross-cutting priorities of growth and closing the opportunity gap. We urge the Executive to publish reports in the 2007 spending review on those cross-cutting priorities, as it did following the 2002 spending review.
Can Wendy Alexander confirm that the cross-cutting themes are growth, sustainable development and closing the opportunity gap?
Indeed. There are also themes surrounding equal opportunity. I made mention of two priorities, but I happily concur with Mark Ballard on that point.
On the issue of overall priorities, we are anxious to work with the Executive and with other committees to deepen subject committees' understanding of some of the complex financial decisions that relate to their portfolios. We encourage subject committees to seek from the relevant Executive departments appropriate trend data on spending patterns since devolution. Clearly, such trend data are not appropriate for the budget documents, although they will be relevant to subject committees and can aid budget scrutiny, particularly in the tightening financial climate that lies ahead.
Local government finance is another area of overall priority, and the committee urges the Executive to undertake detailed comparisons of grant-aided expenditure provision and local spending levels in the period ahead, with a view to identifying any area of GAE that involves significant overspending or underspending. If every, or nearly every, council diverges from GAE in significant ways, as appears to be the case for children's services, for example, it is important that we consider why that divergence is happening and that we look to revise GAE allocations to reflect emerging spending patterns on the ground.
The second of the three issues is targets. The committee believes that the Executive's budgetary systems need to be developed further to demonstrate better the linkage between cross-cutting priorities and resource allocation priorities. Looking forward, we think that that means that all portfolio targets that are set for the 2007 spending review should quantify outputs or outcomes and be directly and transparently linked to a specific budget line.
On the performance of spending departments over recent years, we recommend that the Executive provides the Parliament with the outcomes for the original 11 targets from SR 2002, which were subsequently replaced. That would allow a more robust and comprehensive assessment of performance against all the previous targets.
The third area that I wish to discuss is the draw-down of resources from Her Majesty's Treasury. The committee believes that the Executive should, in future, look to specify more precisely not only the components of the draw-down but the priorities that the expenditure is meant to address. We suggest in our report how, technically, that might be done. We do not expect a full answer on that from the minister today, but we hope that, between now and its report back, the Executive will examine the issue in some detail. For the moment, we hope that the minister will indicate whether some of the reserve has been drawn down in the recent local government funding settlement.
I have not dwelt on matters that relate to the Scottish Parliamentary Corporate Body or to Audit Scotland. Those matters were fully rehearsed during our debate yesterday on accountability.
In my remaining time, I would like to commend to the chamber the sections of the committee's report on equalities issues and how we can make progress on equality budgeting, and to the sections on efficient government and local government funding. I know that colleagues will focus on those issues in their speeches this afternoon.
I conclude on a forward-looking note. The Finance Committee wants to record that it believes that significant progress has been made in the past four years on the budget process as a whole. During the final months of this session of Parliament, the committee is anxious to reflect on the budget process in Parliament and on how it might be strengthened and improved in the third session. The committee wants to look in particular at the role of subject committees and, indeed, at its own role. It is important to use the third session of Parliament to build on the progress made during the second.
I begin by welcoming Wendy Alexander and Gordon Jackson to their new roles. I know that they will bring fresh rigour to the work of the committee, which is most welcome.
I echo Wendy Alexander's appreciation of Des McNulty, who was convener of the committee for around three and a half years and did the job very well indeed. Not only has his work been acknowledged by his colleagues, but it has led in some way, I am sure, to his recent appointment as a Scottish Executive minister. I offer him my sincere thanks and take this opportunity to wish him well in his new responsibilities.
The Finance Committee's report is useful and will undoubtedly make a positive contribution to future engagement between the Executive and the committee. The Executive does not expect, and I do not expect, a parliamentary committee to accept or agree with everything that we do. However, we are pleased—and I personally am pleased—that the committee's report has acknowledged progress not only in the quality of Executive documents but in the quality of the process of scrutinising the annual budget.
I take this opportunity to assure the committee and the chamber that we see the work of the committee as an asset to the work of the Executive. We are committed to working with the committee. Of course there will be differences of opinion from time to time, and there should be robust exchanges, but we fully acknowledge the value of the work that is being done.
That work will be particularly important as we move towards the spending review next year. That will be a critical time not only for our parliamentary process but for the future direction of government and public policy in Scotland. The way in which the Executive works with the body that scrutinises it at that time will be very important indeed.
We will of course respond in detail in writing prior to the stage 1 debate, so I will not deal with every individual point in the committee's report. However, I would like to highlight a few specific points.
The Finance Committee has recommended that portfolio committees adopt a more active approach to budget scrutiny—Wendy Alexander gave more details of that. We welcome that worthwhile recommendation, which will improve overall scrutiny within the Parliament. Scrutiny should not be the role just of the Finance Committee; the portfolio committees also have a very important role to play. It is perhaps easy to make such a recommendation, but we will need to pay a bit more attention to it and take a bit more time to ensure that that more active approach is seen in the Parliament.
We will continue to try to improve the presentation of our documents, as the committee has asked us to do. We attempted to respond to last year's request to concentrate on new resources. However, there was some misunderstanding about exactly what was required. I think that subsequent correspondence has now rectified that. In future years, we will reflect the required change within the budget documents.
As Wendy Alexander rightly said, we will in future years improve our equalities reporting as a result of the disability equality scheme that was published on 4 December. That is an important point. We will publish—[Interruption.]
This is the fourth time today that I have had to ask members to switch off their mobile phones.
We will publish annual reports on public sector equalities and, to aid clarity, we will ensure that, although those documents will be published along with the budget documents, they will be separate documents in their own right.
A key recommendation of the Finance Committee concerned local government finance. In last week's statement, we responded well to that recommendation, with an additional package of more than £250 million. As a result of productive engagement with local government, we have secured benefits for the people of Scotland from that investment. Council tax levels will fall and council tax collection rates will rise. Greater efficiencies will be secured and further reassurance on the cost of personal care will be provided to the people of Scotland who depend on that policy. Last week's statement means that we have increased the previous year's figures by £393 million. We have gone further than the committee recommended and, in the interests of good governance and good local services, we have ignored some of the more vacuous noises about election bribes.
The Executive shares with the committee the joint aim of improving the understanding, transparency and scrutiny of the budget process. Through the budget, communities will be more confident, services will be of a higher quality and the transformation of Scottish life will continue. We welcome the Finance Committee's report and look forward to working with the committee in future.
The Scottish National Party joins the new convener of the Finance Committee and the minister in recording our good wishes to Des McNulty in his forthcoming responsibilities as a minister. In my view, Mr McNulty was a very effective convener of the Finance Committee, who dealt with the committee's work in a true and outstanding parliamentary fashion. I wish also to thank the clerks for their assistance during the production of the report.
I begin by referring to local government finance. I would be the first to acknowledge that the Government has improved the position on which its original plans were based. More money is being given to local authorities to assist with downward pressure on council tax levels. That is an important objective. I wish that the Government had listened to the Finance Committee in the previous financial year as well; if it had, council tax payers would perhaps have been protected from council tax increases that were, on average, above inflation, as a result of the financial settlement that the Government offered last year.
It is worth while for me to remind members that last year produced the lowest average rise in council tax increases since devolution.
That is a statement of fact. It may be the outcome of what the minister himself referred to as a "productive engagement" between the Scottish Executive and local government. If the minister was being fair, he would recognise that, for a large proportion of the period since devolution, this Administration has not presided over a constructive and productive engagement with local government. I am glad that the Executive has now embraced such an approach because it will reap the rewards that all of us who argued for it in the first place believed it would produce.
I move on to the efficient government process, of which the Scottish National Party is very supportive. However, we have concerns about whether the process not only appears credible but can be proven to be credible. In its report, the committee said—not for the first time—that it was concerned about whether it was possible to verify the effectiveness of the efficient government programme because of the lack of established baselines against which the process and the achievements that the Government was claiming could be judged. The committee made the same comment a year ago.
In addition, our views have been endorsed in the Audit Scotland report, which was published just the other day and was discussed at the Audit Committee meeting on Tuesday. The Auditor General for Scotland makes it clear that the development of
"Robust baselines … to … provide a ‘line in the sand' against which improvements can be measured"
is essential if we are to validate the savings that have been reported. The lack of such baselines is an issue of concern.
I give way to the minister again.
In the interests of clarity, let me just quote a section from Audit Scotland's report:
"Improvements in the content of ETNs demonstrate the Executive's commitment to provide greater assurance on the level of savings delivered and on the extent to which gains are achieved without reductions in quality of services."
The Audit Scotland report also states that the development of
"Robust baselines … to … provide a ‘line in the sand' against which improvements can be measured"
is essential if we are to validate the savings that have been reported. Instead of exchanging quotations with me, the minister would be better served by responding to Audit Scotland's criticism and improving the recording process so that we can have a valid debate about what savings are being achieved. We support the efficient government initiative, but, as the Auditor General said, and as the Finance Committee said—not for the first but for the second time—the process must be made more robust so that we see that improvement.
The way in which the Executive draws down resources from Her Majesty's Treasury is an issue that has concerned the committee for a couple of years. I record that the minister gave us a bit more information about the substance of the draw-down, which, in his statement to the Parliament in June, he said was expected to be £780 million over financial years 2006-07 and 2007-08. We asked him to specify what the known pressures were for which he was budgeting. When he reported to the Finance Committee, he provided us with information on about £333 million of the £780 million. If portfolios are facing "known pressures", I cannot understand why the Government cannot share that detail with the Finance Committee openly. We should all be made aware of what those pressures are, what the state of the reserves is at Her Majesty's Treasury and how those reserves will be utilised going forward. I think that we have begun to shine a light on how those resources are used at the Treasury, but we need to have absolute clarity on how that work is undertaken.
One limitation on the ability of the committee and the Parliament to know how effectively public resources and expenditure in Scotland are utilised has been that the Government, after it received the report from the Howat committee, has gone to an extraordinary degree of trouble to prevent the publication of the report. The whole parliamentary process of engagement between the Executive and the Parliament's committees, whereby the Finance Committee seeks to get to the bottom of how the public's money is used in public spending, would have been much better served if we had been given access to that report. After all, the Howat committee was established not just to inform the spending review but to judge whether all Scottish Executive programmes were delivering adequate performance and adequate value. In his closing remarks, I hope that the Deputy Minister for Finance, Public Service Reform and Parliamentary Business—who I know has had to front up the Howat review in Parliament on several occasions—will set out the Government's plans for early publication of the report so that we can have an informed debate as the draft budget moves through the parliamentary process.
In my view, the Finance Committee report makes some pretty robust arguments about how the Government must improve the way in which it handles public finances, how it manages the efficient government programme and how it utilises the resources that are drawn down from the Treasury. I hope that the Government will pay close attention to the issues that the committee has raised.
The scrutiny of the draft budget has, once again, been a long process. Like other members, I pay tribute to the committee's clerks, to the people who gave evidence to the committee and to Des McNulty, who, as convener, was very able at squeezing out information that was relevant to our deliberations. I wonder whether his promotion was as much to do with his having caused difficulty for the Executive as with his ability. In that respect, I only hope that the current convener also proves difficult for the Executive.
I was particularly glad that the committee went to Dumfries to take evidence from local organisations about aspects of the Scottish budget, because one danger for Government in Scotland is the feeling that it is too central-belt biased. Most committee members who went to Dumfries found it a useful occasion, and I know that local groups that gave their views found it useful to have an interaction about the problems that they face. I hope that some lessons have been learned at a national level from the challenges that are faced in some of our remote regions.
Wendy Alexander talked about some of the recommendations in the report. She is right to say that those on the ombudsmen and the Scottish Parliamentary Corporate Body were fully aired yesterday, so I will not dwell on them either.
One aspect of the budget that gave us concern was targets. They are a much-vexed area in budgeting, and all of us have had some concerns about the robustness of the targets and their measurement. Members come at the issue from different perspectives, but the committee has drawn out some valid points.
Let me give an example. There was particular concern about targets that have changed. The Justice Department's target number 1 was originally a 5 per cent reduction in serious violent crime by 2003-04. According to the analysis of targets in the draft budget report, that was replaced because it was difficult to measure and because 2002-03 had the highest recorded levels of serious violent crime.
Notwithstanding the reasons for changing the target, its replacement was to
"increase the police clear-up rate for serious violent crime"—
we would all endorse that as a valuable target—with the
"Desired level of improvement to be discussed with police forces."
We can all agree that improving the clear-up rate is a valuable direction of travel, but a process that allows those responsible for meeting a target to be so explicitly involved in setting it does not strike me as being as robust as it could or should be.
Some of the other targets that were replaced were perhaps more favourable. One in particular that caught my attention was the ninth target in the tourism, culture and sport portfolio, which was changed to
"Increase the number of cultural successes by 3 per cent by end March 2008".
On that, the Executive deserves some credit, as it is well on the way to meeting the target, and calling in its aid the collective efforts of "Balamory", Gordon Ramsay and Rory Bremner. We should give credit where it is due, although we can perhaps reflect on whether that was a particularly wise target to change to in the first place.
The key question on the budget for those outside the chamber—it should be the key question here, too—is the extent to which we achieve value for money for the significant sums that are spent in Scotland. On that, the jury is very much out.
Mr Swinney was right to mention the Howat review. We have covered it many times, but we have still not had the appropriate answers. For example, we still do not understand why the Howat review is relevant to the spending review but not to this year's budget. The Howat review was based on last year, and we still do not know whether any of the decisions taken by ministers have been influenced by it. Of course, ministers have had the benefit of seeing it, which those of us on the Opposition benches have not. If there are problems in any area of Executive spending, it would be much better if the Executive was open about them so that we could have a robust discussion about how they might be dealt with. I repeat previous calls for the Executive to publish the Howat review as soon as possible, because I cannot see how it can be relevant to the future but not to the budget that we are currently considering.
Mr Swinney also referred to the efficient government initiative, and the key question is whether we can achieve more from the efficiency targets than we are currently delivering. In the past year, the Government has not published a single new technical note on efficiencies—it seems odd in the grand scheme of things that not a single new idea has emerged from a Government that is so keen on efficient government.
Mr Swinney was also right to mention baselines, because gross savings may disappear. That might throw into question the funding of the council tax freeze that he is so keen on, as he appears to be casting doubt on some of the savings that he is relying on for that, but I will quickly move on from that point.
You will quickly finish, Mr Brownlee.
Wendy Alexander mentioned the future, which is a fundamental point. The budget process as it is may well be better than it has been in the past, but it must improve. We have to involve other committees and all MSPs in improving it. The legacy paper that the Finance Committee produces may well turn out to be one of the most significant documents published by the committee this session.
Like other members of the Finance Committee, I thank the clerks and the support staff. I also thank our departed convener, Des McNulty, for setting us on course in our scrutiny of the draft budget and I wish him well in his new role. In particular, I congratulate the Finance Committee's new convener on analytically scything through the figures and detailing where we would like improvements to be made.
Derek Brownlee has a point when he says that in considering the budget for the forthcoming year it is best to look at the situation outside the building. Hardly a week goes past without a major capital project coming to completion. Those projects are renewing Scotland's infrastructure, whether they are new waterworks, flyovers or hospital extensions. Those works come after a period of stagnation and underinvestment in the late 1980s and early 1990s.
When I visit schools I see some of the results of improved investment in education. Last week, I visited an elderly friend in hospital and again saw the benefits of increased funding from the Scottish Executive.
The figure for the budget has been quoted as £25 billion. In a quiet moment during the preceding Procedures Committee debate, I worked out that that means that £1 million is spent every 17 minutes; £2 million of Scottish Executive money was spent during the Procedures Committee debate.
The Tories may gripe that the current percentage level of public expenditure is not healthy for a nation's economy, but it is essential after their years of parsimony and neglect.
Although this may be close to self-congratulation, I believe that the Finance Committee's conclusions and its recommendations on the coming year's budget will, if taken on board by the Executive, improve the transparency and accountability of Government. As the convener of the Finance Committee said, there is in particular a need for a clear statement of overall priorities and an equally clear statement on how additional spending would attain those priorities.
The committee would also like much more definition within the section of the draft budget on cross-cutting expenditure, so that the effectiveness of such spending can be monitored and measured.
As Derek Brownlee said, the Finance Committee is encouraging other committees to become more involved in examining the spending plans of the Executive and to use spending trends as part of their budget scrutiny.
Looking forward to this year's proposed expenditure, it is particularly pleasing for me to see increased funding for local authorities. As somebody with a foot in the local authority camp, I know that they are facing real challenges in meeting the demands now made on them. Therefore, the increased award to councils is welcome.
As Wendy Alexander pointed out, in another recommendation the Finance Committee has asked the Executive to look more closely at grant-aided expenditure within local authorities and to establish whether it is going to the right place and is operating as effectively as it could. Many of the challenges within local authorities are being brought about by the increased longevity of our population. We have a higher percentage of people aged 80 or over than we have ever had in Scotland's history. Our commitment to care for older people requires considerable funding, so this year's increase in aggregate external finance is welcome.
Another major challenge for local councils is the size of the support packages that are now needed to ensure that the policy of social inclusion is properly carried out; six-figure sums are not unusual in that sector for annual care and support. That must be recognised.
The Finance Committee's recommendations are well made and are designed to improve the openness and transparency of Government. I believe that the budget for the coming year is a good budget for Scotland and I am sure that the people of Scotland will recognise that in May.
On behalf of all members of the Parliament and the general public, I congratulate the Finance Committee and thank it for its work, which is appreciated.
Local government is important in the everyday lives of citizens and is a fundamental element of our democracy. However, by definition local government is unable to raise its own budget. It is constantly making and mending in the face of a council tax that is inadequate for the task and plainly unfair to the citizens who pay it; ring fencing; new burdens; and annual settlements that match up neither to the tasks that are allocated to councils nor to the demands that are placed on them. For a long time, local government has been underfunded for the tasks that central Government sets it. Besides the bureaucracy that is involved in best value, performance criteria, league tables and other central Government demands, new responsibilities are constantly being given to it. In a country the size of Scotland there are surely more efficient and effective ways of running the local government system and dovetailing it into national Government finances.
The legacy inherited from Westminster must be radically modernised and made fit for the 21st century. Finance is a good starting point. Indeed, we would all be better off if central Government puts its financial house in order first. Rather than ever-increasing demands and a failure centrally to fund services properly, I would like a clear definition of what local government is for and is expected to do, and a much clearer view of the source of finance that would allow it to do that.
The member's concern for local government is admirable, but how will it get on after the Scottish National Party has stripped £1.2 billion out of the resources that are available to it by capping local income tax at 3 per cent and freezing council tax for the next two years?
Under an SNP Government, local authorities will be properly funded. I had expected ministers to talk other than nonsense in the chamber; I was used to that at Westminster, but I do not like to hear it in Scotland. I put it to the minister that the extra money that he is producing for 2007-08 comes with no guarantee of continuity. Are those funds part of mainstream local authority budgets from now on, or are they simply one-off payments?
I want to develop my point, as the deputy minister will have a chance to sum up. I would like him to address the issue when he does so.
My next point concerns the money for free personal care. The Community Care and Health (Scotland) Act 2002 is not clear about the responsibilities involved, what exactly is devolved to local government and whether or not those functions are properly funded. Government ministers should be able to address those points. Will the minister today provide a proper definition of free personal care, which would allow an accurate assessment of the adequacy of the extra funding that is being supplied for these fundamental services to be made? The Finance Committee, too, emphasised the need for clarity and accountability, and it was wise to do so.
Will the minister comment specifically on the £61 million of extra capital for efficiency savings that is linked to revenue? How exactly does he intend the system to work? Where will the efficiency savings have to be generated? If such savings involve an authority's roads department, they will be longer-term revenue savings, rather than more immediate revenue savings that relate to the following year. However, they may be the most effective and efficient solution for the council involved. Will the minister make clear how the savings will be implemented and whether he intends to reward only shorter-term fixes that are made next year but not beyond that? Local government should be looked at in the medium to long term. I deeply regret the fact that that has not been the case in the past.
I am also interested in knowing whether the minister intends to take into account whether local authorities have a proven track record of efficiency in using their finances. Squeezes on local authorities are sometimes not targeted in the right direction. What allowance will the minister make for councils that already perform well in every one of the five categories of priority that he expects authorities to address? It is important to reward authorities for past financial prudence, rather than to punish already efficient authorities. Those are specific questions that local government and I would like to hear answered.
I will develop the member's point further. If the SNP caps local government council tax rates because efficiency savings have been achieved, is it not the case that councils that are already efficient will have no money to maintain the cap? Will not tax increases or cuts in services be required?
One minute, Mr Welsh.
Angus Council has one of the lowest council taxes—and always has had, under SNP administration—yet it is always in the top five, right across the whole range of services. I call that good management, and it is something that I would recommend to other authorities.
Scotland's local authorities are rightly worried that the 2007-08 extra money will come with no guarantee of continuation in their mainstream funding budgets, especially from a central Government system that demands of local government an economy, effectiveness and efficiency that it does not operate in its own budget.
Will the member give way?
I have already told Mr Welsh that he is in his last minute.
That point about central Government accountability and financial prudence was repeated in this year's report.
Given the £2.1 billion that has been thrown at the McCrone settlement, Scottish hospital consultant contracts based on no Scottish data whatsoever and transport spending before a transport strategy was created, with no clue as to value for money or measures of effectiveness, as well as other instances of such spending by the Executive, what we need, although it is something of an afterthought, are financial resolutions at the forefront of Government legislation, budgeted for as part of a well-thought-out financial solution to legislative desire. If we did that, we would all benefit, but I have not seen it yet.
Wendy Alexander said that this final slot before the recess had become a bit of a Christmas tradition for the Finance Committee. John Swinney talked about the things that appear in this year's Finance Committee report that also appeared in previous Finance Committee reports, so, to some extent, this is not only the traditional slot but also my traditional speech, because it will focus on the same things that the Finance Committee has talked about this year and in previous years. It will be about the Executive's priorities, its key challenges and how they relate to the cross-cutting themes laid out in its budget documents.
Looking through the two documents, I am struck by the four key challenges that are based on the 2002 targets: growing the economy; delivering excellent public services; building stronger, safer communities; and revitalising our democracy. Those challenges are then linked in some rather unclear way with the five key priority areas: growing the economy, which is the same; reforming criminal justice and promoting respect; improving the nation's health; improving educational attainment; and safeguarding the environment. Then, on top of those key challenges and key priorities, we have a set of cross-cutting themes—originally three, now four—which are: growing the economy; closing the opportunity gap; promoting equality; and sustainable development.
Although it is true that growing the economy is consistently a priority, a challenge and a cross-cutting theme, the rest of the priorities, challenges and themes cover a wide range of different issues. The problem with the budget documents is that it is impossible to analyse how those priorities, challenges and cross-cutting themes actually relate to the spending decisions that are being made.
The Finance Committee has as ever produced an excellent report this year, and has laid out the issue clearly in paragraphs 37 and 39. The problem for the Finance Committee is that the Executive has never defined what "priority" means in terms of resources. We have those cross-cutting themes, but how they relate to existing spend or to the additional spend is never made clear. Paragraph 39 states:
"The Committee expected the Minister to be able to say how these allocations were reflective of the Executive's priorities rather than a bland assertion that they were. This is not evidence based decision making."
That is the problem that we have with the budget. It is not clear how all those things relate to how the money is spent.
I would like to give an example from the budget document. It says that sustainable development is one of the cross-cutting themes, and if one looks through the document at the narratives, one ends up at the education section, where there is an £800 million budget and a firm commitment of £125,000 towards the eco-schools project. That £125,000 is welcome, but when it becomes the only evidence of a cross-cutting theme's impact on £800 million, we have to question the purpose and impact of those themes.
That relates to the points that Wendy Alexander and others made about targets. I ask the minister to respond to the comments in paragraphs 106 and 107 of the report that it is a major shortcoming of the current reporting system that one cannot relate the priorities to the targets, which change halfway through the process, which means that targets that are set out in 2002 disappear and are replaced by new 2005-08 targets. No data come back on the targets, so we cannot tell what is their impact on spend.
Until we get that information, a debate in this slot of the session will not ensure transparent and accountable budget setting. If we do not have the information on how the Executive's priorities apply to financial decisions, all that we can do is repeat our concerns about where the cross-cutting themes and priorities have an impact.
There are genuine concerns. Andrew Arbuckle mentioned the problems of local government funding. My colleague Robin Harper has repeatedly challenged the First Minister on issues surrounding funding for children's social work and the massive funding gap between what local authorities spend on those services and what they are given by central Government. We still cannot drill down into the documents to see the impact of Government decisions on core services.
The Environment and Rural Development Committee was right to express concern that significant change in budgets is not dealt with properly. The budget revisions and central unallocated provision mean that it is difficult for committees to make like-for-like comparisons between where money has been spent in the previous year and where it will be spent in the next year.
Although it is good that we have a budget process and that there have been improvements in the clarity of budget documents, we still have a long way to go before we can claim that the current budget process gives the Finance Committee and the other committees the opportunity to interact with the budget and challenge the Executive on the relationship between what it says that it will do with the money and what it does with it.
I am speaking as a member of the committee that presented the report, without having taken any part in the work that went into it or in the preparation of the report itself—nothing new there, some might say. I joined the committee only as the report was being finalised and, until then, had never thought much about the budget process at all. I confess that I find the whole thing quite difficult.
It is clear from listening to other members that we are discussing complicated issues and a complicated process. I say sincerely that I am full of admiration for the other members of the committee, the clerks and everyone who knows their way around this material, because I do not. I will therefore not have anything to say about the technicalities of the process. Members are welcome to intervene and ask me about them, but I will not be able to answer, so they should not bother.
Having been forced to speak—note the word forced—I had another look at the report, in what I confess was a very simplistic way, and some lay things stood out. For example, I read with interest a discussion on health spending when Mr McCabe gave evidence to the committee. If I have understood it right, the situation seems to be that of the extra money coming to Scotland as a result of the United Kingdom budget, a large percentage—about two thirds—went on health spending, which means that there has been a significant increase in real money terms of £483 million. To me, as a layman, that was obviously a good thing. Govan is an inner city area with a degree of deprivation and there are real concerns about health issues there. Many people are simply not as healthy as they could or should be. That is why a development at the Southern general is fantastic. The development of a gold-standard service with every modern facility is welcome.
As a lay observer of the process, it struck me that increasing spending on health was worth applauding—full stop, end of story. That was why I was surprised when I read the exchanges with the minister. I mean Mark Ballard no disrespect, but I think that he was involved in those exchanges. I confess that I do not have a detailed understanding of matters, but there was apparent concern that spending such a high percentage of the new money on health might not be the right thing to do. I think that it was said that the best way to grow the Scottish economy would be to make more money available to do so. The implication seemed to be that the money would have been better spent on promoting economic growth, as economic growth should be the number 1 priority. There are technical arguments for supporting that view, and I do not disagree that investment to grow the economy is needed, but I agreed with the minister. I do not always agree with him, but I did so then.
The member nearly always agrees with me.
Indeed. The minister said:
"our health service requires significant investment and … we are determined to meet the major health challenges, including the three killer diseases that have a particular impact on people throughout Scotland. By doing so, we will enable our health service to make a significant impact on our economic growth and quality of life."—[Official Report, Finance Committee, 6 November 2006; c 4052-53.]
Nothing is more important for ordinary people than improving health care, particularly in deprived areas, but it seems to me that improving health care cannot be divorced from the direct effects of economic growth. In simplistic terms, healthy people work better and are more likely to be economically active if there are fewer health concerns for them and their families. I thought that improving health care would be a good thing economically.
Will the member take an intervention?
Please intervene. I am glad that someone wants to do so.
Gordon Jackson mentioned that I questioned the Minister for Finance and Public Service Reform at the Finance Committee's meeting in Dumfries. I sought clarification of the link between the Executive's stated priorities and the increased spending. If the Executive's number 1 priority is to improve the health of the nation, it would make sense for most of the money to go on health. I simply tried to test the links between the Executive's stated priorities and where money is going. I fully support spending more money on health—that is great—but I wondered how doing that related to the Executive's priorities.
I understand what the member has said, but, as a layperson, I found the pigeonholing that occurred to be unhelpful. Of course economic growth is the Executive's priority, but that does not seem to me to exclude spending a lot of the new money on health. It seemed to me that there was pigeonholing in a way that was not accurate, acceptable or commonsensical. If I were politically minded, I would say that we would not have such a debate next year if my colleagues in the Scottish National Party got their way because the new money would disappear; there would not be much of a debate on how the new money would be divided because it would not exist. However, bearing in mind what someone said earlier, making such comments would have more to do with electioneering than finance.
I do not really understand the rest of the issues, but I am glad that the report highlighted what is being done with the new money as far as the health service is concerned. I will not go into the technicalities that are involved, but I commend the report for that reason if for no other.
As a former member of the Finance Committee and in the light of the kind request that I received to speak in the debate, I sympathise with Gordon Jackson.
I want to raise a wider issue, which does not relate only to the process. My views have been formed not only by my experience as a member of the Finance Committee, but by my experience as a member of the Steel commission, which was chaired by the former Presiding Officer of the Parliament. I have considered the constitution and the Scottish Parliament's powers, and the relationships between the Parliament and local government, which Mr Welsh focused on, and civic society.
The debate on the process should cover two other issues that have not been discussed. We should all recognise one of the lessons that I learned early on when I was a member of the Finance Committee. The Parliament can intervene in what happens to only the 15 to 20 per cent of the annual budget that is discretionary and flexible. Much of a budget is already committed in the long term, whether that is on capital plans, staffing levels, the employment of teachers, or health. The overall flexibility for the Parliament is limited.
I turn to the second point, on which I will touch only briefly. Our ability in the Parliament to affect expenditure in the Scottish budget is limited. However, it is interesting to make a comparison of our overall levels of expenditure and tax base with those in other Organization for Economic Co-operation and Development countries. For example, the Czech Republic, Denmark, Finland, the Netherlands, Norway and Sweden have a much higher tax burden than that of the UK and Scotland.
In any debate on expenditure in the Scottish budget, we cannot have a genuine debate on the size of overall expenditure. As much as any member on the Conservative and other benches may say that they want to see smaller Government and less Government interference or expenditure, the genuineness of the debate is lacking. That is because no one is calling for cuts or saying that Scotland wants to have a tax base that is more akin to that of Finland or Sweden. A comparison between the United Kingdom and other OECD countries shows that the overall tax burden for the UK, when expressed as total tax receipts as a percentage of gross domestic product, is 35.8 per cent. For Finland, the figure is 45.9 per cent; and for Sweden, 50.2 per cent. That is the context of the overall debate.
I was interested to read the conclusions and recommendations that the Finance Committee made in its report. I commend the committee on the thoroughness of its work. I was struck by some of the consistent features that arose during the time that I was a committee member, not least of which were the repeated appeals to the Executive for it to do more work to make clear its expenditure, particularly on cross-cutting areas. I have considerable sympathy with that, although I accept that doing so is not an easy task. Since the time at which I was a member of the committee, considerable improvement has been made in that regard.
When I left the committee, it had just begun its inquiry into cross-cutting expenditure. The work that the committee undertook in producing that report, and also that which it put into the report that is the subject of the debate, led to the Executive putting in place new systems to demonstrate the linkages between cross-cutting priorities and resource allocations. One of the areas where the debate is still weak is that we do not have an alternative budget. Our procedures limit what we can do in that regard. It would be great to have an SNP alternative budget.
I think that many people consider that the level of debate would be raised if we were able to discuss various budget options. In that regard, would it not be helpful if, in addition to Government ministers having sight of the Howat review on the failures of the current budget, Opposition members were also to have access to it?
The point about whether or not alternatives are put before the Parliament is this: year on year, the Conservatives and the SNP tell the chamber that, because they do not have access to a civil service resource, internal reviews or mechanisms, they cannot put forward alternative budgets. It is funny how those budgets materialise just before an election campaign, but that is how it is.
In its updated, pre-UK budget report, the SNP said that it had made the most thorough investigation of and case for independence. Its members then come to this place and say that the party does not have the resources to put together an annual budget. We are talking here about only one part of the budget—its spending plans. I do not want SNP members to get me wrong: I think that it has spending plans—boy, does it have spending plans. For example, it has earmarked £1.7 billion for writing off English student debt, and £1.5 billion for making a reduction in corporation tax. Those spending plans sit alongside its plans for cuts in fuel tax, whisky duty, and a cap on council tax—the list is almost limitless.
If the SNP wants to put forward a collated budget document in which it sets out both revenue and expenditure, I would welcome that, as we could then scrutinise its budget proposals. I will take just one example: the SNP's plans for a 10 per cent cut in corporation tax. Any consideration of the level of business taxation is valid. However, one has to be honest in how one presents it. The SNP plans would rely on business profits going up by 10 per cent year on year to compensate for the reduction in revenue from corporation tax. The SNP is not saying that that is likely to happen. We want to know where the SNP will find the alternative revenue to compensate for the £380 million reduction in revenue that will result, year on year, from its proposed cut in corporation tax.
Has the member paid any attention to the recent report by the Economic Research Institute of Northern Ireland, which shows that a dramatic and crudely executed reduction in corporation tax from 30 per cent to 12 per cent would result in a ballooning of overall tax revenues in Northern Ireland? That finding has been accepted by the totality of the political spectrum in Northern Ireland.
There is a case for saying that having lower taxation overall results in more revenue in the long term, but my point is that the SNP should be honest in its presentation and say that benefits would accrue only in the long term. Interestingly, the UK has a lower tax base than all the countries that Mr Mather cites as being better off than us. There is an argument for reducing corporation tax, but the SNP must be honest by presenting the case for it on a year-by-year basis and explaining that the benefits will not be achieved overnight. It would be more honest if the SNP said in its tax proposals that Scottish businesses would grow by 10 per cent year on year, but it does not say that.
I will give a final example of how the budget process would be helped by the submission of clear alternatives. At 11.55 this morning, the SNP's Maureen Watt attacked scare stories that oil would come to an end—the implication being that, under the SNP, oil would be limitless. At 12.29, Fergus Ewing cried out to know where the Deputy First Minister would get the money for the transport plans in Scotland. On the one hand, we are told that we have limitless oil and a £27 billion surplus since 1979 but, on the other, we are told that we have no money to pay for the existing transport plans in the draft budget.
Oh, you are finished.
No wonder.
Order. I realise that a very exciting topic is being debated and that Christmas is approaching.
We move to closing speeches. I call Frank McAveety. We have about 10 minutes in hand, so I can put the speaking times up to around six minutes.
That is a noble ambition, Presiding Officer.
First, I join other members in saying that the former convener of the Finance Committee has played a highly positive role in bringing to account not just Government ministers, but a number of Government agencies on how best to spend our money in Scotland and on how they have sought to do that. I sympathise with the committee's clerks in that after a period of Des McNulty, they now face a period of Wendy Alexander—I do not know what they have done to deserve that. I have worked with both colleagues at different levels, so I can testify to their rigour and tenacity and to their occasional obsessiveness when it comes to figures, which is not a bad quality for the convener of the Finance Committee to have. The committee will enjoy the journey over the few months leading up to the May election and—we hope—beyond that.
I am sure that members of all parties would agree with what Wendy Alexander said about the level of budget that we have to spend, especially the many of us who cut our political teeth on the debate about home rule in Scotland in the 1970s and the 1980s. Regardless of where people stand on how we should govern this country, compared with that difficult period, we now have a level of resources—£25 billion—in respect of which we can use our imagination, intellectual wit and desire in order to ensure that it is spent effectively. Although I, with my colleague Gordon Jackson, sometimes find my eyes wandering across to Arthur's Seat during finance debates, we have the capacity to assess whether that £25 billion is used in a way that can genuinely make a difference throughout Scotland.
As many members have said—we have had shared discussions on the subject—a key theme that the committee's report focuses on is how we track cross-cutting priorities and how we identify whether resources follow them. What is more important, especially for many of us who have had experience in local government, is the debate about how to ensure that the needs of the cross-cutting themes are met by maximising expenditure in the big-spend areas rather than by providing them with a single budget allocation. The truth is that that is an extremely difficult and complex process. Individuals must be personally committed to it and must have the evidence base to rigorously track what happens. I hope that the committee's report at least signals ways in which we can do that much more effectively, in relation not only to the Executive, but to the many public agencies that we must deal with.
A second benefit is that that should help Government ministers. Any Government minister must feel frustrated by the recognition that, in order to deliver for the area on which they have been asked to play a role—which, in many cases, they have a passion for—they require the support of other portfolios. It is difficult to get the system to respond in the timeframes that ministers are given. When I have been a Government minister, I have had interesting timeframes. It strikes me that we have a genuine chance of finding ways to break down that barrier more effectively. The Finance Committee's recommendations are helpful in that regard.
The second big issue is to do with allocation of grant-aided expenditure and how we best direct that resource to the areas, communities and individuals that most require it, as those of us who have a progressive philosophy want to do. Parliament has toiled with but has not resolved that problem, although we have tried to address areas of concern. Until we have addressed the issue comprehensively, we will continue to have debates such as this, in which we consider Finance Committee reports. There is no single answer to the problem, but the Finance Committee's successor committee in the next session of Parliament would benefit from a legacy in that regard. A great mission for Parliament during its next two sessions would be to address the issue much more comprehensively, because doing so would not only benefit many of my constituents, who live in one of the most disadvantaged parts of the United Kingdom, it would also make good sense ethically and economically.
Parliament cannot address the issue unless analysis is done, inputs and outputs tracked and outcomes identified. I do not want to sound like Jim Mather—I say with due respect to Jim that I probably have greater ambitions than he does on the matter—but we cannot argue for redistribution of GAE without knowing what our starting point is. Our lack of exact knowledge in that regard is a concern.
You have one minute left.
In the final minute that the Presiding Officer has generously given me, I will comment on Andrew Welsh's speech. I do not know where Andrew Welsh has been during the past week, but his comment that
"Under an SNP Government, local authorities will be properly funded"
was astonishing. That is as credible a statement as the many claims of, "Trust me, darling—I'll only take one drink and I'll be home by 10 o'clock" that will be made at festive parties during the next three or four days. Andrew Welsh's position is not credible, because the reality is that choices will have to be made.
Will the member give way?
I will let the member in as long as he does not ask me to trust him again.
The proof of the pudding is in the eating. I was the first provost of the first SNP administration at Angus Council, which has always had the lowest council tax and the highest quality in economy, efficiency and effectiveness of services. That is what we call good management and it is what I want for the whole country.
I do not doubt—
Your time is up, Mr McAveety.
Oh. Andrew Welsh gets to finish my speech. That is parliamentary democracy.
You gave up your time to Mr Welsh, which was very seasonal of you. I call David Davidson, who may have six minutes, but no more.
I note that during the debate, ministers moved rather far apart from each other. Now the Minister for Finance and Public Service Reform has deserted the ship.
Will the member give way? I have a speech to finish—[Laughter.]
I will give way later. Mr McAveety can work on his speech.
Members on the Conservative benches welcome the Finance Committee's report and share many of the committee's concerns, particularly about transparency and openness. Wendy Alexander started her speech well—that is her style—and captured the issues and challenges that the committee addressed. She divided her speech into three parts: budget priorities, targets and draw-down.
No one is arguing about what the budget priorities are supposed to be but, as Wendy Alexander made clear, we do not have the evidence base that we require. We need to consider inputs, outputs and outcomes. Mark Ballard was also right to make that point. More than half the speakers in the debate concentrated on GAE and local government spending. Too many local authorities find, when they try to send a message to Government about the pressures they are under, that they seem to be ignored.
Many members talked about social work budgets. This week, Aberdeen City Council told me that it has what amounts almost to an inbuilt imbalance of £22 million in social work. Parliament is considering legislative proposals on social justice and management of offenders in the community that will put incredible pressure on local authorities, but such pressure does not seem to have been recognised in the GAE settlement.
Wendy Alexander's comments on draw-down reminded me that there is a £1.5 billion reserve. Some cheap people might call that a war chest, but it is interesting that the minister is to draw down half of it. John Swinney asked the minister to tell us what that is for, but we did not get an answer. Now that we have no ministers in the chamber, I wonder whether we will get an answer.
Tom McCabe began by saying that he found the report useful. I wonder whether that means he accepts all its proposals and will act on them. As almost every other member seems to have quoted the Auditor General, I will throw in another quote. He said:
"there is a need for improvements in the way potential efficiencies are being set up and measured. Until this happens it will not be possible to validate completely the Executive's reported savings".
The minister ought to be reminded of comments by two of his colleagues. Margaret Curran said clearly in November 2005:
"A principle of good governance is that it should be as open and transparent as possible".—[Official Report, 2 November 2005; c 20191.]
In 2003, the First Minister said in the Labour Party manifesto:
"As First Minister of Scotland I guarantee to … Be open and transparent in government".
However, as many members have said, we have not seen the Howat report.
Members have raised a series of issues, but they come down to the robustness of targets and the replacement of targets without any apparent logic, although no doubt some minister will try to correct that for us.
Andrew Welsh concentrated on social work and I have highlighted a couple of issues that will lead to even deeper problems with social work. I do not know whether, in the spending review in 2007, the ministers will tell us how the issues that arise from just one bill that is proceeding through Parliament will be funded and where the bodies will come from to deal with them.
When I was a member of the Finance Committee in the first session of Parliament, we asked about tracing and accounting for cross-cutting spending, what happens, who does what and what we get for that spending. After all these years, the committee is still asking the same questions. I do not argue that the process is not more open now than it was in the first session of Parliament. Improvements have been made and the Executive acknowledges that more improvements need to be made, but it should be making greater strides toward providing the committees and Parliament with information about where it is going, what it is going to do and how we will have a good and transparent system.
There are a lot of anoraks in Parliament—they are in every committee—but that is part of our job. The committees and Parliament are about scrutiny. However, we must have adequate information to ensure that the right questions are asked of the right people and that the right answers are given. I congratulate the committee on its report.
The debate has proved that opinion on the big debate on the financing of Scotland is still polarised. However, it has also shown that the arguments are accumulating in favour of Scotland gaining financial powers. Tom McCabe started with his usual assertions, but he will realise that we still have major concerns about how Scotland raises, or does not raise, its revenues and about the operation of Scottish Water, the efficient government programme, the Howat review and general accountability.
Gordon Jackson made an interesting speech. He made Edwin Morgan's dreary mantra, "It wisnae me", sound almost respectable. I was interested in his chicken-and-egg approach to whether improved health gives a strong economy or a strong economy gives better health. I look forward to engaging in that debate in the future.
Mark Ballard said that the rhetoric on the cross-cutting themes is impossible to reconcile with spending and that there is a distinct lack of evidence-based policy. I must agree. Frank McAveety struggled with the link between spending and outcomes that are good for the people of Scotland, and Derek Brownlee spoke effectively about Executive targets and exposed the weaknesses of the process. I echo his focus on value for money.
Jeremy Purvis, one of the Finance Committee's old boys, called for a genuine debate. I wonder how he voted on 2 November, when the SNP had a motion to that effect.
I did not vote for a motion that was lodged by a party that had already made its mind up, before the debate started, that it wanted independence.
Noted. The member's response does him as much credit as his vote did on the day.
Andrew Welsh exposed the criticality of the efficient government savings and the dangers that would arise if those savings were not forthcoming. Generously, he offered to export the management techniques of Angus Council across Scotland. I am sure that lots of people will be queuing up to take him up on that offer.
John Swinney highlighted the polite, pointed and effective judgment of Audit Scotland regarding the inadequacies of the efficient government initiative, particularly with regard to its accounting, and he sought clarity about the use of public resources from the Treasury and in connection with the Howat report.
We heard Wendy Alexander's suggestions about the 2007 spending review. I am sure that Mr Swinney will have taken note of that for future reference. In relation to what she said, we need to have more tangible goals and better measures. Although Wendy Alexander is excited about what she calls progress, I am somewhat less excited, although there are one or two glimmers of hope. The Finance Committee had an interesting exchange with Rob Wishart, during which he said that he expected that the new statistics board will pick up on the need to focus on a tighter range of key statistics. I would welcome that.
There is a need for unifying goals that can pull us together, such as maximising the number of working-age people who are in work across Scotland. That would have a positive impact and would answer some of Gordon Jackson's questions about health, life expectancy, population numbers, motivating people and even crime. It would certainly have an impact on economic growth, which we would welcome.
The committee also heard some positive words from Professor Midwinter, who agrees that we should have a smaller number of strategic goals that should be worked on progressively over time under tight statistical scrutiny and control.
However, it is not all good news. We have a continuing pattern with Scottish Water: more and more money is being released back to the Executive from Scottish Water, which essentially proves the Cuthberts' assertions time after time. I have made some interesting requests under the Freedom of Information (Scotland) Act 2002, which I will talk about in detail some other time. However, I am still awaiting an answer from the minister. Perhaps the Deputy Minister for Finance, Public Service Reform and Parliamentary Business can tell me exactly how much capital has been released by Scottish Water to the Executive for other projects since 2002-03. I ask about that with specific regard to Dumfries.
The other major cause for concern is the Howat report. I am shocked at the situation that we find ourselves in because the validity of those data is evaporating minute by minute. I have known Bill Howat for many years—we were at school together in the early 1960s, I knew him when he was chief executive officer of Western Isles Council and I even met him when we were at an event about trust in politics that was held by the chair of ethics at Glasgow Caledonian University. At that event, I impressed on Bill Howat the fact that his report could have a major impact, that I had reservations about the weakness of the efficient government initiative, that Scotland was changing and that he should make his report as strong as he could, given that we were on the cusp of a new beginning. I regret to say that I might have tipped the man over the edge and he might have done exactly what I suggested, which might be exactly why we have still not seen that report. The sooner we have that report and it is put to work for the benefit of Scotland, the better. The longer it lies in the locker, the longer the galvanised badge of shame that this Government wears for trying to run Scotland on a purely expenditure-only basis will glint and shine.
Despite the fact that some would say that this was a dry and dusty subject, I think that there have been some excellent speeches. At the end of the day, the budget of the Executive underpins many of the improvements that people have seen in the condition and management of Scotland's public services since 1999 because of the priorities that we have set.
Wendy Alexander highlighted the three issues that concern the Finance Committee. She said that the committee seeks a clear statement on how individual departments contribute to the cross-cutting themes. We have made progress on that, although I accept that more progress could be made to provide further clarification. I am sure that the matter will be considered closely in the next round of the budget process.
Wendy Alexander made an important point about GAE. She said that, as there is significant divergence in, for example, children's services, we should consider making adjustments to reflect the reality of current spend rather than historical spend. That is an important point. She also said that we should be more specific on the draw-down of end-year flexibility resources. I can confirm that some of those resources were indeed used for the local government settlement.
I am glad that Mr Swinney acknowledged that we are making good progress with the efficient government initiative and welcomed the extra finance for local government, although I am not sure how that squares with his commitment to cap council tax increases in the next couple of years. Academics have now rubbished that and said that it would be virtually impossible to do. On the point about baselines in the efficient government initiative, I point out that the Auditor General confirmed that there are established baselines for 86 per cent of the efficiencies that he examined. It is clear that there is further to go, but the vast majority of efficiencies have proper baselines that enable us to measure the progress that is made.
I do not know whether the minister heard the evidence that the Auditor General gave the Audit Committee on Tuesday, but the Auditor General gave the clear impression that he expected the Government to make more progress in assuring parliamentary committees and the wider public that the efficient government process is robust. Has the Government reflected on the Auditor General's evidence and the report that he published on Tuesday? It requires a systemic change in the structure of the efficient government process.
The Government seeks to improve the process at all times, but I welcome the Auditor General's report, which states:
"Our review has found a wide body of evidence to suggest that the initiative is progressing and that it is delivering efficiencies that would not otherwise have been achieved."
The Auditor General recognises that we have made significant progress and that we are delivering substantial efficiencies that would not have been made without the process.
What about the criticisms?
We accept that there are criticisms in the report and we are committed to improving the process as time goes on.
The Howat report was mentioned a couple of times in the debate. I am pleased to state once again that the Executive intends to publish the Howat report when the spending review process has been completed. Of course, it is not binding on any future Administration.
Mr Brownlee was right to say that the key point is the need for value for money from the budget and the budget process. The budget is only a means to an end. It reflects the Government's priorities and states what the money will be spent on. The public will judge what we do with the money on the facts. We have built 200 new schools and employed thousands of extra teachers. There has been a big increase in the quality and quantity of public transport, which is being used by record numbers of people. We have built a substantial number of new hospitals and we have extra doctors, nurses and allied health professionals. We have the lowest waiting times that Scotland has ever had. We have extra police on our streets and there has been an overall drop in crime. In the past seven years, we have made record investment from the centre in local government.
People must consider those facts when they judge whether the budget is delivering. I believe that, in May, the people of Scotland will recognise that the budget has delivered significant progress and that there has been a big improvement in public services since the Administration came to power.
Andrew Welsh accused the Minister for Finance and Public Service Reform of talking nonsense, but the only nonsense in the debate was talked by SNP members. What is their position on tax rises? Is it Angus Robertson's position or Alex Salmond's position? What is their position on the £11 billion black hole? They are unsure whether to rubbish the numbers because, if they do, the next instant they are using the same numbers to try to talk their way out of the mess. How do they plan to fulfil their commitments to billions of pounds of extra spending, as my colleague Jeremy Purvis outlined in his speech? How are they going to cap council tax levels, given the views of the professors who have been quoted? I suggest that the only nonsense that has been talked in today's debate has been from our colleagues in the SNP. Those hard questions are certainly not going to go away over the coming months.
Finally, I call Dr Elaine Murray to wind up for the Finance Committee. [Interruption.] Order.
I do not intend to shout over Mr Swinney, particularly given that I have done him the favour of taking over his slot in summing up for the committee—on this occasion it is not because I was late. However, I do not mind, as it gives me the opportunity to be the last member to speak in a debate in the chamber in 2006. As my family can confirm, I enjoy getting the last word.
And we will see her here next year.
Indeed.
The debate has been an opportunity for many members to trot around the chamber, metaphorically speaking, on various hobby-horses. We heard speeches about efficient government, the Howat review, local government finance and the importance of health spending in Gordon Jackson's constituency. All those topics are of importance and interest.
However, in summing up for the committee, I will return to the subject of its stage 2 report on the budget process. In its report, the committee recognises that significant progress has been made with the budget process over the past four years. Indeed, the Executive has taken into account many of the suggestions that the Finance Committee made in previous years. We should recognise the way in which the Executive and the Finance Committee have been able to work together on the process. Ministers themselves may feel that the Finance Committee can sometimes be a rather aggressive forum. However, we have managed to work together and we have seen progress with the budget process.
As other members have said, this was a relatively light year, as the UK spending review was put back a year to 2007. As a consequence, the Executive's spending review will also take place in 2007. Given the considerable burden of legislation that the Parliament has had to deal with this year, I for one am quite pleased that the spending review was put back a year, as that will give us a little more time to consider it. In some ways, the timing presents some difficulties—there is an event of some significance in May next year, which may create a certain hiatus in our concentration on the spending review.
Mark Ballard, Frank McAveety and others voiced concerns over the presentation of cross-cutting issues and how they are being supported by the various departmental portfolios. That is a difficult matter. I do not think that they are not being presented because the Executive does not want to present them, but it is difficult to drill down into the various departmental budget lines to identify how those issues are being dealt with.
The Finance Committee has a number of suggestions to make for SR 2007. For example, we suggest that there should be a clear statement of overall priorities and we want to see a definition of the spending programmes that contribute towards them. We must recognise that some budget lines will of course contribute towards more than one priority. We would also like to see an explanation of how priorities are reflected in portfolio budget lines, although we recognise that some departments—we single out the communities portfolio—are already doing that job fairly well.
As Wendy Alexander and Derek Brownlee mentioned, we highlight the need for the publication of spending review reports on the cross-cutting priorities. Furthermore, we would like completion of the reports on the SR 2002 targets that were replaced in SR 2004. We cannot measure whether they were achieved unless we get the final reports, so it would be useful to have them.
We would like reports following spending review 2007 to focus on the changes to proposed budgets in subsequent years, with an explanation of the major changes in the guide accompanying the budget. I know that ministers have pledged to take that on board.
Others have referred to subject committee input to the budget process, and to the level of information that committees should discuss with the relevant Executive departments. We know that the Enterprise and Culture Committee already does that. We have to consider the level of information that committees need in order to allow them to make a significant input to the budget process.
A more general issue for subject committees came up yesterday during the debate on the accountability of commissioners: the need for subject committees to receive reports from the various commissioners—especially reports on the subjects that most closely relate to the committees' responsibilities. The Finance Committee's legacy paper, to which Derek Brownlee referred, will have to take account of such issues. Committees have legislation to consider and they often have wide-ranging inquiries on issues in which they are passionately interested. It is therefore sometimes difficult for committees to fit in financial scrutiny, and indeed the scrutiny of commissioners. After the election in 2007, there will have to be discussions between the convener of the Finance Committee and the conveners of the subject committees on how such scrutiny can be built into the committees' programmes.
Subject committees will also have to look into the level of support that they require—from advisers, for example—to allow them to undertake scrutiny more effectively. Some work will have to be done on that. [Interruption.]
Order. I know that it is Christmas, but members should keep a little quieter please.
I will keep going.
Wendy Alexander and George Lyon talked about the need to review GAE figures and local spending levels. The Education Committee was worried about spending on services for children. Obviously, work needs to be done. That work will have to involve the Convention of Scottish Local Authorities and not just the Scottish Executive, because it is COSLA that determines many of the formulae by which various councils receive their budgets.
The Finance Committee also feels that equalities information has to improve; we suggest that each department should perform a gender-disaggregated analysis of one quantitative target, and then use that analysis to inform the following spending review. Seeing the Minister for Tourism, Culture and Sport in the chamber prompted me to think, for example, about general levels of physical activity and about—dare I say it at this time of year?—the need to tackle obesity. Policies may have different effects on men and women, so we need gender-disaggregated information.
Members have spoken about the known pressures. Some issues that we raised in our stage 2 report—such as the draw-down from the central unallocated provision and the pressures on local government funding—were addressed in the ministerial statement last week and in George Lyon's contribution today.
Andrew Welsh asked whether the funding would be recurrent. I think that I heard the Minister for Finance and Public Service Reform say last week that £157 million would be included in further years in the baseline. That deals with many concerns that the Finance Committee has raised in previous years and again this year.
The Finance Committee has three main requests for future years: we would like the Executive's priorities to be more obviously reflected in funding decisions; we would like a sharper focus on cross-cutting themes and the budget lines that contribute towards the Executive's objectives; and we would like there to be more direct linking of objectives, budget lines and targets.
I will end by thanking Arthur Midwinter—as Wendy Alexander did—for his contribution over the past four years. He has done a tremendous amount of work for us. I would also like to thank the clerks, committee members and committee witnesses, and all my constituents and Alex Fergusson's constituents who came to the meeting of the committee in Dumfries to inform us of their priorities and of the issues in the budget that affect them.
Finally, I wish all members a happy Christmas and a prosperous and, indeed, prudent 2007. I am convinced that that will be the happy situation in Scotland should Labour continue to lead the Executive after 3 May.