Budget Process 2002-03
The next item of business is a Finance Committee debate on motion S1M-2042, in the name of Mike Watson, on the 2002-03 budget process.
A year ago today, I introduced an equivalent debate on the 2001-02 budget process. I said then that I anticipated the Parliament and its budget process developing and embracing further changes, although neither I nor anyone else in the chamber could have foreseen the changes brought about in the Parliament by the events of the past 12 months. The Parliament, and indeed all Scotland, lost and gained a First Minister, the SNP lost and gained a leader, the Executive lost and gained a finance minister and, just yesterday, we learned that the SNP had lost and gained a finance spokesperson.
I have enjoyed working with Andrew Wilson on the Finance Committee—he will be missed. We assume that Alasdair Morgan will take his place. It has been said that finance is not a particularly lively subject but Alasdair Morgan has been a member of the Rural Affairs Committee and the Justice 1 Committee, so I am not so sure.
Talking of lively, during the debates on the budget process over the past two years, I have been the target of the coruscating wit of Annabel Goldie. On one occasion, she dubbed me the I M Jolly of the debate, which I did not take as an analogy with Rikki Fulton's acting abilities. Largely for Annabel Goldie's benefit, in parading my credentials for the position of convener of the Finance Committee, I shall reveal a little-known fact. It is time for me to come out of the closet; I cannot hide it any longer. Between the ages of 18 and 20, I was an apprentice chartered accountant. [Members: "Oh."] Well, it was not a pleasant experience and it was one from which, almost 30 years later, I have still not fully recovered.
Will Mr Watson give way?
I see a CA to my right—he is well to my right. I shall give way to him in a moment.
I do not know why I did not make it as a CA. All I know is that it was a complete waste of four years of my life.
I wonder, Presiding Officer, whether this is a resignation speech.
Yes; I am resigned to the fact that I had to admit that at some stage in my political life.
Seriously—I tell Annabel Goldie that that is as good as it gets—we are into the second full year of the budget process, which means that we are now able to compare like with like. It is of considerable importance that detailed scrutiny of the Executive's spending plans is now an established part of the parliamentary calendar.
The Parliament's committees are central to the process and the Finance Committee regards that as a catalyst for change. Many areas of departmental policy that, in the past and certainly until the establishment of the Parliament, had not had to ensure a meaningful level of accountability are now examined in considerable detail.
In support of that contention, I cite the remarks of a senior finance division official, who recently compared the current arrangements with those that existed prior to devolution. He recalled that Scottish Office civil servants used to spend at most an hour and a half giving evidence to the Scottish Affairs Select Committee in the House of Commons. It was rare for Scottish ministers to appear. Now he, his colleagues, the Minister for Finance and Local Government and the minister's deputy regularly give evidence to the Finance Committee during the Parliament's year-long budget process. Indeed, ministers have assisted us on five occasions in the past year. That represents a huge step forward in respect of transparency and accountability in the Government's spending proposals.
When the Finance Committee reported to Parliament last year, it did not pull any punches. We were critical of the style and content of the Executive's annual expenditure report and called for significant improvements. We note with pleasure that considerable progress has been made in this year's document and we highlight significant factors such as the inclusion of real and cash terms in a more detailed breakdown of the annually managed expenditure element of the budget. Those and other improvements are welcome, but our report is tempered with caution because there remains some way to go.
This year, for the most part, subject committees have been able to carry out a review of the activities of the departments. Last year, they found that difficult, if not impossible, due to the shortcomings in content and presentation of the equivalent report. However, there were major exceptions to that this year in relation to local government and health and community care. The committees that shadow those departments—which account for £13 billion of expenditure, or about two thirds of the Scottish budget—reported that there was little transparency about how taxpayers' money is spent, because much of the departments' spending is delivered at a local level. Therefore, we feel that there is a need to move to a system that facilitates a national overview of services that are provided locally.
Our report contains 14 conclusions and recommendations. All are important, but some merit particular attention. To carry out their functions effectively, the subject committees must have the information that they regard as necessary to measure performance against departmental objectives. We were concerned that the Health and Community Care Committee reported to us that it
"believes the targets set in The Scottish Budget to be wholly inadequate for the purposes of guiding or judging performance".
Those comments were all the more damning given that they repeated the criticisms the committee made a year ago. The Rural Development Committee reported that, on the basis of the information in its section of the annual expenditure report, it was not in a position to judge the overall effectiveness of Executive spending in rural areas. That is of equal concern.
If such criticisms had been repeated or mirrored in comments from other committees, the effectiveness of the budget process would be called into question. It is essential that committees are presented with the necessary information in the annual expenditure report in the appropriate format. It is not acceptable that committees should require clarification of inaccurate or incomplete information or that committees should be denied that information within the time scale set out for them to complete their stage 1 reports to the Finance Committee.
I note the point that Mike Watson makes. Does he accept that, as the Enterprise and Lifelong Learning Committee indicated in its submission, one of the reasons why the departments are not very effective in giving good performance targets is that so much is left to the relevant quangos? For example, 70 per cent of the budget that the Enterprise and Lifelong Learning Committee oversees is spent by five quangos. It was clear that the departments did not have a clue what was going on in the quangos.
I accept that that was part of the Enterprise and Lifelong Learning Committee's report. Obviously, my quotes are selective, but I will deal with transparency later. Alex Neil's points fall under that heading.
There was evidence that information had been either incomplete or inadequate or had not been supplied and that there was a lack of indicators in some departmental figures. That made it difficult to compare policy objectives and targets. The Finance Committee regards such evidence as a flaw in the budget process and we expect the various departments to overcome those problems for next year's annual expenditure report.
One means of doing so would be for the various departments to present information in a standardised form. We urge the Minister for Finance and Local Government to take steps to convince his cabinet colleagues of the need for that. This year's summary document—which is a welcome departure—showed evidence of such a co-ordinated approach among departments and we look forward to that being extended to the full report next year.
Given our determination to bring about improvements in the content of the annual expenditure report, the committee was naturally concerned about what we regard as a step backwards in respect of the provision of information relating to private finance initiative and public-private partnership projects. The disappearance of the table on capital spending by the private sector on such projects, which featured last year, is unhelpful. No doubt the table will be reinstated.
The concerns that we expressed in our report about the transparency of funding of such projects reflect comments that were made in the Health and Community Care Committee and the Transport and the Environment Committee reports. The Finance Committee's wider interest in that area is reflected in the fact that we have just commenced our own inquiry into PFIs and PPPs. The report that we produce will recommend means of providing budget information that will ensure transparency on the capital and servicing costs of such projects.
On the content of the annual expenditure report, the committee believes that transparency and accountability would be enhanced if in future all sources of income were clearly shown. We have asked for the inclusion of tables that show consequentials from the comprehensive spending review, the UK budgets and Barnett, plus end-year flexibility and Scottish and UK reserves. The committee sees that as a logical and sensible development of the presentation of information.
The committee welcomes the Executive's eagerness to move to outcome-based budgeting. The ability to quantify the effectiveness of spending needs to progress from the short-term, and often misleading, measure of outputs to a longer-term evaluation. Simply to announce, for example, the recruitment of 1,000 more teachers is a limited barometer of success; indeed, it may not be much of a success at all and proper evaluation of the efficacy of such an increase in numbers may need to be delayed for several years, perhaps until evidence of, for example, an increase in the number of pupils remaining at school after 16 or achieving a college or university place filters through the system. Outputs are not sufficient—we are looking for outcomes and we welcome the Executive's support on that.
Such is the committee's belief in outcomes as a form of measurement that we have commissioned external research to examine methods by which that can be achieved most effectively. We accept that that is a medium-term goal, but we nevertheless expect to see incremental improvements year on year, which is why we ask the Executive to publish plans on how it intends to achieve those improvements.
In the debate on last year's stage 1 report, the Finance Committee urged the Executive to carry out
"a gender audit across spending programmes to assess their overall impact on women and to identify desired outcomes so that we know what the Scottish Executive or individual departments want to achieve".—[Official Report, 28 June 2000; Vol 7, c 785-86.]
A year later, we are no further forward in having that aim met.
As part of this year's process, the Equal Opportunities Committee report—which was, I think, the most voluminous of all the committee reports—was most critical of the Executive's performance. In evidence, that committee had heard witnesses who saw no evidence of a gender impact analysis whatever. Another opined:
"a commitment to gender awareness—never mind gender equality—is so visibly lacking in the budget document."—[Official Report, Equal Opportunities Committee, 1 May 2001; c 1209.]
In addition, the Social Justice Committee lamented the fact that no obligation was placed on all departments to mainstream equalities in their work. It is a fact that there are few signs of an equality strategy being applied to the budget process. That is an area in which we believe firmly that an improvement must begin to be exhibited next time round.
When the Deputy Minister for Finance and Local Government, Peter Peacock, gave evidence to the Finance Committee this month, he was frank in his admission of the difficulty in determining the impact on men and women of expenditure programmes. We do not suggest that he exaggerated the case, but it should be noted that such difficulties have been overcome in other countries—most notably in Canada and New Zealand. Therefore, we hold to the not unreasonable expectation that progress on that important aspect of the budget process should be capable of being recorded by next year. In doing that, we are encouraged by the establishment of the equality proofing advisory group and by the Deputy Minister for Finance and Local Government's commitment to us on the development of equality performance indicators by the end of this year.
However, the approach should be two-pronged. That is why we also recommend that the Equal Opportunities Committee liaise directly with the relevant departments on how its proposals can be progressed. Only if realistic targets are set for next year's annual expenditure report will it be possible for us to record movement in a year's time.
The final aspect I will highlight concerns the linked issues of end-year flexibility and the Scottish and UK reserves. Despite questioning the Minister for Finance and Local Government, his deputy and finance division officials on the reserves on several occasions, it is fair to say that an air of mystique continues to surround them. We would like to receive definitive answers to the following questions. Why should end-year flexibility money be held in the UK consolidated fund rather than in the Scottish one? What precisely is the role of Treasury officials in determining the amount of end-year flexibility money that reverts automatically to Scottish Executive departments and how does the mechanism for accessing the UK reserve operate? Given the importance of such issues, a "don't ask, don't tell" philosophy is inappropriate. Post devolution, transparency is required and the committee intends to ensure that it is achieved.
The budget process has been refined this year and its refinement will doubtless continue. There have been several important developments. The Finance Committee welcomes the fact that four committees used, for the first time, specialist advisers to assist them in formulating their response. However, despite that, no committee felt able to recommend a redirection in the spending proposals. That may well develop in future years; it is to be hoped that it does, because it was clearly envisaged by the financial issues advisory group in its seminal report, which recommended the novel three-stage budget process in which we are now involved. Time is also a factor. That was shown in today's debate on the Protection from Abuse (Scotland) Bill, which is the first bill to begin its course in a committee. It is a matter of evolution; the processes will develop.
The committees are becoming more attuned to the need to schedule the budget process into their work programme. We in the Finance Committee welcome the support of the Procedures Committee in urging the Parliamentary Bureau to take into account the requirements of standing orders in relation to the committees' role in the budget process.
This year, for the first time, each member of the Finance Committee was attached to one of the subject committees, to act as a reporter on stage 1 consideration of the annual expenditure report. That seems to have been valuable to the Finance Committee and to members of subject committees.
The Finance Committee is determined that the budget process should be as accessible and as meaningful as possible to as broad a cross-section of the people in our country as possible. That is why we have insisted in our report that the information provided in the annual expenditure report and the summary document should be supplemented by a leaflet that can be made more widely available. We took the committee to Aberdeen in November 2000 and to Perth earlier this month, as part of our policy of meeting outwith Edinburgh at stages 1 and 2 each year and, if at all possible, taking evidence from the minister at such meetings to provide the occasion with added gravitas. We intend to engage with individuals and organisations from localities the length and breadth of Scotland and to make the budget process a little more understandable. That may not be the most exciting journey undertaken by the Scottish Parliament's committees, but it is certainly one of the most important.
I move,
That the Parliament notes the 10th Report, 2001 of the Finance Committee, Stage 1 of the 2002/03 Budget Process (SP Paper 364) and commends the recommendations to the Scottish Executive.
I welcome the opportunity to respond on behalf of the Executive.
I join my colleague, Mike Watson, in welcoming Alasdair Morgan to his new post as shadow finance spokesperson for the Opposition.
I very much welcome the constructive approach taken by the Finance Committee. We had a useful dialogue prior to the publication of the committee's report and I hope that our good relationship will be equally fruitful in producing further budget documents, although there is an element of "Groundhog Day" to some of the issues that we cover. I hope that we are inching our way forward.
This is the second annual expenditure report. With the committee's assistance and input the report has, I believe, improved considerably from last year. We felt it necessary to publish a summary this year due to the size and complexity of the detailed document. The summary was designed with a wider audience in mind.
Our detailed document now runs to over 250 pages. We set out much more detail than last year because the committees requested it and we wanted to be as transparent as possible. I doubt that many finance ministers publish draft budgets of such great length.
The committee has suggested that we also publish a leaflet to better inform the wider audience. We tried that last year and were not convinced that it was particularly effective, but an alternative format may be more productive. I am happy to accept the suggestion although, as Minister for Finance and Local Government, I must point out that doing so would add further to our publication costs. Mike Watson would expect me to draw that to his attention.
We have taken on board some specific comments in the Finance Committee's report from last year and have improved the presentation of the document. We used an editor to ensure consistency and have, where possible, followed plain English guidelines. That was a necessary step forward.
We have improved the design and have published the document electronically with hyperlinks to associated websites. We have also improved the presentation of the detailed information, which is now presented on a plan-to-plan basis to allow easy comparison. We have included both cash and real terms tables and additional information on capital, annually managed expenditure and end-year flexibility. This year, the Finance Committee has made additional suggestions on the presentation of the figures, which I am also happy to consider.
The committee report is critical of our approach in places. I agree that we can continue to improve presentation of the annual expenditure report and I am happy to consider all reasonable requests. If the committee can identify better practice elsewhere—Mike Watson mentioned equal opportunities in Canada—I will be happy to learn from it and to try to put it into practice. Our discussions about budgets have tended to concentrate on deficiencies in presentation. I hope the committee will welcome the strides that we have made in the past two years to produce documents that are much more transparent and accessible. We are learning as we go along.
I hope that we can, at some stage, consider substance as much as presentation. The document is about spending a large amount of money. The budget for 2002-03 is £21 billion, which is an increase of £1.2 billion on the current year. That increase is distributed across all portfolios. It reflects the impact of spending review 2000, which added £1 billion, £2 billion and £3 billion, in sequence, to the expenditure plans of the Scottish Executive. That money will deliver our priorities in health and education. Later this morning, as members know, I will make a statement on further budget changes directed towards those priorities. I have held off from making that statement to allow committees to consider changes that they might want to make in the draft budget. I will return to that later.
The committee has raised the question of how EYF works. There is Treasury involvement, because Westminster votes on our grant annually, as this chamber does. Last year's underspend requires approval to increase this year's spending. We tell the Treasury how much we underspent last year and it increases our provision for this year, as it does for Whitehall departments. We then seek the approval of the Finance Committee—and Parliament—for a budget revision to allocate that money to our various votes. There is nothing secretive—or intended to be secretive—or different about the process. It is treated the same way as other changes to our annual spending.
The report also raises the issue of moving to considering outcomes as much as spending. We have discussed that before and I agree that we should move as far as possible in that direction and as fast as possible. We must ensure that we target our spending to best effect. That is why I have made changes to the way that finance operates within the Executive. I also want to see a prudent approach to finance wherever possible. Developing outcome measures for spending is easier said than done; it is a difficult matter and there would be benefit in having further discussion with the Finance Committee as we make progress. I doubt that there is a need to produce an additional document setting out how we can make progress towards outcome measures. What is essential is that we continue the constructive dialogue that we have had so far with the committee.
Mike Watson referred to reserves—a keen interest has been taken in reserves. I have tried to make things clear on previous occasions. There is nothing secretive—or intended to be secretive—about them. We have nothing to hide. I will restate the Executive's position.
The reserves were created as part of SR2000. We have an annually managed expenditure reserve. AME is a specific type of public expenditure category created for demand-led services, which also contains some of the resource accounting and budgeting impacts. AME is agreed annually with the Treasury. If we need more AME due to higher than expected demand, we get it automatically; if we spend less than expected, it goes back to the Treasury.
The Chancellor of the Exchequer reached his decisions on SR2000 in July, well in advance of the Parliament and the Executive making their decisions in September. To finalise the Whitehall spending review, the Treasury had to make assumptions about the amount of additional AME that the Scottish Executive would require. Those assumptions erred quite substantially on the generous side and the AME reserve shows the excess AME that was left over once we allocated the AME that we required in September.
There was a specific choice to create the departmental expenditure limit reserve. It is important that we create a reserve to deal with unforeseen events. Recent discussions on the cost of Holyrood should make it clear why that decision is prudent. If we had not kept a reserve—as some have suggested—we would now have to look for savings from spending programmes to meet increased budget requests by the Scottish Parliamentary Corporate Body.
The reserve will operate as follows. Ministerial colleagues who face insurmountable and unforeseen pressures can make bids against the reserve. I will consider those bids and, where appropriate, will take them to the Cabinet to get collective agreement on allocating the funding. The Finance Committee will then have a chance to debate any such allocation in the normal budget revision process.
Given what the minister has said about unforeseen and exceptional circumstances and given that there is a Scottish reserve, under what circumstances will he be able to persuade the Treasury to give him access to the UK reserve?
We have been over this ground before with Andrew Wilson, whom I welcome to both his new and old portfolio. Although I am somewhat surprised that he has intervened, I suppose I had better get used to him doing so in finance debates, despite his move.
Despite the fact that we hold our own reserve, we have already received moneys from the UK reserve. The reaction to foot-and-mouth disease and the requirements on local authorities to alleviate the effects of the disease through ratings relief is one such example.
We can go to the Treasury in certain circumstances. That is set out in a public document called the statement of funding policy, which—as I have indicated in answers to a number of parliamentary questions—is freely available from the Treasury.
Will the minister clarify the Secretary of State for Scotland's exact role in the application process?
The secretary of state has a formal role in representing Scotland's interests in the UK Cabinet and she would be expected to express a viewpoint in that context. That said, we have direct discussions with the Treasury on any individual circumstances that would require access to the UK reserves. I do not see the secretary of state's role in that context as a hindrance; rather it is an opportunity to have two bites of the cherry as far as having Scotland's interests well represented at a UK level is concerned.
The Treasury is keen to encourage the devolved countries and Whitehall departments to have their own reserves. That represents a mature approach to our finances. As a result, although we will receive UK reserve money for foot-and-mouth, I very much doubt that—to take another random example—we would receive any for increased Holyrood costs.
I hope that we can now draw a line under the subject. Although we have had a lengthy dialogue about reserves with some members, I have not heard very much from them on the £200 million budget that remains to be allocated from the Chancellor of the Exchequer's recent statement. They will hear my plans on that later.
I was interested to read the review of our budget process in this morning's business a.m. and I agree with Mike Watson's final quote in the article. The finances of the Parliament should be widely understood and there are big issues at stake. I am pleased to say that I am at one with the Finance Committee in taking forward a new agenda in managing our public finances. We share the desire to ensure that the £20 billion we spend in the devolved budget is spent to the greatest effect. I will therefore consider the recommendations in the Finance Committee's report fully and carefully.
I thank the minister and the convener of the Finance Committee for their welcome. I had not expected to participate in the debate in my new post, but I was able to read the committee's report during the speeches at the press dinner last night. Furthermore, I took part in the joint consideration of the justice department budget by the justice committees and welcome the chance to join a debate in which we bring together all the subject committee considerations.
When one looks through the two volumes of the report, one realises the vast amount of work that the committees have put in, the amount of scrutiny that the budget is now receiving and the increased openness of the Scottish budget. That said, there is clearly a considerable way to go. The report's subject matter is a huge area to cover. As far as the departmental reports are concerned, I will indulge a constituency interest and examine what Mike Watson might consider to be one of the duller parts of the document, namely, the Scottish Executive rural affairs department budget. I want to reflect one of the then Rural Affairs Committee's concerns when it first considered the SERAD budget for last year's budget report. As Mike Watson pointed out, this year the committee said that it was not able to judge how effective Executive spending was in rural areas on the basis of the evidence contained in the AER.
Although the cross-cutting policy intentions behind the establishment of SERAD were generally welcomed across parties and in the rural community, we need to be able to assess whether those intentions are being fulfilled. When I was on the Rural Affairs Committee, it was clear from the evidence just how difficult it was to extract meaningful information from the available statistics. That position has not changed very much. Common agricultural policy support forms the majority element of SERAD's budget, and most of the rest is largely taken up with assistance to agricultural businesses. Although money from other budgets—for example, the enterprise budget—is spent in rural areas, we are very far from any comprehensive picture of how much, and where, money is being spent. If we are to assess our success or otherwise in rural development, we need such a picture.
The Ministry of Agriculture, Fisheries and Food has just been rebadged—and I hope reorganised—along lines similar to SERAD, not just because of MAFF's perceived failings, but because of the apparent success of the Scottish model. It is therefore a bit ironic that, at the same time as that is happening south of the border, we are actually saying that it is difficult to produce any objective evidence on whether that success is real or illusory.
As the report acknowledges—and as we would all agree—expenditure plans can never be static; the budget will always change, even during our consideration of it. However, the fact remains that, as the minister has already mentioned, no sooner will we have sat down after debating budget plans published a few months ago than we will be back on our feet for the minister's statement. That is not because of any direct decision made by this Parliament, but because of the effects of the UK budget. Although any area that will be allocated extra cash will be duly grateful, the committees have a reason to feel concerned, particularly in relation to priorities between different areas. Their consideration has been unbalanced by the consequences of a budget in which one side of the equation is a hand-me-down from another place.
Another example of the way in which our budget is not complete is the restriction on our Parliament's right to borrow. We must have fewer financial powers than any other country on earth and, as a result, we have the ludicrous situation of paying for a Parliament to last for hundreds of years from budgets for front-line services for one or two years. Surely it would be better to borrow at a low Government rate and to spread the costs over as many years as possible.
If we are to communicate with the voters in a way that will reverse some of the apathy that has been shown in some recent electoral contests, we must do so in a way that can be understood. As scrutiny of the abbreviations in the budget document show, the intricacies of public finance are clearly not for the faint-hearted. However, could we not start by explaining why, when the prudent course for the average man or woman to take when buying a house is to arrange a mortgage, we have to pay for our new house down the road out of three years' wages? Money which by definition would have been directed to front-line services is being paid into Holyrood.
Although the minister urged us to draw a line under the subject of reserves, I will indulge myself in my first speech as SNP finance spokesperson by touching on that subject. The committee's report rightly spends some time on the issue, because no individual subject committee has a direct interest in it. Although setting aside a reserve would seem prudent—and I am sure that the minister wants to be seen in that light—the creation of a double reserve at both Scottish and UK levels against the background of some fairly complex arrangements is at least open to question.
I do not want to criticise the idea of a reserve per se, but I question why we should pay into the UK reserve and, at the same time, jeopardise our access to it by diverting money in our own fixed budget previously destined for front-line services. The minister talked about the rules by which we access the UK reserve. The Treasury guidance is quite clear that such access will be granted only where there are
"exceptional and unforeseen domestic costs which cannot reasonably be absorbed within existing UK budgets".
The committee has pointed out that access to the UK reserve, rather than the Scottish reserve, would depend on
"whether an event which triggers the bid is of UK significance."
The minister referred to foot-and-mouth disease. Will the Deputy Minister for Finance and Local Government, in his summing-up, give a definition of what "UK significance" means? Would he care to speculate on whether the Scottish Parliament building is of UK significance?
The fact that we have £134 million set aside in our own reserve seems to rule out most chances of accessing the UK reserve. Given the fact that that money is set aside from funds that come from the Barnett consequentials of spending that is allocated in England for health, education and the like, our services will lose out doubly. In setting up this second reserve, are the Executive and its Minister for Finance and Local Government trying to give themselves a more important political role than they actually have, giving the impression of financial independence although they are really in a state of financial servitude? By allocating money straight into the reserve, the minister is taking even more out of the departments. At present, 25 per cent of underspend goes to the centre, and I believe that a further £53 million a year is being added to that.
I move on to the Barnett formula and the diminishing share that Scotland receives of UK public expenditure in key service areas. At least that fact is now accepted by everyone in Scottish politics. Even Helen Liddell and Tony Blair, during the recent election, admitted that it was a reality. The Prime Minister called it a process of adjustment. For everyone else, it is a cut in Scotland's share of UK expenditure in the key areas of health and education. The research that was published by the Fraser of Allander Institute last month showed that, over the period of the current spending round up to 2004, departmental expenditure in Scotland—if projected against the overall UK budgets—would be about £1 million higher than it is going to be as a result of the Barnett squeeze. The Barnett formula is clearly a system that is designed for a unitary state; it was not designed for our growing democracy in Scotland. One does not have to be a nationalist to recognise that, in the long run, the formula is unsustainable, even within a devolved Scotland.
The debate on fiscal autonomy made an interesting appearance during the recent election campaign. I am sure that a man of the minister's calibre would want to be trusted with all the nation's finances. The available evidence shows that a substantial majority of the Scottish people think that it would make sense for the Scottish Parliament to raise and collect its own taxes.
If the argument for fiscal autonomy has been won, why did the SNP's share of the vote drop?
The argument for fiscal autonomy is one that every party in the Parliament should support. I am surprised that a man as prudent and ambitious as the minister does not want to have those extra powers in his control. I urge the minister to be more ambitious, both for himself and for Scotland.
I shall not give way, as I am summing up.
I say that in an attempt to be helpful to the minister. It is clear from the comments of both Labour and Tory MPs south of the border that they believe that Scotland receives an unfair share of the total UK expenditure. They will continue to pick at that festering sore until the settlement is changed to what they believe is their advantage, which will be to our disadvantage. It would be far better for Scotland if the Executive was to lead confidently on the issue.
I congratulate the committees on their scrutiny of one side of Scotland's income and expenditure. I am sure that they are as eager as I am to start scrutinising both sides.
I add my welcome to the new finance guru for the SNP.
Once again, the Finance Committee has produced a report that should become the template for future Scottish Executive handling of public resources in Scotland. It lays out clearly the inadequacies of a system that has done nothing but add to the confusion and total lack of transparency of the Executive's proposals. I suspect that, on occasions, that might have suited the Executive.
Despite the minor improvements in some of the documentation, the budget process has failed totally to provide the committees of the Parliament with the information to enable them to conduct the essential scrutiny that is required of the Executive's spending proposals. The committees need time to do their job properly. It is also vital that they are given answers to any questions that they ask within a very short time and that the minister who is responsible ensures that all departments of the Executive respond openly and honestly. If they do not, the budget process can only be a failure, and we might as well give up now. When the minister winds up, I hope that he will assure us that that will happen in future.
Every spending committee of the Parliament agreed that they did not have the correct information in enough detail in a standard format that could be scrutinised in a uniform way. It is an abiding shame that none of our committees made a recommendation for spending change. That was due entirely to the smoke-and-mirrors approach of the Executive, which failed to provide the information that was asked for by the committees. If we are to hold to the guidelines and recommendations that were laid down for the Parliament, what the people of Scotland deserve above all else is honesty and openness—no more recycling of money or duplication of spending statements and promises, just plain speaking so that the Parliament can do what it was elected to do, which is to scrutinise totally the activities of the Executive of the day.
I thank the clerks of the Finance Committee for the excellent support and advice that they have given throughout the compilation of the report. I look forward to hearing from all the people of Scotland, especially the ministers, what conclusions they come to from this budget examination. I ask the minister not just to give us another assurance about openness, but to tell us how he intends to deliver that, especially now that Mr MacKay is in such a strong position regarding all departments of the Executive, presumably controlling all members of the Executive in their bids. If we can get a standardised financial reporting system, which takes in every aspect of Government, and if ministers and officials are open and clear, the process will move on dramatically. The ministers must remember that they are servants of the Parliament, not financial dictators.
One of the points that the report highlights is the lack of clarity in Government figures. Undoubtedly that is due to the Labour party's obsession with spin. Ministers seem to be frightened of the truth and refuse consistently to answer questions directly and to supply clearly in every budget statement and spending policy statement details not only of what they will spend, but of where the cash will come from and of what they expect to get for the money—and, most important, details of what the people will get for their money. There must be a transparent approach from the Government, so that expenditure and policy commitments can be identified and measured.
I hear what the member is saying. I presume that he also agrees that the 55 per cent or so of the public money that is spent in Scotland that is under the control of Westminster should come into the same category, and that its spending should be fully transparent? If Mr David Davis becomes the new leader of the Conservative party, will Conservative members support him in his call for full fiscal freedom for the Scottish Parliament?
When the BBC last week read out a list of contenders for the leadership and my name was at the end of it, I had a bit of explaining to do. As we do not know who the final two contenders will be for the leadership, I am not sure whether Mr Davis will be in that position.
The Finance Committee is beginning to undertake work on outcome budgeting, as Mike Watson said. I accept that that will involve a lot of work. However, it will enable not only the committees but the people of Scotland to decide clearly and fairly what services they might expect to be delivered to them. We want no more of how much we are spending, but more of what we will deliver on the ground.
At last, there is talk of independent evaluation and performance measurement to facilitate comparisons between the elements of each of the programmes. In future, comparison figures must be provided for the committees, which can be reviewed easily and will include the previous year's spending and, it is hoped, the outcomes that have been achieved. Information on all the consequentials that come in during the year—which Alasdair Morgan has described—is needed to enable the committees to deal with the next round of the budget. The way in which end-year flexibility is being managed still seems a bit of an art form rather than a science, as it is not clear where the money came from, which programmes were altered to achieve the underspend or where it could have been spent.
In each section of the budget we need clarity about the new burdens that have been imposed by policy change, what inflation is anticipated in each area, what capital expenditure—public and private, on and off balance sheet—has been utilised. As has been mentioned before, clarity about PPP and PFI spending would be helpful, if not essential. We need clearer linkages between policy development and expenditure, if only to show that this Government understands the direction in which it is heading and to allow the Scottish Parliament to take an honest view of that. Large budgets such as local government and health are divided up locally. It is vital that the committees of the Scottish Parliament receive clear information on how that is done and what has happened.
The Paul Daniels aspects of the budget—how the reserves are pooled and what is done with them—are not easily tracked. The Scottish departmental expenditure limit reserve was supposed to be used to meet exceptional expenditure that could not have been foreseen at the time the budget was set. If that is the case, why did the First Minister decide to use the reserve to fund the overspend on the Scottish Parliament building when everyone knew before the previous budget round that it was in financial difficulty?
The reserve is formed from a 25 per cent clawback of departmental underspends. As Alasdair Morgan said, that comes from underspends on front-line services that were voted for. I am not saying that the money should be spent simply because departments have it—I hope that we are more grown up than that—but it is important to know why there was an underspend and whether the saving has come from the fact that the service has been delivered more efficiently and cheaply. That is the kind of confidence that we need to get from the ministers in future.
How is the money that is to be spent on the Parliament to be renewed and from where? Which public service will have less spent on it if money has to move into the reserve? It is high time that every member of this chamber decided that the people that we represent deserve honesty and openness in everything that the Scottish Parliament does. Today, I would like the minister to state categorically that, in future budget considerations, there is clarity throughout the year on how reserves are formed, on the rules for access—and we have had a little of that from the minister already—and on how elements are prioritised.
The Finance Committee report highlights the fact that the Scottish Parliament budget process is not transparent enough to allow the Scottish Parliament committees to be able fully to scrutinise the spending plans of the Executive. The credibility of the Scottish Parliament is at stake because of that. We must move away from the recycling of spending announcements to an honest position that allows the Scottish people to know exactly what the Executive intends to spend, where it plans to spend it and what services will be delivered.
Today, Angus MacKay must come clean, disown the underhand cover-ups of the past and try the simplest trick in the book: just being honest.
Much of what David Davidson says is correct, but we must keep the matter in context. Our fledgling efforts to be honest and open are already significantly in advance of anything that happens at Westminster. We have made progress and the ministers deserve credit for making a genuine attempt, in many spheres, to be more open. I am sure that the civil servants who have worked with them have worked well. The performance of the bureaucracy as a whole is inevitably patchy and a little bit of exploration is necessary into the slightly dinosaurish and jungly elements in the Scottish Executive.
As a relative newcomer to the Finance Committee, I can say that I have found my membership interesting. The Finance Committee has the potential to be split lethally by political wrangling. Obviously, major issues are involved and the two Opposition parties have strong agendas. However, the committee tends to deal with matters in a civilised and constructive manner. Mike Watson deserves credit for that, and the other committee members deserve credit for trying to be grown up as well as political.
It has been suggested that there should be a leaflet to explain the budget in popular terms. That is an important proposal and we should pursue it, although I know that it will cost money. Several councils in Britain already successfully produce leaflets explaining what council tax payers get for their money. Some of them have tried to have referenda asking people about issues such as whether they would be prepared to be taxed a little more in order to get their bucket emptied twice a week instead of once.
The minister and I have experience of local government and we had a discussion on the matter yesterday. We are aware that some people hold the view that national and local government finance is so complex that there is no point in ever trying to explain it and that it should be a dark secret, like the Schleswig-Holstein problem, that we should keep to ourselves. The issues are complex, but we must make a serious effort to explain them to people. There are many switched-on financial people who seem to make a lot of money by manipulating money and who would understand information that we put out and explained. We owe it to the public to make a serious attempt to be open and transparent. The leaflet idea is worth pursuing in that regard.
There has been a tendency to publish glossy policy documents without any serious costings attached. We have to ensure that departments are made aware that the glorious prose that they use to outline their ambitions and dreams—and we are all allowed our ambitions and dreams—must include some idea of the cost of their proposals. We need to be told which of the areas are priorities and how those priorities are to be paid for. There must be more matching between ambition and money.
We must have more detail in the figures that we get. A member who is trying to find out whether more money is being spent on road mending, whether recycling is improving, whether charges for recreation facilities are going up unreasonably and so on cannot get that information until, a good deal later, the Chartered Institute of Public Finance and Accounting produces one of its excellent documents. I recognise that such matters are decided by local councils and that we do not want to trespass on their areas of responsibility, but it should be possible to get information without impacting on their powers of decision. If we were to find that the roads throughout the country were getting worse, we would clearly need to invest money in them.
Does Mr Gorrie think that it would be helpful if the Accounts Commission were encouraged to be more analytical in the consideration of local authority expenditure, which, as Mr Gorrie will be aware, is the responsibility of the Accounts Commission rather than Audit Scotland?
Some organisations claim that they are over-audited by a multitude of people. We want to have one really good system of auditing. That may best be done in the way the Annabel Goldie proposes. The point is that we should have good information as quickly as possible.
The matter does not apply only to local government. Recently, on behalf of the Finance Committee, I have been in discussion with voluntary sector bodies. In every case, they had serious problems with their funding body. What they said suggests that people are open to criticism, whether it is of local government, the Scottish Arts Council, sportscotland, Scottish Natural Heritage or whoever. We need information on how all those bodies use their money and the grants that they are given. The amount and accuracy of the information that we get are important, as is that we get it as soon as possible.
That committees have not proposed changes to the budget is serious. It arises from the fact that nobody feels confident with the figures that we are given. Committees are never quite sure whether, if they want £1 million more to be spent on a particular high priority and suggest taking that £1 million from something else, they may do some frightful harm because they do not fully understand the figures for the other aspect of expenditure, which are not detailed enough for them to make a decision. We have to create conditions in which committees can make that sort of decision. That would be the ultimate in genuinely democratic approaches to the budget.
Another sphere in which we are failing is cross-cutting, especially preventive expenditure to get departments to come together to do good things so that they will in the long run save money by, for example, making people more healthy, keeping people out of jail and keeping young people out of trouble. That sort of expenditure and co-operation between departments does not seem to exist as much as it should.
Clearly, despite our very good efforts so far, which deserve commendation, the Parliament's committees do not yet have a grip on and control over the expenditure in their areas. The question is: does anyone have a grip on the expenditure? That is the next question that the Parliament has to pursue.
I will make some positive suggestions on the way forward for the Finance Committee. Before I do, I remind members that we should not kid ourselves on that the Parliament has supreme control over public finances in Scotland. First, the money that is allocated to the Parliament is less than 50 per cent of the total spend in Scotland. More significantly, the bit of the budget over which we have control is the bit in which there is the least flexibility. Take the health and education budgets. Much of the money is already spoken for in salaries and existing commitments. Out of the £20 billion over which we will have control next year, I guess that we will be able to change less than £700 million or £800 million significantly.
Let us not kid ourselves on. We were meant to have the financial powers of a parish council. We do not even have those powers: a parish council can at least borrow money, which the Parliament is not allowed to do. Let us not engage in kidology and create the idea that we can somehow make a major impact on what public money is spent on in Scotland. We are only operating at the margins. As long as we as a Parliament and a people are prepared to accept that, that will continue to be so.
Just for illustration, will Alex Neil tell me which parish council in Scotland has power to borrow money?
Every local authority in Scotland has the power to borrow money. I would have thought that my good friend Miss Goldie would have known that. The parish councils south of the border have the same power.
I thought that parish councils could not be found in Scotland.
Parish councils cannot be found in Scotland, but local authorities can. The substantive point remains the same. No doubt Miss Goldie, whom I congratulate on staying put as the enterprise spokesperson in the Conservative reshuffle, will tell us whether she is backing David Davis for the leadership of the Conservative party. If he wins, will she, as deputy leader of the Scottish Tories, tell us whether the Scottish Tories will back his call for full fiscal freedom?
I come to the even more positive comments that I have to make about the Finance Committee's report. A number of issues need to be addressed in the year ahead. I congratulate Mike Watson and the Finance Committee for the work that they have done. Although it is boring work, it is substantive. They have no doubt made enormous progress. However, they should tackle a number of issues in the year ahead.
First, we should question why the money that the Treasury allocates to the Parliament goes via the Scotland Office to allow the Secretary of State for Scotland and the Minister of State for Scotland—neither of whom have much to do of a day—to take their £5 million or £6 million slice before they pass it on to us. What is that money spent on? When I look at the figures, it seems to me that it is a total waste of money. The principle should be that the money comes directly to the Parliament, not via the Secretary of State for Scotland, who basically holds down a redundant job. Having spoken to the Minister of State last night, I would say that he is doubly redundant, particularly this morning.
My second point relates to funding.
Will the member give way?
I have four minutes. If I have another two minutes, I will give way.
You should be winding up.
I will give way.
No, you should be winding up now, Mr Neil.
My final point must be that the debate so far has concentrated on how we monitor the Executive departments. What comes out of every report to the Finance Committee from a committee—whether the Health and Community Care Committee, the Education, Culture and Sport Committee or the Enterprise and Lifelong Learning Committee—that deals with third-party organisations, such as local enterprise companies, delivery organisations in the voluntary sector and the professional sector, is that everybody is crying out for the Parliament to give three-year commitments on budgets. We are asking people to carry out professional jobs in the delivery of community-based services, yet we have so far, in many cases, not given them a commitment beyond 12 months.
Wind up, please.
Such organisations cannot operate that way. A high priority for the next year must be to change to a system of three-year funding for all the appropriate organisations.
Come to a close, please.
That teaches me the lesson not to take two interventions. My four minutes have been cut.
The Finance Committee has been clear—despite "honest" David Davidson's speech—that the budget documents have improved. I think that David Davidson said "honest" about 12 times in his speech. There was nothing about dishonesty. He should find a new word.
There is no doubt that the budget documents are an improvement on last year's—the Finance Committee agreed that unanimously. However, we recognise that progress has been slow. The two areas in which there have been the greatest difficulties are local government and health, which account for two thirds of the budget. Therein lies a perpetual problem of national policy and direction versus local autonomy—the issue of hypothecation or management of a budget over which one has no control. That also applies to many quangos. Alex Neil, I think, referred to that in an intervention.
I will talk a little about health. The massive aggregated sums, particularly in the hospital and community services budget, approached £5 billion. The Health and Community Care Committee is left to debate the much smaller central budget or to seek ever more information. On this occasion, it tried to join up the health improvement plans of the health boards and the policy documents—of which there are a considerable number—with the budget. That was an almost impossible task, even although we tried to do it retrospectively. For example, on the basis of last year's budget, we were able to identify only £1 million for cancer services—one of the three national priorities for six or seven years. We make a plea to link policy objectives to new funding—that must be done.
The Health and Community Care Committee also tried to determine what it perceived as being new money, and it produced a fairly innovative table to try to demonstrate that. It was interesting because the table turned out to be in line with the research that Professor Arthur Midwinter produced for the Finance Committee. I will not summarise the proposals in Professor Midwinter's report, because they are set out in paragraph 42 of the Finance Committee's budget report.
In practice, the situation is complex. In health, any uplift of funding will initially have to be used to meet standard increases in wages and so on—the general deflator, in a sense. Money is also needed for additional increases in wages that are allocated in accordance with UK review body reports. We need money to cover the deficits that arise from a previous year, but we do not know what those deficits are and therefore cannot see how much of any money that is available is being used for that.
We also need money for what I describe as stabilisation: the posts that are kept empty by managers for three or four months to save money within budgets. In health, that is an absolutely disastrous practice, because it leads to major clinical inefficiencies and costs a huge amount of money, but it goes on all the time. We need money to tackle specific areas, such as junior doctors' wages or the European working time and other directives. There are other costs; for example, we know that the increase in drug costs is about 8 per cent. There is not a lot left when we add all that up. It is not the 1 per cent or 2 per cent that Arthur Midwinter discusses in his report; it is probably a lot less. If we are to have clear discussion about how we are to proceed, we need greater detail in the material that is presented to us.
I appreciate that there is a danger that we will start collecting ever more information, and that the health service will become so involved in that that staff do not get on with the business in hand. I put that to Susan Deacon when she appeared before the Health and Community Care Committee. We simply must improve the data that we receive, so that we can determine whether the clinical services that are being undertaken are valid.
I will conclude—I realise that I am out of time—by saying that the other matter about which I feel strongly is our need to get the PFI-PPP thing back in. In other words, we have to understand the continuing revenue consequences of PFI-PPP in the budget. Our investigation on that will help, and—although I know that it is available elsewhere—I hope that the table of information will be restored as part of the budget document next year.
I have never been a chartered accountant, although I was something nearly as exciting: a lawyer. I recall the difficulty that I experienced in trying to persuade my employers that I saved them money. Donald Gorrie raised an important issue in that regard, in relation to evaluating where money is being saved and in relation to action being taken to reduce or minimise expenditure. That is hard for people in private industry and Government to get their heads around but, if we really want a proper evaluation of how money is spent, that must be addressed.
I want to mention quangos, which were mentioned by Alex Neil and which featured in the Enterprise and Lifelong Learning Committee's feedback to the Finance Committee. I will draw on some relatively recent personal experience of the foot-and-mouth crisis. I attended a meeting that was also attended by Alasdair Morgan, at which people representing Scottish Enterprise said repeatedly that they had to go through all sorts of measures before giving grants and loans to people whose businesses had got into difficulties. All sorts of hoops must be gone through and all sorts of consultants and other people must be involved so that the money is granted in a manner that is accountable through public scrutiny.
When we take a step back, however, it is not at all clear to me that the £500 million—a vast amount of money—that comes under the Scottish Enterprise and Highlands and Islands Enterprise budgets is subject to similar scrutiny. We must also strike an appropriate balance in which scrutiny of the giving of a loan to a small business does not cost more than the value of the loan. We have done valuable work in relation to departmental scrutiny; we must now consider much more exacting scrutiny of non-departmental public bodies.
We should develop a joined-up picture. Some of Alasdair Morgan's comments will appeal to Mr Tony Fitzpatrick, the European affairs policy officer at Dumfries and Galloway Council, who is always trying to draw South of Scotland MSPs' attention to the fact that £60 million a year comes into the agriculture and rural community from Europe through the common agricultural policy, whereas only £3 million comes through structural funding, and an even smaller amount comes directly from Executive initiatives. If we do not have the full picture, we will not understand the financing of the rural economy, nor will we understand how each strand of finance will be deployed. We must develop the broader picture, so that we understand fully what is happening.
I support the moves towards a system of outcome-based budgeting. That is the way forward, although achieving it will be a difficult task. I also support the moves towards standardising budgets. For my increasingly high council tax bill from Dumfries and Galloway Council—the only council with an SNP-Labour coalition—I get a leaflet that explains the council's expenditure, but it is pretty incomprehensible. If we opt for a leaflet, let us make it something that the public can understand.
First, I wish to pay tribute to the spirit of self-sacrifice of the Minister for Finance and Local Government, who did not attend last night's do so that he could perfect his speech for this morning. As he will be aware, Scotland's local government community continues to have a number of concerns regarding the budget process as it relates to local authorities.
Foremost in much of the evidence that was received by the Local Government Committee was the issue of ring fencing, which has been mentioned this morning. Representatives of the Convention of Scottish Local Authorities stated in evidence to the Local Government Committee:
"virtually every penny of additional resources that has been made available for the next three years is directed centrally by the Executive. That puts considerable pressure on local authorities to deliver on their core services."—[Official Report, Local Government Committee, 8 May 2001; c 1916.]
Written evidence that was provided by COSLA stated:
"There needs to be more honesty in settlement announcements".
David Davidson spoke profusely about that this morning. The COSLA evidence also said that
"it is disingenuous for ministers to suggest that previous cutbacks in the funding of core service provision have been recognised".
A partnership approach needs to be developed and local flexibility, trust and discretion are required. COSLA believes that we are not quite there yet.
The £440 million funding gap between grant-aided expenditure and budgets must be narrowed. That is an issue not just about distribution, but about the size of the cake.
Transparency, which Mike Watson spoke about first this morning, is important. It is fair to say that COSLA has been irked by announcements about additional resources that turn out to be mirages. In evidence that was submitted to the Local Government Committee, COSLA made it clear that £70 million that had been allocated to tackle road and bridge repairs over the three years to 2004 was expected to come from existing budgets. However, the Executive's implication when it made the announcement was that the money was additional. Such irresponsibility only results in raised public expectations and puts undue pressure on hard-pressed local authorities.
Dundee City Council, Falkirk Council and Perth and Kinross Council expressed concern over capital allocations and expressed the view that their assets are continuing to deteriorate. Capital allocations are not enough to outweigh the deterioration of capital assets, let alone to clear the backlog in, for example, repairs that are required to bring school buildings up to 21st century standards. Such difficulties cannot be avoided by spin; we need a clear picture of what is happening, not a presentation of everything in the garden being rosy.
Like Mike Watson, members of the Local Government Committee were disappointed that the issue of gender was not considered. That was widely discussed by the committee last year and this year, and we feel that the matter should be brought to fruition next year. I hope that, in his summing up, the Deputy Minister for Finance and Local Government will advise us about what he intends to do on that matter.
There has been too much focus on process, rather than on outcome. For example, it is important to identify what is expected in new build and maintenance, rather than merely identifying the resources that are being invested in that area.
Mismatch is another issue that the Local Government Committee highlighted. Six years after reorganisation, half a dozen councils—Argyll and Bute, Dundee, Glasgow, Inverclyde, Midlothian and West Dunbartonshire—have budgets that are significantly in excess of grant-aided expenditure. As a result, council taxes in those areas are substantially higher than the Scottish average, even although more than half the deprivation in Scotland is to be found there. If such areas are to benefit from increased services, it is important that the Scottish Executive recognises the mismatch that exists.
At its meeting in Inverness tomorrow, COSLA will express great concern about the fact that the Executive is continuing to ignore the issue of the 75 per cent housing capital set-aside. We need flexibility in that area, and we need it soon.
In its report, the Local Government Committee expressed reservations about PFI projects and their cost to the public purse—an issue that Richard Simpson has already raised. In particular, that committee is concerned about the viability of PFI projects in rural Scotland.
I welcome the changes in the budget process, but I am sure that the minister will agree that much work remains to be done.
Like Kenny Gibson, I welcome the process in which we are engaged. It must represent an improvement in the way in which we scrutinise these very large sums of public money. Mike Watson also said that the Finance Committee and the Parliament plan to achieve transparency. That is an appropriate way of describing this process and what needs to be done.
I note from the Finance Committee's report that no committee is recommending a change in spend in its area. That has to do with the support that is available to committees. A considerable amount of work at a detailed level of expenditure would be required for such changes to be meaningful.
I do not argue about the amount of work that is needed. However, if level 3 figures are not provided, what do the committees have to discuss and work on?
That is the point that I am trying to make. Detailed figures need to be available if such scrutiny is to take place, and they should be provided.
This morning I will highlight two aspects of the Finance Committee's report that interested me—although I did not read it at the press dinner last night, as Alasdair Morgan did. My first point relates to the joint report of the Justice 1 Committee and the Justice 2 Committee, of which Mr Morgan will have an intimate knowledge, and to those committees' comments on the Crown Office and Procurator Fiscal Service. The committees' consideration of that issue is an important example of how the Executive, ministers and the system should be held to account—not only in budgetary terms, but more generally.
In their report, the Justice 1 Committee and the Justice 2 Committee express several important concerns about the Crown Office and Procurator Fiscal Service. In paragraph 39 they say:
"We put these concerns to the Solicitor General. We were very disappointed in his responses which we often found dismissive and complacent. In the face of significant concerns about the procurator fiscal service, it is not sufficient to say that ‘the notion that the system is cracking up has been advanced as an argument for the past 10 years at least'".
There is considerable merit in having detailed consideration of certain areas, which was undertaken in this case by the Justice 1 Committee and the Justice 2 Committee. They have raised important issues that I am sure the Justice 2 Committee will follow through in its inquiry into the Crown Office and Procurator Fiscal Service.
The report of the Justice 1 Committee and the Justice 2 Committee also illustrates the concerns that exist about consultation and how the budget process is undertaken. In paragraph 40 of their report, the committees note that
"The Solicitor General's dismissal of the evidence given by the Procurator Fiscals Society was particularly patronising."
That is strong language about a Government minister, in anyone's terms. It is extremely important that the process in which the Finance Committee has been engaged since the Parliament came into being is noticed by the outside world, because it gives organisations that want to lobby Parliament the opportunity to have their points of view taken on board.
Secondly, I refer members to the report of the Transport and the Environment Committee. As part of its consideration of the budget, that committee focused on Highlands and Islands Airports Limited. That is an issue of some concern and interest to me. When members' allowances—which we approved last week—were made public earlier this year, I noticed that I was top of the list for transport expenses. That is not surprising, given the constituency that I represent. The Transport and the Environment Committee made a suggestion that could help in that regard. It provided the Finance Committee with evidence of ways in which we could reduce the cost of flying in Scotland, particularly in the Highlands and Islands. Among the issues that were considered was that of slots for flights between Gatwick and Inverness. I have always taken the view that such slots should be at Heathrow rather than Gatwick, but that is a different issue. The committee also recommended that the Executive consider franchising air services.
Those are important points that illustrate the benefits of the budget process to services in Scotland and how the process is able to ensure that the Executive is subject to the necessary scrutiny.
I sympathise with Mike Watson's experience of accountancy, because it was the only exam that I have ever failed and had to resit. However, the fact that we are able to scrutinise the budget each year is helping me to get better at it. That is also true for the committees.
I would like to touch on the joint report of the Justice 1 Committee and the Justice 2 Committee, particularly as it relates to the prosecution service, prisons and—if I have time—legal aid. It was the first time that the Justice 1 Committee and the Justice 2 Committee had met jointly. That was only possible with the consent of the Parliamentary Bureau. If there continue to be two justice committees—which I do not want—they must scrutinise the budget together.
Although this year we were able to provide better scrutiny of the budget, it was not good enough. We took evidence on only two occasions. I was frustrated by not being able to hear from enough outside witnesses, whose views on the budget we would have liked to put to the Executive.
Tavish Scott mentioned the prosecution service. In evidence, it emerged that 60 per cent of the costs of the prosecution service are staffing costs. The Procurator Fiscals Society welcomed the fact that an additional 50 depute fiscals are ready to enter the service this year and another 10 next year, but it expressed concern that that will not help to deal with the current pressures on the service. That is because there is a time lag between new entrants starting work and their becoming fully effective. We all know about the high-profile cases, such as the Chhokar case. However, there are everyday fault lines in the prosecution service that the service's budget will not deal with. Those problems include trials being adjourned because reports are not ready on time, because witnesses are not present and sometimes even because a sheriff is not available. That places additional costs on the justice system, while failing properly to deliver justice.
The Scottish Prison Service is a topical issue. The first question that I want to ask concerns transparency. It took me and other members of the justice committees a year to draw out the difference between the cost per prisoner place and the actual cost per prisoner. After that difference was revealed to us by a representative of the Scottish Prison Officers Association, we were able to put it to the Executive. The cost per prisoner place is based on notional numbers, whereas the actual cost per prisoner is based on actual numbers. As we know, prisons such as Barlinnie sometimes work at double capacity. When one calculates the actual cost per prisoner, it is cheaper to keep a prisoner at Barlinnie than it is elsewhere. That is terribly important when one considers the impact of privatising prisons and the costs of prisons such as Kilmarnock. That is another mystery that we must still unravel. There was no transparency there.
The SPS budget was predicated in part on a £5 million to £10 million saving, which in turn was predicated on a reduction of 250 in the number of prison staff. Staff numbers are already 100 below complement, so a cut of 350 is envisaged. That cut was predicated on the ending of slopping out. How can that work, when the Minister for Justice said recently that slopping out would not end by 2003, and that it might not end even in five years' time?
If we consider the inhumanity of slopping out against the economics of the situation, we can see that the economics do not add up. If the current case leads to more successful cases going to the Court of Session, and to the Executive at least being ordered to accelerate the end of slopping out, I would like to know what provision has been made for costing such an exercise, what the costs will be and from which budget those costs will be met. That would allow people who failed accountancy but passed it on a resit to point with their little finger at where the money will be found to put an end to slopping out before 2006.
I will conclude on that point, although I wanted to talk about the fact that the legal aid budget has been frozen for three years. Solicitors' fees—not a popular issue—will have been frozen for nine years. That impacts on the delivery of justice and it cannot be right that the profession has not had a raise for eight or nine years. Legal aid fees for solicitors are half what solicitors get from private clients and solicitors are not prepared to subsidise legal aid any longer.
We have just heard a plea for poor solicitors.
I welcome the progress that has been made by a number of members in clarifying the budget. A lot needs to be done to link budget allocations better to policy priorities and, more particularly, to performance targets. I sat on two major local authorities and Scotland's biggest health board, all of which were much clearer about where their money was going and what they would deliver than the Executive is in its budget. We must move towards greater transparency, so that members can carry out their scrutiny role more effectively.
In the previous budget debate, I welcomed the minister's announcement of three-year funding for local government, to which Kenny Gibson referred. When the minister sums up, I would welcome his comments on the impact that the introduction of three-year budgeting has had on the budget planning process in local authorities.
I would also welcome his comments on whether there are plans to extend three-year budgeting. Voluntary sector organisations in Scotland are often dependent on a cocktail of local authority and central Government funding and it would be important for three-year funding to reach them, too. Each year, they spend a lot of time and overheads on scrabbling around for next year's budget. Three-year funding would have a profound impact on voluntary sector organisations, and I hope that ministers' efforts in relation to the budget process will result in three-year funding for that sector.
I also ask the minister to indicate what progress is being made on the development of an appropriate financial underpinning of the partnership agenda, which has been central to what the Administration is seeking to achieve. In the context of the Finance Committee's recommendations on outcome budgeting, partnership must be underpinned by flexible and responsive financial systems. We must move away from partnerships that are board-level talking shops that have little or no impact on public bodies' operational delivery mechanisms, towards systems that involve proper shared ownership of outcomes—which happens in relation to community schools—and towards more effective resource sharing and mobilisation of resources from Executive and non-Executive sources, such as lottery and European funds.
We might learn something from the way in which budgets are managed and developed in other parts of the United Kingdom. For example, we could learn from the single regeneration budgets that are making a profound difference in some less advantaged areas in England. The introduction of single regeneration budgets would involve the Executive yielding detailed budget control to local partners and substituting alternative mechanisms of accountability. I recognise that, in relation to the detailed management of budgets, there is a lot of pressure on the Executive to ensure that it gets a bang for its buck. However, departmentalism can get in the way of effective action.
There is a trade-off. People are proud of the way in which the creation of the Parliament has stepped up accountability and accessibility and introduced greater legislative capability. However, as was made clear during the election, people are interested in effective delivery. We must strike the correct balance between the processes of consultation, inspection and budget management, and ensuring that the budgets deliver change where people want change. For example, we must get on with improving health in Glasgow—we must get moving on transforming that situation. People who came to the recent launch of the cross-party group on cancer made that clear.
We have the money, but how we manage it—and how we make a difference—is crucial. It is important that the Parliament makes progress on that task.
This has been an interesting debate, but what frustrates me about finance debates is that they tend to be about processes rather than outcomes. We do not get to grips with what the budget is about and tend to consider how information has been presented and how that presentation could be improved. I am not saying that no work needs to be done on that, but it is a bit surprising that, in a debate on a £20 billion budget, we have heard nothing about how any of that money could be allocated differently.
The budget process is important. We must consider how to judge the way in which the Executive provides resources to meet its policy objectives. We have made some progress on the budget documents, which have improved since last year, but there is still a long way to go.
The committees must also consider how they deal with the budget process, identify the policy objectives within their area of responsibility and hold ministers to account to make them show that they are providing the financial resources to back up those policy objectives. We are still learning—this is only the second year that we have gone through the budget process. It is clear that more could be done to improve the process.
We should not lose sight of what the budget is about and the important factors that it addresses. The budget will make real improvements to public services in Scotland. There will be more money, in real terms, for the health service and for our schools. The budget contains funding to pay for student tuition fees, grants for students for the first time in years and more police on our streets.
As a member of the Local Government Committee, I draw attention to that committee's report to the Finance Committee which identified a number of areas of concern. There is a clear difference between the local government community's view and that of ministers about how generous the settlement is. No one disputes that there has been an improvement, in that local government funding is moving in the right direction for the first time for some years, but clear concerns remain about the gap between what local government perceives it needs to provide services in areas such as community services, which have suffered many cuts, and what the Government is providing. Part of that debate is about ring-fencing and Government direction.
Capital expenditure is the area of greatest concern. There has been an increase in capital expenditure, but there is a major backlog of school, road and other repairs in many areas, which must be addressed. Capital expenditure is only just beginning to make progress in the right direction. There is a long way to go and more money must go into that area.
I was not really surprised by Alasdair Morgan's speech. Although he is a new spokesman—he has been in the job for only a few days—it was not a new speech. We heard the same speech that we always get from the SNP. He talked about communicating with the voters. The SNP communicated with the voters during the general election campaign and the voters said, "No, thank you very much." The SNP vote decreased by a substantial amount and voters rejected its financial proposals for Scotland. The Liberal Democrat vote increased, so our communication sent our votes in the right direction. The more people heard about the SNP's proposals, the fewer people voted for that party. The more people heard about Liberal Democrat proposals, the more they voted for us. I would like the results to continue in that direction.
Alasdair Morgan made an interesting comment about the cost of the Scottish Parliament. He talked about money to pay for the building coming out of our wages. He suggested that if we had a mortgage, it would not come out of our wages, but people pay for mortgages from their wages over a long period of time; they pay interest on mortgages as well, so his point was not very sensible.
The SNP has offered nothing in today's debate. Although it is the principal Opposition party, the SNP has never made a sensible proposal on how the Scottish budget should be spent differently. It never tells us how it would deliver any of its spending pledges or what it would cut to find the money. The SNP has nothing to offer the debate.
I welcome the Finance Committee's report.
Yesterday, I had occasion to address the Finance Committee convener in the street. The exchange was brief. I said to him, "If you were a squirrel, my dog would chase you up a tree." He took that in good spirit. I am now overcome with contrition: I had not realised that in his late teens he was subjected to such a searing experience as admission to the accountancy profession. Accountancy's loss is our gain. His champagne-style delivery was a welcome and sparkling innovation in what has tended to be the leaden tedium of finance debates.
The Finance Committee is to be commended for its constructive report on stage 1 of the budget process. As Donald Gorrie rightly said, positive comments can be made about that process. The annual expenditure report is a better document than last year's equivalent, "Investing in You". This year, subject committees were able to undertake a review of departmental activity, which was virtually impossible last year, owing to the deficiencies of "Investing in You". This year, an effort was made to increase the provision of disaggregated information, but it is still not sufficient. Progress is being made too slowly. It is only right to record that there was a helpful ministerial and departmental response to the Enterprise and Lifelong Learning Committee's requests for information. I endorse David Davidson's comment that the Finance Committee report should be used as a template for how the Executive deals with the budget process.
Those are the positives, but there are a considerable number of negatives that must also be highlighted. There is a lack of standardisation in departments' presentation of information and a shortage of specific information about departmental costs, which is unacceptable in a devolved Scotland. There is no mechanism to achieve outcome budgeting: what is spent means little unless it is known what is got and when. The budgets for health and enterprise are a prime example of that dilemma. The lack of performance comparators in those budgets means that there is no transparency and that it is not possible to compare costs between departments or quangos or local authorities. For example, are the administration costs in the department of enterprise and lifelong learning higher than those of the department of health? If they are, should they be? I do not know the answer, but the Parliament is entitled to ask such analytical questions and, under the devolution structure, the people of Scotland are entitled to answers.
Donald Gorrie made a useful point about whether it is more expensive to repair a pothole in one local authority area than in another. It is right that that information should be available. The people of Scotland should have some basis on which to judge how well their money is being spent.
Another material omission in the annual expenditure report is its lack of information about sources of income. A much fuller picture of how expenditure is being set against the money that is available would be obtained if the annual expenditure report included information about whether the income came from last year's budget, from comprehensive spending reviews, from UK budget consequentials, from Barnett consequentials, from end-year flexibility or from the reserves. That would greatly assist us because we could determine whether we are talking about new spend or recycled money. That would assist us in identifying what items and elements of money are devoted to the provision of particular services or delivery of particular policies.
In short, I welcome the Finance Committee's report. The committee is to be congratulated on a constructive piece of work, but there is still a long way to go. Huge deficiencies still exist. Until they are addressed, the budget process will still be lamentably deficient.
The key message of the Finance Committee's report is:
"The budget process can only be as good as the information presented."
The budget information that is presented to the Parliament's committees is still not up to scratch.
The committee has accepted that progress has been made since last year, but not to the extent that the Executive's plans can be properly scrutinised by the subject committees to ensure full democratic accountability. Transparency needs to be significantly improved. The committee's report and several members who have spoken have highlighted a variety of deficiencies in the annual expenditure report. They include the failure to pick up proofreading errors; the absence of explanations for changes to expenditure and policy compared with the previous year's plan; the lack of quality information, which prevented subject committees correlating departmental aims with expenditure; and the lack of disaggregated spending details for policies that are delivered through local authorities, health boards and quangos—which constitute the bulk of the Executive's budget. Little progress has been made on the reporting of cross-cutting expenditure, which is disappointing, and no progress has been made on gender impact analysis.
I welcome the ministerial commitment, which I believe to be sincere, to fill those gaps. The minister has said that he will act to bring the budget process into line with the Finance Committee's recommendations. I was also impressed by the willingness of the Deputy Minister for Finance and Local Government to move towards a performance assessment framework for departments and towards a system of priority-based budgeting. The focus on the outcomes of spend rather than on the amount of inputs that are purchased is welcome.
I am sure that the deputy minister expressed a consensus view when he said:
"All politicians have a habit of simplifying policies for election periods, saying that they will employ X more teachers, doctors and nurses, for example. There is very little focus on the end product."—[Official Report, Finance Committee, 8 June 2001; c 1318.]
The question is whether we in the Parliament can raise our game to conduct a more relevant debate to re-engage the growing number of people who have lost faith in the democratic process as an instrument of social and economic progress.
In my swan-song as a finance spokesperson, I wish to advance the argument that no matter how well the Executive manages its financial resources, the constraints that are imposed by block and formula funding from Westminster under the current devolution settlement will, sooner or later, limit the Executive's room for manoeuvre. That will be to the detriment of the aspirations of the Scottish people. Already, the Executive is struggling to find the resources to pay for its commitment to fund the teachers' pay settlement, free personal care for the elderly, the abolition of up-front student tuition fees and the cost overruns on the new Scottish Parliament building. Given all that, how will it deliver on its election promises to improve the health and education services?
Problems are arising despite the influx of new money coming into the budget at the rate of £1 billion a year in each of the years that were covered by the most recent comprehensive spending review. That flow of funds will almost certainly slow down in the next CSR period; the Barnett squeeze will bite deeper; and the credit available from the ministers' flexible friend—otherwise known as end-year flexibility—is bound to dry up. When that happens, the Executive will be reduced to having to fund any new initiatives from the 1 or 2 per cent of departmental budgets that it will be feasible to change or redistribute between expenditure programmes. That is not my analysis but that of Professor Arthur Midwinter in the research that was commissioned by the Finance Committee.
How, then, will the Executive—although it might find itself in opposition by that time—respond to the Scottish public's overwhelming support here and now for increased powers for the Parliament? Will we still need to hang onto nurse for fear of something worse? Will the line be held by assuring us that, to secure our wealth, a political and economic union that has brought Scotland the lowest economic growth rate in Europe—a structural deficit of £5 billion per annum, according to the minister—must be retained, despite the cost? I doubt it.
It would be advisable for everyone with Scotland's interests at heart—and I believe that that includes everyone in the chamber—to grasp hold of an idea whose time has come. Independence.
Peter Peacock will wind up for the Executive, but his microphone does not appear to be working. In fact, I have just been advised that the entire sound system has gone down.
Meeting suspended.
On resuming—
I have been advised that we can proceed, although when I switched my microphone on, nothing happened. However, it seems to be working so, optimistically, I call Peter Peacock to close for the Executive.
As others have done, I will start on a personal note, and welcome Alasdair Morgan to his new role. I also wish Adam Ingram and Andrew Wilson well in their new jobs, whatever they turn out to be.
Andrew Wilson performed his finance role with considerable good humour. Of course, his finance policies were also hilarious and caused us great amusement. It looks as though Alasdair Morgan is set to continue in the vein of SNP finance spokespersons, as Andrew Wilson did, if today's evidence is anything to go by. There was more flirting with full fiscal freedom, or foolish fiscal folly, which it is, as it would bring Scotland a deficit of £5 billion a year. That is why the Scottish people rejected that approach at the recent election.
SNP members continue to scoff at the Barnett formula as a hand-me-down or cast-off from Westminster, yet the Barnett formula is bringing Scotland extra cash, not less—£1 billion this year, £2 billion next year and £3 billion the year after. That money will allow us to continue to improve health, education and transport services, and to do all the things for which Scottish people voted in the recent election.
There are no proposals from the SNP on how to use our existing fiscal powers. While calling for full fiscal autonomy, the SNP has not produced a single proposal on how to use the powers that the Parliament already has.
Does the minister concede that in those key areas, Scotland's share of expenditure is declining as a proportion of UK expenditure?
I emphasise the truth, which is that the money that is coming to Scotland from Westminster through the Barnett formula is increasing significantly, which will allow Scotland to develop its services in a variety of ways. The SNP and the Tories have not produced a single proposal on what they would do differently with the Scottish budget. They are prepared to come here and carp and moan, but they are not prepared to produce a single constructive suggestion on how we use our fiscal powers or on what they would do differently. That begs the question, what would they do differently? What would they do to make priorities different for education and health?
I am in a generous mood, and I fully accept that Alasdair Morgan took over his job just yesterday. No doubt he had handed to him a cast-off speech from Andrew Wilson, which he felt obliged to deliver. I look forward to better things as time goes on and to Alasdair Morgan's understanding why full fiscal freedom would be a folly for Scotland matures.
The purpose of today's debate is to consider the constructive contribution that the Finance Committee has made to the budget process. As Mike Watson indicated, we are in only our second year of the budget process and there is far more scrutiny of that process now. Angus MacKay and I have been before the Finance Committee—as were our predecessors—for many more hours in total than was the case previously. As Donald Gorrie said—and I share his aspiration—it is important that we try to widen the Scottish people's understanding of the budget process, so that they can influence it in a variety of ways.
The Finance Committee's report is a useful contribution to improving the budget process. Many comments from today's debate reinforce the report's conclusions. Any serious observer of the budget in Scotland ought to take seriously what the Finance Committee has said—we take it seriously.
Many detailed comments were made during the debate and it will not be possible to reply to them all, but I will try to address some of the main themes.
One of the themes that emerged was on the approach of Executive departments. Mike Watson, David Davidson, Richard Simpson and Kenny Gibson pointed to that, particularly in relation to the health and local government budgets. I am sure that we can do more to shed light on expenditure from those budgets and on the outcomes that we seek from that expenditure, but we must strike a balance between the scrutinising role of the Parliament and the local accountability of councils justifying to their electorates their decisions and priorities within the block sums of money that they receive. That is starkly contrasted in the light of comments such as that which Kenny Gibson made about the need to move away from hypothecation in local spending and to allow more freedom. We agree with that. However, how do we at parliamentary level then scrutinise that expenditure? That involves a tension and we must work at getting round that.
Mike Watson, David Davidson, Richard Simpson, Annabel Goldie and other members asked about the consistency of the supply of information to the budget process and asked us to take up those points with other ministers to ensure that greater consistency is achieved. I am happy to confirm that we will do that and seek to improve consistency.
Members asked about the presentation of information in the annual expenditure report. Members recognise the changes that were made to place information about increases in budgets in real terms as well as cash terms. However, the recognition that progress has been made does not remove the need to make further progress, which I confirm that we want to make.
Almost every member asked about focusing our budget process on outcome measures for spending, rather than inputs. The Executive and the Parliament want to be much clearer about what our money purchases from those to whom we give it. Mike Watson, Alasdair Morgan, David Davidson, Donald Gorrie, David Mundell, Des McNulty, Annabel Goldie and others discussed that. I share the intention and desire that lie behind those points about adopting outcome measures. We will spend much more time doing that. I am pleased that the Finance Committee is commissioning independent research on that, because we are travelling into comparatively unknown territory. We need to learn techniques and what others have done. We must develop our own techniques to explore the matters more fully. That is a priority for us. In that context, several members asked the Executive to set better targets from which we can better measure outcomes.
Alex Neil, Mike Watson, Donald Gorrie and others asked about non-departmental public bodies and the significant amounts of money that they receive from the Executive. Such bodies are at arm's length from the Executive, but they are not absolved of the need to be clear about the outcomes that we are purchasing with our expenditure. The Executive and the Parliament need to apply the same rigours to them that we apply to ourselves and others. We must know what we are purchasing for the money that we are giving and the outcomes against which we can measure performance. David Mundell asked about best value in expenditure from our NDPBs. I confirm that a best-value review process is operating throughout the Executive. That rolling programme of reviews over the next five years will examine a range of aspects of expenditure to ensure that we have best value.
Please wind up.
I am happy to wind up.
The annual expenditure report sets out our plans for spending £21 billion on delivering essential services, improved health and better education for our children and bearing down on crime. The Executive has budget plans that deliver for the people of Scotland. Throughout the remainder of this year's budget process and into the future, the Executive will continue to engage constructively with the Parliament, its committees and the people of Scotland to refine its approach and respond to the people's needs. On that basis, we will continue to deliver.
We are at the end of stage 1 of this year's budget process—a process which is becoming more familiar to us all. The Finance Committee was again ably assisted by Professor Ashcroft—to whom thanks are due—and by the clerking and research staff. I welcome Alasdair Morgan, in his new role, to the Finance Committee. This year, the Finance Committee and the subject committees felt more able to fully engage in the budget process, even allowing for the many improvements that are still required, many of which were highlighted in the debate.
One result of the Finance Committee's work is Professor Midwinter's report "The Real Scope for Change: Appraising the extent to which the Parliament can suggest changes to programme expenditure". That report indicated the areas of the Scottish budget in which spending could be modified. Research is also being carried out in other areas, such as the gender-based budgeting research that was commissioned by the Equal Opportunities Committee.
In future years, committees will have better information and a clearer understanding of the budget, which will result in a more transparent process and allow more meaningful input. I take Donald Gorrie's point that the budget process in the Scottish Parliament is already well in advance of the process at Westminster. As the minister said, our process is already subject to more scrutiny.
By 2003-04, the Scottish budget will have risen in cash terms from £18 billion in 2001-02 to more than £22 billion in 2003-04. In real terms, that is an increase of some 14.5 per cent over the four-year period. In his recent research for the Finance Committee, Professor Midwinter concluded that public expenditure is currently undergoing sustained growth. In his report, he noted:
"the margins of budgetary choice have increased dramatically."
Over £1 billion of new resources are being made available over the 2003-04 period.
Much discussion has taken place about the presentation of the budget document and most committees recognise that considerable improvements have been made to this year's summary budget document. As a result, committees have felt able to take a longer and deeper look at their areas of the budget. They have called more witnesses and have produced much more comprehensive reports as feedback to the Finance Committee.
The budget document has been improved by additions such as the tables that show cash and real terms at levels 1 and 2, which were welcomed by the Local Government Committee. Further improvements are sought, such as the need for tables showing areas of income from UK budget consequentials. I believe that, in a few minutes, the minister will announce the most recent of those in his budget statement. Other improvements that are sought include tables showing funding for new burdens and capital expenditure on PFI and PPP projects, which many members mentioned in the debate.
Outcome-based budgeting has also been discussed at some length, as it has been over the past year or so at meetings of the Finance Committee. The committee has commissioned external research in that area and welcomes the minister's clear commitment to movement towards outcome-based budgeting. As the minister said, we look forward to further discussions as to how outcome-based budgeting is developed so that a clearer emphasis on performance evaluation measurement is achieved, as that would allow us to identify trends. As Des McNulty mentioned, we would then be able to see that policy objectives are being met.
Several committees have highlighted concerns, in particular the Health and Community Care Committee and the Local Government Committee. Those committees have concerns about the detail of information that is received. Health and local government represent some two thirds of the Scottish budget. Health boards and local authorities hold most of the detailed information in those expenditure areas. However, we need to look at how we can make more information available and how cross references can be made to underlying information, such as the five-year financial plans that are produced by the health boards. As Richard Simpson pointed out, reference could also be made to the health improvement plan, so that policy objectives can be linked to the money that is available to meet those objectives.
One of the Finance Committee's recommendations on the budget document is that those two committees should have direct discussions with the Scottish Executive finance and central services department about the information that they seek and what they would like to see in the AER next year.
Other committee members highlighted various issues. Christine Grahame and Tavish Scott both highlighted some of the issues that were included in the Justice 2 Committee's report. Although no committee has recommended that this year's budget should be spent differently, committees are nevertheless engaging much more directly in the budget process. As a result of that engagement, they are able better to scrutinise areas that may need greater clarity, such as the Procurator Fiscal Service.
David Davidson and others mentioned the need for different departments to produce information in a standardised format. I look forward to seeing that in next year's report.
Members mentioned the new Scottish departmental expenditure limit reserve and end-year flexibility and the need for clarity over how the reserve can be used. The Finance Committee welcomes the intention of the Minister for Finance and Local Government and his deputy to consider the matter over the summer.
Gender-based budgeting has been heavily criticised, mainly by the Equal Opportunities Committee. The committees felt that little or no improvement had been made. Kenny Gibson mentioned that the subject was raised at the Local Government Committee. It is to the credit of the Scottish Parliament that it is discussing gender-based budgeting and giving the issue considerable weight. We are probably advanced compared to Parliaments elsewhere. However, one of the difficulties of being at the leading edge of anything is that the methodologies and techniques that are required to give us the kind of information that we want have sometimes still to be developed. While he acknowledged the difficulties, I was pleased to hear the minister give a clear commitment to progress in that area.
The Finance Committee is looking forward to the development of equality performance indicators by the end of the year, followed by an initial equality impact assessment of budgets, leading to a pilot next year. That work will be informed by the equality proofing advisory group, which includes representatives from various organisations such as the Equal Opportunities Commission Scotland and Engender's budget group. Other committees have identified something that affects equality budgets, which is the lack of good baseline data. Another problem that has been raised is how to develop information for monitoring cross-cutting budgets, not only for gender, but for drugs and rural affairs. That was mentioned by Alasdair Morgan.
Various members have raised the issue of how we involve the public in the Scottish budget-making process. There has been a clear commitment on the part of the Minister for Finance and Local Government and the Finance Committee to open out the process to a wider audience. That has led to a number of innovations, such as holding meetings outside Edinburgh. The Finance Committee has undertaken to meet outside Edinburgh once during stage 1 of the budget process and on a second occasion as part of stage 2. Last year, I was pleased that the committee went to Aberdeen as part of stage 2.
This year, the committee met in Perth the day after the general election and took evidence from the minister. It is to the credit of the minister and members that we had almost full attendance of the committee. Considering which day it was, it was a creditable performance by the committee and the minister. However, attendance by the public was poor. I accept that Finance Committee deliberations are not always of the most riveting nature, but given that we are discussing the expenditure of about £20 billion we should continue to try to engage the Scottish public.
As part of that, we recommend the reintroduction of a pocket-sized version of the budget. Academics and parliamentarians form specialist audiences for the budget—we are looking for detailed information, which we now have in the summary and in the full, detailed version of the budget documents. There is room, however, for a more public-friendly version, which shows simply and clearly how much money there is and where the main areas of expenditure are. The audience for information about the Scottish budget is diverse and has undoubtedly increased since devolution. It is difficult to meet all needs. I accept the minister's point that we must consider cost, which is why the committee is recommending that we review the use of reports.
The budget process is not static; it evolves with time and the development of devolution. However, I agree with Iain Smith that we need to move from process to outcome so that now and in future we can meet the objective of having an open, accessible and accountable budget process.