MSPs have this evening formally ratified the Scottish Parliament’s new budget process (Tuesday 8 May 2018).
The move is part of a ‘cultural change’ that will see the biggest overhaul of Holyrood’s budget process since the start of devolution, according to Bruce Crawford MSP.
In a report published last year, an expert review group called for the budget process to be substantially revised to take account of Scotland’s new financial powers and fiscal framework.
Under Holyrood’s new ‘written agreement’, the Scottish Government will provide a long-term perspective on the sustainability of the public finances. Parliamentary committees will be expected to exert more influence on the formulation of government spending plans, with a detailed focus on economic and social outcomes.
Bruce Crawford MSP, Convener of the Finance and Constitution Committee said:
“For Parliament’s oversight of tax-raising and spending plans to be really effective there needs to be a shift from year to year scrutiny to a longer-term perspective.
“To that end, the Scottish Government will later this month set out its first-ever Medium Term Financial Strategy (MTFS) – its broad financial plans and projections for the next five years.
“The new process will also see a move towards multi-year budgets that will help public bodies to develop medium-term priorities and to plan more effectively for future challenges.
“Importantly, parliamentary scrutiny will include a greater focus on outcomes rather than spending. This will enable MSPs to better determine whether policy objectives have been met and public spending has been effective.”
Mr Crawford concluded:
“This evening’s endorsement of Holyrood’s new scrutiny arrangement marks the start of a cultural change and the biggest overhaul of the Parliament’s budget process since the start of devolution.”
The new, full year approach to budget scrutiny will include:
- each spring, a Medium-Term Financial Strategy for Scotland’s public finances published – the first of which is due at the end of May; and
- each autumn, a Fiscal Framework Outturn Report, setting out data for Scottish tax revenues.
With the Scottish Parliament now responsible for raising much of what it now spends, the new budget process has 4 core objectives:
- To have a greater influence on the formulation of the budget;
- To improve transparency and raise public understanding and awareness of the budget;
- To respond effectively to new fiscal and wider policy challenges; and
- To lead to better outputs and outcomes as measured against benchmarks and stated objectives.
Budget scrutiny should be carried out within the following framework:
- Full Year Approach: a broader process in which committees have the flexibility to incorporate budget scrutiny including public engagement into their work prior to the publication of firm and detailed spending proposals;
- Continuous cycle: scrutiny should be continuous with an emphasis on developing an understanding of the impact of budgetary decisions over a number of years including budgetary trends;
- Output / outcome focused: scrutiny should also be evaluative with an emphasis on what budgets have achieved and aim to achieve over the long term, including scrutiny of equalities outcomes;
- Fiscal Responsibility: scrutiny should have a long-term outlook and focus more on prioritisation, addressing fiscal constraints and the impact of increasing demand for public services; and
- Interdependent: scrutiny should focus more on the interdependent nature of many of the policies which the budget is seeking to deliver