Meeting of the Parliament 10 March 2016
I have come late to the topic. I have not served on the Finance Committee, although I have watched some of its ambulations over the period. We have reached a point that is good on the whole. The bill will be supported unanimously tonight.
There is now international recognition that independent fiscal institutions play a vital role in supporting the operation of a country’s fiscal framework and there has been rapid growth in the number of such institutions over the past decade—particularly, as Gavin Brown said, since the 2008 financial crisis. Prediction is a difficult game. Who would have known that the oil price today would have been what it is? Certainly the Government was not able to predict that and I do not altogether blame it for that, although the comments that have been made today on the GERS not being relevant seem extraordinary.
We have no argument with placing the Fiscal Commission on a statutory footing. That is a significant improvement on its previous basis, which was to be helpful and useful, but essentially an adviser to the Government.
The vexed questions that we have faced today have been only half resolved. First, there is the question of the commission producing the macroeconomic forecasts. The Deputy First Minister called it a winding road and it certainly has been. The resolution is in line with the committee’s original view on the issue, although as we have heard, the Scottish National Party members have latterly followed the Deputy First Minister up and down the hills like the Duke of York—although as Jackie Baillie said, the Deputy First Minister abandoned them at the top.
In evidence, the International Monetary Fund said:
“The Scottish Fiscal Commission could contribute to the credibility of the government’s fiscal policy by: assessing the realism of the Scottish government’s forecasts”.
However, having independent forecasts is a much better way of doing it. The SFC is to have its own forecasts, so we will watch with interest—in my case, from afar—to see whether those forecasts match. We welcome the amendment that provides that if they do not match, the Government will have to give Parliament an explanation.
The important thing is that the forecasts are five-year rolling forecasts. That is critical because, in the whole period since the Parliament was established, we have not really looked far ahead. Perhaps we have not had the necessity for that. Audit Scotland has repeatedly said that all our institutions fail to look ahead. They look ahead on an annual basis, and they still try to balance the books at the end of the year. That is not the way to run the country, particularly when we are going through huge changes, as we are with health and social integration. That will take five to 10 years, and balancing the books on an annual basis will be difficult.
The OECD talks about nine principles:
“local ownership ... independence and non-partisanship ... mandate ... resources ... relationship with the legislature ... access to information ... transparency ... communications; and ... external evaluation.”
Gavin Brown gave us some of the additional wealth of information behind those principles. Many of them have been met, but the principle that has not been met as a result of the rejection of what John Mason quite extraordinarily described as “tokenism”—I do not understand that, as there has been consistency on the issue over time—is that of measuring performance against fiscal rules and sustainability. That seems to me to be the bit that is now missing, and it is a great pity that we will not have it. To say that Audit Scotland would do that is quite inappropriate. That is not its role. I have a great amount of time for Audit Scotland, which has been hugely valuable, as Mary Scanlon and I said in committee the other day. It has made an enormously important contribution, but that is not the contribution that it should make.
Despite the contortions of SNP members on the issue, which have been quite revealing of how our committee structure has worked in the Parliament, at least the Deputy First Minister—if I understand him correctly—has agreed to re-examine it, particularly if we get greater flexibility in setting our own fiscal rules. That at least is to be welcomed.
I very much welcome the changes to the appointments system. Some might want to go further and have hearings for the chair before the chair is appointed. I would certainly favour that. At least the Finance Committee will be able to call members for evidence.
The reciprocal arrangements for co-operation between the commission and the OBR are welcome, and the external evaluation is important, although there is a lack of detail on that.
I make a final plea. Ever since the Parliament started, there has been a lack of strategic clarity and transparency in the budget process. I do not deny that the books have been balanced—that is great—but nevertheless it is a matter of looking ahead, as Audit Scotland has said and as I mentioned earlier. The long-term view of where we are going to go is really important. I hope that some of our discussions in the opening session about Oregon and how well it worked are reflected in where we go in future.
Seventeen years on, there are many issues on which there has been no progress, such as health inequality. There was initial progress on child poverty—in fact, the OECD said that that was among the fastest that it had ever seen—but that is going backwards, and the homelessness target has not been met. There are many social objectives that we need to meet, and that has to be done within an overall framework. We will have that partially tonight, and I hope that we will eventually have it in full measure.
My party and I support the bill.
17:58