Committee
Finance Committee 25 January 2011
25 Jan 2011 · S3 · Finance Committee
Item of business
Scottish Variable Rate Inquiry
I will comment on what happened in the year before the Scottish election in May 1999. I do not have access to the papers on that, because the Parliament had not been created at the time—the minister responsible, I think, would be Henry McLeish—but my memory from the discussions back then is that Henry McLeish, as the minister for devolution, approved the creation of the infrastructure at some time around mid-1998 or autumn 1998. The infrastructure was then put in place, and obviously there was a cost for that.The decision that I faced in May and June 1999 was whether to continue with the full-blown infrastructure, which included all kinds of things, such as a call centre to deal with inquiries, or whether to save on the annual running costs of that infrastructure, which amounted to about £20 million—subsequently, we reallocated that to other things—and maintain the database on the system, the annual running costs for which were about £2 million to £2.5 million. To be fair, I think that a cheaper option was put to me at the time, but that would have involved a two-year delay for an incoming Administration. We wanted to make the variable rate available within a 12-month period.With all decisions that involve some investment in technology, you are aware that, at some point, that technology will require to be updated. I do not recall—partly because I was not involved in the original decision in 1998—being told whether an update would be required in three, five, eight or 10 years’ time, but we would have assumed that the computer system would be updated on the normal cycle of things and probably within a decade.
In the same item of business
The Convener
SNP
Item 2 is to conclude the evidence taking on our Scottish variable rate inquiry. First, I welcome to the committee three former finance ministers: Andy Kerr ...
Jack McConnell (Motherwell and Wishaw) (Lab)
Lab
I want to outline briefly, mostly from memory, what took place in summer 1999 when I was appointed as the first finance minister in the new Parliament and th...
Andy Kerr (East Kilbride) (Lab)
Lab
My evidence will be brief. I refer members to the note of 7 July 2003 from Richard Dennis. Following the election in that year, I had a straightforward role,...
Tom McCabe (Hamilton South) (Lab)
Lab
Good afternoon, everyone. Papers on the Scottish variable rate that the former finance ministers who are present today have requested and papers that the Sco...
The Convener
SNP
The cabinet secretary will have the opportunity to respond when he appears before the committee.HM Revenue and Customs told the committee that it could“put t...
Jack McConnell
Lab
I should probably answer that question, given that I presented to Parliament the bill to establish the budget cycle back in 1999, as you will remember. The b...
Tom McCabe
Lab
I am sure that the committee understands the chronology, but it is probably important to clarify it. An incoming Administration may announce its intentions i...
Andy Kerr
Lab
I have a fairly simple point to add. If a party campaigns to either increase or decrease taxation in Scotland, it will present a budget in some form that wou...
Jack McConnell
Lab
I am sorry to come back in again, convener, but it is important to remember—I have always been keen to ensure that we are clear about this—that it is possibl...
The Convener
SNP
Given the evidence that we heard from HMRC, it still bothers me that, time-wise, the bits do not quite fit.Given that it is for the Scottish Parliament to de...
Jack McConnell
Lab
The arrangements comprise the following: the creation of the legislation, which happens in the cycle every autumn, as you say; the possibility or—in my view—...
The Convener
SNP
I throw the questioning open to members.
Joe FitzPatrick (Dundee West) (SNP)
SNP
I am looking back to 1999, so I think that my question is for Lord McConnell, but if I have got that wrong, the other former finance ministers might want to ...
Jack McConnell
Lab
I will comment on what happened in the year before the Scottish election in May 1999. I do not have access to the papers on that, because the Parliament had ...
Joe FitzPatrick
SNP
I want to widen the question and ask about the other money. I think that we reckoned that, over the piece, £25 million was spent on the SVR. When that money ...
Andy Kerr
Lab
We should bear in mind what Lord McConnell said in response to your previous question about predicting the cost of information technology systems, which is a...
Tom McCabe
Lab
As I said, I was aware that discussions were on-going. I was never under any illusion that if there was to be a substantial overhaul of the infrastructure fo...
Joe FitzPatrick
SNP
That deals with the issue as far as the capital is concerned. At the end of the day, we had no assurances.As far as readiness is concerned, Sarah Walker told...
Jack McConnell
Lab
Who is Sarah Walker?
Joe FitzPatrick
SNP
She is from HMRC—she gave evidence two weeks ago.
Jack McConnell
Lab
That is different from what the convener said. The convener said that HMRC’s evidence was that if a decision had been made in May or June 2007, it would have...
Tom McCabe
Lab
I might be able to clarify that. As I said, the position was that the discussions were on-going. Officials were not in a position in which they felt that the...
The Convener
SNP
Let me clarify something. Tom McCabe said to Sarah Walker:“But it was possible to implement the system in 2008—you could have done it.”Sarah Walker replied:“...
Tom McCabe
Lab
If that is what she said, convener, she may have been confused. Her reply contradicts the ministerial briefing note that was given to incoming ministers on 1...
The Convener
SNP
That will be noted in the Official Report.
Joe FitzPatrick
SNP
I think that we are taking off, because that was not the point that I was trying to make. My question was whether given Sarah Walker’s evidence to the commit...
Jack McConnell
Lab
Yes.
Andy Kerr
Lab
Yes.
Tom McCabe
Lab
Yes.
Joe FitzPatrick
SNP
That is useful. What checks did the ministers make over the years when they were making payments to HMRC to ensure that there was 10-month functionality, giv...