Hansard

I am pleased to speak on behalf of the Finance Committee in inviting Parliament to note the revised written agreement, between the committee and the Scottish Government, on the budget process.

The revisions that have been made relate to the introduction of the financial powers in the Scotland Act 2012. The two devolved taxes—the land and buildings transaction tax and the Scottish landfill tax—will be included in the draft budget that will be introduced in the autumn. It is intended that the written agreement will be revisited in due course to recognise the introduction of the Scottish rate of income tax. The committee will invite the Parliament to acknowledge any changes in that regard. The written agreement is an important document that sets out the expectations that the committee and the Government should have of each other in scrutinising financial matters.

This debate should be viewed in conjunction with the Standards, Procedures and Public Appointments Committee debate that will immediately follow this one. Without trailing that debate too heavily, I advise members that the small but perfectly formed changes to standing orders that they will be invited to agree will, for the first time, make scrutiny of Government proposals for revenue raising an explicit responsibility of the Finance Committee and Parliament.

I turn to the written agreement. I will set out what the changes mean for parliamentary scrutiny and then say a few words about the information that the Government will provide to Parliament to inform that scrutiny.

The main changes to Parliament’s role in scrutinising the draft budget are set out in paragraphs 14 to 16 of the revised written agreement. Until now, it has been within the Finance Committee’s power to bring forward in its draft budget report a set of alternative spending proposals. Under the revised written agreement, that has been expanded also to include alternative proposals for taxation. If there are no alternative proposals, the committee will be able to make recommendations on the Government’s tax proposals. Subject committees will be able, in their reports to the Finance Committee, to recommend alternative budget proposals for tax and spending.

The extension of the power to both spending and revenue is a significant and welcome development for the committee. The power is designed to ensure that the committee is in a position to make effective use of it—if and when the committee chooses to do so. In recognition of that, from this year on, a significant focus of the Finance Committee’s scrutiny will be on the Scottish Government’s revenue-raising proposals.

As has been the case with spending powers, in suggesting changes to the draft budget proposals that the Scottish Government sets out, the Finance Committee must consider the overall shape of the budget. Any increase in overall spending must therefore be connected with a commensurate increase in tax levels. The written agreement also makes it clear that any recommendation to increase tax levels should identify how the additional funding should be allocated. The obverse is also true, in that any recommendation to decrease tax levels should identify where spending should be reduced.

Any other committee or individual member who wishes to make alternative proposals will be able to do so by lodging amendments to the Finance Committee motion on the draft budget. Any amendments that are lodged to the motion must comply with the balancing requirements in relation to the overall budget that apply to the Finance Committee; suggested increases or decreases in spending must be matched in revenue terms and the amendment should identify where any changes would be reflected in the budget. Although that is a welcome position for Parliament, it would be remiss of me not to point out that such amendments will not automatically guarantee amendment of the budget bill.

Paragraphs 19 to 23 of the revised agreement set out what information the Scottish Government will provide to enable Parliament to carry out its scrutiny. It includes a commentary on expected income, including tax receipt forecasts and the assumptions, rates and thresholds on which they are based. In future years, when information on actual receipts is available, the draft budget commentary will also include outturn figures for the devolved taxes, including figures on any variance between outturn and forecast. The estimates are intended to provide context to the draft budget and to inform Parliament’s scrutiny of it; they are not intended to constrain the Government in making any adjustment to the indicative tax rates and thresholds, prior to Parliament’s scrutiny of the relevant subordinate legislation.

I move,

That the Parliament notes the revised written agreement on the budget process between the Scottish Government and the Finance Committee (SP Paper 554).