Hansard

The Deputy First Minister is unable to participate in the debate, as he is attending a family funeral. Therefore, I will be representing the Scottish Government in the debate.

The Scottish Fiscal Commission Bill will secure a permanent role for the commission in strengthening the operation of Scotland’s devolved fiscal framework. The bill delivers a long-standing commitment from the Government to give the Scottish Fiscal Commission a basis in statute and further demonstrates our commitment to fiscal discipline.

The non-statutory commission has been in operation since June 2014, with a core function of scrutinising and reporting on the Scottish Government’s forecasts of tax revenues that support the Scottish budget. The bill provides that that should remain the core function of the statutory commission. I will return to that issue later.

The commission’s core purpose should be to maximise the integrity of the forecasts and estimates that are prepared by the Scottish ministers to underpin the Scottish budget. By bringing independent scrutiny to bear on those forecasts, the commission provides Parliament and the public with independent assurances of the robustness of revenue and borrowing estimates, which, together with the block grant, determine the total resources that are available to ministers to deploy in the budget. As such, the commission’s work is central to the integrity of the Scottish budget process.

The bill is a culmination of years of work, which included inquiries that were conducted by the Finance Committee and a Government consultation. We are grateful to all those who have taken the time to contribute evidence, which has helped to shape the development and refinement of our policy. In particular, I thank the committee and all those who provided evidence at stage 1 for their detailed consideration of the bill and the underlying policy issues.

The committee made a number of recommendations in its stage 1 report, and the Deputy First Minister has provided a detailed written response to it on the legislative and Government policy issues that it raised. The committee also made a number of recommendations that pertain to the operation of the commission and how it discharges its functions. Those are matters for the commission, over which the Government rightly has no jurisdiction. My remarks will therefore focus on the issues for which the Scottish Government has responsibility.

The Scottish Government remains of the view that Scottish ministers should be responsible for preparing official tax revenue forecasts. The position that is set out in the bill is that the commission will independently assess and report on those forecasts, maximise the transparency of the forecasting process and ensure that Scottish ministers are properly and democratically accountable to Parliament for those forecasts. The Government believes that the bill, as introduced, reflects the most effective solution in support of the responsible exercise of the modest tax powers devolved to this Parliament.

Under current arrangements, a detailed account of the Scottish Government’s forecasting approach, the findings of an independent evaluation of that approach and the changes that the Government has made in response to those findings are all publicly available. The comprehensive reports that were published by the Scottish Government and the Scottish Fiscal Commission alongside the 2016-17 draft budget are evidence of that. I understand that the committee will have finished its deliberations prior to those documents being available.

The commission rightly challenges the Government to ensure that our forecasting methodologies are as robust as they can be. Any observer of the budget process or reader of the Scottish Fiscal Commission’s report on our forecasts would see that that is exactly what the commission does. We are committed to acting on the commission’s recommendations and Parliament can hold us to account for our response to the issues that the commission raises.

The independent checking function would be lost if the commission were to prepare official forecasts. There would be no formal institutional arrangements to provide timely assurances of the reasonableness of each forecast produced by the commission. It is not clear how Parliament, the Government or the public would be assured about the robustness of forecasts that are critical to determining the level of resource that is available for allocation in the Scottish budget and to the responsible management of Scotland’s public finances.

The committee’s recommendation would lead to duplication of effort and resources—a point recognised by the Institute of Chartered Accountants of Scotland—as the Scottish Government would need to retain in-house forecasting expertise. The resources required by the commission would increase, without any commensurate decrease in the forecasting resource required within the Scottish Government. Our policy position is supported by international evidence, including written evidence that the International Monetary Fund submitted to the committee at stage 1.