Meeting of the Parliament 14 January 2016
Everyone across the UK should thank the Finance Committee for the light that it has shone on the way in which the OBR deliberates. There are some good quotes from HMRC about how its relationship with the OBR is very similar to its previous relationship. What is clear is that there is a lack of transparency in that process south of the border. Of course, there is no question but that it is possible to arrange the process that way round, but the evidence that is clearly set out in the SPICe document is that countries whose independent fiscal institution produces the official fiscal forecast are very much in the minority.
Nothing in the bill prohibits the commission producing alternative forecasts. It is solely for the commission to decide whether it considers that the production of such forecasts would be desirable to support its ability to assess the reasonableness of the Government’s forecasts, and that is the way it should be. I look forward to hearing members’ points on that matter.
I see that time has flown.
The Scottish Government recognises that it is critical to the effectiveness and credibility of the commission that it is structurally, operationally and visibly independent of Government. We have been explicit in the provisions in the bill that the commission will not be subject to the direction or control of any member of the Scottish Government. However, in his response to the stage 1 report, the Deputy First Minister undertook to take further action to reassure Parliament that he is doing all that he can to promote the independence of the commission. He will consider legislative and administrative changes to strengthen the transparency of the operation of the relationship and interactions between the Government and the commission.
The Government welcomes the committee’s support for the appointment process that is provided for in the bill. The Deputy First Minister has already intimated to the committee that the Government will bring forward amendments to the bill at stage 2 to give effect to recommendations to include term lengths in the bill and to allow members to serve two consecutive terms of appointment of no longer than five years each, as recommended by the committee.
The committee raised the issue of the commission’s remit. We recognise that the process of devolution is on-going, with the Scotland Bill going through Westminster and an associated fiscal framework being negotiated. That is why we have provided that the functions of the commission may be expanded in future by regulations, following consultation with the commission and with the express approval of Parliament.
The committee talked about two areas in particular. It suggested that the commission be given the functions of assessing adherence to fiscal rules and assessing the long-term sustainability of devolved public finances. Those issues would most appropriately be revisited following the devolution of further powers. However, it is very much the view of the Government that assessment of the sustainability of public finances is primarily a role for elected members of the Scottish Parliament, who should hold ministers directly to account for the robustness of our financial judgments.
Taken together, the provisions in the bill and the resourcing proposals in the financial memorandum will create a statutory commission that is well equipped to assure the robustness of the tax forecasts that underpin the Scottish budget.
The Government remains of the view that our approach—whereby the commission independently assesses and reviews official forecasts that are prepared by Scottish ministers—maximises transparency and delivers public value by offering the strongest safeguard over the robustness of the forecasts that underpin the Scottish budget. We are not persuaded by the committee’s case, but we will to listen to all the points that are made today. I look forward to hearing members’ views on those and other issues.
I move,
That the Parliament agrees to the general principles of the Scottish Fiscal Commission Bill.
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