Hansard

I am pleased to speak to the Finance Committee's report on stage 1 of the 2003-04 budget process. I begin by offering my thanks and the thanks of members of the committee to the Finance Committee clerks and to the clerks of the Parliament's subject committees, who have made substantial contributions to a comprehensive stage 1 review process. This year, we tried to work in concert with the subject committees to assist them in reviewing the Executive's budget proposals. The co-ordination between the clerks and the advisers to the various committees has enhanced the process and has made it much better for everyone concerned.

We should pay particular tribute to Professor Arthur Midwinter, who is the Finance Committee's adviser on the budget process. Professor Midwinter has contributed a great deal of expertise and background knowledge to our work and has been the source of many difficult questions about the budget process, which we have asked the Executive. That has assisted the scrutiny process and has made construction and analysis of the budget much more effective.

Since the first budget in 1999, the Finance Committee has become more effective in scrutinising the budget. We have undergone a learning process and have developed our procedures in a way that will allow us further to improve budgetary scrutiny in future. There will be less concentration on documentation and more focus on priorities and improved output information from the Executive. I thank Executive ministers and officials for assisting the committee by providing improved and better-targeted information. We have managed to generate specific spending recommendations from the subject committees, which is a first. In future, we expect to spend more time on cross-cutting issues; the Finance Committee has initiated two cross-cutting reviews, which we hope will report later in the year.

Angus MacKay, the former Minister for Finance and Local Government, and his successor Andy Kerr, the Minister for Finance and Public Services, have helped us by improving the presentation of the budget. Although the budget documentation is much more comprehensible than it was, we are concerned that the Executive was not able to produce all the information that we needed on baseline expenditure for new spending proposals. However, we have received assurances from the Minister for Finance and Public Services that that information will be made available in subsequent annual expenditure review documentation, and will include a summary of outputs and data.

One of the themes of our report is that more work is required on certain areas, such as gender proofing the budget. We want the Executive and the Equal Opportunities Committee to agree a working definition of equality proofing and a mechanism for ensuring that the equality strategy is reflected in budgetary allocations. We need greater consistency in that area, as well as greater clarification and definition.

The committee makes the specific recommendation that, when the draft Scottish budget is published in the autumn, the document should illustrate systematically how additional funding will be spent and what outputs will be provided. We want the draft budget to contain an explanation of how the decisions that have been taken advance the Executive's spending priorities, which is particularly important in the context of the spending review. In the past, documentation has focused on tables and columns of figures.

We want to move towards targeting money at particular kinds of outcome, so that we can see how budgetary allocations match up with delivery; the Executive has in its policies made a great deal of wanting to ensure that delivery takes place. It is important that budgetary decisions and allocations match priorities and that they lead to delivery targets being met. We must make that more explicit.

During the Finance Committee's deliberations, we became aware of the need for clarification on how consequentials from the Chancellor of the Exchequer's budget will be dealt with in the context of health. The Minister for Finance and Public Services has made it clear that all the money will not necessarily go to the national health service budget; rather, consideration of allocations will take place in a broader health context. We believe that that is a positive step in the devolution process—we do not have to mirror exactly the way in which money is spent down south. We are trying to develop a more holistic approach.

Subject committees came up with 12 spending recommendations and the Finance Committee tried to consider them in depth and detail. We also tried to reflect the integrity of the work of the committees. This year, the committees considered the budget process more systematically than perhaps they did in the past. Not all committees were equally successful, but certain committees did an excellent job. As I mentioned to its convener, I would like to highlight the work of the Rural Development Committee, which produced an excellent budget report. However, that was just one among a number of very good reports from the subject committees.

The reports contained concrete recommendations that I hope the committees will pursue, not only in the context of reports to the Finance Committee. The recommendations reflect choices that the committees want to make in their own subject areas. For example, the Transport and the Environment Committee highlighted the need for greater focus on roads maintenance; the Health and Community Care Committee made recommendations on provision of chronic pain services and neurological services and on the need for specialists; the Rural Development Committee focused on the rural development fund and the need for additional resources; and the Education, Culture and Sport Committee focused on school estates. I will not go through them all, but those are the kinds of things that we want committees to do. We want them to consider their remits and the areas where spending is required, to identify where problems lie, and to propose solutions that the Executive can consider.

To be fair to the Executive, it has welcomed the responses from committees and it has considered their proposals. Even in yesterday's statement on end-year flexibility, there were indications that committee proposals were being taken into account. We hope that that will continue in deliberations of year-on-year spending.

In future, we want to move from an input-based budgetary approach to a greater focus on outputs—so that we are clear about what is obtained from spend—and then on towards an outcome-based approach. In the past few weeks, we have been consulting on a major report on outcome budgeting by Norman Flynn. Outcome budgeting is some way off; we will have to build up expertise and understanding. Trying to transform the way in which budgets are put together cannot be done in one, two, three, four or possibly even five years. However, we want to move towards a system that is based on defined outcomes. We want to bring together the different services that can contribute to those outcomes to see how spending priorities and allocations can become less of a barrier to and more of a help in achieving outcomes.

People are interested in whether there will be an effect on them as a result of the way in which the Executive spends its money and the way in which services are delivered. There is sometimes a gap between budgetary allocations and processes and what happens on the ground. The Finance Committee, the Executive and the Scottish Parliament have a strong interest in trying to ensure that the way in which we spend our money delivers the most that it can. We must ensure that departmental or budgetary structures and boundaries between different organisations and areas of the budget do not form barriers. We have a considerable way to go towards delivering barrier-free budgeting, but that is the direction that we should take. The Parliament and the Government of Scotland have an opportunity to lead the way in barrier-free budgeting. Our new Parliament should do things in new and different ways and our efforts to work with and develop the mechanisms that we have point to an exciting future.

We have moved the budgetary process forward significantly in the course of the year and we have worked more closely with the subject committees. The standard of the reports that we received this year was much higher than was previously the case. Credit for that should go to Arthur Midwinter and the various advisers to the committees, as well as to the committee members and the clerks. We have mapped out the direction for scrutiny of the budget, the organisation of the budget and the data that we need in order to reach better decisions. The subject committees have made recommendations that the Executive will consider systematically. We have identified areas in the process in which there are data gaps or where points of focus—such as gender budgeting—have not been given sufficient attention, and we have identified areas where there is need for improvement.

We want to move towards outcome budgeting; the work that we have done this year has taken us a significant step forward. We have been able to take that step forward partly because the resources that we are receiving this year and next year are a significant step up on what was previously available. We have been experiencing budgetary growth, which has allowed us to make positive allocations and priority decisions more freely than we have been able to at various times in the past.

I hope that the Finance Committee has done its job effectively. We hope to continue to do that, not just over the next two stages of the budget, but in dealing with the spending review and the budgetary process in the years to come.

I move,

That the Parliament notes the 3rd Report 2002 of the Finance Committee, Stage 1 of the 2003-04 Budget Process (SP Paper 597) and refers the recommendations to the Scottish Executive for consideration.