Committee
Finance and Constitution Committee 06 June 2018
06 Jun 2018 · S5 · Finance and Constitution Committee
Item of business
Medium-term Financial Strategy
That is a very fair question, to which I have a clear answer. The medium-term financial strategy sets out the Government’s principles and its key commitments. When Government ministers make statements in the chamber about what our commitments are, those statements are obviously very important, but setting out our commitments in a financial strategy shows that we are serious about delivering them. In setting out our priorities, the strategy describes the challenge that we face, because not everything can be a priority. As well as setting out the share of the budget that would be involved in meeting our key commitments, it provides greater certainty that we are serious about those key commitments, which I think is important. Any committee of the Parliament can do what this committee is doing at the moment—every committee can scrutinise the spending plans of the appropriate cabinet secretary. That is the purpose of all-year-round scrutiny. Committees should not just wait for the three-week period between the UK budget and my announcement of the draft Scottish budget. All-year-round scrutiny means that cabinet secretaries and ministers can be called to account for what is happening in real time. You mentioned the Health and Sport Committee; you gave other examples, but I will take that example, because it was the first one that you gave. The Government is committed to providing more financial detail on how to meet the health challenges, recognising the demographic challenges, the higher expectations and the higher cost of providing services. The publication of a medium-term financial strategy specifically for the health service is imminent. We have committed to doing that. Mr Tomkins was referring to my medium-term financial strategy, but we said that we would provide more detail on the need for investment in the on-going process of transformation in health. The Health and Sport Committee can scrutinise that, as can the Finance and Constitution Committee. Those documents will work in tandem with each other. A specific look needs to be taken at health spending, because it accounts for the lion’s share of the Scottish Government’s budget, for good reason. The illustrations of scenarios show just how dominant it will be in future spending if we are to meet the commitments that have been made on health. The medium-term financial strategy refers to the increase of £2 billion in spending on health, which the Government committed to in its manifesto, but more detail will be provided in the document that will be specifically about health. Mr Tomkins asked what the medium-term financial strategy says to the committees that deal with education, policing and justice. It says what our key commitments are. It was never meant to be a document that dealt with the operation of each part of the public sector. It sets out how we propose to invest in those areas. As well as reinforcing a real-terms increase in resources for the police, it refers to the VAT issue, which sits within the justice portfolio. It also sets out the principle of access to education, the use that will be made of the pupil attainment fund and the commitment of around £0.75 billion to tackle the attainment gap in Scotland The medium-term financial strategy represents an update of the budget. It is a forward look and it sets out the fiscal position as we see it at the moment. It includes a lot of policy content, but the committee can come back on any particular strand on which it would like more information.
In the same item of business
The Convener
SNP
Item 2 is consideration of the Scottish Government’s medium-term financial strategy. I welcome to the meeting Derek Mackay, the Cabinet Secretary for Finance...
The Cabinet Secretary for Finance and the Constitution (Derek Mackay)
SNP
In view of the fact that I have given a statement to Parliament and taken questions, and the fact that members have now had more time to read the medium-term...
The Convener
SNP
That is very helpful.
Emma Harper
SNP
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SNP
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Ash Denham
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Derek Mackay
SNP
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Ash Denham
SNP
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Derek Mackay
SNP
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The Convener
SNP
We turn to scrutiny areas.
Adam Tomkins
Con
I welcome the publication of the Scottish Government’s medium-term financial strategy. Of course, the strategy was a key component of the recommendations of ...
Derek Mackay
SNP
That is an excellent question. This is the first time that we have done the financial scrutiny collectively. I am open to suggestions about what else could b...
Adam Tomkins
Con
Clearly, the committee must play, and will continue to play, a lead role in budget scrutiny. However, one of the themes that runs through the budget process ...
Derek Mackay
SNP
I am sure that there is a paragraph in the conclusion to my medium-term financial strategy that says that the strategy does not present new policies. It was ...
Adam Tomkins
Con
We are the Finance and Constitution Committee, but how will the document help the Health and Sport Committee to scrutinise the medium-term financial stabilit...
Derek Mackay
SNP
That is a very fair question, to which I have a clear answer. The medium-term financial strategy sets out the Government’s principles and its key commitments...
Alexander Burnett
Con
We have probably touched on this a bit already. Adam Tomkins mentioned the budget process review group. There were four elements to its recommendations, one ...
Derek Mackay
SNP
The Government can announce new policies any time that it likes, in accordance with parliamentary protocol. This is an opportune moment to reflect on the cur...
The Convener
SNP
Let us move on to income tax forecasts. When you first saw the Scottish Fiscal Commission’s figures for income tax, that must have been an uncomfortable mome...
Derek Mackay
SNP
There will be no immediate impact, as the committee will be aware, because the numbers in the forecasts are locked into the budget setting itself—it is worth...
The Convener
SNP
Cabinet secretary, you have hinted—in fact, you did more than hint—at the HMRC figures that will be published in the summer. Paragraph 31 of the summary of t...
Derek Mackay
SNP
I cannot answer that question in isolation, because it relates to the OBR and we know that the OBR was too optimistic and that the actual outturn figures for...
The Convener
SNP
We are in a new process and, as I said to the Scottish Fiscal Commission, there will be unintended consequences. In quoting those paragraphs from the report,...
Derek Mackay
SNP
The risk analysis is in the document, which gives the central scenario of the funding that we would have available and then gives the upper and lower ranges....
The Convener
SNP
I meant the risk in the process that we are dealing with.
Derek Mackay
SNP
There is to be an independent review of the process, which will lead to the UK and Scottish Governments revisiting it in 2021. I return to the point about o...
The Convener
SNP
It might have been a fair question, but you have not given me an answer. I wanted an answer on whether the Government intends to undertake any risk analysis ...
Derek Mackay
SNP
Our current analysis has gone into the strategy that we are discussing, but it is right to ask whether we should develop our thinking on the approach that is...
The Convener
SNP
Thank you.
Murdo Fraser
Con
Cabinet secretary, it is absolutely fair that you talk about the fact that we are discussing a forecast that is subject to change and it may be that talking ...