It is with pleasure that I open this debate on the Finance Committee’s consideration of, and report on, the Scottish Government’s draft budget for 2014-15. I thank all those who assisted in our consideration of the draft budget, including those who submitted written evidence and witnesses who gave oral evidence. I also thank the Finance Committee clerks; our budget adviser, Angela Scott; and the Scottish Parliament information centre for its very helpful briefings.
The budget process works to a tight and demanding schedule, and this year was no exception. We agreed before the summer recess that our main focus would be on the national performance framework and the Scotland performs website. However, not wishing to lose sight of topics on which we had concentrated in previous years, we also continued our on-going scrutiny of the Government’s progress in moving towards a preventative spend agenda, particularly with regard to the ways in which public bodies might work more closely with one another. In addition to those significant and substantive themes, the committee continued its on-going consideration of where the Government’s spending decisions are aligned with its stated purpose of increasing sustainable economic growth.
To support our scrutiny of the draft budget, we issued a call for evidence prior to summer recess, in response to which we received 34 written submissions. We also took oral evidence through the autumn from witnesses including economists, academics and representatives of the public, private and third sectors.
In early November we held an external meeting in Arbroath, which gave us the invaluable opportunity to hold workshops with local businesses, voluntary organisations and public bodies, from whom we heard at first hand about issues that mattered most to them. We then took evidence from the cabinet secretary and put questions to him based on the evidence that we had heard.
In addition to our own scrutiny, each of the subject committees, along with the Equal Opportunities Committee and the European and External Relations Committee, conducted its own inquiry into the draft budget. Those inquiries focused on the impact of the budget on the areas in the committee remit. Each committee then submitted a report to us highlighting its findings and priorities.
I turn to the national performance framework, which is intended to support an outcomes-based approach to performance. It is underpinned by five objectives and consists of 16 national outcomes that describe what the Scottish Government wants to achieve over a 10-year period. There are 50 national indicators that track progress towards the achievement of those outcomes, which ultimately contribute towards the delivery of the Government’s stated purpose. All those measures are tracked and reported on the Scotland performs website, which is intended to show at a glance whether performance is improving, worsening or remaining steady.
The Cabinet Secretary for Finance, Employment and Sustainable Growth has described Scotland performs as
“the primary source of information ... against the outcomes set out in the National Performance Framework.”
He also stated at committee that it
“is not a report card on the Government; it is an assessment of Scotland’s performance. Of course the Government contributes to that, but so do many other players.”—[Official Report, Finance Committee, 4 November 2013; c 3235.]
We heard from a number of witnesses that the NPF is internationally recognised as an exemplar of an outcomes-based approach to the measurement of Government performance. Nevertheless, there was broad consensus that, although the framework itself is commendable, it is not widely known outside policy-making circles.
In recognition of that point, we invited the Government in our report to detail the exact purpose of the NPF, its intended audience and how it works in practice. We also recommended that the information should be published on the Scotland performs website. Similarly, we sought clarification from the Government in relation to how it intends to further embed Scotland performs in policy-making circles across the Scottish public sector.
Another point that arose during our inquiry is the lack of a clear link between spending and outcomes. The Joseph Rowntree Foundation, for example, suggested that there is a need
“for much clearer links between the priority setting and resource allocation decisions that are made by Government and its partners in contributing to the targets and outcomes.”—[Official Report, Finance Committee, 2 October 2013; c 3080.]
Our budget adviser noted that there is
“no link between the Government‘s spending plans, as set out in spending reviews and draft budgets, and the intended impact spending will have on future performance.”
She also pointed out that some jurisdictions, including the state of Virginia, have moved towards a system of linking expenditure to performance.
Expanding on that theme, we asked the Government whether it has any plans to move to a more substantive approach to linking performance and resource.
Perhaps unsurprisingly, we heard a number of different views regarding the national indicators, with organisations such as Oxfam and the Scottish Trades Union Congress calling for the inclusion of an indicator measuring median household disposable income, which they stated would be a
“much better indicator of national collective prosperity than GDP.”—[Official Report, Finance Committee, 9 October 2013; c 3120.]
The committee was persuaded by that suggestion and has recommended that the Government incorporate such an indicator into the NPF. In keeping with the importance placed on the NPF both by the committee and the witnesses from whom we took evidence, we welcome the Government’s commitment to consulting on the option of putting it on a statutory footing.
Turning to another subject of our budget scrutiny focus, I will address the topic of preventative spending. It has been a key area of interest for the committee and its predecessor in the previous session. We also considered the importance of the preventative spend agenda in the context of demographic change and an ageing population, which is an increasingly important issue on which we conducted an inquiry in 2012.
We committed to monitoring the progress made with regard to the Government’s various change funds, including those related to the care of older the people, the early years of childhood, and programmes aimed at reducing rates of reoffending. For that reason, we requested that the Government provide an overall assessment of the progress being made towards implementing a preventative spend approach. In doing so, we recognise the need for robust monitoring and evaluation frameworks, and we would welcome an update on the progress made towards putting them in place.
The Government committed to investing up to £500 million in change funds in its budget for 2012-13, and the committee welcomed that investment. It is clear that local authorities have responsibility for much of the service delivery that has the greatest impact on people’s daily lives. Local authorities must also contribute towards those funds, but the committee is concerned that not all local authorities appear to be doing so. For that reason, we ask the Government to provide us with details of how much new money has been contributed to change funds by local authorities.
We heard from third sector bodies that evidence of the required shift in spending priorities is lacking, with the focus continuing to be on treating the symptoms of problems rather than on preventing them from arising in the first place. NHS Greater Glasgow and Clyde summed up the difficulties faced by councils and health boards in seeking to
“invest in new programmes of prevention and intervention while managing their budgets in a way that deals effectively with the problems that confront them at present.”
It argued that that
“balancing act is probably the biggest challenge that health boards and local authorities in the west of Scotland are facing.”—[Official Report, Finance Committee, 9 October 2013; c 3143.]
Our report highlighted the committee’s concerns relating to the apparent lack of evidence of the necessary disinvestment taking place to support the shift towards a preventive spend agenda. Without the disinvestment in existing services, it is difficult to see where the additional resources required for investment in preventative services will come from.
We recognise that difficult decisions require to be taken and appreciate that that is not easy. Glasgow City Council said to the committee that disinvestment is
“extremely difficult to do at any time ... but it is particularly difficult to do at the moment”.—[Official Report, Finance Committee, 9 October 2013; c 3153.]
We ask whether the Government is content with the progress that public bodies are making in that regard and that it provide examples of resources being unlocked for preventative measures through disinvestment in existing services.
There is some evidence that the necessary shift in spending is taking place in certain areas. One that stood out as a role model was the Highlands, where a partnership agreement between Highland Council and NHS Highland was signed in 2012. The agreement is intended
“to achieve better outcomes for people through directing resources more effectively, and through new and integrated service delivery models.”
The committee welcomes that approach.
We recognise that it is not possible simply to switch off existing services in order to reallocate funding, and we heard of the importance of bridging funds that allow the temporary double running of services until demand for existing services is reduced. We also recognise that there is a range of challenges and barriers that can prevent the necessary cultural and structural changes from taking place, and we would welcome the Government’s views on how best to address them.
As I mentioned in my introductory remarks, another key focus of our scrutiny of the draft budget was the continuation of last year’s consideration of the Government’s progress towards realising its purpose of increasing sustainable economic growth. A key element of the Government’s strategy for realising that goal is capital investment through which it intends to accelerate the country’s economic recovery. Much of that investment is intended to be allocated via the non-profit-distributing model.
The draft budget states:
“Progress continues to be made on delivering the full Non-Profit Distributing ... pipeline of investments”,
with an estimated £809 million-worth of projects due to start construction in 2014-15. However, the cabinet secretary noted in his ministerial statement on the draft budget:
“In the short term, NPD investment is lower than was originally forecast.”—[Official Report, 9 October 2013; c 23471.]
He attributed that to two reasons: first, some NPD projects are being concluded at lower than expected costs; and, secondly, some are taking longer than expected to be prepared and planned.
We took evidence from the Scottish Futures Trust, which stated that,
“overall, longer preparation time, rather than confirmed cost savings, is the greater part of what has changed the profile.”—[Official Report, Finance Committee, 30 October 2013; c 3179.]
It also stated that “very significant” progress has been made, yet it explained that some projects
“have taken longer than anticipated to bring through early project development and hence the overall build up in construction activity will be slower than that anticipated in the earlier projections which were based on high level information.”
The SFT is ambitious in setting targets for the delivery of NPD-funded projects, and the committee agrees that it should be. As the cabinet secretary stated,
“it is better to set an ambitious target and not reach it than it is to set an underambitious target purely and simply for the device of passing it.”—[Official Report, Finance Committee, 4 November 2013; c 3241.]
Despite that aim, it would appear that a pattern of consistent overestimation of the delivery of NPD projects has emerged in recent years, so we recommend that the process for formulating those estimates be reviewed.
The committee also considered the Government’s plans to switch more than £700 million from resource to capital between 2012-13 and 2014-15. However, the estimated resource to capital switch in the draft budget is £165 million, which is significantly lower than the estimated £270 million that is set out in the 2011 spending review. When we questioned the cabinet secretary on the reasons for that, he explained that he considered it the best way to respond to budgetary changes resulting from Barnett consequentials. He emphasised the fact that it has not affected the planned delivery of any specific projects.
Although the committee recognises the need for the cabinet secretary to make budgetary changes in response to changing circumstances during the year, we highlight the need for greater clarity in presenting past proposals for resource to capital switches. We therefore recommend that all future budget revisions provide the latest available figures in relation to the transfer of funding from resource to capital.
Another important theme to which the committee returned during its budget scrutiny is improving employability, particularly with regard to young people not in employment, education or training. That was one of the main topics of discussion during our workshop sessions in Arbroath, where we heard of the problems that are faced by some local employers in accessing the modern apprenticeship scheme. The Economy, Energy and Tourism Committee and the Equal Opportunities Committee also expressed concerns relating to access to modern apprenticeships, and we have invited the Government to respond to those concerns.
The committee also considered a wide range of other issues during its scrutiny of the draft budget, ranging from the impact of welfare reform and fuel poverty to the Government’s progress towards achieving its climate change targets. I am sure that some of those themes will be touched on later in the debate. Although I could discuss those topics in detail, I have covered a number of issues in the time available and I am conscious that time for the debate is limited.
I said at the beginning of my speech that the committee’s budget scrutiny focused on the national performance framework but that we also sought to monitor progress in relation to preventative spending and increasing sustainable economic growth.
The committee greatly welcomes the NPF and applauds the Government for developing an internationally recognised exemplar of an outcomes-based approach to performance measurement. However, it is clear that the NPF is not widely known, which would appear to be at least partly due to a lack of clarity with regard to its purpose and intended audience.
On preventative spending, the committee has concluded that there is some evidence of progress despite a challenging fiscal environment. Nevertheless, there is less evidence of the necessary disinvestment and the system and cultural changes that are essential for the shift towards a preventative approach to be fully realised. The committee would like to see a much better and clearer alignment between the NPF, draft budgets and the emphasis on a preventative approach. On those key findings, and all other aspects of our report, we look forward to the Scottish Government’s response.
That the Parliament notes the Finance Committee’s 10th Report, 2013 (Session 4): Draft Budget 2014-15 (SP Paper 431) and its recommendations to the Scottish Government.
I thank the Finance Committee for its report on the Government’s budget. Although I will give some initial reactions to the content of that report in my comments to Parliament today, the Government’s full response to the Finance Committee’s report will be provided in writing in advance of the stage 1 debate on the budget bill in late January.
I welcome the degree of interest that the Finance Committee has taken in Scotland performs and the national performance framework. It was a bold endeavour by the Government to set out, in 2007, to create a framework in which we would signal to all relevant public authorities, as well as to the private sector and the third sector, the focus of our public policy intentions and how we intend to structure the different interventions that we make to realise our ambitions.
The purpose of Scotland performs is twofold. First, it is to provide an integrated framework for policy delivery that is relevant to all public bodies and public authorities in Scotland and which gives the clearest possible indication to private and third sector organisations of the focus of policy making in Scotland. Secondly, it is to provide a mechanism to assess the performance of Scotland as a whole in working towards achieving the objectives and aims that are set out within Scotland performs.
In that sense, the comments that Mr Gibson relayed, which form part of the Finance Committee’s report and which I put on the record at our discussion in Arbroath, are absolutely correct. Scotland performs is not designed to be a report card for the Government. There are many appropriate ways in which the Government’s record, plans and policies can be subject to scrutiny on a daily basis—through the reports that Government makes to Parliament, the appearances of ministers at meetings of parliamentary committees, the debates that we have in this chamber and the wide variety of statistical evidence that the Government publishes every day about our performance in relation to our policy intentions.
Scotland performs is designed to elevate that debate to a more strategic level and to assess the degree of progress that Scotland is making in realising the ambitions in the national performance framework. That is driven by the Government’s purpose of increasing opportunities for all to prosper in Scotland through increasing sustainable economic growth and, as Mr Gibson correctly identifies, through the various national purpose targets that we have set out, the national outcomes and the indicators of performance.
I think that that represents an excellent framework that—as I think the Finance Committee would recognise, based on the organisations it heard from—is increasingly recognised by organisations in Scotland as providing the policy discipline within which organisations are able to take their decisions.
If taking account of my assessment of Scotland performs is not appropriate, Parliament should take account of the view of the Carnegie UK Trust. In its report, “Shifting the Dial in Scotland”, which discusses examples of strong public policy frameworks across the world, it said:
“We did not expect to find international innovation on our doorstep. But our work has repeatedly found that the Scottish National Performance Framework is an international leader in wellbeing measurement, a sentiment repeated by Professor Stiglitz in his address to the OECD World Forum in India, in 2012.”
That strong endorsement of the value and strength of Scotland performs should give Parliament a great deal of confidence.
That was reinforced by the comments that Jeremy Peat, of the David Hume Institute, made to the Finance Committee:
“I think that Scotland should be proud of the NPF. It is a remarkable achievement to have got something so detailed, so regularly presented and so transparent in terms of the data, targets and information that are set out. It is a hugely positive base from which to proceed.”—[Official Report, Finance Committee, 2 October 2013; c 3087.]
The Government believes that we took the right step to establish the national performance framework, and I think that the statements of independent commentators evidence the fact that it is having a significant effect on the structuring of public policy.
One point that Mr Gibson raised on behalf of the committee, and which was reflected in some of the views of the committee’s adviser, is that there is a difficulty in establishing the link between policy and outcomes. I completely disagree on that point; I do not accept it by any stretch of the imagination. The ability for us to construct a model that can trace the impact of any individual pound of public expenditure to a policy outcome will involve us in an assessment of such complexity that it would stop us from doing virtually anything as a policy-making community.
What is important is to test the ambitions and the policy programme of Government against the outcomes that are achieved and are recorded in Scotland performs. For example, to look at the outcomes that have been achieved on the economy in a 12-month period strikes me as a vivid test of whether the Government has succeeded in establishing a link between its interventions and the achievement of desirable policy outcomes.
Let us consider the data. In 12 months, the gross domestic product of Scotland increased by 1.8 per cent, compared with 1.3 per cent in the United Kingdom; employment in Scotland rose by 83,000, compared with a rise in employment across the UK of 485,000; unemployment in Scotland fell by 8,000 over the year, compared with the fall in unemployment in the rest of the UK of 121,000; and economic inactivity in Scotland fell by 69,000, compared with a fall of 156,000 across the whole of the UK.
Those measures of economic performance—GDP, employment, unemployment and economic inactivity—indicate that the Government’s aspiration to take a set of decisions that are designed to intervene in the economy and deliver a better performance are evidenced by the material that Scotland performs and the statistical base that the Government supports are able to establish.
I hope that that reassures the Finance Committee that the Government has clearly established, in the particular measure of the assessment of our economic activity, the link between policy intervention—I could not have been clearer in my 2010, 2011, 2012 and 2013 budgets about the Government’s focus on improving economic performance—
I accept that point. Surely that is what performance assessment is about; otherwise, there is no point in putting in a policy framework that tests the policy direction of a Government. When it does not work out, we find that our policy interventions are not correct.
It matters to me what is in Scotland performs, and I look at it on a regular basis to determine whether the Government’s interventions are satisfactorily delivering the policy outcomes and objectives that we want to achieve. That seems an elementary aspect of the assessment of performance.
The focus of the Government’s budget that is before Parliament remains on improving economic performance. The skills investment that we set out, the £8 billion-worth of capital investment over a two-year period, and the investment in our college and university sector exceeding £1.52 billion in 2014-15 are all part of the Government’s programme of activity to strengthen our economic performance.
I will close by making some remarks about the wider sustainability of public finances. The Finance Committee is absolutely right that preventative interventions are crucial to delivering sustainability of public finances and to the transformation of the way in which we deliver services. However, I do not take the same view as the Finance Committee that disinvestment in particular public services is the key measure or indicator. Surely if we follow the logic of the centrality and importance of Scotland performs, the achievement of better outcomes for our citizens will be the test of whether we are meeting the needs and expectations of the public.
Scotland performs is assembled on the range of different indicators of public service performance, impact and improving outcomes for members of the public that are a direct consequence of the investments and interventions that we make as a Government. Through the shift of emphasis into preventative measures—whether through reshaping care for older people, through the early years change fund or through the reducing reoffending change fund—the Government remains focused on delivering the decisive shift to prevention that I set out in the spending review, which remains at the heart of our public service reform agenda.
The Finance Committee is to be congratulated on the approach that it has taken to the budget this year. Mr Gibson took us through that extremely eloquently at the start. Not only did the committee, as it has sometimes only done, scrutinise what is up and what is down in the budget, but it took a longer-term, more strategic look at how the budget underpins the Government’s objectives.
After all, it is now six years ago that the Scottish Government unveiled its purpose—
“a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth”— along with five objectives, 16 national outcomes and no fewer than 50 national indicators, all woven together into a purpose framework and tracked in a national performance framework.
In the course of his evidence, the cabinet secretary told the committee,
“I am not sure that it is vital that it is understood by members of the public”,—[Official Report, Finance Committee, 4 November 2013; c 3242.]
which may be just as well, but made much—fairly—of the complements that many witnesses paid to the national performance framework as an approach. However, he cannot then simply ignore the fact that, one after another, those expert witnesses told the committee members of their concern that they could find no connection between the Government’s purpose and its spending decisions.
Mr Gibson quoted his committee’s adviser, who said:
“There is … no link between the Government’s spending plans … and the intended impact”.
However, not only the Finance Committee found that. The Health and Sport Committee also reported on the
“lack of clear links … between the information in the Draft Budget and the indicators”,
and the Infrastructure and Capital Investment Committee concluded:
“There is no attempt to link spend to specific Targets or Indicators.”
The fact that no committee could find any link between the budget and what it is supposed to be for cannot simply be dismissed. Whether it was making Scotland wealthier, fairer, healthier or greener, our committees could see no plan, strategy or targeting of resources.
Mr Swinney says that we should not worry about that because we should test against outcomes, so let us do that.
Unemployment figures may be improving, but there are still 75,000 more Scots on the dole than when the Scottish National Party came to power. More and more Scots who are in work earn less than the living wage, more are in part-time work and more are on zero-hours contracts. Those are not outcomes with which we can be satisfied.
Let us look at the health service. The budget claims to protect the health service—the First Minister made much of that earlier today—but a recent survey showed us that less than one third of NHS staff think that we have enough doctors and nurses, and marginally over half think that the NHS puts patients first. That is in a week when what must be one of the most damning reports into any hospital that the Parliament has ever seen was published. Those are not outcomes with which we can be satisfied.
When the cabinet secretary published his budget, he made much of an increase in the housing line, but the truth is that he is simply restoring cuts that, at one point, cut the housing budget in half. Every year, he tells us that he intends to build his way out of recession but, last year, fewer houses were built than at any time since 1946, 20 per cent fewer social rented houses were completed than in the year before and waiting lists spiralled.
As for the future lifeblood of the country, Mr Gibson is right that the Economy, Energy and Tourism Committee was concerned to find than the number of 16 to 19-year-olds not in employment, education or training is not reducing. In fact, it increased last year.
As for creating a fairer Scotland, the SNP inherited £1.5 billion of anti-poverty programmes and £1 billion of those programmes has disappeared. Is it any wonder that we still have 200,000 children living in poverty?
The connection between those decisions and the outcomes does not seem too complex to me.
The Government’s spin doctors rather let the cat out of the bag when the budget was published, because they briefed that it was a budget for independence. Of course, that is the Government’s actual and only objective. It is a budget to get through the referendum, so steady as she goes. Difficult decisions are dodged, responsibility is refused and no horses are frightened. That is not good enough.
If the cabinet secretary wants us to believe that the budget is about more than that, he should start by making two changes. First, he should use the consequentials from the autumn statement to extend 600 hours of nursery provision to 50 per cent of two-year-olds right now. Secondly, he should identify the money and the means to mitigate the whole impact of the bedroom tax; £20 million is less than half of what is needed.
I am sorry, but I am in my final minute.
I believe that such a spending decision would have the clear outcome of immediately reducing the suffering that is faced by tens of thousands of Scottish households. If the Scottish Government fails to act, that implies that it would rather keep issues such as childcare and the bedroom tax as referendum issues in order to leave Westminster on the hook, and that is not good enough.
The Government should accept the obligation to use the powers that it has now, take the decisions that are necessary and inject some purpose into the budget, which it seems to singularly lack.
I will begin by looking at Scotland performs and the national performance framework, on which the committee took a fair bit of evidence. In my view, the vast majority of that evidence was extremely positive, and although I think that the cabinet secretary fairly conveyed the flavour of the evidence that we received in the comments that he read out, I gently ask him to reconsider his remarks about what we should do about linkages between the NPF and the spending decisions that are made in the budget.
I entirely accept the cabinet secretary’s statement that it would not be worth while looking at the result of every public pound that is spent by the Scottish Government and, indeed, local government. That is a fair position to take. It would be possible to spend too much time on that and not get to the bottom of things, taking resources away from other parts of budget.
However, it is important for the Government to listen to what the committees and the experts had to say. The committees were strongly of the view that, as things stand, the linkages between expenditure and the NPF are not enough. Some people would say that there is no linkage whatever; others would say that there are linkages but they are not yet sufficient.
I think that the conclusion of the Infrastructure and Capital Investment Committee, which the Finance Committee invited the Government to consider, probably puts it best. It asked the Government
“to improve the linkage between expenditure and the NPF.”
That is a fair conclusion. It does not say that every piece of expenditure has to have a perfect and direct link with the NPF, but I think that it would be worth the Government’s while to review the issue and to look at where the linkages can be improved so that a clearer picture is provided. It appears to me that such linkages are established to a greater degree in the state of Virginia, which is where the framework that Scotland performs is based on originated. If it can be done to a greater degree in the state of Virginia, I am convinced that more can be done in Scotland to make those linkages clearer.
I firmly hold the view that the linkages are clear, because the Government’s policy decisions are informed by the outcomes that we want to achieve. However, if committees want to suggest to the Government how those linkages could be improved, I will willingly consider their propositions. I cannot accept that there are no linkages—I think that that is a baseless remark—but I will be happy to consider suggestions from committees about how the linkages could be strengthened.
I look forward to seeing the Government’s written response to the Finance Committee’s report. The cabinet secretary makes a fair suggestion. He has thrown down the gauntlet to committees and others. Although I would not say that there are no linkages whatever, I think that they could certainly be improved.
Another recommendation on the NPF that it is worth looking at is recommendation 37, which states:
“The Committee would welcome clarification in relation to how Scotland Performs will be embedded within the policy-making community across the public sector including the Scottish Government.”
I have no doubt that there are sections of the Scottish Government and of the wider policy-making community that look at the NPF in detail, but the flavour of the evidence that the committee received was that Scotland performs is not embedded in that community and that we need to think about ways of ensuring that that happens to a greater extent in future.
In his remarks, the convener also touched on the NPD programme that the committee took evidence on. We discussed it with the cabinet secretary and, indeed, with the Scottish Futures Trust. The figures, of course, are laid out in the appendix to the budget document and show that, in this financial year, the spend will go from £338 million down to £185 million, which was predicted. Next year there will be a reduction from £973 million to £809 million.
The Scottish Government said to us initially in the budget statement that the changes were partially to do with savings and partially to do with delay. Subsequent to that, the Government has suggested that the balance will be more to do with delay than with savings. What we do not know at this stage is what percentage of the change is down to delay and what percentage is down to savings.
Any reduction in spend due to savings is to be welcomed, in our view; any reduction due to delay is clearly not to be welcomed. I ask the Government either to get back to us today or to get back to the committee on what percentage is down to delay as opposed to savings. Indeed, while we are at it—now that we are eight months through the financial year 2013-14—the Government could say where are we in relation to the £185 million that was predicted to be the case in September. We are two thirds of the way through the financial year. Is two thirds of the construction spend happening? Are we likely to hit that or, indeed, to be over it or under it? Also, how will the Government address that going forward, as suggested by the convener?
I want to touch on one other issue. We looked at business rates over the course of the inquiry and there is just one question that I want to put to the Government at this stage. The Scottish Government has central projections for business rates. It believes that it will be £2.688 billion for 2014-15. It predicted £2.435 billion for 2013-14. What impact do the recent announcements have on those projections, because they are going up by 2 per cent instead of 3.2 per cent? Clearly, that will reduce them slightly but growth is projected to be higher than it was previously—it is projected to be 1.4 per cent this year and 2.4 per cent next year. What impact will that have on the projections for business rates? We would certainly welcome any update on that from the Government.
I thank witnesses for their evidence, the clerks for their support and other committees for the evidence that they provided the Finance Committee with—as others in the Finance Committee will undoubtedly do and as the convener has already done.
I will speak from the perspective of not only a member of the Finance Committee but deputy convener of the Welfare Reform Committee during its budget scrutiny.
As the convener set out, the Finance Committee focused on two main areas: the national performance framework and how it interacts with the budget process; and the preventative spend agenda.
On the NPF, I confess that I have not been particularly engaged in thinking about the Scotland performs website that is associated with it and have not particularly utilised it, so I will need to consider how I do so in the future. However, it is clear that those who are engaged in that area and who think about it like what they see. The cabinet secretary quoted from the Carnegie UK Trust report and set out its perspective. The trust also told the Finance Committee that the NPF is
“a tool of international significance.”—[Official Report, Finance Committee, 9 October 2013; c 3124.]
Donald MacRae said in written evidence that the national performance framework
“deserves strong support and positive endorsement”.
“setting ambitious targets across all the areas identified” in the national performance framework
“is to be commended.”
Therefore, it is clear that the NPF is well-liked by the policy-making community.
Some concern was expressed that the NPF is not particularly well known. When the cabinet secretary was giving evidence to the Finance Committee in Arbroath, he stated that he felt that the NPF is probably “pretty well known” at public leadership level and “probably well known” by the policy-making community. There was a degree of irony in having people before the committee telling us that the NPF is not well known when they are there telling us everything that they know about it because they do in fact know about it.
A more appropriate question than whether the national performance framework is well known is probably whether it is being used as well as it could be. To reflect on my own experience, a number of witnesses and other committees spoke about how the national performance framework could be better linked to spending priorities. I take on board the cabinet secretary’s points about how it would probably be impossible to link every outcome to every pound that has been spent—Gavin Brown made that point, as well—but I wonder how the national performance framework might interact better with the budget process. Perhaps that is as much a matter for Parliament as it is for the Government in setting its budget, and perhaps there is as much an issue for the Parliament in how we use the national performance framework in our budget scrutiny across the committees.
We will have an opportunity to consider that in light of the consultation on the community empowerment and renewal bill, as the cabinet secretary has confirmed that the Government will consult on putting the national performance framework on a statutory footing in that consultation. Perhaps when members consider that bill, we can think about how we might utilise the national performance framework better in future.
The other area is the preventative spend agenda. Obviously, the committee’s assessment builds on previous work in previous years. It is clear that preventative spend has to be a priority for all of us. In an environment in which budgets have been tightened, we must ensure that every pound in the public purse is spent wisely, but we must also, of course, consider that the preventative spend agenda can lead to better outcomes for individuals. Various examples have been cited, such as the older person who wants to stay in their home and not have to go to hospital. Clearly, if we can deliver that, it will be a better outcome for them; and it would be a better outcome for the public purse. Intervening early with a young person who may be in danger of falling into the criminal justice system and keeping them out of jail is also better for them and for the public purse. Therefore, I welcome the change funds that have been delivered to help to achieve that end and look forward to continuing to assess the preventative spend agenda.
I note that the Finance Committee said:
“The Committee welcomes the additional money to alleviate the impact of the welfare reforms”.
There was a similar experience at the Welfare Reform Committee, which focused its budget scrutiny work on the Scottish welfare fund and the council tax reduction scheme. As a committee, we commended
“the actions of the Scottish Government in supporting” the Scottish welfare fund
“and protecting the vulnerable”,
and supported the proposed level of funding. On council tax reduction, the committee welcomed
”the steps taken by the Scottish Government and local authorities to work together on the provision of this scheme, which has avoided some of the difficulties being experienced in England and Wales.“
I note that other committees, such as the Infrastructure and Capital Investment Committee and the Equal Opportunities Committee, have engaged in thinking about the welfare reform agenda. Like the Welfare Reform Committee, they are doing so on a collegiate basis.
I was disappointed that there was a division in the Economy, Energy and Tourism Committee. Some members, including the two Labour members, voted against the money that is being delivered for discretionary housing payments. That rather puts in context Iain Gray’s demands now for additional money, as Labour members cannot even welcome the funds that have been delivered.
The Finance Committee has done the Parliament and perhaps Scotland more generally a service by helping to bring Scotland performs out of the shadows. We certainly heard many compliments about it in the Finance Committee, but it is a fact that it is not widely known, and to many people its purpose and intended audience are not clear.
Although compliments were paid about Scotland performs, many qualifications were also made about it. The key qualification, of course, related to there being no clear link between spending and outcomes. The cabinet secretary was very concerned to rebut that, of course, but it is a fact that expert witnesses in significant numbers and several committees made that point, so it cannot be so easily brushed aside. I was not overimpressed by the cabinet secretary’s line of argument on that. I intervened during his speech because it seemed odd to me that he would judge the success of all the measures that he put in his economic policy by the outcomes. First, because the outcomes are open to debate, as Iain Gray said, and, secondly, we all know—the Scottish Government emphasises this repeatedly in other contexts—that the Scottish Government by no means has control of all the external economic factors. I was not overimpressed by that argument.
It would be a good discipline to connect individual spending decisions to Scotland performs and, perhaps most obviously, to the indicators. If we do not do that, the danger is that spending decisions will be made for political reasons. The charge has been made—in fact it was the Government’s spin doctors who set the hare running—about Scotland for independence. Be that as it may, the suspicion will be that the decisions are made for political reasons rather than because of the objectives of Scotland performs.
If we focus on the indicators and relate spend to them that would be a step forward. There was a lot of discussion about the indicators; many people thought that there were too many and we should certainly discuss that as part of the budget process. I was impressed by the idea of having median household income as a new economic indicator. I hope that the Government will look at some of those issues.
We commend the Government’s intentions on preventative spend and pay tribute to the Finance Committee in this and the previous session for doing a lot of the initial work on the topic. Everyone is signed up to those intentions in principle but the committee has made several points about that. First, more evaluation and monitoring are needed. Secondly—to cite a quote in the committee’s report—the Health and Social Care Alliance was concerned that the change funds may
“prop up existing service provision so that it is maintained rather than driving the change agenda.”
I do not think that the committee necessarily endorsed that view, but it highlights the need for monitoring and evaluation because that is the view expressed by some expert players in the field.
The Finance Committee’s main point was that we are not seeing the disinvestment that is required in order to make preventative spend of a sufficient scale to be effective. The committee was not being overcritical in that regard, because many witnesses highlighted the difficulties of disinvestment at this time, particularly with regard to demography, which I think was Glasgow City Council’s main point, as quoted by the convener earlier. That is a very challenging situation, given the financial circumstances that we face. However, if we cannot get more focus on disinvestment, it will be very difficult to get the scale of preventative spend investment that we want.
However, we have a golden opportunity in the budget—I am two thirds of the way through my speech and I am moving on from the Finance Committee’s report—because we need to start considering what spending shifts we want. As someone who has supported further investment in childcare for several decades—certainly during all my time in politics—I am very attracted to what Labour is putting forward with regard to using the consequentials from the Westminster budget to start the process of expanding childcare.
The big gap in the Scottish Government’s childcare arrangements is in provision for two-year-olds, yet all of us, because of our commitment to preventative spend, believe in early intervention. Crucially, one of the main insights that we had on preventative spend when I was on the Finance Committee is that nought to three are the crucial years. I do not think that anyone can argue in principle against more investment for two-year-olds. I find the Government’s objection to investing in childcare under devolution absolutely absurd. In other contexts—I think it was the Deputy First Minister who said this—the Government says that it cannot invest in childcare because the economic fruits will go to Westminster. For goodness’ sake—that argument undermines the whole purpose of the Government. Why on earth is its main purpose economic development when the fruits of taxation go to Westminster? That is a completely illogical argument.
Iain Gray’s second proposal related to the bedroom tax. On that matter, I merely quote Danny Alexander, Chief Secretary to the Treasury, who was asked specifically whether the Scottish Government would be penalised if it gave more than £20 million to bedroom tax alleviation. He said:
“what the Scottish Government does with its block grant is a matter for the Scottish Government.”—[Official Report, Finance Committee, 4 September 2013; c2890.]
He was clearly signalling that how much money is given to local authorities and housing associations to deal with the bedroom tax is entirely at the discretion of the Scottish Government.
Labour has flagged up its two main priorities for the budget: childcare—particularly for two-year-olds—and the bedroom tax. I hope that the Finance Committee members will forgive me for using the last third of my speech to repeat those points.
I commend the Finance Committee, which has been particularly methodical, thorough and persistent in the pursuit of issues that might otherwise go unobserved by the public and the Parliament.
The exchange between Gavin Brown and John Swinney was instructive and we might have a reasonable way forward on the links between policies, inputs and outcomes. I hope that in future more such links can be made, although I acknowledge John Swinney’s point that taking the approach to the nth degree might be an all-consuming task that would not give value for money.
I was interested in the part of the report that dealt with the Scottish Futures Trust, which has been held up as the cure for our economic woes. It is just as well that we were not relying on the SFT to deliver economic recovery, because it has been disappointingly slow at getting through the NPD programme. The 2013-14 figures show reductions from £696 million to £338 million and then to £185 million, which is incredibly disappointing, because I thought that we had got over the difficulties that the Government had discovered with the NPD programme. The extra 1.3 million jobs—110,000 in Scotland—and the economic growth that is emerging do not have much to do with the SFT.
I am grateful to the committee for highlighting the division between savings and delayed spending. It is clear that it is more about delayed spending than it is about cost savings. It is important that we understand the split between the two.
I do not want to bring conflict into the debate. Like Malcolm Chisholm, I want to ensure that we engage seriously on the budget. I like to think that John Swinney and I have engaged constructively in previous budget rounds and I will ensure that our objectives are set out again this year. I have with me a copy of a letter that is winging its way to John Swinney’s office this afternoon, which sets out clearly what we think the objectives for this budget should be.
Mr Swinney will not be surprised to know that nursery education is our top priority. Given that he has additional funding from Westminster, given that expansion in nursery education is party policy and is in the white paper, and given that he has the power to make it happen, the full complement of factors is there to enable him to deliver. Also, such an approach has the support of an unassuming character, who is probably prevented from claiming that he leads the campaign: Bob Doris. I am sure that Bob Doris’s views will have a great influence on Mr Swinney when it comes to the budget round, because I know that he is a strong advocate for improved nursery education.
I am attracted by Bob Doris’s call for massive investment in childcare, and my party advocates that. However, nothing prevents us from acting now on two-year-olds. We have suggested a modest, phased programme; some members seem to take an all-or-nothing approach. I am slightly disappointed that Bob Doris seems to dispute that we can act now, because I have held him up as a champion on the issue. I think that we can move forward together and achieve our ambitions. Perhaps we can put aside some of our differences about the longer term and, in this budget, achieve the objectives that I know that we both want to achieve.
The Finance Committee has been persistent in raising issues that it raised in previous years, and there is probably an element of frustration in the report in relation to, for example, how much money has been switched from revenue to capital and from traditional to preventative spend. The issues are opaque. I understand John Swinney’s point that we should focus on outcomes rather than where the money comes from and disinvestment, but if there is to be genuine change in how we deliver public services we need to know where the money is coming from, so that we can develop services that can endure over the long term.
We know that Scotland faces considerable challenges, not just because of the demographics, but in tackling poverty and ensuring that we meet our environmental objectives. Enduring on all those things means that we need evidence of a proper seismic shift of investment from one area to the other. I would therefore encourage John Swinney to be more open and transparent about the shift from traditional spend to preventative spend, and from revenue to capital spend. That way, we will see that we have an enduring, long-term shift in the delivery of public services.
I rise to support the commendable Finance Committee report on the draft budget and its recommendations to the Scottish Government, particularly on its outcome-based approach in its conclusion.
If I may, I will indulge myself a bit by talking about what the creation of a budget means to me. As the former UK finance director of a very large global company, I was charged with achieving an acceptable expense to revenue ratio related to the company’s policies in the risk assessment and market framework in which we operated. During the 1992 recession, I was asked to reduce that percentage of the budget by 2 per cent, which meant a reduction of £2.2 million on revenues of £100 million, which is nothing like what the cabinet secretary is confronted with every day. We had the luxury of choice. We could either increase revenues or cut costs. This Government and the cabinet secretary do not have the luxury of increasing their income element, nor is there a lot of scope for increasing other revenue streams.
That means prioritising spending within that financial planning or market framework to secure economic progress on the back of capital asset improvement and structural and social employment changes. With all good intent, I say to the Opposition—indeed, I say it to us all—there is nothing wrong with wishing to prioritise extra spending in certain areas but we should be flexible. We have an obligation or duty to see how and where we can cut to meet the new spending policies and priorities, wherever they come from within the chamber.
The fundamentals of every budget seek to establish an economic growth pattern that embraces long-term growth while providing parallel sustainability of human and environmental development. In securing those objectives, the focus on continued infrastructure and asset investment as keys to the future efficiency of the economy is welcome, and I noted the comments on that in the Finance Committee’s report. The aggregate spending of capital in the budget, enhanced by the various supplements to capital, giving a spend of £4 billion on infrastructure, is within all the policy frameworks that we wish to achieve by creating a springboard for future employment and efficiency.
As a member of the Economy, Energy and Tourism Committee, I want to look at a few of the considerations in our review of the budget that are related to the national performance framework. There is little doubt that proper scrutiny of increased productivity and demand, under a tight discipline of, for example, public procurement supported by European directives on procurement and the unleashing of productivity and innovation via the proposed community empowerment bill, will see a greater level of economic activity. That is, of course, part of the NPF’s policy driver.
The marginal reduction as a result of the regrettable top-line Barnett cuts in the enterprise agencies and the retention of social enterprise and third sector funding provides Scotland with greater impetus to make the social and structural change to continue to find, develop and grow innovative companies that have high growth potential. Within that, we need to increase the role of women and ethnic minorities. A number of account-managed, high-growth companies will achieve their potential, as will the sustained growth of social enterprise—again, part of the wider policy framework.
I will finish by talking about a specific area that I believe is fundamental to the success of every profound and, in this case, supportable budget, and I relate it to what I consider to be a key driver in achieving our policy and financial objectives. In that regard, I return to my opening comments on the budget. We are trying to create a fairer system with a fairer pay regime in the public sector, to start to demolish the genie effect of the gap in remuneration between the lower paid in our society and those at the top of public sector pay scales, for example. I welcome our commitment to establishing a minimum basic pay increase and to starting to secure the payment of a Scottish living wage for all who deal with the public sector. I believe that that is a fundamental change, which will secure Scotland’s increased performance.
In the current environment and against a backdrop of what some of us think is a nonsensical financial relationship between controlled expenditure in this place and non-controlled income—control over which is exercised elsewhere—I applaud the Finance Committee on the thorough financial analysis in its recommendations on the budget and the wider planning framework.
I welcome the opportunity to speak in this debate. Although I am not a member of the Finance Committee, I welcome the publication of its report on the draft budget and the opportunity to scrutinise the Scottish Government’s spending priorities. I add my thanks to the committee members, SPICe and the clerks for producing the report.
As I said last week in the Scottish Conservatives’ finance debate, politics is about priorities and choices. Both the UK Government and the Scottish Government have their own decisions to make. The chancellor set out his choices in the autumn statement, but with a budget of £35 billion, the Scottish Government also has big decisions and big choices to make in the coming months.
I do not intend to talk this afternoon about all the various budget streams; I will concentrate on how the Scottish Government could, and should, use the £300 million of Barnett consequentials that it will receive over the next two years to take action now to support families by providing extra childcare.
Last Wednesday, my Labour colleagues and I called on the Scottish Government to invest the Barnett consequentials following the autumn statement in childcare for two-year-olds, as Malcolm Chisholm said. I rise again today to make the same demand of the finance secretary and the SNP Government.
We talk all the time about the importance of the early years in children’s learning and development. The committee has rightly scrutinised the effectiveness of the preventative spend agenda and issues around the early years change fund. We also talk consistently about the need to help people with the cost of living and about the importance of childcare to the economy. Families across Scotland want us to not just talk about it but take action. That is why we are proposing that the money from the Barnett consequentials be used to give childcare to half of Scotland’s two-year-olds now.
I lodged amendments to the Children and Young People (Scotland) Bill to that effect, which could save 30,000 families more than £2,000 a year on childcare costs. The proposal is very similar to the promise on childcare for two-year-olds made in the white paper. I know that the Liberal Democrats have been pushing for action on this, as Willie Rennie said again today, and I hope that the proposal will receive support from SNP and Conservative members as well.
I do not criticise the Scottish Government’s aspirations in the white paper for more childcare. In actual fact, I am proposing that it deliver its pledge on two-year-olds now. However, I do criticise the Government for not even providing full costings for its proposals. The fact that it has not provided a full price tag raises the question how serious it is about improving childcare now.
The fact is that, despite all the hype about childcare, it has in reality done very little to help families with childcare over the past six years. As we know, childcare is already fully devolved to the Scottish Parliament and, therefore, the SNP Government. The SNP Government’s childcare record is simple: families have yet to see any significant benefit from its childcare policies since 2007. No doubt, the Government will point to a small increase in hours for three and four-year-olds and the proposals in the Children and Young People (Scotland) Bill. However, we in the Labour Party have said consistently that we will not solve the childcare problems of 2013 with a policy that is six years old.
Members will know that last week I compared the SNP’s record to Labour’s record in office. Labour’s record included a childcare strategy within months of coming to power; the introduction of universal early years education for three and four-year-olds; provision for vulnerable two-year-olds; the raising of standards; child tax credits; and much, much more.
Labour is clear: families need help with childcare now. As I have said time and again in this chamber, it is regrettable that the SNP Government has yet to deliver its promise of 600 hours for three and four-year-olds, despite that promise being made way back in 2007. It is also regrettable that the Scottish Government cut back nursery programmes for vulnerable two-year-olds when it first came to power and that the SNP Government and SNP MSPs voted against Labour’s proposal for a childcare commission back in May.
There are lots of ways in which families need support for childcare, and those could have been looked at by a cross-party commission. The reality is that families do not care who delivers the support as long as action is taken to address their needs. However, the SNP now has the opportunity, as it has had in every year since 2007, to put more money into childcare and help families with the cost of living.
I was encouraged during last week’s debate when Mr Swinney said that he would consider Labour’s proposals. I welcome that. He said that it would be up to the Cabinet to decide. The Cabinet will probably have met since last week so I ask the cabinet secretary whether that has been discussed. Will the Scottish Government support that proposal? Are the members of the Cabinet raising concerns about this? As we said in May when we proposed a childcare commission, we are happy to work on a cross-party basis and urge Mr Swinney to act on that as soon as possible.
Labour wants extra childcare to help families with the cost of living now and to help give children the best start in life. Affordable, quality and flexible childcare has always been a priority for the Labour Party. It was a big priority for the SNP three weeks ago; I hope that it still is. There was a lot of mention of testing ambitions earlier. I think that this is a key test of ambition. It is time that we helped families with the cost of living. It is time that the Scottish Government made up its mind and backed Labour’s call. The SNP Government has the powers and the resources. The only thing that it does not have is excuses.
I would like to concentrate on the climate change targets that are mentioned in the Finance Committee’s report on the draft budget. One of the 16 national outcomes in the national performance framework is that
“We reduce the local and global environmental impact of our consumption and production.”
Related to that outcome is the Government’s two purpose targets, which are
“To reduce emissions over the period to 2011” and
“To reduce emissions by 80 percent by 2050”.
Both those targets are shown as improving on the Scotland performs website. That is welcomed by the Rural Affairs, Climate Change and Environment Committee. However, the committee notes that the statutory climate change targets for 2010 and 2011 have both been missed.
In that light, my committee asked other committees in the Parliament to consider the climate impacts of the budget from their perspective. Ahead of their considerations, I wrote to all the relevant committees with a set of questions that would allow them to interrogate their own report. The first question was
“how the draft budget delivers proposals and policies that relate to their portfolio as set out in the RPP”.
The second question was
“how the draft budget supports measures aimed at making up the shortfall in emission reductions” because of missed targets. The third question was
“how funding for those public bodies covered by their portfolio will help integrate action to tackle climate change in their business and service delivery functions”.
In addition to the questions that we asked generally, SPICe provided some detailed questions for the Economy, Energy and Tourism Committee, the Health and Sport Committee, the Infrastructure and Capital Investment Committee, the Equal Opportunities Committee and the European and External Relations Committee. Some of those questions seem to have been picked up, but others were not. Therefore, we had to assess exactly what the result was in terms of the climate balance in the budget discussion.
The Health and Sport Committee, the Justice Committee, the Local Government and Regeneration Committee and the Education and Culture Committee did not mention anything about the carbon content in the budget. I will give examples of the questions that were suggested for the Education and Culture Committee. We asked it:
“to what extent does funding for Scotland’s Schools for the Future programme support delivery of Scotland’s emission reduction targets; to what extent does the skills and training budget support the opportunities associated with realising a low carbon Scotland; and what progress are Historic Scotland making in integrating action to tackle climate change in its operation and service delivery functions and fulfil that duty under the Climate Change (Scotland) Act to contribute to Scotland’s emission reduction targets.”
We would expect each committee to use the questions that we provided to interrogate its own contributions, but the committees that I have just mentioned did not do so. I am delighted to say that the Finance Committee noted these issues and that the European and External Relations Committee, the Equal Opportunities Committee, the Economy, Energy and Tourism Committee and the Infrastructure and Capital Investment Committee all made substantive comments. However, when five other committees did not pursue any of the suggested issues, we in this Parliament need to ask whether each of its committees is taking seriously the role of climate change mitigation in all its responsibilities and whether the Parliament as a whole is meeting the aims and targets in the national performance framework. This is a serious issue. Before we get the Government’s response, we need some means of measuring how some of these matters might affect our approach.
Another example relates to the Finance Committee’s responsibility for scrutinising the Scottish Public Pensions Agency and its investments. How many of the investments in its portfolio boost the development of a low-carbon economy and how many have been invested in less environmentally friendly ways? We need to know that information and find some means of getting a response to such questions in future.
In its report, the Finance Committee states that it
“would welcome further details on the acknowledgement by the Minister for Environment and Climate Change that a ‘renewed effort’ is required to meet the statutory climate change targets”,
which we missed in 2010 and 2011, and that it
“supports the view of the RACCE Committee”— my committee—
“that ‘funding information for climate change mitigation measures should be published alongside publication of the draft budget’.”
I would also add that it is essential that each committee makes its own input to ensure that we meet the aim, shared by the whole Parliament, of tackling climate change.
I welcome this opportunity to take part in this debate on the Finance Committee's draft budget report. It is important that we remember the financial situation that the Scottish Government faces, even after the UK chancellor’s recent autumn statement. According to the updated figures that were issued after that statement, the Scottish budget is being cut by £3.1 billion or 9.9 per cent over the current five-year spending review period. However, despite that substantial cut, Scotland continues to outperform the rest of the UK. The Scottish economy grew by 1.8 per cent over the year to June 2013, while the UK economy grew by just 1.3 per cent. Over the past year, Scottish employment increased by 83,000 and now stands at 72.6 per cent, which is higher than the UK rate of 72.2 per cent. Moreover, at 7.1 per cent, Scottish unemployment is lower than the UK rate of 7.4 per cent.
Over the past five years, the rate of youth employment in Scotland has continually been higher than the rate in the UK as a whole, with Scotland achieving more than 53 per cent employment for 16 to 24-year-olds compared with a figure of less than 50 per cent for the UK as a whole. The budget will also continue to support the 25,000 modern apprenticeship new starts every year to enable employers to strengthen and grow their business.
Although still too high, our latest youth unemployment figure means that only eight out of 28 European Union countries have a lower youth unemployment rate than Scotland. The situation is improving not only because Scotland has the only dedicated Minister for Youth Employment but because of the Scottish Government’s investment-led recovery strategy, which is supporting and sustaining employment as well as investing in our country’s future. NPD projects worth more than £800 million, including Inverness College, City of Glasgow College and Ayrshire College, started construction this financial year.
“The Scottish Government made a commitment to maintain colleges’ cash funding earlier this year and we are very pleased that this has been incorporated into the draft Budget for 2014-15”—
No, thank you.
Mr Henderson went on to say:
“We also welcome the additional resources that are being allocated to the college sector for 2015-16. We look forward to engaging with the Government on how we can use these resources in areas such as expanding school and college partnerships. Investing in the college sector is investing in Scotland’s future prosperity and supporting economic recovery.”
Scotland’s schools for the future programme has 13 schools that are already operational and nine that are under construction, and there will be 67 new or refurbished schools by March 2018. The draft budget highlights that more than £8 billion of investment will take place from 2014-15 to 2015-16 to continue that investment-led recovery strategy.
That strategy has helped the Scottish Government to achieve the highest level ever recorded for school leavers heading to a positive destination. The percentage of school leavers who entered employment, training or further and higher education reached 91 per cent for the year to July 2013. The Educational Institute of Scotland general secretary, Larry Flanagan, said:
“The very high percentage of young people moving on to a positive destination when they leave school is good news for Scotland and reflects the strong performance of our comprehensive education system. Our young people deserve the best start in life, and our schools are continuing to equip pupils with the education and skills that they need to move on to further and higher education, into training programmes, or straight into employment.”
The ability of our young people has been recognised in the latest Organisation for Economic Co-operation and Development programme for international student assessment—or PISA—rankings, which rate Scotland as doing at least as well as, if not better than, a number of leading world economies in literacy, numeracy and science.
The latest PISA results from 2012 reveal that the achievement gap between rich and poor students in Scotland has closed in maths, reading and science. However, it is not only on the youth employment front that things are improving. In today’s papers, there is the news that the number of women in work has hit a 21-year high at the same time as overall unemployment in Scotland has fallen.
The number of women in employment has reached more than 1.2 million, and this budget will help to sustain and improve that position by investing more than £190 million to fully fund 125 additional hours of early learning and childcare. That will mean that free nursery provision will rise from 475 hours to 600 hours per year.
Since 2007, with the limited powers that the Scottish Parliament has, the Scottish Government has been able to create jobs and boost the economy at a time of unprecedented cuts to our budget from Westminster, but Westminster’s austerity agenda is holding Scotland back. The Office for Budget Responsibility has stated that the UK’s economic strategy is “unsustainable” and that the UK will run a fiscal deficit in each of the next 50 years. The OBR states:
“In the absence of offsetting tax increases or spending cuts this would widen budget deficits over time and eventually put public sector net debt on an unsustainable upward trajectory.”
Only with independence, where we have control over the economy, can we do things better and more effectively, bringing about lasting growth and making Scotland a fairer country.
I will concentrate my remarks on the Finance Committee’s report, and specifically on the recommendations that were made to that committee by the Economy, Energy and Tourism Committee, which I have the pleasure of convening. A number of those recommendations were picked up directly in the Finance Committee’s observations.
I think that we would all agree that we want the Scottish Government to use its budget to maximise Scotland’s economic potential. In practice, that means putting in place measures that will assist with the growth of Scotland’s private sector businesses and industries. A number of aspects of the draft budget will have an impact on the ability of businesses to do just that, and I will highlight those.
One issue that came up when the EETC took evidence on the draft budget was procurement opportunities, particularly for small and medium-sized enterprises. I am well aware that the Procurement Reform (Scotland) Bill has been introduced and is being scrutinised by the Infrastructure and Capital Investment Committee. It was clear to us that there is a large burden of expectation on the bill to improve the availability of public contracts for smaller, more local businesses.
During the budget process I asked the cabinet secretary what percentage of Scottish Government spend was won by domestic businesses. His reply was that 80 per cent of the contracts that were awarded through the public contracts Scotland portal go to Scottish businesses. However, what is not clear is whether the 80 per cent of the number of contracts awarded represents an equivalent share of the value of the contracts. It might be, for example, that very large value infrastructure projects are going to companies outwith Scotland; we need to know whether that is the case in order to get a true picture of the benefit to the Scottish economy from the Government’s procurement spend. I was pleased that our committee asked the Infrastructure and Capital Investment Committee to pursue that issue as part of its scrutiny of the Procurement Reform (Scotland) Bill.
Our committee spent quite a lot of time looking at the performance of Scottish Enterprise, Highlands and Islands Enterprise, and the business gateway. Scottish Enterprise has an ambitious target of increasing the number of its account-managed companies by 20 per cent over the period to 2015. On the basis of its record to date, it is doubtful whether that can be achieved. That is an area on which we need more evidence to see what steps are being taken by both Scottish Enterprise and HIE to accelerate the rate of increase. It is clearly in everyone’s interest that we see more high-growth companies being brought within the reach of our enterprise network.
Concerns were raised with the committee about the operation of the business gateway. The committee has looked at that issue in the past, and we have asked the Scottish Government for further information on how it views the performance of the network. Specifically, we have suggested to the Scottish Government that now is the time for a review of small business support that would cover both the business gateway network and the work of the enterprise agencies. In view of the importance of those agencies to growth in the economy, it is important that we keep that under constant scrutiny.
I was surprised to see that Scottish Enterprise is seeking to fill a gap in its income for the coming year of £26.3 million from what it refers to as “further asset realisations”, which are in effect property sales over and above the routine annual disposal of excess assets. Scottish Enterprise admitted in evidence to the committee:
“This may not be the best time, in the economy, to dispose of or to realise money from those assets.”—[Official Report, Economy, Energy and Tourism Committee, 30 September 2013; c 3307.]
Indeed. If they are commercial property assets, as a great majority of them will be, it might not be the best time to sell them when the commercial property market is very depressed and they might achieve a very low value—in effect, we might be talking about a fire sale. That is a matter of some concern, and the committee agreed that we should seek further information on what is proposed; that was picked up by the Finance Committee in its report.
The Scottish Government has put great store by its principle of prioritising capital spend in order to stimulate the economy. It seems rather to turn things on their head for Scottish Enterprise to dispose of its capital assets at a time when they might not realise the best price to be achieved in normal economic times in order to fill a gap in its annual income. I am not sure that that amounts to responsible stewardship of the public finances.
Scottish Enterprise, Highlands and Islands Enterprise, Skills Development Scotland, VisitScotland and the Scottish Further and Higher Education Funding Council are all part of the strategic forum, which requires to make savings of £40 million in each of the next two financial years. From the information provided to us, the projected savings amounted to £27 million for 2014-15. We must therefore assume that the Scottish funding council, which is not under our committee’s remit, is contributing the missing £13 million in savings, but it would be helpful to have that clarified. There seemed to be a certain lack of detail from the cabinet secretary on that point when he gave evidence to the committee.
The committee is concerned, too, about the funding of fuel poverty programmes. We heard in evidence, as we have heard it in previous years, that £200 million must be spent annually to keep up to date with fuel poverty programmes. Some of that money comes from the energy companies, but there is a lack of clarity about how much exactly is coming from the private sector. It is important that that is identified.
As we have heard already in the debate, the Scottish Government decided to take £10 million out of the fuel poverty budget to provide support to people impacted by the underoccupancy charge for social housing. To my mind, that is the wrong priority. We already have a major issue of fuel poverty in Scotland and it is a matter of regret that the fuel poverty budget has been raided.
There is much in the Scottish Government’s budget that can be supported, but there are a number of key areas of concern. I hope that, as the budget progresses through Parliament, we will see those concerns addressed and a greater focus on private sector business growth and support.
It does not surprise me that one of the leading cheerleaders for the bedroom tax is opposed to money being used to mitigate the impacts of the bedroom tax. However, I take a different approach from that of Murdo Fraser and welcome the use of that money by Mr Swinney and the identification of those funds to help the most vulnerable, many of whom are among my constituents.
I have a couple of observations to make. In his opening remarks, Mr Gray planted his and the Labour Party’s flags on the issues of the bedroom tax and childcare. He may want to pass a memo to his colleagues who speak on housing, health, local government, education and pretty much all portfolios, telling them that those are the Labour Party’s funding priorities. In every debate that we have in the chamber on all those portfolio issues, key Labour members and spokespeople demand additional revenue funding for those areas.
No, thank you.
Mr Gray is yet to give us a coherent understanding of where he would get the extra £30 million to top up the £20 million that the cabinet secretary has identified to deal with the bedroom tax, but I am sure that that will come in time.
Malcolm Chisholm obviously has more faith in the UK Treasury than I have. His remarks and his quotation of Danny Alexander fall some way short of the guarantee that I would seek that the block grant will not be touched. He is right to say that how Mr Swinney chooses to spend the block grant is a matter for Mr Swinney. We need only look at the recent episode regarding public sector pensions, whereby the cabinet secretary was sent a letter from the Chief Secretary to the Treasury that made it clear in no uncertain terms that, if he pursued a different approach on public sector pensions, he would see the block grant reduced on a pound-for-pound basis. In that context, I have little faith in the UK Treasury when it comes to the flexibility that Malcolm Chisholm is looking for.
Mr Chisholm claimed that the argument about where revenues from the childcare policy and the shift of people into work would go is a self-defeating one. The point is that if we use the revenues that the policy would generate to underpin, guarantee and fund that policy in the longer term, that is a critical element of the argument about the policy. We cannot deliver the one without having the other available to us to fund it. That is why the argument that the Deputy First Minister makes is critical to the debate.
I sound a note of caution to the Labour Party on its enthusiasm for the use of consequentials. We must remember that the current consequentials exist in the budget for only the next two financial years. We also do not know what shifts may take place in the overall departmental expenditure limit budget over those two years. The point that I make to Mr Gray—it is simply a note of caution—is that suggesting that a long-term policy could be funded on the basis of non-guaranteed and not necessarily recurring revenue to the Scottish Government is fraught with difficulty.
The argument that the consequentials cannot be used for childcare because they are available for only two years is, frankly, ludicrous. We are considering a budget that is for only one year, and even I am not cynical enough to think that Mr Swinney is not going to fund schools or hospitals after next year because he has given us a budget for only one year. All Governments budget for one, two or, at most, three years. It is a ridiculous point.
No, it is not. We know that the Scottish Government is going to have money available to it in future years to fund what it proposes this year. What I am saying to Mr Gray is that the additional money from consequentials is additional only for the next two financial years—I am simply sounding a note of caution on that.
I will conclude by touching on preventative spend. During the budget scrutiny process, I was a member of the Health and Sport Committee and we looked at preventative spend as part of our budget scrutiny. There are two key areas that would merit further examination, on which the cabinet secretary may be able to respond in his closing comments. The first of those is how preventative spend is being modelled and monitored by public bodies. The allied health professionals said that they feel that there is a lack of an evidence base in relation to their sectors, although the Royal College of Nursing highlighted work that is under way on a pan-UK level through the Office for Public Management. I would be interested to know from the cabinet secretary whether the Scottish Government has been able to feed into that or see the work that is being done.
The second question, which relates to how we ensure that we get the best out of preventative spend, concerns the fact that the people who spend the money are not necessarily the people who derive the benefit from that spend. Sometimes, I feel that there can be a reluctance on the part of some public bodies to say that they will make significant preventative spending decisions because it might not be their area that would derive the benefit. For example, a preventative spend in education might deliver a significant future saving not in education but in criminal justice. We need to ensure that such issues are being borne in mind and that silo thinking does not creep into the preventative spending agenda.
I congratulate the Finance Committee on its comprehensive report, and I thank the clerks who put it together. In my speech tonight, I represent the interests of my constituents across Glasgow and my colleagues in local government.
This budget could have addressed the most dire economic circumstances that we have faced for a generation. Local authorities are the very last line of defence against Westminster austerity and Holyrood point scoring, using their scarce resources to mitigate the worst excesses of both. However, the budget limits the power to provide any real form of relief for disabled people, those on low incomes and those who are most reliant on public services—the most vulnerable in our society.
The biggest challenge that local authorities in Scotland face concerns their ability to continue to serve their communities in the face of the underfunded council tax freeze. Our councils are forced to raise funds in other ways, and have done so principally through increasing the charges for the non-statutory services that they provide, which are services that are often relied on by those who are most in need. I have been contacted by a number of constituents and local organisations, who tell me that the financial settlements from the Scottish Government are really beginning to affect them personally. They say that local services are facing increased demands and higher costs, leading to far more pressures being placed on the vulnerable groups and those with additional support needs.
I do not doubt Ms McTaggart’s sincerity when she talks about disabled people and vulnerable citizens. Mr Gray has highlighted his position that any additional money should be spent on childcare. What would Ms McTaggart spend the money on? Would she give it to local government?
If the council tax freeze were not underfunded, I am sure that we could fund both things.
The harsh reality is that the council tax freeze disproportionately benefits the rich, while an increased reliance by local authorities on council charges disproportionately affects those who are most in need. Those families who are most likely to rely on council services lose out, while people who own the most expensive properties reap the biggest rewards. The cumulative benefit of the council tax freeze to a band H home owner by 2013 is more than £1,500, in contrast to the cumulative benefit to a band A home owner of only £250.
I most certainly was not saying that they are all rich.
For too many families, this Christmas will be a modest affair, with the tragic choice between heating and eating once again being contemplated. More families are in this situation than was the case at this time last year because of the huge number of public sector redundancies that have been necessary in order to meet yet more budget cuts. Last month’s Audit Scotland report on Scotland’s public sector workforce concluded that there were 26,600 fewer jobs—that is 26,600 households—in the public sector in March 2013 compared with March 2009, which amounts to an incredible 5 per cent of all jobs in our councils. That pattern of redundancy, poverty and hardship is unsustainable and much more must be done to make a real difference to the lives of those who are suffering the most.
Although the Westminster Government is damaging our economy with its misplaced priorities, we can do so much more here in Scotland to mitigate the effects of its decisions. It is time to pursue a cross-party solution to the very real problems that Scots face in the new year. That means looking for solutions that exist now, not putting Scotland on pause.
As I was a member of the Finance Committee in the previous parliamentary session, before the most recent election, I am always interested in reading the Finance Committee’s reports. I was particularly interested in this one, because I am a believer in having a national performance framework, such as Scotland performs, and I was interested to see it reviewed after five or six years of operation. I participated in the first inquiry into preventative spend that the Finance Committee undertook. If I remember rightly, Malcolm Chisholm was also a member of the Finance Committee when it undertook that inquiry, before the most recent election. Those two things tie in very well.
I was truly delighted in 2007 that not only did the SNP win the election, but we came to government with what I believed to be an absolutely fresh approach. That approach looked at Scotland as a whole and asked what kind of country we wanted to be, how we should target policy towards that and how we should monitor ourselves to see how to achieve that. I believe that the national performance framework, Scotland performs, set us on that road. It was a bold initiative—an integrated framework for policy delivery, in the parlance that is used—and it was a mechanism to assess Scotland’s performance and give us the discipline to look at successes, look at failures and look at what is best for our society as a whole, to move forward.
We heard the cabinet secretary talk about the measurements of GDP, employment, unemployment and economic inactivity and I was very glad to see in the report that he was open to reviewing and revising the indicators, based on discussion, because that is very important. Along with Patrick Harvie, I was a member of the steering group that Oxfam ran on the humankind index, and I know that the cabinet secretary was interested in looking at some of its findings. The wider discussion beyond the findings of the Finance Committee is certainly worth having.
That brings me to preventative spend, which is a major issue. Anne McTaggart just talked about cross-party action. One of my great wishes and aspirations for our Parliament, from the very start, was that we would get beyond the petty party politics that we hear so much of in here and recognise that our country faces some big issues, over which surely we could have consensus, and that no matter who was in power, we could move towards attaining some of those aims. That ties into the assessment of the nation through Scotland performs.
I found the Finance Committee’s first preventative spend inquiry quite difficult, because I had to recognise that although we had the boldness of single outcome agreements for local authorities, for example, and different initiatives to look at public service in general, our society very much works in silos. Sometimes, we found far too much of an emphasis on health boards or local authorities wanting to hold on to their own budgets and not have any kind of sensible sharing across budget lines, not only to make things better for people—it is all about people—but, in the longer term, hedge our resources better.
That brings me on to working together. I was interested to hear that, all of a sudden, the budget consequentials from the autumn statement at Westminster have all to be spent on childcare and mitigating the remnants of the bedroom tax after the mitigation that we have already carried out. I sat on the Welfare Reform Committee and the point that we should look at the bedroom tax again was not even raised as part of the budget scrutiny.
I welcome the fact that, in the budget, we are trying to mitigate and alleviate some of the effects of the welfare reform that has been imposed on us. In the news this week, I see that more than 500,000 people in the UK have turned to food banks since April and thousands have been hit by welfare penalties. Willie Rennie said at First Minister’s questions that we have turned a corner and things are good. I repeat that it is about people and there are an awful lot of people that it just ain’t good for.
I find it a bit galling that we have an Opposition party that talks about working together but could not even vote together to try to bring some of the powers over welfare reform to the Parliament. We hear Opposition members saying, “Use the powers you have. Use the powers you have,” but we could have had many more powers. We could have been doing better than just tinkering around the edges of trying to alleviate some of the issues that are being imposed by Westminster.
It is back to what Anne McTaggart said—
I am just finishing.
It is about working together, cross party, to determine what is best for Scotland and how we want Scotland to perform. Let us get on and do it.
I extend my thanks to the Finance Committee for its work in producing the report and bringing it to the chamber.
First, I will say a few words on the national performance framework. Members of the Scottish Green Party have probably been boring members over the years with speeches about why it is important to move away from narrow metrics such as GDP growth and have a broader understanding of the economic health of our society. We need broader metrics such as the humankind index that Linda Fabiani mentioned. However, members do not have to be Greens—they do not have to take the position that says that everlasting economic growth is impossible on a planet of finite resources and that the everlasting pursuit of it will be destructive—to recognise the reality.
The lesson of history is that there have been long periods in which our country has experienced continual economic growth and the lion’s share of the economic benefit of that activity has been hoarded by those who are already wealthiest—those who need the resources least benefit the most. Very often, that activity happens at the expense and exploitation of people and the environment. Very often, it means the exploitation of the environments in which the most exploited people live. Members do not have to be Greens to recognise that lesson of history.
The cabinet secretary is to be congratulated on his approach in developing the national performance framework and his desire for cross-party dialogue on its future development. However, Malcolm Chisholm was also right to say that some of those congratulations have been qualified. I think that the cabinet secretary would recognise that it is the beginning of a journey. He does not have all the answers yet on the future development of the concept and, although Scotland may be ahead of the curve in relation to the rest of the world, it is not a steep curve that we are ahead of—very few countries are doing anything at all in the area—so let us welcome the work that is being done but not rest on our laurels.
On climate change, I welcome many of the points that Rob Gibson made. I also welcome the fact that the Finance Committee included a quotation from the Minister for Environment and Climate Change, Mr Wheelhouse, who acknowledged that, although we are nearly five years on from passing the Climate Change (Scotland) Act 2009, we are yet to achieve a single annual target and that renewed effort is needed to meet the statutory climate change targets.
I make a plea to the cabinet secretary to make this the last year in which the climate change figures that accompany the budget come in right at the end of the committee scrutiny process and—in future years—to give those figures to the committees early enough to allow us to carry out robust and fair scrutiny. I hope that the Government would welcome that.
Among the areas in which we clearly need to do better as regards social justice and achieving the climate change targets are active travel and the energy efficiency programme. Mention has been made of taking money from energy efficiency to pay for bedroom tax mitigation, and I have a concern that, in doing that, we are, essentially, taking money from the pockets and purses of the very people whom we are trying to help, particularly in a year in which Barnett consequentials are available to use and in which money is being moved from revenue into capital. Those are potential alternative sources of funding that could be used to meet the equally important need of mitigating the bedroom tax.
On active travel, I commend the Stop Climate Chaos Coalition’s call for a doubling of the spend on the cycling budget. On paper, active travel—walking and cycling—is at the top of a hierarchy of transport priorities but, in reality, it is right at the bottom of the spend. The Government has increased spending on it a little this year, but the funding that is being provided is still way short of what is necessary for us to be able to meet the Government’s priority of 10 per cent of journeys being made by bike by 2020. Let us see a bit more focus on that.
On the wider health impact of active travel, there is a real opportunity to complement the Government’s approach on preventative spend through initiatives such as the change funds by building one around active lifestyles, healthy choices and healthy behaviour. At the moment, the Government has the community food and health (Scotland) project, which has just been brought under the auspices of NHS Health Scotland, but it has a tiny budget of around £60,000 a year. Demand massively outstrips supply, and I suspect that demand would be a great deal higher if many people had heard of the initiative.
Another Scottish Government minister, Shona Robison, has previously told us that obesity currently costs Scotland £457 million a year and that that figure could increase to up to £3 billion a year if we do not get a grip of the issue. If the Government were to take the same change fund approach to healthy and active lifestyles and to healthy food, that would be a useful way of complementing its approach to preventative spend in a way that would meet social and environmental objectives. I hope that the cabinet secretary will be willing to discuss that with me over the coming weeks and months as we move forward in the budget process.
I thank the Finance Committee for its detailed and thoughtful report on the draft budget for 2014-15.
I would like to look at the moneys that the Scottish Government is giving to change funds, which is an issue that is of particular interest to me, as deputy convener of the Health and Sport Committee. In the three years up to 2014-15, £500 million is being invested in change funds. As the report that is before us notes, the draft budget for 2012-13 said:
“Together it is anticipated that national and local government and their community planning partners will invest up to £500 million through these change funds to support the greater alignment of budgets across the public sector on a preventative and outcomes-focused basis.”
I suppose that that leaves us asking, “What does that actually mean?” For my part, it means reforming public service delivery in a way that best delivers the outcomes that we all want to see.
I have a particular interest in active ageing and the health of our older population, so among the outcomes that I would like to see being achieved—to which the Scottish Government has a clear commitment and to which I am sure that members across the Parliament have a joint commitment—are older people being happier and healthier and staying in their own homes for longer before having to move to a residential setting, if that is necessary; their making fewer unplanned visits to hospital acute services because of slips, trips, falls and so on; and fewer of them being stuck in hospital wards for longer than they need to be as a result of delayed discharge.
In recent weeks, Alex Neil, the Cabinet Secretary for Health and Wellbeing, has talked about having a seven-day healthcare service to help achieve those outcomes. We are trying to achieve quite clear outcomes using change fund money. I hugely welcome the use of £420 million in the change fund for older people between 2011 and 2016, including £70 million in the budget that will be before us early next year.
However, we also have to scrutinise the good and effective use of those moneys in achieving those outcomes, some of which I have mentioned. For example, we want to ensure that change fund moneys transition into the core financial budgets that health boards and local authorities set in order to better mainstream any initiatives that are developed through the change funds.
As the Finance Committee has said, we need to examine how we can encourage local authorities to make a greater contribution to the change funds. Health and social care integration for older people is currently being legislated on through the Public Bodies (Joint Working) (Scotland) Bill, which is before the Parliament, and we need to think more carefully about how we carry out robust budget scrutiny of single accounts under the bodies corporate that will involve local authorities and health boards. We have to come to terms with scrutiny in relation to that issue as well.
The outcomes are easy to measure but they are challenging to achieve, and the framework that I mentioned will be important in ensuring that we can achieve them. The Finance Committee’s report refers to what the Health and Sport Committee said about the lack of a clear link between the draft budget and the indicators. I have been on the Health and Sport Committee for a number of years and there is almost a necessary tension between the budget and the indicators, given that individual health boards have local strategies to identify and address some of the indicators and that there is also a disconnect between when the Parliament sets the budget for health boards at a national level and when health boards set their own budgets. There is a scrutiny issue in there, too. I think that we can improve, but I see a necessary tension as regards how we can go further. I think that it is up to Parliament to suggest how we can do that better.
I will come to the Barnett consequentials in a second, but in relation to the moneys in the budget that we are considering—the existing moneys—I have noticed that not one person from the Labour Party has said how one existing pound would be spent elsewhere, despite Labour’s repeated demands that we spend lots of money in lots of different places. That critical fault line runs through the Labour Party’s approach to budget scrutiny.
I see that Mr Rennie is in the chamber. He will be delighted to hear that my commitment to extending childcare has not waned; in fact, it is stronger than it has ever been. However, I have had a commitment to kinship care payments and to the roll-out and extension of free school meals for just as long as I have had a commitment to extending childcare. Each of those commitments has to be individually funded and paid for on an on-going basis. There are challenges in that regard, and there are decisions that everyone has to make—including me, Mr Rennie.
The free school meals pilot, which was carried out by the Scottish Government in partnership with local authorities, was pretty successful, but it was discontinued because of cuts from the UK Government. That is an example of a pilot that was brought to Scotland by a Scottish Government but which was directly undermined by UK Government spending decisions. We have to bear that in mind.
As we look at the budget, it is worth putting on record other potential spending consequences for the Parliament. We know that there is a cross-party effort elsewhere in the UK to take £4 billion away from Scotland by scrapping the Barnett formula. We also know of estimates of a multi-billion pound saving from the NHS in England with the greater use of private funds there. Those two examples have potential spending consequences that put Scotland at risk financially. Yes, I want that step change in childcare—I want to dramatically improve childcare—but I want to ensure that we get that improvement not just for a short time but in perpetuity.
The committee learned from expert witnesses that the national performance framework is internationally recognised and admired. It may not be as well known or as widely understood as we would like in Scotland, but it is a tool of international significance. The Centre for Public Policy for Regions has stated that the setting of ambitious targets across all areas is commendable. The cabinet secretary and the Scottish Government should therefore be commended for their determination to make a success of the NPF. I agree with the cabinet secretary that it is pretty well known at public sector leadership level, if not among the public. More can be done to raise awareness of the national performance framework and its national indicators, of course, and I am sure that there will be further attempts to do so.
Unfortunately, we have a race-to-the-bottom economy in Britain. As a result, Scotland is one of the most unequal societies in the world. According to Oxfam, the wealthiest households are 273 times richer than the poorest households, and the inequalities in Scottish society are deepening and being exacerbated by the declining progressivity of the UK tax and benefits system. Some 40 per cent of Scots in poverty are in work—that is a national disgrace and quite staggering for a country that is so wealthy. That figure is on the rise, as is the number of people in Scotland who are turning to food banks as a last resort. That is another national disgrace.
The Scottish Government can only mitigate those factors. It has no say over how the tax collection system is structured and has simply very little control over the issues that affect people’s lives on a daily basis. I suspect that it is that frustration that has brought the argument into the Parliament today.
The cabinet secretary and his colleagues have done a fine job in balancing the budget, given the tight financial constraints that Scotland has faced over recent years. How could we say any different? In real terms, Scotland’s budget has been cut by around 11 per cent over five years, and capital spending has been cut by more than 26 per cent. It is therefore hardly surprising that everybody is tightening their belts and that things are getting worse.
I find it remarkable that, under those financial pressures, the Scottish Government has committed to maintaining the council tax freeze. That is the only tax that can put a pound back in people’s packets. The Scottish Government has done that—it aims to do so for seven years. I also find it remarkable that it has committed to a consolidation of public services where possible; that it is investing further in colleges and the training of Scotland’s young people; that it is committed to investing £33 million a year in a welfare fund to try to protect the most vulnerable from Westminster’s austerity agenda; and that it will continue to protect the budgets of the NHS and local government in Scotland.
We are faced with a less-than-attractive future if we vote no next year. During his speech at the Lord Mayor’s banquet in London last month, the Prime Minister made it clear that austerity is here to stay.
The Prime Minister called for
“a leaner, more efficient state.”
From looking at the spending cuts and the desire for privatisation south of the border, we all know what he meant. Sooner or later, because of the way that the Barnett formula works, the Scottish Government could be forced to make decisions that it does not wish to make, including the possibility of cutting NHS Scotland’s budget. Such decisions will be the result of continuous cuts to the overall block grant. That is the reality, and it is generally accepted that those cuts will continue in Scotland next year and thereafter. There appears to be no willingness at Westminster to end austerity or to examine and enact change in the current relationship between the UK tax system and the UK benefit system. I sometimes think that the situation seems to favour the UK Government’s privatisation policies.
I believe that a fairer, redistributive tax system is crucial if we are to tackle the poverty that Scotland faces right now and will face in the future. That goal is not achievable under the current arrangements. As we know, Scotland is a wealthy country, but the Scottish Government simply has too little influence to make a real difference to people’s lives. Therefore, I truly believe that independence is the only way to deliver a positive future for the people who live and work in Scotland.
That brings us to the closing speeches. I regret to note that two members who participated in the debate are not in the chamber. I trust that they will return to the chamber for the closing speeches.
With regard to the end of Jean Urquhart’s speech, I say that it is important not to overegg the so-called Westminster-imposed spending reductions on the Scottish Government. Indeed, it is worth looking at the figures that have rightly been produced by John Swinney on page 189 of the draft Scottish budget and to put them on the record. For last year, 2012-13, the total Scottish Government budget was £33.794 billion; for the current year, 2013-14, the total is £34.588 billion. Even someone who has only a casual relationship with mathematics can see that that is an increase and not a savage cut.
I will give way in a moment.
Next year, 2014-15—the budget that we are looking at now—the budget will increase from £34.5 billion to £35.3 billion and, just for good measure, in 2015-16 the budget will increase to £35.9 billion. Therefore, between last year and 2015-16, we will go from a £33.7 billion to £35.9 billion total Scottish Government budget, according to the Scottish Government’s figures.
I have no doubt that, had we been in times of economic plenty all the way through, those figures would have been bigger. However, when people talk about savage cuts, it is worth putting on the record the amounts of money that are going to the Scottish Government.
Thank you very much, Mr Brown. It is a neutral intervention. Last year, Mr Brown made the point that he has just made, so I will make the same point as I did then. In real terms, once one has accounted for inflation, the budget reduction is 7.8 per cent in resource and 26.9 per cent in capital. Is that or is that not the case?
I would have thought—especially after having had the same exchange last year—that the convener of the Finance Committee would know the difference between a departmental expenditure limit budget and total Scottish Government spend, which takes in annually managed expenditure. I know that the Scottish Government wants to talk only about the DEL budget because that is the one in which it can make the most decisions, but AME budgets also represent money that is spent in Scotland. Although the Scottish Government has little flexibility in terms of what it can do with that money, it still represents money that is spent in Scotland.
I know that it is a fact that the Scottish Government does not like to acknowledge or talk about, but according to its own figures in its published budget, the figures have increased year on year. If the cabinet secretary wishes to tell me that the total Government budget has gone down in cash terms in any of those years, I would welcome his intervention. He does not wish to intervene; I do not blame him.
Let us return to a couple of issues that were covered in the debate. Bob Doris spoke eloquently, in a fairly thoughtful contribution—for the first 90 per cent of it; I will ignore the last 10 per cent—about change funds. The committee and everybody else in the chamber buy into the concept of preventative spend; indeed, it has had cross-party support over a number of years. The committee came to a conclusion at paragraph 105 of its report that is worthy of a specific response from the cabinet secretary—if not today, then certainly in written form:
“The Committee invites the Government to update it on the progress in ‘establishing fit-for-purpose monitoring and evaluative processes’ as stated in the response to last year’s draft budget report.”
I take on board the comments that were made last year by the cabinet secretary to the effect that is it very difficult to evaluate every single public pound that is spent, but given the amount of money that is going into change funds—Bob Doris mentioned £500 million—it is worth looking carefully at that to ensure that we are spending the money on preventative spend, as opposed to covering gaps, so that we get long-term results.
Murdo Fraser made a couple of comments to which I hope the Scottish Government will respond. One was about the percentage of contracts that are awarded via public contracts Scotland to Scottish companies. We heard the figure for the number of contracts, but what is figure for the value of the contracts? That would very useful information that is important for Parliament to know.
Murdo Fraser also commented on what Scottish Enterprise said about the gap of £26.3 million in this year’s budget, which is to be covered by extra property sales over the financial year. There is the question whether disposing of property is the best thing to do. Is it a good idea to sell property at a loss now, in order to cover a revenue gap in a single year?
I will finish where the debate started. Mr Gibson talked about the national performance framework. Evidence that was heard led a number of committees to conclude that linkages should be improved. The cabinet secretary challenged committees to come to him with more detailed proposals. That was fair; there is work for Parliament to do. However, there is also work for the Government to do. Will the cabinet secretary work in tandem with the committees and perhaps take the lead on the issue by convening a meeting, so that we can drive things forward together rather than wait for Parliament to act alone? In 12 months we will have a similar debate. Will we be able to say something more positive about linkages then?
In the Finance Committee’s report and in today’s debate, important points and recommendations on the Government’s proposed spending have been highlighted. A theme that runs through the report, which was mentioned in the debate, is how we can better measure and match the outcomes that are delivered through the Government’s £35 billion budget.
Not for the first year, the Finance Committee found it difficult to assess the Government’s spend against the national performance framework. The committee called for development of the tool to enable us to understand better how the money that the Government spends on delivering core policies is contributing to the outcomes that it wants for Scotland.
There is an opportunity here for the Scottish Government to be smarter and better at delivering a budget that engages the key challenges that face Scotland—as members have said throughout the debate. This is about the public’s understanding of what their Government is doing for them, because government is about choices, which are never mutually exclusive, so the need for policies that follow priorities and are linked to performance indicators is important—not least when several indicators show that there is room for improvement.
That was evidenced in the committee’s scrutiny of the Government’s prioritisation of preventative spend. In assessing the change funds, for example, the committee welcomed the additional money for the early years fund, but noted a lack of investment at local level. As the Local Government and Regeneration Committee found, part of the reason for that is the difficulty that local authorities have in reprioritising their spend to target appropriate preventative policies in extremely difficult circumstances. That point was made throughout the debate—we heard it from Kenny Gibson in his opening speech on behalf of the committee, from Iain Gray on behalf of Labour and from Anne McTaggart and Bob Doris during the open debate.
As Neil Bibby said, there are levers that the Government can pull now to strengthen its preventative spend agenda significantly in relation to the early years. Labour’s proposal to use the money and powers that we have to deliver childcare to 50 per cent of two-year-olds would benefit nearly 300,000 children through investment in their wellbeing and education from an early age, and by providing parents with opportunities to get back to work at a time when our economic recovery needs them. The policy embodies effective preventative spend, and delivery now is within our gift, given the powers of Parliament and the autumn statement Barnett consequentials.
The Finance Committee considered the impact of welfare reforms on local authorities and communities. The issue has been well rehearsed in Parliament. In evidence to the Welfare Reform Committee, the cabinet secretary said that £20 million is the maximum amount that is legally allowable to mitigate the bedroom tax. However, as we have also heard this afternoon, the Chief Secretary to the Treasury, in response to a question about whether the Scottish Government would be penalised for providing more than £20 million, said that what the Scottish Government does with its block grant is a matter for the Scottish Government. The Scottish Government has the opportunity to go further than it has committed to going.
I apologise to Jamie Hepburn for my mistake. It was actually the Finance Committee that the finance secretary appeared before, but he made the same point and said exactly the same thing. I am sure that the member agrees, and I know that members across the chamber have rehearsed many times the fact that the bedroom tax is causing misery in communities that we all represent across the country. There should be no hesitation in bringing forward the full £50 million to mitigate that impact. That is what we ask for.
We welcome the committee’s report and its recommendations. This has been an interesting, balanced and enjoyable debate. The committee’s recommendations are robust and challenging to the Scottish Government. They highlight several areas in which we could do better on matching our budget to the outcomes that we want to see for Scotland. Scottish Labour’s proposals on childcare and the bedroom tax harness that spirit by offering practical solutions to enduring problems, so I ask the finance secretary to use his power and the money in his budget to do those things now.
I will address some of the issues that members have raised during the debate.
Iain Gray has made it absolutely clear that his view of the budget priorities is that the Scottish Government has to use the consequentials that we have received from the United Kingdom to extend the availability of childcare. I assume that we also have to find other resources from other areas of the budget to mitigate all the impacts of the bedroom tax. Mr Gray has clearly put on record the Labour Party’s priorities.
Most Labour members were reasonably on message today on that question, although Anne McTaggart made the case for more money for local government. I was in the chamber for First Minister’s question time today when I heard Johann Lamont marshalling an argument about a lack of staff in the health service in Scotland. If we are to have more staff in the health service in Scotland, I presume that they will have to be paid, and if they have to be paid, more money will have to go into the health service.
I delicately suggest that, if there is to be an iron discipline around childcare provision and the bedroom tax, the Labour Party needs to be a tad more disciplined about the propositions that it brings to Parliament on a daily basis.
Mr Swinney is right in that I said that, if he wants to improve his budget, there are two things that he could do for a start. He will, however, acknowledge that I also said that, over time, our view was that the approach to many of the Government’s own stated key priorities had been flawed and without plan or strategy—and we will always criticise that. In other words, the cabinet secretary is quite clear that it is not always about spending; sometimes it is about doing things better in trying to deliver outcomes.
I will read that in the Official Report to see whether I can comprehend what underlay that comment.
Mr Brown has persistently raised the link between spend and outcome. In my intervention on Mr Brown, I tried to make a bit of progress on that question, and I think that Mr Rennie acknowledged that I made a fair point.
Mr Brown rather compromised his point by saying in his closing remarks that I should take the lead in the process. I ask him to forgive me because I am not going to do that. I have designed a mechanism that links spend to outcomes, and the Carnegie Trust said:
“We did not expect to find international innovation on our doorstep. But our work has repeatedly found that the Scottish National Performance Framework is an international leader in wellbeing measurement”.
The cabinet secretary knows that the Carnegie Trust quote was not referring to the linkages in any way whatsoever; it was a general proposition. There is a job for Parliament to do, but does the cabinet secretary not accept that the Government can play its part, too, instead of just sitting back and waiting for committees to report? The committees have reported already.
I am not sitting back. I have delivered an internationally leading performance management framework for public policy in Scotland. It could only be the Scottish Conservative Party that is prepared to see that evidence from the Carnegie Trust and run it down as somehow unacceptable. I simply say to Mr Brown that it is dead easy for people to say that we have to improve the linkage between spend and outcomes. That is a really easy thing for a parliamentary committee to say.
Yes, my colleagues did sign up to that; it is dead easy to do it. I am simply saying, “Here’s the challenge for the parliamentary committees: suggest the mechanism, I will consider it and then we will have a debate about it.”
Mr Chisholm and Ms Marra raised a point about the Chief Secretary to the Treasury’s remarks to the Welfare Reform Committee. If I am paraphrasing him correctly, I think the chief secretary said that what the Scottish Government does with the block grant is a matter for the Scottish Government. That is technically correct—I am free to give local government as much money as I want—but if I want to compensate individuals for the implications of the bedroom tax, the law of the United Kingdom says that I have to do that through discretionary housing payments, for which there is a ceiling of £20 million. That is the point of law that I have to observe.
I am not questioning the comments; I am explaining the comments. The chief secretary is technically correct: what I do with the block grant is a matter for the Scottish Government, and I can give local government as much money as I want. However, if I wish to compensate individuals for the implications of the bedroom tax, the only legal mechanism I have to do that is through discretionary housing payments, for which the law of the United Kingdom says that the most that we can contribute—the most that a local authority, not the Scottish Government can contribute—is £20 million. Those comments are not meant to be obstructive; they are an explanation of the legal position as I am advised of it.
I am glad to see that Mr Hepburn and Mr Gibson are on the same wavelength; it is reassuring and worrying in equal measure.
Mr Rennie said that the progress of the NPD programme has been disappointingly slow. I simply point out to Mr Rennie that the NPD programme was brought in to deal with the swingeing cuts in capital expenditure that were brought forward by the UK Government. I accept that progress has been slower than I said it would be, but if we had not brought it in, we would not have been able to fund the Aberdeen western peripheral route, the Inverness College, which is currently being constructed, the City of Glasgow College, the college in Kilmarnock, and various schools. Progress has not been as fast as I would have liked. I have accepted that.
There is a great conflagration about the fact that I have decided to change the level of resource that I put into capital. I say to Mr Rennie that that is purely and simply a budgetary transaction to deal with the fact that, within the financial year, I have acquired more capital from the UK Government but I have also been given less resource. I am simply trying to defend the spending plans that Parliament has democratically voted for when my budget has been reduced by the UK Government in-year—in 2013-14—and changed compared with the budget that I set out in draft to Parliament for 2014-15.
My final comment is to Mr Harvie. I thought that he made a very well marshalled argument about healthy living funds and more exercise being the greatest contribution that people can make to their own wellbeing. I could not agree more. I have tried to make my own contribution to that in recent months. It is a subject that I look forward to discussing with him in the new year.
In closing the debate on behalf of the Finance Committee, I would like to touch on a few issues that have been mentioned during the debate and make some other comments, as time allows. I echo the thanks of the convener to the various people who have contributed to the budget process, because even practical issues such as arranging our trip to Arbroath involve a lot of work. I also thank all members for their useful contributions, some of which we would agree with more than others.
If I have time, I will touch on some of the extremely useful workshops that we held in Arbroath, where we listened to local people.
The convener spoke about the national performance framework and the Scotland performs website. I will not spend a lot of time on that, as it has been mentioned quite a lot by other members. It is worth highlighting a statement that we heard in evidence from Professor Jeremy Peat of the David Hume Institute, who said:
“I think that Scotland should be proud of the NPF. It is a remarkable achievement to have got something so detailed, so regularly presented and so transparent in terms of the data, targets and information that are set out. It is a hugely positive base from which to proceed.”—[Official Report, Finance Committee, 2 October 2013; c 3087.]
That illustrates the point, which came through at committee, that no one is saying that the NPF is the final article and cannot be built upon. It is something that we all want to build on.
While such positivity about the NPF was welcomed by the committee, we should accept that it is not well known among the public. More could perhaps be done to promote its use, especially in supporting scrutiny of the budget.
Members made quite a range of comments about the national performance framework, including Mr Swinney. Kenny Gibson referred to it in his opening remarks. Members also referred to the positive feedback from the Carnegie Trust and the Royal Society of Edinburgh.
The point has been made that Scotland performs is a measure not just of Government but of the whole country. That takes us into an area of complexity about who we are measuring and how we are measuring it. That is an issue not just of fact but of putting across to the public, and even to academics, who is responsible for what.
In a useful contribution, Iain Gray, I think, asked whether the cabinet secretary would accept that it was always his responsibility if something went wrong. Clearly, we would all agree that that is not the case, but it can sometimes be difficult to differentiate between what the Government has done and what it is responsible for in the outcomes and the other factors that are involved.
A number of members touched on outcomes and outputs. The NHS in particular has been mentioned, with, on the one hand, the satisfaction of much of the public with the NHS and, on the other, measures of output such as the number of nurses.
On preventative spending, it was clear in committee that if we were successful in keeping people out of hospital—which many of us would like to do—that would mean fewer hospitals and fewer nurses. However, few politically would dare to stand up and say that they welcome fewer hospitals and fewer nurses.
Gavin Brown talked about wanting a stronger link between spend and outcomes. Mr Swinney asked him how a stronger link could be achieved.
I did not think that I would say this but I was struck by what Mr Hepburn said, which was that we all have a responsibility to ask questions and use the NPF in debates in the chamber and in committee. He hit the nail on the head there, because it is perfectly feasible for all of us, when we are questioning Government ministers—or anyone for that matter—to ask them how what they are doing ties into the NPF and the indicators. I am as guilty as anyone of not doing that. There is a lot of potential for all of us to get involved in that and to move forward.
Yes, I think that we would all agree with that. One question is how much of the NPF should be in statute and how much of it should be allowed just to carry on without a statutory basis; indeed, another question is whether the indicators themselves should change over time. After all, whichever Government or party is in power, society changes and priorities change. I do not think that we reached a final conclusion on that matter; some suggested a limit on the number of indicators, while others wanted them to be expanded.
Last month, the committee met in Arbroath. We were joined by the cabinet secretary in the afternoon but, in the morning, we spent some useful time listening to the views of local people and organisations. I sat on a small group that comprised a diverse range of participants, including representatives from Angus Council, local small businesses, the Prince’s Trust and Enable. It soon became clear that there was a range of familiarity with NPF, with some participants being very familiar with it while others, frankly, had little knowledge of it at all. That was very much in keeping with previous evidence heard by the committee that, although many of those familiar with it felt that it contained a lot of useful content, there was a lack of broad familiarity with it across the country as a whole.
However, despite the differing levels of familiarity, when the group started to discuss some of the issues addressed in the NPF, it became clear that many of them were tangible and of everyday relevance to people. Coming from Glasgow, with a tendency to be slightly city-centric, I found it helpful to hear different perspectives from smaller towns such as Arbroath and its neighbours in Angus. We heard, for example, that many local businesses had particular issues with competition from the bigger cities.
As has been previously noted—indeed, it has been extensively mentioned this afternoon—preventative spending has been a key area of interest. Both the current Finance Committee and its predecessor have spent a lot of time on the matter. Clearly national and local government must utilise their finite resources as efficiently and effectively as possible; however, the committee recognises the challenges faced by public bodies. These were summed up by Glasgow City Council, which said:
“the expectation is that we will treat the population and their needs as they stand right now, yet prevention and early intervention dividends will be felt much further down the track, five or even 10 years away. The reconciliation that health boards and local authorities are left to deal with comes from the fact that the pressing needs and the expected gains do not coincide.”
That issue has been touched on a few times this afternoon. For example, the benefit of the extra money that education might spend on prevention now will be felt in health, prisons and so on. Although progress towards integrating the provision of public services has been made in some areas—most notably, perhaps, in the Highlands—Fife Council highlighted to us some of the challenges that it faced, saying:
“The success of prevention and early intervention will depend on the reshaping of mainstream provision and universal services. It is not about a small, targeted response; it is about reshaping the whole system approach.”—[Official Report, Finance Committee, 9 October; c 3144 and 3167.]
Turning to comments that were made in the debate, I note that Malcolm Chisholm mentioned the issue of disinvestment. I think that that takes us back to Glasgow City Council’s comments; the difficulty is that this is a moving playing field. For example, demand for hospitals and elderly care might be increasing. Disinvestment might not necessarily mean closing a hospital; it might mean not opening an extra hospital because more people can be treated at home. We simply have to accept that these issues are tricky.
A number of members talked about priorities and where money should be spent. As Bob Doris mentioned, most of the suggestions have been about what to do with the consequential funds; there have not been many suggestions about changing the budget as a whole. We may get to that at stage 1, but at the moment it certainly seems that most of the debate is about what to do with those funds. Mark McDonald commented that Labour was asking for a lot of things—everything, in fact—and Anne McTaggart, who spoke immediately afterwards, asked for more money for local government.
In conclusion, I note that the next draft budget that we will be scrutinising will make use of the powers under the Scotland Act 2012, and will include the land and buildings transaction tax and the landfill tax. For the time being, however, I very much look forward to the Finance Committee’s on-going work in that regard, and I support the motion in the convener’s name.