Draft Budget 2017-18 (Timetable)

– in the Scottish Parliament on 4th October 2016.

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Photo of Christine Grahame Christine Grahame Scottish National Party

The next item of business is a debate on motion S5M-01788, in the name of Bruce Crawford, on the timetable for the Scottish Government’s draft budget 2017-18.

We have a little time in hand, so I will make allowances for interventions.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

This is my maiden speech as convener of the Finance and Constitution Committee. I can safely say that I have had a steep learning curve over the past month. I also concede that I had not anticipated spending quite so much time considering the timetable for the draft budget.

There are two main areas that I want to cover on behalf of the committee. First, there is the immediate issue of the timetable for 2017-18; and, secondly, there are issues arising from the new financial powers, which will have a significant impact on how we conduct our budget scrutiny this year and beyond.

On that specific matter, the committee and the Cabinet Secretary for Finance and the Constitution have agreed to establish a budget process review group. The group’s work will include examining the impact of the new powers. I am delighted that a number of senior public finance experts, including the Auditor General, have agreed to join the group. Along with the cabinet secretary, I welcomed the external experts before they began their work at the group’s first meeting last Thursday. The group has a huge challenge in considering the impact of the new powers and redesigning the budget process, together with its timetable, prior to the publication of the draft budget for 2018-19.

With regard to the draft budget timetable for 2017-18, it might be helpful to the Parliament if I provide some procedural context for the debate. Under the terms of the written agreement, the Scottish Government is required to consult the Finance and Constitution Committee on a revised timescale for the budget process if it believes that it might not be able to publish the draft budget by 20 September. As a result, the cabinet secretary wrote to the committee on 23 June, indicating that his preferred option would be for the draft budget this year to be published after the United Kingdom Government’s autumn statement.

As we now know, the autumn statement will be published on 23 November, and the cabinet secretary has indicated to the committee that he intends to publish the draft budget three weeks thereafter, which takes us to the week beginning 12 December. The committee recognises that the timescale is challenging but emphasises that it is necessary in order to allow some evidence to be taken prior to the Christmas recess. The committee has sent the cabinet secretary a draft timetable for scrutiny of the draft budget 2017-18 that fully demonstrates that point.

In order to more fully understand the financial and fiscal context in which we are operating, two weeks ago the committee took evidence from the Fraser of Allander institute on its excellent, detailed and challenging report on Scotland’s budget. One of the main themes of that discussion was the potential impact of Brexit on the public finances at the same time as the new tax powers are being devolved. As the Fraser of Allander institute report points out,

“Delivering these new powers in ‘normal’ times would be challenging enough. But ... they are being delivered at a time of significant fiscal challenge and economic uncertainty.”

The Fraser of Allander institute report includes a number of hypothetical scenarios for the resource block grant arising from the autumn statement. If on 23 November the UK Government announces a further reduction compared with what was set out in March this year, the Scottish block grant could bear significant consequential effects. One of the report’s scenarios involves a further cut to the resource block grant of around £200 million for 2017-18. As the institute’s report points out, given the budgetary commitments that the Scottish Government has already made, the implication of a further reduction to the block grant of £200 million is that unprotected areas of spend could experience a real-terms cut of 2.2 per cent between 2016-17 and 2017-18. The FAI report further points out that an added challenge is that those areas

“have borne a significant share of the burden of fiscal consolidation since 2010-11.”

The committee recognises that the Scottish Government faces significant challenges in preparing the draft budget while there is so much economic and fiscal uncertainty arising from Brexit. It also recognises that a number of subject committees have already begun their budget scrutiny in advance of the draft budget being published. That is an approach that we and the previous Finance Committee have encouraged as part of a move towards more outcomes-based financial scrutiny. For example, I know that the Education and Skills Committee has begun to scrutinise a number of public bodies that fall within its remit. That work includes seeking information on the performance of those public bodies against the outcomes that are expected of them by the Scottish Government.

Although the committee supports a move towards a more flexible approach to financial scrutiny that may be carried out throughout the year, that should not be viewed as a replacement for scrutiny of the Government’s actual spending proposals. However, the committee recognises that this year is different, given the unique set of circumstances that currently exist as a consequence of Brexit and the imminent devolution of further tax powers.

Therefore, the committee has sought to work with the Cabinet Secretary for Finance and the Constitution to consider what level of information could reasonably be provided to support scrutiny prior to the publication of the draft budget. On 7 September, the cabinet secretary informed the committee that he would be willing to produce as much scenario-planning information as possible. There followed an exchange of letters between the cabinet secretary and the Finance Committee. I make it clear to the cabinet secretary today, as the committee did in its letter of 21 September, that the committee would find it unacceptable if he confirms that he is not prepared to publish any such information in advance of publication of the draft budget.

To move forward on a more positive note, it is also important to emphasise that the Government has agreed that the arrangements for scrutiny of this year’s budget process should not be viewed in any way as setting a precedent for future years. Part of the important work that the budget review group will now do over the coming months is to examine the effectiveness of scrutiny of the draft budget for 2017-18.

I want to touch briefly on some of the very important and complex issues that the review group will have to grapple with as a consequence of the operation of the fiscal framework; I understand that the deputy convener will also address some of those issues in his closing speech. The process will be highly complex and I am no expert, but it is essential that colleagues across the Parliament are well aware of how the money that will be available to the Scottish Government is calculated each year.

There are a number of elements to the process that are worth highlighting. As is obvious from the settlement, the budget will increasingly depend on the money that we raise through the devolved taxes as well as the block grant from Westminster. As the money that we raise increases, there will be a corresponding reduction in the size of the block grant. However, that will not necessarily be a zero-sum calculation, as the reduction to the block grant will depend on the impact of the relative performance of the UK and Scottish economies in respect of tax receipts. If, for instance, the Scottish economy outperforms the UK economy, the Scottish budget should benefit, but it will suffer if we underperform against UK economic growth.

The size of the annual Scottish budget will initially be based on forecasts, which will then be subject to a reconciliation process. The annual adjustment to the block grant will be based on forecasts that the Office for Budget Responsibility has prepared, and the expected tax receipts will be based on forecasts that the Scottish Fiscal Commission has prepared. That is quite a complex set of information that the review group, the Finance and Constitution Committee and the Parliament will have to grapple with.

Understanding the interrelationship between those forecasts and the subsequent reconciliation process will be one of the main challenges that face the budget review group and, in due course, the Finance and Constitution Committee and the Parliament. Obviously, we wish them well.

These are challenging times, and it is essential that we redesign our process to ensure that the Parliament can rise to meet those challenges. I look forward to hearing the contributions of members of the Finance and Constitution Committee and of other members in this important debate and to hearing the cabinet secretary’s response to my speech.

On behalf of the Finance and Constitution Committee, I move,

That the Parliament notes the timetable for the Scottish Government’s Draft Budget 2017-18.

Photo of Derek Mackay Derek Mackay Scottish National Party

I welcome Bruce Crawford to his position as convener of the

Finance and Constitution Committee and very much agree with him about the joint approach that we are taking on the longer-term look at the budget approach in the Scottish Parliament, in a partnership style.

There was a strong record of co-operation between the Scottish Government and the Finance Committee. As a former member of that committee, I look forward to maintaining and, indeed, strengthening that relationship in this session with a highly transparent approach to budget scrutiny that dates back to 1998. That approach provides much more satisfactory arrangements for holding the Government to account than is the case at Westminster.

As I have said previously to the Finance Committee, even before the EU referendum result there was already a strong reason for publishing the draft budget after the UK autumn budget statement. That is a legacy issue from the previous session that required to be addressed.

The referendum result has given rise to significant additional economic and financial uncertainty. The Chancellor of the Exchequer emphasised that point just yesterday in his party conference speech. He has also warned us this week that we should expect that the UK economy is heading for a “rollercoaster” ride over the coming two years or more, during negotiations to leave the European Union.

The uncertainty continues, and we will not discover until 23 November what all this really means for the content of the autumn statement and the accompanying economic forecasts that the Office for Budget Responsibility sets out. Both could potentially impact on the overall spending power that is available to the Scottish Government positively and negatively in respect of Barnett consequentials and the calculation of the block grant adjustment. It is also conceivable that the chancellor could set out changes to tax policy, welfare and pay, all of which we would want to consider and respond to.

Photo of James Kelly James Kelly Labour

The Government has a £30 billion budget. The cabinet secretary heard Bruce Crawford say that the Fraser of Allander institute reckoned that the variable could be in the region of £200 million, which is less than 1 per cent of that budget. Does the cabinet secretary agree that that is a reasonable assessment?

Photo of Derek Mackay Derek Mackay Scottish National Party

That relates to the point about uncertainty. I am uncertain about what the chancellor might do. I do not think that even he has clarity about what he might do, as he will be reliant on the OBR forecasts that drive his decisions, which in turn affect the Scottish budget.

I say again that publishing our budget before the autumn statement would mean that forecasts for tax receipts in Scotland and in the rest of the UK would rely on economic data that was published alongside the March 2016 UK budget. We have serious concerns about the validity of such data in light of the economic upheaval following the EU referendum outcome, which was also referenced in the letter—

Photo of Derek Mackay Derek Mackay Scottish National Party

I am afraid that I do not have time.

That was also covered in the letter from the Finance Committee, which stated:

“the resulting economic and fiscal uncertainty arising from the Brexit vote means that there is now an arguable case for delaying the publication of the draft budget until then.”

It therefore makes sense, in my view, to defer finalising and publishing our spending plans until we have the additional clarity that the autumn statement should bring.

Having set out the factors that will influence the timing of the Scottish Government’s draft budget this year, I today confirm my intention to publish the draft budget 2017-18 on 15 December 2016. That is in line with the aim that I set out at the committee on 7 September: that I am committed to producing a budget as quickly as possible after the chancellor’s autumn statement, and that we will work incredibly hard to produce the draft budget in those three weeks after the autumn statement.

I am acutely aware of the potential impact that that will have on budget scrutiny in the traditional sense, so I was heartened to read the convener’s acknowledgement that a number of committees have already adapted their approach to budget scrutiny ahead of any draft budget publication to ensure that effective scrutiny continues to take place.

Back in 1999, when the written agreement was designed, the Scottish budget was funded almost entirely from the block grant from Westminster, and only around 10 per cent of the budget was funded from taxation. The increased scale and complexity of the fiscal responsibilities that the Scottish Parliament and Scottish Government are adopting is hugely significant.

The Deputy Presiding Officer:

Please sit down, Mr Harvie—the cabinet secretary is not giving way.

Photo of Derek Mackay Derek Mackay Scottish National Party

I will make further progress, and then I will take an intervention.

The changes over the next few years will take us to a position in which more than 50 per cent of our budget will be funded directly from taxation. The arrival of those new powers necessitates a long-overdue and essential reform of the budget process, as opposed to further minor adjustments. I welcome the work that is now being undertaken on that joint approach, and I am very supportive of the establishment of the joint working group to look at the budget process with that external advice.

It is important to ensure that we develop a process that balances the time that is required for proportionate and effective parliamentary scrutiny with the need to ensure that the information that is being scrutinised is as accurate as possible and based on the most up-to-date forecast information.

I reiterate my willingness to provide the committee with additional strategic information to assist committees in preparing for the autumn statement and the draft budget. On 7 September I offered to provide further work on updated economic financial modelling, which could provide analysis that demonstrates the impact that changes in economic performances would have on the Scottish budget.

I can go on further about the detail that the committee requested, but I certainly intend to honour the commitment that was made to the committee on providing further information. What I cannot do is provide a draft spending plan and budget—that would be a draft budget—but I will hold true to what I promised the committee.

I am happy to take Patrick Harvie’s intervention.

Photo of Patrick Harvie Patrick Harvie Green

I am grateful to the cabinet secretary for giving way. He knows very well that the committee looked at the letter from him at the beginning of September and said that what it amounted to was unacceptable. He also knew, before he got to his feet today, that a majority of members in this Parliament had already formally recorded a request for him to put scenario planning information with indicative figures into the public domain by the end of the October recess.

We could have pushed the matter to a vote—we could have sought a vote at 5 o’clock and dramatic headlines at the end of the day—but the committee has bent over backwards to give the cabinet secretary alternatives to producing a draft budget because we understand the difficulty that he is in. Will he not say anything, following the position that he offered at the beginning of September, to go further than he has gone so far and allow Parliament to do its job in budget scrutiny?

Photo of Derek Mackay Derek Mackay Scottish National Party

I have said to members in the chamber that I will honour the commitment that was given to the Finance Committee on sharing as much information as I possibly can. I cannot produce a scenario plan that is a draft spending budget without having all the information that will come from the chancellor’s autumn statement, and the committee recognised that point.

I will produce as much information as I possibly can, but I cannot produce a draft budget that would be credible because of the uncertainty that exists within the system. I will continue to work constructively with the committee and share as much as I can to give as much certainty as I can, but that does not mean that we can produce a draft budget. That will come in a credible way through the channel that has been outlined in the committee’s draft timetable. I hope that members will appreciate a positive approach to try to share as much as I can to support scrutiny of the Parliament and welcome the fact that many committees are already undertaking pre-budget scrutiny. That is a helpful approach in the Parliament.

Photo of Murdo Fraser Murdo Fraser Conservative

I start by thanking the committee convener, Bruce Crawford, for setting out the committee’s position very fairly in his opening speech. As someone who is noted for his loyalty to the Government, I appreciate that this has not been an easy job for him to perform personally, but the role of a committee convener is to represent the committee view, even when one might hold different personal opinions, as I know from my own experience.

The finance secretary essentially had a choice when he came to the chamber this afternoon: he could either listen to the will of Parliament as expressed in the number of signatures to Mr Harvie’s motion, which represents a majority of Parliament, and offer concessions to meet Parliament and the Finance and Constitution Committee half way; or he could try to brazen it out. I regret that he has decided to take the latter path in this afternoon’s debate.

The key point that we need to stress is that the issue is not actually the timing of the draft budget. The committee is not calling for the finance secretary to publish his budget before December. Much as we would like the budget to be published in September, we entirely recognise the difficulties that that would cause the Scottish Government and the parliamentary process.

This debate is about whether sufficient information can be provided by the Scottish Government prior to the publication of the budget to allow effective parliamentary scrutiny. It is clear that neither I nor the other members of the Finance and Constitution Committee, from all different parties, are satisfied with the cabinet secretary’s response. In the letter of 21 September from the committee to the cabinet secretary, language is used that might well be unprecedented in such a communication.

The matter revolves around the level of information that can be provided to subject committees prior to the publication of the budget. As Bruce Crawford reminded us, when the cabinet secretary came to the committee on 7 September, he said, in response to a question from Mr Harvie:

“I am willing to produce as much scenario planning information as I can.”—[

Official Report, Finance Committee,

7 September 2016; c 16.]

In his subsequent letter to the committee, the finance secretary declined the committee’s request that he publish indicative budget figures or scenarios at the level of individual portfolios or programmes in advance of the draft budget to assist scrutiny. He stated:

“I think this would risk creating some confusion.”

The concern is that the finance secretary has now gone back on his word to the committee and is offering less than he previously promised. That is what led the committee to write in the very strong terms that we have seen.

As Patrick Harvie has already said, all Opposition members have signed up to a motion in his name that calls on the Scottish Government to do what the committee asked the Government to do and publish budget scenario planning information and illustrative figures before the end of the October recess. I sincerely hope that, even if the cabinet secretary does not do so during the debate, he will reflect on the stated view of the majority of members of Parliament and hold true to his original promise to the committee.

This is not merely an academic matter. Effective democracy requires appropriate parliamentary scrutiny of the actions of Government, and nowhere is that more important than in relation to scrutiny of the draft budget. In “OECD Best Practices for Budget Transparency”, the Organisation for Economic Co-operation and Development states:

“The government’s draft budget should be submitted to Parliament far enough in advance to allow Parliament to review it properly.”

Our Parliament’s past record in this area has been excellent. Indeed, it has been far better than that of Westminster. Last year, the introduction of the budget was delayed because we were awaiting the outcome of the UK Government’s spending review. At that time, we were told by the Scottish Government that that would be a one-off. It is therefore very disappointing that budget scrutiny is being truncated for the second year in a row.

Photo of Murdo Fraser Murdo Fraser Conservative

If the former finance secretary wants to intervene, I will listen to what he has to say.

Photo of John Swinney John Swinney Scottish National Party

I have a simple point to make. The budget process was delayed this year for the same reason that it was delayed last year: the delay to the UK autumn statement. It is delayed for exactly the same reason, so I do not quite know why Mr Fraser is working himself up into a lather about this particular point.

Photo of Murdo Fraser Murdo Fraser Conservative

Perhaps if Mr Swinney was still finance secretary, he would treat the Finance and Constitution Committee with a bit more respect than his successor seems to. The point, surely, is that the autumn statement will come at the same time every year. If we get into a pattern of delaying the Scottish Government’s budget on an annual basis, that is clearly not acceptable.

We are trying to find a compromise position that allows the committees of this Parliament to do their job properly by getting them the information that they require at least to start their budget scrutiny work. They are unable to do that at the moment because of the lack of information.

On the risks to the Scottish Government’s budget, it is worth looking at the advice that the Finance and Constitution Committee has been given by its own adviser, whose actual words were that the impact of the autumn statement on the overall Scottish Government budget was likely to be “relatively minor”—those were the actual words that he used. He suggested elsewhere that the overall impact on the budget—as Mr Kelly said in his intervention—was unlikely to be higher than £200 million. That is in the context, of course—

The Deputy Presiding Officer:

The member is in his last minute.

Photo of Murdo Fraser Murdo Fraser Conservative

I am sorry, Mr Crawford.

That is in the context of an underspend that was revealed in the latest Audit Scotland report on the Government’s consolidated accounts of double that figure, or £400 million.

There is a very simple way for the Scottish Government to resolve the issue to the satisfaction of Parliament, and that is for the cabinet secretary to keep his word to the committee. He needs to provide enough information to Parliament and to subject committees to allow them to do effective and proper scrutiny work. To do otherwise, frankly, is to show contempt both for the work of this Parliament and for the work of its Finance and Constitution Committee. I am pleased to support Mr Crawford’s motion.

Photo of Kezia Dugdale Kezia Dugdale Labour

Setting a budget is this Parliament’s most important responsibility. The budget determines how much money is available to spend on the national health service—the most precious institution in this country. The budget allocates funding for nurseries, schools, colleges and universities—the institutions that will give our young people the skills that they need to compete for the jobs of the future and, indeed, to grow our economy. The budget decides how much money our councils receive, which has major consequences for the funding of vital local services such as social care.

In an age of austerity, a Government’s budget requires more scrutiny than ever before, not less, yet less scrutiny is exactly what the SNP is attempting to deliver. Derek Mackay’s decision not to publish the draft budget until December will severely limit the ability of the Parliament’s committees to scrutinise the budget properly.

In addition, by refusing to provide as much information as possible in advance of the publication of the draft budget later this year, Derek Mackay is treating the Parliament with contempt, particularly as he is going back on a promise that he previously made to the Parliament. The late publication of the chancellor’s autumn statement has consequences for the Scottish budget—of course it does—but that is not sufficient justification for Derek Mackay’s refusal to publish indicative figures and budget scenario planning information. In response to an intervention, the cabinet secretary suggested that we were looking for absolute figures. Of course we recognise that that is unreasonable. We are asking for indicative figures and the ability to look at different scenarios—that is all that we are calling for today.

As the Finance Committee confirmed, the consequentials from last year’s autumn statement impacted just 0.5 per cent of the Scottish block grant. Given the cuts that we face, that is not an insignificant amount of money, but it cannot be used as an excuse to avoid scrutiny of the Government’s spending decisions.

We are only having this debate because the committee’s convener—a member of the governing party—rightly would not accept the finance secretary’s attempt to avoid parliamentary scrutiny as much as possible. To quote Bruce Crawford, it is “unacceptable” that the finance secretary is

“not prepared to publish any such scenario planning information in advance of ... the draft budget.”

I am pleased to support Patrick Harvie’s motion, which urges the Government to come forward with budget scenario planning before the October recess. I have yet to hear anything from the cabinet secretary in response to Patrick Harvie’s intervention as to whether that clarity will be provided. At the last count, the motion had received the support of the majority of MSPs across the chamber.

I say to the cabinet secretary that there is an irony about the two debates that we are having this afternoon. We support the Government’s efforts when it comes to debating the impact of Brexit on Scotland’s economy—we have lent the First Minister our support on that. Each time that we have a vote in the chamber on an issue such as the impact on higher education, the First Minister takes that message out of the Parliament and presents it to other European countries as the will of the Parliament. How can the First Minister rely on the will of the Parliament when she is beyond it but not listen to the will of the Parliament while we are in it? I ask Mr Mackay to reflect on the seriousness of the motion that Patrick Harvie has lodged.

The Parliament must hold the Government to account for the budget that it seeks to pass, and the Labour Party will certainly do that. I have three specific questions for the finance secretary. Will he commit to producing a three-year spending review so that public services and all organisations that are dependent on Government funding can plan ahead? Will he guarantee that next year’s draft budget will revert to being published in September, as in previous years? Will he support Labour’s calls for the Scottish Fiscal Commission to independently scrutinise all Scottish Government accounts, including spending commitments?

The Labour Party will not vote for any budget that meekly passes on cuts or even doubles them, as has been the case with local government. The First Minister promised voters that she would be an anti-austerity champion; instead, she has become an administrator for that austerity. Therefore, when the Scottish Government presents the budget to Parliament, Labour will lodge amendments to introduce a 50p tax on those who earn more than £150,000 to invest in our schools and nurseries, and we will seek to add a penny on income tax to pay for public services. That is making decisions for Scotland that the Tories would never make and using the powers in this place that we have argued for. That, together with our other tax proposals, will enable us to stop further cuts to the public services that we all rely on.

Given the full range of powers that the Scottish Parliament now has, the Scottish National Party faces a clear choice: accept a Tory budget from Westminster or go our own way with proposals to grow the Scottish economy and protect our schools and hospitals. More and more cuts to Scotland’s budget harm our country’s growth and risk jobs and prospects for our young people. We need to invest to provide the next generation of Scots with the chances that they need to succeed. If the SNP minority Government does not accept those proposals and forces another austerity budget on Holyrood, we the Labour Party will vote against it. If the SNP wants support, it will need to look to the Tories for that. Labour will not and cannot help the SNP to pass an austerity budget.

The Deputy Presiding Officer:

I gave the member a bit of leeway, but the debate is about scheduling and timetabling. I expect that we might wander a little, but members should keep a lookout not to wander too far from the topic in hand.

We move to the open debate, with speeches of four minutes or thereabouts. I have room for interventions.

Photo of Kate Forbes Kate Forbes Scottish National Party

Judging by the Conservative Party conference yesterday, we are all in for a treat, as Mr Hammond takes us for a rollercoaster ride. After all, he and Ms May are stationed at the controls and, while she promises to push the button on article 50, he is ready to reset the economy in the autumn statement.

This is not a normal year, so I think that we all agree that it cannot be a normal budget process. New fiscal powers introduce greater risk and reward to the Scottish budget at a time of economic uncertainty following the referendum and unknown plans at the hands of a new UK chancellor.

Yes, there are some clues. The Fraser of Allander institute has suggested that

“a weaker economic outlook and rising inflation” mean that the chancellor is even more likely to cut the Scottish budget by perhaps up to 6 per cent by 2020-21. However, those are clues and, unless Mr Hammond chooses to enlighten us now with one stroke of the pen or one word in person, we will be dealing with clues until his autumn statement on 23 November.

Photo of Adam Tomkins Adam Tomkins Conservative

Given that the member quotes the Fraser of Allander institute, does she agree with its point that

“the role of Parliament and civic Scotland in scrutinising and influencing budgetary plans should be strengthened” and not weakened?

Photo of Kate Forbes Kate Forbes Scottish National Party

Precisely. I agree with that, but scrutiny should be judged not solely by the number of weeks but by the focused attention to the budget. The cabinet secretary has said that he will assist in that process as much as possible by providing modelling and information in advance of the budget.

For the Government to publish detailed numbers or scenario plans—which are, in essence, the budget—in advance of the autumn statement, when Scotland’s relative performance is more important than ever before, at a time of economic uncertainty, and when we are entirely in the dark about the UK Government’s spending plan would be not just unwise but downright irresponsible. The cabinet secretary has a responsibility to the people of Scotland to manage our finances with prudence and reason, which is precisely what he is doing.

I agree fully with those such as Adam Tomkins who argue that scrutiny is more critical than ever, and I do not underestimate the time pressures on the Finance and Constitution Committee and subject committees—I am a member of one of them. To ask members such as me to scrutinise numbers that we know to be incorrect and then to ask us to do that all again when we have the right ones is not effective scrutiny or a good use of parliamentary time. As I just said, scrutiny should be measured not solely by the number of weeks but by its effectiveness, and it must be based on highly accurate and up-to-date forecasts.

I am not usually one to quote the Tories, but yesterday their chancellor said:

“When times change, we must change with them”.

It is to the credit of members in this Parliament that every subject committee has already adapted its approach to budget scrutiny, be that through high-level pre-budget scrutiny or extra committee sessions. That is happening already.

This is not a normal year and it cannot be a normal budget process. Our budget timetable was designed nearly two decades ago. The original principles of the financial issues advisory group should underpin the budget process every year, but how we apply those principles must adapt to the changing economic and political climate. In sharp contrast to Westminster, this Parliament is noted for its adaptability to change and its scrutiny of the Government’s budget. We have the opportunity to do both: to refocus our efforts by adapting our timescale for more effective scrutiny. There is a responsibility on all of us to the people of Scotland to get on and do that.

Photo of Graham Simpson Graham Simpson Conservative

The Parliament has been criticised in the past for its poor standard of scrutiny—that was certainly lacking before the current session. Governments do not tend to like scrutiny, and this one certainly does not, but it is vital that laws and budgets are put through the wringer so that we end up with better legislation and better spending plans. To do that, MSPs need adequate time in which to carry out our vital role.

Photo of Graham Simpson Graham Simpson Conservative

No.

For Derek Mackay to give the subject committees two weeks in which to scrutinise his draft budget is frankly ridiculous and unacceptable. We can see how Parliament feels about it by the strength of support for Patrick Harvie’s well-crafted motion.

Derek Mackay had an opportunity today to give concessions, but he chose not to take it, which is disappointing.

It must have pained Bruce Crawford to write the letter that he did to the cabinet secretary. Mr Crawford clearly takes his role seriously and he is to be commended for acting in the way that he did.

Derek Mackay can bleat all he likes about the timing of the autumn statement, but it is a pathetic excuse.

Photo of Derek Mackay Derek Mackay Scottish National Party

What does Graham Simpson make of the Northern Ireland Executive delaying its budget until after the chancellor’s autumn statement?

Photo of Graham Simpson Graham Simpson Conservative

The National Assembly for Wales has not delayed. Derek Mackay is the finance secretary of Scotland, so let us deal with Scotland and his responsibility to this Parliament.

As the adviser to the Finance Committee stated, if Derek Mackay published the draft budget before the autumn statement, any changes afterwards would be likely to be “relatively minor” and “marginal”. Derek Mackay is the finance secretary of Scotland and he is answerable to Parliament.

Photo of Graham Simpson Graham Simpson Conservative

No.

Mr Mackay owes it to members of committees to allow us to do our jobs effectively. He is a former council leader, so he should know that people need time to consider things such as budgets. They also need a heads-up on what is likely to happen. It was quite reasonable for the Finance Committee to ask for scenario planning information. Mr Mackay initially said that he would help, but then he performed a screeching U-turn.

I say to Derek Mackay that he is not there to be a roadblock; he is there to help smooth the way. I once had high hopes for him—particularly when, as a council leader, he agreed to speak to a meeting of Conservative councillors at my invitation. However, those high hopes are dwindling. It comes to something when an SNP committee convener tells a minister of his own party that his behaviour is “unacceptable”. Derek Mackay would do well to heed Bruce Crawford’s words. Derek Mackay should reflect on the matter and, when he has done so, he should conclude that, as I said at the start, proper scrutiny is essential and two weeks does not allow for that.

Scotland used to be a world leader when it came to the time that is allocated for budget scrutiny, second only to the United States. Derek Mackay is taking us to the bottom of the pile and that is simply not good enough.

Photo of James Kelly James Kelly Labour

I must say that I found Derek Mackay’s response disappointing. This is a serious debate about how best the Parliament can scrutinise the budget. The Finance Committee had reasonable discussions with him and Mr Harvie offered him a reasonable way forward but, to be honest, we got seven minutes of absolute waffle.

The bottom line is that we have a £30 billion budget to consider and the Finance Committee was looking for scenario planning. That means having an optimistic scenario that involves a budget of £30.4 billion, a middle scenario that involves a budget of £30 billion and a pessimistic scenario that involves a budget of £29.6 billion, and running all the high-level figures through them.

It is disingenuous of Mr Mackay to pretend that it is difficult to do that, because a lot of the information has already been published. The Government budget holders do not sit with a blank piece of paper each year, waiting for the budget to come round; they go back to the previous year’s budget and start with that. We should not forget that 55 per cent of the Scottish budget is made up of staff costs, which do not vary a great deal from year to year, and there are other fixed costs. In the programme for government, we heard the Government make a number of spending commitments that will roll over into the budget. There is no excuse for not being able to produce different scenarios with high-level indicative figures.

When the Finance Committee discussed the matter, I favoured publication of the budget according to the normal timetable, because I was not convinced by the cabinet secretary’s arguments. However, the committee—very reasonably—gave Mr Mackay a way forward and asked for scenario planning and indicative figures. At the meeting, he gave the committee the impression that he was prepared to go along with that solution. It therefore came as something of a shock—a slap in the face for the committee—when Mr Mackay wrote to the committee to refuse to provide that information.

Where does that leave us now? We cannot carry out proper scrutiny. How can the subject committees properly scrutinise the budget in a matter of two weeks? That weakens and undermines the process. The irony in all this is that it is the most important budget in the history of the Scottish Parliament, at a time when we have more powers at our disposal than ever before, yet Derek Mackay is seeking to curtail and close down the debate. More than at any time before, we should be opening the budget process up for scrutiny, looking for ideas and involving more people, but it is difficult for us to do that when the timescale has been reduced.

I say once again that Mr Harvie’s motion, which has the support of the majority of the Parliament, gives Mr Mackay a way forward. Mr Mackay should seriously reflect before he stands up to respond to the debate, because if he does not respond positively and does not seek to address the issues in that motion, he and his Government will be seen to be treating Parliament with contempt.

Photo of Patrick Harvie Patrick Harvie Green

I am grateful that the smaller parties have a chance to participate in what is a relatively short debate. It is important for us to have the debate, and I argued in the Finance Committee that the issue should be brought to the chamber. I pay tribute to Bruce Crawford for the way in which he has chaired that committee and sought consensus, which I acknowledge was not easy.

I also acknowledge the difficult position that Mr Mackay and the Scottish Government are in. I do not pretend for a moment that this is easy. However, it is important to acknowledge that, instead of a committee debate, with a motion that says that we should debate the timetable, the Opposition parties could have insisted on a substantive debate, with motions, amendments and votes at decision time. We did not do that. We could have agreed to a letter that demanded that a draft budget be published in October, as set out by one of the earlier proposed timetables. We did not do that either. At every stage, we have sought to give the cabinet secretary not only an incentive but an opportunity to bring forward a budget process that is up to the job.

The letter that Mr Mackay referred to, which told us what he was able to talk about, largely indicated that he was willing to expand on information that is already in the public domain or to set out some of the choices that the UK Government might make. We can all speculate about that, just as the Fraser of Allander institute can, but what we—and our subject committees—need is to be able to consider the choices that the Scottish Government will make in response and how that will impact on many of the things that we all care about.

I will disagree with some of the things that are anticipated in the budget when it is proposed, and I will agree with others. I want radical investment in the provision of much more childcare in Scotland. I want the investment that has long been needed in a national infrastructure priority for energy efficiency. As our subject committees meet and take evidence ahead of the draft budget, I want to know whether those things are under threat and what the impact will be if the Scottish Government’s budget is indeed cut.

Others might be concerned to know whether the Scottish Government’s existing tax plans—on income tax or air passenger duty or at a local level—will have to change as a result of the budget. Local councils and other public bodies around Scotland are trying to make their plans now. They are trying to look ahead and they are all having to do that under the assumption of the worst-case scenario, because nothing else is out there.

I express gratitude to the members who have added their names to my motion. I reinforce to SNP colleagues that I lodged a motion deliberately to express the support of members who share that view and not to force a vote but to give the cabinet secretary the opportunity—I hope that he will take it in his closing speech—to give us more information about what he will put into the public domain.

Photo of Derek Mackay Derek Mackay Scottish National Party

I expressed in my opening remarks a willingness to continue to work with the Finance and Constitution Committee to share as much information as possible. I hear the request for scenario planning.

Members have said that they do not expect a budget, but there has to be room for agreement about something that, although short of a budget, contains enough information to allow fuller scrutiny. I say genuinely to Patrick Harvie that I think that there is room for agreement and that I will continue to work on that and to listen to voices in Parliament.

Photo of Patrick Harvie Patrick Harvie Green

I agree that there is room for agreement and that we have to accept something that is short of a budget, but that is what we discussed a month ago at the Finance Committee, on the record, when the cabinet secretary told us:

“I am willing to produce as much scenario planning information as I can.”—[

Official Report

,

Finance Committee

, 7 September 2016; c 16.]

Since then, that commitment has been withdrawn, which the committee has agreed is unacceptable.

I respect and understand the position that the Government is in. Regrettably, we need to acknowledge that something that is short of a draft budget will be necessary. However, we need more detail. I would like to hear a commitment from Mr Mackay, in his closing speech, that he will accept the will of the majority of Parliament and publish that scenario-planning information, with illustrative figures, by the end of the October recess. That is what Parliament has asked for. It is not only MSPs who have a right to expect that but all the people we serve and the organisations whose livelihoods, work and public service depend on the public spending plans that the Government will bring forward.

Photo of Willie Rennie Willie Rennie Liberal Democrat

I have always thought that Bruce Crawford is a wise, sensible and reasonable man. That has been confirmed this afternoon. I see him squirming in his chair as I give him that commendation, but it comes to something when somebody of his stature is prepared to put forward such a powerful case and to use phrases such as “unacceptable behaviour”. The cabinet secretary should pay heed to that.

We all accept that circumstances have changed with the new powers on welfare and tax, plus the autumn statement and Brexit. They make the case for more scrutiny—not less. They make the case for having a more detailed discussion with the country, not a less detailed one. Of course we understand that Derek Mackay cannot produce a draft budget that has all the variables in place, but let us understand a bit more of the detail. After all, the SNP Government is expert on everybody else’s responsibilities. Apparently, we have projected the cost of Brexit for the next 20 years but cannot predict the budget just a few weeks ahead.

We need a bit more perspective and understanding. The Fraser of Allander institute report that the minister has repeatedly quoted made projections over five years. That report must have some credibility, because he spends quite a bit of his time giving credit to it. However, he seems to be incapable of using all the might and resource of the Scottish Government to produce anything to compare with it.

It would be helpful if the minister were to pay heed to what has been recommended on producing scenario planning with indicative figures by the October recess. That is a reasonable thing to do and I think that I have seen a bit of movement from him today. I hope that it is movement towards that position so that we can have greater scrutiny and debate.

I fear that the hesitation and resistance that are clear from him are an indication of uncertainty about the SNP’s manifesto commitments, which were worked out months ago in advance of the election. What does the £500 million extra spending on health mean for the headline budget? What do the real-terms increases in police spending mean for the final budget? I would also like to see some profiling on the childcare commitment—one of the Government’s biggest and boldest commitments—to test whether some of the predictions that have been made about its roll-out can come true. Also, what is the real price of the cut in air passenger duty?

One of the biggest points that the Fraser of Allander institute makes is the need for detail on what departments are protected and which are unprotected so that we can fully understand the implications for the unprotected ones. The First Minister, who has quoted the Fraser of Allander institute’s report at First Minister’s question time, has made it clear on a number of occasions that the cuts could be something like £1.6 billion. We need, before the budget is finally published, to see some of the detail of what that could mean for the unprotected departments. That is some of the detail that the Parliament deserves to see.

I hope that we have seen some movement from the minister and that he pays heed to Bruce Crawford’s wise words so that we can come to an acceptable compromise on the matter, and so that the situation is no longer unacceptable in the Finance and Constitution Committee’s eyes.

Photo of James Dornan James Dornan Scottish National Party

Before I make some comments about the role of the Education and Skills Committee, I will comment on one or two things that have been said.

I take on board Patrick Harvie’s comments about how the Finance and Constitution Committee could have gone another way and I accept his sincerity in going the way he did. However, when I look at some politicians from the other parties, I see people who are playing political games with the situation. Kezia Dugdale gave us some of her top lines from her failed manifesto, Graham Simpson used the issue to attack Parliament but then praised Parliament for exactly the things that he had attacked it for, and then we got Willie Rennie scaremongering about the consequences of the SNP’s manifesto commitments. That is not what the debate should be about.

My colleague Kate Forbes made a very good speech in which she talked about effective scrutiny being not about time—not about weeks—but about the quality of scrutiny. She is quite right.

Photo of James Dornan James Dornan Scottish National Party

No.

How can we possibly scrutinise when we do not know how much money we have to spend? Surely it is important that we have the budget there—then, we can scrutinise it closely. If that means that the Education and Skills Committee needs to work longer or more often, then that is what we have to do.

Bruce Crawford very kindly referred to the Education and Skills Committee having done work on pre-budget scrutiny, but it is quite clear that we are not alone in having done that. We agreed to undertake scrutiny this autumn, prior to the expected publication of the budget, on the performance of four public bodies: Skills Development Scotland, the Scottish Further and Higher Education Funding Council, the Scottish Qualifications Authority and Education Scotland. We have recently written to those bodies asking them to set out their performance in delivering outcomes, how outcomes are measured, how they have adopted the Christie principles of reform, and how their work contributes to the Scottish Government’s climate change targets. We expect a response by 14 October and we will hear from the bodies at committee in November. That is all stuff that we could be doing in the run-up to the budget coming from the cabinet secretary. Our work follows the work of our predecessor committee, which looked at the same bodies last year, and it is also influenced by the then Finance Committee’s guidance to subject committees, which was issued at the beginning of summer.

Photo of James Dornan James Dornan Scottish National Party

No.

Our work is not just something that popped into our heads when we were thinking about what we could do while we were waiting on the budget. The purpose of the work is to hold those bodies to account for their spending and strategic decisions, and to help to ensure that their continuing performance is of the highest quality. The Education and Skills Committee is keen to get a good understanding of how those bodies have delivered outcomes and positively affected the lives of the people of Scotland. Looking back in that way also puts the committee in a good position to evaluate future spending decisions.

As well as writing to the bodies involved, I have written to a number of stakeholders and experts seeking their views on how the four public bodies perform. It is important also to hear from the people who deliver and use public services. We will, of course, accept relevant submissions from anyone, and in order to help to ensure that everyone is able to speak freely, we have agreed to publish submissions anonymously, if an individual asks us to do so.

Along with my colleague Ross Greer, from Patrick Harvie’s Green Party, I will tomorrow be speaking to teachers here in Parliament about their direct experience of the bodies and the impact that they have on the teachers themselves, their schools and outcomes for their pupils.

The Education and Skills Committee will soon publish a short survey—again, with a focus on how the bodies deliver on outcomes. Committee members also plan to undertake a number of visits to get a real feel for the work of the organisations. The purpose of the engagement work is to get a well-rounded understanding of those public bodies and their work. That will support the committee’s scrutiny, and we want to include as many people as we can in the process.

I make it clear that the Education and Skills Committee includes two Labour members, two Conservative members, one Green member and one Lib Dem member, and that they have all signed up to the pre-budget scrutiny and all see it as the way forward. They have all accepted the timetable that has been put in front of us. For me, that is what highlights that the criticism that we have heard is not about the very important issue of scrutiny of the budget. We have to accept that the matter is out of our hands. If it was not for the Brexit vote and the UK Government’s awaited autumn statement, which could have a devastating impact on the Scottish budget, we would not be in the current situation in the first place.

The cabinet secretary has said that he will work closely with the Finance and Constitution Committee, so let us hold him to his word on that, but let us, at the end of the day, support him in doing so.

Photo of Linda Fabiani Linda Fabiani Scottish National Party

We move to the closing speeches.

I call Alex Rowley. You have around four minutes please, Mr Rowley.

Photo of Alex Rowley Alex Rowley Labour

The debate has been fairly consensual in that there is an acceptance that the Government is not in full control of the situation in terms of the UK Government’s autumn statement. However, when I looked at the papers last night and at what the Finance and Constitution Committee and Bruce Crawford were saying, I did think that we would be able to reach consensus today in respect of being able to provide as much information as possible. That is a point that I will come back to.

The OECD principles of budgetary governance state that

“the national parliament has a fundamental role in authorising budget decisions and in holding government to account”, and that “government” should provide

“for an inclusive, participative and realistic debate on budgetary choices, by ... offering opportunities for the parliament and its committees to engage with the budget process at all key stages of the budget cycle”.

The concern that all parties have raised here today is that we will not be able to do that with this year’s budget. Clearly, we were not able to achieve those principles with last year’s budget, either.

The Scottish Parliament information centre’s budget briefing said that overall, at least, the Scottish process comes out relatively favourably when measured against most OECD criteria. Scotland is in line with best practice when it comes to the time that is allocated for budget scrutiny, to the committee structure that is in place for dealing with budgets, and to the involvement of the Finance and Constitution Committee in ordinary legislation. Scotland is also better placed than many legislatures because it has some capacity for obtaining expert advice and research on financial matters. In general terms, our Parliament would be up there among the best, but given what has happened over the past two years, we are not. Nobody here today has suggested that that is the fault of the Scottish Government. The situation is clearly to do with the autumn statement.

Bruce Crawford talked about a budget process review group, which will examine the situation in the light of what has happened over the past two years. The minister might want to say something more about that. As Kezia Dugdale said, we do not want to find ourselves in the same situation next year. I hope that the minister also picks up Kezia Dugdale’s point about a three-year budget cycle, which has been called for by most of local government and the third sector.

I am a bit lost, however, because Derek Mackay said to the then Finance Committee on 7 September:

“I am willing to produce as much scenario planning information as I can.”—[

Official Report, Finance Committee

, 7 September 2016; c 16.]

What has changed? He has then gone on to tell the committee that he will not publish any such scenario planning in advance of the draft budget. It is a legitimate question. Some people have suggested that his officials told him that it would be too difficult. That information is all that the committee is asking for.

Yesterday, I met a group of local government leaders from across Scotland. Right now, they are looking at their budgets and agonising over where cuts will have to be made. One of them said to me that they have been told by Derek Mackay that things are likely to get much worse in the coming years. Given that we are talking about real people who depend on public services, the situation is not satisfactory.

The Deputy Presiding Officer:

The member is too far on, Mr Doris.

Photo of Alex Rowley Alex Rowley Labour

All that the other parties are asking for today is for the cabinet secretary not to go back on his word. He told the committee that he would look at scenario planning and bring forward that information: I urge him to do that.

Photo of Adam Tomkins Adam Tomkins Conservative

We are a parliamentary democracy. We do not elect our Government directly; Government emerges out of Parliament and is accountable to it—not the other way round. Effective and robust parliamentary scrutiny is the very lifeblood of our democracy, so any attempt to dilute that effectiveness and to undermine Parliament’s ability to do its job of holding the Government of the day to account for its policies, decisions and actions should be tested against the highest standards. If they are found to be wanting they should be resisted. The cabinet secretary’s proposal not to publish the draft budget until the middle of December manifestly fails that test.

The finance secretary first brought his proposal to the then Finance Committee in June. On that occasion his excuses for seeking the evisceration of effective parliamentary scrutiny included that this Parliament, in comparison with its predecessors, has increased spending powers, particularly on social security. However, as those responsibilities are to come in later years of this session, and not in the current budget cycle, it was obvious that the cabinet secretary was pulling a fast one or—if that is not parliamentary language, Presiding Officer—pulling the wool over the eyes of the then Finance Committee.

As the committee said in its letter of 21 September to Mr Mackay, we did not consider that the reasons as set out in June would have been sufficient to justify delaying the publication of the draft budget. It was only much later, and in some evident desperation, that the finance secretary turned to the SNP’s favourite excuse for inaction—Brexit—as the all-too-convenient hook on which to hang his shoogly plans. I do not believe a word of it. What I believe are the words of the Finance and Constitution Committee’s independent adviser, who said that the effects of the UK Government’s fiscal decisions on the Scottish Government’s budget are likely to be “minor”, “marginal” and “limited”.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

A number of members have raised that point. Does Mr Tomkins accept that following the Fraser of Allander institute’s report, the committee adviser’s perspective changed a bit?

Photo of Adam Tomkins Adam Tomkins Conservative

As James Kelly and other members have pointed out repeatedly throughout the debate, we are talking about a margin of about £200 million, in a budget of more than £30 billion. That is relatively minor in comparison with the devastating impact that Derek Mackay’s proposals will have on effective parliamentary scrutiny.

When we consider the marginal impact that the UK autumn statement is likely to have on the Scottish Government’s budget against the significant impact on effective parliamentary scrutiny that the cabinet secretary’s proposals will have, it is obvious where the balance of public interest lies.

The cabinet secretary’s plans are disproportionate, unnecessary, profoundly disrespectful of Parliament’s authority and—to be frank—unworthy of him. As Audit Scotland said:

“Effective Parliamentary scrutiny is critical to ensure that decisions being taken by government are thoroughly tested and independently reviewed.”

Audit Scotland went on to say that there is

“the need for a step change in budget scrutiny”.

Well, this is a step change in budget scrutiny, but it is not quite in the direction that Audit Scotland had in mind. The proposals are unworthy of the cabinet secretary and should be resisted.

Photo of Derek Mackay Derek Mackay Scottish National Party

This afternoon’s debate has been helpful, constructive and useful.

Of course, Adam Tomkins cannot help himself—he has to add a bit of colour to the debate. I challenge some of what he said about the chancellor’s autumn statement presenting us with marginal budget challenges. That is not the impression that I get from the Chief Secretary to the Treasury or from the chancellor, who has spoken about a need to reset fiscal policy and about economic turbulence.

The current Tory chancellor has abandoned the economic policy of the Tory chancellor whom he replaced, and there is a great deal of consensus that the Brexit vote will have a profound impact on the UK economy and, of course, the Scottish economy. That is thanks to the party-political games that the Tories have been playing—look at the mess that they have left the UK economy in. There will have to be a response to that.

The Scottish Parliament’s Finance Committee in the previous session left the Parliament wise advice about addressing legacy issues to do with wise use of forecasts and making decisions as close to the forecasts as possible. That information was helpful, which is why I immediately embarked on the transformation of our scrutiny processes, in recognition of the powers that we have, the increased complexity and the role that Parliament should have.

Of course the Parliament’s role should be respected. That is why we embarked on the joint working group, which has representation from the Scottish Parliament, the Scottish Government and well-respected external participants.

Photo of Kezia Dugdale Kezia Dugdale Labour

Will the cabinet secretary take an early opportunity to explain to the Parliament exactly what he will publish between today and 15 December to allow the Parliament to do its job?

Photo of Derek Mackay Derek Mackay Scottish National Party

I will do that, and I appreciate the member’s intervention. What I am hearing from members is that this is about publishing not a draft budget but more information to take forward the debate that we have had in the committee. I repeat that I will be happy to provide the Finance and Constitution Committee with additional strategic information, to assist committees in preparing for the autumn statement and draft budget. I commit to producing that information by the end of the October recess.

I have been grateful for the interventions and comments of members. In previous correspondence, I have outlined the information that I think it would be helpful for Parliament to consider on current spending, on the outcomes focus and on other areas. I will also include a set of high-level analyses of the Scottish Government’s financial position and of the way in which possible UK tax and spending scenarios arising from the autumn statement could impact on the resources available to us. That is what members have repeatedly told me that they are looking for and I will provide that within the timescale that has been requested.

Photo of Derek Mackay Derek Mackay Scottish National Party

I would like to make some further comments.

It is really important to produce credible information—not just to produce something for the sake of it—and to produce incredibly accurate information so that the Parliament’s function to scrutinise a credible budget is used. Kate Forbes is absolutely right—it is about not just the length of time spent on scrutiny, but the quality of that scrutiny. It is also important that what is being scrutinised is robust, accurate and close to the forecasts from the OBR, the autumn statement and the work of the Scottish Fiscal Commission. We will allow those statutory duties to bed in before we look further at that role.

On Kezia Dugdale’s question about the three-year spending review, we are one year into that so there are two years remaining. I have publicly said that I will look at a multiyear spending review after this year’s one-year budget—that does not set a precedent. The joint working group will look at the entire process in a constructive way and will produce recommendations by next summer to inform the way in which we do business in future. That does not set a precedent, but we are in unprecedented times regarding the uncertainty that we face and the increased complexity in place for Scotland’s budget.

I hope that there is recognition that it is not just Derek Mackay and the Scottish Government taking that approach. The Northern Ireland Executive has taken the same view regarding that level of uncertainty, which has informed its position to defer its budget until not just later this year, but into next year. I have set a timescale that I will keep to—about three weeks after the chancellor’s autumn statement—and I will hold true to that. I have repeatedly made the commitment—to the Finance Committee and to Parliament—to provide as much information as possible and I think that that information should be sufficient to address the number of concerns that has been raised.

Photo of Patrick Harvie Patrick Harvie Green

The cabinet secretary has one last chance—he keeps using the same language that he used in the letter that the Finance Committee described as “unacceptable”. Will he publish as much information as he can about the spending plans that the Scottish Government is considering in the wake of the impact, or will he publish only information about what he thinks the impact will be?

Photo of Derek Mackay Derek Mackay Scottish National Party

The Parliament has asked for high-level scenario planning, and I have been quite clear that I will provide that within the required timescale. I am happy to write to the Finance and Constitution Committee and Mr Harvie will take great interest in that.

I have said repeatedly that I will not publish a draft budget. I cannot publish a credible draft budget—or a number of draft budgets—but I will publish the scenario information as I pledged to the committee. We will take it forward in a mature and rational way because, as we embark on using the new powers of the Scottish Parliament, it is important that we do that in a credible and robust way, which involves proper parliamentary scrutiny. That process should be sound.

Photo of Alex Johnstone Alex Johnstone Conservative

This has been a worthwhile debate that has been useful in highlighting some of the challenges that this Parliament faces in revising our processes following the devolution of significant new powers.

Before I summarise some of the excellent speeches that we have heard, I want to focus briefly on two issues. First, I want to comment on the need for some level of scenario planning to be published to support parliamentary scrutiny in advance of the publication of the draft budget; and, secondly, I will return briefly to some of the complexities of the challenge, which the convener mentioned in his thoughtful opening speech.

Members of the Finance Committee made it quite clear at our meeting on 7 September that, in agreeing to the draft budget being published after the UK autumn statement, some level of scenario planning would need to be provided prior to that. The cabinet secretary responded:

“I am willing to produce as much scenario planning information as I can.”—[

Official Report, Finance Committee

, 7 September 2016; c 16.]

The committee therefore finds it unacceptable that the cabinet secretary has gone on to say that he is not prepared to publish any such scenario planning. During the minister’s closing remarks, we heard a further extension of that form of words. Unfortunately, I believe that it will take some time to work out exactly what has been offered and what the outcome of that is likely to be. The committee considers that, without such information, it is unlikely that there will be sufficient opportunity for the subject committees to scrutinise the Government’s spending proposals.

I turn briefly to how we will address the complexities of the budget process in future years. As we have heard, the budget process review group will have the unenviable task of unravelling these complexities and designing a new process that meets the Government’s emphasis on accuracy and the Parliament’s emphasis on robust scrutiny. I am sure that that will involve a number of trade-offs and, in all probability, an element of compromise on all sides.

There are a number of issues that the committee has raised with the Scottish Government and which the review group is likely to consider. The first of those issues is data sharing. The fiscal framework makes it clear that the Scottish Government and the Scottish Fiscal Commission should

“have access to the necessary data, information and models held by the UK Government to support policy development and produce forecasts of a comparable quality to those produced by the OBR.”

That raises issues of timing and transparency. It is essential that data is made available timeously in order to maximise the time that is available for parliamentary scrutiny and that that data is published in a way that recognises the need for taxpayer confidentiality.

The second issue concerns levels of budgetary information. One of the benefits of budget scrutiny is that it has led to much greater levels of transparency in the budgetary information that is provided by the Scottish Government. The level of information that is provided regarding the operation of the fiscal framework will be vital in ensuring effective scrutiny, especially in relation to the calculation of the adjustments to the block grant; the methodology and assumptions that are used to calculate forecast tax receipts; the reconciliation process; and the use of the new borrowing powers, including the operation of the Scotland reserve.

The third issue concerns the timing of the publication of the draft budget. The committee has indicated that the reasons that are set out in the cabinet secretary’s letter of 23 June—which predates the Brexit result—would not have been sufficient to justify delaying the publication of the draft budget until after the autumn statement. One of the key challenges of the budget review group will be identifying an optimum time for the publication of the draft budget that can address both the relative accuracy of the numbers and the time that is available for scrutiny.

The final issue is the fact that the review of the budget process offers a real opportunity to improve financial scrutiny. In particular, the committee is keen to develop the move towards a more outcomes-based approach to budget scrutiny, which our predecessor committee began during the last session. That should involve much more scrutiny of the impact and effectiveness of how public bodies are spending public money before considering how it should be spent in future years. It should also result in an all-year-round approach to financial scrutiny and far better linkage between the audit and budgetary functions. However, the committee has made it clear that that new approach should not be viewed as a replacement for scrutiny of the draft budget document.

As I approach the end of my speech, it is appropriate for me to comment on some of the things that have been said during the debate. Some members—perhaps out of frustration—strayed into discussing the budget itself. Given today’s notification that publication of the draft budget is still some 10 weeks away, that frustration is understandable.

Other members chose to demonstrate the level of tolerance that the committee has shown towards the cabinet secretary. Patrick Harvie, in particular, set out the fact that the committee and the Parliament have much to be concerned about. In the simplest terms, the committee has offered the cabinet secretary a compromise, and it appears—at the moment, at least—that the cabinet secretary has not yet accepted that compromise. As we go forward, it is vital to understand that, if a compromise is possible, it must be reached quickly, because the worst possible outcome would be for the present stand-off to continue until 15 December and for the draft budget to be published with our having made no progress in advance.