Will Scotland’s Budget allocate resources in the best possible way? It seems unlikely when a fixed formula is used to determine spending in both health and local government
Could Scotland find a different way to distribute its vast amount of public resources? Is a different way necessary?
To be honest these questions will not be foremost on the minds of MSPs in the Scottish Parliament as they prepare for passage of the annual budget bill. The questions in fact are probably not in the minds of Scotland’s Parliamentarians at all. The budget bill, in fact, is likely to pass through Parliament, largely unnoticed.
The Scottish Government, with the first single party majority since devolution, will not have to engage in political bargaining with opposition parties to ensure passage of the budget. John Swinney, the Cabinet Secretary for Finance, Employment and Sustainable Growth, must be contrasting this with his first budget in 2007 when the then SNP minority government budget bill failed initially. It succeeded only after concessions to ensure the necessary number of votes was secured from opposition parties.
So approval of Scotland’s expenditure of £33bn will be passed, but the question it does beg is how much different will the budget now look given the existence of this majority? The answer is well… it looks pretty much the same as before. The reason for this is that around a third of the resources will go to health. Then, another third will go local government. The final third is allocated to higher and further education, justice and to the other devolved services.
The reason for the certainty of the third to both health and local government is that the allocation to each is determined by historic formulae. This apparent stagnation of the resource distribution mechanism can be contrasted with the encouragement by Government to ‘do things differently’. The most recent example is the proposed single integrated delivery framework for adult health and social care.
So should we scrap the existing and traditional models for resource distribution? Should we be looking for a different and more holistic means of ensuring that valuable public resources are matched to the service outcomes?
CIPFA thinks that the answer is ‘yes’. The Commission on the Future Delivery of Public Services agreed with evidence from CIPFA and Scotland’s local government directors of finance that the existing mechanism should be looked at. The reason is that amidst a drive for clear public service outcomes, there is almost certainly a disconnect between what we want to get from our public services at the point of delivery and what we think that we’re going to do when resource allocation is calculated.
The issue for the Scottish Government is that, no matter the size of its majority, or the speed of passage of the bill or its undoubted desire to do things differently, the limiting factor to reform will always be the existing time-bound formulae. Any reforms achieved could be argued to be despite rather than because of the existing formulae.
There’s no indication that the Scottish Government plans to revisit the existing means of resource distribution. This is perhaps understandable because lobby groups for local government and health usually seek to preserve or increase sector share.
In the absence of action by Parliament, by ministers or by government, CIPFA is about to launch a major project in Scotland. The project, the first of its kind to consider major distribution methods across Scotland’s public services, will examine the existing resource allocation methods. It will also assess whether these methods remain fit for purpose.
We expect this to trigger a significant but necessary debate in Scotland of how we should modernise our distribution of £33bn. So watch out for this issue finally reaching the minds of MSPs
Don Peebles is policy and technical manager at CIPFA in Scotland
