Expert calls for clarity in Scotlands budget

6 Nov 03
A leading economist has criticised Scotland's £22bn budget as being inconsistent, difficult to understand and lacking in inter-year comparisons.

07 November 2003

A leading economist has criticised Scotland's £22bn budget as being inconsistent, difficult to understand and lacking in inter-year comparisons.

Donald MacRae, chief economist for TSB Scotland and a member of the Scottish Executive economic advisory group, told the Scottish Parliament finance committee that there was a need for greater clarity on the balance between capital and revenue.

MacRae told the committee, which is scrutinising the budget: 'It is not a budget as much as a collection of spending plans. A budget normally shows both income and expenditure, but the draft budget document really just reflects the current constitutional arrangements for raising and spending taxes.'

MacRae said the substantial spending increase planned would bring the total to around 50% of the gross domestic product, which put Scotland ahead of the rest of the UK and many other European countries. The budget would make Scotland's overall economy more dependent on the public sector.

He also pointed out that he found little link in the budget between the expressed priorities and the planned expenditure totals. He believed fewer priorities should be set and that these should be ranked, a process that would lead to better understanding.

MacRae claimed there was inconsistency between changes proposed for enterprise and lifelong learning and the stated objective of concentrating on economic growth.

He added that he had difficulty in making inter-year comparisons, partly because of the use of different discount rates.

However, another economist, Peter Wood, of Pieda Consulting, described the budget as being 'full and detailed'. He added: 'I would say that the documentation is more detailed than what comes out of the National Assembly for Wales or the ever-changing Northern Ireland Administration.

'Both those administrations produce documents to support their budgets, but the Scottish documents are particularly detailed and provide a wealth of information for those who are prepared to mine them.'

Former enterprise minister Wendy Alexander MSP said MacRae's views were a 'pretty weighty indictment of the lack of transparency and comparability in the budget'. A former Northern Ireland deputy electoral officer and chief executive of the Ulster Unionist Party has been charged with theft and false accounting at the province's Electoral Office. Alastair Patterson resigned when questioned by the police in July.

A four-year scheme for increasing tenant involvement in running housing estates has failed to make any significant difference. An independent study suggested tenant participation compacts proposed by the Office of the Deputy Prime Minister should be relaunched and rebadged to coincide with a new national framework.

The Institute of Public Finance has published guidance on managing business risk in public bodies. It is in response to Audit Commission findings that many public bodies have yet to develop a formal risk strategy.

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