Scottish Budget changes ‘will usher in massive cultural shift’

24 Aug 17

Scotland’s new fiscal powers will bring about a “massive” culture change to Holyrood’s budget process, a member of the independent expert group charged with drawing up reforms has told PF.

Don Peebles, head of CIPFA Scotland, said: “The wider cultural change is going to come from two places. One is greater public involvement in the process, beyond the normal stakeholders and lobby groups. The other is the government, with the assistance of parliament, which is going to mean a longer-term outlook on finances and wellbeing.

“At the moment, the government produces the budget to a specific timetable, and parliament undertakes budget scrutiny at a fixed point in time. For the public, there is little interaction and – dare I say it – little understanding of the process.

“That interaction is going to change because the tax-setting process for income tax is going to be predominantly here in Edinburgh,” Peebles predicted.

“The relationship that people have with Westminster, which is mature, is going to change into a more mature one with Holyrood.”

The group’s report, published in late June, calls for a more strategic approach to the process, including the publication of economic data in an annually updated medium-term financial strategy in the spring and a fiscal framework out-turn report each autumn.

It sets four thematic objectives: wider influence in shaping the Budget; better transparency and public understanding; greater capacity to respond to challenges; and better benchmarking against properly measured outputs and outcomes.

These would underpin a new approach, with committees taking account of the budget implications of policies; and budget planning made subject to year-round parliamentary and public scrutiny, rather than being examined only in the weeks between the budget statement and bill.

Peebles said wider engagement would be unlikely to increase demand for spending from different groups.  

“I’d like to think it’s more likely to mean greater awareness and understanding of what the intended outcomes are from the government’s perspective, what resources there actually are, and what has to be done by the respective parties to meet those outcomes,” he said.

“What we mean by a whole-year approach is a greater awareness on the part of committees that finance and financial consequences are ingrained into what they are considering. Finance is a part of, not apart from, normal policy issues.”

Extended scrutiny also reflects the continued interdependence of Holyrood and Westminster timetables, Peebles said. “The fact that the UK government has revised its timetable to bring the Budget from the spring into the autumn means an additional complication.  

“That was what we thought about in setting out a minimum timescale for publication of the [Scottish] Budget after the UK Budget, which means not only that there has to be a budget produced within a few weeks but also appropriate time for scrutiny. In recent years, especially in spending review years, the time for scrutiny has sometimes been compressed to an unacceptable level.”

The budget process will be just one part of a much-expanded financial discussion, Peebles said, which would include “the wider fiscal framework, a medium term financial strategy, the fiscal framework out-turn report and, in a spending review year, the statement of objectives or framework documents”.

Finance secretary Derek Mackay welcomed the group’s conclusions.

Peebles said that a high degree of consensus should not disguise the scale of the changes. “The move from a single-year focus to thinking over the longer term – that’s a massive step,” he said, adding that it was a conscious attempt to address the perennial tension between long-term thinking and short-term electoral cycles.

  • Keith Aitken
    Keith Aitken

    covers Scottish affairs for Public Finance from Edinburgh. He was formerly economics editor and chief leader writer on The Scotsman and now has a busy freelance career as a writer, broadcaster and event chair.

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