3rd Report, 2009 (Session 3)

Annual Report 2008-09

Remit and membership

Remit:

1. The remit of the Finance Committee is to consider and report on-

(a) any report or other document laid before the Parliament by members of the Scottish Executive containing proposals for, or budgets of, public expenditure or proposals for the making of a tax-varying resolution, taking into account any report or recommendations concerning such documents made to them by any other committee with power to consider such documents or any part of them;

(b) any report made by a committee setting out proposals concerning public expenditure;

(c) Budget Bills; and

(d) any other matter relating to or affecting the expenditure of the Scottish Administration or other expenditure payable out of the Scottish Consolidated Fund.

2. The Committee may also consider and, where it sees fit, report to the Parliament on the timetable for the Stages of Budget Bills and on the handling of financial business.

3. In these Rules, "public expenditure" means expenditure of the Scottish Administration, other expenditure payable out of the Scottish Consolidated Fund and any other expenditure met out of taxes, charges and other public revenue.

(Standing Orders of the Scottish Parliament, Rule 6.6)

Membership:

Jackie Baillie (Deputy Convener) (1 October 2008 - present)
Derek Brownlee
Linda Fabiani (12 February 2009 - present)
Joe Fitzpatrick
James Kelly
Liam McArthur (1 May 2008 - 2 September 2008)
Tom McCabe (1 May 2008 - 1 October 2008)
Elaine Murray (Deputy Convener) (1 May 2008 - 1 October 2008)
Alex Neil (1 May 2008 - 12 February 2009)
Jeremy Purvis (2 September 2008 - present)
Andrew Welsh (Convener)
David Whitton (1 October 2008 - present)

Committee Clerking Team:

Clerk to the Committee
James Johnston

Senior Assistant Clerk
Mark Brough

Assistant Clerk
Allan Campbell

Committee Assistant
Jennifer Bell

Annual Report 2008-09

The Committee reports to the Parliament as follows—

Introduction

1. The Committee has had a busy work programme in the second year of the third parliamentary session. The Committee’s main area of work is the annual budget process. In addition to its budget scrutiny, the Committee has considered 14 financial memoranda, has completed a major inquiry into the methods of funding of capital investment projects and has begun taking evidence for an inquiry on the challenges for the 2010-11 Scottish Government budget. The Committee has also continued with a review of the budget process, and has taken evidence on issues relating to public sector pay.

Inquiries and Reports

Budget Process 2009-10
2. The principal role of the Finance Committee is to lead the Parliament’s response to the Scottish Government’s spending proposals through the annual budget process.

3. The planned budget for 2009-10 was originally set in Spending Review 2007, before the effects of the current economic downturn were evident. As well as examining the overall budget, the Committee, therefore, focussed its scrutiny in part on the impact of public spending measures by the Scottish Government to address the effects of the economic downturn. As well as the Draft Budget 2009-10, published in September 2008, the Committee’s scrutiny was significantly influenced by the Scottish Government’s response to the UK Chancellor’s Pre-Budget Report in November.

4. In order to continue its aim of gauging local views on the budget, the Committee held an external meeting in Ayr on 10 November 2008, at which it took evidence from the Cabinet Secretary for Finance and Sustainable Growth, John Swinney MSP. In preparation for budget scrutiny, in October the Committee took evidence from the Cabinet Secretary on the 2007-08 consolidated accounts and on the Scotland Performs reporting framework.

5. The Committee’s report was published on 10 December 2008. Alongside noting improved provision of budgetary information, the Committee made further recommendations on improving the link between expenditure and priorities and outcomes, including through Single Outcome Agreements and Scotland Performs.

Strategic scrutiny of the 2010-11 budget
6. In March 2009, the Committee launched an inquiry focussing on the effects of recession on public sector budgets in Scotland, and particularly the pressures and demands on the Scottish Government’s 2010-11 budget and spending in the longer term. The Committee began taking evidence in April, and will continue the inquiry in the next parliamentary year, with a view to informing parliamentary scrutiny of the Draft Budget 2010-11 in the autumn.

Inquiry into the methods of funding capital investment projects
7. The Committee completed a major inquiry into the methods of funding capital investment projects, hearing evidence over a series of sessions from a wide range of witnesses including public bodies, expert advisers, contractors, funders and commentators. The Committee’s report was published on 16 December 2008, and was debated by the Parliament in April. The report examined current funding options, and contained a series of recommendations for ensuring that value for money is achieved in future public capital investment.

Review of the budget process
8. The Committee continued a review of the annual budget process. Having published a detailed consultation paper, the Committee took evidence on different approaches to budget scrutiny, and will continue this in the next parliamentary year, considering in particular the resources available to support scrutiny.

Other issues
9. The Committee heard evidence from central and local government employers, others public bodies and trades unions on issues relating to public sector pay. The Committee also continued to monitor specific Scottish Government initiatives, and held a one-off evidence session on the efficient government programme. It has also considered and approved the terms of two contingent liabilities.

Bills

10. The Committee has continued to apply its three-level system for scrutinising financial memoranda of Bills. Level 1 involves sending a standard questionnaire to affected bodies. Level 2 involves taking written evidence from affected bodies and oral evidence from the Scottish Government. Level 3 involves the same steps as level 2, plus oral evidence from affected bodies. This year, five financial memoranda have been scrutinised at level 1, six at level 2, and three at level 3. This scrutiny covered 11 Scottish Government Bills, two Members’ Bills and one Committee Bill, and has so far resulted in six reports to lead committees at Stage 1, and also a report to the Parliament at Stage 1 of the Scottish Parliamentary Pension Scheme Bill.

Subordinate Legislation

11. The Committee has considered and reported on three affirmative and two negative Scottish Statutory Instruments.

Innovations

12. As part of its scrutiny of the 2009-10 budget, the Committee held an external meeting in Ayr. Prior to the meeting the Committee held workshops with selected representatives from businesses and organisations from within the local community. Participants were chosen to represent a wide range of views, and the discussions focused on economic development and infrastructure and investment. Issues arising from these workshops were then raised with the Cabinet Secretary for Finance and Sustainable Growth during a formal evidence session.

13. A further very successful workshop was held, with students from three local secondary schools making presentations and discussing budget priorities. Again, issues arising from this workshop were reported back as part of the Committee’s formal evidence session with the Cabinet Secretary.

Equalities

14. In its preparatory work for the external meeting the Committee sought to ensure that the venue was accessible to disabled people and had good transport links with the local area to allow the highest possible participation.

15. The Committee recommended in its report on the 2009-10 Draft Budget that an appropriate mechanism should be developed for reporting on equality proofing the budget. The Committee will continue to follow-up this issue in its strategic scrutiny of the 2010-11 budget.

Meetings

16. During the parliamentary year (from 9 May 2008 to 8 May 2009), the Committee met 29 times. Of these meetings, four were held entirely in public, 21 were held partly in private and four were held totally in private. The purpose of the majority of private items was to consider Committee reports.

17. All Committee meetings were held in Edinburgh, with the exception of the meeting in Ayr on 10 November 2008.