Holyrood ramps up budget scrutiny process

MSPs have approved a new budget scrutiny process to take account of the Scottish Parliament's expanded financial powers and fiscal framework.

Under a new "written agreement", the Scottish Government will provide a long-term perspective on the sustainability of the public finances, while parliamentary committees will be expected to exert more influence on the formulation of Government spending plans, with a detailed focus on economic and social outcomes.

With the Parliament now responsible for raising much of what it spends, the new budget process has four core objectives:

• to have a greater influence on the formulation of the budget;
• to improve transparency and raise public understanding and awareness of the budget;
• to respond effectively to new fiscal and wider policy challenges; and
• to lead to better outputs and outcomes as measured against benchmarks and stated objectives.

Recent budget timetables have given rise to controversy, as the Scottish Government has delayed the process until the Westminster budget statement which now takes place in the autumn, leading to complaints that there has been too little time for effective scrutiny of its proposals to meet the parliamentray timetable and the start of the financial year. The new, full year approach to budget scrutiny will include:

• each spring, publication of a medium-term financial strategy for Scotland’s public finances, the first of which is due at the end of May; and
• each autumn, a fiscal framework outturn report, setting out data for Scottish tax revenues.

However a full year approach is envisaged, under which committees will have the flexibility to incorporate budget scrutiny including public engagement into their work, prior to the publication of firm and detailed spending proposals. Scrutiny should be continuous, with an emphasis on developing an understanding of the impact of budgetary decisions over a number of years, including an emphasis on what budgets have achieved and aim to achieve over the long term.

The need for fiscal responsibility is recognised, with a greater focus on prioritisation, addressing fiscal constraints and the impact of increasing demand for public services; and also on the interdependent nature of many of the policies which the budget is seeking to deliver.

Bruce Crawford MSP, convener of Holyrood's Finance and Constitution Committee, commented: "For Parliament’s oversight of tax-raising and spending plans to be really effective there needs to be a shift from year to year scrutiny to a longer-term perspective."

He said the new process would see a move towards multi-year budgets that would help public bodies develop medium-term priorities and plan more effectively for future challenges.

"Importantly, parliamentary scrutiny will include a greater focus on outcomes rather than spending. This will enable MSPs to better determine whether policy objectives have been met and public spending has been effective."

Speaking after yesterday's unanimous approval, Mr Crawford concluded: "This evening’s endorsement of Holyrood’s new scrutiny arrangement marks the start of a cultural change and the biggest overhaul of the Parliament’s budget process since the start of devolution."