A fundamental review of Holyrood’s budget process to take account of Scotland’s new fiscal powers has been announced.
A ‘tri-partite’ review group, involving the Scottish Parliament, the Scottish Government and external public finance experts and academics will carry out the review.
Over the coming months, the review group will examine what changes are required to the Scottish Parliament’s budget process to ensure there is proper oversight and scrutiny of Scotland’s new tax and spending powers.
The group will be asked to consider the new complexities of the Parliament’s powers including the potential impact of:
- forecasting of tax receipts and demand-led social security spending;
- the operation of the indexation mechanism;
- the calculation of the adjustments to the block grant;
- the reconciliation between tax receipt forecasts and outturn figures;
- the UK Government’s Autumn Statement;
- the availability of relevant outturn data;
- associated revenue effects of tax change behaviours.
The review comes at a time of increased uncertainty in public finances following the EU Brexit vote.
Finance Committee convener Bruce Crawford MSP said:
“Holyrood’s budget process was designed nearly 20 years ago, at a time when the Scottish Government’s budget was largely determined by Westminster through the Barnett formula.
“With Scotland’s new tax powers, the Scottish Government is about to become responsible for raising much more of what it spends, and will rely on tax forecasting in order to set out its draft budget before Parliament each year.
“Understandably the Government will want to rely on the most accurate forecasts of tax revenue possible in order to ensure confidence and credibility in its budget.
“Equally, however, the Finance Committee will want to ensure that any new budget process still includes sufficient time for proper parliamentary scrutiny.
Cabinet Secretary for Finance and the Constitution Derek Mackay said:
“I am very supportive of the establishment of the review group which will bring together representatives from the Scottish Parliament, Scottish Government and a panel of external experts to ensure there is meaningful scrutiny of the budget and an opportunity for Parliamentary engagement in the process.
“Scotland’s budget process needs to evolve to take account of the complexities and opportunities associated with the Scottish Parliament’s new powers. It is important to ensure that we develop a process that balances the time required for proportionate and effective Parliamentary scrutiny with the need to ensure that the information being scrutinised is as accurate as possible and based on the most up to date forecast information.”
The full remit of Tri-Partite Scottish Parliament Budget Process Review Group can be found here.
The Group will consist of a range of external experts, Scottish Parliament and Scottish Government officials. The membership of the external group of experts is as follows:
- Caroline Gardner, Auditor General for Scotland
- Don Peebles, Head of CIPFA Scotland
- Sean Neill, Chief Executive, Scottish Fiscal Commission
- Professor James Mitchell, Director of Academy of Government, University of Edinburgh
- Dame Sue Bruce, Non-Executive Director
- Dr Angela O’Hagan, Glasgow Caledonian and Gender Budgeting expert
- Elaine Lorimer, Chief Executive of Revenue Scotland
- Professor Mike Danson, Heriot-Watt University
The timescale for the review will see a report to the Finance Committee and Ministers before summer recess 2017 (see above link for full details of the review timetable).