Finance Committee announces parliamentary inquiry into the creation of a ‘Scottish OBR’

25.06.2013

Proposals to set up a Scottish ‘Office of Budget Responsibility’ (OBR) are to be the subject of a new inquiry from the Scottish Parliament’s Finance Committee, it has been announced.

Committee Convener Kenneth Gibson MSP is calling for expert and public opinion on how such an Independent Financial Institution (IFI) should work in practice. 

Mr Gibson said:

“In evidence to the Finance Committee last month, John Swinney the Cabinet Secretary for Finance stated that, as a consequence of the new financial powers arising from the Scotland Act 2012, Scotland will require an independent forecasting body that can provide independent assessment to the Government and the Parliament of what might be generated as a consequence of those taxes.

“The Cabinet Secretary said it was his intention to establish a new body prior to the implementation of the newly devolved taxes in April 2015.

“Our committee therefore wants to examine carefully how such a body should work in practice and to whom it should be accountable.”

He added:

“Many OECD countries have set up IFIs in recent years, including the UK, Australia, Ireland, Sweden and Canada.  We want to hear expert and public views on what powers a Scottish IFI should have and what areas of analysis it should focus upon.”

Full details of the committee’s call for evidence can be found on its webpage:

http://www.scottish.parliament.uk/parliamentarybusiness/CurrentCommittees/29822.aspx

The Committee would welcome views on the proposed independent forecasting body including: 

  • What should be the role and remit of the new body?
  • Should the new body be established on a statutory basis?
  • What powers should the new body have?
  • Should such a body be appointed by and accountable to the Executive or the Parliament (or both)?
  • What would be the key objectives for the new body; what should be its key reports/areas of analysis?
  • In the light of the OECD’s suggested principles for independent fiscal institutions what should be the core principles for the new body?

The closing date for responses is Friday 6 September 2013.

Background

Many OECD countries have set up IFIs in recent years (source OECD, 2013).  A small number have existed for some time whilst over the past decade new IFIs have been established in South Korea (2003), Sweden (2007), Canada (2008), Hungary (2009, although effectively abolished as of 2011), Slovenia (2010), UK (2010), and Australia, Ireland, Portugal and the Slovak Republic (2011-12). 

IFIs vary considerably:

  • They may be under the statutory authority of the legislature (eg parliamentary budget offices, like the Canadian Budget Office), or the executive branch of the government ( like the Swedish Fiscal Policy Council)
  • They may vary according to degree and type of independence, leadership arrangements, staff and budget size, and their overall mandate.

The OECD suggests a broad definition as follows: “a publicly funded, independent body under the statutory authority of the executive or the legislature which provides non-partisan oversight and analysis of, and in some cases, advice on fiscal policy and performance.” 

Critical to this definition, says the OECD, is that IFIs have a forward looking task (in contrast to audit institutions, which look backwards).

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