A budget shaped by values?

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“Don’t tell me what you value: show me your budget and I will tell you what you value”

US President Joe Biden

In this memorable quote, President Biden (or to be more accurate President Biden’s father) makes the point that when it comes to turning values into actions, the budget is, arguably, the single biggest set of decisions taken by governments each year.  

It is not surprising therefore that the type of budget, and the values and analysis underpinning it, are considered important. For example, there have been calls that the Scottish budget be built on an understanding of (amongst other things):

  • equalities,
  • and within that, gender,
  • human rights, and
  • wellbeing. 

So, what are these approaches, and what do they mean in practice?

Firstly, it should be said, it is not necessarily a zero-sum game, and all of these approaches have the potential to complement each other.  Whilst there are other ways of cutting the budget (such as using a climate, environment or sustainable development lens), this blog takes a quick look at these four different approaches.

Equality budgeting

The Scottish Government argues that in practice equality budgeting means

…making more effective and targeted use of public finance…. analysing the implications of any budget decision in terms of individuals with different protected characteristics and how those characteristics, such as sex, race, class, disability and age, intersect with one another.

The Scottish Government has published an Equality Budget Statement (EBS) alongside the budget documents every year since 2009. In 2018 this was renamed the Equality and Fairer Scotland Budget Statement, and the most recent Equality and Fairer Scotland budget statement examined the equalities implications of the 2021-22 budget.  The government has also been providing guidance to policy makers within and outside the government, developing a financial transparency programme, and doing some work to model the distributional impact of the budget.  

In all this the Scottish Government is advised by an Equality Budget Advisory Group (EBAG).  And in July, EBAG published a detailed report on equality and human rights budgeting.  Amongst its recommendations were that:

  • The Scottish Government should produce a pre-budget statement, in-year reports and a mid-year review, with all these including equalities analysis
  • There should be a Citizens’ Budget (a condensed, accessible version of the budget, and an easy read version of each of the key budget documents).
  • The Scottish Government needs to organise itself better, for example so that finance, policy and analyst staff work closely together to produce equalities and human rights analysis of spend; and that this is backed up by investment in building knowledge and capacity

Gender budgeting

Gender budgeting is one of the most common approaches to equality budgeting, and it is now backed up by a significant body of analysis (for example see gender budgeting resources from the OECD, and from the Scottish Women’s Budget Group). 

A briefing from the Canadian Center for Policy Alternatives sets out the case for gender budgeting:

You can’t assume that government budgets affect men and women the same way—or other groups for that matter—since men and women generally occupy different social and economic positions. Unfortunately, until very recently, governments have done exactly that—developing policies and assigning funding to them in a gender-blind fashion.

Some examples of gender budgeting from around the world (at a national level) include the following.

  • Canada’s Budget 2021, where gender budgeting is a requirement of the Gender Budgeting Act 2018, and uses specific gender budgeting tools.
  • Austria, where the Constitution has included gender budgeting as a requirement for all levels of government since 2009.
  • Iceland, where gender budgeting arose out of the 2008 financial crash and is now a requirement of the Public Finances Act 2016.
  • South Korea, where a legal framework for gender budgeting was enshrined into the National Public Finance Act revised in 2006, and submission of the gender budget statement and the gender performance report to the National Assembly became mandatory from 2010.

An OECD report on gender budgeting (2017) reported that at that time 15 of 34 OECD countries either had, or were planning to, introduce gender budgeting, and it was often legally underpinned.  However, there were many different approaches and often little agreement on what was meant by gender budgeting.  Half of the countries surveyed could point to “specific examples where the gender-budgeting tool had brought about significant changes in policy design and/or outcomes”.

In Scotland, the First Minister’s National Advisory Council on Women and Girls looked at the issue (March 2021) and recommended that intersectional gender budget analysis should be integrated into the Scottish Budget process, and that this should be given “a statutory footing”.

Human rights budgeting

The Scottish Human Rights Commission (SHRC) has looked closely at human rights budgeting.  Dr Alison Hosie of the SHRC suggested that a human rights approach to the budget “starts with asking the right questions”, including:

With regard to resource generation, (in those areas where the Scottish Parliament holds the revenue raising powers) this means asking:

  • Is sufficient revenue generated to invest in realising basic levels of rights for all?
  • Where and whom are resources generated from? Are particular groups unjustly impacted?
  • Is government revenue increasing/ could it be increased further?

With regard to resource allocation, this means asking:

  • Do allocations prioritise the achievement of adequate rights for all?
  • Do allocations close the gaps in human rights enjoyment between different groups?
  • Are allocations growing or shrinking? Are reductions justified in human rights terms?

Dr Hosie also says that with human rights budgeting, greater fiscal transparency is required and that:

Developing capacity on Scotland’s human rights obligations across all government portfolios and their budgets will be crucial if the government is to take human rights leadership off the page and into action”

This Scottish Parliament is in the early stages of working out what this means in practice.  The Equalities, Human Rights and Civil Justice (EHRCJ) committee’s pre-budget scrutiny this year included a focus on human rights budgeting, and the Convener pointed out that the committee is “in a learning process”.  SPICe is also recruiting for an academic fellow, to help develop understanding of how human rights budgeting can be applied practically in the parliament.

Wellbeing budgets

The SNP manifesto (p48) included a commitment to “deliver a wellbeing budget”,  though it should be noted that the budget is already “underpinned” by the cross cutting National Performance Framework (NPF), one of its purposes being “to increase the wellbeing of the people of Scotland”.  

It is also worth noting that a wellbeing budget would be related to, but is not the same as, a “wellbeing economy”, which is a “top priority” for the Scottish Government.

Perhaps the most well-known wellbeing budgets elsewhere are those created by the New Zealand government. In May 2019 a “wellbeing budget” was launched which  included increased funding for mental health services, tackling child poverty and tackling family violence.  The New Zealand government Treasury said that the budget would meet its objectives by

1. Breaking down agency silos and working across government to assess, develop and implement policies that improve wellbeing

2. Focusing on outcomes that meet the needs of present generations at the same time as thinking about the long-term impacts for future generations

3. Tracking our progress with broader measures of success, including the health of our finances, natural resources, people and communities.

The New Zealand Treasury also makes use of a wellbeing-based cost-benefit analysis tool to assess budget decisions.

Reflecting on the impact of the budget, two years on (Guardian April 2021) Arthur Grimes, former Chief Economist at the Reserve Bank of New Zealand, and now a Professor of Wellbeing and Public Policy at Victoria University School of Government, said

It was marketing as opposed to substance,

but also suggested that

…to have governments committed to prioritising wellbeing, in a measured and accountable way, is certainly better than the opposite.

Another commentator, Bryce Edwards, of the Institute for Governance and Policy Studies at Victoria University, Wellington, was unclear about the impact but said the approach:  

was a positive rebalancing of that focus – to realising GDP in itself, economic growth in itself isn’t the be-all and end-all.

There was a degree of scepticism about wellbeing budgets from some witnesses to the EHRCJ Committee pre-budget scrutiny sessions.  For example, Dr Alison Hosie of SHRC said: 

There is a danger that the wellbeing focus is the next new shiny thing for the Government.

And Dr Angela O’Hagan, (independent) Chair of EBAG, said

New Zealand has attempted wellbeing budgeting, but the critique there was that it was not very strongly gendered and there was no strong intersectional analysis in that approach.  

A data gap?

Whichever approach, or approaches, are taken to the budget, if decisions are to be based on values, they need to be informed by accurate, relevant and up to date, data and analysis.  The Scottish Government is aiming to tackle this through its equality evidence strategy, its Equality Data Improvement Plan, and specifically for example, a Race Equality: Immediate Priorities Plan

Nevertheless there is further work to be done, and recent reports from the Fraser of Allander Institute, and the Joseph Rowntree Foundation, both backed up long standing concerns about significant shortcomings in equalities data (relating to people with a learning disability, and ethnicity respectively in these cases).  The issue has also been identified by the EHRCJ Committee, in its pre-budget letter to the Scottish Government (November 2021).

As one official working on gender budgeting in Iceland’s Ministry of Finance said:

Ignorance is bliss”, said Thomas Gray.  But we cannot be in that place anymore.

Simon Wakefield, SPICe Research