On 10 January 2023 we shared a blog that looked at the Scottish Budget 2023-24 from a human rights budgeting perspective, using the three principles of human rights budgeting – transparency, participation and accountability.
In this, we identified that the three principles of human rights budgeting could be a useful approach to looking at the common and overlapping themes between different committees’ pre-budget scrutiny.
This blog expands on that. We look first at the committee scrutiny process and how that has changed over the years, then identify the common themes across the pre-budget letters and reports produced by 12 committees in autumn 2022, and where these themes fit within the three principles of human rights budgeting.
Committees are currently taking post-publication budget evidence from stakeholders and Ministers, and a parliamentary debate on committee budget scrutiny will take place on Thursday 26 January. This overview should provide some useful context.
Because of the length of this blog, we’ve added a table of contents to make it easier to navigate.
Reform of committee budget scrutiny
Until 2018, the parliamentary budget process included all subject committees submitting a report of their budget inquiry findings and recommendations to the Finance Committee. As part of guidance on this, specific mainstreaming requests might be made, including consideration of equalities and climate impacts. This might include some oversight by other committees, for instance, the Equal Opportunities Committee look at how other committees had considered equalities in their budget scrutiny (last reported on in 2015).
The current process for scrutiny was put into place in 2018, partly in response to calls for enhanced opportunities for scrutiny. Much of this arose from the Budget Process Review Group.
The Budget Process Review Group
Established in 2016 by the then Finance and Constitution Committee and the Scottish Government, the Budget Process Review Group (“BPRG”) aimed to explore how the Scottish Parliament’s budget process could be refined in the context of increasing fiscal devolution.
The group reported in 2017, and recommended that a revised budget process framework include:
- A full year approach: a broader process in which committees have the flexibility to incorporate budget scrutiny including public engagement into their work prior to the publication of firm and detailed spending proposals.
- A continuous cycle: scrutiny should be continuous with an emphasis on developing an understanding of the impact of budgetary decisions over a number of years including budgetary trends.
- Be output / outcome focused: scrutiny should also be evaluative with an emphasis on what budgets have achieved and aim to achieve over the long term, including scrutiny of equalities outcomes.
- Fiscal responsibility: scrutiny should have a long term outlook and focus more on prioritisation, addressing fiscal constraints and the impact of increasing demand for public services.
- Interdependent: scrutiny should focus more on the interdependent nature.
of many of the policies which the budget is seeking to deliver.
The Group also identified key actions for the Scottish Government, including the use of spending reviews to support multi-year budgeting, the introduction of a Medium-Term Financial Strategy, and that the that “the Scottish Government clearly links its detailed annual spending proposals and multi-year spending reviews to relevant policies, strategies and plans”.
Committee budget timetable
Previously, committee budget scrutiny typically took place between the initial publication of the Scottish Government’s spending plans and the legislative process attached to Budget-setting, usually between September-November and January. Because the Scottish Budget timing is impacted by the timing of the UK Budget, and had progressively taken place later in the year, this left only a small window for scrutiny, and a focus limited to changes in annual funding allocations. The BPRG said:
“The existing process is also too input focused and forward looking with little assessment of the effectiveness of spending in delivering outcomes. There is also little consideration of the options for reallocating existing budgets. Rather, any parliamentary recommendations for policy change tend to focus on the need for additional funding rather than moving money around.”
Budget Process Review Group Final Report, 30 June 2017 (Para 40)
A revised full-year approach was recommended, and subsequently adopted. This allows committees to take more detailed evidence and to write to the Scottish Government a minimum of six weeks before the publication of the Budget. The expectation was that this would allow Committees to understand the longer-term impacts of portfolio budgets, and the Scottish Government a chance to reflect committees’ findings and recommendations in its spending proposals.
Interdependent policies
The BPRG highlighted that:
“many of the outcomes in the NPF, such as tackling inequalities, addressing climate change and improving health and wellbeing, cut across several policy areas. This means that many policies and objectives span the remit of more than one committee”.
Budget Process Review Group Final Report, 30 June 2017 (Para 122)
It suggested that the Finance Committee identify a small number of interdependent policy challenges in its annual guidance for subject Committees.
At the same time, the Group also suggested that the Finance Committee no longer have oversight of other Committees’ budget reports, on the grounds that subject committees were likely to have the greater expertise in the area.
Whilst the revised scrutiny process allows individual subject committees to build and understand longer-term evidence on the impacts of spending decisions on their portfolio areas, it also means there is no specific process to reflect upon the common and overlapping themes in committee budget scrutiny.
Common themes in pre-budget scrutiny 2023-24
Anyone familiar with any single committee’s budget scrutiny may have seen familiar themes and issues crop up each year. But what about between different committees, in the same year?
SPICe has looked at the pre-budget letters and reports produced by committees in 2022, to see to what extent the themes in evidence and recommendations overlap. The aim of this exercise is to show where an identified budget or fiscal scrutiny challenge might be present regardless of portfolio.
This analysis does not look at the Scottish Government’s responses to committees, or the follow-up evidence heard by committees.
Common fiscal challenges
As might be expected, most committee outputs noted the wider challenges that the Scottish Government is facing – the cost of living and energy crises, rising inflation, and pressures around public sector pay. Lesser cited, but still present, were issues around COVID-19 recovery, workforce pressures and the wider stresses on public services.
It will also come as no surprise that a common request from committees was that the Scottish Government clarify whether funding packages are at risk, or whether emergency funding will be available for at-risk sectors and programmes. A handful of committees identified funding shortfalls and called for these to be addressed. Likewise, asks for multi-year funding, a need identified by the BPRG in 2017, appeared in multiple portfolios. Another long-running trend was requests for increased fiscal flexibility – this year within the Education, Children and Young People, Finance, Public Administration and Constitution (specifically on Local Government finance) and Social Justice and Social Security portfolios. Prioritisation of spend on preventative measures also came up regularly.
Human rights principles in pre-budget scrutiny
Aside from the acknowledgement of the wider fiscal context and issues relating to funding levels and packages, the common themes in pre-budget scrutiny can be structured effectively into the three principles of human rights budgeting.
Transparency
The Transparency issues identified in pre-budget scrutiny across all portfolios clearly mirrored those raised more specifically in the context of human rights budgeting, and the issues identified by the Budget Process Review Group in 2017.
A need for greater fiscal transparency – clear breakdowns of budget lines and where spending is being targeted, the data underlining spending decisions, clear identification of new funding and annual changes, and clear links between Budget documents – was included in the recommendations of all 12 committees who wrote to the Scottish Government.
Tied into fiscal transparency, several committees called for improvements to data. In some cases, this was statistical data, such as the Economy and Fair Work Committee’s calls for gender disaggregated data on business activity and procurement, or the Health, Social Care and Sport Committee’s ask for improved data on spending on mental health and alcohol and drug services. In other cases, Committees asked for more detail on proposed or ongoing programmes, strategies, and funding packages. Almost every committee expressed a need for further detail in discreet areas to assist in scrutiny.
Accountability
In 2017, the Budget Process Review Group recommended that:
“… the Scottish Government ensures that any new policies, strategies or plans clearly set out the outcomes they are aiming to achieve and the intermediate outputs, measures and milestones that will be used to monitor progress towards this. It should be clear how spending on the particular policy or activity will contribute towards improving specific national outcomes in the NPF, including cross-cutting issues such as equalities outcomes.”
Budget Process Review Group Final Report, 30 June 2017 (Recommendation 24)
It’s worth noting that the Scottish Government sees committee scrutiny as the main mechanism for accountability within the Budget process.
In pre-budget scrutiny for the Scottish Budget 2023-24, all but one committee made recommendations relating to a need for further detail to better understand the decision-making process. This ranged from requests for the Scottish Government to explain the rationale behind specific cuts, to requests for Equality Impact Assessment data and evidence that the impact on spending decisions on specific groups had been understood and considered.
The need for clear links between the outcomes in the National Performance Framework and the Budget was mentioned in the reports and letters of seven committees. Elsewhere, outcomes identified within other strategies, such as the Covid Recovery Strategy or National Islands Plan, were referenced. Only three committee outputs did not mention outcomes at all.
Several committees also highlighted a desire for the Scottish Government to better explain the links between the Budget and interactions across different strategic frameworks, strategies, programmes, and policies, as well as between the Budget and the aims set out in the Programme for Government.
Participation
The evidence on this aspect of human rights budgeting was less prominent in committee output, but some of the calls for fiscal transparency related to accessibility. The underlying point in this case being that with clearer, more transparent documents, stakeholders, and ideally the public, would be better able to engage with the budget-setting process.
There were also some calls for more co-production and power sharing arrangements, particularly when it came to delivering local authority services, and in relation to further education, net-zero delivery, and islands initiatives.
As noted, the Scottish Government strongly links accountability to committee scrutiny. Participation is an important part of this process. In post-Budget publication evidence to the Equality, Human Rights and Civil Justice Committee on 24 January 2023, Angela O’Hagan, representing the Scottish Government Equalities and Human Rights Budget Advisory Group, said that in both the Scottish Government and Scottish Parliament there “needs to be greater effort, and that means some spending, around meaningful opportunities to participate”, including capacity and knowledge-building. She said that Committees themselves need to be much more engaged with community organisations to build that capacity and knowledge around public finances and scrutinising public finances.
The level of participation in the scrutiny process could be explored further, by looking at the range, number and diversity of stakeholders engaging in the year-round budget scrutiny process.
Mainstreaming in committee scrutiny
As noted, the committee scrutiny process involves the mainstreaming of certain issues so that they are considered across multiple portfolios.
There is some evidence of this – four subject committees made recommendations referencing Equality Impact Assessments, and two mentioned a need for gender disaggregated data to understand any disproportionate impacts of spend and policy on women.
More prominent, perhaps, were the calls for the Scottish Government to embed certain issues across all portfolios and identify the links between spend in one area on outcomes in another, particularly when it came to preventative spend. For example, the Constitution, Europe, and External Affairs Committee suggested the Scottish Government do more to understand the preventative impact of culture spend on health outcomes, and that it embed culture in its aspirations for a wellbeing economy. The Health, Social Care and Sport Committee went further, suggesting the health impacts of spend across all portfolios be considered, potentially using health impact assessments.
This brings us back to the Budget Process Review Group’s acknowledgement of understanding interdependent policies, and the Scottish Governments increasing focus on mainstreaming policy (for instance, on mainstreaming Covid Recovery).
The future
A human rights budgeting approach can be useful for benchmarking and understanding common issues, and potentially for measuring improvements in coming years. This applies across all portfolio areas, not just those covered by the Equalities, Human Rights and Civil Justice and Social Justice and Social Security Committees, who both used human rights budgeting as a structure for scrutiny (which was also adopted by the Scottish Government in the Equality and Fairer Scotland Budget Statement 2023-24).
It’s clear that there are matters that most or all committees are concerned about beyond the level of funding, notably fiscal transparency and accountability in the form of robust data to measure impacts, back up spending decisions, and link them to outcomes.
There may be opportunities for the Scottish Government to consider this, for instance in the upcoming review of the National Performance Framework. The Deputy First Minister and acting Finance Minister himself said, in evidence to the COVID-19 Recovery Committee:
“I am certainly prepared to consider—I am not setting out my last word on this—that there is a misalignment of budget priorities with the national performance framework.”.
John Swinney, Deputy First Minister and Cabinet Secretary for Covid Recovery, COVID-19 Recovery Committee, 19 January 2023
The only question remaining is where there might be appetite and scope in the committee scrutiny process to link up the common themes and concerns across all portfolios and better understand the Budget Bingo full house.
Ailsa Burn-Murdoch, Financial Scrutiny Unit, SPICe