As another Scottish parliamentary budget scrutiny cycle ends, this blog provides some reflections on this year’s process.
Budget Scrutiny 2024-25: timing is everything
One key reflection this year has been around timing and, specifically, the timeliness of information being available to support Scottish parliamentarians in undertaking budget scrutiny.
First was the timing of the Budget documentation (19 December 2023) which came close to Christmas and more than 3 weeks after the UK Autumn statement, outside the “no more than 3 working weeks” agreement set out between the Finance and Public Administration Committee and the Scottish Government.
When that Budget came, there was a noticeable lack of information provided relative to what had previously been committed. There were no multi-year funding allocations, no details on public service reform or workforce plans, no revised infrastructure investment plans and no public sector pay policy. Many of the commitments that had been made for publication alongside the December Budget were kicked down the road to after the UK Spring Budget or the May Medium Term Financial Strategy (MTFS).
Given what had been trailed in advance around “difficult decisions” being required to set the Scottish public finances on a sustainable footing, it felt that Parliament was being asked to undertake budget scrutiny in a bit of a vacuum.
Now that Parliament has voted on and passed spending plans for next year, another issue around timing has arisen.
This comes in the timing of the UK Spring Budget due for Wednesday 6 March, which looks like it could materially change the funding position of the Scottish Budget for next year. For example, if the UK government introduces changes to income tax in England, this will affect the related adjustments to the Scottish budget. This will come AFTER the Scottish Budget and income tax rates and bands for next year have been approved by the Scottish Parliament.
This means that the amounts voted by Parliament for 2024-25 will be subject to further change via the in-year budget revisions, and is far from ideal from a parliamentary scrutiny point of view.
It seems likely that the two budget revisions for 2024-25 will again involve significant budgetary movements. This means that the Budget provided later this year (for 2025-26) will in all likelihood involve debates around whether a Budget to Budget or latest Budget (Budget Revision) to Budget is the best way of presenting information.
It also raises questions around whether there is adequate parliamentary oversight of these often significant in-year budget movements. Budget revisions are presented to Parliament in the form of secondary legislation and considered by the Finance and Public Administration Committee. As such, they can either be accepted or rejected in their entirety, but cannot be amended (there is no reasoned amendment option available for committees and Members). They typically involve a single evidence session with the Minister (as opposed to the Cabinet Secretary).
Transparency gains but again questions on timing
Despite the lack of detail in key policy areas when the Budget was published, there were a couple of new publications added to the budget mix this year, which came later in the process. The Scottish Fiscal Commission (SFC) published a document on 22 January 2024 setting out spending trends in the 2024-25 Scottish Budget on an internationally approved “Classification of Functions of Government” (COFOG) basis. This was based on more detailed data provided by the Scottish Government to the SFC post-Budget, and showed, among other things, that spending on social protection has increased rapidly at the expense of other parts of the Budget, including even health spending, which has not kept pace with inflation over the period of the analysis.
Subsequently, the Scottish Government published additional information presenting budgets in a new comparative way, notifying the Finance and Public Administration Committee of this on 7 February 2024. The Budget is traditionally presented on a “Budget to Budget” basis. However, some argue this is misleading as it fails to include the in-year changes that occur via the Budget Revisions. Budget to Budget presentation means that these in-year changes are not taken into account and can result in some misleading comparisons.
Again, frustratingly, these documents came a touch too late in the process, after the Budget and the Committees had looked at the spending proposals and how the Government had responded to various pre-budget reports.
Although both welcome additions, they would have been much more impactful and helpful for debate if they had been provided at a time when they could have been considered by Committees. Hopefully, in future budget processes, the Scottish Government is able present this comparative information alongside the main Budget documentation and provide the SFC with earlier sight of the information required for their spending trends analysis – this would be of particular use to the subject committees in allowing them to work out how their respective portfolio budget have been prioritised or not.
These additions, however, are still helpful and will inform ongoing year-round scrutiny of the Budget. SPICe has published a tool setting these numbers in a more user friendly manner. This allows people to compare the changes between portfolio, level 2 and level 3 budget lines on a “Budget to Budget” basis (as the Scottish Government does in its main Budget document) as well as a Spring Budget Revision to Budget position. This responds to requests from the Parliament’s Finance and Public Administration Committee, the Institute for Fiscal Studies and others.
Budget never stops
As this year’s budget process comes to an end, there will be more to consider in the coming weeks and months. On 6 March, the UK Spring Budget will be published with potential Scottish budget impacts.
Then, in May, there will be publication of the MTFS. Given that the Scottish Government has committed to publishing documents alongside the MTFS that had previously been promised for the Budget, there should be plenty of things to consider then.
Watch this blog space.
Ross Burnside, Senior Researcher, Financial Scrutiny Unit (FSU)