Expert panel calls for change to budget process

Finance Secretary Derek Mackay has welcomed the report
Finance Secretary Derek Mackay has welcomed the report
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Big changes are needed to Holyrood’s budget process to deal with Scotland’s new tax and welfare powers, an expert group has said.

The panel warned the budget will become “increasingly complex” and “subject to greater uncertainty and volatility” as the new powers are introduced and has made almost 60 recommendations for change.

Its report identifies “weaknesses” in the current system, including limited parliamentary influence and a failure to take sufficient account of the UK budget timetable.

Cultural change is now needed to improve both the process itself and parliamentary scrutiny, the panel concluded.

The Scottish Government is urged to take a more strategic approach to financial planning by shifting towards multi-year budgets and publishing a medium-term financial strategy each spring, setting out plans and projections for at least the next five years.

The panel also recommends ministers provide a report setting out data for Scottish tax revenues every autumn.

It further recommends Holyrood should take an “all-year-round approach” to scrutiny, with committees seeking to influence government plans in advance of the budget being published each autumn.

Dame Sue Bruce, member of the budget process review group, said: “Scrutiny at present tends to adopt a short-term approach, with an over-emphasis on ‘winners and losers’ year on year.

“There is little consideration of longer-term trends.

“It is also evident that the sequencing of the current budget process fails to deliver sufficient opportunity for Parliament to exert its influence over the Government during its budget preparation.

“We recommend, therefore, that budget scrutiny shifts to a full-year approach.

“Committees should engage with their respective ministers at least six weeks prior to the budget being published, setting out their respective policy priorities for the forthcoming budget.

“This, we believe, will facilitate more scope for Parliament and its committees to influence the Government’s formulation of tax-raising and spending plans.”

Finance Secretary Derek Mackay welcomed the report’s conclusions and said the government would consider the recommendations over the summer and discuss them with Holyrood’s Finance and Constitution Committee.

He said: “A lot has changed since the current process was designed, including the devolution of significant new financial powers through the Scotland Act 2012 and 2016.

“This report proposes a new approach to our budget process that suits the wider powers and responsibilities that Scottish Parliament now has.”

Committee convener Bruce Crawford said: “The Finance and Constitution Committee welcomes this report as a major contribution towards shaping the Parliament’s future budget process.

“I look forward to considering it in full with the committee in September.”

The panel was set up last year and was tasked with developing a revised budgetary process to take into account Scotland’s new powers. The panel was made up of Scottish Parliament officials, Scottish Government officials and external public finance experts.

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