Holyrood in £500m overspend

Published on Sunday 24 December 2006 00:07

THE true cost of laws passed by the Scottish Parliament since devolution is more than £500m higher than ministers have admitted and is growing by almost £200m a year.

Recently-released figures show the 100 acts introduced at Holyrood since 1999 have cost the nation around 570m more than the official estimate.

The figure represents more than 100 for every man, woman and child in the country and is considerably more than the notoriously underestimated cost of the parliament building itself.

The revelations led last night to calls for excessively-costly legislation to be torn up and for ministers to give greater thought to the cost of new laws before proceeding.

The true cost of devolution was unveiled by Conservative MSP Derek Brownlee, who asked the Executive for details on how much each new piece of legislation was costing. The figures show that in 2005-6 alone, the true cost of Scottish Parliament laws was almost 982m, around 177m more than ministers had estimated.

When the 'real' cost of laws since 1999 is calculated, the accumulated spend is about 510m over the estimate. But ministers also underestimated one-off, 'start-up' cost of new laws to the tune of 58m, giving a final extra bill of 568m.

The biggest increase in costs emerges in the Community Care and Health Act (2002), which introduced free personal care for the elderly in Scotland. The original estimate of 125m for 2005-6, placed in the original act, has rocketed to 220m. The other major error is in the Primary Medical Services Act (2003), which introduced new contracts for family doctors. The estimated annual bill of 575m for 2005-6 has been revealed to be 623m.

Other acts that have rocketed in cost include the Regulation of Care Act (2001), which introduced a new system of watchdogs to oversee care and education services. The estimated annual cost of 18m has gone up to 34m.

Costs for the Housing Act (2001), which places a duty on local authorities to house homeless people, have similarly risen - from 12m to 21.2m.

Meanwhile, the Mental Health Act (1999), which closed a loophole allowing some mentally-ill prisoners to be released, has gone up in cost from 376,000 to 18.9m.

Brownlee last night told Scotland on Sunday: "Ministers cannot go on bringing forward new laws without thinking about the costs to the taxpayer.

"Fewer, better laws would improve the way government works and allow Parliament to spend more time scrutinising legislation and get it right before it is passed.

"Perhaps we should be considering limiting the number of acts passed each year, or ensuring that if the costs of an act are significantly out of line with what was estimated when Parliament voted on it, the act has to be reconsidered."

The revelations will place most focus on the two biggest costs - from the new GP contract and free personal care.

In October, the Healthcare Financial Management Association warned that the new GP contract - which has handed double-digit pay rises to family doctors - had done little to benefit NHS patients.

Earlier this year, the Scottish Parliament's health committee called for a rethink on free personal care after it found the service was far more expensive than thought, forcing councils to set up waiting lists in some areas.

Brownlee added: "Much of the increased costs come from two acts, introducing the new GP contract and free personal care. These are notorious areas where spending has increased beyond what was expected, but even still the figures are surprising. There must be fundamental questions about just how carefully ministers considered all the consequences of these acts before they were brought into force."

The initial estimates for the acts was placed in a 'financial memorandum' which must accompany each new piece of legislation, laying out its best estimate of costs. A Scottish Executive spokeswoman said the memorandum gave the best possible information about its cost implications, but they were all "necessarily" estimates.

Previously, the permanent secretary to the Scottish Executive, Sir John Elvidge, had admitted that individual budgets for bills did "not necessarily fit precisely" with costs arising from the legislation.

The new figures will once again throw doubt over the ability of Executive ministers and MSPs to keep a tight rein on spending. Most notoriously, they spent 431m on the new Holyrood building, after initially claiming that it would cost just 40m.

Taxpayers are now paying more than ever to support the state, according to two new reports. Figures released by the Office of National Statistics show that the income tax burden on families is at its highest level since records began two decades ago. The ONS said that taxes are absorbing 23.60 of every 100 earned by British workers. That is before council tax and stamp duty are taken into account.

Meanwhile, analysis by the Organisation for Economic Co-Operation and Development has found that British households have experienced the biggest rise in taxes in the western world since Labour came to power. It found that, by 2008, the share of national income being taken up by taxes under the Labour government will have soared by 3.8%. In most other developed countries, taxes are falling.