The new Scottish Parliament has been in existence now for over 17 years. Just as its powers are evolving and expanding as devolution continues, so the “checks and balances” on that Parliament and, via Parliament, on the Scottish Government have to develop as one critical means of encouraging sound decision-making.
This priority for improved governance increases along with the extent of Parliament’s devolved powers. Indeed, this priority is particularly apparent now so far as economic and financial policies and programmes are concerned. While these matters are always of significant importance to all in Scotland, we are now entering a period when the growth in Scotland’s tax revenues, critical to the enablement of economic and social priorities, will be dependent upon not just some obscure formula laid down from afar, but specifically upon Scotland’s economic performance.
If our output grows more rapidly than the rest of the UK then our revenues will in turn grow faster. That will permit a wider range of policy options; with prospects of benefits for all. However, if our output growth underperforms the rest of the UK, as has been the case in recent years, then the obverse will be true, bringing risks for us all. Given the importance of these issues last month the Royal Society of Edinburgh (RSE) came together with the David Hume Institute and the University of Strathclyde’s International Public Policy Institute to organise a major conference on governance – entitled Minding Scotland’s Money. The conference was very well attended, by leading decision-makers, and was addressed by the key people engaged with the provision of those checks and balances. Papers from the conference are now available on the websites of the three organisations involved.
Good governance comes from a diverse range of sources. The Parliament itself and its committees have to provide a vital element of economic governance. Sir Paul Grice, Principal Clerk to the Parliament since its establishment, made abundantly clear the importance he attaches to this topic, along with his desire to see rigorous, objective, non-partisan and informed assessment of government policies by strengthened committees and the Parliament as a whole. His understanding of the critical nature of governance, especially in a unicameral parliament, was echoed and reinforced by Caroline Gardner, Scotland’s Auditor General. Audit Scotland, under Caroline’s steadfast watch, is the critical external and official critic of Parliament and its policies and programmes. Their essential role is to be fiercely independent in scrutiny of policies, programmes and decision-making; and to be transparent in their critique. I strongly commend the papers by Grice and Gardner, and those present were much reassured by their understanding and clearly stated determination to provide the required oversight.
Another official group critical to the exercise of governance is Scotland’s Independent Fiscal Commission – our evolving equivalent of the UK’s Office for Budget Responsibility. The Commission has had a stuttering start, with concerns regarding its true independence, the limited breadth of its role and the scant resources at its disposal. But there have been major improvements. No longer can Commission members also sit on the First Minister’s Council of Economic Advisers, thereby running real risks of conflicts of interest. The Commission will soon make the forecasts upon which Government budgets have to be based – rather than being no more than commentators. And there is every indication that they will be well-resourced and therefore able to undertake the complex but vital forecasting work needed to fulfil their role. There is scope for further change – for example they should be required to access the sustainability of Government’s finances – but they are well set to play a key role in economic and financial governance in the years ahead.
Some checks and balances have to be external and wholly independent – albeit constructive and informed. Here the RSE will continue to play a key role – building upon its strong reputation and excellent track record in contributions to the Holyrood debate. As will others. At the conference we heard both from the Director of the UK’s Institute for Fiscal Studies, an exemplar of an influential, external, commentator and the new Director of the Fraser of Allander Institute at Strathclyde, which is being built up in order to undertake a major role within Scotland. Their input will be much welcomed.
Governance is improving and will improve further. To me this is a necessary condition for good decision-making and good decision-making is a necessary condition for a strong Scottish economy and prosperity for all.
Professor Jeremy Peat is a Fellow of the Royal Society of Edinburgh and a Visiting Professor at the University of Strathclyde International Public Policy Institute