Scotland is reviewing its Budget process now that Scottish Budgets can include tax raising, as well as spending, measures.
In September 2016, the Scottish government commissioned a tripartite group of experts, collectively known as the Budget Process Review Group (BPRG) to produce a two-stage piece of work on the effectiveness of the Scottish Budget process.
The BPRG’s remit is: ‘To carry out a fundamental review of the Scottish Parliament’s Budget process following the devolution of further powers in the Scotland Act 2012 and Scotland Act 2016. To bring forward proposals for a revised budget process which are consistent as far as possible with the principles of the Financial Issues Advisory Group for consideration by the Finance Committee and the Cabinet Secretary for Finance and the Constitution.’
Stages 1 and 2 of the review: Stage one of the review was completed by the end of February 2017 and an interim report published on 10 March 2017. The second part of the review is to be completed by the end of May 2017 and a final report published shortly thereafter. A debate in the Scottish Parliament is then expected to follow in around September 2017 and any process recommendations followed up in time for the next Budget. This is what the BPRG has called the ‘full year review’ approach to its remit.
The first stage of the review has been undertaken in a closed environment by the tripartite group, who commissioned a report from Joachim Wehner, associate professor in public policy at the LSE, to gain knowledge of the Budget process in other jurisdictions. The second part of the review will encompass a public consultation to which businesses and individuals are invited to contribute. Responses to the consultation questions are to be submitted by 28 April 2017.
Main points coming out of the interim report: The interim report draws no fixed conclusions but aims to harness the considered views arising from the six meetings of the members of the BPRG in stage 1, the OECD presentation heard in October 2016 and Joachim Wehner’s report. All findings will collectively inform the final report.
The report acknowledges that the current Budget process was adopted by the Scottish government to execute its delivery of a purely expenditure-based Budget. However, this method is not necessarily suitable for a combined tax raising and expenditure Budget. Another issue for the BPRG to consider is the change in timing of the UK Budget, which has been changed to the autumn, and its potential impact on the timing of the Scottish Budget.
The report states that revisions to the current Budget process will be unlikely to be finalised in time for the publication of the 2018/19 draft Budget, and suggests that a form of transition will need to take place and that elements of recommendations from the final report will need to be phased in over a number of years. It is clear, however, that a constant scrutiny of the Budget process should be maintained throughout the year, which is supported by the Fraser of Allander Institute and the OECD to enable the Scottish government to adhere to the four IMF best practice principles.
The BPRG has identified five key themes to address in phase two. These are:
how effective is the existing budget process?
what is the impact of the fiscal framework?
how effective is the current approach to multi-year budgeting?
how effective is the current approach to medium term financial planning? and,
how effective is the current approach to outcomes based scrutiny?
Scotland is reviewing its Budget process now that Scottish Budgets can include tax raising, as well as spending, measures.
In September 2016, the Scottish government commissioned a tripartite group of experts, collectively known as the Budget Process Review Group (BPRG) to produce a two-stage piece of work on the effectiveness of the Scottish Budget process.
The BPRG’s remit is: ‘To carry out a fundamental review of the Scottish Parliament’s Budget process following the devolution of further powers in the Scotland Act 2012 and Scotland Act 2016. To bring forward proposals for a revised budget process which are consistent as far as possible with the principles of the Financial Issues Advisory Group for consideration by the Finance Committee and the Cabinet Secretary for Finance and the Constitution.’
Stages 1 and 2 of the review: Stage one of the review was completed by the end of February 2017 and an interim report published on 10 March 2017. The second part of the review is to be completed by the end of May 2017 and a final report published shortly thereafter. A debate in the Scottish Parliament is then expected to follow in around September 2017 and any process recommendations followed up in time for the next Budget. This is what the BPRG has called the ‘full year review’ approach to its remit.
The first stage of the review has been undertaken in a closed environment by the tripartite group, who commissioned a report from Joachim Wehner, associate professor in public policy at the LSE, to gain knowledge of the Budget process in other jurisdictions. The second part of the review will encompass a public consultation to which businesses and individuals are invited to contribute. Responses to the consultation questions are to be submitted by 28 April 2017.
Main points coming out of the interim report: The interim report draws no fixed conclusions but aims to harness the considered views arising from the six meetings of the members of the BPRG in stage 1, the OECD presentation heard in October 2016 and Joachim Wehner’s report. All findings will collectively inform the final report.
The report acknowledges that the current Budget process was adopted by the Scottish government to execute its delivery of a purely expenditure-based Budget. However, this method is not necessarily suitable for a combined tax raising and expenditure Budget. Another issue for the BPRG to consider is the change in timing of the UK Budget, which has been changed to the autumn, and its potential impact on the timing of the Scottish Budget.
The report states that revisions to the current Budget process will be unlikely to be finalised in time for the publication of the 2018/19 draft Budget, and suggests that a form of transition will need to take place and that elements of recommendations from the final report will need to be phased in over a number of years. It is clear, however, that a constant scrutiny of the Budget process should be maintained throughout the year, which is supported by the Fraser of Allander Institute and the OECD to enable the Scottish government to adhere to the four IMF best practice principles.
The BPRG has identified five key themes to address in phase two. These are:
how effective is the existing budget process?
what is the impact of the fiscal framework?
how effective is the current approach to multi-year budgeting?
how effective is the current approach to medium term financial planning? and,
how effective is the current approach to outcomes based scrutiny?
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