Finance Committee – 1st Report, 2008 (Session 3) – Annexe F

Equal Opportunities Committee 

Report on the Budget Process 2008-09 (Stage 2)

The Committee reports to the Finance Committee as follows—

Introduction

1. The Scottish Government published the Scottish Budget/Spending Review 2007 on 14 November 2007, which includes the Scottish Government’s Draft Budget for 2008-09.

2. At its meeting on 27 November, the Committee took evidence on the Draft Budget from Muriel Robison, Equality and Human Rights Commission; Calum Guthrie, Scottish Council for Voluntary Organisations; Morag Gillespie, Scottish Poverty Information Unit; and Angela O’Hagen, Scottish Women’s Budget Group.  The Committee also took evidence on 4 December from Stewart Maxwell, Minister for Communities and Sport, and Yvonne Strachan, Head of the Equality Unit, Scottish Government.  The Committee would like to thank all those who gave evidence.

Overall Context

3. The devolution settlement in Scotland brought with it a strong commitment to equal opportunities and equality and to ensuring that equality considerations feature at every stage of the policy process, including the budget process.

4. While equal opportunities is actually a reserved matter under the Scotland Act 1998, there are exceptions to the reservation which allow the Parliament to encourage equal opportunities and to impose duties on office holders, as well as Scottish and cross-border public authorities, so that they meet the equal opportunity requirements.  Moreover, equal opportunities is a founding principle of the Scottish Parliament.

5. One of the four guiding principles of the Consultative Steering Group (CSG) on the Scottish Parliament is that the Parliament should recognise the need to promote equal opportunities for all.  The CSG stated that:

“Equal opportunities should be mainstreamed into the work of the Parliament, and through the demands of and scrutiny by the Parliament, into the work of the Executive.”⁹⁶

6. The Scottish Executive also explicitly committed to the principle of equality mainstreaming as defined in its Equality Strategy,published in 2000:

“Mainstreaming equality is the systematic integration of an equality perspective into the everyday work of government, involving policy makers across all government departments, as well as equality specialists and external partners.” ⁹⁷

7. The systematic recognition of the differing needs of different social groups, men and women for example, is key to the effective delivery of a mainstreaming approach to equality; hence, the Scottish Government has an express commitment to the use of equality impact assessments across the work of all Scottish Government portfolios. The Equality Strategy clearly stated that this will be underpinned by equality impact assessment of budgets and spending plans, including the development of appropriate mechanisms for budget scrutiny from an equality perspective:

“The Executive will also work to assess the equality impact of spending plans and decisions, as part of the mainstreaming agenda”.⁹⁸

8. Prior to commencing its formal scrutiny of the Scottish Government’s Draft Budget 2008-09, the Committee received written and oral evidence from the Equality Proofing the Budget and Policy Advisory Group (EPBPAG)⁹⁹.  The group’s written evidence provided a definition of the term ‘equality proofing the budget’ and its specific meaning in Scotland:

“Equality proofing the Scottish budget is the mechanism for linking the mainstreaming of equality in the policy process with the appropriate distribution of resources.” ¹⁰⁰

9. Having taken evidence from EPBPAG, the Committee wrote to the new Scottish Government to question whether it remains committed to the principles of mainstreaming equality and equality proofing the Scottish Budget.  The reply from the Cabinet Secretary for Finance and Sustainable Growth, John Swinney MSP, stated that:

“We have stated clearly in the budget document that we will ensure all our investment and policies promote equality and do not discriminate or perpetuate inequality. Our key driver for delivering this is through equality impact assessment which we believe is the key to delivering equality across policy and practice in the Scottish Government…Fundamentally, the principles of equality underpin the Government's investment and work across all strategic objectives.” ¹⁰¹

10. In addition to commitments on mainstreaming and equality proofing the budget, the Scottish Government is now subject to three public sector duties on race, gender and disability.  These public sector duties are enshrined in law and have the common aim of ensuring that the Scottish Government (and other relevant bodies) works actively to promote equality and eliminate discrimination in all of its activities.  Principal measures in the general and specific duties include equality impact assessments of policy, including service delivery and employment.

Main issues

11. There are six main issues to have emerged from the evidence taken by the Committee that it wishes to highlight to the Finance Committee:

• How the Budget is perceived with respect to an overall equality mainstreaming agenda;
• The role of subject committees in making the link with policy and spend, in particular during the scrutiny process;
• Understanding equality, equity and equal opportunities;
• Equality Impact Assessment Tools;
• Outcomes-focused approach; and
• Lack of baseline data to monitor progress

12. Each of these issues is considered in more detail in the following paragraphs.

Issue 1: The Budget and Mainstreaming

13. The Foreword to the Scottish Budget/Spending Review 2007 by the Cabinet Secretary for Finance and Sustainable Growth makes clear that the Scottish Government’s spending plans are primarily targeted at ‘the people of Scotland’ and in particular at ensuring ‘prosperity and opportunity’ for all:

“The Government Economic Strategy has set out a clear and achievable way forward and this document now provides more detail of how our spending plans over the next three years will help deliver that Purpose – greater prosperity and opportunity – for the people of Scotland.”

14. The focus of the Scottish Government’s Budget therefore is people.  It follows that the process of how decisions are reached with respect to prioritising policy and subsequently allocating the necessary resources should adequately account for the very different needs of different groups of people.

15. The national budget is effectively a public statement of a government’s political and economic priorities.  However, the actual budget document is often considered distinct from the policy process in that it is presented as a financial statement indicating where and how monies across the whole range of government activities are spent.  With reference to an overall commitment to mainstreaming equality, there has been significant progress to date, within a Scottish public policy context, in successfully making the link between policy and spend:

“Making changes to policy to improve equal opportunities is only half the story. Making sure that the money goes with the policy is the other half. For some time now the Executive has been exploring ways in which it can link its work on mainstreaming equality into policy with the distribution of resources.” ¹⁰²

16. High level policy statements to promote equality and equal opportunities will remain relatively meaningless without the resources to implement associated policies.  Thus, the budget documents should not be considered as merely a statement detailing the numbers with respect to absolute levels of spend but rather the budget and spending review documents reflect the resource commitments required to secure high level policy priorities.

17. Equality impact assessment of budget systems and spending proposals is a crucial feature of any successful mainstreaming strategy.  Accounting for equality in the allocation and distribution of public resources leads to more effective targeting and improvements in service delivery.  This implies efficiency gains across a range of public policy interventions in addition to promoting the goal of equality.  While the allocations contained within the Scottish Government’s Draft Budget are the immediate focus of the Committee’s scrutiny, if this scrutiny highlights any possible differential equality and equal opportunities impact, then this will ultimately feed through into policy design, thereby making explicit the link between the Scottish Government’s policy choices and actual spending allocations.

18. The Committee is concerned about the seemingly contradictory evidence regarding the Scottish Government’s recognition of the crucial function of the budget process in supporting an overall commitment to mainstreaming.

19. On the one hand, there is a limited presentation of equality in the budget documents, while, in evidence, the Minister for Communities and Sport stated that “the budget numbers themselves do not tell you the level of commitment and desire in the policy; they just tell you about the money”.¹⁰³

20. On the other hand, as paragraph 9 makes clear, the Cabinet Secretary for Finance and Sustainable Growth believes that the principles of equality “underpin the Government's investment and work across all strategic objectives”.

Issue 2: The Role of Committees in scrutinising the Draft Budget

21. The role of the Finance Committee is central, in terms of co-ordinating the overall response by the Scottish Parliament’s committees to the Scottish Government’s Draft Budget.  As part of this broad role, the Finance Committee circulated interim guidance to committees to assist them in considering their approach to scrutiny prior to the Draft Budget being published.  Final guidance was also circulated, setting out the issues that the Finance Committee would like to see addressed in subject committees’ reports.  

22. While the final guidance from the Finance Committee does include a helpful section on equality issues, because of delays it was received by some subject committees after their last evidence-taking session.  The interim guidance, however, made limited reference to equal opportunities considerations.  Rather than, for example, referring to the Equal Opportunities Committee’s remit or the six equality “strands”¹⁰⁴, the interim guidance referred to the importance attached to “equity” and stated that this could be “interpreted in a number of ways:  for example, by gender, generation and geography”.

23. The Equal Opportunities Committee invites the Finance Committee, bearing in mind the Scottish Parliament’s commitment to mainstreaming, to consider how its future guidance could better reflect this commitment and the cross-cutting nature of equal opportunities and equality in the budget scrutiny process.  As all subject committees appointed an adviser to assist with their scrutiny of the Draft Budget, the Equal Opportunities Committee and the Finance Committee may also wish to consider the extent to which these advisers briefed each committee on equal opportunities issues and the Draft budget.

Issue 3: Understanding equality within the context of the Draft Budget

24. It is not clear from the Draft Budget where the promotion of equality is located in terms of policy priorities or how the concept of equality is actually understood.  For example, written evidence from the Scottish Women’s Budget Group stated that:

“…the conflation of an anti-poverty agenda, focused on relative income disparities and health inequalities fails to recognise the structural causes of inequality specifically between women and men…the approach to equality set out in the Draft Budget fails to integrate that analysis and demonstrate understanding that inequality is not straightforwardly expressed in terms of relative economic position or state of health as both are significantly gendered realities.” ¹⁰⁵

25. Within the context of spending allocations it would appear that the concept of ‘equality’ is being subsumed within a more narrow and confining focus on economic inequalities.  In oral evidence on 27 November, witnesses repeatedly raised the lack of clarity on definitions being used by the Scottish Government.  For example, Calum Guthrie from the Scottish Council for Voluntary Organisations said:

“Although I welcome the high-level commitment to ‘"ensure that...investment and...policies promote equality and do not discriminate unjustly or perpetuate inequality and disadvantage”, the analysis of equality that is used is not clear from the budget. There is a lot of discussion about equity but not about equality. Equity, from my perspective, is not necessarily compatible with equality.”¹⁰⁶

26. Muriel Robison from the Equality and Human Rights Commission added:

“There are references to inequality, which seems to equate to poverty, and references to equality of opportunity, which seems to refer to discrimination, but there is a real lack of understanding of what equality is and the outcome that is sought…Despite the early references to equality issues in the targets and spending plans, they seem to be lost in the other parts of the budget, with no reference to equality and no links between promoting equality and the budget. That concerns us.¹⁰⁷

27. The lack of clarity with regard to how the Scottish Government appears to understand and subsequently act on issues relating to ‘equity’, ‘equality’ and ‘equal opportunities’ is a cause for concern.  In evidence to the Committee, the Minister for Communities and Sport stated that:

“Equality is about equality of opportunity. It is about providing different support levels for different groups in society to ensure that they get equality of opportunity to be all they can be”. ¹⁰⁸

28. However, the Scottish Budget/Spending Review 2007 does not appear to reflect this, rather, it implies that people are to be treated equally.

29. With reference to an overall understanding of equality mainstreaming, the Committee heard evidence which highlighted the need for effective policy responses to address the structural and institutional causes of inequality.  Failure to do so will ultimately lead to narrowly conceived policy responses.  For example, Mary Senior, STUC, stated in other evidence to the Committee that:

"Generally, we do not need to put the onus on the individual; we need to look at the structural issues…because there are clear structural issues that need to be addressed about how we support people to achieve their potential.” ¹⁰⁹

30. A policy focus on redistribution that fails to account for, and subsequently address, barriers to access, barriers to use and barriers to opportunities, will effectively act in limiting the impact of any redistribution for many people.  This approach contradicts the overall emphasis on the Scottish Government's 'outcome-focused' approach.

31. Addressing poverty via redistribution will benefit many individuals. However, to promote this as an exclusive policy response to tackling poverty can be criticised for a focus on 'inputs' in that there is an implicit assumption that increasing individual incomes will address relative disadvantage.  The outcome associated with increasing incomes may not be the same for all people as it depends upon a number of factors that impact on individual expenditure behaviour.  For example, various roles and responsibilities within households tend to be allocated in line with traditional gender-based divisions of labour. Women continue to assume most of the responsibility for the care of children, therefore increasing their individual incomes at the margin may indeed allow for more resources to be allocated to spending on formal child care provision but will have very little impact on individual welfare.

32. The outcome associated with increasing individual incomes can therefore be very different for different people depending upon the nature and consequences of the structural inequalities that impact both directly and indirectly on individual expenditure demands.

33. While the reduction of inequality is presented within the Scottish Government’s national performance framework as a national outcome, it is not clear from the budget documents how the Scottish Government will measure its progress on tackling even those inequalities listed as a priority – income, regional and intergenerational.  Therefore, there is a need to ‘show workings in the margin’ to allow for effective scrutiny by the Equal Opportunities Committee and other committees.

34. For future scrutiny purposes the Committee would therefore require that each portfolio chapter in the Draft Budget:

a) draws upon existing data and evidence to highlight the priority areas (the Committee would expect at least two or three significant examples) with reference to promoting equality;

b) outlines key measures and subsequent budgetary allocations intended to promote equality within the identified priority area and how Equality Impact Assessments had been conducted with reference to these key measures and budget allocations; and

c) outlines specific policies and subsequent budgetary allocation under a heading of ‘tackling significant inequalities’ (i.e. the Scottish Government’s own stated national outcome).

35. Both a and b are more akin to an overall mainstreaming approach and would provide evidence of proactive measures to be monitored in terms of progress in ‘equality proofing the budget’ whereas c is limited to a focus on monitoring progress with regard to a singular target.  Together they would comprise a package which would facilitate more effective scrutiny from an equality perspective by the Equal Opportunities Committee and other subject committees.

36. For the record, the Equal Opportunities Committee wishes to make clear to the Finance Committee that in the last Draft Budget produced by the Scottish Executive, each portfolio set out the work it was undertaking in order to promote equality.

Issue 4: Equality Impact Assessments (EqIA)

37. The application of EqIA has been identified as key in delivering equality mainstreaming across all of the Scottish Government’s activities.¹¹⁰

38. The Committee heard evidence from a Scottish Government official that the work of pilots in budget analysis (in relation to sport and health) undertaken in 2004-05 had been instrumental in developing the EqIA tool and the expectation was that the work of EPBPAG would continue to feed into the development and use of the tool.¹¹¹

39. Given the emphasis placed on the use of EqIA and how budget work has fed into their development, it is extremely disappointing to see no evidence within the Budget documents that these have been applied in drawing up the Draft Budget.  In fact, the Minister admitted in evidence that he “does not have a full picture” of where EqIA are going on.¹¹²

40. The Minister's evidence appeared to show that EqIA would be employed in assessing which policies were contributing effectively to national outcomes, as opposed to being applied throughout the policy process from design to implementation.  Furthermore, as the budget is effectively part of the policy process – indeed a crucial part given that without the required budgetary allocation policy would not be implemented - then it follows that the budget itself should be subject to EqIA.  This is not the case from the Minister’s evidence:

“There was no equality impact assessment of the budget as a whole, or of individual portfolio spends.” ¹¹³

41. Mainstreaming – and considering the needs of diverse groups of people - is an approach that should be applied at the beginning of the policy formulation process and throughout, in order to inform both policy and any requisite funding allocations.  If the Scottish Government is now simply taking measures to adapt or support existing policy structures in accordance with equality goals, then this gives the impression that mainstreaming is simply an ‘add-on’ to the policy process.

42. Clearly, then, the process of equality mainstreaming requires not only political will, but also an appropriate and accurate evidence base upon which to act, and a commensurate resource commitment on which to follow through.  Failure to make such connections will result in policy making that merely treats equality concerns as ‘add-ons’.

Issue 5: Outcomes Focus

43. The Committee welcomes the Scottish Government’s approach to resource allocation, which contains a significant focus on ‘outcomes’.  However, there is a danger when this excludes any kind of attention paid to inputs/outputs.  Inputs and outputs need to be described in any policy process and then the outcomes analysed.

44. The Minister said on 4 December that there is “a lot of work to be done on tackling issues such as occupational segregation and equal pay”.  As the Committee is interested in occupational segregation¹¹⁴, the undervaluing of women’s work and the associated issue of equal pay, then given the Scottish Government’s overall commitment to invest in ‘the human capital development of our people’, questions relating to inputs/outputs and outcomes can be raised.

45. If the outcome is to be greater equality in occupational choices, patterns of participation in the labour market and rates of pay, then we know from existing evidence that substantial rigidities exist within current labour market structures that serve as barriers to securing such an outcome.  Indeed, the Committee welcomes the focus on outcomes because the experience of the Modern Apprenticeship work around occupational segregation highlighted the problems with a focus on outputs i.e. head counting and increasing the numbers of women participating being viewed as an ‘equality’ success.  However, the patterns of participation remain segregated and are similar to those found in the wider labour market.

46. As occupational segregation is a major cause of pay inequalities, the narrow focus on ‘outputs’ effectively masked the ‘equality’ impact of initiatives to promote greater participation in the programme amongst young women.  Addressing equalities with regard to outcomes in this sense would require an examination of inputs and how they are targeted at addressing rigidities in the labour market.  For example, are funding mechanisms favouring the traditional apprenticeships, particular age groups, etc?  All these are questions relating to inputs and resources that cannot be ignored in the analysis of outcomes.

47. If it is accepted that equal pay is an outcome that the Scottish Government has prioritised within its overall National Performance Framework, then clearly inputs are crucial.  The costs of securing equal pay has been presented as a significant barrier in achieving this particular equality outcome.  However, as the Committee heard in evidence from Muriel Robison, the costs of managing ‘unequal pay’ appear to be equally prohibitive:

“we know that 20,000 women who are employed in local government are pursuing such [equal pay] claims, and it is inevitable that local authorities will incur costs as a result…Local government has a real opportunity to tackle it, but we are concerned that the budget nowhere identifies how that significant spend is going to be addressed. That is one of the budget's failings—there is no recognition of the big spend that we anticipate.”¹¹⁵

48. Again, the inputs targeted at addressing rigidities within labour market processes, particular with reference to pay and reward schemes in order to promote equal pay, need to be subject to equality impact analysis and this needs to be transparent in the budget documents.  This would allow for effective scrutiny of the resource allocation in this area from an equality perspective.

49. Another good example would be the focus on early years intervention combined with improving women’s position in the labour market (which can be seen as key to overall economic strategy) yet there appears to be little evidence of ‘inputs’ to child care provision in the budget document.  In evidence, Morag Gillespie, Scottish Poverty Information Unit, stated:

     “Some things have disappeared off the radar. I am happy to talk more about others, but the obvious one is child care. We can no longer see clearly what is happening with child care and what priority it is given.”¹¹⁶

50. While outcome measures do provide a more meaningful basis for evaluating the equality impact of public expenditure in Scotland, they are not enough on their own.  Developing appropriate outcomes and methods of measuring them is a long-term process and should occur in parallel with the continued use of input/output analysis, in recognition that outcome measures will play an increasingly important role in determining resource allocations.

Issue 6: Lack of Baseline data

51. The Committee wants to highlight that a lot of good work has been done on equality issues in the labour market, but this is not feeding through into the budget.  While the Minister has acknowledged that there is still a lot of work to be done, it will be difficult for the Committee to track progress on this (or any of the targets set out in the Scottish Budget/ Spending Review 2007) due to a lack of evidence to demonstrate that available disaggregated data has informed thinking.

52. A relevant example to focus on would be the Scottish Government’s smoking target (to reduce smoking prevalence among adults aged 16 years and over to 22% by 2010); who would comprise that 22% and does it matter?  We know from existing evidence gathered as part of the equality proofing budget work that more young women than men are taking up smoking, so why is this information not informing the Scottish Government’s targets and will the inputs allocated to meeting this target be designed in accordance with the very different behaviours of young men and women in mind?

53. Existing evidence highlights the barriers faced by many groups of people in accessing skills development/training (e.g. Modern Apprenticeships may be available to all but women could not get on to a plumbing apprenticeship) which shows where a focus on improving the ‘skills of people’ is essentially ‘equality blind’ as opposed to equality neutral.  By treating all people the same, this fails to recognise the very different barriers faced by, and ultimately choices available to, different groups of people.  For example, the Health and Wellbeing chapter of the Draft Budget could draw upon existing evidence to show differences in participation rates in sport to show, again, that a focus on ‘people’ is limiting and fails to recognise different people’s needs in this area.

Conclusions and Recommendations

54. The Scottish Government’s Budget is the key mechanism for delivering on its objectives and if equality is not considered throughout the budget process, then outcomes will at best not reflect a commitment to mainstreaming and at worst will result in policy failure.  The Committee will continue to scrutinise the budget within the context of an explicit commitment to mainstreaming and will support all other committees in this respect.

55. The Equal Opportunities Committee notes the final guidance issued by the Finance Committee and the issues that it would like committees to address in their reports: Presentation of information; Alternative spending plans; Efficiency targets; and Spending priorities.  Before commenting on these headings, the Equal Opportunities Committee highlights to the Finance Committee the extremely limited timescale available to take evidence and report on the Draft Budget, and invites the Finance Committee and the Scottish Government to discuss whether future timescales can be lengthened.

Recommendation 1 (paragraph 23)

56. The Equal Opportunities Committee recommends that the Finance Committee, bearing in mind the Scottish Parliament’s commitment to mainstreaming, considers how its future guidance could better reflect this commitment and the cross-cutting nature of equal opportunities and equality in the budget scrutiny process.

Recommendation 2 (paragraph 23)

57. As all subject committees appointed an adviser to assist with their scrutiny of the Draft Budget, the Equal Opportunities Committee recommends that the Finance Committee considers the extent to which advisers, when appointed, brief each committee on equal opportunities issues and the Draft budget.

Presentation of information

58. Regarding the presentation of information in the Draft Budget and whether this has affected scrutiny, the Committee has noted that in the last Draft Budget each portfolio set out the work it was undertaking in order to promote equality, but that this is not in the Draft Budget 2008-09.

Recommendation 3 (paragraph 41)

59. Mainstreaming - and considering the needs of diverse groups of people - is an approach that the Committee recommends should be applied at the beginning of the policy formulation process and throughout, in order to inform both policy and any requisite funding allocations.  If the Scottish Government is now simply taking measures to adapt or support existing policy structures in accordance with equality goals, then this gives the impression that mainstreaming is simply an ‘add-on’ to the policy process.

Recommendation 4 (paragraph 34)

60. The Committee recommends that for future scrutiny purposes each portfolio chapter in the Draft Budget:

a) draws upon existing data and evidence to highlight the priority areas (the Committee would expect at least two or three significant examples) with reference to promoting equality;

b) outlines key measures and subsequent budgetary allocations intended to promote equality within the identified priority area and how Equality Impact Assessments had been conducted with reference to these key measures and budget allocations; and

c) outlines specific policies and subsequent budgetary allocation under a heading of ‘tackling significant inequalities’ (i.e. the Scottish Government’s own stated national outcome).

61. The process of equality mainstreaming requires not only political will, but also an appropriate and accurate evidence base upon which to act, and a commensurate resource commitment on which to follow through.

62. The Committee welcomes the Scottish Government’s approach to resource allocation, which contains a significant focus on ‘outcomes’.  Whilst outcome measures provide a meaningful basis for evaluating the equality impact of public expenditure in Scotland, they are not enough on their own.  Developing appropriate outcomes and methods of measuring them is a long-term process and should occur in parallel with the continued use of input/output analysis, in recognition that outcome measures will play an increasingly important role in determining resource allocations.

Spending priorities

63. Whilst the Committee welcomes the increase in the Draft Budget for “promoting equality” it would request further detail from the Scottish Government on the activities that this budget funds; how the support mentioned will be delivered and by whom; and what will be prioritised within the promoting equality budget.  The Committee would also request an explanation of why age discrimination is not mentioned within the context of this budget. 

Equality Proofing the Budget and Policy Advisory Group: Recommendation 5

64. The Committee recognises the important role of the Equality Proofing the Budget and Policy Advisory Group in helping to mainstream equalities into policies and budgets.  It therefore welcomes the Minister for Communities and Sport’s statement that the Scottish Government is reviewing whether the group’s membership is appropriate.  The Committee recommends that membership should be extended to include senior representation from the finance and sustainable growth portfolio.

Alternative spending plans and Efficiency targets

65. As the Equal Opportunities Committee does not scrutinise a specific portfolio, it cannot make any alternative spending proposals, nor can it comment on plans for making efficiencies within portfolios.

 EXTRACT FROM THE MINUTES OF THE EQUAL OPPORTUNITIES COMMITTEE

3rd Meeting, 2007 (Session 3), Tuesday 2 October 2007

Budget process 2008-09: The Committee considered its approach to the 2008-09 budget process and agreed to seek to appoint a budget adviser.

4th Meeting, 2007 (Session 3), Tuesday 23 October 2007

Budget process 2008-09 (Stage 2) (in private): The Committee agreed a ranked list of candidates for appointment as budget adviser to assist in its scrutiny of the Scottish Government’s Budget.

5th Meeting, 2007 (Session 3), Tuesday 6 November 2007

In attendance: Ailsa McKay (Committee adviser)

Budget process 2008-09: The Committee received a briefing on the work of the Equality Proofing the Budget and Policy Advisory Group (EPBPAG) from—

Philippa Bonella, EPBPAG member, Equality and Human Rights Commission;

and

Laura Turney, EPBPAG Chair, Scottish Government Equality Unit.

Budget process 2008-09 (Stage 2) (in private): The Committee agreed its approach to the budget process.

6th Meeting, 2007 (Session 3), Tuesday 27 November 2007

In attendance: Ailsa McKay (Committee adviser)

Budget process 2008-09 (Stage 2): The Committee took evidence on the Scottish Government’s Draft Budget 2008-09 from—

Muriel Robison, Equality and Human Rights Commission;

Calum Guthrie, Scottish Council for Voluntary Organisations;

Morag Gillespie, Scottish Poverty Information Unit; and

Angela O’Hagen, Scottish Women’s Budget Group.

7th Meeting, 2007 (Session 3), Tuesday 4 December 2007

Also present: Johann Lamont.

In attendance: Ailsa McKay (Committee adviser)

Decision on taking business in private: The Committee agreed to consider a draft report on the Scottish Government’s Draft Budget 2008-09 in private at future meetings.

Budget process 2008-09 (Stage 2): The Committee took evidence on the Scottish Government’s Draft Budget 2008-09 from—

Stewart Maxwell MSP, Minister for Communities and Sport, and Yvonne Strachan, Head of the Equality Unit, Scottish Government.

8th Meeting, 2007 (Session 3), Tuesday 11 December 2007

In attendance: Ailsa McKay (Committee adviser) (item 1).

Budget process 2008-09 (Stage 2) (in private): The Committee considered its draft report to the Finance Committee.  Various changes were agreed to, and the Committee agreed to consider a revised draft, in private, at its next meeting.

9th Meeting, 2008 (Session 3), Tuesday 18 December 2007

Budget process 2008-09 (Stage 2) (in private): The Committee agreed its report to the Finance Committee.

Finance Committee – 1st Report, 2008 (Session 3) – Annexe G

Health and Sport Committee

Scrutiny of the Scottish Government's Draft Budget 2008-09

The Committee reports to the Parliament as follows—

INTRODUCTION

1. In advance of the publication of the Scottish Budget: Spending Review 2007 (“BSR”) and, in light of the interim guidance issued to subject committees by the Finance Committee in September 2007,the Health and Sport Committeeagreed that, in addition to considering those parts of the health and wellbeing budget falling within its remit, a significant focus of its 2008-09 budget scrutiny would be the budget allocated to people with drug and alcohol problems and their families.

Budgets for health and sport

2. In considering the budgets for health and sport, the Committee took oral evidence from the Cabinet Secretary for Health and Wellbeing on 5 December 2007. On this occasion, the Cabinet Secretary was accompanied by the Chief Executive of NHS Scotland and Director-General, Health, and other Scottish Government officials.

3. To inform its overall consideration of the health budget, the Committee had previously taken oral evidence from Bill Howat, lead reviewer, and Jenny Stewart of the Budget Review Group. Similarly, to inform its specific consideration of the budget for sport, the Committee had previously taken oral evidence from Bill Howat and Bill Hughes of the Budget Review Group and, at a separate meeting, from Julia Bracewell and Stewart Harris of sportscotland. These evidence sessions took place on 26 September, 3 October and 21 November 2007 respectively.

Drugs and alcohol budget

4. In agreeing to make the budget for responding to drugs and alcohol problems a focus of its work, the Committee was aware that a significant part of the budget lies outwith the NHS budget covered by its remit. In particular, the budget for dealing with offenders with drug and alcohol problems lies within the remit of the Justice Committee and that for local authority social work services to support those in the community with drug and alcohol problems lies within the remit of the Local Government and Communities Committee.

5. However, the Committee was of the view that it would be appropriate to undertake some cross-cutting scrutiny of the Scottish Government’s budget and, on that basis, issued an invitation to representatives of the Justice Committee and the Local Government and Communities Committee to participate in its meeting on 28 November 2007 to take evidence from the Deputy First Minister and Cabinet Secretary for Health and Wellbeing, the Cabinet Secretary for Finance and Sustainable Growth and the Cabinet Secretary for Justice. The Committee is grateful to the cabinet secretaries for agreeing to appear before it to give joint evidence on the drugs and alcohol budget. It is also grateful to members of the Justice Committee and the Local Government and Communities Committee for lending their subject-specific expertise to those proceedings.

6. The Committee’s decision to pursue this approach was influenced by the evidence it received from Bill Howat and Jenny Stewart on 26 September 2007. Both witnesses suggested that problems in scrutinising budgets arise in relation to matters for which responsibilities arise across government departments. In this context, policy and spending related to drugs and alcohol were raised as an example. The Committee was also alert to the Finance Committee’s attempt to promote links between committees in their budget work and a common approach to scrutiny by facilitating meetings between committees’ budget advisers, as set out in its interim guidance to subject committees circulated in September 2007.

7. To inform the evidence session with the cabinet secretaries, the Committee had previously taken oral evidence from the Scottish Association of Alcohol and Drug Action Teams, NHS Greater Glasgow and Clyde, Angus Council and Grampian Police and, at a separate meeting, from the Scottish Drugs Forum, Alcohol Focus Scotland and the UK Drug Policy Commission. These evidence sessions took place on 14 and 21 November 2007 respectively.

Report structure

8. The first substantive section of this report deals with the overall budget for health services; the second section details the Committee’s findings in relation to its cross-cutting consideration of the drugs and alcohol budget; the third section deals with the evidence received on the budget for sport and, in the conclusion to the report, the Committee seeks to address a number of the issues for consideration raised in the final guidance for subject committees circulated by the Finance Committee in early December.

BUDGET FOR HEALTH

Increases in the overall budget

9. The Committee notes that the annual increases in cash terms in the health budget will be 4.3%, 3.9% and 4.2% over the next three years. These are small increases compared to the increases of 8.4%, 6.0% and 8.7% in the previous three years¹¹⁷. However, they are broadly in line with the cash increases for the overall Scottish Government’s Departmental Expenditure Limit of 4.4%, 4.5% and 3.7% over the next three years. As the Cabinet Secretary for Health and Wellbeing noted in her opening remarks—

“Despite the tough settlement for Scotland and the range of competing priorities that we are committed to delivering, the Government is increasing spending on health in Scotland by an average of 4.1 per cent each year over the next three years. This is in line with the overall average annual increase in spending in Scotland as a whole over the next three years”.¹¹⁸

10. The Committee is aware of a number of the cost pressures facing the NHS, including, for example—

• Demographics - attributed to the rise in the older population involving people living longer but not necessarily in good health;
• Staffing - including pressures related to backfilling as a result of the European directive on working time and Modernising Medical Careers, the potential for equal pay claims, the policy of no compulsory redundancies, the costs of some pay agreements including the costs of out-of-hours services and the effects of Agenda for Change still working through the system;
• Drugs – any benefits from the Efficient Government target counterbalanced by pressures from new drugs;
• Other cost pressures – such as the implications of changes to capital accounting which has stopped profits from the sale of assets being used for revenue from April 2007;
• Potential costs of redesigning services - experience suggests that these have not been cost neutral in the short to medium term; and
• NHS inflation – no Scottish-specific estimates of NHS inflation are produced.  However, NHS pay and price inflation tends to be higher than the GDP deflator. Between 1993-94 and 2003-04 the Department of Health in England estimated that NHS inflation rose faster than the GDP deflator in all but two years.¹¹⁹ The University of Kent has estimated that pay and price inflation was 4.6% in 2006-07.¹²⁰ The Department of Health in England has estimated an NHS inflation figure of 5% in the setting of the national tariff for 2007-08, offset by an assumed 2.5% efficiency saving.¹²¹

11. In evidence to the Committee, the Cabinet Secretary for Health and Wellbeing acknowledged such pressures, indicating that many of them are “pressures that NHS boards and the NHS as a whole are already facing up to, and have been doing for some time”.¹²² These r emarks were augmented by Alex Smith of the Scottish Government Health Finance Directorate, who told the Committee—

“Although you identified some areas of significant potential increase, there are, equally, some areas in which we do not expect the same level of increase in inflationary terms.  Our experience has shown the level of funding that we have identified as giving a 3.2 per cent uplift for boards can be accommodated, as can some other developments that have been identified in the budget.  We have also set a significant efficiency savings target in the order of 2 per cent, to assist should there be any areas that we want to draw on to cover excesses”.¹²³

12. The Committee notes that the Scottish Government forecasts that the NHS can accommodate the inflation and has indicated to the Committee that its estimates of inflation were based on submissions to the pay review bodies made by the Scottish Government health directorates.¹²⁴

13. The Committee is unable to scrutinise the health budget effectively without knowledge of the inflation that has been forecast for the NHS. It notes that no description has been given of how the agencies affected by these assumptions (e.g. the NHS boards) are involved in deriving these assumptions and queries how realistic they are. It recommends that the Scottish Government includes in future draft budgets its estimates of future sector-specific inflation. The Committee understands that budgets for specific pay settlements cannot be revealed but believes that aggregate estimates of inflation can be provided with supporting information. In addition, in relation to the resources arising from efficiency savings the Committee acknowledges the Scottish Government’s 2% target but notes that no details are provided in the BSR and are not expected to be published until March 2008.¹²⁵

14. Without this additional information, the Committee is sceptical about whether the increases in the health budget can cover expected cost pressures including both inflation and planned service expansions, such as increases in the number of consultants.

Allocations to specific spending areas

15. The health budget line is divided between six spending areas and the income line. The planned division between these areas is shown in percentage terms in Table 1. The Committee sought further understanding of the rationale behind these changes.

Table 1: Percentage of Health budget by spending area

Source: Budget Adviser’s calculations based on Table 21.02, BSR.

NHS and special health boards

The Committee notes that the proportion of the health budget allocated to NHS and special health boards is planned to decline from 76.8% in 2007-08 to 74.8% in 2010-11. As a consequence of this redistribution, the cash-terms increases for boards will be 3.2% per year for the next three years, below that for the health budget overall. If the board budget line had retained the same proportion of the overall budget as its 2007-08 value, it would be £226.7 million larger in 2010-11. The Committee also notes that the increases for boards include the £15 million previously identified separately in the budget as national priorities spending on coronary heart disease/stroke.

17. The Committee was concerned that the settlement for territorial NHS boards might be tighter than the 3.2% because the special health boards have historically received larger increases than the territorial boards. Between 2003-04 and 2006-07, the special health boards had 51% growth in cash terms compared to 27% growth for the territorial boards. In oral evidence, the Cabinet Secretary reassured the Committee that this trend would not continue indicating that historical increases reflect “some transfers from territorial boards to special boards to pay for services, such as the ambulance service” as well as start-up costs in some cases.¹²⁶

18. However, allocations for individual NHS boards will not be announced until January 2008. Committee members were concerned that application of the new NHSScotland Resource Allocation Committee (NRAC) formula would lead to difficulties for some territorial NHS boards. The Cabinet Secretary indicated that no final decision had been taken in respect of the NRAC proposals and that, if she decided to implement them, this would be done on a phased basis. She   reconfirmed her previous commitment that “no health board is facing a cut” as a result.¹²⁷

19. The Cabinet Secretary also emphasised that NHS boards would be able to retain the efficiency savings, that the NHS had been successful at achieving the efficiency savings in the past and that boards will be supported by a national steering group which will use approaches such as benchmarking and tariffs.

20. More generally, the redistribution of the health budget away from NHS boards raises concerns for the Committee. In response to questioning about why this was happening, the Cabinet Secretary emphasised that the 3.2% uplift for NHS boards over the next three years arises in the context of a “tighter scenario” for the entire public sector.¹²⁸ Over the same period, there is to be “significant increased spending on health inequalities and health improvement”.¹²⁹ The Committee welcomes this shift towards health improvement but is concerned that not enough progress is being made on shifting priorities to community-based care, mental health provision and treatment for substance misuse.

21. In his evidence Kevin Woods, Chief Executive of NHS Scotland, clarified the way in which the decline in the percentage in the health boards’ budget line should be interpreted, pointing out that, in addition to an increase of 3.2% and a possible additional 2% in efficiency savings, boards will receive a share of central budgets for specific initiatives, such as those on access and for tackling alcohol misuse and infection.¹³⁰ These funds will be distributed to the boards based on “Arbuthnott” shares, with account taken of local demand and capacity issues.¹³¹ The Committee sought clarification on whether boards would be subject to rewards for good performance or penalties for poor performance in relation to such initiative spending and was told that it has not been practice to penalise, but rather to “get agreement about what they are going to achieve with the resources that they are allocated”.¹³²

22. The Committee is not convinced that this approach being taken in the health portfolio is consistent with the new approach to finance exemplified in the proposed single outcome agreements for local government. The budget plans in health involve a greater ring-fencing of budgets and apparently more micro-management of NHS boards. The Committee notes the Cabinet Secretary’s view that boards are already well performance managed and her comment that the “performance management regime that we have in the NHS is ahead of that in other parts of the public sector”.¹³³ It wishes to see a more generous direct settlement for NHS boards should the Health Directorate General move towards the single outcome agreement model.

23. The Committee has further concerns where resources have been transferred from health to local government. It is concerned that, for example, without specific and timely-monitored outcome agreements for delayed discharges the recent success of this initiative will be eroded. It can see no reason why a mechanism cannot be developed to track the resources transferred to local government even though the ring-fencing has been removed and recommends that early action be taken in this area.

Primary and Community Care Services

24. The Committee notes that zero uplifts had been included in the Draft Budget for four major spending areas within this budget heading. These are pending pay negotiations with specific professional groups: general practitioners, general dental practitioners, general ophthalmic practitioners and pharmaceutical services contractors. The Committee sought clarification on whether allowance had been made for the potential for above-zero uplifts to these budgets. The Cabinet Secretary replied that funding was contained within Miscellaneous Other Services in the General Services budget.¹³⁴

25. The SPICe briefing 07/64, Spending Review 2007: Health, identified that many of the additional specific commitments in the BSR were to be funded from this Miscellaneous Other Services budget. These additional commitments amount to more than the increase in this budget from its 2007-08 value in 2008-09 and 2010-11. If these additional commitments are to be delivered, any pay uplifts for the four groups of primary care contractors must therefore be funded by reductions in the other elements of this budget. These have not been specified in the BSR or in subsequent correspondence.

26. The Committee has calculated an upper limit on the contingency fund for uplifts in expenditure on primary care contractor services. The Committee is concerned whether this is sufficient and highlights the reductions in other activities that might be required to meet these costs.

27. The Committee also raised concerns with the Cabinet Secretary about the apparent lack of priority given to primary care in the BSR. It acknowledges the Cabinet Secretary’s clarification that priority primary care investments are included elsewhere in the Draft Budget, including resources directed to people in deprived areas and for access and anticipatory care. However, the Committee remains concerned about whether the available resources are sufficient to promote a meaningful shift to primary care.

Link between budget and strategic objectives

28. The Scottish Government aims to use available funding to achieve a single, overarching national purpose, “to focus government and public services on creating a more successful country, with opportunities for all of Scotland to flourish, through increasing economic sustainable growth”.¹³⁵ Delivery of this purpose is supported by five strategic objectives and 15 national outcomes. One of the strategic objectives is “a healthier Scotland” and three of the 15 outcomes relate to health services. Progress on these outcomes will be measured by 45 national indicators and targets.

29. The Committee was concerned that some key health priorities did not appear among the 45 indicators and sought clarification on the future use of other performance management systems in the health sector. Kevin Woods informed the Committee that, as indicated at the bottom of page 47 of BSR, other performance management regimes would remain in place.¹³⁶ The Cabinet Secretary advised the Committee that the Scottish Government is in the process of revising the Health, Efficiency, Access and Treatment (HEAT) set of targets, to ensure that they “align with the Government’s priorities going forward and that they are aligned with the performance outcomes framework for local authorities”.¹³⁷

30.  The Committee expressed particular concern about the new indicator for mental health, which measures the mental wellbeing of the general population. While this is welcome, there is a fear that it does not reflect outcomes for those with serious mental health problems and suggests that mental health is no longer a national priority. The Cabinet Secretary confirmed that mental health is still a “high priority”.¹³⁸ Kevin Woods clarified that the mental health indicator will be supported by “far more specific annual targets for boards to address in relation to mental health” including one on reduced anti-depressant prescribing and one on reduced rates of readmission to acute mental health facilities.¹³⁹ It was also emphasised that, during the current round of annual reviews, NHS boards’ use of resources for the expansion of psychological service is being considered.¹⁴⁰ In the absence of any detail regarding the proposed single outcome agreements for local government in relation to mental health, the Committee remains concerned about the delivery of mental health programmes previously funded through ring-fenced allocations.

31. The Committee also expressed concern about the lack of focus on health inequalities in the new National Performance Framework. In response, Kevin Woods highlighted the indicators that focus on inequality in general and the two indicators of health improvement in the most deprived areas.¹⁴¹

32. Details of these 45 national indicators and targets were published on 30 November 2007. The Committee does not understand why these details were published after the Spending Review document. If budgetary decisions were based on achieving these indicators and targets, the Committee expects that these details would have been available to the Scottish Government before publication of BSR.

33. The Committee is also concerned about the lack of detail for some of the indicators. Several of the indicators are not SMART and it is not possible, therefore, for the levels of spending required to meet quantified improvements in particular outcomes to have been calculated. The quality and timeliness of data seriously compromises the potential value of outcomes monitoring. The Committee believes that this is indicative of a general problem in tying spending decisions to particular outcomes. There is a lack of sound data on: (a) existing spending; (b) the outcomes achieved by existing spending, and (c) the additional spending required to achieve outcome improvements. The Committee suspects that the traditional approach to budget-setting - historical spending plus uplifts for expected inflation – will continue without this evidence.

34. This lack of sound data is an issue that the Committee has identified starkly in its specific review of drugs and alcohol expenditure. In the context of the health service in general, it is particularly concerned by the planned cash-terms reductions in spending on the former Centre for Change and Innovation, which promoted evidence-based service redesign in the health service. Though the Cabinet Secretary indicated that the funding “has, effectively, been mainstreamed”¹⁴², the Committee is concerned that this may leave less funding for development and introduction of future improvements.

CROSS-CUTTING CONSIDERATION OF DRUG AND ALCOHOL BUDGETS

Introduction

35. In preparing to undertake scrutiny of the cross-cutting budget to support drugs and alcohol policy, the Committee asked the Scottish Government to update the figures in the Review of Executive Expenditure on Tackling Drug Misuse published in 2000 (the “2000 Report”) and to provide similar figures for alcohol misuse. The figures were updated from 1999 to the most recent completed financial year, 2006-07, and are reproduced in the evidence section of this report, together with a briefing paper prepared by the Committee’s budget adviser.

36. The 2000 Report had been produced to “explore the scope for directing activity and expenditure in pursuit of [the Executive’s] policy goals”¹⁴³, in particular “to shift over time away from reacting to the consequences of the drugs problem and towards positive investment in preventing and targeting it”.¹⁴⁴

37. To this end, the figures were broken down into three main categories of spend—

(1) Drugs specific expenditure – specific lines, grant programmes, ring-fenced budgets, or expenditure closely and explicitly related to the drugs strategy;

(2) Drugs generic expenditure – where a proportion of service time is drugs work; and

(3) Expenditure consequences – where agencies deal with effects of drugs misuse.

38. Some figures in categories (2) and (3) were based on estimated proportions of larger budgets. Some of these were explicitly described in the 2000 Report as “guesstimates” or “anecdotal”. More accurate and timely estimates were requested but these were not available and figures based on the original estimates were provided. The Committee believes that this is a clear limitation on the ability to judge the extent to which “spend to save” initiatives have been successful.

39. The specific and generic expenditure figures had also been divided by the primary purpose of the funding: (a) prevention, education and research; (b) treatment and rehabilitation, and (c) enforcement.

Government expenditure on drugs and alcohol

40. The figures provided by the Scottish Government identified £106.1 million of expenditure specific to alcohol misuse compared to £431.5 million for drug use, a ratio of 4.1 to 1.

41. The Committee notes that the figures provided for expenditure that could be specifically assigned to alcohol misuse suggested an imbalance in the alcohol spend compared to drugs spend. Over 75% of identified alcohol expenditure related to the consequences of alcohol misuse rather than specific or generic programmes to tackle alcohol misuse. For drugs expenditure this figure was 48%. However, the Committee notes that no figures have been provided for the generic programme spend on alcohol and that there was £14.4 million expenditure in specific programmes that had not been separated between drugs and alcohol.

42. The Committee notes that the available alcohol-specific expenditure figures suggested that one-tenth of expenditure on alcohol misuse was spent on prevention initiatives. The remainder was spent on treatment and rehabilitation, though this may be explained by the lack of information on the proportion of health promotion spending dedicated to alcohol misuse prevention.

Changes over time in Government expenditure on drug misuse

43. The Committee notes that the total identified expenditure on drug misuse that had been estimated on a consistent basis had increased from £304.5 million in 1999 to £431.5 million in 2006-7. This represents an increase in nominal terms of 41.7%.

44. The Committee notes that identified expenditure had increased in all three categories with the greatest increase in drugs-specific expenditure. Specific expenditure accounted for 25% of total expenditure in 2006-07 compared to 16% in 1999. The Committee is pleased to note that the balance of spend had shifted from expenditure consequences to specific and generic expenditure.

45. However, the Committee is not clear that this indicates success in attempts to “mend the spend”. More expenditure was being specifically targeted at tackling drugs misuse but the expenditure consequences of dealing with drugs misuse had also increased. It is difficult to scrutinise these changes without knowing the counterfactual, i.e. what would have happened to the expenditure consequences of dealing with the problems caused by drugs misuse if expenditure on drugs specific programmes had not been increased by 127% in nominal terms? The Committee notes that effectiveness information would be required to answer this and this information was not available.

46. It had been estimated in the 2000 Report that just under half of specific and generic drugs expenditure was spent on enforcement. Where updated figures had been provided on a consistent basis, they indicated that this proportion had reduced from 50% in 1999 to 41% in 2006-07. There had been a reduction in the percentage of spend on prevention (from 13% to 11%) and an increase in the percentage of spend on treatment/rehabilitation (from 37% to 48%).

Inadequate information on levels of expenditure

47. The Committee notes that the figures in the 2000 Report had not been updated in the intervening years. Moreover, the 2000 Report listed wider consequences that, at that time, were not quantified. The Scottish Government was asked to quantify these if the information was now available. No additional figures were provided and the Committee notes that the information therefore remains partial. The Explanatory Note (provided by the Scottish Government) that accompanied the updated figures (reproduced in the evidence section of this report) emphasised the difficulty of identifying expenditure levels.

48. Several witnesses agreed that the current level of information is inadequate and had consequences for budget scrutiny. Jack Law, Chief Executive, Alcohol Focus Scotland, emphasised that more needs to be known about what is currently being spent on alcohol services, where is it being spent and how effectively. He indicated that he suspected that this is still not known, “partly because some funding streams have been shifted around and because there will be a long tradition of spending on services that have not been examined effectively”.¹⁴⁵

49. Tom Wood, chair of the Scottish Association of Alcohol and Drug Action Teams, also highlighted the limitations caused by the current lack of information—

“When considering budgets and spends in this area, the first problem that we come across is that we do not know how much we spend. We know how much we spend through dedicated health and social services budgets, but that is only some of the money that we spend on dealing with alcohol and drugs across the board. In local authorities, the health service, the justice system and other areas, we do not actually know what we spend. Therefore, it is very difficult to judge whether we spend the money wisely or well”.¹⁴⁶

50. This appears to be an issue for all agencies. Simon Blake, Chief Superintendent, Grampian Police, commented that identifying the budget spend for the police on tackling drugs and alcohol issues is a problem, because although there are specialist units that target drugs problems, drugs and alcohol issues are “insidious” and affect a huge percentage of core policing and specialist policing.¹⁴⁷

51. The Committee believes that this lack of information is a serious impediment to budget scrutiny. For example, asked about how alcohol and drug action teams (ADATs) monitor the contributions of health boards, Tom Wood replied that alcohol and drug services are not priorities for most health boards or local authorities and that he knows of only one or two health boards or local authorities in Scotland that give more money to dealing with addictions, whether alcohol or drugs, than they are required to, or than is ring-fenced for that purpose.¹⁴⁸ This contrasts starkly with the Scottish Government’s view that “based on returns from Alcohol and Drug Action Team (ADAT) Corporate Action Plans it is estimated that a further £30m is spent by ADAT partners on tackling drug and alcohol misuse”.¹⁴⁹

52. The Committee recommends that the Scottish Government makes more effort to generate evidence and disseminate the evidence that it has in respect of patterns of expenditure. The figures provided by the Scottish Government, for example, do not support Tom Wood’s assertion to the Committee that “recovery and prevention services have been the poor relations” and that “there has been far more investment in justice, some investment in treatment and very poor investment in recovery and prevention”.¹⁵⁰

53. It was suggested by Tom Wood that the uncertainty may be caused by the current funding arrangements, which he described as “piecemeal”. He gave the example of six distinct funding streams in respect of drugs in Edinburgh operating through various statutory and non-statutory agencies, each with its own terms and conditions and service-level agreements and periods of operation. He concluded that “such a complex tangle of funding militates against planning for the future and having a secure platform for service delivery”.¹⁵¹

54. However, the Committee notes that this was not a view shared universally. During its evidence session with ADAT funding partners, Catriona Renfrew, the Director of Corporate Planning and Policy from NHS Greater Glasgow and Clyde, gave expenditure figures and did not express concerns about the funding arrangements, pointing out that the board spends a further £23 million of its mainstream allocation—which has been increasing—on drug and alcohol services over and above the £10 million of allocated funding. She stated that, as local authority partners also spend similar sums of money, “the total pot for drug and alcohol services is much more substantial than AAT and DAT allocations” and suggested that the biggest issue is the total value of the pot rather than the routes via which it comes.¹⁵²

55. A similar view was expressed by Robert Peat, Director of Social Work at Angus Council, for whom the key issue was the impact of action on drugs and alcohol on local authority services, including mainstream services—

“Significant resources are dedicated to addressing those issues. The money will not be labelled as alcohol or drugs funding, but the demands that are placed on our services mean that we are devoting significant resources to addressing those matters”.¹⁵³

56. The Committee notes the difficulty of working out what the health-related spending is in these policy areas. It believes that this is because of the variety of different funding routes across different portfolios. Consequently, there seems to be little scope for the “challenge function” recommended by the Budget Review Group, which would involve proper scrutiny of current ways in which resources for drugs and alcohol are spent.

57. All witnesses agreed that while sums are spent under different headings little is known about what is spent in aggregate on drugs and alcohol. The Scottish Government’s response to the Committee’s request for updated information also emphasises its own uncertainty. This allows some commentators to claim that funding partners underspend on ring-fenced monies and others to claim that they contribute over the ring-fenced allocation. It also allows little challenge of those who claimed that there had been erosion of funding for core services over time. The Committee believes that this is a limitation on strategic decision-making and does not encourage accountability.

58. The Committee notes that there is insufficient detail in the BSR to produce current or projected figures. The Committee asked the Cabinet Secretary for Finance and Sustainable Growth whether he could provide it with information on the Scottish Government’s detailed spending plans for tackling drugs and alcohol misuse over the period covered by the 2007 Spending Review, based on the methodology used to supply the Committee with that information for the most recent completed financial year, 2006-07. The Committee believes that this information would be helpful in tracking the detail of any changes in the drugs/alcohol budget given its cross-cutting nature. It thought that the methodology of the 2000 report provided a helpful approach. The Committee notes that the Cabinet Secretary for Finance and Sustainable Growth will provide this information in March 2008 and expects to receive similar information annually as part of the budget process.

59. The Committee notes the Cabinet Secretary for Health and Wellbeing’s comment that “the totality of spend on drugs and alcohol, the matching of spend to policy, the role of the alcohol and drug action teams and the overall strategy...are all matters of serious interest to the cabinet secretaries and the Government”.¹⁵⁴ The Committee is pleased to note that research has been commissioned to estimate the economic and social cost that is associated with illicit drug use and that this work was being extended to cover alcohol abuse and tobacco consumption. The Committee looks forward to the publication of this research in March 2008.

Unmet needs and hidden harm

60. Some witnesses expressed concern about sizeable unmet need. Catriona Renfrew commented that Greater Glasgow and Clyde’s current spending on services is approaching £50 million but that only 10% of the alcohol misusers and half the drug misusers are being reached, giving a “sense of the scale of the treatment issue and the multi-million pound gap that exists”.¹⁵⁵

61. The Committee is particularly concerned by the reported extent of “hidden harm” – children affected by drugs or alcohol misuse by someone in their family. Jack Law reported that, in the context of alcohol misuse “…around 100,000 children in Scotland are affected in some way or another by that hidden harm, which is not receiving much exposure relative to the issue of alcohol misuse in our country”.¹⁵⁶ Catriona Renfrew reported that in Greater Glasgow and Clyde “around 20,000 children live with either a serious alcohol misuser or a serious drug misuser”. However, she indicated that only half of them get any kind of social care or additional family support service. She suggested a figure of 70,000 or 80,000 throughout Scotland.¹⁵⁷

62. Witnesses from local government agreed with the profile of this problem and reported significant spending in this area. Describing services for children who live with substance-misusing parents, Robert Peat told the Committee that those services “place significant pressure on local authority social work budgets” and that “funding to local authorities has increased for work in children's services—mainly for preventive work with young parents and children in their early years”.¹⁵⁸

63. The Committee is concerned by the reports of the scale of hidden harm. It believes that further evidence is required of whether social work services are meeting these needs. The Committee recommends that the Scottish Government undertakes an urgent needs assessment and ensures that any additional resources required are marshalled to meet the needs identified, in particular to support children living in families where there is substance misuse.

Drugs and alcohol

64. A continuing theme throughout the Committee’s evidence sessions was the wisdom of combining the funding for tackling the two issues of drug and alcohol misuse in single organisations. While most witnesses agreed, in principle, that funding for drugs and alcohol ought to be combined, there was no agreement as to how this should be achieved.

65. Tom Wood told the Committee that, while he considered that “alcohol is a far bigger and more deeply rooted problem in society than are drugs”, spending and funding have not reflected this—

“During the past 20 years we have given an awful lot more money to drugs, in particular at the justice end of the issue, than to alcohol services”.¹⁵⁹

66. Jack Law agreed that expenditure on alcohol was de-prioritised and suggested that “separating alcohol from drugs when deciding how to spend money would bring considerable benefits”.¹⁶⁰

67. However, this conflicts with the views expressed by David Liddell, Director, Scottish Drugs Forum, who told the Committee that drugs and alcohol should be tackled together, “particularly because of the many crossovers”, using pooled budgets based on “a strategic approach to effective needs assessment of the extent and nature of problems and to the evidence about what has an impact”.¹⁶¹

68. The Committee notes the differing views expressed on whether funding for alcohol and drugs should be channelled through the same agencies. It is concerned by the views expressed that alcohol was de-prioritised because of these arrangements. The Committee recommends that the Scottish Government establishes mechanisms for ensuring that the appropriate priority is given to these two issues.

Outcome indicators

69. In her evidence to the Committee, the Cabinet Secretary for Health and Wellbeing emphasised the Scottish Government’s focus on outcome-focused work, in particular with respect to the new funding relationship with local authorities. She indicated that she thought it imperative that an outcome-based approach be developed in relation to alcohol and drugs.¹⁶²

70. Tom Wood had previously indicated enthusiasm for such a focus on outcomes, provided that structural barriers could be removed.¹⁶³

71. Catriona Renfrew highlighted the absence of outcome indicators as a particular problem, claiming that there is “no clear national statement about the services that local authorities and the NHS are expected to provide for drug and alcohol problems” and that it is therefore “left to local discretion”.¹⁶⁴

72. She went on to indicate that the priority given to drugs and alcohol services was influenced by other, more clearly stated and monitored, priorities. In the absence of a requirement on local authorities and the NHS to assess needs in their areas or to demonstrate how they are meeting needs for drugs and alcohol services, services with specific targets – such as the targets for primary care appointments – tend to take priority.¹⁶⁵

73. Robert Peat, however, reported that local authorities’ responsibilities to drug and alcohol misusers were covered under the general requirement for community care service provision, telling the Committee that local authorities have a “statutory responsibility to assess need for community care services, regardless of whether someone has an alcohol or drugs issue, is an older person or is someone with a disability—no such distinction is made”.¹⁶⁶

74. The Committee is concerned that priority is not being given to funding drugs and alcohol services because of a lack of clear requirements. The Committee recommends that national outcome indicators for drugs and alcohol misuse services are developed as a matter of urgency.

The current role of ADATs in influencing budgets

75. The Committee is concerned by the findings of the Stocktake of Alcohol and Drug Action Teams. Sandy Cameron, the chair of the stocktake, reported that, in many cases, ADATs were doing very valuable work but that there were “significant structural weaknesses” in the current arrangements and “fragmentation in the way in which problems were dealt with across Scotland”. He described the issue of how resources are applied and used to best effect as “one of the vexed issues”.¹⁶⁷

76. The Committee is encouraged by the report from NHS Greater Glasgow and Clyde that pooling the resources from mainstream budgets and from specific allocations and agreeing how to use them in a “comprehensive and strategic way” has not been a problem in that area.¹⁶⁸ It was emphasised that the local NHS board has an agreed formula for the distribution of resources through the ADATs and through local authority planning groups, which then decide on local priorities.

77. The Committee was told that the problems in some ADATs were caused by lack of senior level engagement. Sandy Cameron explained that the composition of ADATs “had to be at a senior level if they were to be the people in command of the resources and able to take those decisions” and that “it is clear that in different parts of Scotland the level of representation has become diluted over the years”.¹⁶⁹

78. David Liddell told the Committee that the intended dispersal of resources from key agencies according to need and other evidence regarding the areas in which they would make the biggest impact “has not happened in any significant way as many of the key players were reluctant to give up control of their resources to a partnership”. He explained that this led to a very “muddled” situation, in which ADATs have “direct control over some resources, influence over other resources and no control over another section of resources” and that “teams have been tasked with taking a strategic approach, but they have not been given the means with which to be strategic—they do not control their budgets”. He added that, without control over budgets, nothing will change and expressed a fear that, in five or 10 years’ time, the issues will not have changed.¹⁷⁰

79. Tom Wood indicated that there was a more serious structural problem, stating that alcohol and drug action teams were set up “with a lot of responsibility” but “were never empowered to do the job that they should be doing”.¹⁷¹

80. The Committee notes that a review of ADATs by the Scottish Government is currently under way. The Committee recommends that clarity in budgetary issues be given particular consideration in this review.

Pooling and integration of services

81. The Committee was particularly interested in the cross-cutting budgets for drugs and alcohol. Several witnesses identified a lack of integration but offered different solutions to ensure integration.

82. Roger Howard, Chief Executive of the UK Drug Policy Commission, for example, suggested more use of incentives to encourage organisations to co-operate and to break out of their “silos” rather than simply relying on strong performance management and “diktats from the centre”. He offered as an example the introduction of “a mechanism to switch resources from incarceration to community-based treatment.” Referring to the example of the transfer of resources from the health service budget to the local authority social services budget on the closure of psychiatric hospitals, he suggested that “community care and mental health is probably not the most illustrious example to use, but there is a principle about how…to incentivise and transfer resources”.¹⁷²

83. David Liddell suggested “a pooled or unified budget from a range of Government directorates: health and wellbeing; justice; education; enterprise and lifelong learning; development, in particular housing and regeneration; and, ideally, from the Department for Work and Pensions”. He indicated that he believed that there are government-level funding silos that are mirrored at strategic local level, which result in “service silos on the ground”. He expressed a vision of a budget that is top-sliced from the budgets of different departments and delivered through a single funding route, such as the health budget.¹⁷³

84. However, Catriona Renfrew queried the value of attempts to integrate funding at national level—

“At a local level, we need to improve how we shift money between agencies and how flexible we are in using cash. It is enormously difficult to do that when we are all short of money to deal with the alcohol and drug problem. We are not in a position to have an academic debate about where the next £1 million goes, because there is pressure at every point. It would be perfectly legitimate to try to develop a policy framework that says that the police, the NHS and local authorities as the three primary funders—the voluntary sector is important, but it does not bring cash to the table—should examine how they pool resources and move them between budget heads. However, it would be difficult to do that at a national level”.¹⁷⁴

85. Jack Law proposed a national framework supported by local commissioning, indicating that the issues of accountability, scrutiny and challenge needed to be considered nationally, so that we create a national framework and enable it to be clearly interpreted locally. He also called for a “local commissioning framework” to identify the services that people want to purchase, not just from the voluntary sector but from across the board. He added that clear indications are needed of what requires to be spent and why, who is delivering services and how the money will be accounted for.¹⁷⁵

86. Sandy Cameron proposed a challenging and robust annual accountability review process to “flush out whether all the money is on the table, whether agencies are being up front about what they are doing and whether they are using money to best effect”. He said that annual delivery plans should be clear about the outcomes to be achieved, with it being possible to: (a) measure whether the apportionment of resources is achieving what it was intended to achieve, and (b) shift resources if things are not working.¹⁷⁶

87. The Committee notes that the Scottish Government is reviewing the arrangements for alcohol and drugs services. The Cabinet Secretary for Finance and Sustainable Growth emphasised to the Committee that the Scottish Government is encouraging the health service and local authorities to work more closely at the local operational level—

“We have the opportunity to align national Government and local government policy much more effectively through the mechanisms that we have put in place. That alignment will not be achieved overnight, and I do not want to suggest to the committee that it is all sorted already—it will take a formidable time to achieve it—but we have put in place the architecture that will allow us to draw services more closely together”.¹⁷⁷

88. The Cabinet Secretary for Health and Wellbeing also emphasised the importance of local arrangements for joint working, including a role for ADATs as well as community planning partnerships and community health partnerships.¹⁷⁸

89. The Committee asked the cabinet secretaries how the Scottish Government will ensure that the budget is driven forward in relation to its strategic objectives in working with ADATs and what the mechanism was for drawing together budgets at a local level. The Cabinet Secretary for Finance and Sustainable Growth indicated that the answer lies in a focus on the architecture of government—

“We have established cross-cutting priorities through the pursuit of outcomes, and we have indicators to measure our performance. It is crucial that we have aligned the support for those outcomes at both national and local government level…That alignment gives us the opportunity to encourage joint working with the health service at local level and local authorities…”.¹⁷⁹

90. The Cabinet Secretary for Health and Wellbeing added—

“I get a strong sense from people on the ground who work in CHPs (community health partnerships)—the same, no doubt, applies to community planning partnerships and ADATs, although they are in a slightly different position…that there is an appetite to get beyond structures and to focus on outcomes. Following the Cameron stocktake of ADATs, we have a piece of work to address the weaknesses that were identified, such as the facts that ADATs are a mixed bunch and they do not necessarily have the clout to follow through with their budgets…I think that we have the structures in place to enable joint working and the pooling of resources. The key now is to focus on accountability, whether through the performance management arrangements for the NHS or the outcome framework that we are developing with local authorities. We need to ensure that local authorities and the NHS are accountable for the outcomes, which they cannot achieve on their own without effective joint working. The structures exist, but we need to ensure that they are used properly and that agencies are held to account for the outcomes”.¹⁸⁰

91. The Committee recommends that the Scottish Government develops robust mechanisms to ensure that pooled budgets are being spent appropriately at local level and to ensure that there are resources for "through-care" for individuals.

Knowledge development and use of evidence

92. The suggested failure to base spending decisions on evidence was a repeated theme in the evidence heard by the Committee. Roger Howard reported that there has not been enough research on drug strategy throughout the United Kingdom. In such a climate he said, “good pragmatic policy innovation and analysis are often stifled”. He suggested that Scotland under-invests in the creation of evidence in international terms, citing positive examples from the United States of America, Canada and Australia.¹⁸¹

93. However, based on the limited UK-evidence available, and international research, Roger Howard was able to summarise for the Committee the relative value of investing in different interventions, including focussing on education and prevention, treatment or criminal justice approaches.¹⁸²

94. In this regard, the Committee welcomes the Cabinet Secretary for Health and Wellbeing’s support for more evidence—

“…we have detailed decisions to take on the allocation of that money, but I give a commitment that research and evaluation will certainly be a higher priority for us than everybody would agree they have been in recent years”.¹⁸³

95. In this context, the Cabinet Secretary for Justice reported that the Scottish Government is “examining the option of establishing a Scottish Advisory Committee on Drug Misuse evidence sub-group, to comprise key partners, with a remit of developing a more co-ordinated evidence base on drugs”. He added that the evidence sub-group would aim to ensure that existing research from Scotland and, indeed, from the rest of the United Kingdom and the world is consolidated, with any gaps identified, and that it would also aim to maximise funding opportunities by pulling together the resources of different funding bodies.¹⁸⁴ The Committee welcomes this development.

96. The Committee was, however, advised that the remit of proposed group will be restricted to drugs. The Committee believes that there is a profound need for more evidence to direct policy in both drugs and alcohol. The Committee recommends that a similar body be established for alcohol misuse so that the Health Directorate General can, as the Cabinet Secretary for Health and Wellbeing indicated, learn from that approach in relation to Scottish Government research and evaluation of alcohol policies.

BUDGET FOR SPORT

Introduction

97. Scottish Budget, Spending Review 2007 (BSR) outlines the following spending plans for sport for the three financial years to 2010-11—

98. Around 91 per cent of the £47.4 million 2008-09 Draft Budget for sport is to be directed to sportscotland.

99. The Draft Budget in section 3 of BSR indicates that the budget will support delivery of the following priority goals for sport in Scotland: increasing participation; improving sport performance, and creating a legacy through major events such as the Olympic Games, the Paralympic Games and the Commonwealth Games.

100. The portfolio spending priorities, set out in chapter 11 of BSR, also cite programmes and projects that address “sporting opportunities, including planning and delivering programmes to attract and retain non-participants with particular focus on hard-to-reach groups”, among a range of programmes and projects that target inequalities and aim to improve life chances for the most disadvantaged. The Committee notes that the budget document gives no detail of what budget will be allocated to such measures over the three-year period.

Funding arrangements for sportscotland, including lottery support

101. In its evidence to the Committee, sportscotland indicated that the funding provided to it by the Scottish Government is augmented by income from the National Lottery. In 2007-08, that funding amounted to £18.5 million, having fallen from a peak of £33 million in 1997-98. This decline is accounted for by a decline in lottery ticket sales and by a top-slicing of income in respect of elite sport at a United Kingdom level. According to sportscotland’s projections, its future lottery funding will decline further, by an estimated £17 million between 2008 and 2012, due to arrangements for the funding of the London 2012 Olympic Games.¹⁸⁵  

102. In this context, Julia Bracewell, Chief Executive of sportscotland, described the 2007 spending review announcement of an additional £31 million over three years as, “…a welcome balance to a fairly depressing picture”. However, she went on to say that “the difference that that funding might make is entirely dependent on whether it is new money”, indicating it was unclear whether the £31 million includes some £27 million held in capital reserves for the national and regional facilities strategy, which aims to develop a network of multi-sports facilities across Scotland.¹⁸⁶

103. The Committee subsequently asked the Cabinet Secretary for Health and Wellbeing for clarification on this latter point and she responded that the £31 million represents a combination of new money and money held in capital reserves.¹⁸⁷ The Committee would welcome further information on the breakdown between these elements.

104. In response to questions about the implications of reduced lottery funding, Julia Bracewell indicated that sportscotland’s options include a cut in the budget for elite sport programme, in funding for governing bodies, in funding for building for sport in communities programmes or a cut across the range of activities.¹⁸⁸ In taking such decisions, the organisation would take direction from the Scottish Government in relation to national priorities for sport.¹⁸⁹

105. In her evidence to the Committee, the Cabinet Secretary outlined the action being taken by the Scottish Government to seek assurances that loss in lottery revenue would be no greater than current estimates. The Cabinet Secretary indicated that representations had been made to the UK Government and would continue, particularly in the light of Glasgow’s successful bid to host the Commonwealth Games in 2014.¹⁹⁰

106. The Committee recognises the contribution made to the Scottish budget for sport by lottery funding and welcomes the ongoing efforts to secure future funding levels.

Efficiency savings

107. At its meeting on 3 October 2007, the Committee questioned representatives of the Budget Review Group on the group’s recommendation that a 7% efficiency saving target be applied to sportscotland, the equivalent of £1.7 million annually. In responding, Bill Hughes said that “the group felt that that created the opportunity to make some reduction in spending that would not impact on service areas about which [the Committee is] rightly concerned”.¹⁹¹

108. However, when these points were pursued with sportscotland during the oral evidence session on 21 November 2007, witnesses indicated that around 88% of the exchequer and lottery money received by the organisation is disbursed to local authorities and Scottish sports governing bodies, leaving a remainder of £6.2 million from which to make efficiency savings - an effective target of 27%.

109. In turn, the Cabinet Secretary indicated in evidence on 5 December 2007 that the Scottish Government “will discuss with sportscotland the impact of efficiency savings targets, but the 2 per cent efficiency saving applies across the public sector”. As a priority such savings will be channelled “in to the front line and away from administration and backroom functions”.¹⁹²

Sports funding via local authorities

110. In light of the new funding arrangements for local authorities announced by the Cabinet Secretary for Finance and Sustainable Growth, and the element of the sportscotland budget that is disbursed to local authorities, the Committee was keen to ascertain whether specific output targets would be attributed to these resources.

111. The Cabinet Secretary for Health and Wellbeing was unable to give details of any outcome targets, indicating that this matter was still the subject of discussions with COSLA but she went on to say that she was aware that COSLA wanted to increase its focus on sport in the run up to the Commonwealth Games. She also indicated that there are a number of layers to the discussions with COSLA and that the Cabinet Secretary for Finance and Sustainable Growth would report to the Parliament on the outcome in due course.¹⁹³

112. The Committee commented on the potential implications for health-related service provision arising from the new approach to local authority funding earlier in this report (at paragraph 23). In addition, the Committee is aware of limited success in the past in achieving targets for minimum hours of physical education in schools, using the local authority delivery route, and reiterates its view that there is a need for specific and timely-monitored outcome agreements to be associated with such funding and a mechanism to track these resources.

Sports facilities

113. The Committee is aware that an audit conducted by sportscotland identified a deficit of around £2 billion in funding for sport facilities at a local level and was interested to explore the extent to which sportscotland is in a position to address the deficit in the context of the Draft Budget. The Cabinet Secretary acknowledged that this was a daunting, inherited sum and would take time to address. She went on to indicate that it was a matter for sportscotland to decide how it allocates resources between national and local facilities.¹⁹⁴

114. In relation to b