Equality Budget Advisory Group: recommendations for equality and human rights budgeting - 2021-2026 parliamentary session

Processes

This section addresses recommendations for the budget process as a whole, as well as how equalities and human rights analysis can be better integrated into policymaking and budgeting cycles.

Currently all policy and spending proposals should include an analysis of the equalities dimensions, existing inequalities, and actions to realise human rights.  These are requirements under the Public Sector Equality Duty of the Equality Act 2010, and the Fairer Scotland Duty. What is clear is that current practice of equality and human rights impact assessment is at best variable. It is also clear that the starting point for policy formulation is not an analysis of the equality dimensions and a clear articulation of objective to advance equality and progress the realisation of rights. That fundamental starting point for policy and spending decision-making must anchor the analysis, evidence, and focus of policy decision, drawing together the overarching social justice discourse of the Scottish Government, and the specific actions to realise the outcomes expressed in the National Performance Framework.

Wider budget process

Multi-year budgets

There are inherent problems with single-year budgeting: one-year budgets are not conducive to challenging systematically embedded social issues, which take time to address. While the Scottish Government is somewhat constrained by HM Treasury in this respect, multi-year budgets offer much greater opportunity to tackle embedded inequalities and should therefore be worked towards. This is particularly important in order to provide some longer-term funding certainty for local government, and more generally for public bodies and third sector organisations.  These issues were a particular focus for change in the Calls to Action of the recent Social Renewal Advisory Board. COVID has highlighted the importance of flexibility – but longer term strategic planning which looks at principles for raising revenue and strategic priorities for spend over a five-year period is essential to tackling structural inequalities.

Medium term financial strategy (MTFS)

Despite its focus on major public spending commitments over a five-year horizon, including public sector pay and other spending commitments with direct equalities implications, the MTFS to date has not yet incorporated equality analysis nor articulated the aspirations of medium-term spending commitments to advance equality objectives and the realisation of human rights.

Budget Process Review Group recommendations 2017

The Budget Process Review Group recommended specific actions to improve scrutiny within the budget process, including closer evaluation of progress towards agreed outcomes and the flexibility to re-orientate policy in order to secure equality and human rights outcomes. In practice this requires significant improvement of assessing new commitments made throughout the year for their consistency across the Programme for Government (PfG), National Performance Framework (NPF) and other targets informed by equality and human rights analysis both within Scottish Government and within Scottish Parliament. Specifically, the Budget Process Review Group recommended “that this should be a cumulative process and that committees should build up an evidence base throughout each session of the Parliament through, in particular, the evaluation of the impact of previous budgets and progress in achieving objectives”.[1]

Open government and open budgets

SHRC’s Open Budget Survey work found that as of the 2017-18 budget, Scotland provided adequate oversight of the budget including the presence of effective checks and balances to ensure integrity and accountability in the use of public resources.  However, it also found limited budget information including a lack of transparency, and timeliness of key budget documents, with few or no opportunities for public engagement in the budget process. Transparency and public participation are therefore areas in which particular improvement is required. The International Budget Partnership, which conducts the Survey, recommends that in addition to the budget documents already produced by Scottish Government, a pre-budget statement, in-year reports and mid-review are also published. Commitments to transparency and participation in the Scottish Budget process formed part of the 2018-2020 Scottish Government Open Government Action Plan. Various changes have been made to the process and documentation over the years, which the Permanent Secretary considered to be a significant step-change, and developments in 2021 as setting a positive course for incorporation of human rights analysis. These commitments require more dedicated focus and action as they roll over into the Open Government Plan from 2021.

Recommendations

Scottish Government takes the recommendations in this report and turns it into a prioritised and resourced action plan to ensure step change improvement in budgeting appraisal processes over the parliamentary term.

1. New commitments and their intended outcomes should be developed on the basis of advancing equality and human rights, and assessed for their consistency with the PfG, NPF and other targets.  Existing requirements under the Public Sector Equality Duty and Fairer Scotland Duty should be effectively implemented, alongside human rights assessments and other dimensions of wellbeing, equality and human rights analysis. Closer scrutiny is essential to ensure they are conducted in a timely and meaningful way and that they are monitored and updated as policies are implemented over time.

2. Existing cumulative and ongoing spending commitments and funded programmes should be included in assessments of equality outcomes and progress in securing human rights and NPF outcomes.

3. Multi-year spending reviews should be aimed for in the future. Multi-year spending reviews were part of the original design of the Scottish Budget process and recommended by the Budget Process Review Group, including the production of a pre-budget framework developed in dialogue with partners. Multi-year spending reviews are particularly important for local government and other key delivery partners, and should form part of the budget process from the 2022-23 budget process.

4. Produce a pre-budget statement, in-year reports and a mid-year review in line with international standards.[2] The pre-budget statement should disclose the broad parameters of fiscal policies in advance of the Executive’s Budget Proposal and outline the government’s economic forecast, anticipated revenue, expenditures, and debt. In-year reports should include information on actual revenues collected, actual expenditures made, and debt incurred at different intervals, and be issued quarterly or monthly. These should also report the equality and human rights impacts of in-year budgeting allocations or adjustments. Finally, the mid-year review should be a comprehensive update on the implementation of the budget as of the middle of the fiscal year, and include a review of economic assumptions and an updated forecast of budget outcomes. Equalities analysis and narrative within the core budget document is improved as a result. These recommendations are consistent with both the Budget Process Review Group report, and the commitments in the Open Government Action Plan.

5. Work with public authorities funded through the Scottish Budget and who have obligations under the Public Sector Equality Duty and human rights legislation to develop processes for reporting on the impact of past spend and budget allocations on equality outcomes and advancing human rights.

6. Analysis of the impact of changes in spending commitments to public and third sector organisations in relation to advancing Scottish Government priorities should be conducted and published.

7. Improve transparency and public participation in the budget process through the consistent publication of a Citizens’ Budget and accessible information on the budget process. 

Processes for integrating equalities and human rights analysis into policymaking and budgetary cycles

The historic and current commitment from the Scottish Budget is to advance equality and secure the realisation of rights. In the EFSBS, the function of the Budget was set out as:

“The Scottish Budget seeks to increase wellbeing by improving outcomes for Scottish society as a whole, but also its component parts. It seeks to eliminate discrimination, advance equality of opportunity, foster good relations and progressively realise human rights through both the generation of revenues and the allocation of expenditure” (Scottish Government, 2021, p.2)

The realisation that equality and human rights objectives are the starting point for policy action and always central to the formulation of policy proposals is essential and central to improvements in the budget process. Operationalising that commitment requires an understanding that policy objectives, including in relation to equality and human rights, drive funding allocation. This in turn requires equality and human rights analysis and impact assessments to be improved and built in to all stages of policy formulation.

High-quality analysis of budget decisions is dependent on equality analysis being fully embedded into all stages of policymaking and throughout scrutiny of policy and spending decisions and outcomes. For example, conducting full impact assessments of policies during their development ensures that Scottish Government has gathered, considered and is able to discuss the evidence that a policy will have particular impacts for given groups of people. When done well, it also ensures that policies are tailored to maximise their positive impacts and minimise their negative ones, and that this can be clearly articulated during analysis of proposed budgets. Advice from the Equality and Human Rights Commission (EHRC) has reiterated the importance of ongoing assessment of policy decisions, advising public bodies – including Scottish Government – that systems to enable monitoring and review of the actual impact of policy form an important part of equality impact assessment (EqIA) processes and should be clearly set out and understood by everyone involved. As the general equality duty is still applicable to ongoing policies, even where they have been subject to an EqIA, ministers need to be satisfied that policy and spending decisions are continuing to meet each of the needs of the general equality duty.

An example of recent practice that illustrates these recommendations in practice was in the development of the Scottish Child Payment. A systematic approach was developed to assess policy and delivery options for a supplement, to model its expected impacts, and to use this evidence to target the initial roll-out to children who stood to gain the most from it. This meant that the positive and targeted projected outcomes from spend on the Scottish Child Payment could be clearly set out in the 2020-21 EFSBS.

In recent years, a range of perspectives and approaches to maximising budget processes as a mechanism for activating equalities mainstreaming policy and the integration of human rights analysis have been developed. The work of the SHRC is a clear example of this, along with the work of the International Budget Partnership or gender and ‘gender plus’ intersectional approaches implemented at national and sub-national level in a number of European countries, Canada, and Iceland, among others. Scotland is a member of the Wellbeing Economy Governments group in partnership with Iceland and New Zealand, who are developing their approaches to wellbeing or wellbeing and gender budgeting, to varying effect. Current activity around the incorporation of the UN Convention of the Rights of the Child and research on children’s rights budgeting are consolidating demand for integration of this approach in the Scottish Budget process. The Scottish Exchequer has a working group on Open Budgeting, which takes a different analytical starting point from equalities and human rights budgeting but spotlights important process issues in relation to public participation and information. These multiple voices focus on the significance of the budget process and the need for alignment between analytical perspectives that drive and underpin social justice outcomes. This reinforces the need for building capacity within the Scottish Government, developing and implementing practical approaches for improving policy analysis, and integrating equality and human rights analysis and outcomes.

Recommendations

8. Invest in building knowledge and capacity on understanding equality evidence and human rights international standards in order to improve equality and human rights assessment and evaluation of outcomes. Set a timetable for training with oversight by the Mainstreaming Strategy Steering Group and Executive Team, with relevant updates on training on budget analysis to EBAG.

9. Evaluation of outcomes as published in the annual wellbeing report should become an integral part of the budget process and inform the different stages of pre-formulation, budget preparation, and evaluation of spend. These evaluation reports, of outcomes and spend, should be published on the Scottish Government website and should include consideration of key structural inequality by protected characteristics (and their intersections) as well as impacts on the realisation of human rights.

10. Public participation in formulating budget commitments and to ensure the integration of lived experience of policy decisions is essential. It is also contained within existing Open Government and Budget Process Review Group commitments to improve transparency and participation in the Scottish Budget process, as well as a necessary to meet international standards.

The fiscal transparency project of the Scottish Exchequer is also exploring the formulation of a Citizens’ Budget which aligns with the recommendations from EBAG.

11. Continue to develop, improve and embed equality in the policy process that helps Ministers make budget decisions and informs the nature of associated budget publications including the Equality and Fairer Scotland Budget Statement (EFSBS).  In addition, introduce a pre-budget statement as part of the advance formulation and scrutiny process, as recommended in the Budget Review Group Report, and to fill gaps in international standards as identified in the SHRC Independent Budget Initiative. This statement should include a Pre-Budget Equality and Human Rights Assessment / Annual Portfolio Performance Update and be published immediately before summer recess. Progress reports should be made to EBAG and published on the Scottish Government website.

12. Promote internal engagement with the EFSBS process and external use of the EFSBS as part of a suite of analytical activities and products that focus on how public resources and decisions are being used to drive equality and human rights and the evaluation of the impact of that spend. This analysis would be produced internally and assess the key inequalities of outcome relating to the main policy objectives in each portfolio, and what evidence there is on how these inequalities could be addressed. This analysis allows Ministers and senior officials to actively consider key issues and make budget and Programme for Government decisions informed by the evidence.

13. Build on initial approaches to frame action on equalities within a risk assessment framework as trialled in the 2021-2022 Draft Budget/EFSBS to support the process of identifying and responding to inequalities and advancing equality and the realisation of rights as the basis for allocating funds. 

14. Retain EBAG with an expanded/re-worked name to reflect the drive for equality and human rights budgeting, confirm a set of Terms of Reference for EBAG, and continue the role of independent chair.