Resource Spending Review Framework: Analysis of consultation responses

Annex C: Note of the Academic / Think Tank Roundtable

Resource Spending Review:
Note of roundtable discussion 16:15 – 17:00
31 March 2022

Present:

Kate Forbes, Cabinet Secretary for Finance and the Economy
Mairi Spowage, Professor of Practice and Director, Fraser of Allander Institute
Philip Whyte, Director, IPPR Scotland
Susan Murray, Director, David Hume Institute
Ben Zaranko, Senior Research Economist, Institute for Fiscal Studies
Krishan Shah, Economist, Resolution Foundation
Graham Atkins, Associate Director Performance Tracker Team, Institute for Government

Deputy Director of Public Spending
Supporting Scottish Government Officials

Purpose of Discussion

This is part of the external engagement programme for the Resource Spending Review (RSR) which supplements the online consultation (opened 9 December 2021 with publication of the RSR Framework, closed 27 March 2022).

The Cabinet Secretary for Finance and the Economy welcomed stakeholders from the think tank and academic community to discuss the RSR and gain their insight into two key discussion topics:

• What a successful RSR might look like.
• Good practice examples of any countries/regions that have done particularly well in addressing the types of challenges Scotland is facing.

Introduction

The Cabinet Secretary for Finance and the Economy provided a progress update on the RSR to the attendees. She stressed that the absence of multi-year spending envelopes had stifled progress for Scottish Government and its delivery partners and she is committed to addressing this as far as possible, while opening up the space for supporting a reform agenda across the whole parliamentary term.

Roundtable discussion

What are your views on the priorities we've set to guide the Resource Spending Review process? Do you think these are the correct priorities to help us target and re-direct our spend in this tight fiscal context, or are there others that would be helpful?

Attendees offered the following contributions and views:

• General agreement that the number and focus of the priorities set out in the Resource Spending Review Framework are appropriate. The addition of a fourth priority on resilient public services was also welcomed.
• Links with the National Performance Framework need to be clearer to aid understanding of how the RSR priorities relate to previously agreed areas for progress and the ongoing evaluation.
• Attendees noted the importance of translating the priorities into actual funding, identifying the potential trade-offs that may have to happen in funding priorities, and the need to ensure robust appraisal and evaluation of policies and funding streams to ensure the desired outcomes are achieved.
• There are a number of challenges to achieving the priorities with the likely funding available, including public sector wage bill inflation, energy costs, social security commitments and tax base challenges. Trade-offs are likely to be needed.

What does a successful RSR look like to you?

Attendees offered the following contributions and views:

Multi-year funding

• Agreed that SG requires more certainty for its own funding in order to enable proper planning – the current arrangements for (not) supporting carryover, as well as limiting borrowing, combined with late consequentials create challenges for SG.
• Welcomed multi-year spending plans to provide some certainty for organisations to support their own organisational planning, in particular, the third sector.
• Interested to know whether SG is exploring the possibility of introducing rolling budget/spending review estimates to help with spending and planning, rather than the current rhythm of annual budgets and occasional spending reviews. This could help manage the inevitable increasing uncertainty in the outer years and allow for adjustments in line with more detail in the near years
• Important to align the RSR and the Medium Term Financial Strategy (MTFS), which will be published together in May 2022.

Outcomes based approach

• Taking an outcomes based approach would allow for better planning and results – setting out the logic or theory-of-change of how spend is expected to deliver key outcomes is key, and the National Performance Framework potentially provides a framework for this for SG.
• Attendees queried whether SG has sufficiently robust appraisal and evaluation of policy to ensure that the Scottish Government programmes provide the best value, and a spending review should commit to this for future improvement.

Volatility and resilience

• It is important to consider where stresses are likely to be felt over coming 10 years and allocate funding accordingly. The Framework sets out some of the drivers on spending so it's good to factor in dynamics like demography to explain spending planning.
• Building in resilience is important, particularly given UK-level changes can have a fiscal impact on Scottish Government funding. This could involve spending plans that contain an annual 'reserve', would allow for resilience to address the unexpected during financial years.
• It was argued that a spending review should acknowledge that perhaps everything cannot be funded, and be clear about the trade-offs that may be required to make the budget balance – the Framework made clear that there is likely to be a funding deficit so the RSR should be clear about how that is to be managed.

International examples

• In UK Government, spending allocations are accompanied by statement on the intended outcomes to be achieved with the funding. Attendees highlighted this works well and would encourage Scottish Government to consider doing the same.
• Rare internationally to see multi-year resource planning. Only a handful of countries attempt this and this is mainly a reflection of the challenges in doing such exercises.
• There is little evidence on how well countries abide by their multi-year spending reviews after they have been set.

Closing the session

The discussion was extended beyond the planned time when Ms Forbes had to depart. The Deputy Director of Public Spending chaired the meeting until close, thanking all attendees for their participation and agreeing a process for clearing a short note of the discussion, to be included in the analysis of all responses to the RSR Framework consultation.