 Good morning and welcome to the 6th meeting in 2020, one of the Finance and Public Administration Committee. The first item on our agenda is to take evidence from the Auditor General for Scotland on tracking the impact of Covid-19 on Scotland's public finances. Audit Scotland recently published a report on this important topic that members have received copies of along with a note from the clerks and a private briefing paper from the Financial Scrutiny Unit in Space. Can I welcome Sean Dowey, MSP Deputy Convener of the Public Audit Committee who joining us i'w wneud hyn o'n cyrchydig i ni gorfodd, i broses i'r gwaith yn y ddweud hwnnw. Yng Nghymru yn enw i'w ddweud eich seith earliestau yn Ysgolodd a Mark Taylor, wrth fwrdd gydych chi i'w dyleiddiant o'r Sgolodd. Yn 10 ar 90 Fear guidance o mynd i ddiwedd i gael i gael i ni'n dduwi'r cyffredinol, mae gyn stampo ar y gweithio o Gymru, ac rwy'n meddwl i fynd i'w ei dduw i gael i'w ddydd i gael i gael i'w ddweud. I'm really delighted to be with you this morning to say a bit more about our work, our submission to your consultation on the 2022-23 Scottish budget and say a bit more about our own briefing paper that you referred to in your introductory remarks, convener. In August of this year, I provided a submission on your call for views on Scotland's public finances. In this, I highlighted the issues that the Scottish Government should consider around the impact of Covid-19 and how it will affect Scotland's people, Scotland's financial sustainability and the priorities that the Scottish Government and the Parliament will choose to implement in future years. The four harms of Covid-19 for the people of Scotland are complex and trends will need to be carefully tracked by the Scottish Government and the resources in the budget allocated appropriately to prevent a widening of inequalities. The pandemic is also extremely challenging for the stability of Scotland's public finances. The Scottish Government's response in future will require effective planning for recovery and renewal over the medium term. It will be difficult to match spending to available funding in coming years. The Scottish Government will need to make difficult decisions in ways that minimise the disruption to individuals, public bodies and public services and ensure that value for money is maintained. Understanding the longer term pressures facing the Scottish budget becomes increasingly important. The Scottish Government will also need to be clear on its priorities following the pandemic and how those are aligned to spending plans and the delivery of the national outcomes. To achieve its goals, decisions-making processes must be transparent and co-ordinated with other levels of government. In our response, I highlighted some of the areas where I consider the committee's scrutiny to have most impact. Those include how the Scottish Government manages changes to the budget in year, linking spending to people's wellbeing and financial plans for the transition from the response to the recovery phase. We would be happy to discuss those with the committee. Lastly, convener, earlier this month we published the third in a series of briefing papers tracking the impact of Covid-19 on Scotland's public finances. It highlighted the scale of spending on Covid-19 to date, around £9 billion in 2020-2021 and the scale of some of the on-going financial challenges facing the Scottish Government. The response to the pandemic will therefore be the backdrop to not only the budget process for 2022-23 but also the planned UK and Scottish multi-year spending reviews. This year's financial position will also continue to change, with the remaining uncertainty over the coming winter and beyond. At Audit Scotland, we will continue to audit the response to the pandemic, and we are committed to supporting this committee and other committees in this Parliament. Mark and I would like to be here and look forward to answering the committee's questions this morning. Thank you very much for the opening statement. In time, onward fashion, I will start with some opening questions before opening up to colleagues around the table. The first question is, you have said that, commenting on your own report that, I quote, Transparency around what is classed as Covid-19 spending across Government portfolios remains challenging in a fast-moving and unpredictable environment. Can you give me an example of where spending is ambiguous and could be better explained? I will do my best, convener, and I am sure that Mark will wish to contribute as well. We looked to track the scale of spending—we set out some of the sums involved—over £9 billion, but also some of the processes that have been used over the course of the year, individual spending announcements. At the end of July, we were up to 300 individual spending announcements. The majority of those have been in the previous financial year, some of the numbers are still to be entirely audited and we are in the midst of that process at the moment. On how that translates to budget management and budget reporting, it becomes much more complex. The allocation against individual lines on the budget has been a matter of judgment that Scottish Government officials have had to deploy to say which line best fits that. For the most part, that will be clear whether it is health-related spending or local government, but there will be some cases in which judgment will need to be applied. I will say a bit more about that. We tried to illustrate in the briefing paper the scale of change in volatility and how the challenge of that can be to manage. We are hoping, as we emerge from the pandemic, that there is an ebbing of the volume of announcements, but it does not detract from the fundamental point of the need for transparency, given the vast scale of spending that has taken place in recent months. That is clear as to what has been Covid-related activity and what are other parts of Scottish Government expenditure. I will ask Mark if he wishes to say anything more. It is really about health, but we are really asking how that can be improved, that process. Thank you, convener. I will add three things briefly to the general's remarks. One of the things that can be improved on what the Government is working on is what it describes as classification. As Auditor General says, at a high level, it is clear where money is going and what is going on at a high level activity. Much of that is clearly Covid. Things that sit below the water line, if you like, within individual directorates and individual DG families, where a lot of the budget management happens at a lower level, it is more difficult to identify the classification of Covid spend. The Government, as you will see from my undertaken exercise report, is currently working through that. That is important because there have been political commitments about how Covid funding will be used. It is important that the Government can demonstrate that through the time. It absolutely needs improvement and there is work going ahead on that. The other two things are to draw out. One is about the change in the nature of spend through time. We are very much coming out of, from a spending perspective, what has been the immediate response. The Government is beginning to plan for some of that recovery stage. As we go into the recovery stage, what is investment in recovery from Covid, from what is investment in public services and the economy, becomes much more ambiguous. That will be an increasing factor. Again, there are political commitments to spend Covid money on particular things for you as a committee to be able to unpick that. I think that there is some scope for improvement in that area. The third area that I would flag up is recognising that Covid funding is largely non-recurring. There is something for you as a committee to consider about how clearly that has been applied to non-recurring spending areas. A risk that, because the money is very much clear, will be in non-recurring and then is applied across Government, is how much expenditure is that stocking up on a recurring basis. We have not done the work to get into that area yet and we will look to try and do that later in the year. However, there is an underlying inherent risk that money comes on a recurring basis. I need for clarity about how that is applied. I am trying to handle on that because I think that this is fundamental to the whole issue that we are talking about in terms of knowing where public money is going and how it is being spent on vested, however you wish to describe it. You have said that, in determining budget proposals, a Scottish Government will need to have a clear understanding of how it plans to transition from its initial financial response to more of a recovery phase. You have talked about continuing uncertainties in the course of the pandemic and the likely to maintain a flexible approach to financial planning. How can Scottish ministers grapple with that? At one point, you are looking for more certainty in terms of understanding the transition, but at the other time, you are trying to enable flexibility. How can we square that circle? The first thing that I would say is incredibly difficult. It is important to acknowledge the circumstances that we are in as we are still in the midst of the pandemic. You have seen the scale of some of the funding announcements that have still come through. The scale of additional public spending from what we have recognised as being the baseline exemplifies that we are in the midst of a really volatile environment. Whilst recognising that, I would also make two points. One is that there is a need for continuing and improving transparency around how the budget is being managed. We have previously welcomed some of the additional mechanisms that have been used, particularly the summer budget revision process and how that has supported some of that transparency. We have had, in addition to the two other cycle of budget revisions, I think that there is still thinking to be done about how further transparency could help, whether that is part of the committee's own thinking about other steps in intervening periods across the annual cycle that might support some of that budget transparency. The other point that we would make similarly is that part of the transparency is that the committee will recall that my predecessor and I in this role have been in discussions and calling for a wider suite of public financial reporting in Scotland, notably a set of Scottish public sector accounts that sets out a much clearer picture beyond the Scottish Government consolidator accounts, what Scotland is spending, what its income is, the scale of assets and liabilities, as we think that we are keen to see progress on that front. The last thing that the committee has done is to look into the longer-term convener. There is much talk about the need for medium-term financial planning, setting out the scale of volatility. None of that brings any immediate certainty or predictability, but it is a good place to start in terms of indications of what spending plans might look like. Whether it is five years or whether it is progressing with the work that the Scottish Fiscal Commission has indicated its intention to do into next year and beyond, of much longer-term thinking, we would welcome that. None of that attacks, and this is still a very volatile environment, convener. You have said, and I quote, that the UK position is a source of uncertainty for the Scottish budget, and then you want to say that the Scottish Government has been informed of £175 million to be allocated, however, those consequentials will not be confirmed until the UK Government's supplementary estimates have published early in 2022. What kind of difficulties does that present for the Scottish Government? I will have a kick-off on that one again. Mark me if you want to say a bit more about it too. In itself, yes, it is a challenge to about the scale of change in the budget. In the wider scale of some of the changes and additional funding that has happened, it is one of the examples of the uncertainty that has been faced. Similarly, in the Scottish budget management and last year's budget cycle, through the very considerable sums of Barnett consequentials that came through, and at varying times of spending announcements and then how that translated into concrete certainty, the timing of some of those announcements that we captured in our briefing paper. Similarly, some of those came through right at the end of the budget process, and the Scottish Government and the UK Government came to an arrangement to allocate that into UK reserves for the Scottish Government to become available later in the year. It is an example of uncertainty coupled with whatever may come out of the spending reviews and the budget processes across the UK and the Scottish Government. Mark me if you want to say a bit more about the estimates process. Where I'd start is that there is uncertainty over the amounts involved and how that translates about how much money is available to spend, and the timing of that coming through, given that the Scottish Government has the challenge of managing an annual budget process at a degree of flexibility between one year and the next. However, some plans already in place about how some of that money will be carried forward. The amount that comes through the uncertainty over that. More of the challenge is almost in the classification of the funding in two ways. One is the obvious split between resource capital financial transactions and the like and where money can be used and uncertainty about how that might move around through the year, both in terms of additional funding and how much more. However, there has been a history, if we look back, not too far where the actual capital spend at a UK level was reduced from what was planned and if it was a reduction in funding as a result of that. There is that uncertainty over how the money is batched up. The other thing to reflect is that the Government has made some commitments to use certain Barnett consequentials for certain purposes. The most obvious one of those is health, where health money flows through the system that the Government has committed to applying to health purposes. One of the challenges that the Government has faced around that and that it may continue to face has been where there has been an expectation of money coming, but it is not clear what badges or what labels attached to that money. It is difficult to know from a Government perspective how much to commit that money to particular areas where subsequent events might change the nature of where that funding comes from. Some of that is inherent in the system and some of that comes from the way that the Government has chosen to make commitments and to manage its money, which gives an extra layer, an extra degree of difficulty and complexity for it to manage. You have talked in the report about how, although addressing the pandemic was obviously a priority, the Scottish Government should not really deflect from some of its longer-term goals, such as addressing climate change. However, some of the measures to tackle Covid would not help in dealing with climate change. One thinks of the huge, and thousands of tonnes of PPE equipment, for example, are going into landfill or whatever over the past 18 months. How can the Scottish Government address that? Clearly, the number one issue is the pandemic, so how can it respond more effectively in dealing with the longer-term issues of climate change without having to compromise on addressing some of those issues in relation to the pandemic? I repeat myself, convener. We recognise that that is complex and challenging. The pandemic inevitably will remain the focus for as long as it needs to, but through the Scottish Government, local government and public bodies across Scotland, and, as individuals, we will get to the point that as we move into a new recovery, a transformation phase that sets out a clearer direction of what the future of spending patterns will be and what impact that has on public services. The committee will be familiar with the fact that Audit Scotland has been supporters of a clearer transparency around the national performance framework and the clear connection between spending and outcomes for the delivery of public services. We continue to make the case for that. We also recognise, though, that it is challenging and that there is conflict between spending. You make the point about PPE and environmental concerns. Similarly, you can make analogies between infrastructure, economy and environmental challenges and how those spending patterns will come into conflict, too. What we are keen to see is that, as government and public bodies work through that, there is a transparency around what spending is achieving and how that better connects to the national outcomes. That is done on a regular and iterative basis, so there is just that regular transparency and people can know and can track what the impact of spending is achieving. Thank you. That is one final question from me before opening out to the committee. The committee's predecessor recommended that the incoming committee, IE, yourselves consider inviting the Scottish Fiscal Commission to publish a long-term fiscal sustainability report at least once during each session of the Parliament. When, during the session, do you think that that would be most appropriate? I am happy to offer a view on what Mark Wood would do. I guess that there is no right answer to that type of question. I think that it captures a broader suite of transparency, even when there is a great deal of volatility. Over the course of the next year, 18 months, if we are into a more stable environment, I think that I read, convener, that, as part of the Fiscal Commission's own thinking about into 2022, we are starting to consult into 2023, indicating that therein will be a clearer environment with which to publish following consultation a longer-term sustainability analysis of Scotland's public finances 10, 20, 30 years into the future. That would feel like an appropriate thing to do. I think that our biggest point that we would make is that it is a necessary thing to do when the timing is right and when there is clarity best to do so, but that timescale feels about in the right timescale for us. I am happy to see Mark Wood's view on that, too. A couple of things to say. I think that I emphasise strongly supportive of the proposal to do that and really to get that sense of what the pressures on the public finances in the longer-term are and really see the value of that and the pressures on sustainability, both in terms of the aggregate funding but also how funding will need to be redirected through time and some of the aspirations that are there in Christy and the like to respond to that. In terms of timing, I think that the two reflections that I offer on that, one is because of the nature of the task, which is to look ahead 30 years, 25 years ahead, it is helpful that it is almost divorced from the political cycle. I think that the fiscal commission's proposals landed quite nicely in the middle of the parliamentary cycle. That would seem, if you forgive this phase, a safe space for that, where some of the immediate politics are set to one side and it would feel to be a good time to do that and to look right through as to what the longer-term perspective would be. So strongly supportive of the proposals and the timing that is proposed would seem to be about right. I do not know, even in 20 or 30 years, I am sure that Ross will still be with us. The first question from the committee is listed before by Daniel. May I stay on the issue about the transparency and accountability? I entirely agree with the convener that that is the biggest job that faces this committee and, dare I say it, I think that it is also the biggest job facing the Parliament. You have been quite clear that both your predecessor Caroline Gardner and yourself are keen to see some additional processes that would enhance that transparency. You mentioned, I think, in your briefing just now about the summer revisions and you mentioned also about the Public Accounts Commission. Could you do that? Would you also recommend that there are structures in this Parliament that could be improved to enhance the scrutiny and accountability? For example, I know that you cannot comment on policy at all, but would you ever consider that something like a finance bill, which this Parliament has not had as a customary procedure, would you consider that to be a possible way of improving transparency and accountability? Thank you. Good morning. I will certainly comment in detail on the first two points and maybe a bit less on the notion of a finance bill. Mark, you were to comment in all three. You are quite right that transparency and accountability are where incredibly important pre-pandemic and the need for such have been increased during the course of the scale of public spending, the volatility, addressing all the forearms and all those factors that we have talked about. We have said publicly that we welcomed the summer budget revision, given the volatility in the scale of additional spending, as an appropriate mechanism for which there could be additional scrutiny over new and significant forms of public spending that has taken place. Whether the Parliament and the Government choose to continue that is a matter for yourselves to decide upon, or whether it goes further, indeed, is some of that additional in-year opportunity, whether it is through this committee or elsewhere in the Parliament, for on-going scrutiny of how public spending takes place. I would offer that some—there is regular scrutiny, as members would expect, in some of the individual public bodies themselves that are spending this money through their own governance structures, and there is a change of accountability through to the Parliament on a regular basis therein. On the point that you mentioned about the Scottish public sector accounts, we have been commenting regularly about the need for additional public financial reporting in Scotland. There is a UK-wide mechanism that the committee may be familiar with—a whole of government accounts—that sets out all the range of what the UK public services spend and generate, but we do not have an equivalent version in Scotland. Given the scale of change that we have seen about the additional financial powers and responsibilities that the Scottish Parliament has acquired in recent years, we feel that that is a missing component. The Scottish Government has publicly committed to it, as the permanent secretary has stated. We recognise that there have been plenty for the Government to be getting on with over the course of the past 18 months that have interrupted progress, but there is always plenty to get on with. Our sense is that there needs to be progress made on this so that we have a much clearer picture of what is spent. On the point about the finance bill, I am probably less in a position to give a definitive view about the merits or demerits of that. On a general point, we are, as an organisation, keen to support scrutiny, accountability and transparency, and we are happy to consider and give a more detailed view on writing about where that might fit in. Mark May wishes to come in in more detail on that point, thank you. Thanks for the question. I guess just to briefly run through on the public consolidated accounts, just to build a little bit on the general's point, I think I have made the link between that as additional information and the work that the fiscal commission may do in its longer-term look at financial sustainability provides a different look at the future, because it takes into account essentially the public sector balance sheet, as it currently stands in any pension liabilities, the asset base, and it gives a more rounded look at the current position as an eye to the future. The other thing that I pull out on additional information is about the increase in importance recently and will continue to be of in-year budget management. A lot of the focus of scrutiny and of transparency is being around the budget proposals. Increasingly, as those proposals changed through the year and as actual spending diverges from what was planned in understandable circumstances, there is something for the committee and for the Parliament or generally to pay closer attention to those changes throughout the year and the nature and extent of scrutiny that we put both on the budget revision process and on the actual spending information that comes to you. I think that as part of the spring budget revision, you should anticipate the most-to-date update on the actual year-to-date position, and it is important to look at both of those and the information around both of those as an opportunity to develop that. On the question of finance bill, I recognise some of the challenges here, so this is not fully within the scope of this Parliament to be able to address because you have a way in which the Scotland act interacts with Public Finance and Accountability act. I think that one of the merits of a finance bill allows that picture in the round to be looked at both on the spending and the revenue raising side in the round, but I recognise some of the technicalities that need to be worked through on that. Can I just pick up the point that you just raised about spending in the round trying to get an overview picture? One of the greatest challenges in politics today is to try to win the trust of the public about, especially the tax-paying public, as to where their money is being spent and who is accountable for that spending, and if anything goes wrong with it, what are we as a Parliament, as a committee, going to do about that? I wonder what your views are on the concern that some people have members in this Parliament and perhaps some members of the public and some other bodies that sometimes we make our judgments about scrutiny and public spending in relation to a specific committee, and as we are doing just now on specific issues, rather than having the mechanism certainly outwith the budget process to see the whole thing in the round. That is why I was asking about a finance bill, obviously, with the concerns about how that would articulate with the Scotland act, but I wonder if you have any views on whether there are any other procedures that are required to enhance the overview of Scotland's public finances and whether that comes down to better forecasting or whatever. I am just interested in what you feel there. I am happy to start. I wish to come in again. I think that there are existing measures that are in place that support some of the scrutiny. There is an audit process around all the spending that is allocated through the budget bill, and the funding that flows into the Scottish Government to associated bodies to local government to NHS and so forth is all subject to an annual audit. Much of that spending is then consolidated back into the Scottish Government's annual consolidated accounts. The out-turned pre-audit is reported to the Parliament earlier this year, and then that is subject to an audit process and completion of accounts. For a number of years on back, I think that the memory says we have seven or so years now consecutively, myself and Caroline Gardner have prepared a section 22 report on the Scottish Government's consolidated accounts as a way of enhancing the accountability and public scrutiny of some of the spending that has taken place across public bodies, in particular those bodies that are fed into the Scottish Government's consolidated accounts process. Unfortunately, there is a complexity about which bodies are in and which are out, known as the accounting boundary. That means that there are still some significant lines of public spending that are not captured within and some very high profile examples of money that has gone outside of the Scottish Government to other organisations and so forth that have been subject to our commentary and examples being our call for a greater set of framework for investing in private companies as a mechanism to support additional accountability and scrutiny. I welcome any additional measures that allow for a more rounded set of scrutiny and audit arrangements across public spending. The Scottish public sector accounts would be one example and then, as Mark has mentioned, whether over and above that mechanisms that the Parliament and the committee may wish to explore would further enhance the existing set-up. One more question, convener, if I may. Can I just pick up on the point about this additional scrutiny last week? I think that it was the convener who was asking the Deputy First Minister about how easy it is to drill down—when it comes to a national performance framework—how easy is it to drill down on something that is a national spend and something that is a local government spend? That is very difficult, because it is not easy to see where the money is being spent and who is accountable for it. Do you have any recommendations about how we could improve on that process of understanding where the budget lines are for a local government as opposed to national spend? I am happy to start again, and I am sure that Mark will want to come in at this point. It is not a new theme for our Scotland. We have produced a report in 2018 on planning for outcomes that again call for a much clearer connection between what is spent and what outcomes that have been achieved from that public spending. There have been examples of progress across the piece, but especially the point that you make about who is accountable for those different lines, where those lines come into conflict between different public bodies, and the risk of repeating myself is that it is complex. There are not enough examples, even looking outside Scotland across the world, about where that has done terribly well, but there ought to be ways that we can do so. Following through on the recommendations that we made in our report, and then tracking through where the spend is, who is perhaps the most direct organisation responsible for individual lines of public spending, and then having the accountability that is fed back through into the public reporting through the medium-term financial strategy, through the public sector accounts, Scottish Government accounts, then the national performance framework that will come report all feel like appropriate ways that we can best do so, but there is no doubt that there is progress to be made on that front. I think that I start by recognising that the Parliament has a relatively new budget process, budget scrutiny process, and at the heart of that scrutiny process was to deal with questions like this. I think that the turbulent period that we have been through since then has thrown some challenges in the Parliament's way around how to apply that scrutiny process, but the core of that still holds and works well and enables individual subject committees and finance committee to take on different aspects of the budget in the round. At its heart is to provide the opportunity for committees to look at where is money going, what is it achieving, what is working and what is not working well, both on a subject committee by subject committee basis and local government as the opportunity to explore local government spending that. To look at how the information is made available to indicate when the spending initiative is coming in or when this new strategy is coming in, that is what we expect to happen in terms of the impact on outcomes both in local government and in central government, and here is the reporting back from Government from public bodies about how well is that happening. The budget process was premised on better articulation of those two things, where public money is going and what we are getting for our money. I think that there are opportunities right across the Parliament to focus scrutiny on that, not on a line-by-line basis, but in an overall sense and to pick out some particular areas. I think that the challenge for this particular committee and the Parliament as a whole is how the cross-cutting decisions are made around that. I think that that is one of the advantages of the finance bill, is that it gives an opportunity for a focus on that. I guess that one of the things for the committee to consider is how much it is able to and wishes to get into that sense of well, if we pull back from subject committee to subject committee, all of which will generally say that we think that we need more money for our area. I think that we could all recognise that into what some of the trade-offs in there are. I think that with the Deputy First Minister's role to have that cross-cutting look, I think that there is a real opportunity for this committee to engage on that question and engage on, well, how do you as Government do that and what evidence are you able to provide us about the decisions that you have made on that? Very lastly, and in reference to an earlier question, there is something here about clarity of priorities from Government, that question. I think that you asked, convener, about how do you balance the here and now of Covid with the longer term aims? I think that that is a priorities and transparency question. How is Government doing that and how is it directing the money to support that? I think that the budget process that is currently designed helps to support that activity. Thank you very much to those of you who are here. It's very helpful. Thank you, Daniel. To be followed by Ross. Before I do, and I guess that this is transparency as well, I have been struggling to keep up with precisely what has come through in terms of the Covid money and what has been allocated and what has not, and I just say that Exhibit 4 in your report is extremely useful. Just to clarify what this is saying, so £4.9 billion in the current financial year has been allocated by the UK Government, the Scottish Government, but essentially everything that has come through in consequentials since March, my understanding is that that has yet to be allocated. Is that by the Scottish Government a correct summary or I would just appreciate your view on what has been allocated and what has not of the overall £4.9 billion? Thanks for the question. I think that March is going to take us through the Exhibit and to explain our assessment on it. I think that the first thing to recognise is that the autumn budget revision was published yesterday, so the answer to that question today is different from the answer to that question on Friday. What the Exhibit shows is that this is to do with the nature of the budget process being episodic. A number of occasions through the year, traditionally twice, but last year there was a third summer budget revision, the Government balances the books if you like in terms of a budget process, but in advance of that the Government has an understanding of, to different degrees of certainty, what money is expected to flow through and where that money comes from in terms of UK decisions. What the Exhibit shows is that, at the time that we pulled this report together, at that point the Government was aware of up to £5 billion worth of funding in the year, but had, through a formal budget process, allocated the cumulative amount of £3.7 billion. Yesterday's announcement added another £1 billion to that, so £4.7 billion out of the £5 billion. The autumn budget revision document explains that, effectively, £300 million is yet to be allocated from reserves and UK Government funding. What that does is to give the Government a degree of flexibility over how it applies that, but there is a recognition that the formal budget process is always, if you like, lagging behind Government decisions about where the money is going to go. In a very fast-moving environment that we have had, that has been much more apparent than it would normally be. It is the sense of almost that speed dropping off a little bit and therefore getting a bit closer, particularly with yesterday's announcement to that end position. You have got two things going on. One is a bit of a lag before information is formalised in the budget process, plus a degree of contingency management and flexibility that we would recognise is important to allow the Government to respond. An update up to the 4.7 yesterday. That is really helpful. Moreover, I recognise that the point that you are saying is that, quite often, even when those are allocated, they may be labelled, but that does not necessarily mean that you know precisely where the checks are going. You are both nodding at that. I would like to move on a little bit about why there is an issue with transparency. Again, we get paragraph 41 on the bullet points. That rang some alarm bells for me. The existing processes for monitoring the budget were not designed to separate out specific spending in areas across portfolios and specifically under the reallocations point, saying that it is not always possible to establish a detail of re-prioritisations within directories. You just explain what you are saying to me. On my reading of that, one of two things is happening. Either the Scottish Government has that information and is not sharing it and reporting on it, which would be troubling, or it is not tracking effectively that information at a sub-directorate level, which is not just worrying. It is downright dangerous. For an organisation of around £40 billion, I would be expecting them to be tracking their spend at organisational units well below directorates. Are you comfortable that they are tracking their spend at an effective level as an organisation? I am happy to start. I am sure that Mr Johnson and Mark Oatman want to come in as well. In totality, I think that they are tracking the spend and whether or not, if I step back for a second, I would say that all the things that we have talked about, the volatility and recognising that, but the need for additional transparency that goes around it. We mentioned in the report elsewhere that some of the judgments that the Government had to make in terms of the officials of migrating spending announcements flow through abarnic consequentials, and how that is then allocated to individual budget lines and directories. It is undoubtedly complicated. Nonetheless, the need for a clear and consistent mechanism with which to support reporting aside that is one of our key asks that comes through in this process, whether that is through additional budget processes within Government reporting to the Parliament alongside the summer budget process all feels like it is a necessary component of taking this forward. We would say that the reprovisioning arrangements are also to be looked at early working. A lot of the processes that the Government has brought in and deployed to track from the spending announcements into individual budget lines have been done at great pace. We have commented previously that the fiscal arrangements within the fiscal framework were not designed for the mechanisms that we find ourselves dealing with. What transpires on what comes will be a matter for both Governments and Parliaments to determine. Nonetheless, we think that there is a greater mechanism that can be set about to improve the transparency that we currently see. Mark, you want to come in on the two points. Thank you. I think that I would start just by recognising that the focus of our work today has been on the numbers and understanding what is happening. We have also got a more detailed piece of work up and running, which will run over the next few months and look to report and spring on exactly this sort of question about how the detail of the management happened, recognising as Auditor General says the circumstances in which that took place and how things developed through time. In time, we will have more in-depth understanding and greater evidence to be able to get into the detail of this at a broad level and based on our understanding at the moment. What is happening here is that it is the ability of Government quickly to aggregate up information that it holds is the real challenge. What Government is doing is almost having not designed the systems to do this first pass is going back to look at a very detailed level to identify what the spend was on. As we look into the current financial year, they have built more systems to enable them to do that on a more routine basis and will make that more straightforward, but it is quite a manual process to go back through. That is not to say that it has not been managed because it has been managed at a more detailed level within directorates, within individual spending areas. The last thing to say is that there is a protocol between Government and this committee and the Parliament generally about what gets brought to the budget in terms of amounts and what is able to be managed at those lower levels. As far as we can see, the Government has been working within those levels, but there has been a lot more of that detailed in-department management that has had to happen through time. We will look to work with Government and try to get more of an understanding of how that has worked and some of the detail that sits behind that through time. The information that we share today is our best estimates for what the impact has been. That is really helpful. I would love to go down the rabbit hole of how the Scottish Government manages its cost centres, but I will save that for another day. I would like to explore what greater transparency looks like. If I am taking comparable-sized organisations, they would typically report on a quarterly basis, and they would typically be reporting both how their revenue and costs have tracked against what they had stated previously in an annual statement. Indeed, in America, the SEC requires three such quarterly updates alongside their annual report. That used to be the case in this country until 2014. Do you think that that would be a reasonable thing to ask of Government to provide a regular, pre-scheduled, quarterly updates on the budget? Critically—I am guessing that this is what you were implying by some of your previous comments—both have budgets that are revised but are also tracking spend against budget. Sometimes, in this place, we have a habit of focusing entirely on the budget and a lot less on how the money is being spent against budget. Is that a concept that could be applied to Government? That is a reasonable starting point. The scale and complexity of spending that goes through the Scottish Government accounts and the Scottish budget would not be many comparable examples in the private sector of organisations of the size of that level of turnover. The scale and how that translates to in-year budget management—as we touched on in passing this morning—is that the Scottish Government, like all organisations, has its own in-year budget management process, its own in-year reporting that it does to its executive team. Government ministers will have insight as to progress against the budget lines. As that translates into the Parliament, we have typically had the autumn budget revision, spring budget revision and, more recently, the summer budget revision. Adding another quarterly reporting into that mix to satisfy the scale of change and volatility and support transparency is a very reasonable suggestion. Whether that is one that is achievable in practice would clearly require additional investment to get to that point. However, it is not something that we have said beyond the realms of possibility. The point that you made, Mr Johnson, about the shift away from focusing on the budget—for us, we are keen, as you would expect, as auditors. Part of our role is, as well as the backward look is also the forward look. However, in terms of that backward position, reporting on the out-turn and reporting on the consolidated accounts through Parliament and our section 22 reporting to the Public Audit Committee are all part of the components. For specifically the point that you requested about, could one additional cycle be brought in to support transparency? If that was felt to be an appropriate mechanism, then it would be one that we could see happening. Thank you for saying that I made a reasonable suggestion. That might be a first in this place. Just one final question. I think that the committee is broadly in the same place that you are about the importance of the national performance framework, but the need to make sure that it is properly embedded. One of the thoughts that was explored last week by the Deputy First Minister is whether it should be reported on formally either at the same time as the budget or certainly that there should be a regular reporting. I understand the point that you are making about the need for these things to be reported across Government, but we very rarely hear cabinet secretaries report on how their bit of the national performance framework is progressing. Do you think that regular reporting of it, and indeed by portfolio, might actually help to give that due weight and prioritisation and change the behaviours regarding how the national performance framework is used? We have been commenting for a number of years about the importance of the national performance framework. There is a much clearer connection between what money has been spent and what has been achieved from that spending. My one note of caution around it is the measures. We tried to convey some of that sentiment in some of our recent reporting, recognising the 10-year anniversary of the Christie commission report that the measures drive a lot of the behaviours. I really need to think about, are the measures the right one to produce the outcomes, particularly the convener's earlier point, is that some of the measures will be in conflict with one another in terms of what is intended to be achieved. We see that across public bodies. Public bodies in many ways will perform to the measures, even if the budget and accountability goes alongside that. That may not necessarily produce the right outcome for the people who are using and relying on public services. Although we are absolutely supportive of there being a much clearer connection between spending and outcomes in the national performance framework reporting, no doubt. I think that we are just slightly cautious or indeed enthusiastic that there is an assessment of the measures that are being used to determine how well public spending is being made. Returning to Diane Johnson's initial line of questioning, I am still trying to understand the relationship between the underspend of Covid-specific funds in 2020-21 and the reallocation of non-Covid budgets towards Covid-related purposes in that year. You have identified it in the report. There is a £700 million gap between the amount of money allocated for Covid-related purposes specifically and the identified spend in that area, but there is simultaneously more than a billion pounds that was reallocated from non-Covid budgets into Covid-specific purposes. How much of that £700 million was spent but has not yet been identified as Covid spend for the reasons that you noted earlier? How much of it was simply not spent in that year because, presumably, it came too late and other money had already been allocated to meet that need? Good morning. I will have to kick off and invite Mark to come in in a minute. On a high level, we have looked to set out in the tracker, and as Mark mentioned, it is our best estimate, subject to some of the numbers, to be audited before we were able to be definitive on what was spent and what was reallocated. It is noting both the complexity and the volume of changes that took place, some of those happening quite late in the year. In terms of the allocations at a high level, in addition to the Scottish Government's commitment that it would use Barnett consequentials to fund Covid-related expenditure, it also reallocated spending from some of its existing budgets. What we have generally seen is that those tended to follow a portfolio-related activity. One example that we refer to in the report is that subsidies for travel arrangements were allocated towards travel operators to support their costs. That similar point about some of the monies coming very late in the year also added to that complexity. I will pause for a moment to see if Mark was just to address the specifics of the numbers that he asked about, Mr Greer. The short answer to your question is that we do not know yet. That is the fundamental thing. The work that the Government is doing to uncover to identify the spending at a lower level will help us and the Government to identify that. As I said at the outset, there is an importance to that given political commitments that have been made about the use of that funding. In terms of the overall picture, there are a number of moving parts here about the additional redeployment of money from other spending areas to Covid areas, from the Barnett consequentials that are coming through and also from the use of the reserve both to draw from money and to carry forward money to future years. I think that the rounded picture set out in the out-turn statement about where that lands and then when you look in detail at the autumn budget revision that was published yesterday, you could then see how that money then is then reallocated, if you like, in the current year as it flows through from the reserve. A lot of moving parts are there, but the shorter version is that at this stage we cannot answer that question. Therefore, it is more important in the work that the Government is doing to identify all of its Covid spend. What expectation have you been given from Government on the timescale for that work to get the more granular information that is required? I think that my expectation is that, as the Government moves towards the next budget round and the autumn budget revision that we would look to pull that together, we will never—never. I think that we are unlikely to get to a definitive position. I think that there will be a kind of diminishing return setting. When we look at 2021 as opposed to 2021-22, I think that there is a degree of realism that we have about how difficult that is, given the environment in which decisions were made, particularly at the start of the pandemic. The only point that I would add in reference to this earlier is that we have worked under way as part of our following the pandemic pound programme of audit activity and looked to report in the spring of next year about how well some of the money that has been spent through the Covid process, both across central Government and local Government, is a joint piece of work on the Accounts Commission to try and give a sense of moving beyond what has been spent, but getting some of that territory that outcomes the value from money or the scale of spending that has taken place. I will probably book you in for an appointment in spring now to talk about that. You mentioned some of the money on transport. I think that it is a useful example for one of the other issues that I was going to raise around the explanation provided by Government for underspend. Your report mentions that the explanation given for some of the underspend on money for buses, for example, and that some operators simply moved back to a place of viability quicker than was expected. There is not any explanation mentioned in your report for the underspend on rail. Is that simply because this is a relatively high-level report and you were just looking to provide some commentary or are there areas where you have not yet been given a sufficient explanation from Government for why those underspends took place? It is the former rather than the latter, but Markaw may wish to come in in a moment. It is a high-level report and it is part of a series of trackers. As part of our wider role, as well as auditing the council's contribution to inform the scale of spending that has taken place, we have not sought to, in this report, set out all the reasons for under and overspends. In addition to the work that we do, there is a very clear role for Government in terms of transparency about why there are over and underspends. Some of that will come through the consolidated accounts, which are usually included narrative against individual spending lines where there has been an underspend. I apologise, Mr Graham, but I think that it is of where there is a variance of £5 million. There is usually a company by an explanation, but it is a range of, through our own report, a space for Government to set out that, again, Markaw may wish to say about the conversations that we have had with Government. This example that we have used in the report to illustrate the challenge here, and the challenge for Government is that quickly it has had to make announcements on spend. It has had to assess the likely demand for that spend, assess the forward affordability for that spend and will make an announcement and start getting money out the door to people who need it. As it then experiences, will how much demand is there for that particular area of funding and to what extent has that sector or industry recovered or is able to meet the requirements, then it will refine its estimate? What you are seeing is that refinement process. I think that, critically, where that has happened, and one of the things that we are looking to investigate in more detail in the work that is coming, is that the job of Government is then to understand where money is freeing up and make the best decisions about where to redeploy it. You will see from exhibit 2 around the first and second transfer of business support measures as an example of that, where the initial estimate was above what was required, but then the underspend, if we want to use that phrase, was then recycled into the next set of announcements. There is real value in that way of working. I guess the difficulty of that is that when you add those numbers up it looks like there is an underspend, and what we are trying to explain in the report here is the dynamic nature of the way in which that budget is managed through time. The underspend is probably not the most useful phrase for us to use, particularly that the business allocation is probably the best example of that. It was spent quite well, just not in exactly the same way. Just one final, potentially quite daff question. You mentioned some of the reallocations. For example, money that had initially been allocated for passenger subsidies in relation to buses was moved over towards supporting the operators directly. In terms of the budget lines that are listed here for spend-on buses, that is the same money appearing in the same place. It does not create the appearance of an underspend in one area because that money is then being allocated as spend in another. I think that on that example that is the case, but there are other examples where it becomes more complicated and harder to track if there has been a reallocation of a budget that is perhaps not barnock consequential related in an existing budget, not required for whichever drop in demand or spending circumstances. If that is then moved to another budget line, that becomes harder. I am pretty clear that there will be examples of both of those things through the budget process. Thanks, that is all for me, convener. No bother. John, to be fought by Douglas. Thanks very much, convener. To continue the theme of tracking Covid expenditure, which most of my predecessors have raised, I just wonder, A, is it possible and B, is it helpful or necessary? I was trying to think of an example, and the example I came up with was if somebody's operation was postponed, hit replacement or something like that, and because of Covid, they then need more painkillers while they are waiting for their operation, they have to see a nurse, they have to see a GP perhaps. So, where does the cost of the painkillers, the nurse and the GP, where does that go? In one sense, they are there anyway. That is not directly related to Covid, but you could say, well, it is because of Covid all of these costs have come along. There is never a right answer to that. I can see the arguments on both sides. That has got to be a judgment, surely. I am delighted to have good morning. I guess how the Government has sought to frame the four harms of Covid, so you will have the direct health implications of the pandemic seen through NHS spending and NHS budget lines. Some of those indirect health will also be captured in health spending, but, again, it gets much harder to track through the societal implications and economic. There will be direct budget lines that we have seen, whether it is support for businesses, additional funding for local authorities, whether it is through some of the societal aspects to support education that we have commented on. Undoubtedly, the point that you make about it becomes one of judgment and trying to frame what is and what is not Covid-related. The complexity of doing so probably becomes quite overwhelming as you get not too far into it. What we would say, if we were able to step back slightly, is that, whilst we are in the pandemic and still in the very clear spending phase of the pandemic, there is a necessity, just for the sheer impact that is had on Scotland's public finances, that we do our best at the Parliament as clear as it can be about what is Covid-related and what is not Covid-related. However, I think that the very clear point that you make, Mr Mason, is that the further we go out and some of that direct spending on the pandemic ebbs, that is going to become much harder to do so in the longer term. Does that matter? Should we be worried about that or do we just have to accept that? I think that it matters for as long as we are able to do so with a clear mechanism that we deploy it. Probably what comes next will be of equal interest that through recovery, renewal and transformation is supported by clear mechanisms, appropriate transparency of how public spending is being undertaken. I think that it goes back to the earlier line of questioning about what has been achieved from that public spending and what are the outcomes associated with it and whether that is through the direct lines on the medium-term financial transport plan or the budget. Those are the intended outcomes from the spending and there is then a process of transparency and accountability that can track what was achieved from it. As long as we understand how the decision was made, even though the decision could have gone either way, that is helpful. You made the point that it was in the report somewhere that 300 different announcements related to Covid. Is there an implied criticism there that there were too many announcements, too many funds? The whole thing was too complex. We were doing better with just two funds, one for business, one for the health service and got on with it. It is not intended as a criticism, but it is a factual comment that we look to make in this report. I think that it probably captures what we have tried to do through the series of trackers is that those are more information-based as opposed to judgment-led from us. On the scale of the announcements, again, across the range of initiatives that are addressing the foreharm and where money is needed to be spent at great pace, and that probably captures the circumstances that we are in, probably followed the pattern that we expected at this stage of the evolution of the pandemic. Last year, we got to 230 spending announcements in the 2021 financial year. I do not have the up-to-date figure, but at the end of July that we quoted in the report, we were at 70, so we can probably see a reduction in the scale of spending. What that means in the future will be to be determined. The point that we were making in the report is that it is harder and more complex when there is such a scale of additional spending announcements. As we move to a more steady state through recovery and renewal, we probably expect that to be far less than we have seen. Sometimes in relation to tax, for example, it gets more complicated because we are trying to make it fairer. If you make it simple, it is not so fair. Would that be a dichotomy that you agree with? It is an interesting analogy that the simplicity of a system has benefits, but it can rub up against fairness or transparency. It is a trade-off, as we move into that steady state of renewal, recovery and future budgets. Again, I would understate that it is complicated and particularly that point about translating what public spending is achieving from outcomes and that some of those outcomes may be in conflict. It is a challenging thing to do, but nonetheless important that clarity and transparency are there. We have spent time before and we will spend more time in the future, but I will leave the one about the links with the national outcomes at the moment. One of your other suggestions—I think it is point 26 in the report—talks about future updates that should include better information about planned spending options and how those could affect outcomes. I wondered what was meant by that. Local government in its budgeting quite often has options, so it will say things like, well, if we close all the libraries, that will save us £1 million, and then the public all gets excited and reacts, and then they save the libraries, and that is good news. That has not been the way we have tended to do it at the Scottish Parliament, Scottish Government budgeting. Is it that kind of thing that is throwing out options that people would then comment on, or is it something else that was meant? That is an interesting example. I am not sure if it is the one that we would necessarily intend, although we recognise that the type of spending and revenue-generating decisions that local authorities will make, whether it relates to libraries or the setting of the council tax and so forth, is a mechanism. Whether the Parliament would, similarly, wish to deploy that through its income tax-raising powers and spending-related approaches is one of those options. In addition, I think that we are a bit more neutral about some of the options that the Parliament might wish to deploy, but I will turn to Mark, see if there is anything that he wishes to add. Thank you, Auditor General. The route of the point is really round, but I think that there is a medium-term financial strategy. Historically, there have been cases where Government has known that there has been a budget adjustment mechanism reconciliation coming. Previously, in the medium-term financial strategy, there were no options or no indication of how Government was looking to meet the impact of that. Indeed, that could go the other way, and the Government might look to say that a windfall is essentially coming and how can we use that. We think that when Government spells out its medium-term financial strategy, as well as looking at the core mid-point expectation, there is something about that things are coming and that is the sort of thing that we need to deal with. That is the range of demands that that is placing on the public finances. Therefore, the options that we have to deal with are reduced expenditure, increased revenue, et cetera. In the context of that medium-term financial strategy, it is a bit more of a sense of how Government is thinking that it will address some of the challenges that are inherent in the next few years. The ball would start to be in the Government's court that it would come forward with three or four options in a particular area. As committees in Parliament, we would perhaps discuss that in the public as well as that. There is an opportunity for that. What we have called for essentially is that at least one is set out, recognising the challenge and recognising what the anticipated response to that is. When there is ambiguity about what that response might be, then perhaps a range of options would be an opportunity for discussion about that. I think that our point that we have made and reported on previously is that budget pressure has not been responded to in the material that has been set out. In that same kind of sector of the report talking about transition from response to recovery, paragraph 28 talks about the Government's need to have a clear understanding of how it plans to transition. However, two lines further down, it is also likely to need to maintain a flexible approach. It strikes me that those two are somewhat in, what is the word, not contradiction, but to balance against each other. Is it possible to get the balance in there? Time will tell if it is possible to get that. I am not sure that we are in a position to give that level of certainty at the moment, recognising the volatility that we are in. I think that it is the point that we are making about the clarity around the priorities. We have all seen through the course of the pandemic and recent reporting that Scotland's public finances were dealing with many priorities before the pandemic. Some of those have been exacerbated following the impact of the pandemic. We have talked in some of our reporting about the challenges within the NHS and our justice systems and recovering to levels of service and throughput that the public will want, some of the harms of the pandemic and inequalities that have been exacerbated. All of those things are true, but there is that conversation and transparency about how those priorities will be set and how they will be funded and what will be achieved from them. I think that my final question is to follow up something that Mr Taylor said to Liz Smith about more looking at changes during the year. I get Ross Greer's point on whoever said it that maybe we should have four reviews or there should be fixed times, but I was just wondering if you could unpack that a little bit more. If we get a bit of extra money from Barnett, Westminster and the Government announces, we are going to put it into child care or something like that. Are you thinking that that committee, be it education or local government or something, would then do a bit more work on that kind of announcement? Is that how a committee should be, or you would suggest, a committee might examine that more than they've been doing in the past? I guess where I'd start on this is that I'm absolutely supportive of the shift from reporting on plans to reporting on what's actually been spent, so I think that that's an important shift. Having said that, I think that there's an opportunity for this committee through its work around budget amendments to look in more detail about the specifics of that. If we look at the most recently published budget amendments—about £1 billion has been added in yesterday's announcement alongside the underlying budget position—there's an opportunity for this committee and its scrutiny of that budget revision to investigate where that money is planned to go and how it fits with the issues that we've been talking about earlier about that sense of who needs the money and what differences it has made. I'd start there as an opportunity to build on the approach that you've got to the committee already and to get into that more generally. It is an interesting question at the extent to which that work is shared around and that there might be an investigation and enquiries around some of the big spending platforms that are part of the Covid response across committees. I think that there's opportunities for committees to do that as part of its pre-budget scrutiny. Local government was mentioned earlier and that's an obvious example, but that might happen. I think that the route of my comment was around the opportunity for this committee to look at the dynamic nature of budgeting through the year. We've been through two years where what the actual spend at the end of the year bears very little—it looks very different from what was planned at the budget at the start—but if you look at the balance of where scrutiny happened, 95 per cent of it, probably more, was on that initial position. It's an opportunity to broaden out that look as to what's happening through the year both in terms of change plans and also what's the actual spend that's coming through. It's quite an interesting thought. Maybe it's up for the committee to look at that in the future. If, say, the Government announces more for health, who would then challenge the Government and say, no, don't spend so much on health, let's spend more on education? I don't know if that's the role of this committee or who would do that. Anyway, I'll leave it at that. Thanks so much. I think we're all taking the fifth on that one, John. Douglass will be followed by Michelle. Thanks, convener. When Liz was asking earlier about transparency and external organisations, I think he said that some were under the Scottish Government umbrella in terms of audit and some weren't. As a new member, could you maybe just explain a little bit more on that? I'm very happy to do so. The start from the high level, the Scottish budget sets out what the Parliament approves will be spent, and much of that flows to Scottish Public Bodies, Scottish Government itself, NHS, local government. All of those bodies in the public sector of Scotland will prepare their own accounts that will all be subject to audit. Public reporting goes alongside that. Some of those bodies' accounts are then brought back into what's called the Scottish Government consolidated accounts, and there's an accounting boundary. I apologize for the technical description, and that is determined by a combination of Scottish Government and financial reporting guidelines that give an indication of which bodies are in that. The reason that's probably come into sharper focus in recent years is that there are some bodies that just aren't part of that accounting boundary, and they're quite high profile in the work that they've done, their use of public money in recent times. It really stems, and we don't think that's a strong enough position to be. It supports accountability for how well public money has been spent, and that led us really to a number of years ago, on the point that we've made repeatedly in recent times of why we think there's a missing component, why the Scottish public sector accounts feel like a necessary thing to do to set out all of the scale of assets liabilities that Scotland generates and what it spends. I guess that would also include bodies that were given money to allocate for Covid funding. Just as an example, I'm thinking creative Scotland, who, I think they had a culture organisation and venues recovery fund, where they can allocate between 10,000 and quarter of a million, and there's a list of which organisations receive funding. I can't see any basis of how it was allocated. Would that be one organisation, for example, that maybe more transparency could be given to the public? You're right. There's a range of public bodies that have been responsible for spending Covid-related monies, and there's two components to it. One is where they've spent the money themselves, and the other is where they've been more of an agency-style function, where they've been allocating the spend, preventing to onwards recipients. A lot of the business grants have been in that space. I don't think that there's an accountability gap necessarily around that organisation in that they will be preparing their annual report and accounts. It will be subject to audit and scrutiny that will set out really quite clear detail what money they spent and, importantly, what was achieved from it. Again, we've mentioned it already this morning to supplement that. We have a programme of work following the pandemic pound. It doesn't just cover central government bodies. It is going to bring in to the enterprise agencies, Creative Scotland, local government bodies, and just about how well that money has been spent. The building on the tracker of papers that we've been producing is something that we'll be publishing into the spring of next year. That's the advance of an expression, which was around the following pandemic pound, but organisations like that will be part of that work. It's a broad suite of work, and I'll pass to Mark in a moment. He's leading that on behalf of Audit Scotland. There's a lot of organisations involved. I think it forces the opportunity with the public audit set-up that we have in Scotland that can bring in organisations in central government that I'm responsible for auditing and then those for the Accounts Commission in local government. That's a really good example of that. Just because of the scale of public spending of Covid monies, that it's really across the panoply of public bodies that we can do that, so yet it involves central government, NHS and local government bodies, but Mark can say a bit more about where we're going on that. Thank you, Auditor General. I think that our overall approach is initially to look at where the money's gone, how it's been used and whose pocket has it ended up in, ultimately, and what the decision making and accountability arrangements are around all that, which will deal with some of your questions there. I think that through time, increasingly, as Auditor General suggests, we'll make the shift to how well did that work then, type questions and the evaluation of the spend, but inevitably and necessarily that will take some time to be able to get to that stage given the nature of the pandemic and how governments work through that. In relation to a body like Creative Scotland, I guess the question for us is the degree of granularity to look at individual bodies alongside the overall picture. So we set out to look at overall picture. We've picked a number of bodies and an initial piece of work where, who have been the largest recipients of funding, to look at how those sort of arrangements have worked in those bodies and we'll report on that. I think that as time goes on, then we'll, on a risk basis, look to try and think about what other, how do we drill down into some of the detail alongside, as Auditor General suggests, the reporting that we will already do on Creative Scotland and Auditoral will do on Creative Scotland around its own arrangements. So a longer term period of programme of work underway and you would expect reporting over the next months and years as we get into the detail of that. So when will we start seeing the follow the pandemic pound reports coming back to us? So a very quick answer to that is one of the first ones you're looking at today. On the specifics, the broader look at how this has been managed and a bit more of the judgments that Auditor General was talking about, we've scheduled that for spring and would expect to take that initial broad view of how pandemic spending has been managed and begin to exercise some judgments on the management of that in the spring next year. Next question was around in 23 you talk about the Scottish Government has committed to producing a consolidated account to cover the whole public sector in Scotland, including assets, investment, liabilities and things. It's recently been highlighted to that there's a need more than ever for that. I'm just trying to think when was that commitment made? Do we have any idea of when it's going to be coming and why is it so important? Taylor, it's a number of years since there's been a formal commitment from Government to produce it and there have been progress behind the scenes in terms of iterations about the point that we made about the accounting boundary, the fact that there are complexities in a different style of financial reporting of public bodies in Scotland, so the way that local government sets out accounts is really quite different from that of the NHS and central government. So I absolutely recognise that this isn't a straightforward process, but I think that there are senses that progress hasn't been what it ought to have been recognising the significance of this component of financial reporting in Scotland. We were pleased to hear the permanent secretary reaffirm the Scottish Government's commitment to it and the progress that they intend to make at the previous public audit committee at the beginning of this year, but that pandemic activity response had slowed progress. We are again calling for the need for this component of Scottish financial reporting to be completed as soon as possible and we will, through our own reporting on the Scottish Government, later this year will report how well that is going. It's a necessary thing to happen, Mr Lums, and we hope to see progress soon. Why do you feel that it's so important to have that information? What we don't have is a single reference point at the moment that sets out all of Scottish public assets and liabilities, revenue that's generated and what's being spent. We have various different documents that set out aspects of that but no single source. For example, we have public sector pensions and Scotland's road assets, both a significant liability and a significant asset. They're not in the same document at the moment, but we know that they exist. For ease of public scrutiny and public understanding, the Parliament's awareness ownership of what we think is a really important thing to take forward. Final question was around point 5 and 7. You talked about the destructions to education and more. It's most likely that those who are already economically and educationally disadvantaged that the pandemic will affect more and 7 as well talks about increasing inequality. Listening to that but also listening to that, there's I think it's well I think it was mentioned 300 million of that's uncommitted so far. So I guess you know this is so important as I think we all think it is. There's money there to be spent quickly if the government chooses to do so. Would that be right? I'll ask Mark to come in about the 300 million and the extent to which that's uncommitted and available. As you say, in terms of the disruption points in education, we, myself and the council commission reported earlier this year and gave evidence to the public audit committee on the education outcomes report and the impact that Covid has had on Scotland's children and young people. So recognising that point, we also done in our previous suite of following the pandemic pound reporting also touched on aspects of inequality that's been exacerbated by the pandemic in our NHS report. We mentioned some of groups in society that have been more adversely impacted by the direct health implications of Covid too. As all of these factors I think bring us back to through this report about the priorities that government parliament wish to set for public spending that that's clear and money is used as quickly as possible but on the 300 million but I'll just ask Mark to come in on that point. Thanks for the general. I guess this is an example of what John Mason and the convener were asking us about that tension between flexibility and plans and I think that that uncommitted amount is the concrete example of that and I guess a job for the committee is to understand the extent to which there are plans up government's sleeve or whether that's a rainy day fund or whether in between those two but I think that recognition that the flip side of committing all available funds and all the funds that you expect is that you've minimised the flexibility you have equally by holding a contingency by having a degree of flexibility that allows you to deploy money later in the year in response to events obviously you take the judgment take the policy decision that you're trading off against that as to some of the spending that you can you can identify now I guess that's the stuff of a government and the stuff of politics and absolutely the stuff of scrutiny for this committee. I guess it's all about urgency and priorities so okay thanks. Sorry about that. I suppose following on a wee bit from what Douglass is saying I mean we've spent a large part of the session looking and evaluating the complexity of your scrutiny and our scrutiny and as you pointed out Mark a lot of it we start to understand that and it's already passed so I want to kind of think about something going forward and I'm struggling to get my head around this from my sort of formal life being very clear in management terms of the difference between accountability and responsibility and I see this sort of writ large here because we've got the Scottish Government accountable for spend outcomes via the national performance framework which we've talked about today but has no responsibility in other areas we've got the security situation where the Scottish Government is accountable for these outcomes but have no responsibility for efficient and effective delivery we've got the UK Government responsible but reluctant or have no accountability whatsoever in this place when we then look forward at the replacement for EU structural funds that we already have on the record will be spent by UK government direct to local councils administered by a local government minister I think it was the English communities minister how on earth do you start to audit for that effectively I can see your thinking this is already a belter but it's very complex I think how on earth do you audit for that how are you reflecting on that additional complexity going forward when you link it back to outcomes thank you good morning I'm happy to start and I'm sure Mark will want to come in as well it is undoubtedly complex and I think the example you use on the changes to European funding following the UK's departure from the European Union and what happens with those funding streams and what they are replaced by we're tracking that closely because we don't yet know the answer and don't yet know what the associated audit arrangements will be we'd have a very clear role in that up until now whereby part of our audit work took us into the auditing of how the European Common Agricultural Funding was spent in Scotland we worked closely with the other UK audit agencies to audit that and alongside the structural fund changes as well we don't yet know where how that's going to be spent whether it's going to be spent by directed by the UK government into local authorities or what role the Scottish Government will have we are clear that we're continued to track and monitor as a conversation that I had with the public audit committee in recent weeks about the audit arrangement but I think it's an example about that there is a remaining volatility in the system as to how public money is being spent and whether it's been spent by UK government the Scottish Government or local authorities and I think that led us to a point that we make in this paper about where possible the need for effective communication and cooperation between the different spheres of government so that there is that level of clarity and transparency about how about what public money has been spent and what's been achieved by it but we recognise the point you made, Ms Thompson, that it currently it is complex. I was recognising when you were asking the question there about how complex it is and I think that's that there's no getting away from that and there's also an increasing ambiguity, a wavy line about what's devolved and what's reserved and how those two spheres of government interact with one another and you've given an example about how that has been further blurred around some of the funding streams and there is an accountability challenge for the Parliament, for us as Audit Scotland and others involved is to unpick and work our way through that. Some of that is relatively straightforward in that the spending bodies that are devolved, spending bodies, wherever they get their money from, falls into the remit of either those to the general or the accounts commission as an opportunity to look how those spending bodies spend the money that's available to them and manage that. Where it gets more difficult isn't exactly the root of your question about when that aggregates up and what's government in the round responsible for and where again there's a partnership agreement between government and local government and other bodies to deliver on the aims of the national performance framework and the outcomes that are in place and that's where the real challenge is. I guess one of the things that the Auditor General has recommended in the past touches on this question and one or two of the others that came up before is that what's missing from the system at the moment and the Deputy First Minister touched on it a little bit when you had him in front of you recently is that annual report of will house all that going from a government perspective what's this year's narrative what's this year's assessment of performance and we think there's a real opportunity yes recognising the difficulty and the complexity of accountability but pulling back from all that from a government perspective I think you asked convener earlier what's government's contribution to outcomes and how are they responding to that we think there's a real opportunity to add a further layer of reporting to help explain that not because it's simple to do but it's important to do that given the complexity that you set out. Thank you both for that and so following on from the problem we all agree that we don't know till the data is there and obviously that fits into your function but getting the right balance between retrospective assessment and future forecasting particularly when we adhere to good principles around accountability and responsibility. Can I ask if you have any plans to put some meat on the bones of how that will make your role and our role of scrutiny more complex it may be that as you start to get more information coming through that you'll also consider reflecting on that because it's beyond complex already and this will be complex cubed in my humble opinion. Yes all of those things isn't it and it is that right balance between the retrospective look where audit has most traditionally found itself and also then about the financial sustainability of Scotland's public finances and we have a role in that alongside others so we've talked to Ed this morning about the fiscal commission's plans for that really longer term analysis of the financial sustainability of Scotland's public finances and then the government's own reporting through the medium term financial strategy the improved connections that that makes to outcomes through the national outcomes so we think that's a unnecessary component. For us it will always we'll always look to strike that balance between through the traditional audit work so through the audit of over 200 plus public bodies that are spending the money that the Parliament approves much of that is reported directly through the individual public bodies we then complement that with a suite of of performance reporting some of which mark has drove into that explains in a bit more detail about some of those budget lines whether it's on the NHS education or other aspects of the pandemic pound but the point you make is quite right is that we're in a really volatile environment some of the changing nature of accountabilities and for us that we'll continue to track and report on that the one of the things that I think that we've mentioned through previous tracker reports is that we flexed their own approach in recent times to that historically we would have had an annual programme of performance reports and that would have been relatively fixed but here are the lines of budget spend here are the areas that we plan to report on pretty clear through the early stages of the pandemic that wasn't going to serve as well to reflect the volatile environment that we're in so we now have a quarterly opportunity to refresh that to de-prioritise and to increase the priority around other areas and that's on that we keep under review through our through our regular reporter thank you very much Michelle just a couple of questions just to finish up for myself and you've said in the report that the tracking of spend is more straightforward across health and social care in the larger support schemes outset of these judgments have been made about how Covid-19 disruption to spending on services has been recorded and I'm just wondering how this has varied has there been a consistency or inconsistency of approach across the directives throughout the Covid-19 pandemic I'm happy to start I'm sure Mark will say a bit more about some of the conversations and evidence that we've received from government I think really the point that we make convener that's led us to the it's it has been much clearer in health and social care as through the the use of Barnett consequentials some of the spending announcements I've tracked into those whether it's for additional PPE very clearly become health and social care related some of the support for local government similarly which is one of the other very significant components of the spending that's taken place has been much more clearly ring fence to identify against previous budget heads some of the others though we think it's been a reasonable position and reasonable reflection report is that judgment has had to be used to map some of the 300 odd spending announcements to particular budget lines so there's a sense of that's a fair thing that's had to be done but in terms of some of the specifics against that we think there's a need for a kind of clearer process and once the volume of those changes ebbs there are maybe if Mark wants to say a little bit more about how we arrived at that judgment so as part of the work that we're planning to do I think these are the sort of questions we'll look to get more evidence about and work through that I think inevitably given the degree of judgment that's been exercised we would anticipate there was a degree of inconsistency but also recognise that and again this is something we'll look to test and evidence that how things develop through time changed so that when the pandemic hit and there was a need to spend and support public services quickly we would expect that environment to be different from 12 months and 18 months in in terms of those sort of questions so I think one of the things we'll look to uncover is how what's that how did that change through time and how does how reasonable was that by way of approach? My last question I mean first of all Stephen you've basically said that there's been a variation through necessities much as anything else but with regard to what you've just recently said Mark have reporting mechanisms and transparency improved stayed the same or deteriorated over the pandemic if they hadn't there was it had actually although you said earlier or another layer of reporting would be helpful but you have said it has improved over the last 18 months would it be fair to say that or do you feel it hasn't improved if it hasn't improved hasn't improved as well as it perhaps could have what would be your view on that? I think we'll both offer a view on that and I suppose you the reference point would be difficult to to say is a fair comparator that through 2019 you'd said that there is a range of compared to where we are now there be a range of improvements and deterioration given the scale of change so I think it's difficult at this stage to say that to form definitive judgments around the quality of budget management and reporting just reflecting the complexity that's taken place convener I at my sense would be it probably feels too soon to make that kind of judgment and with a degree of empathy that I think that we we're trying to bring this recognising just the scale of change and pace of spending that was taking place so one I think was probably it will take a while yet before we're in a position to say whether there has been improvement or deterioration Mark so absolutely recognise that I guess I guess we we're doing the work they'll give us the evidence base to report a conclusion on that in some other areas I think a couple of observations I would share one is in that list of things you asked us about there convener I think there are different responses to different elements of that just to pick out a couple of them so in terms of financial management and how government has managed I would expect and we've yet to gather the evidence I would expect that would to be improved through time and we've seen some evidence engaging with government that'll be the case and we'll look to explore that a bit more I'd also reflect that in terms of transparency there was a particular period from around December last year through the last budget process into February March this year where I think the height of transparency and the level of detail that the cabinet secretary was able to share about spending plans and COVID related matters what reached its peak I would recognise that in advance of and we've yet to digest the autumn budget revision that that information that level information was perhaps dropped off a bit for understandable reasons new parliament new government etc and I would hope that it would return to that level of articulation and level of transparency about where this money is going and what it's been used for okay well thank you that's very helpful and all your evidence has been very helpful I'm sure to speak on that committee and saying that so work further I'd like to terminate this public session of the committee till our witnesses and official report to leave and we'll reconvene at noon