 Fy oeddwn i chi i gael i gael i'r 6 yma yn 2016 y byddai'r Ffynns Gwmwylliannau a gydol chi i chi i gael i chi'r mwyaf o'r ddoch, fod yn gwych gael i gael i gael i'r mobile tewlaethau, mae'n gau aelodau ei chyfnodol. Gael i'r 1 ymgyrch. Rwy'n gael i chi'n gael i'r 5 ym prif, rwy'n gael i'r gael i'r mwyaf i'r gael i'r gael i'r mwyaf i'r gael i'r gael i'r mwyaf i'r gael i'r mwyaf i'r gael i'r mwyaf i'r Scottish Fiscal Commission Bill at stage 2. We are joined by the Deputy First Minister, who is accompanied by Alison Cumming and John St. Clair of the Scottish Government. I welcome our witnesses to the meeting. We are now turned to formal proceedings on the bill. The question is that section 1 be agreed to. Are we all agreed? We are all agreed. I call amendment 5 in the name of Gavin Brown, grouped with amendments 6 to 11 and 13 to 16. Gavin Brown to move amendment 5 and speak to all amendments in the group. Amendment 5, 6 and 7 include amendments 5 through 11 and 13 through 16. I will speak to all amendments in the group. Amendments 5, 6 and 7, I have used the substantive amendments in this group. When you combine them together, they result in the official forecast being produced by the Scottish Fiscal Commission instead of the Scottish Government, which is the current position of the bill. That reflects the conclusion that was reached by the committee in our stage 1 report, namely paragraph 69 of that report, which states as follows. The committee therefore recommends that, in order to ensure that the commission is seen to be independent, it should produce the official forecasts. The committee believes that, given the commission ownership of the forecasts in this way addresses many of the concerns that we have raised in the previous section in the report on independence. If the commission does not produce the official forecast, then those concerns could remain. Amendment 5 instructs the Scottish Fiscal Commission to prepare reports setting out its forecast of receipts from devolved taxes. Amendment 6 instructs the commission to prepare reports setting out its forecast of receipts from income tax, attributable to Scottish rate resolution. Amendment 7 instructs the commission to prepare reports setting out its forecast of receipts from non-domestic rates. I have reflected the wording of the draft bill as closely as possible. I thank the member for giving way. He puts forward some of the arguments for the Scottish Fiscal Commission producing its own forecasts, but would he also accept that a body can be independent while checking, as with the example of auditors like Audit Scotland, who are very independent and do not produce anything but just check somebody else's work? It still leaves the question of who would check the forecasts if the Scottish Fiscal Commission are doing them, because at the moment they are doing the checking, and would it not mean duplication of resources if both the Scottish Government and the Fiscal Commission were producing forecasts? I am grateful for the intervention. Auditing by its very nature is backward looking, and it is a very different beast. You can distinguish auditing from forecasting reasonably straightforwardly. On the argument of duplication, I accept that there may be a degree of duplication, but I would look carefully at the sums that we are talking about. On the financial memorandum, the maximum spend for the Fiscal Commission would be £850,000. The tax that it will be looking at, going forward, would include about £600 million worth of LBTT, more than £100 million worth of landfill tax, this year £4.9 billion worth of income tax and £2.7 billion worth of non-domestic rates. When you add that all together, you get to over £8 billion of public spend. If we are out by a fraction of a per cent, that can make a huge difference. If there is a degree of duplication, in which the total budget is £850,000, you can easily argue to the general public that it is in the public interest that we take a belt and base braces approach that. I do not think that the level of duplication, relative to the size of sums that we are talking about, I regard it personally as de minimis. In terms of checking, I think that the OECD principles, and it is their final principle, deal with this point very carefully. Let me just read from it exactly so that we are careful. It is actually the last one that is described as principle 9, which is entitled external evaluation. IFI should develop a mechanism for external evaluation of their work to be conducted by local or international experts. That may take several forms, review of selected pieces of work, annual evaluation of the quality of analysis, a permanent advisory panel or board or peer review by an IFI in another country. There are clear ways in which it can be done. In the current format, though, it is not clear to me that we are getting independent external evaluation. I think that there are very blurred lines between the advisory process and then the evaluation process. It is very unclear—I think that it was unclear to the committee—where one started and where the other ended, which was one of the reasons that we reached the conclusions that we did. Moving back to the specific amendments, I have outlined what 5 through 7 do, and I have attempted to mirror the wording of the draft bill as closely as I can. Amendments 8 to 10 remove the commission function of assessing the Scottish Government forecast, which would be unnecessary if they are doing the official ones. Amendment 11 removes the definition of economic determinants because, again, they would be doing the official forecast. 13 through to 16 are technical in nature and reflect the changes of 5, 6 and 7. Why the committee reached that view, I think that we made clear in the report, was the quality of the evidence that we received, particularly from Dr Armstrong, Professor MacGregor, Professor Pete and Chris Stewart. The current setup leads to blurring. It is unclear where the challenge function stops and the evaluation begins. I think that there are legitimate concerns that we end up with advisers in the end, as opposed to an independent fiscal institution. They have said to the committee on the record that they do not look at the numbers or outputs, and when it was put to them by me, they were unable to say what would be classed as not reasonable, which caused me huge concern. By having them doing the official forecasts, we avoid optimism bias, which I think can plague any Government. It removes the in-built incentive to be optimistic. Ultimately, they need to be independent and, just as importantly, they need to be seen to be independent. On that basis, I move amendment 5. I have a couple of points. As members will know through the discussions that we had in committee, I had some reservations around the area, and those remain. While listening to what Gavin Brown was saying, in particular his citation of the OECD principle, I remain unclear as to the exact mechanism through which the work of an SFC producing forecasts would be appropriately and adequately scrutinised. He talks of, for example, checking after the fact. What we have seen from the reports that the SFC has produced is that there is an on-going challenge function that the SFC is performing. Gavin Brown categorises that as an advisory role. I see it as a challenge role, and I think that it is an important challenge role, because it is an important challenge role that ensures that, when the final forecasts are produced, they have been subject to challenge throughout, and then, at the end, they are subject to analysis by the SFC. There is also a question here around the independence that Gavin Brown puts it in. I think that it would be very dangerous for us to assume that the individuals who are on the SFC are not capable of exercising their functions with a degree of independence and with the degree of independence that we would expect from them. I think that, through the evidence that they have presented to us, it is very clear that they are discharging their functions with independence, but they are also taking on board the importance of the role that they have. There is a question here around individual reputation and credibility as well. The idea that those individuals who are on the SFC would authorise reasonable forecasts that they were not convinced were reasonable would obviously be them staking their reputation and credibility against those assessments. I think that, from that perspective, I am unconvinced by the amendments that are put forward here, because, as Gavin Brown has cited the OECD principle, there is nothing in this amendment that says how those forecasts would then be scrutinised, what the role would be. There had been discussion in debate about this committee having a role, and I have great reservations about the capacity and expertise within the committee or a successor committee that would be able to perform that role to the same degree that the SFC is currently doing. At the moment, I do not see with those amendments where that question is necessarily answered. The citation that Gavin Brown gave is helpful in outlining what he thinks would happen, but I do not see anything in those amendments that would lead to that automatically being the case. At the moment, I am afraid that I cannot support those amendments. I echo quite a few of the things that Mark McDonald has just said. My understanding is that, internationally, it is quite normal for the independent institution to do the challenging and checking and not to produce forecasts themselves. The situation is not totally black and white, because on the visit that Tegin Urquhart and I made to Ireland, it was clear that the Irish equivalent had started off purely on a checking role, examining role and challenging role, but had started to do some of its own forecasts in specific areas. That is fine, and I am quite happy about that. That is quite different from saying that it is the main role of the independent body in the Scottish Fiscal Commission to produce the main forecasts. On the three points that I raised with Gavin Brown, independence is an issue in which we discussed a lot during the committee. I am convinced that it is partly because of the structure that we get independence, but it is partly because of the attitude of the individual people involved. You can have a good structure and if you do not have the right people in it, there will not be independence. You can have all sorts of structures, but with the right people in it, you will have independence. I think that we put a little bit too much emphasis on the independence being only linked to the structure. If we get the right people in there and they are going to be appointed by the Parliament, then they can be independent. I still think that Audit Scotland is a good model for that. It can be very critical, very challenging of Government at all levels, and it is widely seen as independent. The question of who checks remains open if we have the forecast produced by the Scottish Fiscal Commission. They themselves have said that there would need to be some kind of checking role. On the question of duplication, I take Gavin Brown's point that the costs are not huge, but the costs are already quite considerable compared to Ireland and Sweden. We are tight for money these days. I think that doubling up forecasting is not where I would be spending any extra money that I had. The importance of having an independent forecast ought not to be underestimated. On what we have heard, as somebody who has produced forecasts for different organisations, you cannot solely depend on an individual's agency to be able to select. Everybody agrees on the model, but the variables that you put into the model are about detaching the politics from the economics. It is not a precise science. There is quite a lot of... While one of my degrees is a master's in science, it is economics. Economics is an art. It is about you pick your variables. There is always going to be a significant factor of optimism bias. That is why peer reviewing needs to be about an independent, arms-length and independent. Forecasting is not like auditing. You go through the actuals, and the actuals are actuals. It is either right or it is wrong. Forecasting is a completely different ball game. I think that she is a little bit unfair to auditors of which I have a little bit of experience. Auditing is also about valuing buildings and a whole range of things. It is not the major point that I accept, but my basic argument would still be that the independence comes more from the attitude of the individuals rather than the structure. Does she not accept that? You cannot disfactor, it is going to be dependent on an individual's agency. You need to have the structure as well. That is why it needs to be independent. The credibility of the whole factor on an individual's agency needs to be independent. I think that John Mason has summed up what I wanted to say. I want to refer back to the Dublin experience that we had. Although there was some forecasting done by the Fiscal Commission in Dublin, it had developed into that. We are at the very start of the Scottish Fiscal Commission. The letter from the chairman, Lady Rice, is relevant in this context too. I just feel that we are trying to anticipate, in a sense, that we are creating some problems where they do not exist. I think that we should let the Scottish Fiscal Commission under the present bill do its job, but there should always, as everything that this Parliament does, that there should be review of that situation in consultation with the commission. I think that what you said there about where we are creating problems or for seeing problems before they actually exist. The piece later on is about prevention and we are trying to prevent problems occurring. Would you not accept that? No, not really. I do not accept that. The Parliament has been here for 17 years. We are at the start of a process. We have to pay attention to the fact that we have professional people in the Scottish Fiscal Commission whose views that Parliament accepted that there were people to do this job and we should hear what they have to say as much as we hear what you have to say. One last thing is possible to give. The whole focus, the cultural shift from being reactive to being preventative is what the Parliament is doing now. It is trying to mainstream preventative measures, whether it is in health or whatever sphere. I think that this is what the amendments are for to prevent. Perhaps you could also say that this is a preventative measure, which has been introduced. I think that it is offering a certain amount of reassurance and security and that we should accept the bill as it is at this stage and accept also that things can always be reviewed. I think that this is the most important element of this bill. I think that it is critical that we get it right, because it is about the independence of the commission and securing that for the future. I have heard what people have said about individuals. With all due respect to the many individuals that will serve both now and in the future on the Fiscal Commission, it is not about them. It is about the commission itself and how we secure how it operates for all time, irrespective of who serves on it. That is critically important. Equally, I think that Gavin Brown has outlined the OECD principles about how you would scrutinise those bodies. It is not beyond us to make sure that we draw from that to have a robust scrutiny regime in place. I know that the Deputy First Minister has said in the past that other similar bodies do not do that kind of forecasting. It is not something that he has seen. What he has not mentioned in to him is that, in many of those other cases, such as Ireland and others, there are independent institutions that produce forecasts on which those commissions have relied. There is no similarity with Scotland in that regard, because there are not those other independent organisations that are already out there producing forecasts. Of course. Would the member not accept, though, that, as Jean Urquhart pointed out, we are at the beginning of a process here? The absence of those independent institutions is because, up until this point, there has been no requirement for that role to be performed within Scotland. Perhaps what we need to see is some of those organisations, some of whom came and gave evidence to the committee to look to develop that capability and capacity in order to be able to undertake that function. Will the member also accept that, in terms of the role of the Fiscal Commission, we took evidence from the OBR who stated that, although the OBR produces forecasts, it is in the gift of the Treasury to ignore and reject those forecasts. Would she be happy with a situation where the Scottish Government was in a similar position? I do not think that the Scottish Government would reject forecasts. I think that they would seek to work with whatever commission was in place to arrive at a conclusion, and that certainly characterised the method of operation so far. In relation to Mark McDonald's second point, I do not see that as an issue. In relation to his first point, that is, of course, one argument that you could make. However, when we have the opportunity to set out in legislation what a Fiscal Commission should do, surely we should take that opportunity rather than hope that somebody else out there might do those independent forecasts. We have no control over those organisations. We do have control over the bill that is before us, and I would hate us to miss that opportunity. I say as well that there were very many witnesses to genearkat, including very professional people from the Royal Society of Edinburgh and others beside who made a compelling case as to why the commission should do forecasting. Again, while I am very respectful of Lady Rice, there are others with a differing point of view that are equally valid. It is our job to balance that. Convener, for me, that is just irrespective of government, because that will impact on future Governments, too. That is about setting out how we want to proceed in the future. We need to be quite clear that we should have a very robust scrutiny regime. We have nothing to fear from that, and I think that giving the commission the power to forecast, to be responsible for the forecasting, is exactly what we should be doing. I acknowledge that this is a central issue for the debate, and I acknowledge and respect the committee's interest and the energy that the committee has taken to consider those issues as part of its scrutiny of the bill and its scrutiny of the wider questions that it has been engaged with for some considerable time. I would like to go through some points of principle and some points of detail, convener, about the amendments that are in front of the committee today. As the committee knows, I believe that the core function of the statutory commission should be to independently scrutinise and report on the Government's forecast of tax revenues published in the Scottish budget. I have previously set out to the committee my view that the Scottish ministers should be responsible for the production of tax revenue forecasts and should be directly accountable to Parliament for those forecasts. The Scottish Government's proposed approach maximises the transparency of the forecasting process and maximises public value by ensuring that the forecasts underpinning the Scottish budget are independently assured as reasonable. There is indisputable evidence that the weight of international practice favours the approach provided for in the bill as introduced. This is clear in the spice briefing on the bill and in the various OECD publications. 20 of the 23 independent fiscal institutions in place in OECD countries do not prepare official forecasts. They independently review those forecasts and some of them may also prepare alternative forecasts, something that the Scottish Fiscal Commission is already and will continue to be empowered to so do. They are also practical and resourcing issues to consider. The Scottish Government would need to retain a forecasting function to support policy development and responsible management of Scotland's public finances. Those amendments would inevitably increase the operating costs of the commission above those provided for in the financial memorandum. They would either give rise to significant duplication of effort and resources at significant costs to the public purse or lead to a replication of the OBR model whereby fiscal forecasts continued to be produced by the Scottish Government or Revenue Scotland staff, potentially threatening the commission's independence. That is an important point, given the evidence that the committee heard from Edward Troupe of Her Majesty's Revenue and Customs, where Mr Troupe was making the point that the groundwork and the detailed work in the preparation of OBR forecasts was in very big undertaking by officials of government. That had the potential to undermine the independence of the Office for Budget Responsibility. That is my interpretation of Mr Troupe's remarks. That is an interesting point. The OBR is not completely independent. In one sense, it is impossible to have an organisation that is completely independent because it needs input from the other side. It is perfectly possible for an organisation to be independent in its decision making capability, because once presented with the evidence and the information, that body can determine and take forward its stance. I think that what we have to be careful about—this is the point that I think that Mr Troupe was making to the committee—is that there is a danger that, although we label an organisation like the OBR independent, its source of information and its source of interpretation of a lot of data comes from Government. Therefore, we have to be careful about just the degree to which we believe an organisation to be independent in that respect. In the model that I am putting forward to the committee in the Parliament just now, it is crystal clear that the Government is doing the forecast, and then the fiscal commission, free of Government, is absolutely distinct from Government, is able to challenge that forecast in the process. Aside from the issues of principle and practical application, I consider that the amendments that Mr Brown has put forward would not provide for a workable statutory solution should the commission be required to prepare official forecasts. I would like to go through some technical issues for the benefit of committee members in their discussions today. Those amendments would reduce, rather than increase, the scrutiny of forecasts used in the budget. They make no provision for timely independent checking of or assurance over official tax forecasts prior to their inclusion in the Scottish budget. Those amendments would undermine the challenge to which official forecasts are subject and lead to a diminiation of scrutiny with a consequent increase in the risk that forecasts may not be robust. That concern was also raised by the fiscal commission when they gave evidence to the committee in November of last year. It is not clear how Parliament, the Government or the public, will be assured as to the robustness of the forecasts, which are critical to determining the level of resources available for allocation in the Scottish budget and critical for the responsible management of Scotland's public finances. Parliament and the public will be reliant upon the existing requirement for the commission to subject its performance to independent review at least once every five years. I believe that that could undermine or even threaten the integrity of the Scottish budget. Furthermore, those amendments do not address the additional access to information which the commission would require if it were to prepare official forecasts. The commission would require statutory rights of access to additional sources of information, particularly to support the proposed new function to prepare forecasts of revenues from non-domestic rates. The amendments therefore do not equip the commission to prepare robust and reliable tax forecasts. The amendments to section 4 do not require the Scottish Government to use the forecasts prepared by the Scottish Fiscal Commission to underpin the Scottish budget. It would remain open to the Scottish ministers to bring forward its own forecasts and to use those forecasts in the Scottish budget, just as the charter for budget responsibility enables the UK Government to effectively disregard OBR forecasts. It is therefore not clear what public value is served by those amendments. The commission would be required to produce forecasts, but the Government could simply replace them with forecasts of its own. Indeed, in her comments to the committee today, Jackie Baillie accepted the fact that the Government has already accepted that the existing Scottish Fiscal Commission arrangements essentially subject the Government to accepting the analysis and the perspective applied by the Fiscal Commission because of the test of reasonableness that is inherent in the Government's provision. I think that what has already been demonstrated by Gavin Brown is that the test of reasonableness is such a high one. There are going to be very few occasions, if any, that the Fiscal Commission is not going to say that your assumptions have been reasonable. I do not share that opinion. For many of the reasons that Leslie Brennan put to the committee earlier on, in the sense that there will be assumptions that will underpin the forecasts that are made, those assumptions are utterly exposed to challenge by the Fiscal Commission. If the commission considered the assumptions that the Government had made in its forecasting not to be appropriate or correct, it would have a basis for explaining, just as Leslie Brennan set out earlier on, the basis upon which it believed and judged our forecast not to be reasonable. The test is a test whereby the assumptions that are made by the Government must be subjected to very significant rigour of analysis. Amendments 15 and 16 amending reporting functions in section 4 do not provide for a workable process by which the commission prepares forecasts to feed into the budget process. There is no indication of how the forecasts are to be provided to the Scottish Government in time for it to prepare the draft budget. Forecasts delivered on the day of the budget are of no purpose in setting a budget that must be finalised several days before the budget announcement is made to Parliament. Indeed, section 4-1, as amended by amendment 15 and 16, does not require a report on all matters in time for the budget, only one of them. If so minded, the commission could choose not to provide to produce devolved tax forecasts. I would suggest that this is a fundamental weakness in those amendments. Those amendments clearly do not provide for a workable legislative vehicle by which the commission could be required to produce official tax forecasts to support production of the Scottish budget. Critically, the Scottish Government would be under no obligation to use the commission's forecasts when preparing its budget. The amendments would create duplication, could dramatically increase costs, make no provision for access to relevant information and do not provide for independent scrutiny of forecasts that underpin the Scottish budget, placing the very integrity of the budget at risk. I recognise the aspiration of committee members to address the issues that have motivated the formulation of those amendments. I would like to offer the committee the opportunity to discuss with interested members well in advance of stage 3 how the aspirations of members may be addressed and to provide better reassurance around the contents of the provisions that are inherent in those amendments. I therefore invite Mr Brown not to press amendment 5 and not to move the remaining amendments in this group, failing which I would urge members not to support them if they were moved. I am grateful that there was a huge amount covered there, so I hope that you will bear with me in addressing each point turn by turn. The first point that was made was that challenges take place at the moment and everything is transparent, but we know that that is not correct. We know that there was a challenge to non-domestic rates last year, and we still do not know what fiscal changes were made between the initial forecast and the published forecast. I think that there is a lack of transparency, and the bill is drafted, in my view, and it does not change that. I am sure that that is true. Will Gavin Brown accept that the cabinet secretary has been on the record that putting two different forecasts into the public domain, rather than putting forward the forecast that has been assessed as reasonable and subject to challenge in the process of compiling it, would lead to a level of confusion, which is why the Scottish Government has only ever put forward the final forecast, which has arrived at following that challenge process. I accept entirely that the cabinet secretary said that, but I think that that was one of the weaknesses of the bill was the lack of transparency and not seeing both. Indeed, the member may remember signing up to a clause in our report saying that everything ought to be published. I think that that is an interesting argument to bring forward at this stage. Mr Brown makes a reasonable point here, but I think that he is confusing two different things. One is a process of transparency and the other is the exercise of a challenge function. It is beyond dispute because the fiscal commission has said it and I have confirmed it that the fiscal commission exercised a challenge function because it led me to change the forecast. That is beyond dispute because the commission exercised that leverage over me. There is an issue of transparency that Mr Brown fairly raises, which is should all the traffic about that change in position be published. I think that there is a reasonable issue there that has to be addressed. Although we arrive at one complete forecast, because my view has always been that we should not have competing numbers, what is the right number, so we settle on one forecast, but if it would help the transparency process for us to publish the traffic around how we have arrived at that, I am entirely prepared to consider that. I certainly welcome that. That is a change of position from the last time that you gave evidence, cabinet secretary, but that is the first point. The second point is that, because the individuals are able on the commission—indeed, they are—they would not say that it was reasonable unless they thought that it was reasonable, and I suspect that that is probably correct. However, as was pointed out to us by witnesses, reasonable is a very low bar, an extremely low bar. After our report, we took evidence from the commission on this point, and I stress again that they were unable to give us a single number that could be classed as unreasonable. They said to us quite specifically, we do not look at the numbers or the outputs, we look at the methodology. For that reason, I do not think that there was genuine, full, independent and seem-to-be independent assessment. The cabinet secretary raised the issue of international practice and suggested that somehow the changes that I suggest would make us, if not an international outlier, close to being one of the outliers. The changes that I put forward bring us closer to international practice than the current bill. Yes, the majority of OECD IFIs do not do the official forecast, that is a matter of fact, but there is not a single IFI on the planet that I have been able to find or the Government that has been able to find that looks only at the official Government forecast, does none of its own forecasting and does not have another independent forecast with which to benchmark against the Government's. Of course I will. Mr Brown will know that there is nothing in this bill that prevents the SFC from undertaking its own forecasting. In fact, the cabinet secretary has confirmed that on the record today. So, to categorise it as a fiscal institution that does not do its own forecasting is incorrect? I do not agree with that. In terms of the OECD principles, it says pretty clearly that the functions of the IFI should be on the face of the bill and it gives a list of examples, including forecasting. It is not on the face of the bill and I think that there is a severe danger that it argues that it is not in our official remit to produce forecasts and I suspect that it would not happen. When you add to that the statements over a period of time from the Scottish Government and in particular from the cabinet secretary who has made it clear that he does not approve of them doing forecasting, he is not legally going to stop them but he wants to discourage it with his statements, I actually do not think that there is sufficient comfort in the bill as it stands. I hear what you said but we have been around the houses of this before in the committee's scrutiny of these matters because what I have put on the record is very clearly my view that the ability of the commission to prepare any alternative forecast that it wishes is adequately provided for in section 2.1 of the existing bill, in section 2.3 of the existing bill and in section 2.5 of the bill. I do not think that it is in any way fair to say that this is not on the face of the bill. The word forecast is not on the face of the bill. The issue of the commission being able to exercise that if it chooses to do so is provided for by the three sections that I have set out in the bill. The word forecast is not on the face of the bill. We have been around the houses and I think that we disagree with the Government on that particular issue. In terms of international practice, I repeat again that there is not a single country, there is not a single IFI that relies only on Government forecasts and nothing else. We were told of course. On that point, although clearly the cabinet secretary wants us to be an independent country, the realities were not. We count as a sub-national level, I believe. At that level, I think that it is very unusual to have any forecasting and any SFC equivalent at that level. Therefore, can he not accept that we do not need quite the same level? We are not going to have the same level of forecasts as an independent country would have. I cannot point to a sub-national IFI, though, that relies only on an official Government forecast, so Mr Mason can. He is welcome to do so. We were told that Sweden and Ireland were in a similar basket, but we now know from having visited both that that simply is not the case. The next argument in principle brought forward was what might be described as the troop argument, one that I know that the cabinet secretary has raised before. However, I have to say that he gives a very misleading picture of the reality to quote only Mr Troop and not to quote the very clear and exact response from Robert Chote in response to that very quote. I want to quote from Mr Chote's response to that, because I think that it is important. The convener, a couple of months later, asked him this question. Mr Chote said that he is right in the sense of the first cut. What happens then is that we have very detailed discussions in which we tell HMRC how we want it to change those numbers. It is our forecast. We tell HMRC what the forecast is. The point is that they are our forecasts. The conditions, the sort of first cut that they bring to us as distinct from the sort of first cut that it might have brought to politicians in the old days, does not have a whiff of political interference about it. Mr Chote concluded, speaking personally on how we are doing the job, I take comfort from the fact that, at the end of the day, I am coming up with a central forecast and not judging whether I am willing to accept someone else's forecast. I take comfort from the fact that we have HMRC as a good, robust professional organisation, providing us with material that, as I say, does not have the whiff of politics about it. I think that it is important to put that on the record, because the convener's response was, thank you very much, for that comprehensive answer. I think that I did counter a number of the points that were made by Mr Chote. Now, who wanted to—well, I could let you benefit first into the department with Donald. I just wondered if Gavin Brown would agree with me. It seems that the cabinet secretary, the key things that, rather than the substantive point of having something independent, he seems to be coming up with almost process issues about the timing and access to data, which, if those are process issues, are rather than having an independent forecast. I intend to address the process issues, because, quite rightly, they have been raised, but I want to address the principles first, in the same way that the cabinet secretary addressed the principles first, too. Those are the principles, so I have set that out pretty clearly. He cites some of the evidence that Robert Chote gave to the committee, and he will recollect, I am sure, that Robert Chote also confirmed at that evidence session that it is in the gift of the treasury to disregard the OBR forecasts should it wish to do so. I can quote exactly the charter budget responsibility, which is the secondary piece of legislation. The Government has adopted the OBR's fiscal and economic forecast as the official forecast of the budget report. The Government retains a right to disagree with the OBR's forecast, and, if that is the case, will explain why to Parliament. They are perfectly at liberty should they choose to do so, but I think that it would—and it has obviously never happened—been a pretty unusual situation, where a chance of the exchequer has to go to Parliament to explain why the independent experts that they have appointed are going to be ignored. I am grateful to Mr Brown for giving way. I think that he rather makes my argument that I have been making for me, in the sense that Mr Brown has just said that it would be a very unusual circumstance for a chance of the exchequer to go to the House of Commons and to disagree with an OBR forecast. Can he therefore not accept my argument that it would be an inconceivable situation for a finance secretary in the Scottish Government not to change his forecast if the SFC said that it was unreasonable? The point is this, and he, in some ways, makes my argument for me, too. First, in his report, cabinet secretary, he has expressed huge concern with the lack of behavioural analysis and yet no change. No change in a year and a half has been made by you or the Government in relation to the behavioural analysis on the residential aspect of a land and buildings transaction tax. Let me finish the answer first. They have made huge concerns, yet that is still deemed to be reasonable. I return again. They could not give me a single number that would be deemed to be unreasonable, not a single one. Therefore, I think that the bar is so low that I cannot foresee a circumstance where they ever actually say that this is unreasonable. They could not give me a number. I am grateful to Mr Brown again. The issue that he raises about the comments about behavioural analysis by the commission essentially confused the point that he is trying to make here. The point here is about the assessment of the reasonableness of the forecast. That is the test in law that the commission must assess. The commission in law considers that issue and it judges it to be reasonable. If it judges it to be unreasonable, how on earth could a finance secretary put that forecast to Parliament? The issue on the behavioural analysis is that the commission has said, as part of their reportage, that the Scottish Government needs to improve its behavioural analysis. In no way does that question the reasonableness of the forecast. It means that we have a job of work to do, which I have already told the committee will be done before the next forecast is undertaken. Those are two things that are being confused to try to suggest that something other than a very hard test in statute has been applied to the fiscal commission. It is not a time to confuse at all. I just do not accept that it is a hard test. I think that when they are unable to give me a single number that would be unreasonable, it seems pretty unlikely that they are ever going to—I will give it once more, but I feel now that we are attempting to prevent me from getting to the technical points. I do feel that we are going around the houses a little. I am going to cut you short, thank you. I am in no way seeking to filibuster Gavin Brown in any way. He is being very generous in accepting interventions. However, that rather gets to the point that Leslie Brennan was making about this being an art rather than a science, is that if we were to fixate on the number that comes out at the end, rather than the robustness of the methodology that is applied, which is what the focus should be on, then it gets away from that point about reasonableness. It is about the methodology that is applied being reasonable in coming to that conclusion rather than what that conclusion is in terms of a precise number. I make no apology for fixating on the final number. I think that it is pretty important, but the idea that you do not look at it, I just do not think that, in my view, it is acceptable. In terms of the technical points, convener, the first one is that there would be a lack of a right to information. I am not sure that I would accept that, because in terms of—if you bear with me just a moment. In terms of section 7 of the bill that is drafted, there are some pretty high powers in terms of access to information. Indeed, they can get into information in the possession or control of any member of the Scottish Government. If the Scottish Government has it and is able to do it, it seems pretty obvious that the Scottish Fiscal Commission would be able to have it and be able to do it. If we felt that it was necessary to stage 3 add in F to add in local authorities on top of that, I would have no objection to that whatsoever. In terms of E there, they can bring in any regulations to specify any other person that they want to do so, but I think that it probably would be wiser at stage 3 just to add in local government. However, the fact that the Scottish Government already has the information and the Fiscal Commission can get it from the Scottish Government means that that is not a concern and it is certainly not a reason for objecting to the amendment. I think that the idea that for a Government that I think is very keen on framework acts—most of the acts that I think that we have seen—a number of acts that we have seen through this committee have been classed as framework acts and because every single piece of procedure was not on the face of the bill—in fact, that is an argument—often used for not having stuff on there because they want to deal with it in secondary legislation. Again, I think that that is a confusing one. If you look back to the position of the 2011 act at UK level, that was very, very basic on the face of the act. That was filled in by secondary legislation. The idea that the idea to disagree with the forecast was set up in the charter of budget responsibility, which was a piece of secondary legislation. If the Government wants to include that sort of comfort later on, then, again, it is perfectly entitled to do so. The fact that there is not a specific number of checks that need to take place over the course of the year nullifies those amendments in any way. Section 9 of the act has a clear clause for a review of the commission's performance. It is currently down as a five-year period. If the amendments are to go through, I think that it would be sensible. I suspect that I would want to lodge amendments to decrease that number massively. I suspect that I would be beaten to it by the Government with the amendments to go through to make sure that we had a much shorter time frame. Again, I do not accept that that is a reason to reject the amendments. Section 9 could be bolstered and strengthened pretty easily at stage 3. You have regulatory power all the way through the bill, but I think that it would be better to do it at stage 3 than in advance of that. For all those reasons, convener, in terms of the principles and in terms of which I do not think that the technical arguments genuinely stack up, I think that I have attempted to deal with every point put forward and every intervention put forward. On that basis, convener, I do want to press amendment 5. Okay, the question is that amendment 5 be agreed to. Are we all agreed? Okay, let's go to the vote. All those in favour of amendment 5? All those against? Defeated. I call amendment 6 in the name of Gavin Brown already debated with amendment 5. Gavin Brown to move or not move? All those in favour? All those against? Okay. I like to call amendment 7 in the name of Gavin Brown already debated with amendment 5. Gavin Brown to move or not move? All those in favour? All those against? I like to call amendment 8 in the name of Gavin Brown already debated with amendment 5. Gavin Brown to move or not move? The rest of the amendmentszydd ond yn y trempi yn 5, 6 ydy— Mae hywent dohaeth i gwylo sydd gennych rhaglen i ddechrau gynnal b protectionau, ddydd i — Dw i — Mag所有 wnaeth yr aed Usyn ar yr ysgrifff ai? Ond, mewn llawer o het bod Princess Christ Cooler wedi ddaf i indu ymmerallol y cwmhwng. Cirrhau mhau 9 o namer i GwymUSNol oedd wedi'i gallwn cyfranddau'r mhau mhau mhau 5, ac yn ni'n wneud mhau mhau mhau mhau mhau mhau mhau. Mae an müe ar y cynllun yng Nghymru. Mae an müe ar â gyfer, mae am y ddifud? A mhau mhau mhau mhau mhau mhau. Gyntaf, mae'n ardydd yn ganodog arill yn ddim yn fathry. Mae an müe ar â'i gwrthu. Mae an mhau mhau mhau 10 o mhau mhau mhau mhau mhau mhau mhau mhau mhau mhau is not moving it. In the question amendment 11, I agree to it again, Gavin is not moving it, so that's not being taken forward. Okay, I call amendment 12 in the name of Jackie Baillie in a group of zone, Jackie Baillie to move and speak to the amendment. Thank you very much, convener. The committee was unanimous in their view that the bill should be amended to widen the functions of the commission and in particular to include assessing performance of the government against its own fiscal rules and also an assessment to the long-term sustainability of public finances. That view was shared by very many witnesses that came before the committee, many of them very professional as well. The amendment today reflects that what I regard as an emerging consensus. Scottish ministers have already set a few fiscal rules and it is entirely appropriate to judge how well you can be measured against your performance. It is the case that a long-term look at public finances and its sustainability has to be a positive thing. My amendment enables the commission to look back to see whether it has its forecast right, not that it is now producing it. In her amendment, the committee says that an assessment of the actions of fiscal and economic forecasts previously prepared by it. Does that mean that it is prepared by the commission and if so, is the amendment dependent on the commission preparing the forecasts? It presumed that the commission would prepare forecasts. Listening to the cabinet secretary, he has not closed down the possibility of the commission producing its own forecasts and therefore this amendment still stands. That is clear to the member, that is great. The OBR, of course, produces reports on financial sustainability. They are not alone in doing so, others do so. If I read from a list of fiscal councils that have these powers in doing so, Austria, Belgium, Canada, Denmark, Germany, Hungary, Netherlands, Slovenia, Sweden, the UK, as I have already mentioned, and the US Congressional Budget Office. That is not a strange thing to do. It is quite usual across the world. When you look at the IMF fiscal council dataset, the second most important function of both previous and new emerging fiscal councils is a judgment of long-term sustainability of public finances. The third most important function of the emerging new generation of fiscal councils is to check the Government's compliance with their own fiscal rules. That is nothing strange. It is nothing unusual. Across the range of fiscal bodies, particularly those most recently established, long-term sustainability and compliance with rules is a very important part of their remit. On that basis, convener, I would move amendment 12 in my name. I support this amendment entirely. It reflects a conclusion of 119 of our report, which was reached unanimously by the committee. It backs up the Scottish Fiscal Commission evidence to the committee, which, I have to say, its letter yesterday was extremely surprising that both the timing of it and the content of it, the SFC and its written evidence to us said that they believed that they should have responsibility for assessing the forecast on the sustainability of Scotland's public finances, such as adherence to the fiscal rules, and would welcome the bill being amended now to anticipate the additional responsibility. Professor Hughes-Hallot said in evidence to us that the bill should be amended to make explicit that the commission has a role in carrying out sensitivity analysis and in assessing fiscal sustainability. Professor Campbell Leith, again in evidence to us, said that this is one of the main objectives of creating a fiscal commission to ensure fiscal sustainability. Indeed, it is the raison d'etre of a fiscal commission. The wording appears to be similar to the 2011 act, which is quite clear and quite exactly the right thing to do. The argument was put forward at one stage at the Government that this is a role for members to do. Of course, it is a role for members to do, but having the SFC look at the overall finances and tens of their longevity would do nothing to diminish our role, in my view. Indeed, we would enhance our ability to do so. You need to look at any budget debate in the House of Commons, and you will see that MPs from every party regularly quote the OBR analysis and that enhances their ability to hold Government to account and to look at the state of the public finances. For all the reasons that I would support, amendment 10. I acknowledge the interests of the committee in this point, but I think that the purpose of the amendment is far from clear. Listening to the way that has been explained by Jackie Baillie and also supported by Gavin Brown, I think that its purpose is rather confused. I would like to comment on three separate elements of the amendment. The proposed requirement on the commission to assess performance against fiscal policy objectives, the proposed requirement to analyse the sustainability of public finances and the requirement to assess the accuracy of forecast previously prepared by the commission. Turning first to the proposed function to assess performance by Scottish ministers against fiscal policy objectives, I understand that the provision is an attempt to require the commission to assess the Scottish Government's performance against fiscal rules. However, the amendment would seem to include an assessment of performance against policy objectives, as well as against any strictly termed fiscal rules, which would normally relate to levels of borrowing. It is not clear if Jackie Baillie intended the proposed function to be so wide in its scope. However, as it is currently drafted, I believe that this would conflict with the OECD principles for independent fiscal institutions, which provide that such institutions should not have a role in normative assessments or evaluations on the merits of Government policies. That is where I think that the amendments are confused in their drafting. That perhaps highlights the difficulty in defining fiscal rules under the devolved fiscal framework that supports the exercise of the tax and borrowing powers under Scotland in 2012. The Scottish Government is subject to statutory aggregate borrowing limits and annual borrowing limits set administratively by the United Kingdom Government. We do not have free range to act or to operate outside of those predetermined limits. We are also subject to budgetary rules, performance against which is assessed very firmly by the Auditor General as part of the annual audit of the Scottish Government's annual financial statements. I would be concerned that those amendments perhaps intrude on what is the proper statutory provision of the Auditor General to hold the Government to account on those matters. Convener, those points reinforce the Government's view that this proposed function would more appropriately be considered when we collectively assess how the remit of the commission should be expanded to reflect the Smith powers that are proposed to be devolved. Turning to the proposed function in relation to fiscal sustainability, I remain of the view that this is primarily a role for elected members of the Scottish Parliament who should hold ministers directly to account for the robustness of our financial judgments. This is not an appropriate role for the Scottish Fiscal Commission, it is an appropriate role for Parliament to determine the robustness of the budget choices that the Government makes. Does he not accept that members would be aided in that scrutiny by having such reports from the Scottish Fiscal Commission? Does he seriously think that they would be diminished by having that? I think that they would be aided by having those reports available from perhaps a range of bodies. Jackie Baillie in the earlier debate mentioned the fact that we do not have any bodies commenting on some of those issues. Jackie Baillie herself last week hosted an event in Parliament on behalf of the Fraser Vallander Institute, which is making very clear its aspiration to challenge and scrutinise aspects of the delivery of policy by the Government, but that is different from the specific statutory role of the Fiscal Commission. I know that Mr Brown takes a different view of the role of the Fiscal Commission, but in my view the Fiscal Commission has got a very hard test to assess the robustness of the forecast made by the Government in relation to revenue estimates and the evaluation of policy, the consideration of long-term fiscal sustainability. Those are issues that plenty of commentators can comment on, but ultimately members of Parliament have got to form a judgment about what we are here to do and what the Finance Committee undertakes. The final aspect is that the amendment refers to the accuracy of economic forecast prepared by the commission, but neither the bill has introduced nor the amendment's law at stage 2 to require the commission to prepare any economic forecast so that it is unclear what the commission has been tasked with doing here and how much resource it would require to be undertaken. I think that I recalled him saying in earlier evidence that there was the capability for the commission to do their own forecasting, not something excluded by his bill and therefore it would be appropriate for them to be able to do that forecasting. Clearly, the commission has got that scope to undertake that activity, but the question of economic forecasts gets us into even more uncertainty about what the purpose of the scope of those amendments is. I have been making a point about the fact that the amendment has been drafted with a scope that is broader than it is comparatively with the remit in the outlook of the Scottish Fiscal Commission. I suggest that this area is revisited. Once the fiscal framework has been agreed and the Scottish Government has greater fiscal flexibility and potentially sets fiscal rules within that flexibility, which would extend beyond the constraints that are applied by the boring rules of the United Kingdom Government, I therefore invite to Jackie Baill not to press her amendment without failing, which I would ask members not to support it. Thank you very much convener. I will be pressing the amendment in my name. I do not think that there is anything terribly confused about this. It is quite simple in what it wants to achieve, which is common to other countries, so there is nothing unusual about it either. The drafting of the amendments was done on the basis of looking at what the practice of the OBR was and seeking to emulate that practice here. Fiscal rules are already set by the Scottish Government in relation to borrowing, and therefore the amendment stands now. I entirely accept that the significance of that will increase once the fiscal framework is agreed. Nevertheless, the amendment stands now and could therefore be applied now, so we do not need to put it off. Of course the Parliament, I would expect to scrutinise the long-term sustainability of public finances and indeed whether the Government is meeting its own fiscal rules, but I do see the Fiscal Commission informing the work of the finance committee and the Parliament in so doing. I recognise that this is all about the future. It is about Government implementing systems that are robust as they can be, as we assume new powers. The cabinet secretary said that it was the aspiration of the Fraser of Allander institute to set up a body looking at financial aspects of this, and that is very welcome indeed. However, the speed of it being set up and the coverage of it is not something that we have within our control. Therefore, it is important, as a signal from the Government, that we give the Fiscal Commission the power to do that. What you said about the Fraser of Allander institute is an aspiration, so it does not have that. It may say that due to scarce resources it can no longer do that. That is part A. The cabinet minister said that the scope was too wide, but it is pretty explicit when it says in its assessment of the Scottish ministers' performance against any objective set by relating to the formulation and implementation of fiscal policy. Thus, do you agree that he might be suggesting that it is wider, but it is pretty explicit and pretty focused on what you are looking at. It is fiscal policy, the implementation and the formulation of fiscal policy, so it is not too wide. No, I would agree with that. It is quite focused and it is entirely appropriate for the Fiscal Commission to undertake this type of scrutiny. As I said before, it is not unusual and it is not positioned widely. Of course, you need to look at economic policy if you are going to be able to look at issues about the money that this Parliament raises through taxation. Let me conclude by saying that there are a significant number of supporters for this, including this committee, and I hope that that remains the case. But Carlo Cotarelli of the IMF talked about fiscal rules often being part of the responsibilities of Fiscal Commissions. Let me finish on that, making these points. Ian Lynart, who was the adviser to the committee, said similarly. The commission itself, in its written submission, talked about having responsibility for assessing the Scottish Government's forecast on the sustainability of Scotland's public finances, such as adherence to the fiscal rules as an example. Professor Hughes Hallett has already been quoted. Professor Campbell Leith, both of them supporting the commission having this remit. I am happy to give way on that point. She says that the committee has signed up to this, but my agreement to paragraph 119 is that it can assess the Government against its fiscal rules. The amendment says against the fiscal policy, and the cabinet secretary has made the point that I would agree with, that the two are not the same. Does she accept that the two are not the same? Okay, no, I don't. What we've talked about at 119 is assessing the Government against its fiscal rules and as an assessment of the long-term sustainability of public finances. You need to do that in the round. I am genuinely disappointed that members of the committee are not going to, because I've heard enough excuses, frankly. We, as a committee, agreed this. I'm genuinely disappointed that that consensus has not held good, but on that basis, convener, I'll move the amendment in my head. Okay, thank you. The question is that amendment 12 be agreed to. Are we all agreed? Yes. We are not agreed to. All those in favour. All those against. It's defeated. I'd like to call amendment 13 the name of Gavin Brown, already debated with amendment 5. Gavin Brown to move or not move? Not moved. The question is that amendment 14 be agreed to. Are we all agreed? Yes. The question is that amendment 15 be agreed to. Are we all agreed? Yes. Call amendment 15 of Gavin Brown, already debated with amendment 5. Gavin Brown to move or not move? Not moved. Not moved. Call amendment 16 of Gavin Brown, already debated with amendment 5. Gavin Brown to move or not move? Not moved. The question is that section 4 be agreed to. Are we all agreed? Yes. We are agreed. I'd like to call amendment 1 in the name of the cabinet secretary. I'm going to move his own cabinet secretary to move and speak to the amendment. Thank you, convener. As I indicated, committee members are in my response to the committee's stage 1 report. I will seek to take all action that I can to promote and safeguard the independence of the commission. This amendment responds to the committee's recommendation that there should be greater transparency in the interactions between the fiscal commission and Scottish ministers. The amendment introduces a requirement for there to be a protocol between the commission and Scottish ministers and for the commission to publish that protocol. The protocol must set out how the parties are to engage during the scrutiny process, their respective responsibilities and procedures for handling draft reports. The amendment also requires that the protocol be regularly reviewed and revised as appropriate over time. The amendment has been crafted so that the protocol focuses on the relationship between the Scottish ministers and the commission. That is important, as it avoids requiring the parties to agree anything that might impinge on the independence of the commission or its approach to the discharge of its statutory functions. I move amendment 1 in my name. Okay. Anything fuller to add? No members have indicated that they want to speak. Okay. The question is that amendment 1 be agreed to. Are we all agreed? Yes. We are all agreed. The question is that sections 5 to 11 be agreed to. Are we all agreed? Yes. I call amendment 2 in the name of the cabinet secretary group with amendments 3 and 4. Cabinet secretary move amendment 2 and speak to all amendments in the group. Thank you, convener. Amendments 2 to 4 are in response to this committee's recommendations on the subject of term length and the ability to reappoint members to serve a second consecutive term. Amendments 2 and 4 to sections 12 and 13 allow for the reappointment of members on one occasion. They will now be eligible for one reappointment, providing they are a member of the commission at the time of reappointment or were one no more than three months prior. This period of three months is designed to ensure that there is sufficient time to follow the procedure for reappointment, including parliamentary approval, even where the vacancy rises around the time of the summer recess. Those changes also remove the proposed statutory bar on the reappointment of the current members of the commission, who will now be eligible for appointment for a second term. Amendment 3 relates to the committee's recommendation that maximum term lines should appear in the face of the bill. The amendment to section 13 provides that members, including the chair, may be appointed for a term of up to five years. I move amendment 2 and urge members to support amendments 3 and 4. Members, have I to speak anything further to add, cabinet secretary? Nothing. Go ahead, convener. Okay, the question is that amendment 2 be agreed to. Are we all agreed? Yes. We are agreed. The question is that section 12 be agreed to. Are we all agreed? Yes. We are agreed. I call amendment 3, the name of the cabinet secretary. I already debated with amendment 2. The cabinet secretary should move formally. Move, convener. The question is that amendment 3 be agreed to. Are we all agreed? Yes. We are agreed. I call amendment 4, the name of the cabinet secretary. I already debated with amendment 2. The cabinet secretary should move formally. Move, convener. The question is that amendment 4 be agreed to. Are we all agreed? Yes. We are agreed. The question is that section 13 be agreed to. Are we all agreed? Yes. We are agreed. The question is that section 14 to 28 be agreed to. Are we all agreed? Yes. We are agreed. The question is that the long term will be agreed to. Are we all agreed? Yes. Okay, that ends stage 2 consideration of the bill. Ac mae gennymau cynghreifat wrth hynny, o ddweud, sy'n tu hunigiau cymdeithasol am yr unrhyw ddechrau'r cyfrifuill. Yn cael ei gamlau peiradeu newid, mae'n tynnu'r planau 17 dechrau'u dod i'r hydgarfawr ar gyflottu dechrau. Mae'n addysg iawn i'r lleidau i gwirioneddau siadol, roedd yn ddellukei gwirioneddau i gyflotwyd gyfoedd. Mae'n dod i'r lleidau i gwirioneddau i gwirioneddau i'r lleidau i'r lleidau. I would like to ask the Deputy First Minister to make an opening statement. Thank you, convener. I take this opportunity to welcome the report of the finance committee during this year's budget process, as reflected in the publication of your assessment. Thank the committee for its willingness to undertake this scrutiny exercise in the constrained timetable created by the timing of the United Kingdom Government spending review. As I informed Parliament last week, I will respond in full in advance of the stage 3 debate to the committee's report. This session of the finance committee focuses on the content of the budget bill itself as already approved in principle by the Scottish Parliament on 3 February. The Scottish rate resolution will be considered by Parliament tomorrow. As members of the committee are aware, there are a number of differences in the presentation of the budget information between the draft budget and the budget bill. In order to assist the committee, I will explain the main differences with reference to table 1.2 on page 3 of the supporting document. Column H in table 1.2 sets out the draft budget as it is required to be restated for budget bill purposes and columns B to G provide details of the adjustments, including the necessary statutory adjustments, to meet the requirements of the parliamentary process. There is one substantive change to the spending plans outlined in the draft budget that I would wish to take this opportunity to highlight. To ensure that budgets align with the latest available information, there is an adjustment of £141.3 million to the annually managed expenditure budget provisioned for the teachers and NHS pension schemes. This reduction to the draft budget 2016-17 number reflects Her Majesty's treasuries update to the discount rate applied for post-employment benefits announced in December 2015. The other adjustments set out are as follows. First, the exclusion of £148.1 million of NDPB non-cash costs, which do not require parliamentary approval, is mainly in relation to depreciation and impairments in our NDPB community. Secondly, the exclusion of judicial salaries and Scottish water loan repayments to the national loans fund and the public works loan board, which again do not require parliamentary approval. Thirdly, the inclusion of police loan charges to be approved as part of the budget bill. There are technical accounting adjustments to the budget of £129.5 million, reflecting differences in the way Her Majesty's treasury budget for these items and how we are required to account for them under the international financial reporting standards-based accounting rules that apply in respect of the Government financial reporting manual. I remind the committee that the budget conversion to an IFRS base is spending power neutral. The adjustments to portfolio budgets to reflect the requirement that a number of direct funded and external bodies require separate parliamentary approval. Those include national records of Scotland, the Forestry Commission, Food Standards Scotland, the Scottish Courts and Tribunals Service, the Office of the Scottish Charity Regulator, the Scottish Housing Regulator, Revenue Scotland and the teachers and NHS pension schemes. The restatement of specific grants included in the overall 2016-17 local authority settlement remain under the control of the appropriate cabinet secretary with policy responsibility. Full details of all grants treated in this way are included in the summary table on page 41. I would again make clear that these are essentially technical adjustments and do not change in any way the budget that is so far been scrutinised by this and other committees and approved in principle by the Parliament. I would also remind members that, for the purposes of the budget bill, only spending which scores its capital in the Scottish Government's or direct funded bodies annual accounts is shown as capital. That means that capital grants are shown as operating in the supporting document. The full capital picture is shown on table 1.3 on page 4. As I made clear to Parliament last week, I remain committed to an open and constructive approach to the 2016-17 budget process and to continue to seek consensus on a budget that meets the needs of people in Scotland. I will have to address any points to the committee. Okay, thank you. Do we have any questions from members of the committee? I don't have any myself. Sort of processing type questions, if I may. Cabinet Secretary, you said that you are going to respond to our report formally before stage 3, which is what you did stage 1. In terms of when you are going to respond, should we expect that this week, next week or the night before? Do you have a plan at the moment for when we would forget it roughly? I have certainly aimed to get it to the committee in a timely fashion for the committee to consider it before. Certainly not the night before, but it might be... We could debate what night time it is. Soon, shortly. I will endeavour to have it to the committee no later than the Monday before the budget stage 3 debate. Okay. My other question is, in terms of page 10 of the budget bill, I am sure that there is a technical answer to this question, but I just would like to know what it is. Schedule 3, you have got borrowing by statutory bodies, item 4, they are in section 42 of the Water Industry Scotland Act, in brackets Scottish Water. If I could forgive you, is it actually in the budget bill as opposed to the expanded document? Yes, sorry, the actual budget bill, page 10 of the actual budget bill itself. I wonder if Ms Bailey could come to my... It's the only time I'll invite Ms Bailey to come to my rescue. The caption competition in the making. So, schedule 3, item 4, section 42 of the Water Industry Act, in brackets Scottish Water, amount 150 million. In the budget, or in the draft budget, my understanding is that there was net, there was literally zero being borrowed in the next financial year for Scottish Water. Is 150 some kind of maximum if things go wrong or is 150 million the plan? Or can you just explain the difference between that and the figure in the draft budget? Essentially, this is a... As Mr Brown will be familiar, there are always borrowing transactions that are undertaken by Scottish, borrowing transactions both of borrowing and of repayment. So, the budget bill document contains essentially a neutral position, but this provides the capacity and the capability to undertake those borrowing transactions which are necessary to underpin the neutral position. Okay, thank you. That's all my questions. I wonder whether I could turn the cabinet secretary's attention to schedule 1, purpose 8, which is on page 7, and that relates to central government's grant to local government. The reduction, as I understand it, from the Scottish Parliament's information centre is £10.7 billion down to £10.1 billion in your budget Scotland Bill supporting document, which was very helpfully received, and page 41, under social justice communities and pensioners' rights. You talked about a budget last year of £10.5 million, this year of £9.9 million. I'm just trying to understand when you talk about a £350 million cut to local government, these documents talk about a £600 million cut to local government. I wonder whether you could explain to me what the difference is. There are three factors that are relevant here. The first is in relation to the implication of the current spending review period, which will conclude in March of this year, where, as Jackie Baillie will be aware, the Government came to an agreement with local government over the last four years that capital budgets would not be given to local government in a uniform fashion. They would be varied year on year. I think that the term is called reprofiled, and what that essentially means is that in earlier years of the spending review, the amount of capital is reduced and the difference is repaid at later stages in the year. The capital budget for local government in 2015-16 is inflated beyond where it's no more trained position because we are paying more in capital, because we paid less in capital in the earlier years of the spending review. The comparative number that Jackie Baillie uses for the start of the analysis for this financial year is a comparatively high figure because the budget was inflated by an additional sum for capital expenditure. If my memory says me right, it's about £120 million, but I'll write to the committee with the specific details of all the numbers that I'm going to use in this explanation. That's the first thing. The number for 2015-16 is inflated by about £120 million because of capital reprofiling. The second factor is that I'm applying another tranche of that capital reprofiling over the next four years. Local government has been assured by me that they will receive 26 per cent of the capital del available to the government over all of the next four years, but it won't come in a uniform flat line. It will be lower in 2016-17, and it will be much higher in the later years of the spending review. That's the second component of the explanation. The capital number is about £150 million lower in 2016-17 than it should be, but that capital will be put back in later on in the spending review, as I have done in the previous spending review. That's just to enable me to have more capital flexibility and for me to ask local government to use some of their capital flexibility, which relates to both reserves and borrowing, to make up that difference. The final element is a reduction in the resource budget of local government of £350 million. That's the three components that explain the differences in the numbers. If it would be helpful, I'll write to the committee very swiftly to explain the precise numbers that underpin those elements. That's concluded questions from the committee. We now turn to the formal proceedings on the bill. We have no amendments to deal with, but in terms of the standing orders, we are obliged to consider each section and schedule the bill in the long title and agree to each formally. We will take the sections in order, with schedules being taken immediately after the section that introduces them and the long title last. Fortunately, standing orders allows us to put a single question, where groups of sections or schedules have to be considered concetitively. Unless members disagree, that is what I propose to do. I don't know whether that is contrary to what you have just said, but I simply want to record my descent to section 1 or to the first clause, because it introduces schedule 1. I know that there's no vote, but it's simply a matter for the record. We can actually do that, but we can still take them all together with that point that we have already made. First, the question is about section 1, schedule 1, section 2, section 2, section 3, section 3 and section 4, to learn to be agreed to. Are we all agreed? We are agreed. Secondly, the question is that the long title be agreed to. Are we all agreed? Yes. We are agreed. That ends stage 2 consideration of the bill. The bill now proceeds to stage 3. Stage 3 proceedings are scheduled to take place on Wednesday, 24 February. As members are aware, only the Scottish Government can lodge amendments at this stage, and we already have a commitment that we'll have some information from the Secretary by Monday 22nd. Thank you very much. I'd like to thank the Cabinet Secretary once again, and it's a spend for two minutes to allow a change of witnesses in a natural break. We shall reconvene the session. Our next item on the agenda forms part of the committee's continuing work on prevention. I'd like, therefore, to welcome to the committee Peter McCall of Nesta and Malcolm Beatty and Dr Colin Silvan of the Northern Ireland Public Safety Innovation Lab. So good morning to you all and welcome. I intend to allow around 60 minutes for this session, but before we get started, I'd like to invite our witnesses to make a short opening statement. We want to go first, one from each organisation. Good morning, convener, and thank you for the invitation to come and speak to you. I'm happy to lead from the Northern Ireland perspective and then turn to my colleague Peter to cover the work that he's doing. Just by way of background in terms of the Northern Ireland Public Sector Innovation Lab, this started as part of an initiative that our finance minister at the time in 2013, Simon Hamilton, launched on public sector reform. The driver for that was looking at the pressures that we were facing in terms of resources and increasing demand. We have taken a three-pronged approach to public sector reform in Northern Ireland. We've looked at it from the strategic point of view. We've looked at it from operational delivery perspective. We've also looked at it from a point of view of improving engagement. Within that, the lab was one of the tools that we have developed and it ticks all those three boxes. In terms of the lab itself, the committee will be aware that quite a number of the teams and innovation labs have been springing up throughout the world. There are now over 100 of them. For Northern Ireland, my minister specifically commissioned the innovation lab to deploy new ways of addressing complex public service issues. Our remit is to help to improve public services. We are a regional lab, the only one within Government within Northern Ireland, funded by central government and housed within the finance department at present. We provide support across central government, but we are also keen to work across the wider public sector and with local government as well. To date, we have tackled a range of different topics, both at the strategic level and at the more operational delivery level. We've looked, for example, at dementia services. We've looked at business rates and how our volunteering community sector can prosper. We've looked at internal issues such as data analytics within government and reward and recognition of staff. There really have been three main aspects to the operating model that we've deployed. The first method that we've used is drawing upon the approach of the Helsinki design lab, which is often called hot housing, which is bringing people together into a setting for a number of days and using them in a concentrated effort to examine a subject in depth and generate ideas and solutions. That approach was used when we looked at regulatory impact assessments and our big data strategy. We've also used a greater emphasis on co-design and human-centred design involving developing solutions that can be prototyped and tested with the users and citizens. Again, we used that approach when we were looking at dementia. We're also looking at behavioural insights, sometimes called nudge approaches. That's been inspired by the work of the UK behavioural insights team. We're commencing a number of those activities at present. We welcome the opportunity to appear before the committee today. In crafting our approach to public sector reform, we have looked at different approaches across the different jurisdictions in the islands and beyond. We have called upon some of the approaches adopted in Scotland previously, such as the work of the Christie commission, so we're happy to participate today. Thank you very much for that opening statement, Mr McCall. I'd like to bring apologies from my colleague Simon Brindle, who is the director of the ULAB. I think that's how it's pronounced. You've got a commonality of accent at this end of the table, and I don't think any of us speak Welsh. ULAB means the lab in Welsh. It's a programme being delivered by Nest, the Welsh Government and Cardiff University as a government innovation lab. I'm going to talk a little bit about that, but I'm also going to talk about the wider principles of government innovation and the reason why we think that a government innovation lab is a strong approach to adopting a more preventative approach to public services. Nest, as an organisation, recognises the work that's been done in Scotland and is quite excited by the work that's been done in Scotland around the Christie commission, around the prevention agenda. We're quite keen to bring to that some of the learning that we have in bringing together Government agencies and external agencies to deliver on social innovation and broader forms of innovation through an experimental approach, through a social innovation approach. The lab approach is one that's common across government in the world. It's one that's growing. I think that there are around 200 Government innovation labs. Well, there's a good question as to what a Government innovation lab is. We think that there are around 200, although there are obviously definitional questions there. The opportunities available from these labs are substantial. We think that bringing together practitioners is taking an experimental approach to Government policy, although not necessarily being drawn in by the monolith that is the randomized control trial. Bringing together those who wish to innovate is a way in which Government can effectively change the way in which it works, bring in innovation and allow change to happen. One of the things that we're keen to see is a greater understanding of the value of risk. At the moment, Government can be, for very understandable reasons, risk of ours. We want to find ways in which to build more risky approaches into delivering public policy. Looking very specifically at what opportunities there are in Scotland, it appears to us that the creation of integrated joint boards around health and social care will create an enormous opportunity for experimentation, for evaluation, for rapid profiling of public services. Spreading that learning throughout health and social care and broader public services is something that will have considerable value, both more generally but also in delivering a preventative agenda. I invite your questions on anything. Thank you very much for those two interesting opening statements. I'm going to ask some opening questions and then we'll open out the session to colleagues around the table. One of the first things that you talked about was in terms of Northern Ireland. The lab being set up was to look at the pressures on the public sector and how some of those can be alleviated. I'm just wondering how in terms of practicality what has been delivered in Northern Ireland so far in terms of the work as a direct result of the work of the lab? We have now completed 15 labs. We started in April 2014 and we've worked with seven of our 12 Government departments. We are based within the Finance Department. There are a team of eight staff in the lab currently. We are in many ways facilitating a process where we have set up the infrastructure for the lab. We encourage colleagues to bring their thorny difficult issues. Initially, we were perhaps more embracing of topics because we didn't have a portfolio to work to. Now, we have developed criteria that we apply in choosing whether or not the lab is the best place to take forward the issues. As I highlighted in my opening statement, there are a number of different methodologies that you can deploy. We've shown that we've been asked and we've responded to both strategic issues and big issues like dementia, which are huge and have huge implications for public service delivery. Some of the smaller issues are how we help to encourage citizens to respond in particular ways. We've looked at court fines, the payment of those, by changing the wording on letters. We've helped with the benefit uptake campaign in terms of our social security agency to encourage uptake of benefits to which people are entitled but not availing of. It's been quite a diverse approach. As time has gone on, we've developed a body of knowledge as to the methodology. What has been the response in the public sector? Obviously, it's a human instinct that people don't like to be moved out of their comfort zones. If people have been delivering a service, for example, in a specific way over a number of years and come to believe, hopefully rightly, but perhaps wrongly, that that's the best method of service delivery, a lab comes up and looks at it and says, well, in actual fact, we think that you'd be much more effective in terms of outcomes if you were to do it in this different way. What has been the response, effectively, on the front line to some of the suggestions that have been made by the lab? Has it been mixed, positive or negative? Yes, it has been very mixed. I'll turn to my colleague Malcolm, but what's quite interesting is that it's very important for the outset that you get the right people in the lab. We are very keen that we have a very committed sponsor department that wants us to explore. As we have developed our work, we have seen the importance of getting the sponsor, not only to sign up to the importance of us taking a group of people away, experts in inverted commas, some of whom the officials concerned may not be open to those ideas, but being prepared to look around the issue and take people away from their work setting, if you like. Sometimes it's residential, sometimes it's just done on a nine to five basis, but giving them the freedom to think outside of the box. With that, of course, the sponsor department takes a risk that it might not get the answer at once or that there might be issues that they hadn't thought of. One of the things for us to be truly a lab in that term is that we need to be testing and prototyping, not just coming up with ideas but going to the next stage. I'll turn to Malcolm who will be able to give you some more practical examples. I cannot overemphasise in our experience the importance of having a fully engaged sponsor. This is not something that we do to people or to organisations that have to be bought in from the start. Our experience has been that we have tried to open doors, we have just had to recognise that we are not getting in there and we just have to leave that. It's just the big lesson that we have learned. The process, as Colin has indicated, is about involving the people who own the problem and administer the particular service in the whole process. It's not something being done to them. They are front and centre in designing the new interventions and working collaboratively with those other people that we bring to the process. It is interesting that when you do corral the people together and you have the right mix and the right expertise, that their attitudes change and that resistance sometimes filters away when they begin to hear that there is a bigger world and there are different ways of doing this and there are smarter ways of doing it. That has been a big help to us in bringing forward some of the proposals. Critical to that, a bit of success that we have had is involving the end user in the innovation lab, the piece that we did on dementia. We located ourselves in a residential home specifically built for folks with dementia and their families. People with dementia and their families participated in the events. People who deliver services heard the lived experiences of people who are currently contending with dementia in their lives and their families. That richness and experience changes views and attitudes. By those means, you are working to a point where you are helping the problem-owner to come to a solution or some recommendations that, as Colin said, we want to trial and prototype, but you are wanting to arrive at something that everybody has bought into. When it comes to the deployment, you should not be meeting too much resistance or too many barriers. That is the theory that we tried to deploy in the innovation lab. It is interesting that, in terms of the holy grail in the public sector, improved outcomes with savings, have you been able to achieve those to any significant degree? The objective that we have in the innovation lab is to get away from the hot housing approach that we talked about. That comes from Helsinki. It tends to look at strategic measures, strategic issues, and your experts will give you perhaps six or seven big recommendations, and that is where they leave you. You have to take those big recommendations and then turn them into operational reality. Where we have come to now in our operating model is focusing more on the design and the design of small, measurable interventions. We need to see some of those projects pull right through that process. I cannot say to the committee today that here is an example and we saved so many million. Where we are going is to get to solutions that have been designed by the service users and the service delivery people that we can test in small areas and morph and change in the live environment before we get to a point where we are going to implement it more widely. My view of it at the minute is that you need to see the innovation lab not as a holy grail, so to speak, or as a magic bullet. That is what I said to sponsors when I meet them. We do not have the answers. It is not going to revolution your world overnight. It is about a measured, structured approach, bringing people with you, getting the best minds, applying to it with a view to delivering real, tangible benefits at the end of the process. That is important. I am not talking about just savings on their own, but savings with enhanced outcomes is what people are looking for. Making savings is relatively easy, although painful for the people at the sharp end. It is trying to persuade people that they can deliver more for less because it is often talked about, but the proof of the pudding is what we are looking for. Switching to Mr McCall in terms of your report, he is saying on page 4 that we need to move to a position where prevention is about catalyzing social innovation, which he talked about in your initial statement, to help people. Some of that needs to harness developments in technology, but much of it can be done in the base of community action and supporting those with the best ideas. How can that be delivered in practice? To take the first part of that, there is a huge opportunity. Scotland is extremely well placed because of its existing health data, which is world-leading, and the addition to that potential of social care data. Some of the interesting things that are coming out of Scottish Government at the moment about identifying individuals who are users of public service and identifying their care journeys are the sorts of things that can unlock for us the ways in which we can intervene earlier and more effectively to make sure that those people have a better journey through care and the health service. That means using things like predictive analytics so that we can identify who it is that is likely to be using health services, so that we can put in place the adaptations or the structures or the support to make sure that either they do not end up needing that health service, so we put the adaptations into their home so that they do not fall over and break their hip, or that we find ways in which to manage that journey, so with conditions where we cannot prevent them, so taking dementia as an example, identifying early on care plans and co-producing with the individual the way in which they will take their journey through the care system are ways in which we can empower those individuals, and I think that the data will give us the opportunity to analyse this. I think that we can reduce the overall cost as well, so we have the optimal outcome of a better outcome for the individual while also reducing the overall cost to the NHS and social care. Mr Beattie has been nosing vigorously, but that is quite clear that there is a similarity in terms of approach. I want to deal with the second part of the question as well, which is that we know that there are a lot of programmes, projects and community groups out there who want to deal with the pressing problems of our age, and quite often they come up against institutional barriers, or they find that funding is short term and does not support them to deliver appropriately. What we need to do is develop rigorous models so that we can identify what is being successful, so that we can replicate that elsewhere, and so that we can identify what the financial models associated with that are. If you are delivering a community service of a third sector organisation delivering a very effective community service, you can identify what the savings are through the system, so that we know what we should protect, because very often what happens when times get tough is that external organisations to local government are the first to be cut, despite the fact that they may be delivering more effectively than some other services. We need to understand exactly what it is delivering, and we need to be able to assess that. I think that that is an important element of the process. That requires, I think, some externality, and it also requires much more rigorous use of data. Thank you very much for that. One thing that I noted is that, also in your report, you talked about adding a new dimension to healthcare by creating networks of volunteers and non-clinical professionals that support people to take control of their health, maintain healthy behaviours and stay in top of the health condition on a day-to-day basis. The reason I am a wee bit unsure about that is because I wonder how sustainable that is. That sounds the kind of thing that you might be able to do here and there, but how sustainable is something like that on an all-Scotland, all-whales, all-non-island basis? Is it practical to seriously consider relying on volunteers? I think that most people would consider health to be beyond that issue. They think that most of it should be delivered by not only individual responsibility but by a very strong professional health service. Voluteers would be an add-on, not a mainstay. I am just wondering if you can talk me through your thinking on that particular issue. I will have one more question and then we will open up the session to colleagues around the table. I absolutely agree that the health service must be professional and we must have a strong professional service. What we are talking about here is the additionality that you can deliver through volunteering. You can deliver something that is worthwhile for the individuals concerned, for the volunteers, that adds real value to public services and that helps with the users of public service. There are all sorts of examples of that, but to give you a very practical example, in a previous job, I worked with former nurses who had retired, but they wanted to stay in a health setting. One of the things that they would do was to go into hospitals and accompany people while they ate their meals. That increased the hydration of patients, the nutrition of patients and helped with discharge. That was fulfilling for the retired health professionals. It was reducing costs within the system and it was increasing the quality of the service being provided. It is not free and it is not something that can be done purely on the basis of voluntary action. We need to put in place the structures to support that, but volunteering itself is something that is health-promoting and promotes people's own wellbeing. If we can add that into the health system, which we all know needs as much help as it can get, as well as the excellent professional services that we already provide, then we can begin to increase the outcomes while, as you say, reducing some of the costs. The next question is again going to be direct to your service, but I would also like colleagues to respond as well. You have said in the conclusion on page 6 of your report that there are huge opportunities to transform our public services and you talk about adopting a rapid prototyping approach that we can begin to make prevention a reality. I think that we would agree with that, but one of the issues that I am wondering about is scaling and mainstreaming. Obviously, it is wonderful to have lots of innovative approaches here and there, but how do we actually make the mainstream rather than something around the edges? I think that that is key to this entire issue. I wonder if you can respond to that. I will ask the other Dr Sullivan or Mr Beattie to respond. I think that one of the observations around the change fund process has been that there were a lot of good things that were done and it delivered very effectively right across Scotland, but at times there were effective things happening in one place that were not being transferred to another. One of the things that we need to do is find a way in which to take the things that work in one place and allow them to be delivered in others. One of the ways in which you would do that is to bring together practitioners from across Scotland and indeed from across public services, so it may be that things that work in health will also work in criminal justice or education. One of the ways in which to do that is to have a lab with practitioners in it coming together to discuss common problems and discuss how the solutions that they have tried have either worked or have not worked. If we can back that up with good, robust data, then we can begin to get the experience and the learning from particular areas and take them more generally. That is the structure that at the moment is not being delivered through the processes that we have got. It is something that could be delivered through the processes that we have got really quite easily. One of the things that we have done in Essex is a 100-day change programme in the NHS where we get management buy-in to allow front-line practitioners to identify a problem and solve it. The interesting thing about that is that, on some occasions, less the solution and more the fact that professionals across the front line, across different areas of public service have come together and have developed a strong working relationship and are then able to deliver more effectively on solving other problems because the focus on problem solving and on solutions is one that builds the relationships that can help with integration. Even in a country that is Scotland, a 5 million best practice has never been adopted across the country. That is something that is frustrating for many. Dr Sullivan, you have highlighted one of the key difficulties that good ideas do not necessarily get translated into the system quickly. For that, the lab could come up with good ideas. For the lab to have ideas that stick, you need to have evaluated those ideas. You need to have compared the old with the new, so whether that is randomised control trials or whether it is just a straightforward evaluation that indicates that the new world that you are predicting and that you have prototyped and tested is better than the old world. That means that not only having the evidence but also having the hearts and minds and having the sponsors in the room as part of the co-design exercise is absolutely key to that. I think that another impediment to rolling out and mainstreaming is, of course, finance, and the releasing of finance from existing services into what would then become your new services. One example of how that was relatively straightforward to do when there was new finance is through—we have had, on a smaller scale than yourselves, we have had a change fund, where we have encouraged bids for ideas with certain criteria that had to be cross-cutting, had to be preventative, had to be a new approach. One department in Northern Ireland put forward a proposal for a project that would target the improvement of good relations for youth, 16 to 24-year-olds, and with also an employability focus. As this was a new approach that had not been adopted previously, we funded it through the change fund that the finance department has managed. Then we have fortunately been able to access European funds to be able to roll that out. That obviously had the benefit of having separate finance that was not tied up in something else currently to be able to facilitate that. The difficulty, of course, is when you have to take the numbers out of the existing services, and that is where you have to have the hearts and minds of those who are in those services to make that a reality. Thank you, Mr Beattie. Do you want to add anything? I would just emphasise to complement what has been said that when we approach a lab, it is about the sponsor and their view and their ambition. While we may develop a prototype and prove it, it is about whether they have the legs or the finance to take it forward. We always are aiming, and we borrowed that from our Nestor colleagues, of making systemic change, but you have to start small, get-proved prototypes that work, and then start to make the case. Then you have to answer all the funding questions, but it is about getting something that is tangible, measurable and sellable, and then growing up from there. Thank you for that. I will go down to the next session. The first colleague to ask a question has been marked with a 4xG. Thank you, convener. I was just listening to the description about how the lab operates and the need for testing of ideas before things are rolled out. What kind of timeline are you looking at from people coming into the lab to discuss how to do things differently to the point at which you have something that is essentially sellable on a wider scale as a policy? Talk about the work that we have done in behavioural insights, which is a microcosm of that. From beginning to end, we could look at a particular problem that is being faced by a Government department and set up a trial within three or four weeks. We have analysed the problem and understood the sort of intervention that is required, designed it and agreed with them. We want you to trial this intervention in a group of your customers or your service users over a short period of time. Very rapidly, at the end of that, you will begin to see if that small intervention that you have designed actually works. Obviously, if you go to a more complex problem or one of the wicked issues, it will take a lot longer than that. Once you have understood the problem and you have a design, you can get from there. The idea of rapid prototyping is something that will add value. If you have a sponsor who has the ability to open up the doors and allow you to really test those things in the real world, you can very quickly begin to see the relative merits of various ways of doing things and get to something that works and then begin the process of rolling it. I am interested in who is being brought in to the discussion at the initial stage. A number of us around the table have previous local Government experience. My experience from my time as a councillor was that some of the very best ideas for how we could change the way that things worked came from those working on the very front line. How involved are they in the discussions? Although it is great having the strategic directors and the heads of service in the room, sometimes the very best innovation can be suggested by those at the front line who are living it every day and think about different ways that they could be delivering their role that could make a real difference. I think that that is absolutely spot on because getting the right people in the room, the people who know, the people who are dealing with it day and daily, is key to some of those very practical issues. When we looked at the way that the Helsinki design lab was structured, and it typically would have brought together a group of international experts, maybe eight or ten of them, and 80 per cent of them would have been external to Finland. We looked at that as a model, and we thought that that is fine. It is a very expensive model, but it is also a model that does not have local ownership. We thought that both in terms of cost and in terms of local ownership, it was better to try and turn the equation around the other way and to have a relatively small number of external experts from outside of the jurisdiction, but to have people mainly from Northern Ireland in the setting dealing with a particular problem and having the right professionals. It is important to have external scrutiny and challenge in the lab. I do not think that it should all be local people, but I think that the balance needs to be more local than international. In terms of the timeline, just to follow up on that question, it does depend on the scale of the issue, but taking the time in the initial research to ensure that you are asking the right question and to then get the right people into the lab, the lab itself might be run over the period of a week, but the exercise itself could be four to six months. Turning to yourself, Mr McColl, you have highlighted the change fund for health and social care. Speaking from my own local experience in Aberdeen, I am aware of a number of projects funded through the change fund, some successful, some less so, but that is always going to be the approach when you are doing things that are different or innovative. The thing that I noticed was that when you look at what happened after the change fund monies ran out, my expectation would have been that, where you have developed a new way of working that is successful, you look at how you can mainstream that. That did not seem to happen, and I think that that was the case in a number of areas. Essentially, it was a short-term project that then was discontinued rather than a serious attempt being made to say that we found a way of thinking that works here, how can we bring that into our mainstream approach? That was the point that the convener was highlighting. How do you break that mindset? It actually goes to an answer that I was thinking through giving to your previous question, which is about permission. What we find is that the solutions very often come from the front line and sometimes they come from externally to public services and very often they come from users of public services. What we need is permission from senior management to allow those solutions to develop. Very often, what happens is that that permission is not forthcoming. I think that that is a change that we need to try and create. I think that one of the things about the change fund is that very often successful projects were either self-evaluated or evaluated by the organisations themselves, sometimes very well, or they were not terribly well evaluated. The evaluation was not terribly robust. Even if the project was not going to continue, there was little learning that could be taken from it. That is something that I think is really important. One of the things that, as we move to integrate the joint boards, we need to begin to create the robust data mechanisms and the robust research mechanisms so that we can do appropriate evaluation and on-going evaluation of what works and what does not. Even if something does not get funded, which in some cases it may not, we can take the learning from that and use it elsewhere. I think that that is one of the absolutely critical things that needs to emerge from that process and needs to be at the heart of that process if we are to do prevention properly. My opinion for a long period of time has been that the biggest barrier to prevention is the electoral cycle that we operate in, in the sense that, if you look at it, we have got an election coming up this year, another election coming up next year. It is very difficult to get a consensual approach to changing the way that things are done, because there will always be that temptation to say, vote for me and things never need to change, rather than selling the message of we need to change things in order to derive a longer-term benefit. How do we get beyond that? How do we break out of that, if you will, and make sure that we can get wider buy-in to the idea of a preventative approach that maybe in the short term is going to need some quite radical changes to take place, but will pay off in the longer term? One of the things about this is robust data and evaluation. To give you an example, one of the things that we did through the 100-day change programme was when frail elderly person appears at the front door of ANE, unless there was an identifiable problem that could be fixed in hospital, they were refused admission. That sounds like something that will be very unpopular, and I can imagine that were you to take that to the electorate, that would be unpopular. We know that the second greatest cause of admission for frail elderly people after falls is people having taken a turn and unidentified medical episode. Very often, that is not helped by a stay in hospital, that is helped by a referral to social services and a change in the care plan for that person. What we tend to do, because it is low risk, is to admit the person to hospital. It is of low political risk. It is generally of higher risk for the individual. What we need to do is create the evidence through the rapid prototyping, through actual experimentation, that this is good for people, not bad for people, and then we can begin to build a consensus around it. That is where we begin to answer that question, although I do understand the difficulties entirely. I do not know if Dr Sullivan or Mr Beattie have anything to add at this point. It is evidence that you need to be able to drive those political decisions, which can be difficult if you have a short political cycle. I guess that the question is around in the initial stage that it is getting people to buy into the need to gather that evidence in order to then sell a change. I guess that one final question relates to the point that convener made about best practice being a bad traveller. Obviously, no nation is monolithic from top to bottom, and there are variations between rural communities, urban communities, communities of poverty versus communities of plenty. How robust is it to say, if we take an example from, for example, a well-off community, that that would translate well to a community of deprivation or vice versa and an urban community to a rural community, where you have different pressures and different considerations when it comes to service delivery? How robust is it to be able to do that? Do you need to then have more variation in terms of how you look at things? My own thought is that it depends on the topic because it depends whether rurality or poverty are the key issues. That could certainly be the case in service delivery, where a different response is required than the city as opposed to the rural community. Your lab might need to look at different ways of delivery in those two settings, but if you are doing that with something like how people behave when they get a letter through about a court fine, I would have thought that that was not linked to the rurality issue. It is just not relevant in that case, so I think that it depends on the circumstances. That is a question that we need to answer. We need to answer it in relation to each of those programmes. The answer to that is to be more robust about our analysis and to identify what those differences might be and what the problems might be. We are in a situation in which we have not got the ability to collect and analyse data in a way that we never had before. My anxiety is that Government, for all the reasons that you describe it, is not going to do that and that the people who are going to be able to tell you about your impending chronic health condition that you do not know about are Tesco because they have got the data analytics on what you have been buying that can identify that. That is a real prospect. There is an opportunity for the country that gets the data protection, the data security and the person-centred nature of data right to be a world leader in this. We could talk about a new Scottish Enlightenment around data. I think that we need to embrace that and we need to find the ways of embracing that that are not risk laden in the way that perhaps they are seen to be. That, for me, is the important thing here. We begin to use the ability to analyse what is happening to determine whether rurality or poverty are factors in those instances. That is why I do not have a club card, because then they will never know. I want to follow on Mark's point about good ideas not travelling. What was the experience of the Finnish lab that sounds very exciting and clearly has been inspirational? Are there pointers from their experience that you try to incorporate into the work of both Nesta and Northern Ireland? It is very helpful, although it is disbanded, not because it was not a good idea, but simply because the people involved wanted to do other things with their lives and saw it as something that stimulated ideas. We have learned a lot from it. Marcus Daimburg, who was one of the key participants of the lab, is on a ministerial advisory council for my minister. He helps to advise us on the structure and the ideas and the guidance on how we structure the lab. It has been an important aspect of that. When you look at lab methodology, you come to the conclusion that there are different ways to skin a cat. In that sense, we have looked at different methodologies. We have links with labs in France, the silk lab, the social innovation lab and Kent, which has been very helpful to us. Some of the labs are specific to a particular topic or area of business. There are labs on transportation, there are labs in New York and local government on specific issues, education and so on. We have drawn from a lot of different areas, but the Helsinki design lab and mine lab in Copenhagen have been some of the main sources of inspiration. Are you looking for solutions? Do people come with solutions? Do people come with problems or ideas? Is the lab a generally known organisation in your respective areas where there are links with researchers at universities and so on that introduce ideas or would, for example, use your service? Would anybody approach you to find the solution to the situation? We have had a lot of approaches from across the public sector and Northern Ireland from people coming with assumptions such as what we are and what we do. Some of that is about showing them the wrong perception of what we are and what we do. In each of our innovation labs, we tend to reach out to academia and we always aim to have, as Dr Solan has been saying in each lab, an academic expert and, along with that, a practitioner from another jurisdiction who has had big success in solving a particular problem that we are addressing. They come into the group with us and they are there as a moderating point where they can talk about international research or they can talk about the richness of their lived experiences. We tend to answer your question more precisely. We have conversations with, for example, our city council, Belfast City Council. We go out and introduce ourselves and spread the knowledge of what we try to do. We tend to have problems presented to us and, with the people who own those problems, they will have a very fixed view on exactly what the problem is. As Dr Solan has been saying, we spend a lot of time actually on picking that and sometimes we find that what they thought was the problem is actually something quite different. They also will tend to come with some ideas as to the solutions. Part of the innovation lab is really just taking a real step back from it and helping that problem owner or that sponsor to really understand the problem that they are handling and then work with them so that we get to recommendations or prototypes that we can then try out and see if they work. The approach that Nesta has taken with OLAB is to partner with Welsh Government and Cardiff University. You have some of those people sitting around the table and those who are sitting around the table know the context of the other relevant people within academia and within government. I think that the experience elsewhere is right. It tends to be that people come with problems just because that is the nature of this sort of thing. Our innovation lab, which is part of the organisation, tends to provide solutions and offer solutions to people that are then picked up. Certainly, the experience that I have is of very many people picking up pieces of literature or how-to guides and that sort of thing and using those in order to do things similar to what has been done through the Nesta innovation lab. Finally, I think that you mentioned that there were 15 labs in 2014. If you were giving a presentation on that, what would be the most interesting or the most successful of those? What made it the most successful? What was the magic formula? They are all very different. The piece of dementia that we did was exceptionally rich in getting to grips with a problem involving the people who are suffering in the experiencing dementia. That was a seminal experience for me as a public servant of 30 to 35 years to actually begin to hear what it is like to live with some of the problems that we as public servants are attempting to solve. I learned a big lesson in my experience in the public sector. We have always tended to think that we know the answers and we design, build and deliver and implement solutions for lives that we do not live. We have no perception, very often, of what it is like to live in those worlds. That, to me, was the richness of that particular event. The other piece was the piece that we did on data analytics. I will echo what Peter has been saying about the fact that citizens in our jurisdictions are used to services from the private sector that are tailored to me as an individual and yet, in the public sector, we are continually wedded to flat one solution to fit everybody. The richness of data analytics is the ability to do what has been raised to tailor solutions to meet individual circumstances. What I learned from that lab was the vital importance that the public sector gets to grips with what data science is and what predictive analytics can do to shape and mould services to meet individual needs. Those are the two big things that we learned in those two particular labs. You mentioned the change funding. It was also an example given what had been put in place was weakened when that funding came to an end. Is that a challenge for you from the very beginning of any piece of work that you would see that there may be funding to find solutions to things, but how do you embed it in so that it is not necessarily the funding? How is it going to work thereafter? The change fund that we had in Northern Ireland was just a one-year fund. We have another one in this year's budget, and it was a relatively small sum of money. It was £30 million. It was a competitive basis where we asked departments to put in bids against criteria for good ideas. We were oversubscribed by a factor of five times, so we could have spent £150 million. We supported 19 projects, but it was all on the basis that it was for a one-year trial and that they had to demonstrate that it worked, and it had to then go back to their core department to look for a change in the way that the resources already voted to that department would utilise those resources in light of the evidence. I give the example of how we were able to expand a good relations youth programme, targeting those who were having difficulty getting into employment, who had challenging issues around the community background and the issues in Northern Ireland around community difference. We were able to access European funding to expand it into more possibilities and to help more people, but we very rapidly get with those labs and the prototypes that result. We get into the big decisions about whether that actually works and if so, what are we going to do about it? There is no new funding. Typically, it is about going back and using what you have in a different way. I think that the experience that we would like to create is one in which you have a very strong case for the shift in resources into something that is effective. All too often, we have programmes that do good work and we then move on, as Mr McDonnell has described, and we then move on from those without mainstreaming them and without moving them to a position where they are being delivered on an on-going basis. A lot of that is to do with the case made for those programmes and the way in which they are delivered. That is where we need to be much better and that is where we have real opportunities. It is about scaling up of projects. From my experience, I have been involved in projects that I pulled together data from primary care and acute and that predictive risk stratification. Then we designed a project around putting extra nurses in to help those people because it is meant to save so much money. It only runs for six months and you have a valuation of six months. It does not move forward, as Mark says, because you have a balance between spending in acute now and people are turning up now to how do you frontload when most of us would agree with what we are saying. How do you implement it in reality when you have hospitals wanting the money now and how do you frontload it to provide the other services, whether it is nurses in the community, because not all of them will be voluntary. You will need to pay. How do you make that case to bring the money forward when you have a constrained budget and a shrinking budget, but you are arguing that there is going to be a double spend initially? How do you avoid a double spend? Avoiding a double spend is really difficult. The way in which we have to do this is to identify the problems that we think there are substantial savings in. Those where there are substantial savings, particularly in year savings or savings across a comprehensive spending review, tend to be the ones where you will have the greatest impact on the quality of life of the people who are using services. Generally speaking, the way in which you improve quality of life most also happens to be the point at which you save most money, and that allows you to free yourself up to invest more in preventative services and to shift that balance of care, which is what I think everyone is committed to. There is a real issue around you at some times having to double fund, and of course, given the current financial situation, that is going to be particularly difficult. We need to understand what works best and to identify the way in which we can do that. I think that there are some things around such as a delayed discharge where better data, rather than a census approach or real-time data approach, would allow us to identify much more accurately what the causes of a delayed discharge are and to try to find ways to reduce those delayed discharges, because nobody agrees with a delayed discharge. The problem has been identifying what the barriers are and overcoming those barriers. I think that we have the ability now to use real-time data, we have the ability to try and catalyse activity. Please do not misunderstand me. What I am suggesting is not that we have lots of volunteer nurses, but that we can catalyse social action that we do, because that adds a huge amount of quality to the process. That is something that we have not necessarily been good at in the past, but that has to be additional to what exists, not a replacement for what exists. We spent two years pooling data together and getting a good picture. When I went to the GP in Wigan, I said that we produced this. He is your high-risk people and he just said, but do you need it because the people are poor? The real issue is poverty. Obviously, you want to get a parsimonious model, you want to have the key factors. What is your big line for selling big data, rather than the underlying thing, poverty? What is the benefit of big data versus focusing on one key thing? I mean, there are some problems that I can suggest a solution to using an innovation lab approach and using an innovation approach. There are other problems that are big social problems, and I think that it is a category error to try and solve one using the other. I would quite agree with you that if the problem is poverty, we need to solve poverty. However, if we are in a position where we have to deal with that situation, then I think that there are approaches that we can take that are better identified where resources can be spent. That is the case that I am making today, but we cannot end all of the world's problems using these approaches. I would agree with you about that. I think that what we need to do is use the resources that we have in a smarter way, and that is the case that I am making today. How would I want to add to that that big data can be used to help with the symptoms of poverty? It can help to target resources to those who need the help the most, and you can use it for educational support, for health support, so it can be used in a way that those in greatest need get the services. I think that to start with, Mr Beattie, you have mentioned the dementia example a couple of times. I just wanted to unpick that a little bit more. From what you said, you, as I do not know what you describe yourself as a civil servant or something similar, and the end user and presumably some of the people in the middle, carers and management and things, were all round the table or somewhere, talking to each other. You should not be happening anyway without a lab involved. That is a good question. To me, looking at the subject and my experience, is that when we convened that innovation lab and we brought to that consultant psychologist, psychiatrist, mental health nurses, occupational therapists, and voluntary sector, Alzheimer's and so on, they all came to the event very much in their chimneys, so to speak, you know, when I'm extra and I do this, and this is how we do it in our world, but when you brought them all together and they started to hear those stories, that group gelled into one and began to say, we need to address some of the problems here, and one of the things that became very clear in Northern Ireland, and it may be the same in Scotland, I can't speak for Scotland, is that depending where you are, will depend on how you are treated as a person with dementia. The postcode lottery was a term that was used quite frequently. The benefit of the innovation lab in that case was that that group of disparate people with disparate views coming from different parts of the health sector for the voluntary and data from academia is that everybody corrald around this thing, we need to do something about this, and we need a regional model for dementia services, we need to do something about supporting carers, support for carers 24 hours a day so that they can access help, and so there were various things that the group agreed needed to be done. Then we brought those ideas forward and then the NHS started to address some of those things. Yes, you would have thought that those conversations are happening and maybe they are, and maybe I'm speaking as a rank outsider to the health system and having had that experience, but there was a real sense amongst even the professionals in the room that, I'm not going to say a shock, but a recognition that this isn't really working at the minute and we need to address it and change it, so I think that that would be my observation. The suspicion is that that is the case in Scotland and that we also have subjects, be it dementia or other subjects, where there's a lot of people interested in that subject, committed to it, but they're not somehow all joined up together. Is that what the lab is best at, is bringing people together who are not normally coming together? I think that is a big, if that is all we achieve in many cases, that is the richness of it. In that example, we had one overnight and I sat dinner with a number of people and there were clinical psychologists from different parts of Northern Ireland and they'd never met before, and yet Northern Ireland was a small place. They were starting to tee up and then to share ideas and then agree to meet. I see part of the innovation lab as being a gathering point or a collaborative and pulling people together who have an interest in a particular subject and looking at it in a collective way. Do you always need the sponsor behind it and the decision maker behind it who can take the outputs from it and then begin to test them and start to implement some of them? In a case like that, you might have more than one implementer in that you'd have the statutory services in the voluntary sector and they would be able to both implement things. The way in which we have tended to view it in the innovation lab, we go to the owning department. Which is the public sector? The public sector and the health service. In our case, it's the department of health and social services and we find our sponsor there so that the outputs from the innovation lab have the sponsorship of the most senior person who owns the particular policy area and they can start to influence change in the actual health system. Dr Sullivan, one of your answers you talked about is the need for testing and not just having ideas. Could you just expand for me a little bit what that actually means in practice? I think that that's the challenge for us. If we think of the evolution of our lab, our lab has been to date very good at bringing people together. I can give other examples where, again, I've been involved in conversations where people have said that we should have met together before and yet it was the lab that brought them together. But if a lab is really going to do what a lab does, which is to test, then it shouldn't just come up with recommendations. Some of our early work has been around getting the right people together, making sure that you're dealing with the right problem and then coming up with recommendations. What the memorandum of understanding that we're now developing with the sponsor is that they will give us permission to test things in the lab, so with that group we will actually go and do something. Assuming that the legislation is in place to do what depends on what the circumstance is, so that it's not just recommendations that is the end point of the lab when we hand back to the sponsor, but we actually have some, albeit fairly small scale, albeit rough and ready, but we have some pilots to go back and respond to. In the dementia case, could you say how that would work? If it hasn't worked so far, how might it work? That would be about trialling different service provision with dementia sufferers. You might take, for example, the diagnosis process. There's an experiment in Bristol where diagnosis isn't the reserve of all circumstances a consultant and they're trying to get GP to do some of the diagnosis, so the lab might say, well, let's design a similar trial in Northern Ireland and you would go out to the system and say, look, we want to test to see if this has value, does this speed up the diagnosis process, does it help to get people the support they need, and so that's just an example of what we might do and trial it. Okay, thanks. Mr McCall, you gave a kind of hospital example, and part of me believes that we should just close down hospitals and put the resources into the community, but there is some resistance to that. Your suggestion of an elderly person turning up, going to A&E, having had a turn or whatever, and being turned away, part of me is attracted to that, but part of me says what if they had a stroke, what if they had a urinary infection? Surely social services couldn't cope with that. How do we get the balance in there? The approach in that case is that social services provides somebody to be with the person, so if they have a stroke, then the care worker will identify that they've had a stroke and have them admitted to hospital. The reality of hospital care is that there are risks associated with it as well. We underplay those risks and we overplay the risks of care in the community that you've identified. I think that the approach that we need to take is one that's based on the evidence around this, and that we identify what would happen in that circumstance, and we identify what the costs are associated for the individual with admission to hospital. How many of those individuals get dehydrated? How many of them have poor nutrition in hospital? How many of them pick up hospital-related infections? Admitting to hospital is not a guarantee that nothing will go wrong. Any more than being sent home is a guarantee that things will go wrong. It's a lack of information or understanding, perhaps, on the part of the public. I was interested in one of the pages of your report that says, by giving people in communities more power over decisions, we can move public services to co-production, enhancing their ability to be preventative. However, I'm feeling amongst the public is that they want A and E, they want hospitals, so is it just that the public doesn't understand? I think that what the public wants is a guarantee of good care, and they see the NHS as a guarantee of good care. In many cases, that's correct. In almost every case, that's correct. The problem is that, often, the NHS is not the appropriate destination for an individual, and we need to build the case that that is correct. We need to be able to say to people that admission to hospital is not always the best thing for you in every circumstance. In the same way as we've moved from a culture where people used to go in for long stays in hospital to more day surgery and much shorter stays, and we've built an understanding amongst the public that that is a better way of doing things, that if you have major surgery you don't go into hospital for two weeks, you go in for a much shorter period of time. That, I think, is the circumstance that we need to move to, because doing things, because people believe erroneously that they're better for them, is not good for anyone. Okay, that's very helpful. Thanks, I'll leave it at that. Okay, well thank you very much, and that's concluded questions from the committee this morning. I'd like to thank all our guests for an extremely interesting question and answer session, I mean this is something that's still leading the thoughts of the committee. I would, of course, however, add that shutting down hospitals is not that this is Scottish National Party policy. Anyway, thank you very much for that. Any further points you want to make before we wind up? Okay, well thank you very much. I'm now just going to call a two-minute recess to allow our witnesses and the Fisher report in public to leave, and then we'll press on with them, final item on our agenda.