 Felly, rhaiwch! Welcome all those of the committee singing and all of the present. To the ninth meeting of the devolution for the Powers Committee, mind everyone to switch off their mobile phones as usual. Mark McDonald won't be attending again today and Bill Kidd is substituting us on behalf. Everyone else is here. That therefore takes us to agenda item one, so let's get straight into business. Evidence session on intergovernmental relations. Let me welcome first of all our witnesses. Windows is a R. Kyn Thomson, who is the Director General of Strategy External Affairs in the Scottish Government, Professor Michael Keating, Director of the ESRC Centre on the Constitutional Change, and Professor Aileen Macarge at the School of Law at Strathclyde University. We have another evidence-taking session. I know that Michael Ke suffering a particular deadline about 20 past to get away. You might have to go a bit quicker if you realise that. If we could keep things as succinct as we possibly can both in terms of your questions and answers, that would be grateful. Before we get into the really nitty gritty of how inter-government relations work, can I just ask a very general question at the beginning? Obviously, we now have a structure that is developing of shared power in significant policy areas. Therefore, the principles cyffredinol yn ddechrau'r gwasanaeth a'r amgylcheddau i chi'n tyngau'r diwrnod�ig, a hynny yn wnaeth i Al hundredr yn y lleol iawn lleol i ddechrau, a'r cyffredinol yn ddefnyddio i chi'n meddwl i chi, ond, oedd amser byddai rwy'r cyfrif wych yn i fod chi'n bod yn fewn meddwl iawn. Pan oedd mewn byddai'r cyfrif iawn i chi wedi'i wneud yn y fwyllwyr.. ..byddai'n meddwl i chi, nad yw'r cyfrif yn ei wneud yn cael ei gael wedi'i .... I think that that would help us to set a context of where we are, so I don't know who wants to take that on, but Michael Eileen, Michael Eileen. Michael Eileen. Okay, Michael Eileen. A general comment, it's really a word of caution about this intergovernmental relations industry. We know from experience around the world that increasingly in federal and devolved systems, powers are shared rather than clearly divided, you can't have a water type division of competencies. We know all that and there's a great deal of interdependency. But in many countries people feel that this has gone too far and the division of powers is not sufficiently clear to allow governments to make policies on their own within the constraints that are imposed by all kinds of economic and political factors. And that a great deal of policy makers has just disappeared into this intergovernmental world which is untransparent and unaccountable. And as a result of that there's been a tendency to try and clarify competencies a bit better. And we are in danger of going in the opposite direction following the Smith recommendations. The system is becoming I think too complicated as an attempt to specify powers in far too great detail instead of just having reserved powers and everything else goes to Scotland. We've got exceptions to reserved powers and exceptions to exceptions to reservations. And this is creating I think a great deal of unnecessary difficulty or could do. The other point is that intergovernmental relations is essentially a political matter and we've just got to recognise that. That many things will not be taken into formal institutions, they will be resolved politically. I suspect this is going to become more the case as we get into multi-party politics at Westminster including territorial parties from various parts of the United Kingdom. And if we don't recognise that then we're just going to set up an apparatus that's just not going to work. And there's already been a bit of this. You set up formal committees with a legal structure and they don't do anything because the real business is conducted elsewhere. And finally, really related to that point, it's a great mistake to set up committees and institutions that don't have anything to do, that don't have a clear purpose resolving specific problems. Talking shops just don't survive, people stop coming to them. So that I would restrict the concern about reforming local government, intergovernmental relations to those areas where it really matters. And I would really cut down on the formal institutions and intergovernmental committees on various kinds of apparatus that are being talked about and restricted to a few areas. And I've identified three of these. One concerns Europe where there is an intergovernmental apparatus. It's one of the few areas where there's a joint ministerial committee that really works because we have to make policy jointly in Europe because there is only one UK presence in Europe. It's involved with the devolved governments, but it's a single presence in the council of ministers. The second one is to do with finance, where I think it's very important to have some kind of machinery that at least produces a common data set for all the arguments we're going to have about finance when the new powers come in. Now, this is not something that's going to come up with the answers, but will provide common factual basis from which politicians can negotiate. And this must be independent of the Treasury and of the Scottish government. It should be independent of both governments. And the third area is welfare, where we are going to get a lot of complications and interdependencies. But once again, I think that the Smith proposals on welfare are too complex and too messy, frankly. But however we organise welfare, there are new challenges, there are new definitions, new problems coming up that might require a lot of intergovernmental working. Beyond that, I would focus on trying to get the competencies clear and establish what people do, rather than put too much emphasis on joint working that's beyond public knowledge and is intransparent and raises all kinds of problems of accountability. Thank you, Michael. Ely. I agree with Michael that it would be desirable to focus on greater clarity in the division of powers. Although I think that you can overstate the clarity of the division that's in the original Scotland Act. There are already exceptions to exceptions in there. So I think that the Smith commission's proposals certainly make the problem worse, but we already have an unclear division of powers. Having said that, I think that where I would disagree with Michael is that I do think that the formal structures matter and this possibly reveals our different disciplinary biases here. One of the problems with the approach of the Smith commission where you've got a very detailed intermeshing of powers focused very much on existing policies with no real consistency from area to area. One of the problems with that kind of structure is it isn't what the Prime Minister said it sets out to achieve. It's not an enduring settlement because it isn't a system which can survive changing policies, changing priorities, changing political parties and powers. So I think getting the formal structure right is important in trying to develop a system that can endure. That's not to say that formal structures will always be used. Of course, informality will always be there, but I don't think that's a reason for not trying to get the formal relationship right. I think that it would help hugely to have a clearer understanding of how the two layers of government are supposed to relate to one another to set the context in which relationships take place. Aileen, just before I come to Ken, in your own paper you talk about principles of mutual respect and co-operation, transparency and accountability and the principle of shared rule. Do you want to say a bit more about that on the record so that we can establish some of these barriers at the high level? In terms of mutual respect and co-operation, a system of inter-governmental relations that is likely to work is one where the parties recognise each other's legitimate interests in achieving their own policy goals and seek to co-operate on that rather than be obstructive or pool rank and not care about potential spillofer effects. Spillovers can't be completely avoided, but where it is possible to avoid completely interfering with another layer of government's legitimate goals would be a desirable approach. It's not desirable to have a system of inter-governmental relations that purely involves the ability to go to court to sort out disputes. That seems to be obvious that that's not good. In terms of transparency and accountability, I agree with Michael that there is a real problem in inter-governmental relations of trying to secure accountability. One answer to that is Michael's approach, which is to limit the areas of inter-governmental working. The other response is to try and do something about improving accountability and transparency. I think that there are things that can be done in order to improve matters there. The point about shared rule is a more general question about the constitutional context in which this all takes place. It's about moving towards a constitutional system that puts the relationship between the Scottish Parliament or the devolved parliaments and the UK Parliament on a more equal footing rather than on a hierarchical footing. We've developed our institutions for devolution in a typically incremental partial manner. That shared rule aspect has been one that has been rather neglected in the development of the institutions. Can Tomas's appearance of the Scottish Government just for the clarity on the record? Unlike your other two witnesses, I'm a practitioner rather than a commentator. I speak from the experience of working with the system, both between Governments and I think that many of the problems that arise are similar. Some of them are different. However, how you co-ordinate and co-operate between ministries within a Government is very similar in some ways to the problems that you have co-ordinating and co-operating between Governments. To reflect on what Michael and Eileen have said, I think that the principles need to include mutual esteem trust understanding. That is both about structures but also about cultures and behaviours. A great deal of what we're calling IGR in this context happens below the waterline. It happens in day-to-day contacts between ministers and officials. That's where a lot of the co-operation happens. As within a Government, so between Governments, many issues can be dealt with in that space. Other things will come to the surface that could be escalated to a ministerial level or to an intergovernmental level. I agree that clarity is what is needed. The world is getting more complicated. The challenges that Governments face are getting more complicated. That is another factor interacting with the division of powers. I think that my last point would be that where we are presently within a Government relations is a system that was devised. The first version of the MOU was written before devolution actually happened or shortly after. The system has evolved since then and it's evolved notably faster since 2010 when we've not had the same party in power in both London and Edinburgh. I think that it will need to continue to evolve partly because of the Smith process and partly because of the, I should have said, 2007, I'm catching some surprise looks for entity. You're quite right. Partly also because of the difference of political colour in administrations. I'm elaborating one point that Michael made. He said that a lot of this was political. I'm saying that quite a lot of it happens in official space, but probably more of that needs to happen because when you don't have the same party in power in London and Edinburgh as we had for quite a long time, then less tends to happen on political channels and more tends to happen in the more formal channels of inter-governmental relationship both below and above the waterline. Michael, you've heard someone. You started that bit off. Do you want to say in a reflection what they've said before I come to Duncan? Well, just pick up what is absolutely right. He's emphasis is the role of officials. Very often we put a lot of emphasis on big, high-profile, conflictual issues, but sometimes not even the most important or the biggest issues. Many of those are resolved in day-to-day practice, and those working relationships are really critically important, and I think they have undergone change over time. As the civil servants in Scotland came up just within the Scottish system, the old contacts, I think, in some cases have tended to be lost because people are not going to London so much and not mixing with people from other departments. That informal level is absolutely critical. Another point about inter-governmental relations generally in the UK, and this underpins the whole devolution settlement, is the degree of asymmetry because you don't have a centre and then the devolved or federated units. You have a centre which is also the Government of England, and you only have devolution in parts of the United Kingdom. In any negotiation, this is always going to give an advantage to the centre, to the central government, the central departments, notably the Treasury, which still has an extraordinary strong role in government right across the United Kingdom. We need to be aware of that and in setting up institutions to make sure that this doesn't just become a form of re-centralisation whereby the centre can call the shops. It has to be something that, as Eileen said, doesn't involve hierarchy, that requires change at the centre and the acceptance at the centre of some kind of federal spirit. I don't mean that the UK could become a federation, but the federal principle that power is shared horizontally, it's not shared vertically. Then there's a lot of talk about esteem and trust and understanding, which sounds wonderful, but where does it come from? That's what we've got to ask. How is that generated politically? I know that I might have something to say about travelling to London, but I'll let them come back in later on that one. I'll let Duncan in first. Thanks, convener. Good morning, everyone. A couple of quick points. I just said what I've heard up to now. While there has been progress and I think everyone would understand that there's been working relationships where they needed to be, I think we're getting into a new phrase with a phase that everybody agrees. To run our health service, we didn't need to develop relationships or permission from the health department down south or education. We could get on with that much of that, but that's dramatically going to change with the new powers. I'll leave that. The other question does the process and committee trump politics, because we don't all agree around this table in the Government or widely that this myth, some of us agree, it's the answer, or partly the answer, some of us don't agree. How do we make progress in that context, the elephant in the room, that people don't accept that Smith is currently enough, want to go further within Smith and ultimately eligible for political ambition that they don't want the evolution at all? How do you create in that context that trust transparency that everybody says is necessary? I'll leave that, but I want to come back to the political process, but if I can put that out there. I might have a go at that point. I think that there's a difference between how you decide about which powers should lie where and how you operate within that system. In the context that I'm speaking in most of what I'm talking about is where it's perfectly clear of where powers lie and what we have to do is to make that work. My example on that is to your point, Mr McNeill, that we already have an area of taxation of where changes have already happened through the Scotland Act 2012. We don't tend to label that as IGR, but what has happened there is that there has been joint governance of the project to deliver that change, to implement the Scottish rate of income tax, involving my colleagues in the finance part of the Scottish Government and their counterparts in HMRC. We think that that process has worked well. It's been jointly chaired so there has been equality, not hierarchy in that. It's still a work in progress, obviously, but that will provide the model for how we would approach the interaction between Scottish welfare powers and the wider UK welfare powers. We already have some experience of doing that, but I don't want to underplay the point that it is more complex in your example of the health service, which by and large is. There's very little need to contact. There are some issues on which there is co-ordination formally. Most of that is devolved and that's pretty clear. The principle of clarity in the settlement is an important one, but the realm of intergovernmental relationships in my view as a practitioner is largely about making work whatever is decided for us. You don't have to answer, but feel free if you want to. Just one point. Do institutions trump politics? No, obviously not. I think that institutions and formal relationships can shape politics. They shape the way in which decisions can be made. They affect the relative bargaining power of parties and the resources that they can rely on. Going back to my previous point, we cannot say that the formal structures are irrelevant because everything will be a matter of politics or informal relations. I think that they are interlinked. Only if people want to make it work, is the point that I was trying to make. We were told recently that there are already under way broad talks involving the Scottish Government and the UK Government. Let me be the cabinet, I believe, to bring about a new way of working in a governmental machinery. What is the Scottish Government taking into that? What are the principles that they want to establish with those talks with the UK Government and, indeed, Wales and people from Northern Ireland? The work that you are referring to was mandated by the JMC Plenary meeting in December. It involves the Joint Secretariat to the Joint Ministerial Committee. The word joint there is important. The secretariat to the JMC is provided by officials from all four administrations, Scotland, the UK, Northern Ireland and Wales. There has been a long history of those officials working closely together to support the process. We have trained together, we have done exchange visits with each other. That is the point that I wanted to make to the convener earlier in response to the point about coming up and down to London. There is a lot of that interchange. Michael said that it is less common now for senior civil servants to move between Scotland and London than it was when that was a single administration. That is broadly speaking true, but there are other kinds of interchange and I am doing some separate work on that. To come back to your point about the work that is happening on the MOU, what officials take into that? The recent meeting that I chaired involved officials from all four administrations and we were looking at the existing MOU, our experience of working with that, looking ahead to what Smith will bring and beginning the work on how we can evolve the system. I think that it is about evolving it rather than sweeping it away and replacing it with something new. The two features of a new system would be flexibility and that ability to evolve in response to the experience of implementing whatever comes out of Smith and probably after the UK election. Being evolutionary and flexible are the two key words there. I have a couple or three people who want to ask supplementary questions. Tavish Lunder and Lewis. Mr Thomson, you have pointed in your opening remarks about the world being more complex for all Governments. Do you include in that what is now happening in Greater Manchester in terms of, you mentioned health earlier on, the UK Government is now going to devolve the complete health budget to the Greater Manchester area and I think the 12 authorities in that area. That presumably may have implications for Scotland, Wales and Northern Ireland and if we start with just the Greater Manchester area I guess there is no way that is going to stop there. It is going to be next Newcastle. There will be other parts of England as well. Do you have any feel for, after May in London, that that will carry on? Do you think that that will have implications for Scotland? I think that the short answer is in the case of Manchester probably not as much as you might think, but I think that the longer answer is that this is part of a process of finding the right level at which to engage with communities to deliver public services and that is very much a live debate within Scotland as all of the members of the committee will know, especially those from the islands. I think that there is the working out of that process in England and that will affect the relationships that my colleagues, my counterparts in London have with the Treasury and others and with Manchester and we are experiencing similar evolution within Scotland through city deals, through the initiative taken by the islands in the run-up to the referendum so that there is a pattern there and Manchester is one example of that pattern working out. It is just on health and health budgets and the stable principles of how the IGR can work to evolve health budgets to Manchester. Manchester may just take a different view about how to do health budgets in the future. That might have implications down the line financially. I prefer this by saying that I am no expert on the finance budgets but my working assumption would be that that devolution to Manchester would be within the UK health expenditure and therefore would be covered by the arrangements that we have for formula consequences. I will move on. What is being devolved to Manchester in health and in other areas is very much a management administrative responsibility rather than policymaking responsibility and there is no financial power, no financial or fiscal devolution being proposed to the English regions at all. If you go into the details I think that it is less devolution than administrative reorganisation which might result in a better delivery of services but it is really not comparable to what has been happening in Scotland. Linda. I am interested in the top line stuff of this and that balance between formal and informal whilst we all talk strongly about transparency and everything else in all aspects of government and indeed Parliament I think that it is very very difficult to get the balance of where transparency and formality can actually impede progress and I guess the ultimate on that would be if it came to dispute resolution you might end up with a very formal process where in fact had you been able to be informal about it you may well have solved the dispute before it even got that far and I just would like your views on that balance between formality and informality and the level of transparency that is acceptable from government to Parliament from government to the public and indeed from Parliament to the public I might answer that by drawing on the experience of being the lead Scottish Government negotiator in one dispute in one agreement and the dispute was that over the formula consequences of expenditure on the Olympics and the agreement was the Edinburgh agreement on the referendum and in both cases there was a formal and an informal element the informal element was the relationship that I had or that I built with my counterparts in the UK Government and indeed the relationship that ministers built with their counterparts and that you need that and that I agree with you the implication of your question that that needs to be in a private space somewhere safe where you can explore possibilities and options that leads to the formal resolution of the dispute in the case of the Olympics or the agreement in the case of the Edinburgh agreement and that's a formal process both within Government and then in terms of the reporting to Parliament and there's certainly things that we could look at in terms of how that reporting to Parliament is done in the case of the Edinburgh agreement of course it led to the section 30 order so there was an obvious opportunity for both Parliaments to become engaged in that and the summary of my answer is that it's both and you need both the informal private space and the formality of an agreement that then sticks and the ability to report that to Parliaments Lewis I think it's linked to your question but if you'd like to ask that and then move on to parliamentary scrutiny areas because I think that's beginning to emerge from what Ken said anyway I think it would be helpful Certainly and in fact my interest in the parliamentary scrutiny is heightened by some of what we've heard this morning particularly around processes of negotiation already under way but out of public sight and I think that's that heightens the issue so for example and Eileen McHarg is some interesting things to say about the deficiencies of the current system in terms of transparency and visibility but we heard from Ken Thompson about the work that's going on at official level and ministry level around Scottish rate of income tax as a good example so I guess my question is what other than a witness at a committee telling us about it this morning what processes should we have so that Parliaments are aware of what governments are doing on our behalf in these areas and particularly what's the scope for example if we're talking about the Scottish rate of income tax is that a matter for the Public Audit Committee here on the Public Accounts Committee at Westminster to do joint working to hold governments accountable in either joint or separately I wonder if I could have some thoughts on that I suppose two points I think parliamentary scrutiny has been one of the areas where the current system has really not worked neither this Parliament nor the UK Parliament has taken any consistent interest in scrutiny of inter-governmental relations there have been some ad hoc inquiries but that's all and I think that's a real problem I mean there should be a committee in both Parliaments which has scrutiny of inter-governmental relations within its remit so that there is a regular calling to account of ministers in both Parliaments as to what has been going on and I think there's also some interesting precedents in the Northern Ireland Act there is much more formal inter-governmental working and genuinely inter-governmental because we're talking about North South inter-governmental machinery and machinery which perhaps has stronger executive powers but there the First Minister and the Deputy First Minister are obliged to report to Parliament about when meetings are coming up they're obliged to report to Parliament after meetings to explain what's happened so then you have a regular focus for parliamentary scrutiny so I think those two things are worth doing the idea of joint committee inquiries is an interesting one when we've seen very little if any inter-parliamentary working so that would be an interesting possibility going back to Linda's previous question I also think that the issue of confidentiality is important here because whilst I accept I completely accept the need for some degree of confidentiality whether that is tied to particularly sensitive subjects or more generally to enable things to be said which might not want to be said in public nevertheless I think that an over emphasis on confidentiality which comes at the expense of transparency so the minutes that are published for JMC meetings are banal and the extreme the annual report is incredibly short, incredibly uninformative the idea in the memorandum of understanding as well that confidentiality is to be expected across the whole relationship between the two governments is I think also inappropriate that seems to me to be a hangover from the pre devolution arrangements where you were talking about relationships between departments in the one government which were subject to collective responsibility so the principle of confidentiality there supports collective responsibility but of course we're not in that position now we're in the position of two separate governments with separate accountability requirements and that has to be recognised in the relationship between the two governments Early on you said that there should be a committee of both parliaments to achieve scrutiny that's what I suspected you meant there was a recommendation in the common commission five years ago that there should be a greater parliamentary scrutiny and the standards committee standards and procedures committee of this Parliament looked at that and found that to do joint committees of any sort would require a change in the terms of the Scotland Act in relation to who can be members of parliamentary committees so I'm not sure if there's a showstopper but it's certainly added an extra layer of difficulty but your suggestion then is that a parliamentary committee of the Scottish Parliament, a parliamentary committee of the Scottish Parliament and similar arrangements elsewhere would have a formal duty of scrutiny of across the range of intergovernmental working I agree with what Eileen said there I think you could have much more transparency it always happens when you get intergovernmental working that things disappear into rather opaque arenas that's really not necessary and it's a politically British habit I think that we like to have our arguments in private and then things are presented to the public and governments will sometimes exploit that in order to stay away from the public gays and I've argued in the past that this is particularly problematic in relation to EU issues because the UK has got to go to the EU with a single position we don't have to pretend we didn't have any arguments in getting there that's really quite unnecessary because everybody knows there are differences and it would be healthy to have some of these discussions in the open and then come to agreements on the parliamentary scrutiny it's absolutely right we have a very poor parliamentary scrutiny of intergovernmental relations there may be a case for a special committee but I think that the main subject committees themselves would probably take the lead in this where there was a particular issue that has intergovernmental dimensions to it and things are being negotiated intergovernmentally that's something the committee should know a lot more about and as for working amongst the various parliaments and assemblies I think that's a very interesting idea not just with Westminster but amongst the more of the administrations themselves exchanging experiences thinking about problems in common creating new policy ideas and serving to hold the whole system to account by getting more public exposure of what is going on I think you had some questions in the area of parliamentary scrutiny as well Before I do actually just thinking there Ken Thomson's facial expressions I thought were really interesting so I don't know if I actually want to his mind was wondering no doubt you can thank you very much as a civil servant I know that there's some things you'd probably like to say but maybe you're not wanting to say on the record I'll say them in a moment I'll give you the opportunity now if you wish I should question Stuart the first one the example of Northern Ireland and are there any other countries or territories where in terms of that this year of IGR where we could possibly learn lessons either from a positive or from a negative Shall I start and we'll give a panel answer to this one because Aileen and Michael will have a lot to say on that I'm sure linking the previous question to this one the point I wanted to make and perhaps my face was betraying it was that we should see this as black and white I think you're seeing the system of all the fact that we're here, that you have asked us here and that your committee has this within its remit tells us that there is an emerging degree of greater scrutiny of the IGR and of the importance of IGR and to go back to Mr McDonald's question I think there has been scrutiny of the work on the Scottish rate of income tax through the legislative process which has been a feature of that particular policy development and I think on the point about don't see it as black and white applies to the issue of confidentiality you need to think of that as being a spectrum at the early stages of a sensitive discussion between Governments you are going to need confidentiality in other context we would call this diplomacy and a lot of diplomacy happens with confidentiality but it also happens with public scrutiny so I think it's getting the right blend of that and finding the right mechanisms and structures that encourage that blend and what degree of parliamentary scrutiny is a matter for the Parliaments themselves as for where could we learn from I'm going to throw up all that Michael might like to catch which is that I think in systems that have a more formal federal or quasi federal structure and I'm not advocating that as a structure I'm saying that in those systems there's quite a lot to learn from how intergovernmental relations is handled so I'm thinking in particular of places like Australia Canada, Spain in a slightly different way where the process has been you can see a different model for how the process works and to pick up an earlier point what has happened in Britain has been a more evolutionary incremental process so I think we can learn from looking at experience overseas Do you think Yes there have been there's a broad negative experience which is that whenever you get things taken into intergovernmental relations there's a lot of parliamentary accountability and political scientists are very good at telling you how things don't work so I'd better give some positive examples In Canada there's been an evolution of this with the federal provincial conferences and then more recently inter-provincial conferences, the provincial premiers themselves are getting together to provide that horizontal as a very vertical dimension of intergovernmental relations which may in many respects strengthen the position of the provinces then when going to meet the federal government they've come to some common positions themselves that's always going to be different difficult here because we don't have a federal system there's a lot of experience in Germany about rather formal inter-governmental relationships but I think it's very difficult to translate that to the UK because the legal culture is quite different and there's an evolving experience in Spain with what they call the sectoral conferences that took a very long time to become established but particularly as finance and taxation has been devolved to the autonomous communities and at the same time there are European regulations about budget, deficits and debts this has become a very serious process so there's some really serious negotiation there about the distribution of debt and deficit targets and about financing it's very political of course and very conflictual but that is going through that machinery so these are systems that are evolving and they're evolving I think in the way of greater transparency, of greater equality, less hierarchy and a recognition of the horizontal as well as the vertical dimension of inter-governmental relations The only thing I would add is that in terms of parliamentary scrutiny we might look to the relationship between national parliaments and European national making institutions where we have a similar quasi-federal division of powers, we have a principle of subsidiarity which attempts to manage shared competencies where the attempt has been to develop mechanisms for ensuring that national parliaments can have a say in issues before decisions are taken at the European level so we have in the UK Parliament for instance there is a European scrutiny committee it's rather overburdened but it does exist there is something called the European scrutiny reserve which prevents ministers committing themselves before issues have been reviewed by parliaments so you could think of mechanisms along those lines which try to deliver the position of parliaments vis-à-vis the ministers to precisely prevent that shift of decision making power away from parliaments into Governments Stuart, can you make this a very short supplementary because I want to get memory and understanding to give Michael some time on that before he needs to leave How broad and narrow the scope should IGR actually be in terms of parliamentary scrutiny bearing in mind us that this place will mandate more powers than the likes of tax and borrowing so should there be an opportunity for non-government bodies but let me instance some of the likes of the Bank of England to actually come to talk to the likes of the finance committee in this Parliament either before or after some decisions are taken The Smith commission proposals actually do provide for certain examples of that in some areas so is to be made accountable to this Parliament even though most of what it does is reserved off-com similarly I think that that kind of thing is desirable in principle how much influence it achieves at the end of the day if the Parliament has no formal powers is a different question but certainly I think it's hard to object to it in principle Billan, we wanted to move on to memorandum of understanding I'm going to try to get in later Rob, I think you're going to ask some stuff about memorandum of understanding I particularly want to hear it from Michael Find a route map obviously to a better IGR so let's see where we start on that and it seems to start with this pre-referendum pre-evolution memorandum of understanding created at a time when there were actually only there was only one Parliament Is this memorandum of understanding a problem the observance of its principles a problem at the start that we need to actually begin to remove or to change because whilst Ken Thomson has talked about discussions about how to evolve it is it actually the best starting point for us in this journey Michael, you wonderful reflect on that I know you've only got a few minutes left to say that and Ken's got a great deal more experience than I have, but it does strike me it's always useful to review the memorandum of understanding in the light of experience in the light of changed political experience the basic principles about mutual respects and no surprises I think are sound but it's important to review whether that's really working in practice but the memorandum of understanding is only as good as the willingness to stick to it so it's the spirit that underlies it rather than the wording I do respect Aliens Point the formal structures do matter but also the way in which their interpret is absolutely critical and that becomes a question of the political balance amongst the various Governments getting away from the idea of hierarchy towards a system in which all Governments are seeing as having their own role and their own powers and competencies I know that you've got to go in a few minutes so is there anything you'd like to just put on the record that goes beyond your paper which is very useful that you want to reflect on before you need to go? No, I think that that's right I'll just again take up Aliens Point about looking at the relationship between Europe and member states as a useful analogy because in some of the Scandinavian countries notably in Denmark there are much more effective systems of parliamentary scrutiny of inter-government relations and all sorts of things that we're told would be impossible here it seemed to work pretty well so I think that's a very instructive case I don't know my member on their understanding is it fit for purpose and does it need to change I think it's really the question Rob was asking Could I check that one? The version that I have in front of me has evolved and there have been several revisions of it and looking at the contents page it includes section A3 an agreement on dispute, avoidance and resolution and that was a fairly significant new section that was added and I would say this wouldn't I because I wrote some of it but we think it was a benefit at the time that I referred to in 2007 when we no longer had political channels that were able to take some of this negotiation so more of it came into the formal channels and that was an opportunity to review it with an incoming government here and with my counterparts in London and I think that that served its purpose and gave us a set of principles which support a culture in which we were able to resolve big significant disputes like the one on the Olympics although it's not formally part of this MOU the Edinburgh agreement was done in very much the same way to go back to my other point further, there are views among some of the devolved administrations that the dispute resolution procedure for example would benefit from having a greater independent element in it that's one of the things that we'll be looking at in the work we're doing on the MOU but I wouldn't want I wouldn't want to leave the impression that this is a problem I think it is a base that has evolved and from which we can evolve further It really should be included in it now that you haven't mentioned already I've mentioned the point about whether there should be a more independent element in dispute resolution The other point to give you a concise answer I agree with Michael that the main areas that require good IGR at the moment that it's going to change over the Smith process are finance welfare because of the interdependence of those systems and Europe because as Michael said there is one UK line that contributes to that I know you need to go so please feel free Just before we move on from the issue of the memorandum of understanding there's obviously been a fair bit of evolution there I think it would be useful to get a note of what that evolutionary process has looked like over the years so that we can understand how it's got to where it is but I'm also just in a general question I'm not aware of this ever having come to the Scottish Parliament in any way for transparency purposes should there be a role for Parliament to be involved in memorandum of understanding I'll let you link that one off Ken, I'll come back to you The question was is the MOU a problem and I think there are two aspects to that which the convener has just indicated one is the content a problem the other is the fact of the memorandum of understanding that it is an informal non-legally binding document rather than something with a statutory basis I am inclined to think that that is a problem what difference would it make if it were legally binding one difference it might make is that it opens up the possibility of legal enforcement although I don't think that that is actually terribly likely in practice or terribly important but I think that the more important element is the point that you raise is about transparency and about parliamentary involvement my understanding to address your question convener is that the original MOU was debated on and voted on in this Parliament but not in the UK Parliament but subsequent iterations I don't know that they have been so I do think that that is a problem and the objection to putting on a statutory footing would be it's inflexible, it can't evolve but I don't think that's necessarily true you can imagine an approach which makes a fairly general open ended commitment in a statute which requires there to be some machinery for intergovernmental working subject to certain general principles of consultation of information sharing etc but then the details can be filled in through negotiation and can evolve but subject to some kind of formal endorsement by the two parliaments when you mentioned a greater element of independent dispute resolution what might that look like as you're providing your response? I will cover that a few things to say first of all you've asked for a note and we'd be very happy to provide that looking at the title page of the current memorandum it says at the bottom presented to Parliament by Commander for Majesty and presented to the Scottish Parliament the Northern Ireland Assembly and laid before the National Assembly of Wales so there is the opportunity there it would be I don't know the answer to this or not but I think the process has been that the agreement has been revised and then presented to parliaments to make that clear and transparent my second point picking up one of aliens about should this be on a statutory footing there are arguments both ways on that and she alluded to some of them the example I would offer the committee is of the Sewell convention, the parallel which is merely a convention it's not currently in statute as you know proposals to do that so my point on that would be that the Sewell convention has worked well despite not being in statute but we have as the process evolves we have come to a point where people think that now would be the time to do that and to pick up your last point about sorry I'm going to have to ask you to remind me what it was you mentioned that there could be some sort of independent process involved with dispute resolution at one level it could be that the process becomes just as you will in the courts I agree with Aileen that there are quite a lot of disadvantages to that there is a parallel there in the experience in the relationship between the Welsh Assembly Welsh Government and the UK Government over the competence of legislative proposals which has been subject of that kind of formal dispute there are other options there is a provision currently in the dispute resolution process into a dispute for example to enable the Governments to take the benefit of independent expert advice a step beyond that would be to think in terms of some kind of mediation or arbitration there are lots of models for how you might do that short of going to a full court process but I don't think there's a consensus on where on that spectrum the process will land Aileen, how else do you want to reflect on your content at that stage Aileen, there's nothing, okay, fine can I move this on now folks I've still got three areas I want to try to get through I really want to manage that by my desire of 1030 we're going to extend this a little bit to get through some of the work we need to establish ourselves around Alison, you were interested in the issues around no detriment and competencies issues Yes, thank you convener I'd be grateful if you could ask whether or not there's an equivalent to the no detriment principle in other countries with devolved or federal systems in place I don't know, sorry I'm afraid I don't know either Okay, so we'll have to I think we'll come back Yeah Yeah, I mean I do think that would be uninteresting I think that would be good for the committee to understand Can I spice to take up that exercise on and examine where that does exist There's another area that you want to have a look at Yeah, there are areas outside of Scottish Parliament competence that the Smith commission extends intergovernmental working to the energy market systems around renewables incentives broadcasting and even areas like the coast cards and lighthouse I'm just wondering how much influence we might have when there are no formal powers suggested and where that competency means reserved but we have a formal consultative rule How do you see that relationship developing? This is a very interesting question and area because it goes to the question of how does the Parliament and the Scottish Government deal with issues in which it has an interest but over which it does not have competence and the Parliament as of course you all know better than I do can debate on any matter similarly, Governments can express views on whether reserved or devolved and quite a lot of the content of day-to-day intergovernmental relations is just that it is people like me in my counterparts making points to our counterparts in London about the effect of a proposal that they have before them the spillover effect that might happen to Scotland and then seeking to come to some agreement about how that could be managed so that I think that those kinds of issues are within the scope of IGR The other part of your question was about how how could the Parliament influence that and that's taking a bit beyond my my own remit as it were but you mentioned the Lighthouse Board I should also mention I used to be a lightkeeper so I have a personal interest in that so to take that as an example I think it offers the opportunity for the Parliament to hear evidence from the Northern Lighthouse Board to comment on its proposals to draw those to the attention of the relevant UK ministers now that I think is a different kind of influence and scrutiny than you would give to people like me and my ministers if we were responsible for the Lighthouses in Scotland but it is nevertheless a form of influence and scrutiny that's valuable I just wanted to say something about the energy powers I have actually provided separate evidence on the energy provisions I think that is a very interesting area where the Smith commission proposals are inching towards shared competence but they're not there yet and it's one of the areas in which there is excessive ad hocory so for instance you mentioned the Scottish Government and supposedly the Scottish Parliament although it doesn't appear in the clauses are supposed to get a general right to be consulted in relation to the development of renewables policies so no equivalent right to be consulted in relation to energy efficiency or fuel poverty where the Parliament and the Scottish Government also have competencies so I think that's an area in which greater attention to the general principles that should inform shared mutual interests but no powers could be valuable and I think taking a broader view and tying rights to be consulted to very specific narrow areas that approach is not very desirable Dr Eileen was that to the Smith commission in general or was that provided written evidence to this Parliament to us, to this committee it's part of the written evidence okay that's helped to know I'll look at further that Alex I think money the calculation of tax spend no detriment, block grant adjustments it's going to be a big process it's going to be an annual process and it's going to have to fit in with budget process first of all the budget processes in the two parliaments are very different is there a problem with a mismatch of process in that it's a very good question and I'm going to preface my answer by saying that I'm not an expert in the budget process so please bear that in mind in what I say I think there is quite a good example here in the operation of the new Joint Exchequer Committee of how the principle of mutual esteem can be made to work and that the Joint Exchequer Committee operates on that basis and its decisions are taken by agreement and there's no hierarchy involved in that because obviously the two parliaments your point about the interaction of the two budget processes is a good one and that's exactly the kind of issue that we are already working through because of the provisions in the 2012 Scotland Act to ensure that we have a system that works both for Westminster and for Holyrood in terms of allowing the Government the ability to calculate its finances and set out its budget and proper scrutiny of those the further provisions in Smith will impact upon that and my colleagues will be doing the work on that to ensure that when legislation comes forward from the UK Government it takes account of the requirements of both the Scottish Government and the Scottish Parliament in terms of scrutinising that and I think I'm right in saying but obviously he would speak for himself but I think that Paul Grice is involved in the fact that the Parliament's interests are represented in what the UK Government brings forward Intergovernmental agreement is going to be essential in having a complete budget process on both sides is it possible to run intergovernment structures parallel to budget process or would we have to work ahead of budget process are we in effect going to have to agree the figures relating in relationships between the two Governments a year ahead of the budget process there was a lot of discussion of this point in the negotiations that led to the legislation in 2012 and as I said I'm no expert on the detail but you do have to have both a way of estimating ahead of time what the impact of revenue generation will be in terms of block grant adjustment but then you also have to have a way of adjusting to take account of the difference between estimate and out-term so principles of that sort will be involved in the evolution of the new system but I couldn't pretend to be an expert in how it's going to be done final one is opinion probably for you both but we spoke earlier about rigidity of structures and the flexibility that politicians can achieve how rigid does the structure need to be to make budgets work to be predictable or do we have to build in the opportunity for gifted politicians should we ever come across one to influence this process positively I'm going to pass on budget my face very straight to this I think there are two elements to this one is that and again it's both and you need a clear structure and process in relation to budget setting so that we know what the rules of the game are and we know what the deadlines are and we know how the scrutiny will happen and you would recognise all of that in the process that currently works and I would say works well for the Scottish budget that needs to evolve to take account of the interaction between the budget process here and at Westminster I think there's cooperation and skillful negotiation and the closest I'm going to come to responding to your point about gifted politicians is to say that that's the process that I have observed happening in the Scottish budget process ever since the Parliament has been created there is a lot of skillful politicking that happens before the budget gets presented and others will know more about that than I do The description we got from John Swinney about the process the figures around land and property taxation before it was devolved seemed to say he spent two years talking about it at the end of the day, they shoot hands and split the difference that's not a basis for future negotiation I'm pretty sure To the basis for future discussion Stuart Maxwell probably that leads nicely into the fiscal framework questions I think you were interested in Yes it does thank you very much I just want to take us back to the principles of the new fiscal framework that is set out by the Smith commission and they seem to suggest, I think, quite clearly that there is a need for more intergovernmental relations in relation to the finance area, the tax areas and I just wondered whether your review about whether the current finance quadrilaterals that are already established whether they are sufficient to can they be expanded to take on the new stuff or does there need to be a finance JMC or does there have to be something else what's your view in terms of the actual principles of the new fiscal framework described by Smith and how do we meet those principles if they come forward This allows me to make an important point which is about quadrilateral or multilateral and bilateral relationships and the JMC is a quadrilateral institution Quite often the issues that come up in intergovernmental relations are better suited to bilateral discussion and on the budget setting that's particularly true because the nature of the settlement, the devolution settlement for each of the three devolved administrations is different you do need co-ordination across that so again it's both and the finance quad as it's known operates very effectively to do that but that I don't mean that there's always agreement or harmony or that the discussions couldn't have been shorter but it does provide a forum in which those discussions can happen Historians may correct me on this but I don't think it was formally part of the MOU process the finance quad is not provided for in the MOU it's part of the system that has evolved through need so it meets my test of flexibility and perhaps the test that Michael and Eileen were setting of not creating committees just for the sake of it The Joint Exchequer Committee which is the bilateral expression of that provides us with the forum in which we can work through those issues and take what Smith has given us in terms of the fiscal framework and turn that into an agreed outcome and we'll be able to draw on the learning from the 2012 experience again and indeed from the finance quad experience generally so it's always something that you would want to improve I'm not sitting here saying that it's fine but it does give us the basis on which it can evolve Are you saying then that effectively the quad laterals work the Joint Exchequer Committee gives you a place to do some of that bilateral or are you saying that there has to be an increased amount of bilateral work I think that my general point on that would be this is my point about flexibility at the outset that when you look at the issue you then need to say well is that an issue that would be best resolved bilaterally or is there a common devolved in that so you might take it trilaterally or multilaterally so you suit the process to the substance within a broad structure set out in the MOU how will that change I think probably there will be more bandwidth need to be more bandwidth in the bilateral relationship between the Scottish Government and the UK Government because of the interdependence on tax and on welfare in particular that point would be as true in Wales and Northern Ireland for their settlements and I couldn't speak with first time knowledge of that I have a couple of questions on the no detriment if that's unless you had I'm assuming she wasn't I'm assuming she wasn't if that's okay I'm just on the no detriment principle I'm just wondering whether whether you're an optimist or a pessimist in terms of whether the no detriment principles within Smith can be implemented in a way that actually will suit both Governments I am by temperament an optimist and by experience a realist so I think it's the no detriment is a simple clear principle the working through of it will be complex because Government finances complex and I think with goodwill on both sides and the ingenuity that both officials do to it there's no reason why it can't be done but I'm not going to say that it's going to be easy Can I just ask a quick question right in there common database in that case to make sure that no detriment applies properly will be a crucial element I would have thought in terms of so there's common understanding a common database and shared information that everyone's starting off from the same page I guess that's not always there at the moment what you're feeling that how much of a requirement that will be so before you can have a proper discussion about how you're going to do no detriment or indeed how you can resolve any financial issue you have to have a common understanding of the numbers and that's easier to say than to do because often we're talking here about interpretation of numbers or interpretation of estimates that's probably about as far as my experience would take me my finance colleagues would be better able to help you with that where I can draw on experiences in the case of the dispute on the finances of the Olympics where indeed the first an early step in that process was to be absolutely clear that we understood what numbers we were in dispute about and then we could work through the principles by which we might be able to reach an agreement which eventually we did that's useful I think my question though is I suppose based on a slightly pessimistic view my next one which is there may well be disputes in the future and I assume you see some need for arbitration in this process if it's based on some mutual respect and equivalency rather than a hierarchical structure how do you see that operating effectively if there are disagreements about whether or not there have been detriment has occurred because of a policy of one or the other governments how would we resolve that and how we resolve the area of recompense one way or the other again let me use the Olympics dispute as my example here it's an important point that the governments are equals in their own spheres of competence so that there isn't technically speaking a hierarchy there and the process by which agreement was reached on the Olympics included taking it through the JMC dispute resolution process and agreement was not reached as part of that so the dispute was referred back to a group of officials to do some further work on it and through that work a result was achieved so it is possible to resolve a big complex financial dispute within the current system the numbers involved some hundreds of millions were relatively small to the sorts of tax and welfare sums that we may be talking about in future so I think again I'm back to my point that we have experience and structures and processes from which we can evolve something that will stand a chance of working but I think between my optimism and your pessimism we'll probably settle on realism for that one Can I just make a very general point here going back to the issue about formality versus informality I think one of the key points here in terms of dispute resolution mechanisms or when you move between bilateral and multilateral forums is who gets to choose who gets to choose which route is taken and I think an important principle that I would want to see is that both Governments have the same powers to choose a different forum or to trigger a dispute resolution mechanism In the current dispute resolution process that is the case that the access to the dispute resolution process is the same for all four administrations Final question I accept what you're saying about the Olympics and you eventually the dispute resolution process ended up in an agreement at least the scope for that to not occur in future and I'm just wondering about whether or not there should be effectively some system of arbitration external to that, above that, beyond that independent of both Governments and if that's the case who should be that arbitrar I'll be very brief conscious of time my earlier answer about that indicated the range of options that there might be for a greater independent element in the DR process but I don't think there's as yet a consensus on what the outcome will be You've got a view on that Only to say that I don't think courts will be particularly keen to get involved in those kind of disputes Wanda, your question around GMC as well Yeah, I'd like to get something in the record about joint ministerial committees I know they've evolved since 2007 in a rather piecemeal fashion I would imagine if we just talk about the plenary one for the purposes of this question Is there space to strengthen change the way the joint ministerial committee operates for example I would give in that as far as I'm aware it's still always chaired by UK minister we heard Michael say earlier that that in itself can create an issue because that UK minister is also representing the largest part of the nations of the UK Is there room for perhaps having more equality in how these committees are run Is there the possibility of perhaps rather than just having it as a communication forum in some respect making it a joint decision forum as well I think one of the problems here is we don't know very much about how it does operate so that's a problem in terms of the rotating chair there's a contrast with the British Irish council which does have a rotating chair and I know that the devolved administrations prefer that because they see themselves as having a more equal status in that institution so I think these are some of the respects in which the evolution and the informal evolution of the GMC machinery is betrayed that there hasn't been much attention or open attention to the appropriate principles that should underpin it The GMC plenary is chaired by the Prime Minister and I think on every occasion that it's met is met in Downing Street and in evidence to a House of Lords committee Fiona Hyslop recently made the point that the BIC provides an example of doing it differently where the chair and the location of the meeting rotates around the members of the British Irish council so I should say that Mr Swinney plans to write to you and will enclose the evidence that Mrs Hyslop gave to the House of Lords committee because many of the answers she gave were relevant to the committee's questions today in that evidence when it reaches you Thank you very much Ken Thomson and Ailey Macargan I should probably thank Michael Keaton I don't think I did that properly before he went so I'll do it in absentia Thank you for coming and giving us evidence today we're very grateful Agenda item 2 is a decision whether for the committee to take consideration of the draft report on the UK Government's draft legislative clauses in private at this and future meetings Thank you very much The next meeting of the committee will take place on Wednesday 25 March with evidence being taken from the second state for Scotland, Alastair Cymru on the draft legislative clauses and now move us into private session Thank you very much