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7 CONCLUSIONS
7.1 Our main aim was to identify 'headroom' in the Scottish budget, i.e. choices for Ministers to realign spending programmes by shifting funds from areas that are not performing well or are not well targeted against Scottish Executive Ministerial priorities. Our conclusions are summarised in Table 1 in Chapter 1 (Executive Summary) and show that we found £818m of potential options for headroom for Spending Review 2007. We consider there is potential for more headroom to be released if a further set of options is chosen, but we are unable to make clear estimates in these cases. Our best guess is that these amount to around £432m. There are also other areas for consideration where we were unable to make any estimates. We have generally not made any attempt to estimate how quickly any changes could be made or the costs involved if any options are progressed. The table is based on the findings set out in Chapter 6 which includes tables summarising the potential options for headroom in each portfolio.
7.2 Chapters 4 and 5 explain the many issues and difficulties we found in establishing priorities and linking them to programmes. Many of our suggestions, recommendations and conclusions are focused on improving financial planning and management of the SE budget, with particular emphasis on improving the ability of the civil service to interpret a PA (or similar 'political contract') in ways that can be more readily delivered.
The Political Dimension
7.3 Chapter 4, and especially 4.2, Setting Priorities, reviews the experience to date of working with PAs. This is a key feature of the devolution settlement although the evidence reveals a very mixed experience thus far. Everyone involved is still learning and seeking to improve the process, and we see our work as one part of the 'Evolution of Devolution'. We recognise that any PA is a political document. Our interest and locus focused on the ways any PA is translated into reality, i.e. how political aspirations and commitments are turned into visions, outcomes, impacts and priorities. In short, to allow choices for a clear purpose.
7.4 As any PA is a political document, we have made suggestions rather than recommendations on ways the negotiations could be improved to achieve better 'translation of political aspiration' to business planning by officials. We understand the difficulties politicians face in drawing up manifestos. We appreciate that negotiating an agreement based on two or more manifestos within a restricted timeframe adds further complexity. Our suggestions, therefore, focus on practical ideas that should assist the subsequent process of transferring a PA into business plans. However, the first, essential condition for improvement has to be a recognition by all those involved in preparing manifestos of the realities they will face if and when they form, or are part of, a government.
The Organisational Dimension
7.5 Chapter 4 also deals with the organisational issues we found in the SE. It is the 'machinery of government' that translates political aspirations and priorities into reality. In simple terms, the clearer the direction from SE Ministers, then the easier it should be to deliver the desired outcomes or results. But life is never that simple. In our work, we have recognised the complexity of the tasks and institutions that SE and other officials face in trying to establish, understand and deliver political aspirations. In general, officials work well and the 'machinery' has been tried and tested over many years. Like the body politic, it is still coming to terms with devolution. Our comments, analysis and recommendations are intended to accelerate the process of improving the service provided to Ministers, and ultimately Parliament. We found much evidence of the willingness of officials to make devolution work, and especially to make the SE work better.
7.6 In reaching our view on the organisational dimension covered in Chapter 4, we were very cognisant of some key features of the SE and its related agencies. These are summarised at 4.1.3 and show the SE as a highly complex, dynamic organisation with multiple and varied goals, many of which are delivered through external agencies. The chapter sets out our view of financial planning and management in the SE. We suggest a range of measures that could improve the system, in particular, the development of a stronger challenge function, a review of the 'crowded landscape' of external delivery agencies and changes in monitoring and accounting practices.
7.7 In terms of skills, attitude and culture, we believe the SE strives to provide a good service in quite difficult and often demanding circumstances. We see a range of measures and changes that could make it more effective, especially in terms of translating Ministerial priorities into reality. Without repeating them here, we would highlight the general conclusion that improvement will depend critically on developing a Best Value culture throughout the organisation, linked to a strong but light/flexible challenge function. There is always headroom to be had in any budget. The challenge is to devise a system that has incentives for people to be open about underspends or slippage and willing to expose their budgets to challenge against other budgets - even in other portfolios.
7.8 In terms of processes, we would encourage the SE to focus its considerable analytical and research resources on stronger more rigorous appraisals of policies and programmes to ensure the long term consequences are fully considered. It should also learn lessons from evaluation to enable closure of lower priorities programmes and provide a means of finding headroom on a regular basis. This should be part of the challenge function.
Programme and Portfolio Dimension
7.9 Chapters 5 and 6 respectively set out the problems and issues that constrained our ability to find options for headroom and the amounts we could identify by portfolio. We would note that issues such as legacy spending and lock-in are neither new nor unique to the SE budget. They largely explain why many politicians and commentators compare public spending to a 'juggernaut', i.e. very hard to turn or stop. Our review has highlighted the significance of these factors, derived a first attempt at classifying spending in ways that allow some quantification, and pointed the way for future work that should improve understanding of the issues. Our various recommendations aim to clarify the position and enable more informed decision making.
OVERALL CONCLUSION
7.10 This report has shown that there are potential options for 'headroom' available to SE Ministers to allow some realignment of budgets against priorities should Spending Review 2007 prove as tight as expected. The figures are best estimates and need to be considered against the many constraints we found in identifying priorities and linking them to specific programmes or budgets. Further, we have identified a range of factors that inhibit the setting of clear priorities that can be translated into business plans to deliver outcomes. Our suggestions and recommendations seek to address these issues, so that there is scope for SE Ministers to make Choices for a Purpose in SR 2007 and to create further headroom for future choices.
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