Budget Process
The Scottish budget process operates on a two year cycle around the biennial Spending Review. In Spending Review years the process is made up of three stages. In non-Spending Review years, when there is generally little change in budget numbers, the process is truncated. The current process reflects revisions made since devolution, with the agreement of the Parliament's Finance Committee, to take account of the Spending Review and reduce repetition.
The three stages of the budget process are as follows:
Stage 1 - Annual Evaluation Report (Spending Review years only). Following consultation with the Finance Committee, the Annual Evaluation Report (AER) is now a long-term strategy document which sets the scene for the forthcoming Spending Review. It must be published by 31 March, or the first day thereafter on which Parliament sits. The AER includes a performance report showing progress against targets from the previous Spending Review and gives a statement of the Executive's priorities for the next Spending Review. As it is a consultation document, parliamentary committees and the public are invited to put forward their views on the Executive's proposals. The Finance Committee then produces a report which is debated by the full Parliament in June and concludes Stage 1.
Stage 2 - Draft Budget. The Draft Budget for the following year is published in September or October and sets out the Executive's detailed spending plans for the following year. Again, Parliamentary Committees and the public are consulted for their views. At this stage, the Finance Committee may propose changes to the budget, but only if they net to zero (i.e. proposed increases must be offset by savings elsewhere in the budget). The Finance Committee then makes a report which pulls together recommendations from the various subject committees' reports, and this is debated in Parliament in December, marking the end of Stage 2.
Stage 3 - Budget Bill. The final stage of the budget process starts with the laying of the Budget Bill in Parliament in January. The Budget Bill sets out Ministers' spending plans for the following year, taking into account comments made at Stage 2. The Budget Bill must be laid by 20 January each year, or the first day thereafter on which Parliament sits, and must complete all of its stages by 14 February. Only Ministers can propose amendments at this stage, and once enacted, the Bill provides the statutory authority for expenditure by the Executive. Parliament's consideration of the Budget Bill consists of three stages. Stage 1 is a debate in the Parliament, Stage 2 is an evidence session with the Minister for Finance at the Finance Committee and Stage 3 is a further debate in the Parliament.
The Scottish budget process is designed to encourage participation by the people of Scotland in the debate about how the budget is spent. To this end, the budget documents are freely available and are published on the Scottish Executive's website. Stages 1 and 2 of the process are consultations, and all interested parties have an opportunity to make their views known, either in writing or at specially-arranged consultation sessions. The aim is to have a budget process that increases transparency and ensures that Scotland's budget is spent efficiently and effectively.