Procedure Committee
Oral evidence: Scrutiny of the Government's Supply Estimates, HC 190
Wednesday 19 October 2016
Ordered by the House of Commons to be published on 19 October 2016.
Members present: Mr Charles Walker (Chair); Nic Dakin; Patrick Grady; Sir Edward Leigh; Mr David Nuttall
Questions 142 - 171
Witnesses
The right Hon. Mr David Gauke MP, Chief Secretary to the Treasury, and the right Hon. Mr David Lidington MP, Leader of the House of Commons.
The right Hon. Mr David Gauke MP and the right Hon. Mr David Lidington MP.
Q142 Chair: Can I thank our witnesses for coming to see us today: the Chief Financial Secretary and the Leader of the House, two very distinguished guests? I do not think we have had a case where we have had two Privy Counsellors in front of us, so thank you very much—and two Cabinet Ministers, so that is extremely exciting for this Committee. As you know, we are looking at estimates and how Parliament can scrutinise them more effectively. I think the view of many on this Committee is that we do not really scrutinise them at all at the moment. We are encouraged by previous indications from the Treasury a few years ago that there was a willingness to have more scrutiny and to improve on the current system, and we thank the Treasury for that. We hope that we can advance those thoughts in our report. I am not going to spend too long now talking or introducing our witnesses, but does either witness have an opening statement that they would like to make? No? Brilliant. I will throw it over to you, David.
Mr Nuttall: Let’s jump straight in. What function do our witnesses think that the supply and estimates procedures of the House serve at present? Are they useful? Do they serve a useful purpose, to be honest?
Mr Gauke: I suppose the first point I would make is that from my perspective as Chief Secretary to the Treasury, I certainly welcome scrutiny of Government spending. Whether that is through the estimates process or whether it is through the Public Accounts Committee or any other means, scrutinising public spending is an important role for all of us. So, first of all, I welcome that. I think it would be fair to say—
Q143 Mr Nuttall: Can I stop you there? Do you think they get enough attention? Do you think they deserve more attention?
Mr Gauke: The point I was about to make was that there is, if you like, the general debate about the scrutiny of public spending, and then there is the issue of estimates debates and the degree to which there is a successful or well-focused way in which that is done. To some extent, they are two rather different answers.
It is the case that by most international standards, in terms of the level of transparency, the information that is provided, and the fact that the vast majority of public spending is voted on, that is all good. That does not apply in other countries. I think that the reason why this Committee is looking at this area is that the extent to which the estimates debates provide proper scrutiny of how that money is spent, as opposed to a general debate on policy, is a more open question. It is probably not for me to reach a conclusion on that.
To the extent that we can help, whether it is about reviewing the information that is provided—no doubt we will talk about that—or about the extent to which we, the Treasury, for example, could provide more training to Members of Parliament on understanding the information that is put in front of them, again I think that is something that we would look to explore.
Q144 Mr Nuttall: Do you have anything to add, David? I was going to come on to the fact that under Standing Orders at the moment—it is perhaps more appropriate for the Leader of the House to answer this—the Liaison Committee has the right to nominate the estimates that are to be debated, and the subjects on which debates should arise on what we commonly refer to as estimates day. Do you think this system is working?
Mr Lidington: What is the case—and I think this probably lies behind a large part of the Committee’s inquiry—is that at the moment I think there is a certain amount of dissatisfaction that estimates days are not actually used to discuss estimates. They have tended to develop over the years into a debate tagged to particular Select Committee reports, and those debates have focused on policy rather than expenditure.
From my point of view, I am perfectly happy to look, when the Committee’s report comes out, at how that might be improved. There are probably options available to Parliament without needing Government say-so, or without even changing the Standing Orders of the House. I know there has been talk, for example, about a swap between the Backbench Business Committee and the Liaison Committee, but even under the current set-up, it is perfectly possible for the Liaison Committee to decide that a debate should be scheduled that is specifically about an estimate, rather than about a departmental Select Committee’s report on a particular subject. It is not Treasury and it is not me who decides what is debated on estimates days—quite properly so.
It seems to me that where this Committee’s inquiry could play an extremely fruitful role is in stimulating a conversation among Members of Parliament about how best to use not only the limited number of plenary sessions that are available in the Chamber, but also the Committee system to examine estimates more closely, if that is what there is the appetite to do. After all, Select Committees have these powers in their hands already, if they choose to use them.
Q145 Mr Nuttall: You think that is the road that perhaps should be explored? Just as a matter of interest, on that transfer of days, would you have any objection to that transfer between the Liaison and Backbench Business Committees—those three days?
Mr Lidington: It is not something that we have sat down and come to a formal Government view on, but if that is the proposal from the Committee, I think we would look at it constructively.
Q146 Chair: That is encouraging. That is very good news. On the role of the Select Committee, we have asked the National Audit Office to look at how information can be better presented in a format that is more easily interpreted by Members of Parliament. If we were going to involve the departmental Select Committees, there is an argument for ensuring that there is a uniform template, as far as possible, for the presentation of financial information as it relates to each Government Department. Would our witnesses agree that that is a good idea?
Mr Gauke: Yes, my understanding is that there is some consistency, in terms of how different Departments present it, but there is also a degree of flexibility in terms of Select Committees wanting particular things in there. I think that there is some degree of consistency. In terms of presentation of the information, we are certainly willing to work constructively as regards any recommendations that you or Select Committees might have on how the information is presented.
Q147 Chair: What we would be seeking, Chief Secretary, is uniformity that was accessible, so accessible uniformity. You will know that many colleagues here do not have financial or accountancy backgrounds, so you can have a uniform set of numbers that are still fairly impenetrable to the majority of people here. I suppose what we would be looking at is coming up with a format that allowed maximum interrogation, perhaps, of headline figures, with the ability to drill down into the underlying figures.
Mr Gauke: I completely understand and appreciate the point that you are making. The challenge is to strike the right balance between information that is accessible and information that has sufficient depth, so that, for example, the National Audit Office, which is obviously extremely skilled and experienced in this area, is able to hold Government to account. It is the case that there are summaries produced. One can find within the estimates documentation summaries of each of the Departments, which are more accessible because they are at a higher level than some of the detailed information. There is a place for that detailed information as well; it is all about striking the right balance. As I say, we are certainly happy to join in any review of this.
The second point, just to reiterate the point I made earlier, is that if there is any useful training that could be provided to help Members better understand the information that is presented, again that is something that we would be happy to facilitate.
Q148 Chair: You would see the National Audit Office delivering that training, potentially?
Mr Gauke: I am pretty open as to how that is done; that is to be discussed.
Chair: David, do you have any more questions?
Q149 Mr Nuttall: Perhaps I could just pursue this question of the number of estimates that are voted on. I think on average the figures show that only about six out of the total are ever voted on. I wondered if our esteemed witnesses had a view as to whether that was the right number, or whether it should be more. It seems fairly low, I should think, to most people.
Mr Lidington: In a sense, the Appropriation Bills, of course, provide the formal legislative mechanism for approving all the supply. Just to comment briefly on the last question, there are certain things that, whatever the format in which this is presented, have to be included, because the estimate must include whatever is going to be authorised by the appropriation legislation. There are certain things that have to be in there for that reason.
Again, this takes us back to the earlier exchange. It is at the moment very much in the hands of the Liaison Committee to decide whether they are going to put down resolutions or motions that seek to approve particular estimates, or list particular estimates for approval. I again go back to the fact that departmental Select Committees have the remit to look at the financial performance and the expenditure plans of their Department, and I think in most, if not all, cases do take evidence from the Permanent Secretary as accounting officer. What has been the practice is that Select Committees have tended to find that the annual report and accounts is, from their point of view, a more helpful document, I think because it provides both a financial summary and an explanation of the policy on which that is based.
I saw from some previous exchanges during this Committee’s inquiry with other witnesses that reference has been made to the Scottish Parliament system. I did before today have a look at the Budget statement that goes to the Scottish Parliament with the draft Budget. It seemed to me that that was closer perhaps in format to the departmental annual report, with a mixture of policy and figure work, whereas the estimates are, and I think always have been, in modern times, very much an impartial statement of the money, with the explanation given in the summaries. One of the questions, if the Committee is seeking a common format, is: what is the balance that you think is appropriate, in an estimate that is the foundation of a legislative change, between an explanation that will of course always include the Government’s justification of its priorities, and the presentation of factual information about the money that is being spent and on what it is being spent?
Q150 Patrick Grady: I want to come back to what the Chief Secretary said about where we are globally. One of the first bodies we heard from in this inquiry was the OECD. They said to us in a letter, “Although there has been a resurgence of legislative roles and responsibilities in budgeting among OECD member countries, it is notable that parliamentary capacity for financial scrutiny in the UK, and in Westminster-based systems more generally, has tended to be relatively weak.” That was backed up as well by written evidence from Professor David Heald, who said that the UK’s place in the Open Budget Index is lower than it has been, although it is reasonably near the top: “There are certain pathological features of the UK public finance system that are relevant to the Committee’s remit. Good technical processes are marred by abusive political practices, creating distrust in official numbers”. I just wondered if there is not more scope for improvement than maybe you are first suggesting.
Mr Gauke: First of all, we should always look for scope for improvement. My point in terms of the international comparisons is that, as I understand it, the UK is ranked eighth in the OECD Open Budget Index of 2015. That is in a survey of 102 countries. As I mentioned earlier, I think it is the case that nearly all of our expenditure is voted upon, which is not necessarily the case in other countries.
There will obviously be a debate, and there will be a range of views. I certainly do not want to suggest that we should not look always to find ways in which we could improve the process, but I think that by and large it is a process that works reasonably well for the UK. It is pretty longstanding. I do think there is a point about whether collectively we can do more with estimates, but I come back to the point that David touched on: when we have an estimates day debate, how much of that time is spent on debating the estimates as such? Or is it an opportunity to have a wider policy debate in that area? To what extent, therefore, is it scrutiny of the estimates documentation? It probably isn’t. If we want to do more on that, then what can we do to have that?
Patrick Grady: You get called to order and told to sit down, in the case of one of my colleagues, if you start talking in too much detail about the estimates.
Chair: Can we bring Edward in now to follow up on this theme?
Q151 Sir Edward Leigh: Presumably, you agree that we have the best post hoc scrutiny in the world through the Public Accounts Committee and the National Audit Office. We are probably up there at No. 1.
Mr Lidington: They are certainly leaders.
Q152 Sir Edward Leigh: I know a bit about this, having been on the Public Accounts Committee and Commission for so many years. Why it is so good is that we have the National Audit Office, which is completely independent of Government, which prepares 40 to 60 reports every year. We have an independent Committee that never divides on party political grounds. All that leads to the best post hoc scrutiny in the world. Why can we not think of innovative ways to try to replicate that post hoc scrutiny in the ex ante process, in other words before the Government commits itself to spending, i.e. in the estimates process? Why do we close our minds to that? Can we not think creatively of ways in which to replicate the post hoc way of doing things? Do you understand what I am saying?
Mr Gauke: I do. In a way, Sir Edward, you are laying down a challenge to Parliament as much as to Government, in terms of finding ways in which that scrutiny can be improved. As I say, from my perspective, I do want scrutiny of public spending and, as you say, we have a very good process.
Q153 Sir Edward Leigh: Okay, that is fine. I just wanted to get a positive response, because you may recall that the previous Chancellor asked John Pugh and myself to do a paper for him, which we published, and which soon after became a world No. 1 best seller—or maybe not. It suggested that we try to replicate this by way of a new budget committee, supported by a beefed-up Scrutiny Unit. I am not asking you to support this idea now. It may not happen now; it may not happen for five years.
As far as the Government are concerned, if Parliament itself was to try to come up with creative ideas, either through a budget committee or, for instance, a budget sub-committee of the Treasury Committee, or not necessarily an independent new National Audit Office but a beefed-up Scrutiny Unit, are you saying that you are quite happy for Parliament to look at ways in which we can better understand the estimates? It is all about understanding, isn’t it? If you read the estimates, they are just incomprehensible to a layman. You have to have a Scrutiny Unit to explain it to you, to give the questions, to delve into it, and you have to have some sort of Committee structure—I am not saying a new Committee structure—to ask the right questions. You will understand that. Are you saying, from a Government point of view, that you are not necessarily opposed to Parliament trying to think through how we could do this job better?
Mr Gauke: From my perspective, I am certainly not opposed to Parliament trying to think through how it can do the job better. I suppose an immediate observation, in terms of a budget committee or sub-committee, is that no doubt you would want to give some thought to levels of accountability, and to the extent to which there might be areas of overlap with what departmental Select Committees are doing in general, and what the Treasury Select Committee does specifically. Those are points, no doubt, that you would want to consider, as well as the risks of what happens if there is a degree of duplication and so on.
Mr Lidington: I am certainly not going to rule out any particular proposal either. I think I would want to look with a pretty open mind at whatever came forward. The sorts of questions I would be posing to Sir Edward would be: first of all, is everything that it is possible to do through the Scrutiny Unit being done? Are there improvements that could be sought through increased Government support for the parliamentary Scrutiny Unit, without having a completely new Committee organisation as well?
Secondly, there is a cost-benefit judgment to be made; establishing a budget committee with an enhanced unit of some kind to support it is going to be a demand on the parliamentary vote, so does that mean that Parliament is seeking an overall increase in expenditure, or is that to come at the expense of other Select Committee activity?
Thirdly, I would want to test the depth of parliamentary support for such a change. I would certainly want to understand whether the Treasury Select Committee, the PAC in particular, and other departmental Select Committees are comfortable and supportive of such an idea, or whether they see this as an intrusion on their responsibility to interrogate Permanent Secretaries about budgets.
Q154 Sir Edward Leigh: That is all very fair. That is why I termed it in terms of not necessarily doing it at the moment, but thinking about it for the future, or thinking of a sub-committee of the Treasury Committee, or beefing up the existing Scrutiny Unit.
To return to the present system, you have told us that we are number eight in the world, or in the OECD. The truth is that we have these three estimates days, and when my colleague John Pugh stood up during one of them to start talking about estimates, he was ruled out of order by the Chair. I agree that it is an opportunity to have policy debates, but after all, Parliament meets more often than virtually any other Parliament in the world, and we have scores of debates about policy. Are you open-minded about the Liaison Committee or the Backbench Business Committee just saying, “Given that we are spending £600 billion a year or something, we really need to talk about estimates on these days”? Presumably, from your earlier remarks, you did not seem to be opposed to that idea. You rather said it is over to Parliament.
Mr Gauke: First of all, I think the Leader of the House made a very good point that the first step is checking whether, under all the existing powers and resources, more could be done, but I think essentially this is a matter for Parliament. From a Treasury perspective, we think the system works reasonably well, but to the extent that Parliament has proposals to improve that system, then so be it.
Q155 Sir Edward Leigh: At the moment, I think we are all agreed that there is a longstanding rule that Parliament cannot intervene on estimates days and put up spending. I think that is right, isn’t it? It would make it quite interesting, would it not, if on these estimates days you could have votes to cut spending?
Mr Gauke: It would certainly make it interesting.
Q156 Sir Edward Leigh: Would you be opposed to that? As you know, general debates in Parliament tend to be not very well attended, but if there was a bit of beef at the end of it and a vote—I do not know what the present procedure is. I think we vote on the overall thing, don’t we?
Mr Gauke: I think that is right.
Q157 Sir Edward Leigh: We cannot vote to cut anything, can we?
Mr Gauke: I think that is right. We would have to think long and hard before making such a significant constitutional change.
Q158 Sir Edward Leigh: It would give too much power to Parliament, of course, wouldn’t it? We are talking about £600 billion worth of spending.
Mr Gauke: More than that.
Sir Edward Leigh: More than that, yes. Well, you should know: you are the world expert. All right, I will not pursue that any more. I think that is fine.
Q159 Chair: I would like to pick up what the Chief Secretary said, and I think it was echoed by the Leader of the House. It is obviously up to Parliament, and I think if we were to try to use these estimates days to debate estimates, it would be as part of an experiment of a year or two, because it would be for Parliament to decide whether it wants to engage seriously with this matter. Many Members might prefer to be answering constituents’ letters than engaging in the running of the country, and that is a perfectly reasonable position to take. It is not one that I happen to agree with, but if that is where they want to spend their time, that is where they want to spend their time.
Following on from what Sir Edward has been quizzing you on, let’s look at recent debates on estimates days. Some just about sneak in, Sir Edward, as being almost plausible. We have had: the Prevent strategy; Afghanistan and Pakistan; transport and the economy; forensic science services; the funding of the Olympics and Paralympics; UK-Turkey relations and Turkey’s regional role; Government levies on energy bills; child and adolescent mental health services—very important; support for housing costs in the reformed welfare system; the new defence security review of NATO—that could just about be called an estimate—end of life care; the science budget; and reform of the police funding formula. These are not debates around estimates; they are debates around important but specific interests, in the main.
What we want to do, given that there is acres of time to debate these sorts of things through the Backbench Business Committee, Opposition Day debates and Bills presented by Government that deal with these areas, is to have just three days where we try, for a period of a year or two, to discuss estimates. Would you say that is a reasonable ambition? I think that you have already indicated that it is a reasonable ambition, but can you just confirm that?
Mr Gauke: As you said a moment or so ago, if that is what Parliament intends, then I certainly would not want to object to that.
Q160 Patrick Grady: We have had some mention of Scotland and the Scottish Parliament. The Scottish Parliament and the Welsh Assembly complete their budgetary approval process before the beginning of the financial year, so the scrutiny takes place before the money is actually spent. Why are the Government’s detailed spending plans set out in the estimates, not presented to Parliament until well after the start of the financial year?
Mr Gauke: It is essentially linked with the Budget. We have a March Budget, which is just before the beginning of the financial year; that March Budget may have an impact on the expenditure for particular Departments. As a consequence of that, the position is generally, I think, that estimates are laid before the House five weeks after the Budget, which takes us into April, and we then have the debate in the summer. Essentially, it links with that, to ensure that what is debated is as up to date as possible. It all stems from the date of the Budget.
Q161 Patrick Grady: Yes. There are consequences for the devolved Assemblies. The Finance Minister in Scotland yet again this year has had trouble preparing his Budget, because he knows that a lot of the money that he has to spend will be contingent on the autumn statement. He is quite rightly facing scrutiny from the Scottish Parliament as a result of that. Is there not maybe a case to look at the entire timetable of the estimates process, so that it aligns with spending that is happening across—we will maybe come back to the issue of Barnett later on—the processes of all the legislative chambers of the United Kingdom?
Mr Gauke: I think in a way you have made that case, but I suppose what I would say is that the timing of the March Budget is pretty longstanding. There was a period where we moved away from March Budgets, but that traditionally has been the timing of the Budget. That tends to be related to the tax year, and it enables changes for the forthcoming tax year to be announced shortly beforehand. In that sense, there is always a case for moving around the timetable, but there are good and longstanding reasons why we have the timetable that we do.
Q162 Patrick Grady: Yes, but it is kind of related to a lot of what we are asking, in terms of the opportunities for scrutiny, especially if that scrutiny was ever to involve some kind of change. Just out of interest, given that Government starts spending its money on 1 April, what if the House for some reason did fail to give legislative authority for the spending plans? The Supply and Appropriation Bill was passed on 16 July. Standing Orders do not allow for any debate, but imagine if there was a Division of the House, and the Bill fell. What on earth does that mean for the money that has already been spent, and what are the consequences for Her Majesty’s Government, aside from the immediately obvious?
Mr Gauke: As you say, obviously then you are into what the Americans would describe as a fiscal cliff, which is far from ideal. It is also the case that money is voted on account, in terms of the supplementary estimates in the amount, so something like 45% of a department’s spending will have been approved by Parliament in advance of the year to avoid particular problems. But yes, it would obviously cause significant problems and disruption for the UK Government. That is one transatlantic innovation I would not be keen for us to follow.
Mr Lidington: I am sure Mr Grady does not see himself as the Senator Cruz of the House of Commons.
Patrick Grady: No. The Scottish Government, in the early days of the SNP minority Administration, lost a vote on its Budget and had to bring proposals back to the Scottish Parliament after negotiation in the coalition situation. It was not in this situation, but it cannot start spending money until it has had that approval, whereas, although I take your point about the supplementary estimates, the financial year is well under way by the time we get round to voting on what has been in the Budget. To make the other reforms we are talking about here, in terms of allowing extra time and opportunity for scrutiny, that overall timetable maybe has to be looked at as well.
Chair: I think we have almost covered the Liaison Committee, so I will bring in Nic.
Q163 Nic Dakin: It is great to see both of you in the Cabinet, particularly you, Chief Secretary, whom I have always enjoyed asking questions in various situations, so it is good to see you in here. To some extent, you have already dealt with some of the points that I was going to ask about, in terms of the information that is presented to Members, and the issue of accessibility and depth, mentioned in your answers to the Chair earlier. If we look at the main estimates for Government expenditure in this financial year, presented on 20 April, they comprise 658 pages and represent a requirement for cash of £482 billion. Is there a way in which this could be presented that is more easily accessible to Members, so that we can get the balance perhaps a bit back that way?
Mr Gauke: First of all, thank you for your kind words. This is a different forum in which I am responding to your questions; I am pleased to be doing that.
On the nature of the information, as both David and I touched on earlier, to some extent there is a lot of information that we do have to provide—for example, the ambit information, which is quite dry and wordy but is important for legislative purposes. There is a lot of information that maybe is difficult for Members of Parliament to comprehend but is quite helpful, or indeed essential, to the National Audit Office in holding Government Departments to account.
I come back to the point that, first, there are summaries within that documentation. Secondly, if there are ways in which we can improve the way this is presented, then we are certainly open to reviewing that and would take on board any suggestions or proposals that you might have.
Q164 Nic Dakin: I think that is very helpful. Other countries have different ways of doing things, and certainly the evidence from the OECD, which Patrick referred to earlier, suggests that there are things we might learn from other countries, in terms of trying to make information more accessible and thereby allowing scrutiny to be better. Is there anything that Government have done in that area to look at that, or might be happy to do?
Mr Gauke: As I say, we would be happy to look at proposals and happy to look at other countries. The only thing I would say is to caution, in case there is any view that this can be condensed to very simple information, that some of the information that looks apparently quite indigestible is necessary, either for legislative purposes or for the likes of the NAO to properly understand how Government are spending money.
Q165 Nic Dakin: The estimates information, as it is presented, does not usually link back to what came earlier, so would it be possible for clearer examples of what money is proposed to be spent on under each heading, and why there is either additional money needed or a reduction in money needed? Would that sort of information be easily—
Mr Gauke: Again, we are certainly willing to look at that. Of course, you rightly raised the point about the number of pages involved in this. More explanation as to why there might be inconsistencies between one set of documents and another could add to the length of the information provided, and sometimes different documents are doing slightly different things. If there is a way of presenting this and perhaps providing more of a narrative, again I think that would be something we would be willing to look at.
Mr Lidington: Again, I think this is something where I would want to understand whether this Committee had the support of other Select Committees. As you know, Chairman, there is already an estimates memorandum that is published on the Select Committees’ websites, and which should provide three-year comparative data. My understanding on advice is that the precise format does vary from one Department to the other, but that is because the format is discussed with the relevant Select Committee beforehand, and agreed to meet that Select Committee’s particular requirements. Again, there is perhaps an element of tension between what an individual departmental Select Committee would want, and the pressure for information to be produced in a common format and to provide a particular type of explanation and particular comparators.
Q166 Chair: I think that is a very legitimate point, but as a Committee we would want you to understand and recognise that no Select Committee, or the 17 or so Members on it, owns an issue. There is often much broader parliamentary interest. That interest could, we hope, be expressed on the Floor of the House, potentially. I do take that point, but I think we will be looking at how we can broadly engage all Members of Parliament, not necessarily just those on a specific Select Committee.
Mr Lidington: If I was looking at it from the point of view of Government, I would be asking myself whether we want to get into the situation where we had one set of figures and an accompanying explanation for a departmental Select Committee and a different one accompanying the estimates. That could lead to confusion, or even, heaven forfend, allegations of conspiracies and subterfuge, if there was not an obvious read-across between the two.
Chair: A very good point well made.
Q167 Sir Edward Leigh: To sum up, we are asking for so little. If you look at America, the President presents his putative Budget, and then Congress I think spends over 100 days looking at every aspect of it. The congressional committees are hugely powerful and can change every single aspect of it. David, as you know, I am very admiring of you, and I would like you to be the greatest reforming Leader of the House in 200 years. Of course, you are never going to agree to this, are you? We are being broadcast now; what would happen if you said that there is something in the American system, in terms of democracy?
Mr Lidington: Of course there is something in the American system, in terms of democracy. There are also important differences, not least the direct election of the Executive, rather than the Executive sitting in the egislature. I think, though, the key element of the American appropriation system, of course, is that Congress has the power to both add and subtract elements of the Budget. I really would not want to get drawn at all towards the sort of pork-barrel politics that is a feature of American politics. I do not think that would add to the reputation of the House.
Sir Edward Leigh: Well, I just ask the question. I just wanted to convince you that if we are looking at international comparisons, what we are suggesting is such a small reform; it is not a big deal. It is really baby steps.
Q168 Patrick Grady: The main supply estimates published each year give figures for the block grants to be made by the Secretaries of State for Scotland, Wales and Northern Ireland to the respective devolved institutions. The House is asked to approve these grants through the estimates process. What information do the Government provide to the House about how those block grant figures have been arrived at?
Mr Lidington: You have the comparability factors that are used in applying Barnett that are published in the Treasury Statement of Funding Policy, which I think—the Chief Secretary will correct me if I am wrong—is published alongside the spending review, or shortly after the spending review. Then changes to departmental totals in the main estimates are obviously reflected in overall block grants to devolved Administrations.
The difficulty that Mr Grady’s question presents is that, of course, precisely because they are block grants, there is no automatic assumption that a decision to raise or lower spending by the UK Government on a particular head need lead to the same decision on spending in that devolved Administration. It is open to the devolved Administration, via money between different budget heads within the block grant, to reflect the devolved Administration’s priorities; and, of course, certainly in the case of Scotland, it is open to the Scottish Government to raise taxes of certain types, if they wish to do that.
Patrick Grady: Or, indeed, to lower them.
Mr Lidington: Or, indeed, to lower them.
Q169 Patrick Grady: But it does affect the total amount of money available to the devolved Assemblies, and I think this is particularly relevant because of the arguments that were made during the introduction of the EVEL procedures, which are also detaining this Committee at great length. The Deputy Leader of the House, summing up in the EVEL debate, said, “Spending is voted on through the estimates, which are given effect by law by the Supply and Appropriation Bill on which all Members voted.” But we just heard that the Supply and Appropriation Bill is a complete formality. If it was to be defeated, it would trigger a vote of no confidence and a general election. There is not an ability for me as a Scottish Member to have a say through the estimates process on the Barnett consequentials of legislation that might be subject to the EVEL procedure. That is the reality of the situation.
Mr Lidington: The information about Barnett consequentials is provided by Government to the Welsh, Scottish and Northern Ireland Affairs Select Committees, so that information is available as part of the estimates memoranda. As I said earlier, it is open to the Liaison Committee under current arrangements to table an estimates motion that permits the sort of debate that Mr Grady is seeking. This is again one of those matters that it is within the power of Parliament to change, if it so wishes.
Chair: The problem we have, to be honest, with the Liaison Committee—and it is a great Committee, on which I sit—is that, of course, it comprises Select Committee chairmen and women, all of whom have their own particular agendas to push forward, which probably do not coalesce around a debate on estimates, which is why I think as a Committee we are quite keen to remove the three days on estimates and give them to the Backbench Business Committee, so that we can actually debate estimates. While I have great faith in the Liaison Committee to do many good things, I am not sure that they are as interested and as keen to debate estimates as perhaps this Committee is to have them do so.
Q170 Patrick Grady: It might permit debate, but it does not permit an opportunity to change. The example that Professor David Heald had given us, and which has been speculated on, in any event, on a number of occasions, was that if, for example, the Government came along and gave academies the right to charge school fees, which would have a negative effect on overall education expenditure in England, that could have negative Barnett consequentials for Scotland, Northern Ireland and Wales. The same example has been given of what would happen if the Government here wanted to privatise the NHS and reduce the overall spending on the NHS, reducing the overall amount of Government expenditure. That could be determined as a law that came under English votes for English laws, and therefore, as a Scottish Member of Parliament, I would have no say over it, but I have no say in the estimates process either of the consequential effect on the Scottish block grant of the reduction that would follow to Scotland through the current estimates process. That is my understanding of the situation.
Mr Lidington: They are interesting hypotheses, of course. Both scenarios, of course, are flatly counter to Government policy.
Patrick Grady: Of course. Hypothetically speaking.
Mr Lidington: Yes. Equally, there will be some Members of Parliament representing English constituencies who would say that they wanted the opportunity to vote on Barnett in particular. There is discontent always among some Members representing all four parts of the United Kingdom at different times. That is an essential feature, it seems, of any decision to allocate spending between different jurisdictions within one country.
Patrick Grady: With the greatest respect to the Leader of the House, his predecessor sat at this Committee and told me that my opportunity as a Scottish Member to vote and change—well, of course, he was quite careful not to say that. My opportunity to vote on expenditure was through the estimates process, but the reality is that there is no vote; there is no opportunity to change. We can debate. We can have days and days of debate, and I think it would be better if we were at least able to raise some of these potential Barnett consequentials, but there is no genuine opportunity to have that vote. That, I think, will be relevant for the Committee to consider when it is drawing up its response to the technical review of the EVEL procedures as well.
Sir Edward Leigh: I would like to support Mr Grady on that. It is absolutely right. It cannot be denied that you can have Barnett consequentials and Mr Grady or his colleagues, under present estimates procedure, cannot vote on them or debate them, effectively. Of course, I would say to Mr Grady and to you that one way of overcoming this would be to have full fiscal autonomy, and to replace the Barnett formula with a needs-based formula, but I will not weary the Committee with that.
Chair: That might be slightly out of order, to be honest.
Sir Edward Leigh: It might be out of order, but I made the point before you ruled me out of order.
Q171 Chair: Does anybody have any further remarks to make to our distinguished witnesses, who I think have been very candid and open in their responses to us? I would just say to the Leader of the House how much we look forward as a Committee to his response to our excellent recommendations on private Members’ Bills. I hope he does not keep us waiting too long, and I hope he does not disappoint us. If he is to disappoint us, not too much disappointment, please.
Mr Lidington: It is my intention certainly to consult with colleagues about the report, which I have read, and to publish the Government’s response within the normal timeframe.
Chair: Thank you very much for that. Thank you, witnesses, once again.