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Mr. Deputy Speaker (Mr. Michael Lord): With this it will be convenient to discuss the following motion:
- That the draft Scotland Act 1998 (Transitory and Transitional Provisions) (Appropriations) Order 1999, which was laid before this House on 4th February, be approved.
It is challenging and exciting to realise that this is the last time that the House will be called upon to consider the detailed public spending plans for Scotland. We are now just 12 weeks away from the elections to the Scottish Parliament and 19 weeks away from that Parliament assuming its full powers. From then on, the House will be required only to agree the size of grant to be paid annually into the Scottish Consolidated Fund. It will be for the Scottish Parliament to determine how its overall budget should be decided and spent. So this is truly an historic occasion.
Of course, the management and control of public spending in Scotland will not be passed into a void: it will properly be a matter for the Parliament to decide upon its own financial procedures. Meanwhile, a great deal of work has already been done to prepare the ground. In particular, the cross-party consultative steering group has signed off a report from the financial issues advisory group that makes detailed proposals for all the necessary budgeting, monitoring, accounting and audit arrangements. I do not, of course, wish to pre-empt the decisions of the Parliament in any way, but I believe that the template provided for it by FIAG is of the highest quality. It reflects enormous credit upon the expertise of the group's members who gave freely of their time and knowledge. With your permission, Madam Speaker, I place on record our thanks for all their work.
However, FIAG's report provides only a template for the future. Our more immediate task is to get from where we are now--a Westminster-based public expenditure system--to whatever new system is adopted by the Scottish Parliament. We must do so with the minimum of disruption to public services and the minimum of inherited constraint placed upon the Parliament. Meanwhile, we must also maintain the highest possible standards of public expenditure and control throughout the process.
That is what the orders we are discussing today are all about. As their titles strongly suggest, they are transitory and transitional. They are specifically designed to deal only with the financial year 1999-2000 and to get us across during that year from a Westminster public expenditure regime to one that is determined by, and is the responsibility of, the Holyrood Parliament, and to do so in the context of a financial year when spending responsibility will fall to the Secretary of State for Scotland in the first part of the year and, from 1 July, to the Scottish Executive.
Our basic strategy is simple. We have already made arrangements to bring into being on 1 April the Scottish Consolidated Fund. The next step is to set out a financial framework for the transitional year. That the finance order does. However, without actual funds to spend, such a framework will be worthless, so we must give authority to allow expenditure actually to take place. That is why we require an appropriation order that will convert the theory set out in the finance order into the reality of spending on front-line services.
I shall move briefly to the key points of the finance order. In essence, it puts in place for the transitional year, arrangements governing the spending of, and accounting for, money paid out of the Scottish Consolidated Fund. There are similar provisions in a host of Acts of this Parliament, ranging from the Exchequer and Audit Departments Act 1866 to the National Audit Act 1983.
The order sets down the conditions under which sums may be paid out of the Scottish Consolidated Fund during the transitional year. It puts in place arrangements to ensure that any payments from the fund relate to functions that are, or will be, devolved and that they have the necessary legislative authority.
The next main provision transfers spending authority for balances unspent at the date of devolution from my right hon. Friend the Secretary of State to Scottish Ministers and, in certain cases, to the Parliamentary Corporation. This is important because it will enable funding for public services to be approved for the entire transitional year and allocations to move seamlessly from my right hon. Friend to the control of Scottish Ministers without further approval.
While those provisions concentrate on the spending of public money, others ensure that funds are properly accounted for. The finance order specifies accounting arrangements for the transitional year in some detail. It requires the Secretary of State to prepare accounts for transactions that take place prior to devolution and places an identical obligation on Scottish Ministers for the period after that.
Mr. Tam Dalyell (Linlithgow):
Have any arrangements been made for a contingency fund or for what should happen in case of contingencies?
Mr. McLeish:
That will be dealt with, but proper arrangements are in place for a contingency fund, which, as my hon. Friend suggests, is crucial. We operate that, within our financial arrangements. It is being, and will be, taken care of.
Dr. Norman A. Godman (Greenock and Inverclyde):
Organisations in receipt of public funding will be anxious to ensure that the transitional period flows as smoothly as possible. I cite the example of the Caledonian McBrayne ferry company, which hopes soon to place a contract for the construction of a large vessel. It is important that those negotiations continue. My hon. Friend will not be surprised that I expect that contract to be placed with Ferguson's at Port Glasgow.
Mr. McLeish:
I shall resist commenting on my hon. Friend's latter point, but a seamless transition to the new, Parliament is vital. It would be devastating if local authorities, health boards, trusts and other organisations
The Secretary of State will be required to prepare accounts for transactions that take place prior to devolution, and an identical obligation is placed on Scottish Ministers for the period after. Both sets of accounts are to be audited by the Comptroller and Auditor General. They will then be laid before this House and the Scottish Parliament respectively.
Subsequently, the Scottish Parliament will be required to legislate on the accounting arrangements--building, no doubt, on the financial issues advisory group's recommendations. However, we must set down accounting arrangements at this stage to ensure that accountability is guaranteed for the transitional phase. It is simply an added safeguard that if we have continuity of funding, we must also have continuity of accounting and proper auditing.
Mr. Dalyell:
Both my hon. Friend the Minister and I have, at various times, been members of the Public Accounts Committee. What is the role of the CAG? Is it correct to say that he has oversight over all funds during this period?
Mr. McLeish:
My hon. Friend is absolutely right. In an earlier debate in the House on what became the Scotland Act 1998, the Chairman of the Public Accounts Committee, the right hon. Member for Haltemprice and Howden (Mr. Davis), made an excellent contribution and we adopted the points he made. There is unanimity in the House that the CAG must deal with the transitional year to allow continuity of purpose.
Because we are determined that public services should be accountable at all times, we have tasked the CAG with the audit of Scottish spending bodies until the Holyrood Parliament is in a position to implement effective arrangements of its own. Similar considerations apply to the examination of economy, efficiency and effectiveness. The CAG will retain responsibility for that task throughout the transitional year. In addition, the order enables him, if necessary, to complete those studies initiated during the transitional year that he has not finished at year end.
The question of accountability clearly does not end with the specification of suitable financial accounting and value-for-money arrangements. We also need to make more general provisions to ensure that Ministers and officials remain accountable until the Scottish Parliament has put its own arrangements in place. Therefore, the order requires the appointment of accounting officers for both pre-devolution and post-devolution periods.
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