аЯрЁБс>ўџ ўџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџRoot EntrySФБ{z|џџџџџџРџџџџџџџџ РF ?@ABCDEFGH`џџџџџџџџ^џџџџNPQRSTUVkџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџabўџџџdefghijlmnopq:џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџCompObjџџџџџџџџџџџџjџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџўџџџ ўџџџўџџџўџџџўџџџўџџџўџџџўџџџўџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ=4 T џџџ.1   &џџџџРџџџРџџџрР & MathTypeP & џџџџL=4Д@шшўџ џџџџ РFMicrosoft Word Document MSWordDocWord.Document.6є9Вqer we examine some of these issues by combining detailed information from the Treasury Statements with other information from government departments. Our approach in this paper is to look in detail at a number of specific examples, rather than to carry out an exhaustive study of all the sub-programme information in the Treasury Statements. We have primarily, though not exclusively, chosen as examples sub-programmes which are regarded by the government as key to influencing economic development, competitiveness and growth. Background For 2002-03, the planned DEL for Scotland, was Ѓ17.77 billion, (Scotland Office, 2002). In the first instance, this is passed to the Scotland Office, a UK government department under the Secretary of State for Scotland. The Scotland Office retains Ѓ6.6 million to cover its own functions, one of which, it is relevant to note, is to represent Scottish interests within the UK government. Changes to the DEL for Scotland are determined by the Barnett formula. For present purposes, it is sufficient to note that the Barnett formula is applied at spending programme level, where a spending programme is essentially the block of expenditure for which a Whitehall department is responsible - such as Health, etc. The way the formula operates is to multiply the planned change in expenditure in the Whitehall spending programme by the percentage of expenditure in the programme which relates to devolved functions, and by the ratio of the population of Scotland to England, to give a resulting component of the change in the Scottish DEL. The intention of this calculation is that Scotland should receive the same per capita change in the DEL as the per capita planned change in England on devolved services. The resulting amounts are then added over spending programmes, to give the final change in the Scottish DEL. It is, of course, the responsibility of the Scottish Executive to allocate its DEL between spending programmes as it sees fit. The following table, (Source: Treasury 2002), shows the 2002-03 DEL provision for Whitehall departments. The table also shows the comparability percentages for each programme for Scotland, Wales and Northern Ireland. The comparability percentage is, essentially, the percentage of the Whitehall department’s expenditure which is on functions which are devolved in Scotland, Wales, or Northern Ireland. Thus, for example, in the case of the Education and Employment programme, the Whitehall DEL is almost Ѓ23.3 billion, and 99.7% of the functions in the programme are devolved to Scotland. Comparability percentages forProvision 2002 Spending ReviewTotal Budgets2002-03ScotlandWalesNorthern IrelandЃ million%%%Education & Employment23,32499.793.199.8Health 58,23399.699.699.7Transport 8,22286.66087.1Office of the Dep. Prime Minister 5,79499.698.499.5Local Government 37,64855.810040.7Home Office 9,87899.80.82.6Legal Departments 3,28195.901.6Trade and Industry 4,45721.320.726.8Agriculture 2,66983.181.485.5Forestry 107100100100Culture Media Sport 1,44292.186.397.1Works and Pensions 6,4658.78.7100Chancellors Dept 4,541003.5Cabinet Office 1,2784.44.418.6Total167,338 For major programmes like Education and Employment, and Health, almost all functions are devolved. Some programmes however, contain a much lower percentage of devolved functions. For example, in the case of Trade and Industry, only 21.3% of expenditure is on functions which are devolved to Scotland. (Note that the local government programme is a special case: the relatively low devolved percentages shown in the table for Scotland and Northern Ireland reflect the method used by the Treasury to account for non-domestic rates). Specific Issues In this section we consider specific examples, combining detailed information from the Treasury documents, with other information from government departments, to illuminate some of the key monitoring issues noted in the introduction. Tourism. Public spending in support of tourism in the UK takes place at local level, at devolved administration level, and at national level. The only explicit entry for tourism within the Treasury funding statements occurs as a sub-programme within the Department of Culture, Media and Sport, (DCMS). The tourism sub-programme accounts for Ѓ72.6 million within the total DCMS entry for 2002/03 of Ѓ1,442 million. As regards Scotland and Wales, the tourism programme is reserved, and indeed accounts for almost all the reserved expenditure within the DCMS programme. Interestingly, according to the Treasury Statement, the tourism sub-programme is devolved to Northern Ireland. Among the devolved functions within the DCMS programme, (which DCMS therefore looks after for England), are Museums and Galleries, Arts and Sport, and Historic Buildings: these functions are closely allied to tourism. This is a point which will have significance later. While our primary concern in this example is with the reserved DCMS tourism sub-programme, as regards Scotland there is also, of course, significant devolved expenditure on tourism funded through the Scottish DEL: in particular, in 2000/01 VisitScotland received Ѓ25.2 million (VisitScotland 2002). VisitScotland’s primary objective is to help maximise the economic benefits of tourism throughout Scotland. Details on expenditure on the tourism sub-programme are given in DCMS (2002). This indicates that, for 2002-03, planned expenditure is (a) British Tourist Authority (BTA), Ѓ55.5 million, (b) English Tourism Council, Ѓ14.3 million, (c ) Greater London Authority Ѓ1.9 million. Aside from the BTA, which has responsibilities for building the value of inbound tourism to the whole of Britain, the other two categories of expenditure are specifically for England, with no corresponding elements for Scotland or Wales. It therefore appears that the classification of the sub-programme as being 0% devolved for Scotland and Wales, is wrong. EMBED Equation.2 This has financial consequences: it means that elements of the DCMS tourism programme should have been generating Barnett consequentials for Scotland and Wales over the years but have not been doing so. Note too that while Northern Ireland’s tourism entry in the Treasury statement is as a devolved function, the BTA plans show that it regards the promotion of Northern Ireland as part of its remit: (BTA, 2002). One of DCMS’s responsibilities is the development of a tourism strategy. The following quotations from the foreword by the Prime Minister to the DCMS strategy “Tomorrow’s Tourism” (DCMS, 2000) illustrate confusion between whether DCMS is operating in a reserved or devolved manner: “But the challenge facing us now is to create a competitive, world-class tourism industry in Britain which matches both the quality and the best of British business generally and the scale of tourism in Britain in particular.” “I believe that the Government’s new strategy for tourism - a strategy for England, but which has clear implications for Scotland, Wales and Northern Ireland - will help towards this goal.” The implicit assumption that a strategy developed for England, after detailed consultation in England, should fit the characteristics of tourism in Scotland, is then carried over into the arrangements for monitoring and further development. A primary focus for monitoring and development are the annual Tourism Summits, at which Ministers from a number of Government departments, such as Transport, review progress and agree on future cross-departmental actions to assist tourism. At the Summits of 2001 and 2002, Scottish representation appears to have been entirely lacking - as indicated by the published lists of delegates attending these Summits, although delegates were there from Wales and Northern Ireland. (Tourism Summits, 2001, 2002). The conclusion we draw is that, both as regards the allocation of financial resources, and as regards strategy development, the DCMS is not operating its Tourism responsibilities as reserved activities for the benefit of GB as a whole, but is acting as if it were responsible solely for England. It may be understandable how this has happened: given that over 92% of the DCMS budget is on functions which are devolved in Scotland, and also given, as we have already noted, that many of DCMS’s responsibilities are highly relevant to Tourism - such as Arts, Sports, Museums and Galleries - the working focus in the department is likely to be predominantly to service England. Nevertheless, what has happened represents a clear failure of DCMS to address its responsibilities on reserved matters. However, the fail-safe to prevent situation liked this arising should be through the exercise of the responsibility of the Secretary of State for Scotland to liaise with Whitehall Departments. There appears to have been a failure to detect the problems in this case and to liaise properly to remedy them. Trade and Industry: Support for Export Promotion and Inward Investment. The Treasury Statement lists three reserved sub-programmes which are the responsibility of British Trade International, (BTI), within the broad Trade and Industry programme. These are BTI Export Promotion, (Ѓ71.4 million in 2002-03): BTI Inward Investment, (Ѓ20.5 million): and a further Ѓ35.8 million to BTI for administration. Note that significant sums are also spent by Scottish Development International on trade promotion and inward investment: this is devolved expenditure funded through the Scottish DEL. BTI is, however, responsible for co-ordinating all trade development and all inward investment promotion across the English regions and the devolved administrations. With regard to trade development and promotion: a) some expenditure relates purely to England. This is true of the Regional Group Core activities of Ѓ15.4 million, and the BTI Finance Department confirmed that there was no spend within its budget for comparable services in Scotland, Wales or Northern Ireland. b) Even for categories of expenditure which do not relate purely to England, BTI do not operate their accounting system in such a way that it is possible to identify on behalf of which part of the UK the expenditure was incurred: (source: BTI Finance Department). As regards inward investment, of the “reserved” planned spend of Ѓ20.5 million in 2002-03, Ѓ12.9 million was allocated to grants to the English RDAs, and there is no corresponding component for the devolved areas of the UK: (source: BTI Expenditure Plans, and BTI Finance Department). The 100% reserved classification given to BTI’s expenditure in the Treasury funding statement therefore appears to be wrong. There are substantial elements within all categories involving expenditure solely for England, with no corresponding expenditure for Scotland, Wales or Northern Ireland. There is also a second important point, however: namely, that the monitoring and accounting systems operating within BTI are not structured in such a way that it is possible to determine where expenditure is taking place, and hence whether the interests of Scotland, Wales or Northern Ireland are being served as they should be under a reserved programme. Once again, as in the Tourism example, there appears to be a failure by the Scotland Office to exercise a monitoring and involvement role. Trade and Industry: Support for Innovation The knowledge economy is widely recognised as being crucial to the competitiveness and growth of a developed economy. Consistent with this view, there are substantial elements within the DTI programme intended to support the development of the knowledge economy: these include the Innovation sub-programme, (Ѓ211 million, reserved), expenditure on the Research Councils, (Ѓ1.837 billion, reserved), and a range of smaller programmes to assist the industrial exploitation of science, most of which are reserved. In this example we consider two specific initiatives within the Innovation sub-programme: namely, the Link Scheme, and the Faraday Partnerships. Link is the UK Government’s principal mechanism for promoting partnership in pre-competitive research between industry and the research base. Under the scheme, co-operative partnerships involving industrial firms and higher education institutions are funded by the DTI, Research Councils, other Government departments, and industry. The findings of an earlier report on Link, (Cuthbert 2001), are relevant to the present study: namely a) participation in the scheme by Scottish universities was relatively high. b) participation in the scheme by Scottish companies was very low, (even allowing for the relatively smaller number of companies in Scotland). c) there were some specific factors, largely due to the arrangements for recruiting industrial partners into Link, which militated against the involvement of Scottish firms in the scheme. d) with the exception of fish farming, the involvement of the Scottish Executive in the scheme was minimal: this led to a lack of co-ordination between Scottish Executive initiatives to encourage the knowledge economy and the Link programme. For the purpose of the present study, therefore, the conclusion is that, even though Link is an entirely reserved function, it is not being operated uniformly to the benefit of firms across the UK. The Faraday Partnerships are a relatively new initiative, set up in 1998 to encourage new product and process development in key sectors of the economy, by promoting partnerships between academic research and business. The DTI and Research Councils provide funding on a pump priming basis for the partnerships to carry out collaborative research projects, promote core research, and develop networks. Other government departments, and indeed the Scottish Executive, have provided support. The intention is that Faraday projects will be well positioned to access other sources of support such as Link, Teaching Company Schemes, and EU Framework Programmes; and this is already happening in some partnerships. As in the Link scheme, Scottish Universities and Research Organisations are actively engaged in the Faraday partnerships. With regard to participation by Scottish businesses, information on the location of firms engaged in Faraday partnerships is not published. For the purpose of the present study, in summer 2002, all of the then 18 Faraday partnerships were contacted, and asked for information about numbers of business participants, and how many of these were in Scotland. For the 12 responding partnerships who gave useable information, the results are set out below: Faraday Partnership Scottish Businesses All UK Businesses ADVANCE (aero) none 40 COMIT (communications) none direct 24 CRYSTAL (chemicals) none direct 12 Food Processing Engineering around 5 170 SMART (optics) 2 50 High Powered Radio Frequency none 4 Remediation of Polluted Envt. 1 70 Intersect (Intelligent Sensors) 1 61 (inc. HEIs) ProBio (Advanced biotech) 1 33 White Rose Packaging none direct 55 For two further partnerships, Imaging and Technitex, numbers are not known: however, they do have a strong Scottish presence with the involvement of Scottish HEIs as core partners. Imaging receives support from Scottish Enterprise: Technitex has had no financial support from the Scottish Executive and is reviewing its membership fees to encourage greater participation among businesses. Overall, however, participation of Scottish firms in this important new initiative is very poor, and significantly lower than, for example, Scotland’s 7.9% share of high tech employment: (DTI, Regional Competitiveness Indicators, September 2001). The conclusion we draw is that LINK and Faraday are not operating fully to the benefit of Scottish firms. If other elements of the DTI reserved functions designed to support innovation are operating similarly, then this could call into question the ability to grow a knowledge economy successfully within Scotland. This points to the need for scrutiny of the various other DTI innovation functions, to establish whether they are operating effectively for the benefit of the whole of the UK. There also seems to be a general problem about co-ordination between devolved functions in the innovation area, and DTI activities. To give some examples: a) with regard to European Union Framework and associated programmes, where DTI represents the whole of the UK, there is no Scottish strategy in relation to these programmes, and liaison with DTI is handled on a watching brief basis: (source Scottish Executive, personal communication). b) The second example involves links between HEIs in the UK, and HEI centres of excellence in North America. As the Treasury statement confirms, funding for the link between Cambridge and MIT is a DTI reserved sub-programme. However, for HEIs in Scotland, links like those between Edinburgh and Stanford, and Strathclyde and Carnegie-Mellon, are regarded as devolved issues, funding proposals for which are presented to the Scottish Executive. This raises the question as to whether adequate consultation took place with DTI when Scottish links were being established: in other words, it raises questions about how adequately co-ordination was handled between the Scottish Executive and DTI. (This example also raises another issue, perhaps not so central to our current concerns, as to why the Scottish links were not regarded as reserved.) c) As a final example, the Scottish Executive strategic document, “Towards a Knowledge Economy” makes minimal reference to the potential for benefiting from schemes like Link and Faraday. NHS Fees and Charges We noted in our earlier article, (1999), that issues arise because the DEL figures to which the Barnett formula is applied are net of fees and charges. Hence the gross level of service provision depends, in addition to the net resources made available by Barnett, on the amount of income generated by fees and charges: (it also depends on the amount of income generated from other “own resource” sources like Council Tax). If there are large changes in the relative amounts of income generated by fees and charges in England as compared with other parts of the UK, then this could lead to significant shifts in the gross levels of service provision, independently of provision of net resources through Barnett. We argued in our earlier paper that it would be important to monitor whether such changes in income from fees and charges were taking place, since this could indicate the need for an adjustment to the funding package. As we pointed out, it would not be sensible to have any automatic adjustment mechanism. If income from fees and charges was increasing in one country because of local decisions to increase fee rates, then it could be argued that this is a domestic matter for the country in question: and that to automatically compensate the other countries would destroy any incentive for countries to grow their own resources. On the other hand, if income from fees and charges was increasing in one country relative to another even though the structure of charges was essentially the same in the two countries, then that could be taken as an indication of a relatively greater ability to pay in one country: and it might, in these circumstances, be appropriate to adjust the funding mechanism to compensate for this. It can be seen, therefore, that difficult, and essentially political, judgements would have to be made about whether to adjust the funding mechanisms, if income from fees and charges were growing in one country relatively much faster than in another. A key monitoring issue, therefore, was to detect in good time whether significant relative shifts in income from fees and charges were taking place. In this example, we demonstrate that such shifts are taking place, by looking at the particular case of NHS fees and charges. The Treasury Statement gives only limited information on NHS fees and charges: the only significant sub-programme which specifically identifies fees and charges is “Pharmaceutical services: prescription charges income”, which has provision of -Ѓ428 million. Greater detail on NHS fee and charge income, however, can be obtained from successive Department of Health departmental reports. Tables in these reports give figures for the NHS DEL, both on a gross and net basis (the difference being fee and charge income), both for England and the whole of the UK. By subtracting the English figures from the UK figures, it is therefore possible to compare NHS fees and charges for England with the rest of the UK. It is possible to assemble, from different departmental reports, a consistent run of figures for the best part of a decade from 1994/95 to planned figures for 2003/04: (prior to 1994/95, the English and UK figures in the reports are inconsistent). The resulting figures are shown in the following table: NHS Fees and Charges in Departmental Expenditure LimitsЃ millionYears1994-951995-961996-971997-981998-991999-002000-012001-022002-032003-04England-2300-2445-2732-3129-3339-3542-3736-3658-3609-3689Rest of UK-363-416-413-423-364-343-292-253-231-235UK-2663-2861-3145-3552-3703-3885-4028-3911-3840-3924 Over the period as a whole, fee and charge income in England grew from Ѓ2,300 million to a planned figure of Ѓ3,689 million in 2003/04, an increase of 60%, while in the rest of the UK the corresponding figure fell by over 35%. If it were decided to compensate the rest of the UK for the relative decline in its fee and charge income over the period, then this would require an additional allocation of about Ѓ350 million to the whole of the rest of the UK through an adjustment to Barnett. This would be a significant adjustment. As we have argued, the decision whether to make such an adjustment would be an essentially political judgement, which should be taken in the light of more information on the underlying reasons for the relative shifts in NHS fee and charge income. But what this example does illustrate is that significant shifts in fee and charge income are taking place, and that these are of a magnitude which could have potentially serious implications for the operation of the devolution funding formula. The conclusions we draw from this example are that relative shifts in fees and charges should be more explicitly identified, and should be more actively addressed than is being done at the moment. Effect of Programme Mix As has already been noted, the Barnett formula is applied at programme level: this reflects the way the public expenditure planning process works. When a programme consists of a mix of devolved and reserved expenditure, this introduces an element of arbitrariness into the process of applying Barnett. The intention of Barnett is that the devolved country should receive the same per capita change in funding as the planned change in England on those services which are devolved. But where the Whitehall programme is mixed, both the devolved and reserved portions of the Whitehall programme will generate Barnett consequences. The answer on applying Barnett will come out “right”, (in the sense that the devolved country receives the same per capita change as the planned change in English spending on devolved services), if and only if the planned percentage changes in the devolved and reserved portions of the Whitehall programme are the same. If reserved expenditure in the Whitehall programme increases by a larger percentage than devolved expenditure in the programme, then the devolved country will get a bonus from the application of Barnett- and vice versa. In most circumstances, this is hardly likely to matter. As long as the devolved and reserved portions of mixed programmes move broadly in step, any effect is likely to be small- and is as likely to benefit as to penalise the devolved country. Nevertheless, from a monitoring perspective, it would be desirable to be able to check that no consistent bias was being introduced into the Barnett allocation process through the operation of mixed programmes. At first sight, it might appear that one way to carry out this check would be to look at the percentage of expenditure which is devolved for each of the main mixed programmes in successive Treasury statements. If this percentage is rising for a particular programme, then that would imply that spending plans in the devolved part of the programme were increasing at a higher percentage rate than in the reserved part: this in turn would imply that the application of Barnett to the programme would tend to penalise the devolved countries- and vice versa. It is not really feasible, however, to extract the information suggested in the previous paragraph from available published sources. The problem is that the extent of departmental reorganisation, and of transfer of functions between departments, renders successive Treasury statements inconsistent. We recommend, therefore, that future Treasury statements should contain extra information, relating back to the previously published statement, to enable the percentage of expenditure which is devolved in each programme to be tracked on a consistent basis through time. Conclusions In this section we draw conclusions from the preceding analysis, grouping these under three broad headings: namely, issues about the availability of monitoring data: substantive issues about the operation of the funding mechanism: and substantive issues about the operation of devolution itself. Before stating our conclusions, however, we should repeat a point made earlier in the paper: namely that, since our approach has been to consider a number of selected examples, the substantive issues we identify are a selection, rather than an exhaustive stocktake of theRoot EntrySФБ{z|џџџџџџРџџџџџџџџ ?@ABCDEFGH`џџџџџџџџ^ўџџџN_PQRSTUVkџџџџџџџџџџџџџџџџџџџџџџџџџџџџўџџџўџџџabўџџџdefghijlmnopq:џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџ456789DYZ[\]klmnv…–—Рг НоН*Н+Н*ННƒ Нƒ Нƒ Н‚НDНDН+Н*НН,НіН9Н9:ИНЃОf тџќbЩ / ƒыB!’!?ИНЃОp тџќbЩ / ƒыB!’!—˜™š›œЇЉЋ­ЎЏЦЧШЩаекпрсшщР9НоН*Н+Н*НН,НіНщНЊН Н Н Н НН,НіНщНƒНоН*&ИНЃО> тџќbЩ / ƒыB!’!ИНЃО тџќbЩ / ƒыB!’!?ИНЃОp тџќbЩ / ƒыB!’!щъыѓј§"'()KLMNW\afghy§+§*§§,§і§щ§ъ§D§D§+§*§§,§і§щ§Э§ § § § §§,§і§щ§І§Ћ &ИНЃО> тџќbЩ / ƒыB!’!ИНЃО* тџќbЩ / ƒыB!’!ИНЃО тџќbЩ / ƒыB!’!yz{|„‰’“” ЁЂЃЌБЕЙКЛЭЮЯайорфхцљњћќ§Ћ §Ћ §*§§,§і§щ§л§D§D§+§*§§,§і§щ§О§Ћ §Ћ §Ћ §*§§,§і§щ§л§Ћ §Ћ §Ћ §*§ИНЃО* тџќbЩ / ƒыB!’!!ИНЃО4 тџќbЩ / ƒыB!’!" "#$%.38=>?HIJKUY]abcwxyzƒˆ’“§,§і§щ§л§D§D§+§*§§,§і§щ§О§D§D§+§*§§,§і§щ§О§Ћ §Ћ §Ћ §*§§,§і§щ§ИНЃО* тџќbЩ / ƒыB!’!!ИНЃО4 тџќbЩ / ƒыB!’!"“”ЇЈЉЊГЗЛПРСвгдеортцчшїјљњ ол л л л лл,лілщлДлЋ лЋ лЋ л*лл,лілщлолЋ лЋ лЋ л*лл,лілщлоло&ИНЃО> тџќbЩ / ƒыB!’!!ИНЃО4 тџќbЩ / ƒыB!’! #$%&'()<=M78Aьэ…†™ Г#Д#Я$Г%Д%s&t&^)_){,Ќ-­-Ў-і-A/B/ 0Ё0§*§+§*§§,§і§щ§ъшz хz хz хz хz хz хz х z хz хz хz хz хџz ; хz хz пz хz йz хz х z хz х z хz хz хz хz хz хz хz хz Х;§Х­ќИНЃО тџќbЩ / ƒыB!’!'Ё0б0й1с2т2џ34Œ6777D7C9D9е9ж9‰;ж;e<!=>>л>м>ЁAЂAтCуCD;DdDŠDЖDаDљDETEwEžEŸE$GHHJ JЄJ§z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z § z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z -ЄJХKOЫOЬOсO‰QŠQЇVЈV8X9X­\Ў\ц\ч\ш\щ\ъ\ы\ь\э\ю\я\№\ё\ћ\ќ\§\ў\џ\]]]]§z § z §z §z §z §z §z §z §z §z §z §z §z њšЖњšЖњšЖњšЖњšЖњšЖњ‰ЖњŠЖњЃЖњmЖњ‰ЖР‰ЖњPЖњnЖњmЖњРЖњ@ЖњCЖњ‰ЖњŠЖњЃЖ9ИНњЛ ОV тџnС Н 9И}C"Ы"]]]] ]]]$],]4]<]D]L]T]\]]]e]k]q]w]}]ƒ]‰]]•]›]Ё]Ђ]­]В]З]М]С]Ц]Ы]а]е]к]п]р]у]§mЖ§‰Жс‰Ж§PЖ§nЖ§mЖ§РЖ§@Ж§CЖ§‰Ж§ŠЖ§ЃЖ§mЖ§‰Жс‰Ж§PЖ§nЖ§mЖ§РЖ§@Ж§CЖ§‰Ж§ŠЖ§ЃЖ§mЖ§‰Жс‰Ж§PЖ§nЖ§mЖ§РЖ§@Ж§CЖ§‰Ж§ŠЖ§ЃЖ§mЖ§‰Жс‰Ж§PЖИНњЛ О тџnС Н 9И}C"Ы(у]щ]я]ѕ]ћ]^^ ^^^^ ^!^хbцbўb‘c’cŽgg‚hƒh‚kƒkМmНmЩmpp@pqІq,sлsШuєu’v”w9x:x,y§nЖ§mЖ§РЖ§@Ж§CЖ§‰Ж§ŠЖ§ЃЖ§mЖ§‰Жс‰Жоz Жоz оz оz оz оz о z оz оz оz о z оz оz оz оz оz оz оz оz оz оz оz оz оz оz оz оz оz оz ИНњЛ О тџnС Н 9И}C"Ы(,y-ylyєy{я|№|&}Л}~zwxƒР‚љ‚Уƒ1„n„Ђ„|…Ы…†@†A†M†N†O†[†\†]†^†_†§z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z §z ієђі№єz ђђ§z `ќџ%!K@ёџNormala c"A@ђџЁ"Default Paragraph Font@TOC 1a  @ Footer 9r )@Ђ Page Number_ƒ_†џџџџ !џџ џџ џџ џџ џџ џџ џџ џџ џџ џџ  џџ Ђ ЛЯ!б-e9EЮRў_m&z_ƒфМй“ • K†y†DE4—щy“Ё0ЄJ]у],y_†FGHIJKLMNOPQRџ_ƒ:”џ•€ !џ•€!џ•€Л С Œ*’*r0v0*1/1љABBBЩBвB‡CC JJ№lљlŒ€’€–€ž€Aƒ`ƒ@Preferred Customer?C:\My Documents\Scotland\Devolution Monitoring Draft 261102.docPreferred Customer?C:\My Documents\Scotland\Devolution Monitoring Draft 261102.docPreferred Customer?C:\My Documents\Scotland\Devolution Monitoring Draft 261102.docPreferred Customer?C:\My Documents\Scotland\Devolution Monitoring Draft 261102.docPreferred Customer?C:\My Documents\Scotland\Devolution Monitoring Draft 261102.docPreferred Customer?C:\My Documents\Scotland\Devolution Monitoring Draft 261102.docPreferred Customer?C:\My Documents\Scotland\Devolution Monitoring Draft 261102.docPreferred Customer?C:\My Documents\Scotland\Devolution Monitoring Draft 261102.docPreferred Customer?C:\My Documents\Scotland\Devolution Monitoring Draft 261102.docPreferred Customer?C:\My Documents\Scotland\DevolutiRoot EntrySФБ{z|џџџџџџРџџџџџџџџ Ј>Ј>Ј>Ј>Ј>ЈЌ Ќ Ќ Ќ=]Ќšї­š‘ЏрЏX8АSЏЏФІ>ЈDF >Ј>Ј>Ј>ЈЏЏоЈФІФІ>ЈЈоЈоЈоЈ>Ј ФІ>ЈФІ>ЈЌй’w§–ТиІDЇrФІФІФІФІ>ЈЌоЈ@оЈThe Treasury Funding Statements as a Tool in Monitoring the Devolution Settlement Margaret Cuthbert Jim Cuthbert November 2002 Introduction In a previous Commentary, we discussed the importance of monitoring the operation of the devolution settlement: (Cuthbert and Cuthbert, 1999). We argued that the Scottish Parliament would need to maintain an ongoing grasp of the detail under- pinning the annual determination of its Departmental Expenditure Limit (DEL). We also argued that there were important wider issues which needed to be addressed including (a) ensuring that there was proper articulation between devolved and non-devolved services; (b) ensuring that Scotland was getting adequate “value for money” from non-devolved expenditure; (c) monitoring the amount of income generated from “own resource” sources like fees and charges. The Treasury itself recognises that the way in which the Budget of each of the devolved administrations is determined should be clear, unambiguous, and capable of examination and analysis by the devolved administrations and by the UK Parliament. As a contribution to this process, the Treasury publishes every two years a “Statement of Funding Policy” for the devolved administrations: (Treasury 1999, 2000, 2002). The Treasury Statements contain two types of information: first, a general description of how the funding mechanism, that is the Barnett formula, works; secondly, detailed information breaking down expenditure by Whitehall departments to sub-programme level, and showing whether the relevant function is devolved to Scotland, Wales or Northern Ireland. The Treasury Statements are the unique source of this level of detail: but they do not in themselves answer the types of monitoring question which we have identified. In this paper we examine some of these issues by combining detailed information from the Treasury Statements with other information from government departments. Our approach in this paper is to look in detail at a number of specific examples, rather than to carry out an exhaustive study of all the sub-programme information in the Treasury Statements. We have primarily, though not exclusively, chosen as examples sub-programmes which are regarded by the government as key to influencing economic development, competitiveness and growth. Background For 2002-03, the planned DEL for Scotland, was Ѓ17.77 billion, (Scotland Office, 2002). In the first instance, this is passed to the Scotland Office, a UK government department under the Secretary of State for Scotland. The Scotland Office retains Ѓ6.6 million to cover its own functions, one of which, it is relevant to note, is to represent Scottish interests within the UK government. Changes to the DEL for Scotland are determined by the Barnett formula. For present purposes, it is sufficient to note that the Barnett formula is applied at spending programme level, where a spending programme is essentially the block of expenditure for which a Whitehall department is responsible - such as Health, etc. The way the formula operates is to multiply the planned change in expenditure in the Whitehall spending programme by the percentage of expenditure in the programme which relates to devolved functions, and by the ratio of the population of Scotland to England, to give a resulting compofor scrutinising the way Whitehall departments are operating reserved functions to make sure that they are being delivered for the benefit of all parts of the UK. This needs to be rectified and should be the responsibility of the relevant Whitehall Departments, and, given their Whitehall liaison roles, also of the relevant Secretaries of State for the devolved countries. References British Tourist Authority, Business Plan 2002/03 to 2004/05. British Trade International, “The Government’s Expenditure Plans, 2002-03 to 2003-04”, 2002. Cuthbert, J. and Cuthbert, M. (1999) “Monitoring the Financial Aspects of the Devolution Settlement: Issues and Data Requirements”, Quarterly Economic Commentary, Fraser of Allander Institute , Vol. 24, September, 1999. Cuthbert, M. (2001) “Developing a Knowledge Economy in Scotland: Lessons from the Operation of the LINK Programme”, Quarterly Economic Commentary, Fraser of Allander Institute , Vol. 26, December 2001. Department of Culture, Media and Sport, “Tomorrow’s Tourism: A Growth Industry for the New Millennium”, 2000. Department of Culture, Media and Sport, Annual Report, 2002. Department of Health, Departmental Reports: annual. HM Treasury, “Funding the Scottish Parliament, National Assembly for Wales and Northern Ireland Assembly, A Statement of Funding Policy, July 2002,(Third edition). First edition: March 1999; Second edition, July 2000. Scotland Office, “The Government Expenditure Plans, 2002-03 to 2003-04”, 2002. Tourism Summits, List of Attendees, March 2001, March 2002. Visit Scotland Annual Report: Report and Accounts, 2002. PAGE 11 PAGE 11 ™ Єƒ.ЅШAІЇЈ Љ ЊQ  05')#()=L8@џ!"""""Ў-ѕ-7C7уCDЬOрOЎ\№\ё\]]\]]]Ё]Ђ]п]р]^ ^!^цbўb!f)fНmШmp?p-yky№|%}wxƒ …+…@†A†B†H†I†K†ўўўљєљ№ы№ы№ы№щўчтибтччўчЭЧЭЧЭЧЭЧЭЧЭЧХччўччччўУўНЛНЗPaP uDPVc ]a bca c uDLЖ‡AeіџKuDLЖ‡AacvKuD^cUa ca ca bc]a bUHK†L†M†O†P†V†W†Y†Z†[†^†_†y†љїљїљѓљїёяuUPaP uDP RSer€‚KLьэ– —    Ё Ђ ОП 1234§z §z њz њz њz јz јz јz ѕ z ѕz ѕz ѕz ѕ z ѕz ѕz ѕz ѕz ѕz ѕz ѕ z ѕz ѕz ѕz ёоё*ё+ё*ёюг ёг ёг ёг