╨╧рб▒с>■   ■                                                                                                                                                                                                                                                                                                                                                                                                                                                   ▄еhcр eА▐2/:▐/8899999.9.9.9.9.9.9 89 .9D9CB9B9B9B9B9B9B9B9B9D9D9D9D9D9D9З9X▀9PD99B9B9B9B9B9D9B999B9B9B9B9B9B99B99B9B9PC╖НEL╞.9.99999B9B9B9B9Scottish Left Review Past Issues Issue 31: Illuminating WhitehallТs disinterest Author: Jim and Margaret Cuthbert Illuminating WhitehallТs disinterest а Jim and Margaret Cuthbert describe how without the Freedom of Information Act they would never have discovered serious mistakes in how Scottish public spending is assessed а As this article is being written, Scottish political headlines are dominated by an event which has been a direct consequence of the Freedom of Information Act (FOIA), namely, the resignation of David McLetchie as leader of the Scottish Conservatives. Mr. McLetchieТs fate, as is well known, was sealed by the release of his taxi expenses Ц a release of information which would not have occurred without the Act. It would be wrong, however, (and indeed, dangerous), to judge the FOIA purely by its potential for delivering the occasional high ranking political scalp. What we want to discuss in this paper is another, much less glamorous, application of the FOIA, but one which nevertheless gives us some important insights into how devolution is actually working, and, in particular, how it is not being taken sufficiently seriously in Whitehall. а Just as the McLetchie episode was reaching its media peak, it so happened that we published in a specialist economic commentary a critique of the TreasuryТs figures on public expenditure in the different countries and regions of the UK (УA Constructive Critique of the TreasuryТs Country and Regional Analysis of Public Expenditure, Fraser of Allander Quarterly Economic Commentary, October 2005). Each year the Treasury produces the Public Expenditure Statistical Analyses (PESA), containing details of Сidentifiable expenditureТ in each part of the UK. Identifiable expenditure is that which can be attributed as being for the benefit of specific areas. These are the figures which underpin the ongoing political debate about whether Scotland is subsidised by the rest of the UK, and they are also used extensively in serious academic research. These figures carry the full weight both of being produced by the Treasury, and being classified as Сnational statisticsТ; as a result, they are universally regarded as a unique and unimpeachable source . Until the FOIA came into effect, there was absolutely no way of penetrating below the aggregate figures published by the Treasury to discover just what devils might be lurking in the detail. As an illustration of this last point, consider the following quotation from a paper by the respected economist Professor David Heald, given at an international conference: УThe Treasury takes a proprietary view of its database and denies access to this even to the pre-devolution territorial departments and the post-devolution ExecutivesФ. This quotation in itself says volumes about the TreasuryТs attitude to the peripheral (from their point of view) parts of the UK. а The importance of the FOIA is that we were able to use the Act to obtain, for the first time, the detailed database which underlies the TreasuryТs published public expenditure statistics. Among other things, this database contains information on the detailed sub-programme classification of expenditure; to give an indication of how detailed this is, there are almost 800 different sub-programme codes in the database. Another important Treasury exercise is also carried out at sub-programme level and this is the production of the Treasury Funding Statement for the devolved administrations, published biennially, which shows, for each sub-programme in each Whitehall department, whether the corresponding function is devolved or reserved. By cross relating these two exercises we attempted to see whether the description in PESA of how the money is spent is consistent with the description in the Treasury Funding Statement of whether the corresponding functions are reserved or devolved. The answers were illuminating. а First of all, we found a lot of mistakes in the data. For example, there was an inconsistency in the definition of identifiable expenditure between Scotland and England; the effect is that expenditure on functions like prisons, court services and nature conservation is regarded as Сnon-identifiableТ in England, but expenditure on the same services in Scotland is identifiable. The amounts of expenditure involved here are very large Ц at least г4.4 billion of expenditure in England was excluded from the identifiable expenditure base, while the corresponding expenditure in Scotland was included as identifiable. This directly contradicts the statement made by the Treasury when publishing their figures that Уfigures for expenditure per head in the regions of England and the countries of the UK are therefore directly comparableФ. There were other mistakes as well. To give some examples: а * There are a number of cases where expenditure is wrongly attributed in PESA. The examples we have picked up include (i) where the Department of Works and Pensions identified wrongly that it had spent г57 million of its European expenditure on Scotland, even when this is a devolved function and the relevant expenditure was already included in the Scottish Executive spend: (ii) export promotion and inward investment, where expenditure specifically for the benefit of England is recorded as being for the benefit of all parts of Britain: and (iii) tourism, where again expenditure specifically for England is recorded as being spent on behalf of all parts of Britain. а * All expenditure in Scotland on national museums, art galleries and libraries is regarded as identifiable to Scotland even though some of the users of these services will be resident elsewhere in the UK. However, for similar institutions in England, some of the users will come from Scotland and an element of expenditure is identified to Scotland for such users. This therefore represents another asymmetry between Scotland and England in the definition of identifiable expenditure (though the practical effects of this particular error will be fairly small). а * Even the description of some of the purely Scottish data is misleading; the whole of expenditure on Scottish Enterprise is attributed to the СemploymentФ function, while Highlands and Islands Enterprise expenditure is attributed to СenterpriseТ. This would seriously distort any study of comparative expenditure on enterprise and employment in Scotland. а Many of these specific errors are symptomatic of a more general problem, namely that the Treasury has failed to adequately cross relate the two exercises leading respectively to PESA and the Treasury Funding Statement. Information on reserved/devolved status is not recorded in the PESA database and, in many cases, it is not possible even to match up the sub-programme descriptors between the two exercises. а How much does all this matter? The answer is a lot. First of all, these Treasury figures have a major effect on the political debate in Scotland. Readers will be familiar with the annual circus, each time the Scottish Executive publishes its Government Expenditure and Revenue in Scotland (GERS) report, where Unionist politicians line up to criticise Scotland for its high level of general government expenditure and its claimed fiscal deficit. But on the expenditure side, the GERS report is heavily based on input data from the Treasury PESA exercise. Correcting the errors we have identified in PESA has the effect of reducing the GERS estimate of general government in Scotland by about г550million per annum: and even then, we are not confident that we have identified all of the errors in PESA. We are not saying that all that needs to be done to GERS to make it acceptable is to make these corrections Ц we have other worries about GERS, both in relation to data and philosophy. But a distortion of GERS expenditure by г550 million is certainly very material. Secondly, the fact that the Treasury does not record in its PESA database the reserved/devolved status of sub-programmes means that the government is incapable of producing some of the most basic and important analyses about the progress of devolution. To determine whether devolution is indeed having an effect on comparative spending patterns between the different parts of the UK, it is natural to ask whether expenditure trends on devolved services are varying, say, between Scotland and England. But the Treasury has not seen fit to collect or to record in the PESA database the basic information to construct an estimate for England of expenditure on services which are devolved in Scotland. а Furthermore, we have identified important examples where the way in which Whitehall departments are delivering their services is inconsistent with the actual scope of their responsibilities under devolution. This means that Scotland will tend to lose out if, as seems often to be the case, a Whitehall department with reserved (that is, whole UK) responsibilities is behaving in certain respects as if it were responsible for delivering services primarily for England. If the PESA and Treasury Funding Statement exercises were properly integrated, this would force Whitehall departments to think through their responsibilities much more carefully, with a consequent likely improvement in the quality of actual service delivery. а Overall, the conclusion we come to is that both the Treasury and many Whitehall departments do not take devolution seriously. The Treasury do not take it seriously enough to produce accurate PESA data Ц even though this data is known to be key for the ongoing debate about relative levels of public expenditure. They do not take it seriously enough to include in their database the information which would enable them to produce basic analyses of expenditure on devolved services in England. And neither the Treasury nor several Whitehall departments take it seriously enough to ensure that the way they deliver services is consistent with their actual responsibilities. а Why this is the case is not clear. Certainly, the Prime MinisterТs infamous Сparish councilТ quip may have set a very unfortunate tone. And a further contributory factor must have been the virtual castration of the Scotland Office and the demotion of the post of Secretary of State for Scotland to a part time occupation for the Transport Secretary. Given that around one third of public expenditure in Scotland is on functions which are still reserved, Whitehall departments need to raise their game considerably. To achieve this, ScotlandТs Westminster MPs need to adopt a much more pro-active role with Whitehall, and Scotland also needs an active full time representative of its interests in Cabinet. а We think access to the PESA database is a very good example illustrating the importance of the FOIA. Coincidentally, on 2 November, just after Mr. McLetchieТs resignation, there was a debate in the Scottish Parliament about the FOIA. Under the rather self congratulatory veneer, it was not difficult to discern the stirring of reaction. After all, it should never be forgotten that the Irish Freedom of Information legislation was significantly weakened after embarrassing details were revealed under the original version about Bertie AhernТs expenses. It would be most unfortunate if, for whatever reason, our FOIA was modified to limit the extent to which it is possible to access the level of detail which brought McLetchie down, or indeed, which we used in our work on the Treasury database. The Civil Service, as can readily be seen, is already modifying its behaviour so that incautiously phrased minutes or emails are very unlikely to appear in the future. This means that the future value of the FOIA is likely to stem largely from patient plodding through the detail which reveals how processes actually work, rather than through uncovering Сkiller memosТ. Unrestricted access to detail is therefore vital if the FOIA is not going to be neutered. If the McLetchie affair does indeed lead to a restriction on the availability of detail, then it could indeed be said that McLetchieТs taxi had taken us up a very unfortunate blind alley. а Jim Cuthbert was formerly Chief Statistician at the Scottish Office. Margaret Cuthbert is an economist. !С─бЬ─Э─дВ.е╞AжзиайакPWrШЪFt2▌2▐23№·ўїЄїЄЁuVБ]]UБ]Pb c !PrШЪFHЧЩMOMO═╧oqдж  жиО$Р$h'j' * *╠,╬,r2t2▌2▐2■№·°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°Ў#K@ё Normala c,@, Heading 1dd UБ]c0k$(@"( Heading 2ddUБ]c$"A@Є б"Default Paragraph Font ■OЄ face1dd]■OвStrongUБ ■O Plain Text]c▐/▐2    3▐2 @CРTimes New Roman РSymbol "РArial1РCourier New"АЁ╨hhдг&iдг&ьx'ГTЁP Scottish Left Review Past IssuesJ & M CuthbertJ & M Cuthbert ■   ¤   "■   *■                               ■                                                                                                                                                                                                                                                                                                                                                       Root Entry         └FPC╖НEL╞!АWordDocument    /:CompObj            jSummaryInformation(        ╨■    ■    ■                                                                                                                                                                                                                                                                                                                                                                                                                                                                           ■       └FMicrosoft Word Document MSWordDocWord.Document.8Ї9▓q■ рЕЯЄ∙OhлС+'│┘0аРШ─╨шЇ (4 \ h tАИРШф!Scottish Left Review Past Issues1,J & M Cuthbert=0О!NormalчJ & M Cuthbert10.Microsoft Word for WDocumentSummaryInformation8             ф                                    ■       └FMicrosoft Word Document MSWordDocWord.Document.8Ї9▓qxфselfT !Scottish Left Review Past Issuesindows 95@F├#@ШпOEL╞@▐rsEL╞ьx'■ ╒═╒Ь.УЧ+,∙о0┤@HX` hp xфselfT !Scottish Left Review Past Issues