The Scottish Parliament - Finance Committee Report

SP Paper 351	FI/S3/09/R8
	Volume 2

8th Report, 2009 (Session 3)

Stage 1 Report on the Public Services Reform (Scotland) Bill

CONTENTS

VOLUME 1: FINANCE COMMITTEE REPORT

Remit and membership

Report
Introduction
Structure of report
Purpose of the Bill
Scottish Government consultation
Finance Committee consultation
The wider simplification programme and the ambition of the Bill
Part 1 – Simplification of public bodies
Part 2 – Order-making powers
Part 3 – Creative Scotland
Part 4 – Social care and social work: scrutiny and improvement and Part 5 – Health care: scrutiny and improvement
Part 6 – Scrutiny
Part 7 – Miscellaneous and general
Possible Stage 2 amendments
The Financial Memorandum
Other issues
Overall conclusion on the general principles of the Bill
Summary of conclusions and recommendations

Annexe A: Extract from the Minutes of the Finance Committee

VOLUME 2: REPORTS FROM SECONDARY COMMITTEES

ANNEXE B – REPORT FROM THE EDUCATION, LIFELONG LEARNING AND CULTURE COMMITTEE

ANNEXE C – REPORT FROM THE HEALTH AND SPORT COMMITTEE

ANNEXE D – REPORT FROM THE RURAL AFFAIRS AND ENVIRONMENT COMMITTEE

ANNEXE E – REPORT FROM THE SUBORDINATE LEGISLATION COMMITTEE

VOLUME 3 – ANNEXE F: FINANCE COMMITTEE ORAL EVIDENCE AND ASSOCIATED WRITTEN EVIDENCE

18th Meeting, 2009 (Session 3), Tuesday 01 September 2009

ORAL EVIDENCE

Colin Miller, Public Bodies Policy Division, Scottish Government;
Ian Mitchell, Deputy Director: Public Bodies Policy – Scrutiny, Scottish Government;
Mike Neilson, Director, Scottish Government
John St Clair, Lawyer, Constitutional and Civil Law Divisions, Scottish Government Legal Directorate; and
Fiona Tyrell, Legislative Change Leader, Scrutiny Bodies Project Team, Scottish Government.

SUPPLEMENTARY WRITTEN EVIDENCE

Scottish Government bill team (79KB pdf)

19th Meeting, 2009 (Session 3), Tuesday 08 September 2009

WRITTEN EVIDENCE

FSB (17KB pdf)
Institute of Directors (26KB pdf)
Unison (22KB pdf)
Accounts Commission (15KB pdf)
Auditor General for Scotland (20KB pdf)
Board of Audit Scotland (15KB pdf)
CIPFA (13KB pdf)

ORAL EVIDENCE

Garry Clark, Head of Public Affairs, Scottish Chambers of Commerce;
Susan Love, Scottish Policy Manager, Federation of Small Businesses;
Neil MacCallum, Policy Consultant, Institute of Directors Scotland;
Lynn Henderson, Policy Officer, PCS Scotland;
David Moxham, Deputy General Secretary, Scottish Trades Union Congress;
Peter Ritchie, Chair of UNISON Scotland NDPB Committee, UNISON;
John Baillie, Chair, Accounts Commission;
Robert Black, Auditor General for Scotland;
Russell Frith, Director of Audit Strategy, Audit Scotland;
Don Peebles, Policy and Technical Manager, CIPFA.

20th Meeting, 2009 (Session 3), Tuesday 15 September 2009

WRITTEN EVIDENCE

Jo Armstrong (240KB pdf)
Richard Parry (24KB pdf)
Professor Colin Reid and Professor Janet McLean (18KB pdf)
Professor Chris Himsworth (21KB pdf)
Iain Jamieson (30KB pdf)
Aileen McHarg (35KB pdf)
Professor Alan Page (27KB pdf)

ORAL EVIDENCE

Jo Armstrong, Centre for Public Policy for Regions;
Dr Alison Elliot;
Richard Parry, Reader in Social Policy, School of Social and Political Studies, University of Edinburgh;
Professor Colin Reid, Professor of Environmental Law, University of Dundee;
Professor Chris Himsworth, Professor of Administrative Law, University of Edinburgh;
Iain Jamieson; Aileen McHarg, Senior Lecturer in Public Law, School of Law, University of Glasgow;
Professor Alan Page, Professor of Public Law, University of Dundee.

21st Meeting, 2009 (Session 3), Tuesday 22 September 2009

WRITTEN EVIDENCE

Law Society of Scotland (32KB pdf)
Scotland’s Commissioner for Children and Young People (27KB pdf)
Scottish Information Commissioner (51KB pdf)
Scottish Human Rights Commission (34KB pdf)

ORAL EVIDENCE

Michael Clancy, Director of Law Reform, the Law Society of Scotland;
Tam Baillie, Scotland's Commissioner for Children and Young People;
Kevin Dunion, Scottish Information Commissioner; Professor Alan Miller, Chair, Scottish Human Rights Commission.

22nd Meeting, 2009 (Session 3), Tuesday 29 September 2009

WRITTEN EVIDENCE

COSLA (35KB pdf)
Scottish Public Services Ombudsman (26KB pdf)
Scottish Council for Voluntary Organisations (49KB pdf)
Consumer Focus Scotland (35KB pdf)

ORAL EVIDENCE

Professor Lorne Crerar, former Chair of the Independent Review of Regulation, Audit, Inspection and Complaints Handling of Public Services in Scotland; Douglas Sinclair, former Chair of the Fit-for-purpose Complaints System Action Group; Councillor Ronnie McColl, Spokesperson for Health and Well-being, COSLA;
Jon Harris, Strategic Director, COSLA; and Adam Stewart, Policy Manager, COSLA;Jim Martin, Scottish Public Services Ombudsman; Lucy McTernan, Deputy Chief Executive and Director of Corporate Affairs, Scottish Council for Voluntary Organisations; Jennifer Wallace, Principal Policy Advocate, Consumer Focus Scotland.

23rd Meeting, 2009 (Session 3), Tuesday 06 October 2009

WRITTEN EVIDENCE

West Dunbartonshire and Volunteering Services (50KB pdf)
Children 1st (31KB pdf)
Scottish Association for Mental Health (32KB pdf)

ORAL EVIDENCE

Martin Docherty, Policy and Research Officer, West Dunbartonshire Community and Volunteering Services;
Anne Houston, Chief Executive, Children 1st; Carolyn Roberts, Research and Influence Manager, Scottish Association for Mental Health. Nikki Brown, Deputy Director, Creative Scotland, Scottish Government;
Colin Miller, Public Bodies Policy Division, Scottish Government; Mike Neilson, Director, Scottish Government;
Shane Rankin, Head of Scrutiny Bodies Project Team, Scottish Government; and
David Reid, Assistant Director, Finance, Scottish Government.

SUPPLEMENTARY WRITTEN EVIDENCE

Scottish Government bill team (35 KB pdf)

24th Meeting, 2009 (Session 3), Tuesday 27 October 2009

ORAL EVIDENCE

John Swinney MSP, Cabinet Secretary for Finance and Sustainable Growth;
Nikki Brown, Deputy Director, Creative Scotland, Scottish Government; Keith Connal, Deputy Director, Public Bodies Policy Division, Scottish Government; Mike Neilson, Director, Scottish Government; and Shane Rankin, Head of Scrutiny Bodies Project Team, Scottish Government.

Other written submissions and correspondence

Alzheimer Scotland (15KB pdf)
Association of Scotland’s Colleges (15KB pdf)
Care Commission (34KB pdf)
Carers Scotland (45KB pdf) Dr Jim Dyer (27KB pdf)
Equality and Human Rights Commission Scotland (23KB pdf)
General Medical Council (17KB pdf)
Highland Council (23KB pdf)
Hilary Patrick, Mental Health Law and Practice (13KB pdf)
HM Chief Inspector of Prosecution (10KB pdf)
HM Inspector of Constabulary for Scotland (14KB pdf)
HM Inspectorate of Education (95KB pdf)
Learning Disability Alliance Scotland (18KB pdf)
Lord President of the Court of Session (15KB pdf)
Mental Health Tribunal for Scotland (24KB pdf)
Mental Welfare Commission for Scotland (15KB pdf)
National Museums of Scotland and the National Galleries of Scotland (54KB pdf)
National Trust for Scotland (31KB pdf)
Office of the Scottish Charity Regulator (36KB pdf)
PCCS (21KB pdf)
Quarriers (19KB pdf)
Royal Society of Edinburgh (41KB pdf)
Scottish Environment Protection Agency (48KB pdf)
Scottish National Heritage (19KB pdf)
SCPA (21KB pdf)
Shetland Child Protection Committee (13KB pdf)
Social Work Inspection Agency (39KB pdf)
Society of Messengers-at-Arms and Sheriff Officers (41KB pdf)
SPCB (71KB pdf)
SPPA Committee (19KB pdf)
Traditional Music and Song Association of Scotland (20KB pdf)
UK Film Council (19KB pdf)
UK Information Commissioner’s Office (21KB pdf)
Universities Scotland (13KB pdf)
Voluntary Arts Scotland (32KB pdf)
Waterwatch Scotland (71KB pdf)
Letter from the Cabinet Secretary of Finance and Sustainable Growth 17 July 2009 (467KB pdf)
Letter from the Minister of Environment to Rural Affairs and Enviroment Committee 25 September 2009 (915KB pdf)
Letter from Minister of Public Health and Sport 20 October 2009 (165KB pdf)
Correspondence between Finance Committee and Cabinet Secretary of Finance and Sustainable Growth (157KB pdf)

Remit and membership

Remit:

1. The remit of the Finance Committee is to consider and report on-

(a) any report or other document laid before the Parliament by members of the Scottish Executive containing proposals for,
or budgets of, public expenditure or proposals for the making of a tax-varying resolution, taking into account any report or recommendations concerning such documents made to them by any other committee with power to consider such
documents or any part of them;

(b) any report made by a committee setting out proposals concerning public expenditure;

(c) Budget Bills; and

(d) any other matter relating to or affecting the expenditure of the Scottish Administration or other expenditure payable out of the Scottish Consolidated Fund.

2. The Committee may also consider and, where it sees fit, report to the Parliament on the timetable for the Stages of
Budget Bills and on the handling of financial business.

3. In these Rules, "public expenditure" means expenditure of the Scottish Administration, other expenditure payable out
of the Scottish Consolidated Fund and any other expenditure met out of taxes, charges and other public revenue.

(Standing Orders of the Scottish Parliament, Rule 6.6)

Membership:
Derek Brownlee
Malcolm Chisholm
Linda Fabiani
Joe Fitzpatrick
Tom McCabe (Deputy Convener)
Jeremy Purvis
Andrew Welsh (Convener)
David Whitton

Committee Clerking Team:

Clerk to the Committee
Jim Johnston

Senior Assistant Clerk
Mark Brough

Assistant Clerk
Allan Campbell

Committee Assistant
Jennifer Bell

Stage 1 Report on the Public Services Reform (Scotland) Bill

The Committee reports to the Parliament as follows—

introduction

1. The Public Services Reform (Scotland) Bill (“the Bill”) was introduced on 28 May 2009 by John Swinney MSP, Cabinet Secretary for Finance and Sustainable Growth. The Finance Committee was designated as the lead committee on the Bill, and three other committees were formally designated as secondary committees. Under Rule 9.6 of the Parliament’s Standing Orders, it is for the lead committee to report to the Parliament on the general principles of the Bill.

2. The Rural Affairs and Environment Committee (“the RAE Committee”) examined the provisions related to Scottish Natural Heritage (sections 1 and 2 of the Bill). The Health and Sport Committee (“the H&S Committee”) considered the provisions in Part 4 of the Bill related to the Care Commission and care services and Part 5 of the Bill on the new health scrutiny body, Health Improvement Scotland, and provisions in Part 6 on duties of co-operation and joint inspections. The Education,
Lifelong Learning and Culture Committee (“the ELLC Committee”) examined Part 3 of the Bill on Creative Scotland, the
areas of Part 4 of the Bill related to social work, provisions in Part 6 on duties of co-operation and joint inspections and
section 6 of the Bill on the dissolution of the Historic Environment Advisory Council for Scotland. All three secondary committees also commented to some degree on the order-making powers in Part 2 of the Bill.

3. The Finance Committee also received a report from the Subordinate Legislation Committee on the Delegated Powers Memorandum. The report from the Subordinate Legislation Committee and the reports from the secondary committees
can be found at annexes B to E of this report, and are referred to throughout.

structure of report

4. The report is structured as follows—

a brief description of the overall policy objectives of the Bill (paragraphs 5 – 7);
consultation undertaken by the Scottish Government and the Committee (paragraphs 8 – 11);
the wider simplification programme and the ambition of the Bill (paragraphs 12 – 21);
a discussion of each Part of the Bill, taking into account those areas of the Bill scrutinised by secondary committees (paragraphs 22 – 176);
- Part 1 – Simplification of public bodies (paragraphs 22 – 29);
- Part 2 – Order-making powers (paragraphs 30 – 88);
- Part 3 – Creative Scotland (paragraphs 89 – 102);
- Part 4 – Social care and social work: scrutiny and improvement and Part 5 – Health care: scrutiny and improvement (paragraphs 103 – 144);
- Part 6 – Scrutiny (paragraphs 145 – 171);
- Part 7 – Miscellaneous and general (paragraphs 172 – 176);
possible Stage 2 amendments (paragraphs 177 – 186);
the Financial Memorandum (paragraphs 187 – 211);
other issues (paragraphs 212 – 213);
the Committee’s conclusion on the general principles of the Bill (paragraphs 214 – 215); and
a summary of conclusions and recommendations.

purpose of the Bill

5. The overall purpose of the Bill is to—

“[…] help simplify and improve the landscape of Scottish public bodies, to deliver more effective, co-ordinated government that can better achieve its core functions for the benefit of the people of Scotland.”¹

6. The Policy Memorandum explains that the Bill will achieve this through—

providing for the dissolution of certain public bodies;
the transfer or delegation of certain specific functions between public bodies;
the establishment of new national bodies for health and social work and social care scrutiny and for arts and culture, bringing together and improving the functions of existing separate bodies;
providing for general powers to effect organisational and other changes to the public sector landscape or to remove or reduce burdens throughout the Scottish economy which are identified as holding back economy, efficiency, productivity or profitability; and
placing a duty on scrutiny bodies to co-operate with each other and to ensure an appropriate user focus in how they fulfil their functions.²

7. This Bill is only one part of the Scottish Government’s wider programme for public service reform which includes areas of work such as the national performance framework, the efficient government programme and single outcome agreements etc.³ Two strands of the programme – simplification of public bodies and reform of the scrutiny landscape – are linked directly to the provisions in the Bill. Wider background and discussion on these issues is given under the relevant sections of this report.

Scottish Government consultation

8. The Bill is a wide-ranging piece of legislation, bringing together various different strands of work. Different areas of the Bill were subject to different levels and format of consultation and much of the Bill is based on published reports. However, there was no dedicated consultation by the Scottish Government on the Bill and concerns were raised in evidence to the
Committee and by secondary committees on the level of public consultation. The Government’s consultation is considered where appropriate under the discussion on each part of the Bill in the body of the report below.

finance committee consultation

9. The Finance Committee launched a call for written evidence in June 2009 and received 61 submissions.

10. The Committee took oral evidence over a series of seven meetings in September and October 2009. The Committee
would like to put on record its thanks and appreciation to all of those who contributed to its
scrutiny of the Bill at Stage 1.⁴

11. Extracts from the minutes of all meetings where the Bill was discussed can be found as Annexe A to this report. As indicated above, reports from other committees can be found at Annexes B to E and form a separate volume to this report.
All written and oral evidence received by the Committee is reproduced as Annexe F. Annexe F has been published electronically only.

the wider simplification programme and the ambition of the bill

Overall target for reduction of public bodies

12. The Policy Memorandum states that the current landscape of public bodies in Scotland has evolved over time without
clear strategic planning or oversight and that this “has led to overlaps and duplication of effort in the roles and functions of some public bodies.”⁵ This has given rise to a concern that the current landscape gives the impression to the public and business of “a confusing array of organisational roles, remits and functions.”⁶

13. To address this, the Policy Memorandum states that the Government has taken a “strategic approach” which has
enabled it to identify—

“[…] scope for real change to deliver financial efficiencies and tangible service delivery benefits by bringing together bodies with similar functions, stopping activity which no longer contributes to the public purpose or, in some cases, removing the need for a separate organisation by bringing the functions back into Government.”⁷

14. As previously announced, it is the Scottish Government’s intention to reduce the number of public bodies in Scotland by 50 (25 per cent). By May 2009, the Policy Memorandum states that the Government has “delivered a reduction of 11 organisations” and, together with the reduction of the Justice of the Peace Advisory Committees, “this brings the current number of existing or planned national public bodies down to 162”. By April 2011 (the end of the current parliamentary session), the Government anticipates that the total number will be around 120 organisations.⁸ The Bill implements a reduction of eight organisations, and provides for further reduction through the use of order-making powers in Part 2.

15. A range of witnesses commented on the 25 per cent target. Richard Parry stated—

“That is a numbers issue; it is playing a numbers game. It is being done under the banner of simplifying government, but it is more a matter of reducing numbers within the existing public sector landscape, architecture or engineering—those are the images that are used. The important thing is to look at how public services are delivered in each area.”⁹

16. Dr Alison Elliot stressed the importance of the role of the user of public services, and questioned whether reducing numbers of bodies would automatically lead to simplification for the consumer—

“We want simplification for the consumer—for the person who gets the public service. There seems to be a trickle-down theory that if the public bodies landscape is simplified, a simpler experience of public services will be produced at the consumer level. That theory might work, but it will not necessarily do so.”¹⁰

17. However, the Cabinet Secretary reaffirmed the evidence from the bill team that—

“We did not pluck that number out of thin air; we worked through a process of identifying opportunities for rationalisation where duplication currently existed, which brought us to a number. We considered the matter in the context of what could credibly be delivered in one parliamentary session, and we arrived at a figure of around 25 per cent.”¹¹

18. The Cabinet Secretary also stressed the importance of the user focus provision in Part 6 of the Bill¹² (discussed at paragraphs 146 – 153).

Ambition of the Bill

19. Another theme to emerge from the Committee’s evidence programme was the overall ambition of the Bill, and whether it does “reform public services.” Alison Elliot stated that the Bill “is not about reforming public services”¹³ and Jo Armstrong made the point that the Bill—

“[…] represents a big opportunity. Some of the submissions indicated that an opportunity has been lost, but a serious opportunity still exists to focus on what the public sector is trying to deliver, what the appropriate regulatory framework is and what is fit for purpose as we move forward, as opposed to what has been fit for purpose over the past five or 10 years.”¹⁴

20. The SCVO agreed with this interpretation and stated that in its view—

“[…] we do not think that the bill does what it says on the tin. The bill does not reform public services. The bill makes some attempts to clarify the scrutiny dimension, but it does not attempt to change the culture, design and delivery of public services, which is where our interest—that of voluntary organisations that provide a great many public services—lies.”¹⁵

21. The Committee notes the comments received on the ambition of the Bill and on whether the Bill does “reform public services.” While the Committee welcomes the Scottish Government’s commitment to speed up the pace of public service reform, the Committee shares the view of some witnesses that the Bill does not go far enough.

part 1 – simplification of public bodies

Introduction

22. Part 1 of the Bill sets out a number of specific structural changes which make up part of the simplification programme.
The Cabinet Secretary stated that “Part 1 […] dissolves a number of advisory bodies that are no longer necessary.”¹⁶
The changes covered under Part 1 are—

transfer to Scottish Natural Heritage of functions of the Deer Commission for Scotland (section 1 of the Bill);
transfer to Scottish Natural Heritage of functions of the Advisory Committee on Sites of Special Scientific Interest (section 2);
dissolution of the Scottish Records Advisory Council (section 3);
dissolution of Scottish Industrial Development Advisory Board (section 4);
dissolution of the Building Standards Advisory Committee (section 5);
dissolution of the Historic Environment Advisory Council for Scotland (section 6);
delegation of functions under section 7(1) of the Industrial Development Act 1982 to Scottish Enterprise or any other appropriate body (section 7);
delegation of functions under section 5 of the Science and Technology Act 1965 to Scottish Enterprise or any other appropriate body (section 8); and
regulation of officers of court (section 9).

23. The RAE Committee considered proposals related to Scottish Natural Heritage (“SNH”) in sections 1 and 2 of the Bill,
and the ELLC Committee considered the dissolution of the Historic Environment Advisory Council for Scotland (“HEACS”)
in section 6.

24. The Committee did not receive specific evidence on most of the other changes proposed in Part 1, although it did receive written comments on the regulation of officers of the court (section 9). Those areas that have been highlighted in evidence and by other committees are discussed below.

Section 1 –Transfer of the functions of the Deer Commission for Scotland to Scottish Natural Heritage

25. Section 1 provides for the transfer of the functions of the Deer Commission for Scotland (“DCS”) to SNH. In its report to
the Finance Committee, the RAE Committee noted that responses to its consultation mirrored the balance of evidence received in response to the Government consultation, with the majority of submissions in favour of a merger. However, the Committee also noted a number of minor concerns raised in evidence, and proposed that the Scottish Government should lay a progress report before the Parliament detailing how the DCS has been integrated into SNH and evaluating the success of the process.

Section 2 - Transfer of the functions of the Advisory Committee on Sites of Special Scientific Interest to Scottish Natural Heritage

26. Section 2 of the Bill provides for the transfer of the functions of the Advisory Committee on Sites of Special Scientific Interest (“ACSSSI”) to SNH. The RAE Committee received some conflicting evidence on the proposal. However, on balance, the Committee supported the transfer. The Committee also proposed a small technical change to section 2(3)(a) to enable existing committees within SNH to take on the ACSSSI’s functions.

Section 6 – Dissolution of the Historic Environment Advisory Council for Scotland

27. Section 6 dissolves HEACS (although HEACS actually ceased to operate on 31 May 2009). During evidence to the ELLC Committee, Historic Scotland confirmed that it is committed to taking on the role performed by HEACS. In its report to the Finance Committee, the ELLC Committee noted concerns expressed in evidence, particularly regarding the ability of Historic Scotland to provide independent advice and fulfil the role and functions formerly undertaken by HEACS to a level expected by the historic environment sector. In conclusion, the Committee recommended that the Scottish Government work closely with Historic Scotland, former members of HEACS and the wider historic environment sector, to ensure that these concerns are appropriately considered.

Section 9 – Regulation of officers of court

28. Part 3 of the Bankruptcy and Diligence etc (Scotland) Act 2007 (“the 2007 Act”) provides for the creation of the Scottish Civil Enforcement Commission (“SCEC”). However, the SCEC has not yet been established. As part of the Scottish Government’s simplification programme, the First Minister announced in January 2008 that the implementation of the SCEC was to be reviewed. The Policy Memorandum explains that, following consultation with stakeholders, it was agreed that improvements needed to ensure the accountability and transparency of the officer profession could be achieved without creating the SCEC.¹⁷ Therefore, the Bill places additional functions on the Lord President, to allow the Lord President to effectively regulate the profession, taking on key areas of the role that the SCEC was expected to fulfil. The Society of Messengers-at-Arms and Sheriff Officers (“SMASO”) submitted evidence to the Committee supporting the provisions in the Bill. The SMASO was particularly supportive of the decision not to proceed with the SCEC.

29. The Committee notes the comments from the secondary committees on certain specific changes in Part 1 of
the Bill and asks the Cabinet Secretary to respond.

part 2 – order-making powers

Introduction

30. Part 2 of the Bill contains two order-making powers—

Section 10 – allows Ministers to make any provision which would improve the exercise of public functions. This includes modifying, conferring, abolishing, transferring, or delegating any function. It also includes abolishing or creating, or amending the constitution of, public bodies.
Section 13 – allows Ministers to make any provision to reduce or remove ‘burdens’. This can also include abolishing, conferring, transferring or delegating functions, or creating or abolishing a public body.

31. This Part of the Bill proved to be by far the most contentious in the evidence received by the Committee, due to the perceived scope and width of the powers. In addition, all other committees who considered the Bill commented on the powers in Part 2. The majority of comments from the three secondary committees concerned bodies listed in schedule 3 that fell within their own remits. However, both the RAE Committee and the ELLC Committee recommended (by majority) that both powers be removed from the Bill.

32. The following sections of the report examine both of the powers together, as many of the provisions in the Part apply to both powers (for example on parliamentary procedure). However, where issues are distinct to either section 10 or section 13, this has been noted.

Purpose of the power in section 10

33. The Policy Memorandum explains that “delivering the 25% reduction in the number of public bodies is not intended to be the end of the process of simplification”¹⁸ and that the power in section 10 of the Bill is designed to provide the Scottish Government (with approval from the Parliament) with “the flexibility to implement the necessary reshaping of structures to deliver better, more effective and responsive public services.”¹⁹

34. The power in section 10 makes provision for modifying, conferring, abolishing, transferring, or providing for the delegation of, any function of a person, body or office holder listed in schedule 3. There is also provision for amending the constitution of, or abolishing, a person, body or office-holder listed in schedule 3 (except the Scottish Ministers, the Forestry Commissioners, a person listed by virtue of section 11(3)(e)²⁰ or a company (within the meaning of the Companies Act 2006)).²¹

35. The power to transfer or delegate functions (but not to modify, confer or abolish functions) also allows functions to be transferred or delegated to local authorities. The Policy Memorandum explains that substantially unmodified functions may, following consultation, be transferred to local authorities and fire and police authorities. However, the power does not allow Ministers to transfer functions away from local authorities or to make any structural change in relation to local government.²²

36. Orders made under this section are subject to affirmative resolution procedure, with a requirement for additional consultation. There are also a number of preconditions and restrictions on the power on the face of the Bill.

Purpose of the power in section 13

37. The purpose of the power in section 13 is to “remove or reduce unnecessary burdens on the Scottish economy in respect of devolved areas.”²³ This power replicates and updates provisions in the UK Deregulation and Contracting Out Act 1994, which is repealed. The provisions in the Bill also “largely mirror the regime already set out in section 1 of the UK Legislative and Regulatory Reform Act 2006”²⁴ (“the UK Act”).²⁵ The power’s relation to the UK Act is discussed in detail below (paragraphs 44 – 46).

38. “Burden” is defined under this section as a financial cost, an administrative inconvenience, an obstacle to efficiency, productivity or profitability or a sanction, criminal or otherwise, which affects the carrying on of any lawful activity (section 13(2)).

39. Similar preconditions apply to the section 13 power as to the section 10 power, although there are some differences. In addition, the sections of the Bill on procedure, consultation and the laying of an explanatory document apply to both powers as do the general restrictions. The power also applies to all of the bodies listed in schedule 3.

Precedent

Section 10

40. A range of evidence to the Committee suggested that the power in section 10 was unprecedented, either in Scotland or at UK level²⁶ (as opposed to the section 13 power which is similar to a UK Act – see paragraphs 44 – 46). However, in evidence the Cabinet Secretary gave the example of the power contained in section 57 of the Local Government (Scotland) Act 2003 (“the 2003 Act”) which, in his view, provides a precedent as—

“At heart, they give the ability to change primary legislation through affirmative order. Such powers were included in section 57 of the Local Government (Scotland) Act 2003, which provides powers for ministers to modify any enactment that prevents or hinders local authorities from complying with their duties under that act or from exercising the powers that it gave to them. That particular power was tempered by the requirement to lay an order—which is exactly what we have in this bill—that had to be consulted upon, and the Subordinate Legislation Committee of the day regarded those powers for ministers as being entirely appropriate.”²⁷

41. The Committee notes that this Act has not been mentioned as a precedent for the power in section 10 in the Bill, in the accompanying documents or during the bill team’s evidence session. In addition, there would appear to be some potentially significant differences between the example cited by the Cabinet Secretary and the provisions in the Bill. These differences include—

The power in the 2003 Act applies primarily only to local authorities (other public service providers are engaged only in relation to co-ordinating community planning of public services), whereas the power in the Bill applies to all public bodies listed in schedule 3. The list of bodies in schedule 3 can also be amended, meaning the boundaries of the power could be expanded.
The 2003 Act is also limited to taking away or modifying provisions in legislation which hinder the performance of specific best value, publication and community planning objectives set out in that Act. The Bill, however, allows Ministers to make any provision (not just to amend existing legislation) which they consider would improve the exercise of public functions, having regard to efficiency, effectiveness and economy (which are not defined).

42. The Committee subsequently wrote to the Cabinet Secretary seeking clarification on these apparent differences and a copy of both this letter and the Cabinet Secretary’s response is included in the written evidence at Annexe F. The Cabinet Secretary stated in his response that—

“The main point I was making in evidence was that each power […] is a power in secondary legislation to make potentially wide changes to primary legislation, in both cases subject to safeguards and in both cases having regard to economy, efficiency and effectiveness. It seems to me that it is therefore a very close analogy.”²⁸

43. On this basis the Cabinet Secretary reaffirmed his view that he does not agree with many of the witnesses that the section 10 power within the Bill is unprecedented.

Section 13

44. As outlined above, the Policy Memorandum indicates that the power in section 13 replicates and updates provisions in the Deregulation and Contracting Out Act 1994 (“the 1994 Act”) and in doing so, “largely mirrors” provisions in the UK Act.²⁹ However, Aileen McHarg noted in evidence that “as far as I am aware, the powers that the Scottish ministers have under the Deregulation and Contracting Out Act 1994 have not been used at all.”³⁰

45. During the passage of the UK Act it was termed the “Abolition of Parliament Bill” and the UK Government was heavily criticised for the lack of pre-legislative consultation on what were seen as potentially far-reaching proposals.³¹ Following the Bill’s enactment it appears that the powers granted under the Act have been used quite infrequently.³²

46. The Scottish Bill is not, however, exactly the same as the UK Act, particularly in relation to the issue of procedure (discussed below at paragraphs 50 – 53). At this point, the Committee notes that it is not clear why, in drafting the Bill, the Scottish Government thought it appropriate not to mirror the provisions exactly as set out in the UK Act. The Committee therefore asks the Cabinet Secretary to set out his reasons for deciding not to follow the provisions in the UK Act, and to clarify whether Ministers’ powers under the 1994 Act have been used before.

Safeguards applied by the Bill

47. As noted above, the Bill applies a range of preconditions and safeguards to the use of the powers in section 10 and section 13.

Preconditions

48. The Committee heard a number of concerns in relation to the preconditions which apply to orders made under section 10. In particular, the SLC expressed concern that the term “necessary protections” is not sufficiently clear and precise in the Bill as drafted, and noted that it would be open to different interpretations, depending on the context that was being used. The Committee welcomes the Cabinet Secretary’s commitment that he is willing to look again at the issue of preconditions on both powers, and requests that proposals are brought forward to address the concerns raised by the SLC and others.

General restrictions

49. A number of general restrictions (which apply to both powers in Part 2) are contained in sections 15 to 19 of the Bill. These restrictions did not receive significant comment in evidence to the Committee and appear to be based largely on the UK Legislative and Regulatory Reform Act.

Procedure

50. As stated above, orders under this Part are subject to affirmative resolution procedure. In addition, the Bill requires that the Scottish Government must consult before laying an order (section 21), and lay an explanatory document before the Parliament to accompany the order (section 22).

51. The Committee received a range of evidence on the parliamentary procedure for consideration of orders under sections 10 and 13. In particular, that the proposed procedures do not provide sufficient parliamentary safeguards. This point was emphasised in the SLC’s report which recommended that orders under sections 10 and 13 should be subject to a super-affirmative procedure, which requires a proposed draft order to be laid before the Parliament together with the relevant explanatory document for a prescribed period. This would permit public consultation on the terms of the proposed order prior to Ministers presenting a draft order in final form to the Parliament for approval.

52. However, the UK Act on which section 13 is based provides additional procedural safeguards to those proposed by the SLC. Similar to the Bill, UK Government must consult on any order to remove burdens. But, if after consultation, the Government decides to proceed, it must propose whether the order should be subject to negative, affirmative or super-affirmative procedure. Either House of Parliament can resolve to object to the procedure proposed, and require an enhanced procedure – for example either House can require that a proposed order subject to negative procedure should be subject to affirmative or super-affirmative procedure.³³ Under the super-affirmative procedure in the UK Act the Committee charged with reporting on the draft may recommend that no further proceedings be taken in relation to the draft order.

53. The Committee welcomes the Cabinet Secretary’s commitment to consider the balance between the scope of the powers and the accompanying safeguards and his comments that the SLC “has made some constructive suggestions for additional procedural safeguards.” The Committee also notes the relevant provisions in clauses 12 to 18 of the UK Act and recommends that the Cabinet Secretary considers both when bringing back proposals to ensure the role of the Parliament is fully protected in relation to these orders.

Schedule 3

54. Schedule 3 of the Bill contains a list of bodies in respect of which the powers in Part 2 apply. The bill team confirmed that the basis of schedule 3 is the original list of 199 national public bodies which was drawn up at the beginning of 2007, when the overall review of the public sector landscape took place.³⁴

55. One of the main themes to arise from the Committee’s evidence programme, and from the reports of the secondary committees, was concern over the potential impact on the independence of some of the bodies in schedule 3. There was specific concern around three main groups of bodies – those accountable to the Parliament rather than Government, those that have a role in scrutinising the actions of Government, and those with a quasi-judicial function.

Bodies accountable to the Parliament

56. Schedule 3 includes all of the parliamentary commissioners and the ombudsman. It was explained in evidence that these bodies are accountable to Parliament rather than Government because when the Scottish Information Commissioner was established, the Government decided to—

“[…] follow the model of the Auditor General and have the Information Commissioner appointed and funded by the Scottish Parliamentary Corporate Body. That answered at a stroke the question of independence, as the post was to be funded by the Parliament, not the Government. The same model was simply followed thereafter for the other commissioners that were set up.”³⁵

57. All of the commissioners and the Ombudsman were clear in evidence to the Committee that their preference would be for their bodies to be removed from schedule 3 due to the potential, and perceived, impact on their independence from Government. The Scottish Parliamentary Corporate Body (SPCB) also submitted written evidence to the same effect.³⁶ The Scottish Information Commissioner explained why his body should be removed from schedule 3—

“My fundamental contention is that I am not ultimately accountable to ministers, but to Parliament, and it designed the Freedom of Information (Scotland) Act 2002 with that safeguard. It was not glossed over […] Parliament debated that point hard to make sure that we got an independent information commissioner.”³⁷

58. The Chair of the Scottish Commission for Human Rights (“SCHR”) made an additional point about his office’s compliance with the “Paris Principles”³⁸ and suggested that inclusion of the SCHR in schedule 3 could threaten its application as a category A national human rights commission and would also affect public confidence in its independence.³⁹

59. While concerned about his body’s inclusion in schedule 3 as regards its independence from Government, the Scottish Public Services Ombudsman (“SPSO”) did make the point that change which requires primary legislation can be slow—

“I would be concerned by any process that sought to interfere with that independence, and we certainly want to guard against any capricious interference with it. That said, Lorne Crerar was asked to take up his duties in 2006-07, so it is taking quite a long time to make changes to the systems. Although we can look to Parliament to safeguard the independence of the offices, we need to have a good look at how we bring about change if we do not have powers such as order-making powers on the agenda.”⁴⁰

60. In addition to the bodies themselves, stakeholders gave similar evidence to the Committee. Both the Scottish Council for Voluntary Organisations (“SCVO”)⁴¹ and Children 1st cited the amount of work that had gone into the creation of Scotland’s Commissioner for Children and Young People and other bodies. Children 1st made the point that the involvement of children and young people was crucial.⁴²

61. The secondary committees also considered this area of the Bill and the Committee notes their conclusions regarding commissioners and the ombudsman as they apply to their own remits. The Committee also notes the submissions received from the Standards, Procedures and Public Appointments Committee (“SPPA Committee”), which strongly recommends that the Scottish Parliamentary Standards Commissioner be removed from the schedule,⁴³ and from the Scottish Commission for Public Audit, which also expresses its wish to be excluded from the schedule.⁴⁴

Audit Scotland and the Accounts Commission

62. Audit Scotland and the Accounts Commission also indicated that they would prefer to be removed from schedule 3. The Auditor General explained that—

“It seems to me a significant step for the executive branch to take order-making powers over the independent audit agency that is accountable and reports to Parliament.”⁴⁵

63. The Chair of the Accounts Commission echoed this point and stated that—

“We are all just a little concerned that the ability of ministers to flex the scope of scrutiny in a way that may be seen to undermine the independence of the scrutiny function is a potential threat to that independence. As the committee knows, independence is real and perceived, but perception can affect and undermine the reality.”⁴⁶

Quasi-judicial bodies

64. In his submission to the Committee, The Lord President of the Court of Session stated that the Scottish Court Service (“SCS”) should be excluded from the schedule as he regards “it as incompatible with the constitutional position of the SCS that any modification or transfer could occur without the consent of the SCS.”⁴⁷ The Law Society of Scotland indicated its concerns regarding a number of bodies, including the SCS, with “quasi-judicial” functions being included in schedule 3—

“[…] such as the children's panel, the Lands Tribunal for Scotland and the Judicial Appointments Board for Scotland. You will remember the Lord President's comments about the Scottish Court Service and his anxieties about its requirement to be independent. Independence from ministers is an essential aspect of the constitutional function of all those bodies.”⁴⁸

65. The Mental Health Tribunal for Scotland also submitted evidence to the Committee that it viewed its inclusion in the schedule as inappropriate, especially in light of its judicial functions.⁴⁹

Other bodies

66. A range of other bodies (and stakeholders) made submissions to the Committee regarding their inclusion in schedule 3 and the potential impact on their independence. These included—

Scottish Association for Mental Health (“SAMH”),⁵⁰ Hilary Patrick from Mental Health Law and Practice⁵¹ and the Law Society of Scotland expressed serious concerns regarding the inclusion of the Mental Welfare Commission for Scotland;⁵²
National Galleries and National Museums Scotland argued that it would be possible for a future government to change or remove the current restrictions against the sale and transfer of collections, and then either direct or pressurise the Trustees to consider selling some items not currently on display,⁵³ (this point was also raised by the ELLC Committee);
the Police Complaints Commissioner for Scotland stated that its inclusion in schedule 3 would undermine its independence and impartiality;⁵⁴ and
in addition to comments noted above, the SPPA Committee expressed concern regarding the inclusion of the Office of the Commissioner for Public Appointments in Scotland.⁵⁵

67. In response to the concerns outlined above, the Cabinet Secretary stated that he was willing to listen to suggestions regarding the list of bodies in the schedule.⁵⁶

68. The Committee welcomes the Cabinet Secretary’s commitment to look at the list of bodies in schedule 3 again, and recommends that he brings forward proposals to address the concerns expressed in evidence to the Committee prior to formal Stage 2 consideration.

Consultation

69. The bill team confirmed in evidence that no consultation had taken place on either the power itself or the list of bodies in schedule 3 to which the power could apply; but that each proposal to make an order under the powers would be accompanied by its own consultation.⁵⁷ Witnesses including the parliamentary commissioners and Audit Scotland confirmed this, and all stated that they would have preferred to have been consulted.⁵⁸ The Law Society of Scotland explained that in its view—

“One might reflect on the consultative steering group's principles of openness, accountability, consultation and power sharing, so we must think hard about introducing such measures without adequate consultation of interested parties, including the listed bodies themselves.⁵⁹

70. The Cabinet Secretary responded to criticism about the lack of consultation by stating—

“The bill is essentially a product of the dialogue and consultation that started with the Crerar review. The previous Administration commenced that review; we inherited it and took it forward. We then put together the statement that the First Minister made to Parliament in January 2008, which was followed by the publication of the simplification update, which has led to the publication of the bill. Therefore, in my view, the subject matter and contents of the bill have been the subject of extensive consultation.”⁶⁰

71. The Committee notes the strength of evidence received on the issue of consultation and, while noting the work done by the Crerar Review and others, considers that many of the concerns expressed in evidence could have been addressed if full pre-legislative consultation on the provisions in the Bill had been undertaken.

Amending schedule 3

72. The list of bodies in schedule 3 can be amended by an order subject to negative resolution procedure under section 11(2) of the Bill. This was raised during evidence to the Committee and by the SLC, which recommended that orders under this section should be subject to affirmative procedure, and that bodies should be consulted prior to their inclusion in an order. The Cabinet Secretary indicated that he was happy to look at this suggestion.⁶¹ The Committee supports this proposal from the SLC and asks that the Cabinet Secretary considers bringing forward appropriate amendments at Stage 2.

Section 10 – the suitability of using subordinate legislation

73. The Policy Memorandum indicates that the powers will be used to effect “small-scale changes”⁶² and in evidence the Cabinet Secretary stated that the powers “are designed to be narrowly focussed and balanced by careful safeguards.”⁶³ The safeguards applied by the Bill are discussed above (paragraphs 47 – 53). However, a range of witnesses questioned whether subordinate legislation was the appropriate vehicle to implement the type of changes which are the subject of the power in section 10, or whether primary legislation (the status quo) was more suitable.

74. Witnesses questioned the Government’s view that the powers could only be used for “small-scale changes.” Iain Jamieson explained that—

“The power in section 10(1) is unprecedented in its width as far as I can see. It is not even limited by the words ‘having regard to (a) efficiency, (b) effectiveness, and (c) economy.’

The courts have said that a body that is required to ‘have regard to’ something is not bound by the considerations, and may disregard them and have regard to other matters that are not listed in the legislation.

It is so wide—it covers anything that the Scottish ministers ‘consider would improve the exercise of public functions’—that it could be anything that ministers want it to be.”⁶⁴

75. Professor Alan Page stated that, in principle—

“[…] primary legislation should be about important matters of principle, and subordinate legislation should be about picking up the detail. The concern about part 2 of the bill is that it ignores that dividing line, which means that subordinate legislation will end up being used as a vehicle for dealing with matters that should properly be discussed, considered and decided on by the Parliament.”⁶⁵

76. Professor Chris Himsworth made the point that the role of the Parliament could be diminished as subordinate legislation cannot be amended, as compared to primary legislation—

“On the whole, secondary legislation is a take-it-or-leave-it matter—the Parliament either approves or disapproves of a range of different proposals, rather than having a discussion of the pros and cons of particular proposals, as happens at stage 2 of a bill.”⁶⁶

77. Aileen McHarg explained that (as discussed in the section on schedule 3 above) legislation has a “defensive” as well as an “enabling” function and that—

“The statute is not just about giving people powers to do things; it is an important guarantor of public bodies' independence and enables them to resist inappropriate attempts by Government to interfere with their functions. A public body can say to Government, ‘You might want us to do that, but we cannot do it, because our statute says that our functions are X, our duties are Y and our powers are Z.’”⁶⁷

78. COSLA was generally supportive of the use of subordinate legislation for the power in section 10 as opposed to primary legislation, as in its view, it “might help to ensure that the pace of change was kept up year on year.”⁶⁸ However, when pressed on the possible implications for scrutiny bodies coming under the power, COSLA explained that “this is not one of the areas of the bill on which we focussed.”⁶⁹ The Committee notes that COSLA and its members are not subject to the powers in Part 2, other than in a manner which would increase their roles.

79. The Cabinet Secretary confirmed the Scottish Government’s view that the power is not “an accumulation of ministerial power”⁷⁰ and that the purpose of the power—

“[…] is simply that, when we have the opportunity to streamline public bodies, there will be a way for us to do that, with parliamentary safeguards, through a parliamentary process and with protection built in. These are not all-encompassing powers; there are limitations on the powers that can be exercised under section 10. None of the decisions can be taken by ministers except in so far as ministers will have votes when Parliament considers the orders.”⁷¹

80. The Committee considers the question of the suitability of using subordinate legislation for this power in its overall conclusion on Part 2 below.

Section 13 – the desirability and necessity of the power

81. As well as concerns around the suitability of the power in section 10, a range of views were expressed in evidence to the Committee on the overall desirability and necessity of the power in section 13. Business organisations were clearly in favour of the general direction of travel provided by the power. The Scottish Chambers of Commerce stated—

“[…] we have come across a number of issues arising from the consequences—perhaps even unintended consequences—of legislation or regulation, and the powers in part 2 would be a flexible, agile way of responding to those and addressing them as they arise without the need for recourse to primary legislation.”⁷²

82. However, when asked to give examples of pressing changes to regulations that were necessary, the Federation of Small Businesses (“FSB”) admitted that—

“Given how difficult it seems to be for us all to provide examples of the changes to individual regulations that are required, I do not envisage a rush from the business community to find opportunities to use those powers. Nonetheless, when such opportunities are identified—I have given a couple of examples—it is important that we have the right tools at our disposal to address the issues quickly for business, and to be seen to do so.”⁷³

83. The section 13 power was subject to some pre-legislative consultation. Business organisations confirmed that they had been consulted through the regulatory review group.⁷⁴ However, no additional public consultation was undertaken by the Scottish Government. The Committee, although again noting the work of the Crerar Review and others, is concerned about the lack of public consultation by the Scottish Government.

84. Legal academics giving evidence to the Committee questioned whether Ministers were “serious about this power”.⁷⁵ Iain Jamieson suggested that the section 13 power could be “subsumed into section 10” and that—

“I suspect that the reason for the inclusion of section 13 was that all the procedural provisions that attach to the section 13 power derive from the UK act. The Scottish ministers want the power in section 10(1)—the power to improve public service—and they have attached all the provisions that are precedented in the UK act but for a different purpose.”⁷⁶

85. The Committee notes the views expressed regarding whether the power in section 13 is desirable or necessary, and that the equivalent power at Westminster was extremely controversial when going through Parliament and has rarely been used. In this regard, the Committee refers the Cabinet Secretary to its comments above on the issue of the UK Legislative and Regulatory Reform Act 2006.

Conclusions on Part 2

86. As noted in the introductory paragraphs of this section of the report, this Part of the Bill proved to be by far the most contentious in evidence to the Committee. The Committee recognises the very serious concerns expressed in evidence regarding the safeguards applied by the Bill (particularly on procedure), the bodies that the powers could apply to and whether the power in section 10 in particular could potentially alter the balance of power between the Government and the Parliament.

87. However, the Committee is supportive of the Cabinet Secretary’s intention to speed up the pace of public service reform and recognises that a parliamentary mechanism is needed to ensure that small-scale changes like those set out in Part 1 of the Bill can be enacted without the need for primary legislation.

88. Accordingly, as this could result in some relatively major changes to a crucial Part of the Bill, the Committee recommends that the Cabinet Secretary bring forward proposals prior to formal Stage 2 consideration to address the concerns expressed in this report. Some Members of the Committee are not able to support the provisions in relation to Part 2 as they currently stand. By division, the Committee disagreed to a proposal to recommend the removal of Part 2 from the Bill.⁷⁷

part 3 – creative scotland

Introduction

89. Part 3 of the Bill creates a single national public body for arts and culture, embracing the creative industries, Creative Scotland. The Creative Scotland Bill fell on 18 June 2008 due to the Parliament not agreeing to the Financial Resolution, and much of the content of the original bill has now been transferred to the Public Services Reform (Scotland) Bill.

90. The policy behind this Part of the Bill was considered exclusively by the ELLC Committee. The ELLC Committee’s report can be found as Annexe B to this report.

Functions created by Part 3

Creative industries

91. The Bill establishes six general functions for Creative Scotland, as opposed to the four functions outlined in the original Creative Scotland Bill; the significant addition to these functions is for Creative Scotland to have responsibility for the creative industries and other commercial activity. The ELLC Committee concludes that a coordination and partnership approach should be the key to Creative Scotland’s success with regard to the creative industries and recommends that all necessary steps be taken to ensure that this joint working has the necessary foundations for success, perhaps through guidance issued by the Minister. The ELLC Committee calls on the Scottish Government to provide, before Stage 2, further details of how it will ensure this.

Structure

92. At the time of the ELLC Committee’s scrutiny, issues around the proposed structure for Creative Scotland were still under consideration by Creative Scotland 2009 Ltd (the limited company set up to manage the establishment of the new body). The Minister for Culture, External Affairs and the Constitution wrote to the Finance Committee on 21 October 2009, attaching a copy of the Creative Scotland Business Model,⁷⁸ which contains detailed plans for the structure of Creative Scotland. The Committee comments on the financial implications of Creative Scotland in the sections of this report on the Financial Memorandum at paragraphs 194 – 201 below.

Definitions

93. The ELLC Committee notes in its report that there are differences of opinion within the creative sector in trying to define specific terms such as “art”, “culture” and “creativity” and agrees with the Scottish Government that including such definitions on the face of the Bill would be undesirable due to their likely restrictive nature. However, the Committee also notes comments from the Scottish Artists Union, who suggest that the word “artist” could be used in the Bill, or in guidance, without the need for a specific definition, as with other related terms in the Bill.

National Culture

94. Another additional function in the Bill which was not in the original Creative Scotland Bill is for Creative Scotland to provide support for “creative endeavours which contribute to an understanding of Scotland’s national culture”. Although there was some concern expressed in evidence, the ELLC Committee believes it to be appropriate as a broad and all-encompassing term. The ELLC Committee also states that it is pleased that a definition of “national culture” is included in the Policy Memorandum.

Wider policy environment

95. The ELLC Committee received a range of written evidence expressing concern about a lack of clarity around how Creative Scotland would relate to the wider policy environment.

Enterprise agencies

96. The ELLC Committee acknowledges that the Bill provides far greater clarity than the Creative Scotland Bill on the relationship between the new organisation and the enterprise agencies and the possible transfer of funds. However, the ELLC Committee goes on to note that the practicalities of this relationship, particularly with regard to responsibility for the distribution of funds, will need to evolve over time and that all the relevant partners should give such practicalities particular attention.

Local authorities

97. In its report, the ELLC Committee notes points raised in evidence regarding a potential tension between local authorities’ lead role in delivering public services and the work of Creative Scotland in relation to participation in, and access to, the arts and culture. The ELLC Committee concludes that the practicalities of this relationship would benefit from further clarification and therefore welcomes the Minister’s intention to continue to engage with local authorities on this matter. The Committee recommends that the Scottish Government and COSLA make every effort to ensure the relationship between Creative Scotland and local authorities is as clearly set out as possible, through dialogue with all relevant parties and, if necessary, guidance, with particular attention being given to the issue of responsibility for funding.

Ministerial direction/relationship with Scottish Ministers

98. The “arms-length principle” (i.e. how independent from government the new agency would be and what influence Scottish Ministers would have over issues such as artistic direction) had been particularly significant during the ELLC Committee’s consideration of the previous bill. However, the ELLC Committee welcomes provisions in the Bill to clearly establish an “arms-length principle.”

Governance

99. Some submissions to the ELLC Committee commented on the proposed make-up of the board of Creative Scotland, and suggested that places should be reserved for certain organisations. The ELLC Committee is firmly of the view that this would be counter-productive and supports the Scottish Government’s approach that the board should be recruited through fair and open competition, as outlined in the Bill and accompanying documents.

100. The ELLC Committee also considered the issue of Royal Charter status, and noted the concerns raised by the Royal Society of Edinburgh about the potential implications of this, and the Scottish Government’s response.

ELLC Committee’s overall conclusions

101. In conclusion, the ELLC Committee acknowledges that the Scottish Government has moved to address many of the concerns raised during the passage of the Creative Scotland Bill, and that it has provided greater clarity on a number of important issues. However, the ELLC Committee also notes that Creative Scotland has had a very long incubation period and the Committee is agreed that any further delay and uncertainty regarding its establishment would damage the sector. The Committee therefore believes it is important that Creative Scotland becomes fully established as soon as possible.

102. The Committee notes the conclusions and recommendations on Creative Scotland from the ELLC Committee and asks the Cabinet Secretary to respond.

Part 4 – social care and social work: scrutiny and improvement and
Part 5 – Health care: scrutiny and improvement

Introduction

103. A key driver behind the Bill was the Crerar Review: The Report of the Independent Review of Regulation, Audit, Inspection and Complaints Handling of Public Services in Scotland by Professor Lorne Crerar (“the Crerar Review”).⁷⁹ The Crerar review established five key principles for the application and use of external scrutiny functions in Scottish public services, namely: independence, public focus, proportionality, transparency and accountability. Parts 4 and 5 of the Bill establish two new scrutiny bodies for social care and social work, and for health.

Establishment of SCSWIS

104. Part 4 of the Bill would abolish the Social Work Inspection Agency (“SWIA”) and the Care Commission⁸⁰ and replace both bodies with a new body to be called Social Care and Social Work Improvement Scotland (“SCSWIS”). SCSWIS would take on almost all functions of the Care Commission and SWIA. The structure, functions and powers of the new agency would differ very little from an amalgamation of the functions of SWIA and the Care Commission.⁸¹ SCSWIS would also absorb staff from HM Inspectorate of Education (“HMIE”).

105. SCSWIS would have different status compared with SWIA as it would be a non-departmental public body (“NDPB”) rather than a government agency. It would bring together 594 Care Commission staff, 72 SWIA staff and up to 13 HMIE staff.⁸² Like SWIA, it would conduct inspections at the request of Scottish Ministers but could also inspect of its own volition. However, its timetable for inspecting social work services would have to be approved by Scottish Ministers.

Establishment of HIS

106. Part 5 of the Bill proposes to abolish NHS Quality Improvement Scotland and the Scottish Health Council and to replace both bodies with a new body to be called Healthcare Improvement Scotland (“HIS”).

107. HIS would be established as a body corporate. It would have a national remit with the aims of “improving the quality of healthcare through supporting NHS boards and independent healthcare providers in improving patient care by bringing together the provisions of advice, and guidance, support for implementation and improvement and assessment, monitoring and reporting.”⁸³

Committee consideration

108. The Finance Committee considered the issue of the creation of two scrutiny bodies rather than one (as recommended by the Crerar Review). The H&S Committee considered the provisions in Parts 4 and 5 of the Bill in detail, and the ELLC Committee examined provisions in Part 4 as they related to that committee’s remit. The following sections of this report first consider the issue of two scrutiny bodies in the context of the Bill’s ambition, and then follow the structure of the H&S Committee’s report, with reference made to the conclusions of the ELLC Committee where appropriate, although comments made by the committees on joint inspections and the duty of co-operation are considered in the sections of this report on Part 6 (paragraphs 154 – 160) and comments on the Mental Welfare Commission for Scotland are considered in the sections of this report on proposed Stage 2 amendments (paragraphs 177 – 186).

The creation of two new scrutiny bodies

109. One particular factor that prompted some witnesses to question the level of the Bill’s ambition (discussed at paragraphs 19 – 21) was the decision to create two new scrutiny bodies, rather than move to a single scrutiny body as recommended by the Crerar Review. CIPFA stated in its written submission that the Bill represents “a missed opportunity for far reaching reform of public services.”⁸⁴ In evidence, CIPFA expanded upon this point—

“First, any bill that is headlined a public sector reform bill understandably raises expectations. We should also consider the wider context in which the bill was prepared, in particular the Crerar review, which carried out a wide examination of Scotland's scrutiny arrangements. One of the review's key recommendations was the establishment of a single scrutiny body, although the report also acknowledged that the ambition, though achievable, was a long-term one.”⁸⁵

110. However, although his report recommended moving towards a single scrutiny body, Professor Crerar explained that—

“When I carried out my review, which came up with radical proposals, I knew that it would take time for the process to evolve and that it would be a journey. One of my recommendations was that, ultimately, there should be a single scrutiny body rather than a large number of them; however, I recognised that as a long-term ambition that we would have to move towards. There is some movement in the bill towards reducing the number of bodies and creating new ones that amalgamate previously existing ones. Nevertheless, it is a journey and I accept that it will take time.”⁸⁶

111. Although also in favour of an eventual move to a single scrutiny body, COSLA stated that its preference would be to split two new bodies along children and adult lines—

“It seems to us that it would be more sensible to look at, for example, children's services across the education and social work sectors. Government policy is cross cutting—it does not stop at social work, with a separate policy for education. If services are delivered not in silos but across the board, they should be scrutinised across the board, too.”⁸⁷

112. The H&S Committee concluded that, on balance, it would favour taking the step of creating a single body at this stage, in keeping with the recommendations of the Crerar review. Failing that, in keeping with the duties of co-operation placed upon them by the Bill, that Committee considers it vital that the two bodies plan for the potential future amalgamation of their functions into a single organisation. This would potentially include ensuring combined back-office functions and an overlap in board membership from the outset, with a view to there being a single board in the medium term. As part of the co-operative process, the two bodies should determine and clearly set out the benefits of and impediments to achieving this.

113. The Finance Committee heard similar evidence from voluntary sector witnesses, who stated that “true integration” was critical. Children 1st stated that—

“I have been involved in mergers and I have looked at the research, and it is clear that mergers fail when ethos and culture are not got right, because a great deal of attention has not been paid to them and it is not clear to people what they can expect. We hope that there will be true integration, rather than just a merger in the negative sense of the word.”⁸⁸

114. The Committee appreciates that some witnesses have expressed frustration that the Bill does not fully implement the Crerar Review proposals as regards the creation of a single scrutiny body. However, the Committee notes the evidence from Professor Crerar and others that this would be too much of a radical shift at this time. The Committee is supportive of the H&S Committee’s conclusions above and asks the Scottish Government to respond.

Scottish Government consultation

115. Before discussing the provisions in the Bill, the H&S Committee’s report considers the level of consultation by the Scottish Government. The H&S Committee acknowledged that extensive consultation was undertaken by the Crerar Review, but noted that concerns were raised in evidence about the lack of a formal public consultation on Parts 4 and 5 of the Bill. The Committee goes on to draw the attention of the Finance Committee to the issue of consultation, given the scope of the proposed reforms contained in the Bill and the abolition of several scrutiny and improvement bodies – only established over the last six to eight years, many in primary legislation. There was a view that the choices made during the development of the policy underpinning Parts 4 and 5 were not fully explored with all the stakeholders.

Public-focused reform

Cost savings versus improving the system

116. A recurring theme in evidence to the H&S Committee was that the Bill and its accompanying documents emphasise the potential financial savings that may accrue through the proposed establishment and functions of SCSWIS and HIS. Much of the evidence received pointed to the limited cost savings over the potential wider benefits and opportunities to improve the delivery and accountability of health and social care services in Scotland. This report discusses the issue of costs and savings in detail in the section on the Financial Memorandum at paragraphs 202 – 210. The H&S Committee concluded that the development of public participation within the scrutiny and improvement system is central to the successful delivery of the principles advocated by the Crerar review and that the policy of placing the public at the centre of the decision-making process within a healthcare and social care system in Scotland has developed significantly in recent years.

117. The H&S Committee believes that the Crerar review principles provide a clear patient-centred methodology for the reform of the scrutiny and improvement system for health and social care services in Scotland. The Committee is concerned that the Scottish Government has not yet clearly demonstrated how the proposed structure and aims of the SCSWIS and HIS, and the relationship between them and with other key agencies, will deliver on the Crerar review principles. Further, the Committee believes that the Government should set out, as part of the legislative process, what patient-centred benefits are expected; these expected benefits would then serve as standards for the new bodies to work to and enable those bodies to be held to account.

Complaints systems

118. One of the major challenges outlined in evidence to the H&S Committee centred around the changes to the current inspection and public complaints system for health and social care services in Scotland that would arise from the creation of SCSWIS and HIS.

119. Owing to the varying powers and systems in place in the constituent bodies that would be replaced by SCSWIS and HIS, witnesses expressed concern in relation to the lack of clarity in the Bill as to how the new bodies will integrate and operate complaints systems. It was emphasised to the Committee that the governance processes of SCSWIS and HIS have to ensure that the best elements of the existing systems were retained and improved upon under the new structures.⁸⁹ ⁹⁰

120. In concluding on this section of its report, the H&S Committee reserved its judgement on the issue of complaints as the Scottish Government had not yet produced draft regulations specifying the structure and operations of the complaints system. The H&S Committee recommends that the Government produce draft regulations on the complaints system for consideration before Stage 2.

121. The H&S Committee also firmly believes that, in keeping with the Crerar review principles, the public complaints system to be put in place as a result of the creation of SCSWIS and HIS should be a public-focussed system. This would involve putting the public at the heart of the improvement system and should therefore include feedback as well as complaints.

122. Furthermore, a single point of access for all complaints or concerns would be a vital component of this. Such an approach would help to protect patients from a potentially confusing decision about which complaints route to take. For example, a patient should not have to decide whether a complaint about a dental service may need to be addressed to a professional body or to a public complaints body, depending on whether the service was provided privately or on the NHS. This is a relatively straightforward example that illustrates a situation that could occur to vulnerable patients in more complex circumstances.

Scottish Health Council

123. Established in 2005, the primary aim of the Scottish Health Council (“SHC”) is to promote improvement in the quality and extent of patient focus and public involvement in the NHS in Scotland.⁹¹ A major development in the public engagement process will be seen in 2010 with the first pilot elections to be held under the Health Boards (Membership and Elections) (Scotland) Act 2009. This will see the direct election of 12 members to Fife Health Board and 10 members to Dumfries and Galloway Health Board.⁹²

124. The H&S Committee notes that the Bill as drafted provides that the proposed HIS “may” establish a new SHC. It believes that there would be a continuing and important role for the SHC in the structure of the proposed HIS and that, therefore, the Bill should provide that the proposed HIS “must” establish the SHC or otherwise ensure that its current functions are maintained.

125. The Committee goes on to state that the proposed HIS should seek to benefit from the expertise built up by the SHC during the transitional period of its establishment and early development, especially in light of future developments, such as direct elections to health boards. In preparation, NHS Quality Improvement Scotland and the SHC should set out an agreed framework and timetable for review for the role of the SHC in HIS.

Enforcement and improvement

The core aims of SCSWIS and HIS

126. One of the main points of debate raised during the H&S Committee’s evidence taking was the need for a balance in the stated aims and objectives of SCSWIS and HIS, as set out in the Bill, in respect of their enforcement and improvement roles. SCSWIS is primarily an inspection agency, subsuming most of the prior responsibilities of the Care Commission and the SWIA. Evidence on Part 4 of the Bill pointed to the need to clarify the role of SCSWIS in its aims as an agent in improving the delivery and quality of social work and social care services. Evidence on Part 5 of the Bill suggested that much more clarification of the purpose of HIS as an inspection agency, as well as an improvement agency, was needed. Concerns were raised over the lack of clarity in the Bill as drafted on how HIS would assume and execute its new inspection powers.

127. The H&S Committee is of the view that the discrepancies between the aims of the two bodies, as highlighted in the oral evidence, arise in large part from the lack of consultation by the Scottish Government on Parts 4 and 5 of the Bill and that this highlights a fundamental concern about the reform process. They believe that a true integration strategy to deliver on efficient and meaningful improvement in services is called for, not a simple cut-and-paste merger of specific functions between new bodies. The Scottish Government must ensure that the aims of SCSWIS and HIS are aligned and compatible with their joint and separate functions. This will form a key element to the future development of the overall system, should further reform lead to the development of a single enforcement and improvement body for health and social care services.

128. The Committee goes on to note the preference expressed by some witnesses for SCSWIS to have a role in relation to complaints about the commissioning of social work services. However, the Committee regards a local authority’s commissioning of services as constituting a part of its service level and, therefore, to be properly a matter for its own complaints process. Similarly, the Committee considers complaints about professional standards to be a matter for the relevant professional body. However, in recognition of concerns that cost is often an over-riding factor when commissioning services, the Committee recommends that the proposed SCSWIS should have a role in working with local authorities to ensure that the quality of service is given greater weight when the commissioning of services is being considered.

Joint inspections and duplication of scrutiny

129. The H&S Committee also draws the attention of the Finance Committee concerns about potential duplication in scrutiny and improvement functions across the two proposed bodies and its belief that the Scottish Government should bring forward fully developed proposals for minimising such duplication. The Committee also restated its concerns about lack of consultation on this area of the Bill.

130. Further discussion on the issue of joint inspections can be found in the sections of this report on Part 6 of the Bill (see paragraphs 154 – 160).

Commissioning services and the tender pre-qualification process

131. The H&S Committee also believes that the Scottish Government should establish a role for SCSWIS to act as a pre-qualification registration body for service providers wishing to tender/re-tender for local authority service contracts, thereby removing the need for contractors to go through 32 separate pre-qualification systems and ensuring a consistency in application of criteria.

Organisational merger issues ⁹³

Cultural integration, governance and impartiality

132. Many of the witnesses who gave evidence to the H&S Committee commented on the decision to establish SCSWIS as an NDPB at arms length from government but to create HIS as a government agency under ministerial control. Given the inherited function of both bodies, this raises potential questions of impartiality and governance difficulties. Professor Crerar made a similar point in evidence to the Finance Committee.⁹⁴

133. In conclusion on this point, the H&S Committee noted its support for the views expressed by NHS Forth Valley, NHS Greater Glasgow and Clyde and other witnesses in respect of the cultural difficulties faced in the creation of a new body, or of new bodies, and the danger of a ‘dominant agency’ culture developing as a result of a merger procedure as opposed to a true integration process. The new body or bodies and the Scottish Ministers must ensure that sufficient scope and resources are provided to allow the best elements of their predecessor bodies to be retained while developing a genuinely new culture suited to their aims and functions.

Development of shared services

134. Another potential advantage highlighted in evidence to the H&S Committee was the opportunity offered by the Bill to further develop the integration of shared service delivery so as to support the development of combined health and care facilities and thereby reduce waste and improve efficiency. In its report, that Committee recommends that the Scottish Government seeks to examine and develop a clear strategy on joint service development as part of the establishment of SCSWIS and HIS or a single body. This strategy should seek to embed the principle of shared services and co-location in the development of standards, outcomes and arrangements of the new body or bodies. This would assist in the removal of barriers to greater joint service development.

Ministerial powers in relation to SCSWIS and HIS

135. As discussed above, much of the evidence received by the H&S Committee highlighted the different statutory basis on which it is proposed to establish SCSWIS (as an NDPB) and HIS (as a government agency). This raised concerns with witnesses in relation to the independence from ministerial control of these bodies in the exercise of their scrutiny and enforcement functions. In concluding on this point, the H&S Committee recognised the appeal of allowing sufficient flexibility for ministers to deal with refinement and reorganisation of public services in the wake of the Crerar review and the scale of the reforms proposed in the Bill, especially in light of the lack of consultation by the Government on the proposals. However, maintaining the confidence of public sector employees, key stakeholders and especially the general public is vital to the success of any major reform process.

136. The H&S Committee goes on to recommend that, given the uncertainty expressed by witnesses about the direction of travel and in light of the consultation experience in the development of these legislative proposals, the Scottish Government sets out clearly what consultative and legislative steps would be taken in any future reform of scrutiny and improvement functions for health and social care. The Committee further recommends that the Bill be amended at Stage 2 to correct the discrepancy in relation to ministerial powers to approve inspection timetables for social work services but not for social care services.

ELLC Committee

137. The ELLC Committee also examined practical issues around establishing SCSWIS and recommended that the Scottish Government spell out, in practical terms, and before Stage 2, what specific measures will be taken to ensure that any increased degree of risk brought about as a result of the transfer process will be minimised.

138. The ELLC Committee also considered the issue of the relationship between the Scottish Social Services Council (SSSC) and SCSWIS, and welcomed the Scottish Government’s statement of its intention to strengthen the powers available to the new body in respect of the code of practice.

The independent healthcare sector

The role of HIS in the independent healthcare sector

139. Another major issue to emerge from the H&S Committee’s scrutiny of Part 5 of the Bill relates to the proposed reforms of the enforcement and improvement regime for independent healthcare services in Scotland.

140. Under the Bill, the regulation of independent healthcare services would pass from the Care Commission to HIS.⁹⁵ In relation to this, HIS would assume responsibility for a number of functions which do not currently constitute part of the role of NHS Quality Improvement Scotland, the body from which HIS would assume most of its other functions. This poses a challenge for the planning and implementation of scrutiny and regulation of such services, especially in relation to services not currently regulated by any of the existing bodies or agencies.

141. In 2008-09 the acute independent sector hospitals in Scotland treated more than 45,000 inpatient/day-case patients and more than 186,000 outpatients. Scottish independent mental health hospitals treated over 1400 patients during the same period.⁹⁶ This represents a significant increase in the work of NHS Quality Improvement Scotland.

142. In conclusion, the H&S Committee welcomed the integration of the regulation and improvement functions for both the NHS and independent healthcare services in Scotland into one body. However, the Committee considers that the Scottish Government must ensure that the necessary preparatory action in relation to the regulation of the sector is taken before the establishment of HIS. The Committee is further concerned that the point has not yet been reached where there is full scrutiny of the expanding independent health sector, despite the length of time that has passed since the Regulation of Care (Scotland) Act 2001 (“the 2001 Act”) came into force. The Committee looks forward to this being dealt with following consultation.

Regulation of independent healthcare services

143. One of the main challenges confronting bodies such as NHS Quality Improvement Scotland and the Care Commission in advance of the proposed establishment of HIS is the coming into force of the remaining provisions of the 2001 Act. The H&S Committee welcomes the Scottish Government’s announcement of a consultation on the regulation of the independent healthcare sector and, based on the evidence received, recommends that the following issues be taken into account as part of the consultation—

the proposals under consideration by the Department for Health on the regulation of independent healthcare services in England;
inclusion of the Scottish Independent Hospitals Association, and other key stakeholders, in the process of development of the standards and inspection methodology for HIS;
the need to establish agreed definitions for practitioners’ titles in independent healthcare services, especially where such practitioners are not covered by a professional body or the Health Professions Council;
the need to establish an agreed definition of an “independent medical agency” and an “independent medical clinic”;
clarification of the definition of an “independent hospital” where such a facility is co-located with an NHS facility;
in relation to the 2001 Act, (a) what is currently inspected by the Care Commission; (b) what is currently being prepared for inspection; (c) what has yet to commence inspection, and (d) what the timescale is for full implementation of the 2001 Act.

Overall conclusions on Parts 4 and 5

144. The Committee notes the conclusions and recommendations on Parts 4 and 5 of the Bill from the ELLC Committee and the H&S Committee and asks the Cabinet Secretary to respond.

Part 6 – scrutiny

145. A key aim of the Scottish Government’s public services reform programme is to create a “more proportionate and risk-based scrutiny system.”⁹⁷ In addition to creating two new scrutiny bodies for health and for social care and social work, Part 6 of the Bill contains further provisions which—

place a duty of user focus on scheduled scrutiny bodies;
place a duty of co-operation on scheduled scrutiny bodies;
provide for joint inspections between two or more scrutiny bodies; and
amend the Public Finance and Accountability (Scotland) Act.

Duty of user focus

146. Sections 92 and 93 of the Bill will require the scrutiny bodies listed in schedule 13 “to make arrangements to secure and demonstrate continuous improvement in user focus in their work.”⁹⁸ The proposed duty is intended to embed a culture of user focus throughout the scrutiny bodies. How this “continuous improvement” is to be demonstrated will be confirmed in guidance issued by Scottish Ministers.⁹⁹

147. Professor Colin Reid expressed some reservations about the proposed duty and was critical of the use of guidance to set out the detail of how the provisions will work in practice.¹⁰⁰ He went on to question the use of a “general” legal duty and how effective this would be in practical terms—

“Is having a general duty to have regard to user focus really going to make a difference? Will it lead to a better and more effective way of doing things than simply having a clear policy statement and policy guidance? Most of the public bodies that it covers are already subject to ministerial directions of some sort. Public bodies are starting to have a vast list of general legal duties that it is hard to keep track of. They could be distracting people from the really important things, and they lessen the impact of such things being law. Public bodies have so much to do as a matter of legal duty that their focus is weakened on the few really important things that the Parliament thinks should be enshrined in law.”¹⁰¹

148. The Law Society of Scotland had similar doubts about the proposal, and raised issues around the definition of “user”—

“[…] although user focus is a fine idea where the duty is owed to the user, where the duty might be owed to the public at large or to some higher interest such as the protection of vulnerable people, that might not square with a duty focused on the user. When one considers the Mental Welfare Commission for Scotland, which has duties under the Adults with Incapacity (Scotland) Act 2000 and the Mental Health (Care and Treatment) (Scotland) Act 2003 to protect the rights, including the human rights, interests and welfare, of very vulnerable people, one sees that those duties must have an independent focus rather than a user focus. Users of the Mental Welfare Commission for Scotland's powers are by definition very vulnerable people.”¹⁰²

149. The Law Society also questioned what the consequences would be for non-compliance—

“[…] what happens if there is a failure to have the user focus? If it is simply a failure to meet the statutory obligation, remedies might be at the hand of the user of the service. There might be court remedies or judicial review, or something like that. However, under the bill, the failure would lead to ministers being parachuted in with guidance. That is where there is an anxiety.”¹⁰³

150. However, Professor Crerar and Douglas Sinclair were of the view that placing a duty of user focus in statute would encourage cultural change, as outlined in the Policy Memorandum. Professor Crerar stated that—

“Many scrutiny bodies stated in their evidence to my review that they had such a focus and that they took users into account in scrutinising services, but I think that that was a case of gilding the lily. At one level, the purpose of the review was to say that we need much more user focus in scrutiny bodies and to ensure that they are providing us with reassurance. One issue in the bill is around user focus and who the user is. The intention in my review was that that was the public and those who use the services, not the service provider.”¹⁰⁴

151. Witnesses from the voluntary sector were also supportive of this position.¹⁰⁵ SAMH stated that—

“Service users should clearly be at the heart of service scrutiny. Services are provided for their users, who should have the opportunity to influence and be part of scrutiny and to influence the services themselves.

I am aware of the Law Society's concerns, particularly in relation to the Mental Welfare Commission, but our view is that the commission has a duty to have a focus on service users and that, by and large, it already fulfils that duty. It works well with the people who use it. In general, we hear good feedback from people who have asked the commission for help. I do not see a contradiction.”¹⁰⁶

152. The Cabinet Secretary confirmed the Scottish Government’s commitment to the principle of user focus—

“It may be an obvious remark for a Government to say that such a focus should be implicit in all public services, but our view is that we need to make the point—we need to assert it—to ensure that user focus is properly and fully taken into account by the public services in the design of and approach to their activities. In those two respects, having security around rights, entitlement and powers and a duty of user focus provide the necessary reassurance that members of the public who use those services require to see.”¹⁰⁷

153. The Committee notes the conflicting evidence received on the issue of user focus and asks the Cabinet Secretary to respond.

Duty of co-operation and joint inspections

154. Section 94 of the Bill would establish a duty on bodies listed in schedule 14 to co-operate and co-ordinate with each other and, where appropriate, the Scottish Ministers on improving the exercise of scrutiny functions. Section 95 would place a duty of co-operation on SCSWIS and HIS in relation to their inspection processes. These sections of the Bill were examined in detail by the H&S Committee and the ELLC Committee.

155. The H&S Committee considers a single point of entry for users to be vital to the success of the proposed scrutiny and improvement system. This could be fostered by ensuring cross-membership of the boards of HIS and SCSWIS, thereby ensuring co-ordination and uniformity in their approach to joint inspections.

156. In addition, the H&S Committee recommends that SCSWIS and HIS should seek to consult with other inspection agencies on establishing a clear joint inspection protocol with them. This should include provision whereby bodies or service providers falling partly or wholly under the scrutiny remit of both SCSWIS and HIS would be subject to a single joint inspection process, in the interests of minimising the administrative burden placed on them.

157. The H&S Committee also considers that the Scottish Government must establish a clear and robust code of practice for all HIS and SCSWIS staff in relation to their right of access to individual patient records. This code should be consulted on in advance of the establishment of both bodies. It should also consider the potential for a change to the functions of the Mental Welfare Commission for Scotland and how its role in protecting the rights of vulnerable individuals would remain independent and intact in any new joint inspection system.

158. In relation to access to records for child protection issues, the H&S Committee notes the concerns raised by BMA Scotland and recommends that the Scottish Government provide specific assurances on these matters.

159. The ELLC Committee also considered the specific point raised by the British Medical Association on the need to maintain a balance between the need for patient confidentiality and the overriding need for appropriate access to medical records for inspection purposes. The ELLC Committee, however, concluded that the measures and safeguards contained within the guidance associated with the 2006 Act, which will be updated as part of the arrangements for the current Bill, are sufficiently robust, and welcomed assurances from the Scottish Government that further discussions with relevant bodies would take place in due course.

160. The Committee notes the conclusions from the secondary committees and asks the Cabinet Secretary to respond.

Bodies to which these sections apply

161. As described above, sections 92 and 93 of the Bill on user focus apply to bodies listed in schedule 13; section 94 of the bill on co-operation applies to bodies listed in schedule 14; and section 95 on joint inspections applies to bodies listed in section 95(6). These lists can be amended by negative resolution procedure, but before an order to add a body to any of these lists can be laid, the Government must consult both the body and “any other person they think fit.” The Committee received limited comment on the bodies that the various provisions under this section apply to. However, the Police Complaints Commissioner (who is not currently subject to any of the sections) submitted evidence to the effect that the provisions related to changing these lists “constitute a material undermining of the independence and impartiality of the Commissioner.”¹⁰⁸ The Committee asks that the Cabinet Secretary looks again at these provisions in light of the points made by the Police Complaints Commissioner.

162. In its report, the H&S Committee recommends that the Scottish Government considers amending the Bill at Stage 2 to include Her Majesty’s Chief Inspector of Prisons for Scotland and Her Majesty’s Chief Inspector of Prosecution in Scotland in the bodies listed in schedule 14, on duties to co-operate; and the Government should also consider extending the duty on joint inspections set out in section 96 to include Her Majesty’s Chief Inspector of Prosecution in Scotland, Audit Scotland and the Scottish Housing Regulator. The Committee notes the conclusions from the H&S Committee and asks the Cabinet Secretary to respond.

Amendments to the Public Finance and Accountability (Scotland) Act

163. At section 98, the Bill provides for a number of changes to the Public Finance and Accountability (Scotland) Act 2000 (“the 2000 Act”). These changes mainly stem from recommendations resulting from a review of the corporate governance of Audit Scotland conducted by the Scottish Commission for Public Audit (“SCPA”) and published in October 2008.¹⁰⁹ The SCPA is a statutory body comprising five MSPs, and was established under the 2000 Act to provide a route of accountability to the Parliament in respect of Audit Scotland.

164. The Committee received written and oral evidence from Robert Black (Auditor General for Scotland), the Audit Scotland Board and the Accounts Commission. The issues covered by that evidence include matters which the SCPA has previously considered in some depth during its review. A further written submission was received from the SCPA, and a written submission from the SPCB also includes some comment on these issues.

165. The evidence indicates that the main provisions of section 98 are uncontentious—

to provide that it will be the SCPA which in future appoints three members of the five-person Audit Scotland board rather than them being appointed by the two members specified by the 2000 Act (the Auditor General and the Chair of the Accounts Commission);
to provide that the SCPA will determine the terms and conditions of those three members, that their term of appointment will be for three years with the possibility of this being renewed once and that the SCPA will appoint one of those three to chair the board;
to provide for future holders of the post of Auditor General to be appointed on a single non-renewable eight-year term; and
to provide for the defence of privilege against defamation proceedings to be extended to the reports of the Auditor General and to the proceedings of the SCPA.

166. However, the Chair of the Accounts Commission and the Auditor General suggested that, in addition to the provisions above, the SCPA should take over from the SPCB responsibility for determining the Auditor General’s salary and terms and conditions. They argued that the current position raises at least a perceived conflict of interest for the SPCB in that it is a body audited by the Auditor General. The Auditor General said—

“If the SCPA took on that responsibility, that would bring the position in Scotland into line with the principles regarding the independence of auditors set out in the ethical standards for auditors that are issued by the United Kingdom auditing practices board.”¹¹⁰

167. The SCPA considered this issue in 2008, and took evidence from all relevant parties at that time. It recommended no change to the current arrangements, and re-iterated this position in its written submission dated 1 October 2009, expressing concern that taking on this role would potentially change the nature of the SCPA and its relationship with Audit Scotland. It was not persuaded that the SPCB’s procedures risk giving rise to a conflict of interest.

168. The SPCB noted that the issue was also considered by the Review of SPCB Supported Bodies Committee as part of its recent inquiry. That Committee also recommended no change to the current arrangements, noting the SPCB’s view that its Audit Advisory Board could give it appropriate advice on which to determine these issues.¹¹¹

169. The Cabinet Secretary confirmed in evidence that he was willing to look into amendments in this area.¹¹²

170. The Chair of the Accounts Commission and the Auditor General also suggested that the Office of the Commissioner for Public Appointments in Scotland (OCPAS) should be given a formal role in the recruitment of independent non-executive members of the Audit Scotland board, by amending the Act establishing OCPAS to make Audit Scotland subject to its jurisdiction. The SCPA stated that it would welcome such an amendment in principle, subject to any cost implications being clearly understood.

171. The Committee notes that the provisions of section 98 have generally been welcomed. The Committee notes the debate over the most appropriate process for determining the salary and terms and conditions of the Auditor General, and accepts that the Review of SPCB Supported Bodies Committee and the SCPA considered this in detail and concluded that no change was required. The Committee recommends that the Scottish Government considers and responds on the possibility of making appointments to the Audit Scotland board subject to the jurisdiction of OCPAS.

Part 7 – miscellaneous and general

172. Part 7 of the Bill covers the issue of charity trustees’ indemnity insurance and other miscellaneous provisions. On the issue of indemnity insurance for charity trustees, the provisions in the Bill amend the provisions in the Charities and Trustee Investment (Scotland) Act 2005 to allow charities on the Scottish Charity Register to provide all their trustees with indemnity insurance from charity funds. Trustee Indemnity Insurance (“TII”) is a personal insurance that indemnifies charity trustees against the risk of personal liability arising from breach of their duties. Prior to the 2005 Charities Act charities were able to pay for TII for all their trustees from charity funds.¹¹³

173. The Policy Memorandum explains that the Office of the Scottish Charity Regulator was consulted on these provisions, but that “no further consultation was considered necessary because these provisions do not reflect a change in policy – they merely correct an unintended consequence.”¹¹⁴ However, the SCVO was of the view that there was no pressing need for this reform, and that its preference would be for a full parliamentary review of the 2005 Act, which could address this issue among others.¹¹⁵

174. In his letter to the Committee on possible Stage 2 amendments¹¹⁶ (discussed in detail at paragraphs 177 – 186), the Cabinet Secretary confirmed that the Scottish Government is currently consulting more widely on charity law and that further proposals may be brought forward at Stage 2 in light of the consultation outcome.

175. The Committee notes the Cabinet Secretary’s response that a wider consultation is being undertaken.

176. No comment was received on the other provisions contained in Part 7 of the Bill.

possible stage 2 amendments

177. As indicated above, on 17 July 2009 the Cabinet Secretary wrote to the Committee setting out amendments that the Scottish Government anticipated bringing forward at Stage 2.¹¹⁷ The following section of this report discusses the main proposals.

Mental Welfare Commission for Scotland

178. The Policy Memorandum notes that the Scottish Government’s original policy intention was to take the functions of the Mental Welfare Commission for Scotland (“MWCS”) into HIS as part of the Bill. However, following concerns expressed by stakeholders on the potential loss of MWCS’s independence and its safeguarding role, the Government decided to remove the proposals from the Bill as introduced and consult further.

179. The letter from the Cabinet Secretary of 17 July included details of the Government’s consultation. On 20 October 2009, the Minister for Public Health and Sport wrote to the Committee explaining the outcome from the consultation and setting out in detail the Scottish Government’s position as regards the MWCS and the Bill.¹¹⁸ The Committee welcomes the Government’s approach in this regard, and looks forward to scrutinising amendments at Stage 2.

Issues arising from the Review of SPCB Supported Bodies Committee report

180. On 18 June 2009, the Scottish Parliament agreed proposals for a committee bill as recommended by the Review of SPCB Supported Bodies Committee (“RSSB Committee”) report.¹¹⁹ In its report, the RSSB Committee also recommended that certain elements of its report should be taken forward as Stage 2 amendments to the Public Services Reform (Scotland) Bill.

Complaints handling

181. The RSSB Committee recommended that functions in relation to complaints handling suggested by the Fit for Purpose Complaints System Action Group¹²⁰ should be undertaken by the SPSO. The Scottish Government welcomed these recommendations and confirmed its intention to bring forward amendments at Stage 2.¹²¹

182. The SPSO indicated that the proposals may result in an increase of a third in the number of complaints dealt with by his office,¹²² and both the Scottish Government and the SPSO confirmed in evidence that work was ongoing on the financial implications of these amendments.¹²³

Scottish prison complaints

183. The RSSB Committee states in its report that transferring the functions of the Scottish Prison Complaints Commission to the SPSO could be progressed through the forthcoming committee bill. The Scottish Government notes in the annexe to the letter from the Cabinet Secretary that “given the need to have a co-ordinated and coherent approach to complaints across all public services” it would be better for amendments on this area to be included in the Public Services Reform (Scotland) Bill, and that the Government is discussing with the Member in charge of the committee bill how best to approach this.¹²⁴

Waterwatch

184. In its report the RSSB Committee does not recommend transferring Waterwatch’s complaint functions to the SPSO as proposed by the Scottish Government, although it does note that the decision was finely balanced. The RSSB Committee also notes that it did not consider evidence on the transfer of Waterwatch’s advocacy role to Consumer Focus Scotland. In the annexe to the letter from the Cabinet Secretary, the Scottish Government restates its intention to bring forward amendments at Stage 2 of the Public Services Reform (Scotland) Bill to implement both of these changes.

Leasing of forestry land to local communities

185. The Scottish Government also confirmed that it intends to bring forward an amendment at Stage 2 to make it possible for communities to lease land from the Forestry Commission for forestry purposes.¹²⁵ This follows a recommendation from the RAE Committee in its report to the Transport, Infrastructure and Climate Change Committee on the Climate Change (Scotland) Bill. In its report the RAE Committee welcomes the proposal.

186. The Committee thanks the Cabinet Secretary for the advance notice of possible Stage 2 amendments and looks forward to further discussions at Stage 2.

The financial memorandum

187. This section of the report looks first at the overall level of costs and savings arising from the Bill as detailed in the Financial Memorandum (“FM”) and then in more detail at those areas with the most significant level of costs and savings attached and the most significant margins of uncertainty.

Overall level of costs and savings

188. The FM goes into some detail on each area of costs and savings arising from the Bill; includes ranges of costs; and notes the Government’s assessment of the “best estimate” of costs. Table 1 on page 60 of the FM sets out the cost implications of each area of the Bill. As can be seen from the table, the most significant costs arise from the creation of SCSWIS and the creation of Creative Scotland.

189. The Bill proposes some short term costs on the Scottish Government’s budget, which will result in medium term and recurring efficiencies. According to the FM, net savings from the passage of the Bill as a whole over the period 2008-2014 equate to £3.288m (efficiencies of £13.260m – costs of £9.972m). Figure 1 below depicts the spread of these costs and savings over the period 2008-2014.

Figure 1: Estimated Costs and Savings from the Public Services Reform (Scotland) Bill

Source: Financial Memorandum, Table 1

190. Various witnesses and those making written submissions commented on the FM, including those bodies directly financially affected. In their introductory session, the bill team made it clear that the Bill was “not a cost-saving exercise.”¹²⁶ However, the Institute of Directors questioned the veracity of the figures in the FM and the Bill’s ambition to “drive through real change.”¹²⁷ CIPFA made a similar point—

“Savings of £3 million are at the margin. Cash-releasing efficiencies are not the only measure, but they are a reasonable measure and it is important that we understand that costs will be incurred over several years prior to the achievement of net overall savings of £3 million.”¹²⁸

191. Jo Armstrong developed this theme, and explained that in her view—

“The savings could be significant. If the bill is not about cost savings, that is a lost opportunity. Given that serious financial constraints are coming, we could use the bill as an opportunity to make savings, improve the quality and delivery of services, and deliver more for people who will be marginalised as costs and budgets get smaller.”¹²⁹

192. The Committee notes that the Bill is not designed as a cost-saving exercise. However, the Committee encourages the Cabinet Secretary to look for further savings year-on-year from both the Bill and the wider simplification programme.

Consultation

193. A theme that has emerged throughout this Committee’s, and other committees’, consideration of the Bill has been a lack of consultation by the Scottish Government in key areas. In its written submission to the Committee, the Care Commission stated that there had been limited involvement from its specialist staff in preparing the FM due to the “limited time available to the project team.”¹³⁰ The Committee again notes the concerns expressed in evidence on the lack of consultation, and asks for clarification on the “very short timescale” cited as a difficulty by the bill team,¹³¹ given that the Bill was originally planned for introduction in February 2009.

Creative Scotland

Funding

194. In its report, the ELLC Committee notes that the funding of Creative Scotland was a significant concern during the passage of the Creative Scotland Bill and in evidence to the Committee on this Bill. Following completion of the ELLC Committee’s report, correspondence was received from the Minister for Culture, External Affairs and the Constitution, which notes that “whilst work on much of what you requested is currently in progress, I am not in a position to provide complete answers at present.”¹³² In its report, the ELLC Committee concludes that it remained concerned that the level of funding available to Creative Scotland may not be sufficiently high to enable it to achieve its broad and ambitious objectives and recommends that the Scottish Government gives further thought to how this potential shortfall might be met.

Loss of charitable status

195. The FM explains that the Scottish Arts Council will retain charitable status until the organisation is dissolved and estimates that there could be a loss of £546,000 to Creative Scotland if the new organisation does not receive charitable status itself.¹³³ In evidence to the ELLC Committee, the Minister for Culture, External Affairs and the Constitution explained that it would be unlikely that Creative Scotland’s application to the Office of the Scottish Charity Regulator for charitable status would be successful. However, in correspondence to the Finance Committee, the bill team explained that the costs set out in the FM were a “worst case scenario” and “take no account of a range of potential options Creative Scotland may wish to pursue to absorb or mitigate any loss.”¹³⁴ The bill team give a range of options that could be pursued and stated that “there will be no direct impact on grants to artists.”¹³⁵

Overall level of costs and savings for Creative Scotland

196. As indicated above, the FM sets out a range of costs and savings, and a “best estimate”. In terms of Creative Scotland, if the higher estimate of costs is used, transition costs would total £4.44 million and savings at the end of 2013 would total £3.66 million.¹³⁶ In response to concerns that the new organisation would not be making net savings by 2013, officials explained that, in their view, the upper estimate of costs would be “quite unlikely to happen”, due to the uncertainties around many of the transition costs (most notably the costs of the voluntary early severance/retirement scheme – see paragraphs 197 – 198).¹³⁷ In addition, the bill team explained that while some savings could be quantified at this point—

“[…] we [also] expect savings to arise from streamlining of processes, but we cannot quantify them at the moment, so they have not been included in the estimated savings. However, we will expect those figures to increase.”¹³⁸

Staff costs

197. A significant potential area of cost, with a wide margin of uncertainty, is provision for a voluntary early severance/retirement (“VES/ER”) scheme. The FM explains that there will be no compulsory redundancies as a result of the restructuring (in line with commitments made by the Scottish Government on the simplification programme), and that “savings will be achieved through natural wastage, redeployment and re-skilling where appropriate.”¹³⁹ However, the FM goes on to state that should it be necessary, “a cost effective voluntary early severance/retirement scheme will be made available.”¹⁴⁰

198. On the basis of the “most favourable” Scottish Arts Council terms, the FM estimates that the cost of the VES/ER will be between £500,000 and £1.5m, with a best estimate of £1.1m.¹⁴¹ These estimates are based on a headcount reduction of 30 full time equivalent (“FTE”) posts, as outlined in the FM. However, the Creative Scotland Business Model, published in October 2009, sets out plans for a headcount reduction of 35 FTE posts.¹⁴² The Committee appreciates the points made in correspondence from the bill team that there are a range of factors which contribute to the uncertainties around these figures, and that the VES/ER scheme will only be used when other methods have been exhausted. The Committee also notes that the Minister for Culture, External Affairs and the Constitution has already met with relevant trades unions and expects to continue discussions on this issue.¹⁴³

Non-staff costs

199. The major element of non-staff costs in setting up the new body is for harmonising business systems and IT. The FM again gives a wide range of possible costs (£300,000 - £600,000) and a best estimate of £400,000. The bill team explained that there is a range of factors behind the difference in upper and lower estimates and that different levels of integration between the two bodies are possible.¹⁴⁴ The Committee also understands that Creative Scotland 2009 Ltd is tasked with providing recommendations on this area and it is not therefore possible for the Scottish Government to provide more clarity at this stage.

Conclusions on the financial implications of Creative Scotland

200. With the publication of the Creative Scotland Business Model there is now more clarity on the future shape of the new organisation than there was when the FM was being drawn up. The Committee therefore asks the Scottish Government to consider whether it wishes to revise the cost estimates in the FM before Stage 2, especially given the proposed headcount reduction of 35.

201. Overall, although appreciating the uncertainties involved, the Committee is concerned about the wide range of figures provided for some elements of the costs of Creative Scotland and asks that the Scottish Government monitors and reports to the Parliament on the establishment of the new body at regular intervals.

Creation of SCSWIS

Job evaluation exercise

202. The creation of SCSWIS will bring together staff from the Care Commission (594), SWIA (72) and HMIE (up to 13). As with Creative Scotland, the agreed principles of the simplification programme will apply and staff transferring into the new body will transfer on their existing terms and conditions. Assuming a new terms and conditions package is required, the estimated cost of a job evaluation exercise is between £890,000 and £1.43m, with a best estimate of £1.16m.¹⁴⁵ In written evidence the Care Commission noted concerns about the possible consequences that may arise from job evaluations, and that, to obtain the figures above, an assumption of 3% - 5% of the projected new body paybill has been used.¹⁴⁶ While noting that this is not an unreasonable estimate, the Commission is concerned as some evaluations have resulted in much higher percentages and that—

“Each percentage point increase/decrease will add/remove £285k per annum to the pay bill so there is considerable risk associated with this. We think that it is essential to commission a piece of work to evaluate current roles in the high financial risk areas. From the mapping information previously provided, there appears to be risk surrounding admin staff on lower grades. An exercise to establish that SWIA & HMIE admin grades are doing work that would be evaluated consistently with Care Commission admin grades would greatly assist in identifying any risk.”¹⁴⁷

203. In response, the bill team indicated that they recognised the risks associated with these figures, but noted that was the reason for providing such a wide range, “in order to be realistic and reasonable about the assumptions and the risks.”¹⁴⁸

Harmonisation

204. The cost of harmonising current terms and conditions is also “difficult to predict until work has been undertaken to develop a pay remit for the body.”¹⁴⁹ However, the FM estimates that this will cost £738,000 over three years.¹⁵⁰ Responding to criticism expressed in written evidence by the Care Commission, the bill team confirmed that, following the preparation of the FM, a further exercise was undertaken by officials, in which they “worked through all the staff and have arrived at a much more robust figure, which reduces the figure of £738,000 to about £350,000.”¹⁵¹ The Care Commission also expressed concern about grade mapping between civil service and Care Commission grades in its submission. In correspondence to the Committee, the bill team confirmed that this was an issue for consideration by SCSWIS.

Health and Sport Committee

205. The H&S Committee also noted concerns raised in evidence to it regarding staffing and employment issues related to SCSWIS (and HIS). The H&S Committee was again particularly concerned about the lack of consultation on this area of the Bill and concluded that early and successful engagement by government and senior management with staff and trade unions over the employment and pensions issues surrounding the proposed reforms will be absolutely vital to the success of SCSWIS and HIS. This will also be a crucial factor in ensuring that no hiatus occurs in scrutiny and improvement functions during the transitional period.

206. The H&S Committee also considers that transitional arrangements should be put in place as part of the establishment of SCSWIS and HIS which would allow staff who are currently members of the civil service pension scheme to decide whether to remain in that scheme or move to the local government scheme.

207. The H&S Committee recommends that the Scottish Government clarify before Stage 2 what the position would be on the application of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE regulations”) on the transfer of staff terms and conditions in relation to the creation of SCSWIS and HIS.

208. The H&S Committee further recommends that staff in the civil service should have a ‘period of grace’ to elect to remain part of the civil service career system rather than transfer to an NDPB, in order to allow time to decide on their future career development should they wish to seek to transfer within the civil service on their present terms and conditions.

Education, Lifelong Learning and Culture Committee

209. In its report, the ELLC Committee notes a specific issue raised by Community Care Providers Scotland and others regarding the current requirement for voluntary and private sector operators to pay registration fees to the Care Commission. The Committee further notes the Scottish Government’s view that it would “be very problematic” to move from this position, particularly in the current climate. The Committee also notes the argument that the charging and registration regime helps to cement the current status of the Care Commission as an independent body.

Conclusions on the financial implications of SCSWIS

210. The Committee notes the conclusions from the secondary committees on this area and asks the Scottish Government to respond. In addition, the Committee appreciates that issues around harmonisation can be sensitive and complex. However, it appears to the Committee that harmonisation inevitably leads to an increase in the total paybill of a body, and it is not immediately obvious to the Committee why this should always be the case, particularly in light of the anticipated reduction in public spending in future years. The Committee therefore asks the Scottish Government to consider this issue and report back to the Committee, although not necessarily through this Bill process.

Conclusions on the Financial Memorandum

211. In general, the Committee has found the FM to be a detailed and useful document, notwithstanding its specific comments above on certain aspects of the cost implications. However, the Committee notes that the largest element of the savings involved in the Bill appear to come from the reduction in staff at Creative Scotland, and restructuring/streamlining in SCSWIS. As the intention is for staff to be redeployed within the Scottish Government in the first instance (although VES/ER schemes will be available), the Committee questions whether this does in fact constitute a saving to the public purse, and asks the Cabinet Secretary to respond.

other issues

The Policy Memorandum

212. The Policy Memorandum has been referred to throughout this report and the Committee found it to be a useful document in setting out the policy objectives behind the Bill.

Subordinate Legislation Committee report

213. The Committee has referred to issues around delegated powers throughout this report. In its report (Annexe E to this report), the Subordinate Legislation Committee makes a range of other recommendations.

overall conclusion on the general principles of the bill

214. The lead committee’s role at Stage 1 is to report to the Parliament on the general principles of the Bill. As has been expressed earlier in this report, the Committee is supportive of the need for public services reform, although it endorses the view of some witnesses that the Bill does not go far enough. However, the Committee has serious¹⁵² concerns about elements of Part 2 of the Bill for the reasons outlined in detail above.

215. The Committee is content to recommend to the Parliament that the general principles of the Bill be agreed to. However, in relation to Part 2, the Committee welcomes the Cabinet Secretary’s commitment to look again at the issue and requests that he agrees to bring forward revised proposals to the Committee prior to formal Stage 2 consideration.

summary of conclusions and recommendations

The wider simplification programme and the ambition of the bill

The Committee notes the comments received on the ambition of the Bill and on whether the Bill does “reform public services.” While the Committee welcomes the Scottish Government’s commitment to speed up the pace of public service reform, the Committee shares the view of some witnesses that the Bill does not go far enough (paragraph 21).

Part 1– simplification of public bodies

The Committee notes the comments from the secondary committees on certain specific changes in Part 1 of the Bill and asks the Cabinet Secretary to respond (paragraph 29).

Part 2 – order-making powers

Precedent – section 13

The Committee asks the Cabinet Secretary to set out his reasons for deciding not to follow the provisions in the UK Act, and to clarify whether Ministers’ powers under the 1994 Act have been used before (paragraph 46).

Safeguards applied by the Bill

The Committee welcomes the Cabinet Secretary’s commitment that he is willing to look again at the issue of preconditions on both powers and requests that proposals are brought forward to address the concerns raised by the SLC and others (paragraph 48).

The Committee welcomes the Cabinet Secretary’s commitment to consider the balance between the scope of the powers and the accompanying safeguards and his comments that the SLC “has made some constructive suggestions for additional procedural safeguards.” The Committee also notes the relevant provisions in clauses 12 to 18 of the UK Act and recommends that the Cabinet Secretary considers both when bringing back proposals to ensure the role of Parliament is fully protected in relation to these orders (paragraph 53).

Schedule 3

The Committee welcomes the Cabinet Secretary’s commitment to look at the list of bodies in schedule 3 again, and recommends that he brings forward proposals to address the concerns expressed in evidence to the Committee prior to formal Stage 2 consideration (paragraph 68).

The Committee notes the strength of evidence received on the issue of consultation and, while noting the work done by the Crerar Review and others, considers that many of the concerns expressed in evidence could have been addressed if full pre-legislative consultation on the provisions in the Bill had been undertaken (paragraph 71).

The Committee supports a proposal from the SLC [which recommended that orders under this section should be subject to affirmative procedure, and that bodies should be consulted prior to their inclusion in an order] and asks that the Cabinet Secretary considers bringing forward appropriate amendments at Stage 2 (paragraph 72).

Section 13 – the desirability and necessity of the power

The Committee, although again noting the work of the Crerar Review and others, is concerned about the lack of public consultation by the Scottish Government (paragraph 83).

The Committee notes the views expressed regarding whether the power in section 13 is desirable or necessary, and that the equivalent power at Westminster was extremely controversial when going through Parliament and has rarely been used. In this regard, the Committee refers the Cabinet Secretary to its comments on the issue of the UK Legislative and Regulatory Reform Act 2006 as above (paragraph 85).

Conclusions on Part 2

As noted in the introductory paragraphs of this section of the report, this Part of the Bill proved to be by far the most contentious in evidence to the Committee. The Committee recognises the very serious concerns expressed in evidence regarding the safeguards applied by the Bill (particularly on procedure), the bodies that the powers could apply to and whether the power in section 10 in particular could potentially alter the balance of power between the Government and the Parliament.

However, the Committee is supportive of the Cabinet Secretary’s intention to speed up the pace of public service reform and recognises that a parliamentary mechanism is needed to ensure that small-scale changes like those set out in Part 1 of the Bill can be enacted without the need for primary legislation.

Accordingly, as this could result in some relatively major changes to a crucial Part of the Bill, the Committee recommends that the Cabinet Secretary bring forward proposals prior to formal Stage 2 consideration to address the concerns expressed in this report. Some Members of the Committee are not able to support the provisions in relation to Part 2 as they currently stand. By division, the Committee disagreed to a proposal to recommend the removal of Part 2 from the Bill (paragraphs 86-88). ¹⁵³

Part 3 – Creative Scotland

The Committee notes the conclusions and recommendations on Creative Scotland from the ELLC Committee and asks the Cabinet Secretary to respond (paragraph 102).

Part 4 – social care and social work: scrutiny and improvement and Part 5 – health care: scrutiny and improvement

The creation of two new scrutiny bodies

The Committee appreciates that some witnesses have expressed frustration that the Bill does not fully implement the Crerar Review proposals as regards the creation of a single scrutiny body. However, the Committee notes the evidence from Professor Crerar and others that this would be too much of a radical shift at this time. The Committee is supportive of the H&S Committee’s conclusions above and asks the Scottish Government to respond (paragraph 114).

Overall conclusions on Parts 4 and 5

The Committee notes the conclusions and recommendations on Parts 4 and 5 of the Bill from the ELLC Committee and the H&S Committee and asks the Cabinet Secretary to respond (paragraph 144).

Part 6 – scrutiny

Duty of user focus

The Committee notes the conflicting evidence received on the issue of user focus and asks the Cabinet Secretary to respond (paragraph 153).

Duty of co-operation and joint inspections

The Committee notes the conclusions from the secondary committees and asks the Cabinet Secretary to respond (paragraph 160).

Bodies to which these sections apply

The Committee asks that the Cabinet Secretary looks again at these provisions in light of the points made by the Police Complaints Commissioner (paragraph 161).

The Committee notes the conclusions from the H&S Committee and asks the Cabinet Secretary to respond (paragraph 162).

Amendments to the Public Finance and Accountability (Scotland) Act

The Committee notes that the provisions of section 98 have generally been welcomed. The Committee notes the debate over the most appropriate process for determining the salary and terms and conditions of the Auditor General, and accepts that the Review of SPCB Supported Bodies Committee and the SCPA considered this in detail and concluded that no change was required. The Committee recommends that the Scottish Government considers and responds on the possibility of making appointments to the Audit Scotland board subject to the jurisdiction of OCPAS (paragraph 171).

Part 7 – miscellaneous and general

The Committee notes the Cabinet Secretary’s response that a wider consultation is being undertaken (paragraph 175).

Possible Stage 2 amendments

The Committee welcomes the Government’s approach in this regard [i.e. the MWCS], and looks forward to scrutinising amendments at Stage 2 (paragraph 179).

The Committee thanks the Cabinet Secretary for the advance notice of possible Stage 2 amendments and looks forward to further discussions at Stage 2 (paragraph 186).

The Financial Memorandum

Overall level of costs and savings

The Committee notes that the Bill is not designed as a cost-saving exercise. However, the Committee encourages the Cabinet Secretary to look for further savings year-on-year from both the Bill and the wider simplification programme (paragraph 192).

Consultation

The Committee again notes the concerns expressed in evidence on the lack of consultation, and asks for clarification on the “very short timescale” cited as a difficulty by the bill team, given that the Bill was originally planned for introduction in February 2009 (paragraph 193).

Creative Scotland

With the publication of the Creative Scotland Business Model there is now more clarity on the future shape of the new organisation than there was when the FM was being drawn up. The Committee therefore asks the Scottish Government to consider whether it wishes to revise the cost estimates in the FM before Stage 2, especially given the proposed headcount reduction of 35.

Overall, although appreciating the uncertainties involved, the Committee is concerned about the wide range of figures provided for some elements of the costs of Creative Scotland and asks that the Scottish Government monitors and reports to the Parliament on the establishment of the new body at regular intervals (paragraphs 200 – 201).

Creation of SCSWIS

The Committee notes the conclusions from the secondary committees on this area and asks the Scottish Government to respond. In addition, the Committee appreciates that issues around harmonisation can be sensitive and complex. However, it appears to the Committee that harmonisation inevitably leads to an increase in the total paybill of a body, and it is not immediately obvious to the Committee why this should always be the case, particularly in light of the anticipated reduction in public spending in future years. The Committee therefore asks the Scottish Government to consider this issue and report back to the Committee, although not necessarily through this Bill process (paragraph 210).

Conclusions on the Financial Memorandum

In general, the Committee has found the FM to be a detailed and useful document, notwithstanding its specific comments above on certain aspects of the cost implications. However, the Committee notes that the largest element of the savings involved in the Bill appear to come from the reduction in staff at Creative Scotland, and restructuring/streamlining in SCSWIS. As the intention is for staff to be redeployed within the Scottish Government in the first instance (although VES/ER schemes will be available), the Committee questions whether this does in fact constitute a saving to the public purse, and asks the Cabinet Secretary to respond (paragraph 211).

Overall conclusion on the general principles of the Bill

The lead committee’s role at Stage 1 is to report to the Parliament on the general principles of the Bill. As has been expressed earlier in this report, the Committee is supportive of the need for public services reform, although it endorses the view of some witnesses that the Bill does not go far enough. However, the Committee has serious¹⁵⁴ concerns about elements of Part 2 of the Bill for the reasons outlined in detail above.

The Committee is content to recommend to the Parliament that the general principles of the Bill be agreed to. However, in relation to Part 2, the Committee welcomes the Cabinet Secretary’s commitment to look again at the issue and requests that he agrees to bring forward revised proposals to the Committee prior to formal Stage 2 consideration (paragraphs 214 – 215).

Annexe A: EXTRACT FROM THE MINUTES OF THE FINANCE COMMITTEE

16th Meeting, 2009 (Session 3), Tuesday 16 June 2009

Public Services Reform (Scotland) Bill (in private): The Committee considered and agreed its approach to the scrutiny of the Bill at Stage 1.

18th Meeting, 2009 (Session 3), Tuesday 1 September 2009