Office of the Commissioner for Public Appointments in Scotland 1. How can budgetary control be balanced with independence?
1.1 The answer to this question depends on what is meant by “budgetary control”. Is the control in question the determination and allocation of a total budget, or control over how a budget is expended? My experience to date is that the Scottish Parliamentary Corporate Body (SPCB) determines my total budget, so I will answer this question as it applies to me. 1.2 The Financial Memorandum accompanying the Public Appointments and Public Bodies etc. (Scotland) Bill states that the estimates of start-up and ongoing costs of my office were based on information provided by Baroness Fritchie, who at the time was Commissioner for Public Appointments, and on knowledge of the costs incurred in establishing similar bodies. Thus, the notional figure approved was based on detailed knowledge and has proved a sound basis for determining the overall limit of expenditure. 1.3 The total budget provided to any organisation will naturally affect the ability of the organisation to fulfil its functions. The duties and responsibilities placed upon me by the Public Appointments and Public Bodies etc. (Scotland) Act 2003 (the Act) are to: • prepare and publish a Code of Practice for Ministerial Appointments to Public Bodies in Scotland • promote compliance with the Code • report to Parliament instances of non-compliance which I determine to be material to the outcome of an appointment process • examine the appointments process and investigate complaints • prepare and publish a strategy to ensure that appointments (and recommendations for appointment) are made in a manner which encourages equal opportunities. I operate independently within the agreed budget, prioritising work to ensure the necessary outcomes are achieved. 1.4 Any proposed action which will have implications for my total budget is agreed with the SPCB. For example, mindful that a financial memorandum is an estimate of costs, not a target for expenditure, I analysed the costs required to fund the work of OCPAS Assessors. I believed that these costs could be absorbed into my budget, rather than continuing the practice of payment by the Scottish Executive, and agreed this approach with the SPCB. This approach was designed to underline the Assessors’ independence from the Scottish Executive and to provide greater value from my agreed budget. The sum absorbed into my budget was £55,000. 1.5 It is not unusual to balance budgetary control with independence of operation in this way. In two of the three organisations I ran before becoming Commissioner I worked to a similar model: an overall figure was set, within
which I was required to establish, develop and deliver a service to predetermined outcomes. 1.6 How best may this be achieved? In practice, balancing budgetary control with independence may be done through: • identification of the outcomes - and timescales for these - required of the particular body or office to which the funds are allocated • creation by the body of a comprehensive business plan describing priorities, objectives and action required to deliver the above within the budget available • recognition – which may be enshrined in some form of service-level agreement or memorandum of understanding – that the post-holder is the subject expert and the funding body is the guardian of the public purse • negotiation, based on a sound business case prepared by the body, when circumstances indicate a change to the level of resource is required. 1.7 I do not believe it would be appropriate for the SPCB, having agreed the total budget, to then determine how the budget will be expended. This would remove the independence of operation of the post-holder. 2. Is it possible to implement section B2 of the UN Paris Principles and retain suitable budgetary controls? 2.1 My response to this question is again made in the context of controls which agree an overall budget, as opposed to controls on how a budget is expended. The thrust of section B2 is to ensure that national institutions are properly and adequately resourced. If budgetary controls are such that a total budget is agreed within which a post-holder may establish an appropriate infrastructure, then there would not appear to be a conflict between section B2 and budgetary controls. If, however, such budgetary controls result in inadequate funding, staffing or premises, this may affect the institution’s ability to be effective. Thus, the “smooth conduct of its activities” may be compromised. 2.2 As Accountable Officer I must: • submit my budget proposals to the SPCB • discuss my proposals with the SPCB before a final budget is established • manage the operation of my office within the established budget • ensure effective governance and robust financial controls so that I can demonstrate the budget has been spent wisely and efficiently in the discharge of my duties • report to Parliament on the functions of my office and the outcomes of our work • prepare annual accounts according to the direction from the Scottish Ministers • submit to external audit.
The above are suitable budgetary controls which have not, to date, compromised the independence of my role or the smooth operation of my office. 2.3 If, however, budgetary controls refer to how a budget is to be expended, I think this could be viewed as a performance issue. If it becomes clear that funds are not being directed towards the fulfilment of a post-holder’s functions, duties and responsibilities this would be a question of performance management not budgetary control per se. 3. What internal process occurs to establish your required budgets for each financial year in advance of scrutiny by the SPCB? 3.1 In March I conduct a full review of the current financial year’s activities; I determine the priorities for the next financial year and set general objectives for the financial year thereafter. Once priorities for the coming financial year are determined I produce a business plan. This details the objectives, the specific actions to be taken to achieve these objectives, who is responsible for each and the timescales for completion. As part of the business planning process I assess the risks to the achievement of objectives of failing to budget appropriately. 3.2 As I review the current’s financial year’s activities I scrutinise spend to determine the cost of each activity undertaken and to estimate the likely future cost if the activity is to be carried forward. I also attempt to quantify the cost of work which we have not engaged in previously. This may be through inviting quotes, referring to similar work we have done or by speaking to colleagues who have conducted work of the same nature. 3.3 Based on the business plan and the action described at 3.2 I refine the budget which was discussed with the SPCB the previous November. There is seldom a perfect fit between the plan and the budget. Hence, I review priorities, objectives, actions and the costs of these to decide how best to translate proposed expenditure into the achievement of objectives. 3.4 In May of each year I begin the process of estimating the costs of the objectives set for the following financial year. A total budget, set within general headings, is prepared and submitted in June to the SPCB. 3.5 In September I conduct a mid-year review of progress in delivering the current business plan and assess the potential impact on the current or future budget of alterations or additions to the plan. 3.6 SPCB’s formal scrutiny of my budget submission for the next financial year takes place in November. This enables me to discuss and build in any alterations necessary to the budget submitted in June following my mid-year review.
3.7 In March I receive confirmation from the SPCB of my total budget for the next financial year. 4. Do you have any views on how the process for scrutinising your budgets works in practice? 4.1 I have only been involved in one full round of budgeting, so my experience of this is limited. The scrutiny process appears to be appropriate given my experience of business planning and budgeting. It has been supported by guidance provided by staff of the Corporate Policy Unit. 4.2 My use of public funds is subject to external audit, a further scrutiny mechanism. 4.3 Scrutiny of both spending proposals and actual spend is to be encouraged. Scrutiny by the SPCB of a post-holder’s expenditure is legitimate in determining whether the post-holder is performing satisfactorily. The SPCB can determine whether or not funds are being directed towards fulfilment of a post-holder’s functions, duties and responsibilities. The Procedures Committee is currently examining the process for the reappointment of Crown Appointees and has identified a need for information on performance during a post-holder’s first term. Information on their use of public funds may be one element which can be supplied by the SPCB. 5. Do you consider there to be any overlaps between your remit and the remit of any established or proposed independent regulatory or investigatory body? 5.1 The issue of a separate office for the Commissioner for Public Appointments in Scotland was considered at length. In June 2001, “Public Bodies; Proposals for Change” noted the Scottish Executive’s proposal to merge the Commissioner’s office with the new Standards Commission. However, in February 2002, the Executive’s Consultation Paper, “A Scottish Commissioner for Public Appointments”, proposed that it would not be appropriate to merge the Commissioner’s office with the Standards Commission, as appointments to the Standards Commission are made by Ministers and the Executive were at that point proposing that the Commissioner be appointed by the Queen on the recommendation of the Parliament. The independence of the Commissioner from Ministers was seen to be crucial, as the Commissioner would be regulating and monitoring Ministerial powers. During stage one consideration by the Local Government Committee of the Public Appointments and Public Bodies etc (Scotland) Bill the question of whether an overlap existed was discussed in some detail 1 . The committee, in its 15th report, stated that it “found clear distinction between these public offices “. 5.2 I do not believe that there is any overlap between my role and the existing or proposed independent regulatory or investigatory bodies. I am required to
Official Report, Local Government Committee, 10 September 2002, c 3186
create the Code of Practice for Ministerial Appointments to Public Bodies in Scotland and to monitor its application. When I believe that a Minister has deviated from the Code in a material regard, I investigate. If my investigation confirms such non-compliance I report the Minister to Parliament. I am the only Commissioner whose regulatory powers are confined solely to Ministers. 5.3 I do believe that the functions of my office, for example the investigations we conduct, are similar in nature to the work conducted by other bodies and therefore believe that we could share services such as: • accommodation • administrative services • ancillary services • personnel functions • intellectual assets • IT services • certain policy functions • certain process functions It should be possible to make such savings without affecting the integrity of the individual post-holders and it may also be possible to benefit from economies of scale.
Karen Carlton Commissioner for Public Appointments in Scotland April 2006