We now move on to item five, which is the statement from the Chair of the Finance Committee on fiscal reform—lessons from Scotland.

Thank you very much, Deputy Presiding Officer, and I am pleased to be making this statement today, to share the lessons we learnt from our recent visit to Edinburgh to discuss the Scottish experience of fiscal reform.

During our visit, we met with representatives from the Finance and Constitution Committee of the Scottish Parliament, the Scottish Fiscal Commission, and Revenue Scotland. One of the main roles of the Finance Committee is to consider the draft budget and how fiscal devolution to Wales is going to impact on how we do this. Members will be aware that the revised Standing Orders, and the associated protocol, have been agreed in preparation for this year’s budget, which will be the first to take place within our new funding arrangements. However, the committee is also considering a legislative budget process for the future.

In Scotland, where there is already a legislative budget process in place, a budget review group was set up to evaluate the Scottish budget process, specifically looking at public engagement, in-year scrutiny, fiscal framework, multi-year budgeting and scrutiny based on outcomes. The Scottish budget review group was made up of officials from the Scottish Parliament and Scottish Government, as well as external public finance experts, including leading academics and stakeholders with extensive experience of fiscal and budgetary arrangements. The group published its report at the end of June and included a number of recommendations, with the aim of improving financial scrutiny in Scotland. I hope that the Scottish experience, and this report, will be useful tools for us as we prepare to implement our new arrangements, and as we go forward to consider a possible new process.

The establishment of this group in Scotland demonstrates the importance of building expertise in devolved fiscal arrangements, and it is imperative that the same level of support from experts is provided to develop our scrutiny arrangements so as to ensure that they are robust and effective.

Fiscal devolution and the changes in the Assembly represent an exciting and challenging time for Wales. As a committee, we have shown great interest in the preparations for the establishment of the Welsh Revenue Authority. Given that Scotland has already established its equivalent organisation, which has been operating since 2015, we feel that it’s important to learn from those experiences to ensure a smooth transition when the WRA is operational from April next year.

We heard from Revenue Scotland about the importance of stakeholder engagement when developing the website and promoting its role. Extensive engagement with stakeholders when designing the interface for the online tax system led to a high number of digital submissions. The Cabinet Secretary has previously committed to ensuring that this interaction with stakeholders is part of the process, but it’s still not too late to learn from the Scottish experience to ensure that any issues, however small, are ironed out before next April.

We met also with representatives from the Scottish Fiscal Commission, which has been operating on a statutory basis since April this year. The commission’s responsibilities include producing independent forecasts for Scotland, including forecasts for tax revenues, expenditure on social security and onshore gross domestic product. We learned that the commission and the Office for Budget Responsibility will provide fiscal forecasts for Scotland, but that the commission will be using data specific to Scotland rather than UK data that the OBR uses, which should make the commission’s forecasting models more accurate.

Rather than establish such an organisation here, the Welsh Government has appointed a team from Bangor University to undertake scrutiny of its budget forecasts. It appears that the key lesson from Scotland is the need to develop Wales-level data that are specific and timely beyond the data provided at a UK level by the OBR. Personally, I also believe that we will require a body such as the Scottish Fiscal Commission ultimately, as tax devolution is implemented. I note that the Cabinet Secretary has issued a written statement very recently, indicating that the establishment of such a commission is one of the options he is considering. The Finance Committee will examine this issue as we scrutinise the draft budget.

This work on fiscal devolution is an exciting time for the Finance Committee, and the Assembly as a whole, hopefully, and we hope that we can learn from the Scottish experience to ensure that our scrutiny arrangements are as robust as they can be. Thank you very much.

Can I thank the Chair of the Finance Committee for his statement today? As one of the three members of the committee who visited Edinburgh, and the only one who unwisely took the train and ended up taking a lot longer than everyone else, I found it extremely useful when I got there, particularly the meetings with the Scottish Parliament’s Finance and Constitution Committee, the Scottish Fiscal Commission and Revenue Scotland. I think it’s worth stating as well that the Chair and myself—I think we were the only ones—also visited the Auditor General for Scotland, Caroline Gardner, who had an invaluable insight and oversight into the way the different organisations worked together in the new fiscal landscape that is developing.

As you said, Simon, Scotland demonstrates the importance of building expertise in devolved fiscal arrangements and we can learn from both good practice and, indeed, mistakes that have been made north of the border.

So, turning to my main question: what role do you see the Finance Committee being able to play in aiding in this process over the rest of the Assembly term as fiscal devolution progresses? It strikes me that, never in the history of the Assembly has the Finance Committee really been potentially in such a pivotal and influential role in terms of deepening devolution and I think there’s a chance for the committee to really come into its own during this process.

In terms of the development of the Welsh Treasury and economic forecasting capacity, these are huge areas, and although Dafydd Elis-Thomas would say that these are issues for the Welsh Government primarily to be concerned about, I think it’s a huge task for any Government to have to deal with. So, I think there is an important role both for this Assembly and the Assembly committees, including our committee, to do what we can to influence, to provide guidance and to feed back to the Welsh Government on where we think that good practice can be built upon.

The Chair mentioned Revenue Scotland and the importance of stakeholder engagement in framing the system to the benefit of the Welsh taxpayer. Our committee has a wealth of experience in stakeholder engagement, so, again, it can play a valuable role in engagement and pressing for what I think we need, which is a bespoke Welsh tax-raising framework that people in Wales can feel comfortable with and can be proud of. We’ve spoken about this in committee, Chair, but we don’t want an adequate WRA; we want a world-class Welsh Revenue Authority. We want something that really can pave the way—not an easy goal, I know, but I think that’s what we should be aspiring to. Personally, I would have preferred the organisation to have been ‘revenue Wales’, a point that I made in the previous Assembly. I think I was outvoted by every other Member in this Chamber. But I think that, certainly looking at the way that Revenue Scotland has developed, then ‘revenue Wales’ can certainly learn from that organisation north of the border.

Just briefly, Deputy Presiding Officer, and turning to the Scottish Fiscal Commission, I tend to agree, the evidence that we took seemed to suggest that it wasn’t necessary for Wales, or it wasn’t the best value for money for Wales to necessarily go down the route of having a fiscal commission. However, we do need to make sure that the Welsh Government does have access to the best possible and timely data. That has not always been the case in the past, but in the case of fiscal devolution, it’s going to be really important that we get up to speed on that area as quickly as possible, and I know that the Chair of the Finance Committee will say that the committee wants to assist the Welsh Government and the finance Cabinet Secretary as much as possible in this process.

I thank Nick Ramsay. Can I assure him that I took the train back to Aberystwyth, so I’m sure I suffered alongside him, and a very pleasant journey it was as well? I think the key point that he was making around the role that the Finance Committee can play, and one of the reasons, he’ll be aware, that I wanted to bring this statement to the Chamber, was that, in the Finance Committee, we don’t want this just to be a debate in the Finance Committee, but something that involves all Assembly Members, and vibrant to be aware that this is a pace of change that we haven’t seen for some—well, we’ve never seen before because we haven’t seen fiscal devolution before. The pace of change around our scrutiny of the budget, around the budget process itself, will be enormous in these next two or three years, and I think everyone needs to get across that, and that’s one of the reasons, I hope, for bringing the Finance Committee’s own deliberations out into the open, into the whole Chamber, as well. So, we do have that important role to play, and I think our most relevant role at the moment is to look at and examine very carefully what the lessons are in places like Scotland, what the lesson is of a legislative approach to budgeting, and to try and apply those to Wales.

But I would agree with the point that he makes around a bespoke arrangement in Wales. I’m not—. I would not advocate—and I don’t think he does, either—just copying from Scotland or copying from other parts of the United Kingdom, or, indeed, other devolved legislatures elsewhere. We do want an arrangement that is bespoke for Wales and suits not only our scrutiny arrangements, but also the ability of the Welsh Government to propose budgets that are based on the most available and best data and the best information possible.

In that regard, as well, I would take up his point, really, around where we go further forward. What we have in place, I would agree with him, is robust enough for the current arrangements, but as we have future devolution, I think the example of the fiscal commission in Scotland is an interesting one to look at and examine. We don’t need it today, but maybe in two or three years, particularly, perhaps, in the next Assembly when we have fuller exercise of the income tax powers, when, perhaps, we will have had an election where people will have pitched an election debate around raising or lowering income tax. Then we will need a very clear pair of independent eyes on proposals coming forward from whichever Government, whichever party they are. So, I thank the Member for his company in Edinburgh as well, but just to say that we did learn a lot there, but we also learnt that, though we sometimes look elsewhere and think that they’re doing much better than us, when you get down to some of the detail, I think we don’t do quite so badly ourselves either.

I warmly welcome the statement made by the committee Chair, and, as he said, I think it’s important, as we consider the changes that are to happen over the next few years, that the work of the Finance Committee isn’t restricted to that committee but is part of a national debate even outside the Welsh Parliament. Unfortunately, I didn’t have the opportunity and the honour to visit our colleagues north of the border with the committee, but as a former Scottish citizen, I follow developments there very closely. It’s clear, having spoken to fellow committee members who did go on that fact-finding mission, that the visit had been very worth while.

My questions today will focus mainly on participatory budgeting. Now, perhaps it’s an area that Scotland hasn’t been in the vanguard on, on the international level. As part of the agreement between Plaid Cymru and the Welsh Government on the budget, the Government did commit to carrying out research on participatory budgeting and looking at other models and, also, as I understand it, to have a pilot scheme following on from that. Unfortunately, as a committee, we can’t make decisions on behalf of Government—I’m sure that’s not unfortunate for the Government, however—in terms of the process that they use in drawing up their budgets. We can only make recommendations for improvements. I am very grateful that the Cabinet Secretary is open to new ideas. In terms of our work as a committee, we can adopt the principle of participative budgeting in terms of our scrutiny process of Government budgets, and this is perhaps something that the committee Chair might be eager to look at.

As part of our scrutiny process of the budget, we as a committee already invite organisations and stakeholders to provide evidence and there’s also an opportunity for organisations, businesses and individual citizens to provide written evidence. But we could be more proactive in including citizens in the process more and more effectively. So, my question to the Chair is: how can we enhance the opportunities for individual citizens, and communities too, to participate in that process of drawing up budgets in a more proactive way? In terms of good practice from other committees in the Assembly, for example, the Culture, Welsh Language and Communications Committee held a survey into what they should inquire into, with 2,700 people participating and voting for their preferred option from a list of different options. This is important, because given the pressures that we face in terms of the Assembly’s budgets because of the way Wales is funded at the moment, there are some major questions that we as a nation will have to face in terms of prioritisation of the block grant. Even with the partial devolution of some taxation, that block grant is central and there are restrictions in terms of the options. Perhaps the model of participatory budgeting gives us an opportunity to have a real debate with the people of Wales on what the reality is, because many of them perhaps don’t consider that once the funding has been passed from Westminster to the Welsh Government.

Also on this issue, the Scottish Government is funding Glasgow Caledonian University to lead on an evaluation process over a period of two years to look at the impact of participatory budgeting on communities and democracy, with a specific focus on the relationship between these budgets and equality. Now, would the Chair consider carrying out a similar study through the Finance Committee, perhaps looking at legislation in Wales related to equality and the well-being of future generations, perhaps? Just to echo what Nick Ramsay has said on the importance of data, as the nation matures as a democracy and as new powers are accrued and new fiscal powers are accrued, then it’s crucial that we do have economic data in order to consider the link between fiscal policy and economic policy. So, I’d appreciate the Chair’s view on how we can enhance the data available at the moment.

Thank you, Steffan Lewis. First of all, just on that final point, I agree entirely that we need more timely and more appropriate data for Wales, that is more robust, in order to make some of the decisions that we ask the Government to make and then, in turn, the Assembly to approve. I hope that the process that the Government has commissioned—that Bangor University will start on that. He will know, as a member of the Finance Committee, that we’re about to look at the draft budget ourselves and we’ll be inviting in a number of organisations and other people who take this overview of budgets, not just in Wales but also more broadly internationally as well. Perhaps we will learn some good practices from that. What’s important, I think, is that we are ready for the challenges facing us, particularly when income tax comes, and that we don’t sit on our hands and think, ‘Well, this information will come’. We have to be in the vanguard. We have to break new ground, and very difficult ground at times.

Could I just turn to the broader point that you were making about participatory budgeting? It’s right to remind the Assembly about the agreement between Plaid Cymru and the Labour party in terms of looking at that. It’s not my role to answer for the Cabinet Secretary this afternoon, but I know that he is looking at this issue and is looking for opportunities to learn about work that’s being done in this field, and I hope very greatly that we will hear how that is happening. But it’s important to say that the Finance Committee itself is part of the process, although we don’t want to cloud what the Government is doing and what the Finance Committee is doing; our role is to scrutinise the Government and it’s the role of the Government to do the budget.

We were in Beaumaris last week having a stakeholder session with the public, and we have also had, I remember, a very successful session in Bassaleg School near Newport where we did a participatory budget session. Very interestingly, after allocating all the Monopoly money in the classroom, very broadly the budget looked very similar to the budget that we have from the Welsh Government. That is, people do prioritise health, then they prioritise education, then they share the money out amongst other things. It was a very interesting exercise, and I would especially like the committee to do more of that with young people, particularly with the proposal that young people start voting at 16. There is a role for us there, and I’m sure that the Finance Committee would be pleased about a day out from the Assembly from time to time to be part of that process. [Interruption.] Nick Ramsay is very happy to do that.

I wasn’t aware of the work that he referred to at Glasgow Caledonian University. I wasn’t aware of that, so thank you for that, and I’ll make sure that we do draw the attention of the Finance Committee team to that and that we look at that as something that can enrich our work in this area.

Thank you very much. And finally, Mike Hedges.

Thank you, Deputy Presiding Officer. It’s very difficult being fourth to speak and the third person who went on a visit and trying to say different things. I will endeavour to do so, and if I don’t I’m sure you’ll tell me. Firstly, can I thank Simon Thomas for his statement on the Finance Committee’s visit to Edinburgh? I think the one thing we’re going to have to start getting to grips with now is that finance is not something that is only dealt with by the finance Minister and the Finance Committee and a quick political argument once a year in the Chamber, where I can tell you what’s going to happen in the future—what each party’s going to do. We’re going to have to have a much more grown-up approach to it, and we’re going to actually have to come to terms with raising money as well as spending it, and I think that that’s going to have a change of mindset for Members across the Chamber, and I include my own party as well as the others in here.

I’d like to make two quick comments. Asymmetric devolution, with Wales continually playing catch-up to Scotland, is not acceptable. The second point is: the Finance Committee in this Assembly is more thorough in its budget scrutiny than its equivalent in Scotland. We spend a lot of time being told how wonderful Scotland is in a whole range of areas, but I’m sure that the Chair of the Finance Committee would agree with me that our scrutiny is more robust here than that that takes place in Scotland.

I have two questions. Should the budget review committee report to the Assembly or Government or both? And the final point is—and it’s really carrying on from something that’s been raised by both Nick Ramsay and Steffan Lewis—the importance of accurate and timely data. Does the Chair agree with me that it’s really important that we do ensure that we get accurate and timely data? And as we get more resources allocated to us to be got from our own taxation system, it’s going to be even more important to realise exactly how much money is coming in. Otherwise we’re going to be spending money without actually knowing we’ve got it coming. So, this timeliness and accuracy, however it’s done—. And I’m not somebody who says, ‘It has to be done by a university; it has to be done by a group that’s been set up,’ but that accuracy and timeliness, however it’s got, is incredibly important. Does the Chair agree with me that that is probably the most important thing if we’re going to start dealing with raising money—that we’re going to need accuracy and timeliness in order to ensure that what we do, we get right?

I thank Mike Hedges, and I completely agree with his final point there that robust data is essential for the Government’s own forward planning and its own tax plans, and it’s essential for us as an Assembly, then, in holding the Government to account and scrutinising those. I share, I think, his implicit concern that we don’t have that data at the Wales level enough, and certainly not timely enough. It lags behind enormously. So, in the current situation, we will be trying to scrutinise the Welsh Government plans around the economy, around investment, on data that dates back 18 months or even further, and that is not good enough. There is a lesson from Scotland there about working to get more data that’s up to date and is Scottish-specific.

We also know, from the examination of the two tax Bills that we’ve taken through as the Finance Committee, that as you look at the data, and as you get more Welsh data, the picture changes. It changes enormously. It changed for landfill tax; it changed enormously for stamp duty. So, that is a lesson for us all. It changed for the border as well, but Mike Hedges will recall that.

I have to say, Deputy Presiding Officer, although we’ve had a conversation between members of the Finance Committee in the Chamber here, I’d still want to agree with Mike Hedges’s basic point, which is: this isn’t just for the Finance Committee now; this is 60 Members raising income tax for Wales. The way we go about that, at the end of the day, is going to be essential for everyone. So, if you like, I’ll make no apologies—I’ll come back again with further statements, I’m sure, with the permission of the Chair and the Business Committee, just for everyone to have the opportunity to know what we’re doing in the Finance Committee and how that is actually moving on apace, really, with not only the scrutiny but the way we build a parliamentary approach to financial legislation, whatever that might be—budget Bill, finance Bill or whatever we end up with. Just to say on that point, I would see that as a piece of joint work. I want the Welsh Government to be part of that; I want the Finance Committee to be part of that. Our job here is surely to build the parliamentary process, and that’s not a question that the Government proposes, we criticise and we come up with an alternative, and then they criticise us and so forth. That’s a joint piece of work, I would hope, and certainly, as Chair of the Finance Committee, I’d want to take it forward with that spirit, and I sense that the committee wants to do so as well. We have to work with asymmetric devolution, although my criticism of it would be the same as Mike Hedges’s.

Finally, I was more subtle than Mike Hedges when I said that not everything in Scotland is better than we do it here, but the fact is that the finance committee in Scotland didn’t scrutinise their draft budget. It was done in a much more political way, if you like, between party deals and party agreements. We have party deals and party agreements here, but it does not stop the Finance Committee scrutinising the draft budget thoroughly. This year, we’ll be doing it even more thoroughly than ever before, and there’ll be an opportunity for all committees to do that as well, and I hope they’ll join with us and that this will be a learning process for us all.

Thank you very much. Perhaps there might be more Members who will go on your next trip, and then we can all hear what happened when you were on your trips, and more of you perhaps will go, and then we’ll have more time to debate what’s gone on elsewhere.