Scottish Government

SB(07)3rd Conclusions

STRATEGIC BOARD MEETING

8 FEBRUARY 2007

Agenda item 1: Minutes

1. The minutes of the previous meeting (SB(07)3rd conclusions) were formally agreed for publication.

2. David Stewart and Ros Cockerell presented paper SB(07)5 which provided a high level overview of forecast expenditure for 2006-07 and the prospects for 2007-08 and beyond. The report had been recast to reflect the role of the Strategic Board by removing some of the previous detail on the current year, and by adding some sections on wider issues. The regular finance report was a key part of the governance arrangements to support the Principal Accountable Officer. Since not all the Accountable Officers were on the Strategic Board, it would be important that AOs scrutinised their departmental figures at their DMBs, and flagged up any concerns to the PAO and/or Finance Director. A 'Departmental Issues' paragraph would be included in each paper to report on an exception basis to the Strategic Board.

3. It was noted that the advent of the Strategic Board in no way changed the fundamental responsibility of Accountable Officers for their budgets, nor their accountability to the Principal Accountable Officer. The Strategic Board would advise the Permanent Secretary in the discharge of his functions in the context of the ongoing work to achieve better management of budgets across the Executive.

4. The Board noted that there was a forecast underspend of £26m against the HMT central figure, following the Spring Budget Revision, representing under 0.03% of the Executive's overall budget. It also noted that the Executive operated under two budget regimes, one with HMT and one with the Parliament, which could, as in the present year, generate different central totals and, while capital expenditure had increased by £270m in 2006-07, only £100m of the EYF balances available had been drawn down from HMT. A chart was tabled which demonstrated the extent to which more active budget monitoring had contributed to improving the outturn forecasting in the final 6 months of the financial year in 2005- 06 and 2006-07. Similar active management would be required for the remainder of this year in order to minimise drift to a large underspend position.

5. Aspects of the current control regime had implications for financial management. It was very difficult to achieve the requirement to meet a target of 0.3% against budget. This was partly because the individual departmental control regime exercised by the Scottish Parliament was different from that of HMT, which treated the SE as one entity. The implications of the fact that no single SE Department had authority from the Scottish Parliament to breach its departmental budget were an almost inevitable aggregate underspend in the region of £100m, which was the subject of repeated critical comment from Ministers, the Parliamentary Audit Committee and others.

6. The Board agreed to commission work from the Finance team on the most appropriate budget disciplines and tolerances to work to. In addition, they requested a re-examination of the pros and cons of seeking to move from individual departmental Parliamentary controls to an aggregate budget. (Action: Finance)

7. The Board agreed that the proposed format of the report was useful and appropriate. Alongside this, the Board would expect to reflect regularly on the relationship with HMT; Departmental performance and reporting to Cabinet on financial matters. There should be a strong emphasis on exception reporting in order to support intervention where required, and the necessary data should be made available at key points in the cycle where significant decisions required to be made. (Action: Finance)

8. The Board noted that the Chief Secretary to the Treasury had apparently indicated to the Treasury Select Committee on 30 January that there might be a degree of doubt about the precise timing of the CSR announcement. This would need to be monitored, given the potential impact on the devolved administrations' Spending Reviews of any drift away from the anticipated summer timetable. (Action: Finance)

9. The Board returned to its previous consideration of monitoring progress against the Taking Stock Implementation Plan and reflected on the options set out in paper SB(07)06.

10. The Board agreed:

• That members wished to give the Board monthly oral briefings on progress against each area of the action plan;
• That, given that each member was tracking progress against their own delivery plan and an auditable record of scrutiny and assurance was provided by the papers and minutes of Group meetings, there was no need for a supplementary set of written reports for the Board;
• That potential problems should be surfaced at an early stage in order to allow the Board to add value, and that any items for substantive discussion should be notified to the Board in advance in order to assist preparation;
• That, in particular, the Board would wish to be made aware of issues of capacity and resources where these had the potential to impact on delivery; (Action: Delivery Division)
• That the Permanent Secretary would use his bilateral relationships with all Heads of Department to seek assurance on the discharge of their corporate responsibilities, and that he would identify any matters arising from those discussions which required to be brought to the Board's attention;
• That those supporting Board members in their work on the change programme should provide the Permanent Secretary with a brief monthly update on progress, drawing on the minutes of the group meetings wherever possible. This would provide a platform for bilateral discussions and could also be used by Board members as the basis for their regular oral updates. (Action: Cabinet Secretariat, Delivery Division and PS/FCSD)
• That a 'mid-term' report should be issued to all staff at the end of February, reporting on progress towards achieving those actions due to be completed by May; (Action: Owen Kelly and Delivery Division)
• That non-Board members who were chairs of Groups would report any problems or issues to the Permanent Secretary, with a view to having a discussion at the Board if necessary.
• That Andrew Goudie would make a substantive report to the Board on the work of the Strategic Spending Review Group at its meeting on 8th March.

Agenda item 4: Internal Communications

11. In Owen Kelly's absence, the planned substantive discussion was postponed. The Board agreed that a simple explanation of the current structure and the roles of the various Groups should be considered for wider dissemination to address any gaps in understanding. (Action: Sarah Davidson and Owen Kelly).

12. It was also agreed that the improved performance in financial forecasting should be brought to the attention of staff, and that this communication should be prepared in discussion with internal communications colleagues. (Action: Sarah Davidson and Owen Kelly)

Date of next meeting

13. Thursday 22 February at 0830.

Cabinet Secretariat

February 2007