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I guess that with any budget process there will be external and internal volatility, but one of the corollaries of what you are saying is that you would find it useful if the UK Government were more transparent and predictable in the way that it followed through on its spending. If so, is the same true of the Scottish Government? I am thinking in particular of Audit Scotland’s recent comments about transparency, and I was interested to see that in its recent report on these matters it said:

“budget revisions are managed across Government, which means it is not always possible to establish the detail of reprioritisations within directorates.”

To my mind, that sounds a little bit like the situation that you have highlighted with regard to the UK Government.

Is tracking budget changes in directorates an issue? Is there an opportunity to improve the systems that you have in place? Audit Scotland made the supposition that the data is there but you cannot report on it. I am thinking of your relationship with the UK Government and your own practice. Is there scope along those lines to improve transparency and disciplines in budget reporting?

I will just follow that up before I ask my final question. I am speculating about whether more robust, regular and detailed reporting through the year on budgets and spend from the UK and Scottish Governments might help matters. I totally accept that much of Government activity is demand led and that you cannot guarantee absolutely that you will spend a certain amount, but robust reporting and tracking help to manage the situation. That is true in the private sector—a business is dictated by whether customers spend money on its services. I would suggest that that is much less predictable than anything that the Government does. The question is whether such an approach would be an avenue for both Governments to improve things. That explains where I am coming from.

In recent weeks at committee, questions have been raised about outcome-led budgeting and where we are 10 years on from the Christie commission. Given that the medium-term financial strategy is under development prior to its publication, does that provide an opportunity to recast what the Scottish Government intends to do in the medium term on outcomes and objectives? Much of the written and oral evidence that we have received has noted that, unless objectives are baked into how the Government budgets and organises itself, such documents provide only commentary rather than drive change towards the objectives. Will you take such an approach? Can more be done in the MTFS and beyond that to bake objectives into how the Government budgets and organises itself?

That might be why I was asking questions about medium-term spending plans. I will gently conclude there.

I would like to pick up on some of those points. I am interested in ensuring that we develop the fiscal framework and the budget processes around the block grant, because I believe that that is how we can strengthen the devolution settlement, which is my overarching objective.

I would like to test some of the assumptions and assertions in what you have just asked for. Prudential borrowing makes straightforward sense. Income tax revenues for the Scottish exchequer are approximately £12 billion. Your ability to borrow against the forecast error is around £300 million, which is about 2 per cent of that. The errors in recent forecasts have been a little less than that. Is that a real issue or a notional one? If it is a real issue, will you give some examples of where you have hit your headroom on the borrowing limit? Please bring the issue to life for me.

That is helpful. I would love to go down the rabbit hole of how the Scottish Government manages its cost centres, but I will save that for another day.

I would like to explore what greater transparency looks like. Comparable-sized organisations would typically report on a quarterly basis, and they would typically be reporting how both their revenue and their costs have tracked against what they had put in an annual statement previously. In America, the Securities and Exchange Commission requires three such quarterly updates, alongside an annual report. That used to be the case in this country until 2014.

Would it be reasonable to ask the Government to provide regular pre-scheduled quarterly updates on the budget? Critically—I am guessing that this is what you were implying in some of your previous comments—that is how budgets are revised, while tracking spend against budgets. Sometimes in this place we have a habit of focusing almost entirely on the budget and a lot less on how the money is being spent against the budget.

Is that quarterly concept something that could be applied to the Government?

Thank you for that, and also for saying that I have made a reasonable suggestion—I think that that might be a first in this place.

I think that the committee is broadly in the same place as you regarding the importance of the national performance framework, although there is a need to ensure that it is properly embedded. One of the thoughts that were explored with the Deputy First Minister last week is whether the framework should be reported on formally, perhaps at the same time as the budget but certainly regularly.

In a sense, I understand the points that you are making about the need for such things to be reported across the Government, but we rarely hear cabinet secretaries reporting on how their bit of the national performance framework is progressing. Do you think that regular reporting on it by portfolio might help to give the national performance framework due weight and prioritisation and to change behaviours regarding how it is used?

I want to ask about transparency, but before I do that I have another question, which I guess is also about transparency.

I hold my hands up and admit that I have been struggling to keep up with precisely what has come through in terms of the Covid money—what has and has not been allocated.

Exhibit 4 in your report is extremely useful, but I want to clarify what it is saying. In the current year, £4.9 billion has been allocated by the UK Government to the Scottish Government, but it is my understanding that everything that has come through in consequentials since March is yet to be allocated by the Scottish Government. Is that a correct summary? I would appreciate your view of what has been allocated and what has not of the overall £4.9 billion.

That is very helpful. I recognise your point that, when amounts are allocated, they might be labelled, but that does not necessarily mean that you know precisely where the cheques are going. I see both witnesses nodding at that.

I will move on to why there is a transparency issue. The bullet points under paragraph 41 rang alarm bells for me. The paragraph says:

“The existing processes for monitoring the budget were not designed to separate out specific spending in areas across portfolios”.

On reallocations, the report says:

“it is not always possible to establish the detail of reprioritisations within directorates.”

Will you explain what you are saying? On my reading, one of two things is happening—either the Scottish Government has the information but is not sharing it or reporting on it, which would be troubling, or it is not effectively tracking the information at the sub-directorate level, which is not just worrying but downright dangerous. I expect an organisation with a budget of about £40 billion to track its spend by organisational units that are well below directorates. Which explanation applies? Are you comfortable that the Scottish Government as an organisation is tracking its spend at an effective level?

Thank you for that answer, which I do not disagree with. I must emphasise that, ultimately, the national performance framework is useful. I guess that I am wondering whether it could be made more useful. On the points that you just raised, is there not an alternative approach? It is not necessarily purely about setting targets, but emphasis could be applied to certain measures. With balanced scorecards in particular, that is explicitly what you do—you attach weightings to particular measures. Could that approach be taken to strengthen the strategic value of the measurements that are included within the framework?

My reflection on what you have just said is that it is about making explicit how you use the data, which I think might be helpful. We all recognise that the measures are important, but I wonder whether there is a need to report against them more explicitly. I cannot recall the last time a minister made a statement explicitly about the national performance framework—not so much about it as a tool but about its outcomes and what it was saying in their portfolio. Do you think there is a need to have more explicit reporting by ministers against the measures in the national performance framework?