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27 June 2002

S1M-3225 Budget Process 2003-04

The Deputy Presiding Officer (Mr Murray Tosh): The next item of business is a debate on motion S1M-3225, in the name of Des McNulty, on the Finance Committee's third report in 2002. ...

10:15
... ... ...
11:31

Stewart Stevenson (Banff and Buchan) (SNP): I thank my many colleagues in the chamber for giving me room for a speech of about half an hour. I note the enthusiasm of some members for that prospect.

The Deputy Presiding Officer (Mr George Reid): It is not essential, Mr Stevenson.

Stewart Stevenson: Thank you, Presiding Officer.

We have heard that the underspend is £643 million, which follows the more than £700 million underspend of last year. It is interesting that over the past four years—I move straightaway to one of my obsessions, and one of the obsessions of members of the SNP—there has been an increase of £250 million in private finance initiative payments. We do not need to worry about underspend, because in a few years' time we will be heading rapidly towards overspend. There will be no end-year flexibility if we continue to adopt the high-cost finance policies that are associated with a PFI approach to funding public projects.

There is another way. I note from today's edition of Business a.m. that a not-for-profit company is taking over the rail network. The SNP has been advocating that policy in relation to capital projects for some time. If we are to keep our finances in good order and if we are to remain within our budget, one of the things that should be high on the list of the Executive's priorities is to reconsider how we fund our capital projects. I commend to the minister and the Executive the approach of having not-for-profit trusts that we have been advocating for some years. I would welcome the minister's response as to whether that is under consideration.

I mention that in the light of the fact that Grant Thornton—an accountancy company that gave evidence on the prison estates review to the Justice 1 Committee—indicated that that was a practical way forward that would undoubtedly save money. However, we have to be slightly cautious when we are taking about accountants. Once again, they are not getting a good press. There is a great debate in business as to whether accountants or computer people are the more boring. As a computer person I have my views on that and I need not pursue them further. I will talk more about accountants later.

Business a.m. is the only paper that I read in the morning. We see today that WorldCom is being charged with fraud after that well-known and once highly respected company, Andersen, moved WorldCom's accounts in a way that concealed £2.6 billion of costs.

Mr Davidson: I watched the minister thumbing through the budget documents anxiously, but he cannot find a listing for WorldCom in the Scottish budget.

Stewart Stevenson: If the minister were to examine parliamentary answer S1W-22582—I provide the reference number merely to use up a little more time—he might find that Arthur Andersen was a happy recipient of £381,000 from the 2001 budget. My question is whether the fingerprints of accountants on our accounts have led to such successfully inflated outcomes as the outcome that the shareholders of WorldCom have been subjected to.

No less a luminary than Sir David Tweedie, who was lately the chair of the Institute of Chartered Accountants in England, posed a question about whether there is a difference between an accountant and a supermarket trolley, to which he gave the answer, "Yes, the trolley has a mind of its own." Accountants have demonstrated considerable imagination in recent times. I am glad to note that the minister enjoyed the joke. The partners in Arthur Andersen are probably not enjoying it.

Are our figures contaminated? Let us look at some of the possible sources of contamination. The Justice 2 Committee discovered that impairment costs were associated with the Scottish Prison Service's costs. What are impairment costs? In business, we would otherwise describe them as depreciation. Business companies properly include such items in their accounts to offset the taxation that they pay. The existence of such items in the Scottish Executive's accounts does not mean that the Executive is spending the money in question or that it is offsetting taxation. The presence of such items is simply confusing.

The problem does not affect only the justice area. Table 8.1 in the annual expenditure report contains a footnote to the entry on motorways and trunk roads:

"Includes capital and depreciation charges for the existing trunk road and motorway network".

We have spent the money already and we will not spend it again. Has that been done just to inflate the numbers so that they look a little better, or have we used accountants such as Arthur Andersen who are as numerically illiterate as the tribe in Papua New Guinea that has only three numbers—one, two and more? As a mathematician, I have the googolplex, which is the world's largest number.

That is what happens when one is given half an hour and one has written a three-minute speech.

The Deputy Presiding Officer
: It is absolutely not essential to take half an hour.

Stewart Stevenson
: On a serious note, I turn to an issue that emerged from the justice budget and which reveals a lack of joined-up thinking. We welcome the introduction of drug treatment orders and the priority that is being given to people in the criminal justice system who need treatment for their drug habit. The difficulty is that that is happening at the expense of people outside the criminal justice system. An increase in expenditure for drug treatment for people within the criminal justice system should be matched by corresponding increases of expenditure elsewhere.

There is a degree of confusion in the budget, particularly in relation to the handling of depreciation. I look forward to hearing how the minister plans to handle that in future years.

The Deputy Presiding Officer: Before we move to wind-up speeches, I should say to the whips that we are running about 20 minutes ahead of time, in spite of the efforts of Mr Stevenson. I expect that we will reach the Police Reform Bill shortly after 12 o'clock.

11:39

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