OECD Independent Fiscal Institutions Review
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OECD Independent Fiscal Institutions Review Scottish Fiscal Commission (SFC) Organisation for Economic Co-operation and Development OECD Independent Fiscal Institutions Review OECD Review of the Scottish Fiscal Commission (SFC) Laid before the Scottish Parliament by the Scottish Fiscal Commission in pursuance of Section 13(4)(b) of the Scottish Fiscal Commission Act 2016 asp 17 on 24 October 2019. Laying Number: SFC/2019/1 [email protected] and [email protected] OFDE This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 2 Foreword Independent fiscal institutions (IFIs) represent a major innovation in public financial management. They are an essential pillar of many countries’ fiscal setup. The OECD has been bringing together IFIs through its Network of Parliamentary Budget Officials and Independent Fiscal Institutions (PBO Network) since 2009. The PBO Network seeks to identify and share good practices and to set standards for IFIs across member countries. It developed the 2014 OECD Recommendation on Principles for Independent Fiscal Institutions, which includes a provision on the need for IFIs to undergo external evaluations. The logic behind this is simple – with independence comes accountability. Just as IFIs help hold governments accountable, they have a special duty to be accountable as well. The review presented here is part of a series of IFI reviews. The Scottish Fiscal Commission (SFC) was established on a statutory basis in April 2017 as Scotland’s official forecaster for Gross Domestic Product (GDP), devolved taxes, and devolved social security expenditure. Undertaken at the request of the SFC, this review provides options and recommendations in light of national developments and international experience. Recommendations build on the strengths of the existing arrangements for the SFC and observed challenges. The review took place in the context of a fast developing political landscape, with uncertain effects on the evolution of the fiscal framework. The SFC has achieved many positive results in the two years since its creation, building good relationships with stakeholders and a reputation for independent and credible forecasts, and improving the fiscal policy debate in Scotland. At the same time, it faces some challenges and pressures related to the relatively untested fiscal framework, a new budget process and access to information. This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD member countries. 3 Table of Contents Abbreviations and acronyms ................................................................................................................ 5 Executive summary ............................................................................................................................... 7 Methodology ......................................................................................................................................... 10 Chapter 1: Context .............................................................................................................................. 11 1.2. Introduction ................................................................................................................................. 11 1.3. Governance structure and accountability .................................................................................... 16 1.4. Relationship with the legislature ................................................................................................. 17 1.5. Relationship with other institutions in Scotland ......................................................................... 18 1.6. Mandate ...................................................................................................................................... 19 1.7. Global context: the IFI community and compliance with OECD Principles .............................. 20 1.8. Conclusions and recommendations ............................................................................................. 24 Chapter 2. Resources and independence ........................................................................................... 25 2.1. Introduction ................................................................................................................................. 25 2.2. Funding ....................................................................................................................................... 25 2.3. Human resources ......................................................................................................................... 27 2.4. Access to information ................................................................................................................. 31 2.5. Independence .............................................................................................................................. 35 2.6. Conclusions and recommendations ............................................................................................. 36 Chapter 3. Methodology and outputs ................................................................................................ 37 3.1. Introduction ................................................................................................................................. 37 3.2. SFC outputs ................................................................................................................................. 37 3.3. Technical assessment of SFC methodologies ............................................................................. 38 3.4. Key issues for SFC outputs ......................................................................................................... 41 3.5. Conclusions and recommendations ............................................................................................. 49 Chapter 4. Special focus: operating as a subnational IFI ................................................................ 51 4.1. Introduction ................................................................................................................................. 51 4.2. Inter-institutional cooperation with UK stakeholders ................................................................. 51 4.3. Conclusions and recommendations ............................................................................................. 57 Chapter 5. Impact ................................................................................................................................ 59 5.1. Introduction ................................................................................................................................. 59 5.2. Influence on the public debate .................................................................................................... 59 5.3. Fiscal transparency gains and better data .................................................................................... 69 5.4. Conclusions and recommendations ............................................................................................. 70 References ............................................................................................................................................ 71 Annex A. Review team and acknowledgments ................................................................................. 75 Annex B. Interview list ........................................................................................................................ 77 4 Tables Table 1.1. Does the SFC meet the OECD Principles for Independent Fiscal Institutions (assessment of legislation and practice)?........................................................................................................... 21 Table 2.1. SFC budget (millions of pounds) ......................................................................................... 26 Table 2.2. SFC staff ............................................................................................................................... 29 Table 2.3. Gender balance at the SFC (July, 2019) ............................................................................... 31 Table 3.1. Assessment criteria ............................................................................................................... 39 Table 3.2. The SFC’s methodological approaches were assessed to be appropriate ............................. 40 Table 5.1. Number of followers of selected OECD IFIs on Twitter (September 2019) ........................ 67 Figures Figure 1.1. The Scottish Fiscal Commission’s mandate ....................................................................... 19 Figure 2.1. Mandate and resources of IFIs across Europe ..................................................................... 27 Figure 2.2. SFC organisational chart ..................................................................................................... 30 Figure 3.1. SFC reports throughout the year ......................................................................................... 37 Figure 3.2. SFC’s infographic on the Scottish Government’s fiscal framework ................................... 42 Figure 5.1. Stakeholders