This report presents findings of a research project conducted by the Fraser of Allander Institute, part of the University of Strathclyde. The project was commissioned by ClimateXChange, on behalf of the Scottish Government. The research and its findings are intended to inform the ongoing ‘Joint Budget Review (JBR) on matters relating to climate change’ between the Scottish Government and Scottish Parliament.
The research aims to explore options which, if implemented, could:
- Objective 1: Improve the extent to which decision making within Scottish Government is supported by an understanding of the consequences of spending choices on emissions.
- Objective 2: Increase the transparency and value of the carbon assessment of the Budget to support scrutiny and informed discussion.
Fundamental to the recommendations is a focus on the processes, governance, and policymaking environment that will not just support short-term improvements, but also provide the necessary foundations to support government progress to the 2045 climate change targets and beyond.
Key Recommendations for the Scottish Government
The report recommends that the Scottish Government:
- Improves the clarity and transparency of Government decisions that impact on climate change, acknowledging that trade-offs will always exist between different objectives.
- Pursues a cultural shift to ensure sufficient time and resource for robust decision-making processes, allowing business cases, carbon assessments and impact assessments to be undertaken, challenged and scrutinised.
- Enhances cross-governmental policymaking governance, to have oversight and challenge function on the existence and quality of processes and appraisal throughout the entire policymaking process. The governance process would require the capacity for an enhanced approach to pre-budget carbon assessments.
- Urgently expands their internal capacity and skills, including recognising that civil servants cannot expect to undertake processes as intended without enough time, resourcing, and a significant increase in practical policymaking and appraisal guidance.
- Considers periodic external auditing of climate change policymaking governance, processes and carbon assessments.
- Introduces a Net Zero Test to ensure that all spending with major emissions implications undergoes a quantitative carbon assessment.
- Creates a second cross-governmental governance team (see recommendation 3), responsible for assessing climate impacts, providing oversight and a challenge function. The team would ensure the Net Zero Test and carbon assessments are being undertaken and of suitable quality. This would in addition support work across Government to embed consideration of carbon throughout policymaking process. To be effective the team will require the ability to influence Government-wide change.
- Recognises the power of Scottish Government procurement in driving economy-wide carbon reductions. We recommend the Government considers a swift roll out of quantitative carbon management procedures, building on the success of the Cross Tay Link Road case study and carbon management procedures in the City Region & Growth Deals team.
- Considers retiring the taxonomy-based carbon assessment of the Capital Budget and the high-level carbon assessment of the Budget. This will have implications for the Climate Change Act.
- Considers the challenging environment for data collection under current budgetary processes, and that a longer lead in time will be required for better data.
- Moves towards the use of individual-level carbon assessments and gap analysis to provide suitable data for fiscal and policy scrutiny. In time, further mechanisms for scrutiny should also be explored, such as a carbon equivalent to financial memos for any announcements that require legislative changes, and publication of carbon assessment results after decisions have been made.
While these recommendations are made for the Scottish Government, many of the principles are shared with agencies and local government. Supporting alignment with these principles across the whole of government will be critical to developing an understanding of how government spending choices impact on emissions.
More details can be found on ClimateXChange.
James is a Fellow at the Fraser of Allander Institute. He specialises in economic policy, modelling, trade and climate change. His work includes the production of economic statistics to improve our understanding of the economy, economic modelling and analysis to enhance the use of these statistics for policymaking, data visualisation to communicate results impactfully, and economic policy to understand how data can be used to drive decisions in Government.
Mairi is the Director of the Fraser of Allander Institute. Previously, she was the Deputy Chief Executive of the Scottish Fiscal Commission and the Head of National Accounts at the Scottish Government and has over a decade of experience working in different areas of statistics and analysis.