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New head of Holyrood scrutiny committee denies conflict of interest

The Scottish Government nominee to head the body scrutinising the Government's own forecasts - Lady Susan Rice, who is also a Scottish Government adviser - has dismissed suggestions by MSPs of a conflict of interest.

Appearing before the Scottish Parliament's Finance Committee on Wednesday, Rice was asked to reconcile her role on the independent Scottish Council of Economic Advisers (CEA), which advises on economic issues, including the currency of an independent Scotland, and the new Scottish Fiscal Commission (SFC) - whose main aim is to scrutinise and challenge Government forecasts.

Rice insisted her new role on the SFC would "take primacy" over her CEA role, but denied the roles were fundamentally incompatible.

"If there was a conflict it would have to be addressed, pure and simple," she said. "My intention right now is to do both roles unless there is an issue. If it was genuinely a problem we would deal with it."

The economist Brian Ashcroft, emeritus professor at the University of Strathclyde, endorsed the proposed members of the new body, but criticised the scrutiny regime, saying it was "not sensible for an independent or a heavily devolved Scotland".

He said it should instead have been modelled on the US's powerful ­Congressional Budget Office which forms part of the legislature, unlike the UK Government's Office for Budget Responsibility (OBR) or the proposed SFC.

Rice was asked by committee deputy convener John Mason MSP if she expected any tensions between her role as an economic adviser to the Scottish Government and her relationship with the Parliament, a line also pursued by committee member Gavin Brown MSP. Rice said the new Commission would be answerable to Parliament. "If challenges arose we deal with them," she said. "That happens all the time in life."

Rice is former chairman and chief executive of Lloyds TSB Scotland and a director of the Bank of England.

In a written submission she told the committee: "I don't hold any other roles or have a business or financial connection which would give rise either to a genuine or perceived conflict of interest." She said that when she was invited to join the CEA in 2011, the Bank of England required her to take no part in CEA discussions on monetary policy to avoid conflict of interest

Last month, Finance Secretary John Swinney announced the new SFC would be staffed by three unpaid part-time experts. He said its impartial scrutiny of Scottish Government tax forecasts would provide Parliament and the public with assurance on their integrity.

Although its remit is narrower, the Scottish Fiscal Commission will have a similar role to the OBR, set up by the Coalition Government in 2010 to stop ministers manipulating data and forecasts for political purposes. The OBR says none of its three salaried members - all economists - work as advisers to the UK Government or other Government departments.

Under independence it is expected the Scottish Fiscal Commission would have a broader role running the rule over a wide array of economic forecasts in much the same way that the OBR does for the UK Government. To help ensure independence, the commission - to be based at Glasgow University - will not use Scottish Government officials for its analysis.

Last week's Finance Committee hearing was attended by another SFC nominee, macroeconomics expert Campbell Leith. The third nominee, another CEA member, is pro-independence economist Andrew Hughes-Hallett. He is also a member of the CEA's working group on currency, also known as the Fiscal Commission, whose work is the basis for Scottish Government plans for an international sterling zone after a Yes vote in September's poll.

After the meeting, Scottish Conservative MSP Gavin Brown pointed to a potential anomaly of having two out of three of the new Commission's members impartially scrutinising fiscal planning, while at the same time advising in the same field of tax policy and other "economic levers".

The Commission will start work this summer. It will review and comment on Government forecasts of receipts from two taxes devolved as part of the Scotland Act 2012 which come into force in April 2015.

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