Scrutiny for the future
10.1 We have proposed that the core purpose of external scrutiny is to provide independent assurance within a wider performance management and reporting framework, and that the functions of external scrutiny and the organisations responsible for carrying them out should now operate as a system. This will require a much greater degree of leadership and directed co-ordination than at present, and a much greater focus on performance management and associated self-assessment by service providers.
10.2 Below we summarise our recommendations. The changes we propose will all need to be agreed and put in place by the Scottish Government in agreement with Parliament.
Role purpose and principles
10.3 The unique role of external scrutiny is to provide independent assurance that services are well-managed, safe and fit-for-purpose, and that public money is being used properly. The five guiding principles for external scrutiny should be public focus, independence, proportionality, transparency and accountability. These should be adopted by Ministers, the Parliament and other stakeholders. (R1)
10.4 Scrutiny priorities must reflect the public and user interest. Focusing external scrutiny outputs in a way that is more meaningful to the public should be an overriding principle of any change and will assist both in targeting external scrutiny and in informing stakeholders about performance. The Scottish Government should work with external scrutiny organisations and providers, and consumer representatives to achieve this (R2). Specific recommendations are:
(a) The public have a legitimate stake in external scrutiny and there should be greater public involvement in external scrutiny processes. External scrutiny bodies currently involve the public, but arrangements are not fully developed across all services. Scrutiny bodies should take further steps to ensure that they involve the public in all aspects of their work, including determining priorities, gathering information, reporting and governance. (R3);
(b) There is a need for the development of more outcome focused measurements of public services overall, including those used by external scrutiny. External scrutiny organisations should work in conjunction with providers, the Scottish Government and consumer representatives to develop outcome measures and to strengthen the user voice at all levels of public reporting. (R4);
(c) Scrutiny reports should be written in language that people can relate to, and contain information that is relevant to what they want to know and be trusted. Scrutiny bodies must make information more accessible, develop common performance reporting language and explore ways of explaining the complexity of what they have found as straightforwardly as possible. (R5);
(d) The Scottish Government should assess the cost implications of developing an effective public focused system and allocate sufficient resources. (R6)
Performance management and self-assessment
10.5 External scrutiny is part of a wider performance management and reporting framework. The primary responsibility for demonstrating compliance and performance should rest with service providers. The;Scottish Government and Parliament should accept this principle and continue to support the development of robust performance management and outcome-focused self-assessment amongst service providers. (R7)
10.6 Over time the Scottish Government and Parliament should rely more on self-assessment by providers, enabling a reduction in the volume of external scrutiny. In future Ministers and Parliament should consider the extent to which the assurance they require can be provided by providers before commissioning external audit, inspection or regulation.
10.7 Scrutiny bodies should work with providers and the Scottish Government to develop robust and reliable self-assessment processes. (R8)
Features of a scrutiny system
10.8 External scrutiny should operate as a coherent system. The features should include:
(a) Strategic priorities agreed by the Scottish Government and Parliament (R9), and focusing on areas where assurance about public services is most important. We recommend that financial audit should be one of the priorities. (R10);
(b) Core risk criteria should be agreed by Ministers, and considered by the Parliament, to assess the need for current and future external scrutiny. (R11);
(c) Self-assessment by providers as the main source of information about performance. Performance management frameworks are still being developed, so reliance on self-assessment is a medium/longer term goal;
(d) There should be two stages in considering the application of scrutiny. First, there must be an assessment of risk against the core criteria agreed by Ministers (R12). Second there must be an assessment of the appropriate external scrutiny required. (R13);
(e) Where scrutiny is needed, if there is more than one existing organisation, only one should be asked to do the work and to be responsible and fully accountable (R14). Creating a new external scrutiny organisation to attend to the issue should not be an option. (R15);
(f) Each external scrutiny initiative or programme should have a timeframe with a preset 'sunset' clause. (R16);
(g) Cyclical inspection, audit and regulatory programmes should happen only where all other options have been considered and ruled out. (R17);
(h) Existing scrutiny should be removed or scaled back when new scrutiny is introduced. (R18)
10.9 On leadership and control:
(a) Responsibility for decisions to create scrutiny should rest with Ministers, the Parliament or the Auditor General. At Ministerial level a Cabinet-level committee or group should take leadership on this matter. Parliament should identify a suitable committee or group to take responsibility within the Parliamentary system. (R19);
(b) Independent expert panels, drawn from the scrutiny sector, service users and providers, should provide advice on the application of scrutiny. Co-ordination of the panels could be provided by the Auditor General (R20).
10.10 We propose a revised model of accountability where independence from Ministers is balanced by responsibility to Parliament. Parliament should become more proactive in seeking assurance. This would involve placing a strong and appropriate duty on scrutiny bodies to give an account for their activities and use of resources to the Parliament, which will require adapting the existing governance and reporting arrangements for scrutiny bodies (R21). Specific recommendations are:
(a) The Parliament should be involved in all strategic decisions about new external scrutiny programmes. (R22);
(b) The outputs of external scrutiny should be reported simultaneously to the Parliament, Ministers, and to other stakeholders. (R23);
(c) Enhanced reporting coupled with increased capacity to influence scrutiny will provide Parliament with an alternative means of bringing about change, and could reduce the desire or necessity to effect change through legislation. (R24)
10.11 There is no consistent approach to setting up scrutiny bodies and it is not clear why organisations undertaking similar roles have been given different governance arrangements. The complexity of organisational structures is a constraint on a strategic approach to developing and delivering an appropriate scrutiny regime across public services. There is a need to remove constraints to joint working and to simplify the scrutiny governance infrastructure. We are therefore recommending that:
(a) All external scrutiny organisations should have one "status", with clearly defined lines of accountability to the Parliament and to Ministers. (R25);
(b) The Scottish Government and the Parliament should work with scrutiny organisations and service providers to develop impact measures for scrutiny, against which scrutiny organisations should report to Ministers and the Parliament.
Costs and impact of external scrutiny
10.12 It is currently difficult to assess direct costs, compliance costs, and to assess the impact of scrutiny on providers across different scrutiny regimes. There is a need for further work to accurately assess the costs and impact. We recommend that:
(a) The Scottish Government should commission Audit Scotland to develop cost and impact measures to enable comparisons between scrutiny regimes. (R26);
(b) Costs/benefit analysis should become a routine element of any decisions about the use of external scrutiny. (R27);
(c) Scrutiny bodies should report to Ministers and the Parliament against cost and impact measures. (R28)
Reviews of scrutiny activity
10.13 Ministers should immediately carry out a programme of specific activity, co-ordinated at Cabinet level, to assess existing cyclical scrutiny activity against the recommendations in this report, with the aim of reducing activity (R29). This should include reviewing:
- Cyclical inspection programmes;
- Joint and multi-agency inspection programmes, and also ensure that no further joint or;multi-agency inspections should commence without first securing the advice of independent experts;
- Thematic inspections - ensuring that these are aligned with the strategic priorities set for external scrutiny by Ministers and the Parliament; and
- Regulatory functions, particularly inspection activity associated with regulation.
10.14 We also recommend that future performance audits should be aligned with the strategic priorities for external scrutiny as agreed by Ministers and the Parliament. (R30)
10.15 All reviews of specific inspection and regulatory functions should assess the scope for amalgamating bodies with common interests, reallocating responsibilities to one organisation where there are unnecessary direct overlaps and opportunities to share resources (including staff) to deal with overlaps (R31). The legislative changes required should also be identified as part of this process.
10.16 To improve co-ordination:
(a) Existing external scrutiny organisations should review the data they gather, with a view to reducing overall requests and to eliminate any duplicate requests (R32). Ministers should place a high priority on this matter and ensure that priorities and leadership are assigned to taking such work forward. (R33);
(b) The Scottish Government and scrutiny organisations should develop an external scrutiny website, or portal where all planned scrutiny activity will be logged. (R34);
(c) The Scottish Government should also ensure that parallel work to improve data gathering across public services more generally links with work in the scrutiny sector. (R35)
10.17 For the local government sector:
(a) The Accounts Commission should work with other scrutiny organisations to develop a corporate performance audit which absorbs other corporate level inspections in local government. (R36);
(b) The local government sector should be a priority sector in which self-assessment will become the core tool of accountability, with less reliance on external scrutiny required. (R37);
(c) Ministers should immediately identify and appoint an appropriate scrutiny body to co-ordinate scrutiny of the local government until the longer term changes are implemented fully. (R38)
10.18 Ministers should redistribute resources and functions from within NHSQIS, the Scottish Government's health directorates and the Care Commission (in relation to private hospitals and related treatment) to an independent external scrutiny organisation. (R39)
Single national scrutiny body
10.19 Our proposals should enable the creation of a single national scrutiny;body in the longer term. Ministers and Parliament should use reductions in the volume of external scrutiny to reallocate responsibilities to a single national body. (R40)