Chapter 2 Evolving Equality and Fairer Scotland Budgeting
The publication of the Equality and Fairer Scotland Budget Statement (EFSBS) alongside the Scottish Budget 2020‑21 highlights the consistent commitment of the Scottish Government to examine the impact of the Scottish Budget on the diversity of Scotland's population. The designation of this document as the Equality and Fairer Scotland Budget Statement recognises the close connections between the protected characteristics and socio‑economic disadvantage.
This chapter sets out the process taken in this year's EFSBS but also describes the broader context of equality assessment throughout the budget year. Work in this area is complex and challenging and there is an element of trial and error as we seek to identify and roll out tools and approaches within the limits of technical feasibility and our practical resource capacity.
Figure 2.1: Assessing the impact of budgets throughout the policy cycle
The Equality Budget Advisory Group
The Equality Budget Advisory Group (EBAG) has supported the Scottish Government's efforts to bring equality considerations into budget preparations since the early years of devolution. They are tasked with working with the Scottish Government to improve equality assessment and to help identify the range of products that could be utilised to improve articulation of the budget over time. The work of EBAG remains extremely helpful to the Scottish Government in developing its equality assessment, and we remain grateful to its members for their challenge, time and insight.
Assessing The Impact of The Budget
The publication of the EFSBS is an important milestone in the budgeting year, but as Figure 2.1 shows, it is not the only time when analysis of public budgets and spend is relevant. We are continuing to improve our understanding of inequality in outcomes and its relationship to budgets and spend throughout the budget cycle.
In summer 2019 the Scottish Government published informal guidance to help policymakers answer six key questions for their policy areas when thinking about policy development and their corresponding budgets:
1. What outcome is the policy and associated budget decision aiming to achieve?
2. What do you know about existing inequalities of outcome in relation to the budget area?
3. How will your budget decisions impact upon different people and places?
4. How will your budget decisions contribute to the realisation of human rights?
5. Could the budget be used differently to better address existing inequalities of outcome and advance human rights?
6. How will the impact of the budget decisions be evaluated?
This guidance was made available online to the public sector. It was highlighted to senior officials in the Scottish Government as well as to parliamentary committees to help to drive change.
Although the guidance sets out a relatively simple six-step process, it is important to acknowledge that, in practice, this is a highly complex task requiring commitment to consider inequality at all stages of policy development. This starts from horizon scanning to identify the challenges that require a policy response, and continues into the shaping and development of policy, to budget allocation, to implementation and spend and then to a policy evaluation to clarify 'what difference did the spend make?'.
It is fully understood that the better the assessment processes and the better the evidence, the better chance there is of policies being well conceived and achieving their intended outcome. But, this has to be balanced against a reality where policy assessment and impact on outcomes happens within complex societal structures with incomplete data at national, local and community level. This means that inferring any causality between policy, action and outcome is fraught with difficulties. At all stages there is a chance of unintended outcomes and for the most well-intentioned policy to misfire for certain segments of the population.
This chapter describes current practice and future developments to improve equality budgeting and is structured under these six key questions.
Identifying the outcomes that a policy aims to achieve
In 2018 the revised National Performance Framework (NPF) was published with the overarching purpose to: 'focus on creating a more successful country with opportunities for all of Scotland to flourish through increased wellbeing, and sustainable and inclusive economic growth'. Tackling inequality in outcomes is central to the purpose, National Outcomes and values in the NPF and is a starting point for equality budget considerations. In June 2019 a National Wellbeing report provided an overview of performance highlighting some key inequalities. This was supported by a further report considering the NPF outcomes for disabled people.
In order to understand equality budgeting, individual policy teams need to be able to identify which National Outcomes they are contributing to. But, they also need to be much more detailed and specific in identifying what they are trying to achieve with their spend. Understanding inequality in these outcomes by protected characteristic, by socio‑economic disadvantage and by place can then be used to help shape the policy and the spend.
The Scottish Budget 2020‑21 identifies four key cross-cutting priorities to guide spending decisions: improving wellbeing, reducing child poverty, tackling climate change and building sustainable and inclusive growth. Within Scotland, we describe the NPF as our 'wellbeing framework', recognising that for Scotland to become 'a more successful country with opportunities for all to flourish through increased wellbeing' requires progress towards all of the National Outcomes, and application of the NPF values. Taking a wellbeing approach to the budget therefore means prioritising spend which delivers on multiple outcomes across the NPF, and focuses on improving opportunities for all. It also means attending to the conditions that are required to ensure wellbeing into the future, and for future generations, not only for the present.
This year's process asked portfolios to set out more detail on the National Outcomes they contribute to, and how their priorities progress these National Outcomes, with evidence where available. This is an initial step to help make the links between National Outcomes and individual budget lines. A template structure and central guidance was used to encourage consistency in approach.
Describing existing inequalities of outcome in relation to the budget area
The portfolio chapters set out the key inequalities in outcomes they are seeking to address through budgets. But, knowledge of inequality by outcomes can be patchy. Some areas have very good understanding of all aspects, others may have good understanding of some aspects but less developed evidence of others e.g. understanding socio‑economic disadvantage but having poor data on race, or having a good knowledge of outcomes for disabled people but not for sex/gender.
Data on the full range of protected characteristics in Scotland is made available through the newly launched and user‑friendly Equality Evidence Finder website. Policy development during the year and this year's EFSBS have made the most of advances in data to articulate more clearly the inequality of outcomes that need to be addressed by different portfolios. For example, during 2019 a number of reports have helped drive understanding around inequality, such as:
- Gender Pay Gap Action Plan analytical annex – This report examines the range of structural issues behind gender inequality in the workforce (published to accompany the Action Plan in March 2019).
- Tackling Child Poverty Delivery Plan – first year progress report – This reportsets out progress on the first Tackling Child Poverty Delivery Plan, 'Every Child Every Chance'. It includes a child poverty measurement framework (Annex B) and a separate report on child poverty within minority ethnic households (Annex C).
- Welfare reform report – This reportexamines the effects of UK Government social security reforms introduced since the Welfare Reform Act of 2012.
- Brexit vulnerabilities – This project identifies areas of Scotland that are expected to be most vulnerable to the consequences of Brexit, and what drives those risks.
Gaps in evidence remain, including data for small groups and data that looks at people who are socio‑economically disadvantaged as distinct from living in a deprived area. For example we know that about two in every three income-deprived people do not live in a deprived area.
There are ongoing efforts to make the most of the population surveys implemented by the Scottish and UK Governments. For example, the findings of the Scottish Household Survey, Scottish Crime and Justice Survey, and Scottish Health Survey as well as data from the UK surveys like the Labour Force Survey, Family Resources Survey and Understanding Society. However, we know that understanding of small populations as well as intersectionalities tends to be more difficult in sample surveys. The Scottish Government is working with partners to develop a safe and secure platform to link and explore administrative data sources for research purposes. Administrative data is not sampled so should be able to improve evidence for small population groups for some policy areas.
But there is also a lot that can, and is, being done by building qualitative data and consulting with people with lived experience. Good examples include the ongoing peer research work with Gypsy/Traveller communities, the development of Social Security Scotland's experience panels, and the work that early learning and childcare (ELC) officials did to understand the barriers to take‑up of funded ELC.
Understanding how budget decisions will impact upon different people and places
Understanding of budget decisions primarily builds on the legally required equality impact assessments (EQIAs) for new or revised policies and, for strategic decisions, Fairer Scotland Duty assessments.
However, at a strategic level there are some other approaches that can also be considered as described below.
Equality Impact Assessment
Equality impact assessment (EQIA) documents should show the impact of applying a proposed new or revised policy or practice, against the needs of people who share one or more of the protected characteristics set out in the Equality Act 2010. EQIAs help to demonstrate that due regard has been given to the needs of the Public Sector Equality Duty (PSED) and requires that proposals have been adjusted to avoid or prevent negative impact(s).
Some of them do this well. However, we know that there is substantial variation in the quality of EQIAs and therefore the Scottish Government has recently refreshed and published its internal guidance for all staff on the completion of equality impact assessments. That guidance underlines the need for all staff to ensure that new and existing policies are impact assessed as required by law – the Equality Act 2010 (Specific Duties) (Scotland) Regulations 2012 (regulation 5) – and provides resources such as good practice examples and where to find advice on the process. The Scottish Government has also developed, and is actively promoting, an animated resource (Mountains for All) for all staff which sets out good practice in the EQIA process.
We know that some longstanding policy and spend areas may not have been assessed for impact on either equality or socio-economic disadvantage for many years. It should, however, be noted that Regulation 5 requires that a listed authority must make such arrangements as it considers appropriate to review and, where necessary, revise any policy or practice that it applies in the exercise of its functions. Therefore the expectation is that sooner or later all policies will either be revised or replaced (and thus be caught by the EQIA process).
A programme of work has recently been initiated to review the PSED and this work is due to have advanced significantly by Summer 2020. This may therefore provide a good opportunity to take stock more broadly of the effectiveness of our existing impact assessments and consider where there might be scope to improve our approach.
In 2019 a pilot project looking to increase the understanding of gender issues in policy development was undertaken. This training programme was primarily based in the Economy portfolio with materials made available more widely. The project was evaluated and the training programme was found to be successful although it was felt that it could have benefited from more input from senior leaders. This issue was further identified by the First Minister's National Advisory Council for Women and Girls in their 2018 report, identifying the need for a gender beacon collaborative to progress and share good practice. The Scottish Government has accepted this recommendation.
EBAG held deep dives in 2019 with a range of policy areas to help them think about the data and processes that they use to understand impact. Policy areas considered were early learning and childcare, the National Performance Framework, tax and revenue, local government, and social care. The new work plan for 2020 will focus deep dives on housing, transport, planning and economic development as well as follow-up discussions with social care.
As noted above, the best source of data for understanding costs, benefits and barriers to policy implementation is speaking with people with lived experience. Consultation and engagement is a key part of the Scottish approach and, as the portfolio chapters discuss, one that is being increasingly adopted as a core part of policy development.
Fairer Scotland Assessment
Over the last year the Scottish Government has published a range of Fairer Scotland Duty Assessments (FSDAs). Assessments for two major areas of new government spend exemplify how the Scottish Government has actively considered approaches to reducing inequalities of outcome when making budgetary decisions.
The implementation of a Scottish National Investment Bank by 2020 is aligned with the Scottish Government's commitment to inclusive and sustainable economic growth, with investment of £2 billion over 10 years. Missions are prescribed to guide the purpose of the bank towards a more ethical, socially-just and environmentally-aware investment strategy.
- The FSDA drew on focused advice from a panel of experts in tackling poverty and social lending and investment, on how the Bank's lending can reduce the inequality associated with socio-economic disadvantage. Measures they recommended included: working to proliferate financial products and instruments to address barriers to finance among disadvantaged entrepreneurs in Scotland; introducing loan covenants to support small businesses to embed Fair Work conditions, community benefit clauses to high-value investments or requiring borrowing firms to join a business network; developing metrics to assess the Bank's contribution to reducing socio-economic disadvantage and including representation of the voice of those with lived experience of poverty on the Bank's Advisory Group.
From August 2020, entitlement to funded early learning and childcare will almost double to 1140 hours for all three and four year olds and eligible two year olds. This represents a means to reduce the poverty-related attainment gap, enable more parents to be in work, training or study, and increase family resilience.
- The accompanying FSDA focused on how the delivery and implementation of this expansion could maximise the anticipated reductions in inequality. Evidence from stakeholders at framing workshops identified an expanded communications strategy, development of a toolkit for providers, exploring roles for trusted professionals and employers, and sharing best practice in workshops for local authorities as measures that could enhance uptake of the expanded offer among disadvantaged families.
Further examples of assessments, all of which will have implications for the 2020-21 Budget and subsequent budgets, are outlined in Annex A.
The Fairer Scotland Duty is subject to a three-year implementation period which will conclude in April 2021. It is now just over a year and a half since the Fairer Scotland Duty was introduced. As the implementation period progresses, the Duty is increasingly being linked into core parts of Scottish Government business such as the Programme for Government and legislation. It is also encouraging to see the wider level of interest in the duty, most notably in relation to the Welsh Government's decision to introduce a socio-economic duty.
Over the remainder of the implementation period we will continue to work to maximise the strong potential of the Duty to build a significantly enhanced approach and evidence base for tackling inequality in Scotland.
New EFSBS Tools
Two new tools have been utilised for the budget process this year. They were offered to help portfolio equality leads to develop their analysis if they wished to use them.
The first was an Excel spreadsheet helping budget leads to look at the impact of a spend line across a range of key inequalities by sex, race, disability and socio-economic disadvantage. Andalucía in Spain is seen as one of the international leaders in gender budgeting. They developed a tool called G+ ('gender plus') which tries to identify for each spend line whether it will have a positive, negative or neutral impact on gender inequality. Given that the Scottish Government takes a mainstreamed approach across protected characteristics, the idea of 'gender plus' was developed in this Excel tool to include disability, race and socio-economic disadvantage as well as sex/gender. For each characteristic, five to seven key inequalities were identified with the suggestion that portfolios use the tool to quantify the impact of spend.
The second tool was a template which it was suggested could be completed for spend lines over £100 million to help portfolios think through the objectives of a specific large spend line, the inequalities they needed to address, and how they were tailoring policy and budgets.
In practice, the tools and underlying process had varying success. Some portfolios found that adopting new processes at a time when there was so much political uncertainty and when analysts were already undertaking additional work concerned with the withdrawal from the EU, was too problematic this year. But they were keen to learn from the experiences of other portfolios and consider adopting different processes next year.
Other portfolios did explore the new processes with varying success. The Excel tool in particular was often found to be too simplistic to cope with strategic spend lines and, as a result, some portfolios either did not use them or tried to use them and found that results were just wrong or misleading. One particular issue was that the pre-filled key inequalities in the tool where not always relevant to the portfolio and it may be better in future years for each portfolio to identify their own key inequalities.
The templates' less rigid structure allowed for more explanation and some portfolios found them very useful as a building block for understanding the impact of spend. Two examples are provided in Annex B.
As a result the output from these tools has been utilised to a varying extent in the portfolio chapters. After the budget the tools and processes will be reviewed with portfolio budget leads and EBAG to identify strengths and weaknesses and build on the processes for future years. We welcome feedback on the new approaches trialled this year. You can contact Liz Hawkins (email@example.com) or the Chair of EBAG (Dr Angela O'Hagan) via EBAG's secretariat Gillian Achurch (firstname.lastname@example.org).
For some tax and benefit policies, distributional analysis is a helpful tool to examine the impact of various options. For the last few years a distributional analysis of income tax changes across income groups and with respect to age and disability has been published. There is a clear understanding that revenue should be raised in a way that does not discriminate against any specific group and this type of analysis helps to look at potential impacts.
This capability also exists in other areas. The Commission on Local Tax Reformundertook modelling of various council tax options including distributional analysis by council tax band, income decile and household type. New modelling was utilised in Social Security in 2019 to produce an Income Supplement Options report which identified the different options and impacts that were considered as part of the development of the Scottish Child Payment. This modelling is being further extended through the University of Essex's EUROMOD to examine the individual and cumulative impact of some of the policies identified in the Tackling Child Poverty Delivery Plan.
One additional area that we have committed to explore further is cumulative distributional analysis of the budget: adding up direct and indirect taxes, social security and spending on public services. An expert seminar held in October 2018 and hosted by the Chair of EBAG concluded that despite technical challenges in capturing the entire social contract, there are steps that could be taken to extend and improve the analysis currently performed by the Scottish Government. This work is underway and results should be available later in 2020.
Understanding how budget decisions will contribute to the realisation of human rights
There are a number of different aspects to the realisation of human rights through budgets.
According to Ann Blyberg for the Scottish Human Rights Commission, 'Human rights budgeting is a process of developing and executing a public budget in a way that is sensitive to human rights standards and the government's human rights obligations'. She further noted that it has to be part of a larger process following the development of policies, plans, laws and regulations that are sensitive to human rights norms and standards. Equality budgeting follows a similar process, aiming to ensure that policies and budgets are sensitive to protected characteristics. In this way our aim to improve equality budgeting can also contribute to the realisation of human rights. Human rights budgeting is a new and emerging area which we will watch with interest to incorporate any new thinking.
A further aspect of human rights budgeting relates to the transparency of the budget process and documentation and the ability for people to engage with and understand the budget. Scottish Human Rights Commission undertook research in 2019 analysing The Scottish Government and local government's budget documents and processes to identify areas for improvement. Scottish Government welcomed this analysis and will use the findings to seek to improve aspects of budget documentation that were not in line with good practice.
Whether the budget could be used differently to better address existing inequalities of outcome and advance human rights
The published budget is the result of considerations within the Scottish Cabinet to produce a balanced budget which meets its key priorities. Drafts of the EFSBS have been used alongside drafts of the budget chapters for Ministers to compile their portfolio budgets and understand the impact of changes in their spend lines.
The budget will now be subject to Parliamentary scrutiny. The EFSBS, along with a range of other reports and data sources (including individual policy impact assessments), can be used to help parliamentary committees consider whether the budget could be used differently to better address inequalities of outcome in Scotland whilst allowing for a balanced budget.
How the impact of budget decisions will be evaluated
A key element of budget analysis is understanding 'what difference spend made'. Seeking causation between policies and outcomes in a complex society is immensely challenging but understanding what works is key to knowing how best to get value from public money. This is an area that in many ways is in its infancy. Evaluation of small policies has been a key part of analysis for many years but incorporation of budgeting into the evaluation and undertaking it at a strategic or programme level is more challenging.
A number of large policy areas have evaluation programmes in place to help evaluate the outcome of spend programmes. Findings will, in turn, improve predictions of what can be expected from new and revised policies in these portfolio areas and lead to tailored responses. Examples include social security; The National Monitoring & Evaluation Strategy for Primary Care; Fair Start Scotland; expansion of early learning and childcare; and the attainment challenge. It is important that these evaluations consider impacts not only on average but across protected characteristics and socio-economic disadvantage and this is increasingly the case as evaluation practice progresses.
The Poverty and Inequality Commission concluded in response to the 2019-20 Budget that 'there needs to be more done to measure the impact of spending. In particular, there is a need to assess the anticipated impact of the budget on the child poverty targets'. As noted in the Strategic Introduction there is ongoing work by the Scottish Government to set out the impact of budgets on child poverty. This work was published in the annual progress report on Tackling Child Poverty and will be updated in June 2020. Additional experimental work is underway to explore the cumulative impact of child poverty policies and corresponding budgets as well as to understand how systems of policies interact and impact from the perspective of people with lived experience of poverty.
Evaluation of major capital infrastructure projects is also an important part of the Scottish Government analysts' work, and provides an essential overview of whether projects meet their objectives particularly around social inclusion. To assist such evaluations, guidance has been developed for evaluations of major rail and trunk road projects. Using this guidance an in-depth evaluation of the Airdrie to Bathgate Railway Improvement project has recently been completed and will shortly be published.
Within the Scottish Government there is an expanding network of expertise around evaluation. We have published user-friendly guidance for policymakers on conducting evaluations. Scottish Government analysts have been involved in the refreshing of HM Treasury guidance on policy evaluation known as 'The Magenta Book'. The refreshed guidance is due to be launched at the end of March 2020 and emphasises the important role of evaluation in government for learning and accountability.
This section has illustrated some of the ways in which the Scottish Government is using evidence to inform strategic decisions which impact upon budgets, in terms of overall spend and the ways in which spend is targeted at more disadvantaged groups within society.
During this year new tools have been tested to try to build better equality budgeting in the Scottish Government. The tools have met with varying success as they are applied to differing portfolios. As a result the portfolio chapters this year are less uniform than in previous years. This flexibility was agreed with EBAG and is seen as a critical step to allow individual portfolios to develop and tailor their assessment to provide the most helpful assessment of their portfolio spend. A full review will take place so that key lessons can be rolled forward to next year's process.
16. A sample survey asks questions from a random number of households. When a population sub-group is small, they are less likely to appear in the sample and unless a minimum are interviewed the findings cannot be reported.
21. Mazzucato, M. & Macfarlane, L. (2019). A mission-oriented framework for the Scottish National Investment Bank. UCL Institute for Innovation and Public Purpose, Policy Paper (IIPP WP 2019-02). https://www.ucl.ac.uk/bartlett/public-purpose/sites/public-purpose/files/mission-oriented-framework-for-snib_final.pdf