Improving emissions assessment of Scottish Government spending decisions and the Scottish Budget

To meet Scotland’s net-zero targets, it is important that the Scottish Government understands how its policy and spending decisions impact greenhouse gas emissions.

This research explores options to improve understanding of the consequences of Scottish Government’s spending choices on emissions and increase the transparency and value of the carbon assessment of the Scottish Budget to support scrutiny and informed discussion.

The findings contribute to the Joint Budget Review on matters related to climate change between the Scottish Government and Scottish Parliament.

The research considers a number of options based on but not limited to current systems and practices within the Scottish Government, proportionality to the policy process, capacity, avoiding unintended consequences and the practical application. Lessons are drawn from across all policy areas, and from other jurisdictions. The recommendations cover a number of areas, however there is a focus on governance, processes, capacity and culture.

Recommendations

The report recommends that the Scottish Government:

1. Improves the clarity and transparency of Government decisions that impact on climate change, acknowledging that trade-offs will always exist between different objectives.
2. 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.
3. 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.
4. 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.
5. Considers periodic external auditing of climate change policymaking governance, processes and carbon assessments.
6. Introduces a Net Zero Test to ensure that all spending with major emissions implications undergoes a quantitative carbon assessment.
7. 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.
8. 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.
9. 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.
10. Considers the challenging environment for data collection under current budgetary processes, and that a longer lead in time will be required for better data.
11. 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.