Francesca Osowska OBE, Director, Scotland Office -A Masterclass in Evasion for the Scottish Affairs Committee

 

 

 

Francesca Osowska OBE, Director, Scotland Office

Francesca was educated in Cumbria and at Cambridge University where she obtained an MA in economics. She also received an MA in European Economics from the College of Europe in Bruges.

Having joined the civil service as an economist in 1993, her first posting was in the Employment Department in Sheffield. After brief stints in London and Brussels, Francesca moved to Edinburgh in 1997 as a government economist with the then Scottish Office.

In 1998 Francesca joined the Scottish Office education department before going on to hold posts in the education and justice departments of the Scottish Executive and was appointed Head of Sport at the Scottish Executive / Government.

Between 2007 and 2009, Francesca was Principal Private Secretary to the First Minister before being appointed, in December 2009, as Director for Culture, External Affairs and Tourism.

In January 2010, she was appointed Director for Housing, Regeneration and the Commonwealth Games in the Scottish Government and subsequently moved to the post of Director for the Commonwealth Games and Sport in January 2013.

Francesca took up her post as Director for the Scotland Office in the UK Government in January 2015.

Francesca was awarded an OBE for services to Government and the Commonwealth Games in the Queen’s New Year’s Honours in January 2015.

She has links to 33Fifty, which formed part of the Legacy 2014 National Programmes of the Glasgow Commonwealth Games The programme was delivered by the secretive  Common Purpose networking organisation in partnership with the Royal Commonwealth Society.

 

 

 

Scottish Affairs Committee Meeting 2015 – Chairman Pete Wishart – Appearance of Francesca Osowska OBE, Director, Scotland Office – Financial matters
Mr Chope: The plans for 2015-16 and we are talking today about the work of the Scottish Office, not just looking at what was happening before and there it says that there is a figure of £8 million for the 2015-16 plan, as against the out-turn for last year of £7.7 million. That is an increase of £1 million despite the fact that obviously there is no longer a referendum. What is explanation for that?

Francesca Osowska: Again, thank you for the question, because I think it does bear explanation. No, we don’t have a referendum in 2015-16, but what we do have is the continuing work of the Scotland Office to deliver on some of the events after the referendum.

You will be aware that the Smith Commission report was delivered in November 2014. There was an agreement that a draft Bill would be brought forward as soon as possible. That draft Bill was introduced into Westminster the day after the Queen’s Speech, and that legislative process, which commenced effectively on 19 September 2014, has had a great bearing on the work of the Scotland Office.

We have put resource into that to deliver in a very compressed timescale from concept to delivery of a Bill, so the resources for 2015-16 support that work; it is a key priority of the Scotland Office to deliver that Bill.

In addition, earlier in the year, the UK Treasury did have a review of the Scotland Office provision and agreed that the original trajectory of budget provision set for the office in 2010 needed to be adjusted for this fact.

Finally, in terms of the Scotland Bill specifically, as well as the staff resources that are needed to deliver it, which I have mentioned, in addition there are some costs in relation to the drafting of the Bill that add into our costs.

That is the explanation. It is also worth saying that obviously these are plans. As you will know, there is a spending review process going on at the moment. The Treasury have yet to announce departmental provision and so we don’t know whether that will be fulfilled.

 

 

 

Margaret Ferrier: The Annual Report and Accounts show that the grant payable to Scotland was increased by small increment 2014/15 over 2013/14. Excluding the impact of devolution, is the next spending review settlement likely to mean any cuts for Scotland?

Francesca Osowska: In terms of this coming spending review?

Margaret Ferrier: Yes.

Francesca Osowska: I am afraid I cannot answer that. Obviously, the Treasury are considering the spending review at the moment and they will make their announcement on the spending review in due course, and we will see what that means for the Scotland Office.

Margaret Ferrier: The Scotland Office is going to play no part, then, in the spending review process?

Francesca Osowska: No. We have had discussions with the Treasury; sorry, I should have explained that. The Treasury have discussions with all Departments in advance of them finalising their decisions.

We have obviously had these discussions with the Treasury in terms of what the Scotland Office will be doing and the Treasury will then take decisions on the most appropriate budget for the Scotland Office, and I await those decisions eagerly.

 

Mr Chope: This is about the cash reserves. Who administers the Scottish cash reserves that are created to mitigate potential volatility in tax receipts?

Francesca Osowska: Is this the mechanism by which funds are paid to the Scottish Government?

Mr Chope: Yes, £135 million in a year or something.

Francesca Osowska: Yes, the Scotland Office administers that, and that is a consequence of the 1998 Scotland Act.

Mr Chope: Do you think the Scottish Government should have more discretion over when to draw upon that Scottish cash reserve to go alongside its power to make discretionary payments into the cash reserve?

Francesca Osowska: It would not be appropriate for me to comment on whether the Scottish Government should have a more discretionary role in the procedure. However, what I can say is that, as a process, this has been in place since devolution.

All payments relating to both the block grant and changes to the grant are made to the Scottish Consolidated Fund and administered through the Scotland Office. As I said, that is a consequence of the 1998 Act.

Each month, the Scottish Government calculates the amount required to fund its various bodies covered by the grant, and the Scotland Office requests the funding from the Treasury and it is transferred to the Scottish Consolidated Fund.

Treasury is responsible for a cash management programme, which means that funding cannot be drawn down in advance of need, and I think that system has worked very well up to now.

Mr Chope: Do you think it is easily understood by the people in the United Kingdom, collectively?

Francesca Osowska: Again, I am not sure I could comment on that. I understand it, but then perhaps I am slightly more steeped in it than the average person on the street. I think the point is that it works and it works well, and if the average person on the street if there is such a thing does not understand that, does it matter? The Scottish Government receives the funding that it needs on time.

 

 

Chair: Just on this issue, there is always a fight and a fuss about perceived underspends; we have had that in the Scottish Parliament in the course of the past few weeks.

Are there any plans or provisions where this money could be carried forward if there is an underspend that has been identified within the Scottish Government budget?

It is 0.6% that needs to be taken forward. Is there any flexibility in that that would allow the Scottish Government to spend much more if there is an underspend at the end of a parliamentary session?

Francesca Osowska: In terms of any underspend by the Scottish Government and carryover, that is really a matter for discussion between the Scottish Government and the Treasury.

 
Chris Law: I want to ask some questions surrounding the future of income tax collection in Scotland, which is due to start next year. I want to know: is HMRC ready for its implementation and has it identified Scottish taxpayers, and all of them?

Francesca Osowska: My view on that and you will appreciate that I don’t want to speak overly for HMRC would be yes. We know that HMRC will be writing to those that they have identified as Scottish taxpayers, based on postcode data.

There is very good working between HMRC, the Scottish Government and Revenue Scotland. We have seen already this year the devolution of two taxes as a consequence of the 2012 Act (stamp duty land tax and landfill tax) and I think close working between the Governments allowed that to be delivered.

Indeed, on the day that the new taxes commenced, the chair of Revenue Scotland, Dr Keith Nicholson, wrote to Edward Troup, who is the Tax Assurance Commissioner for HMRC, and said, “On what is a historic occasion for Scotland, I wanted to take the time to pass on my gratitude to you and the staff of HMRC for the incredible effort and collaborative working that has been instrumental in seeing a smooth transition from the UK taxes to the devolved taxes today”.

Chris Law: Thank you. Can I ask you, what efforts have been made to ensure that Scottish businesses are ready and that Scottish businesses are fully on board?

Francesca Osowska: I can point to two strands of activity. One of the roles of the Scotland Office, as I mentioned earlier, is obviously to lead some of the engagement on behalf of the UK Government overall in Scotland.

As an organisation, we do engage regularly with the business community and we are able to by this means—through seminars, through emails, through our ongoing contacts provide this information to them. I also know that HMRC are undertaking their own stakeholder engagement and business community engagement to ensure that businesses are prepared for the change.

Chris Law: Let us suppose HMRC costs increase for example, diverging tax rates increasing through customer contact or possibly prompting people to attempt to gain the system. Which Government is going to be liable for these additional costs?

Francesca Osowska: I would need to have a discussion with HMRC and get back to you on that.

Chris Law: What preparatory work have you done for the new devolution of income tax? Is there anything that you have in place already, or have you just learned from the experience of the small devolution of the tax powers just now? What are you doing to ensure that we are going to be in a position to pick up the new income tax powers in the next few years?

Francesca Osowska: As I have set out, I think we did learn a lot, and Revenue Scotland and HMRC learned a lot, from the devolution of the previous taxes. Work continues on that basis and the Scotland Office has a continued dialogue with HMRC, who are leading on this issue for the UK Government.

We have a dialogue and asked for assurance on this work and that assurance is given. Again, if the Committee requires further information on that, we can provide it.

 

 
Kirsty Blackman: In terms of the Scottish rate of income tax coming in and the mechanism for adjusting the block grant going forward, how is that going? Has a decision been taken or an agreement been taken on the mechanism for adjusting the block grant, going forward?

Francesca Osowska: Again, I don’t want to appear evasive, but you will be aware that there are discussions being conducted between the Scottish Government and the Treasury at the moment in terms of the fiscal framework.

Those discussions are ongoing and I cannot comment any further. We know, for example, from the devolution of stamp duty land tax and landfill tax, that block grant adjustment mechanisms can be agreed and are used, and the same will be true for the Scottish rate of income tax.

 

 

Chair: How many of your staff are going to be allocated to working on the fiscal framework? What type of resource is the Scotland Office going to be putting into this whole major piece of work that we are going to have to undertake in order to ensure this is going to be done properly?

Francesca Osowska: I think it might be helpful, in terms of understanding responsibilities, to say that the Scotland Office is responsible for the overall passage of the Scotland Bill that is now going through Parliament.

We also have oversight and are interested in how all of the recommendations from the Smith Commission report are delivered. You will be aware that there were recommendations that were non-legislative recommendations in terms of inter-governmental working, for example and one of the other aspects of the Smith Commission report was to put in place a new fiscal framework to reflect the new arrangements.

Treasury leads on that piece of work. The Scotland Office’s role is to make sure that we connect the fiscal framework conversation, discussions and agreements with the legislative process.

Chair: When it comes to the fiscal framework, then, your role is to be the conduit between the legislation and work with the Treasury, and the Treasury will take the lead in putting together the fiscal framework, in partnership with the Scottish Government? Is that a rough way to look at this?

Francesca Osowska: Yes.

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