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  4. Ministers lack plans for fiscal stability, MSPs report

Ministers lack plans for fiscal stability, MSPs report

6th November 2023 | government-administration | Public sector

Scottish ministers are not carrying out enough long-term financial planning to ensure Scotland’s fiscal sustainability, MSPs on the Scottish Parliament’s Finance and Public Administration Committee have concluded in a report published today.

In particular, as regards spending priorities, the committee says it has seen little evidence of a shift away from a short term approach to financial planning and the “firefighting on a number of fronts” that it reported in January this year.

It “strongly recommends” that the Government produces a full response setting out the actions it will take to start addressing the longer-term challenges. MSPs should also hold a debate in Parliament on the long-term sustainability of Scotland's finances.

“We note the statement in the Scottish Government’s May 2023 MTFS [Medium Term Financial Strategy] that ‘tough and decisive action must be taken to ensure the sustainability of public finances and that future budgets can be balanced’”, the report observes. “However, we are concerned that affordability does not appear to be a key factor in Scottish Government decision-making. We ask that detail of spending announcements is in future provided to Parliament.

“We recommend that the Scottish Government explicitly sets out in the Scottish Budget 2024-25 if there are any areas of spending it has assessed as not meeting its three missions test and where funding will, as a result, be reduced or ceased entirely.”

The committee is also disappointed that the capital funding from the UK Government continues to reduce and that, by 2028-29, it is expected to be 16% smaller in real terms than in the current financial year. “This is particularly concerning during times of financial strain when governments should be investing in infrastructure to stimulate economic growth.” It requests that “the multi-year envelopes for capital and resource spending to be published alongside the Scottish Budget 2024-25 contain a sufficient level of detail to enable meaningful parliamentary scrutiny and to allow public bodies to plan ahead”.

Similarly, on the Government’s public service reform programme, the committee says it has no overall strategic purpose, with limited oversight and direction from Government. On the contrary, the focus of the programme has “changed multiple times since May 2022”, as have the timescales for publishing further detail on what it will entail.  

“Given the financial challenges facing the Scottish Budget, this represents a missed opportunity to be further along the path to delivering more effective and sustainable public services.”

Convener Kenneth Gibson MSP commented: “As the Scottish Budget approaches, we’ve seen little evidence to suggest a shift away from the Scottish Government’s short-term approach towards financial planning – an approach hampered by reliance on one year UK financial settlements.”

He added: “The creation of a Scottish Government advisory group on taxation is welcome. Given the financial challenges ahead, it is imperative that their work to create a clear taxation strategy for Scotland proceeds at pace.” 

Find the report here.

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