Short term approaches don't address Scotland's unsustainable public finances

The Scottish Government must move beyond making short-term savings to balance its budget, and urgently reform to address the public sector’s unsustainable finances.

There has not been enough progress made in reforming public services over the past year. Public sector budget shortfalls of more than £1 billion are forecast, and repayments on borrowing continue to grow. The Scottish Government needs to urgently reform, including looking at the size and structure of the public sector workforce.

The Scottish Government’s consolidated accounts for 2023/24 show it responded to large and ongoing financial pressures through a range of short-term measures such as cutting spending across transport, net-zero and education to balance its £54 billion budget. In September 2024, it announced more actions to balance the 2024/25 budget, including:

• a recruitment freeze on non-essential posts
• means testing winter fuel payments
• emergency spending controls
• and using ScotWind revenue previously earmarked for addressing the climate and biodiversity crises.

These were largely one-off, non-recurring savings being used to meet recurring costs. They do not address the underlying factors affecting the public sector’s unsustainable financial position, such as the design and delivery of services, and the workforce.

Stephen Boyle, Auditor General for Scotland, said:

For some time, myself and others have called for urgent reform of Scotland’s public services to address the public sector’s unsustainable finances and the threats these pose to services. The Scottish Government continues to work hard to balance its annual budgets. But making in-year, one-off savings to fund recurring costs doesn’t tackle the issue, it exacerbates it.

It’s critical that the Scottish Government moves at pace to reform the design and delivery of public services. This includes being clear what the public sector workforce needs to look like to sustainably achieve the outcomes that Scotland’s leaders want for citizens.