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Trouble ahead: The new Auditor General foresees some difficult times for Scotland's public finances

Trouble ahead: The new Auditor General foresees some difficult times for Scotland's public finances

By March, Stephen Boyle knew that 2020 was going to be a momentous year.

He would be moving out of Glasgow for the first time in his life and, in June, taking over the high profile, high pressure role of auditor general for Scotland. 

But he didn’t yet know just how much the COVID pandemic would change everything. 

Audit Scotland scrutinises 222 public bodies in Scotland, including central government organisations, the Scottish Parliament, councils and 23 NHS organisations, to assess whether public money is being spent efficiently and effectively.

Boyle, 44, was taking charge at a moment when vast amounts of extra public money from the Scottish and UK governments were suddenly being pushed out of the door to businesses and communities, administered by officials who were suddenly all working from home.

And his own team were conducting their oversight from their own kitchens and spare rooms.

He does not underestimate the risks inherent in the sudden change to the way public services were run, particularly of fraud.

He also offers a grim view of the task facing the Scottish Government in trying to balance the books from here: “It’s incredibly challenging. Our sense is that there will be some very difficult choices and prioritisation that the Scottish Government and public bodies will have to make.”

But he also notes the astonishing progress made by public bodies in trying new ways of working that previously would have taken years to progress, such as online GP consultations. 

And although some of Audit Scotland’s work was initially paused, most of it has taken place remotely, including annual audits, albeit with some delays (a report on the NHS is due out in February which would normally have been expected in October).

“We have done really surprisingly well, much more than I thought would be possible at the start of the pandemic,” he says. 

It’s been plenty to be getting on with, but there has been change on a personal level too: Boyle moved east with his family in late summer after restrictions on house sales were relaxed. 

He has been getting to know his new area in East Lothian over the past four months with his family (he has two primary school-age children).

“It’s a lovely part of the world that we’re in and we’re taking advantage of rural life and being close to the coast. We took our kids there on holiday when they were babies and never thought we’d end up living there.”

Audit Scotland’s new chief has spent nearly his entire professional life watching how public money is spent. After studying accountancy at Glasgow University, he worked for the accountancy firm PwC on its government team, doing similar work as he would later do at Audit Scotland but for a wider range of bodies.

“I was attracted to the combined commercial skills but also public focus.”

After four years, he opted for a “really massive contrast”, working with Michael Page plc for a year as a recruitment consultant, then returned to auditing, spending five years at Audit Scotland before moving into housing regeneration in Glasgow for a small outfit, Cube Housing Association, and also Glasgow Housing Association, Scotland’s largest social landlord.

“That firmed up for me what public services can do and the life-changing contributions they can make,” he reflects. “You only have to look at the Glasgow skyline and how that’s changed to see the importance of the high quality housing stock that the city didn’t have.”

Returning to Audit Scotland, he rose to become one of its directors before being nominated in March to succeed Caroline Gardner for an eight-year term.

It’s the job of the auditor general even in normal times to deliver some difficult home truths, as well as highlighting the achievements of public services. The organisation is entirely impartial but critical reports can cause discomfort at the highest level of government.

Amiable and calm, Boyle is perhaps well-suited to the diplomatic demands of his new role.

He arrives at the beginning of a difficult period for the Scottish Government’s finances. Paul Johnson of the Institute for Fiscal Studies has characterised the amount of public money being spent UK-wide as “truly astonishing”.  

Boyle says: “You hear the word ‘unprecedented’ being used, probably a lot more than it should be, but if you look at the scale of the money that has come to Scotland over the last eight months it’s truly incredible.” 

By August, Audit Scotland had counted 90 different incremental spending announcements that apply to Scottish Government finances, over and above the amount previously designated in the Budget.

Even Audit Scotland’s expert economists find it tricky to keep track of it all. By November, Scotland had received an extra £8bn of public money.

“The challenge for the Scottish Government is that they still have to balance their budget on an annual basis and maintain that balanced budget,” says Boyle.

The task of achieving that, he describes as “undoubtedly extremely challenging”.

Boyle is acutely aware of the constraints the Holyrood government faces.

He says: “I fear that there’s an inevitability that they will not be able to do everything that they will want to. We will of course monitor it closely with the policy choices the UK Government makes around spending and taxation.

“It’s probably too early to say what the new normal will look like, whether this will set the pattern for however many years of austerity, which we would draw an analogy to from the early part of the 2010s, or whether this is looking like a short period of time and then rapid recovery.” 

Will it be really hard to avoid spending cuts?

“I think it’s too early to predict as to what route the Scottish Government will go down in terms of its priorities.”

He expects the scale of UK Government borrowing to tail off and then it will be a policy choice for governments on how they approach taxation and spending.

“The indication, though, is that regardless, there will be prioritisations that governments will need to make.”

He reiterates: “In terms of the Scottish finances we are undoubtedly challenged and the planned ambition of the Scottish Government relative to the finances will inevitably have to be squared.”

Predictions are well-nigh impossible in these conditions but Boyle tries to offer a best and worst case scenario for how long Scotland’s public finances will be affected by the pandemic: “The best case scenario would be two or three years if it were a snap-back recovery, but I think what we’ve seen in Scotland is increased exposure to industries that have been most affected by the pandemic, like hospitality and leisure, and the shape of the Scottish economy being different to elsewhere. 

“So if it’s a snap-back you’re looking at a short time in years, but if it’s more fundamental than that then it will be many years into the future. I guess because of that, it’s all the more reason that public money is spent well and Audit Scotland has got a huge part to play in that.”

The 2010s will go down in British history as the decade of austerity; the government borrowing figures this time are significantly greater than they were at the time of the financial crash. Are people right to feel afraid for the future of public services?

“I guess there’s two parts to that,” says Boyle. “One is that the scale and size of public services is determined by politicians, the choices that governments make about how much debt they wish to carry and how quickly they choose to pay it. 

“There has been talk that this is the biggest financial challenge since before the union of Scotland and England, which seems absolutely mind-boggling. 

“Equally, some of the analogies that have been drawn are that because this is not just a once-in-a- generation but a once-in-a-century event economically speaking, we should treat this as a war-style event, and a war bond, and repay for the pandemic for many generations to come, easing the burden on those of us living through it right now. 

“Those will be choices that politicians will ultimately choose how to take forward.”

Much has been made by the Scottish Government of its intention to have a so-called “green recovery”, especially with the eyes of the world on Scotland next November at COP26 in Glasgow.

Audit Scotland is monitoring how well efforts to move to net zero are going and points to “competing priorities, in terms of investing in the green recovery relative to some of the infrastructure ambitions that the country will have”.

We are likely to hear more about that and we’ll also be hearing more about fraud risk, which has increased during the pandemic.

“There’s undoubtedly an increased risk around procurement,” he notes.

Public money is being spent quickly and so it’s more important than ever that controls on how it is spent are in place. The National Audit Office produced a report in November showing that there had been deficiencies in the procurement of PPE at a UK level.

Boyle does not sound surprised: “We’re also doing work on PPE and will be commenting on how well that’s been carried out.”

Audit Scotland has issued guidance to public bodies on risks to be aware of. 

Boyle says: “It’s unprecedented. People are working from home and trying to maintain all of the diligence around effective controls at a time when they are juggling all manner of other responsibilities.

“All of those factors increase risk that public money won’t have been spent as well and if that’s the case that’s something we will be commenting on and reporting.”

One of the risks is that “organised crime will look to take advantages of any deficiencies in arrangements”. 

Boyle adds: “The increased risk is related to the scale of new money that’s come through, the haste with which at the start of the pandemic for good reason money was needed to get out to those most in need of it, whether it was through business support and self-employed support arrangements.

“Whenever there’s pace round that, there’s increased correlation in terms of the risk that it enters into the wrong hands.”

The most comprehensive reports on how public money was used during the pandemic will not come out until next year, but there are some significant ones in the offing.

As well as the NHS report due in February, there will be one on educational attainment in the spring looking at the impact of the pandemic on the attainment gap. 

And the auditors haven’t forgotten past commitments just because there’s a pandemic.

Audit Scotland has been “very frustrated” for years about the pace of change on integrating health and social care and will be touching on that in their report. 

But he believes there is much to be proud of in the running of Scottish public services, pointing to a pattern of improvement in the way public money is spent and the outcomes it’s achieving.

“There’s a degree of frustration for us that the use of public money isn’t conveyed strongly enough in [terms of] what’s been achieved, so a big push from us is to try and make it clearer in public bodies’ reporting and then through our own work.”

With Scotland possibly about to lurch from a period of sky-high spending to one of constraint, the wise spending of public money has rarely been so important.  

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