Finance committee calls on Scottish Government for ‘much greater transparency’ over £5bn fiscal gap

The Scottish Parliament's Finance and Public Administration Committee has called on the Scottish Government to provide "much greater transparency" on its progress in closing a near £5bn fiscal gap and on meeting its public service reform targets.

In a new report published today, the committee said there is insufficient evidence to determine whether the government's tax and spending plans are affordable and sustainable.

The committee has been holding an inquiry into the Scottish Government's tax and spend plans.  

The committee's report also warned that the Scottish Budget faces substantial risks if the government does not implement its Fiscal Sustainability Delivery Plan (FSDP) and deliver "ambitious public service reform targets" in full and on time.

The plan, which was published in June last year, sets out the government’s key actions for maintaining sustainable public finances through 2029-30. It focuses on public spending reform, sustainable economic growth, and a strategic approach to tax.

The committee's convener Clare Haughey said: “Our committee recognises the scale of the pressure on the Scottish Budget, particularly in 2027-28. However, we have insufficient evidence to determine whether the Scottish Government’s tax and spending plans are affordable and sustainable.

“We are also concerned that the Scottish Budget faces substantial risks if the three pillars of its ‘Fiscal Sustainability Delivery Plan’ – including ambitious public service reform targets – are not delivered in full and on time.

“We therefore call on the Scottish Government to provide much greater transparency on progress in closing the fiscal gap and meeting reform targets.”

As a first step, the finance committee has recommended that the Scottish Government publish an updated FSDP alongside the Scottish Budget, which will be set out on 3 December.  

From 2027, the committee expects the government to resume the annual publication of the Medium-Term Financial Strategy and commit to regular spending reviews, "given the greater predictability of the UK review cycle".  

It has also urged it to update its public sector pay policy and tax strategy at the earliest opportunity.

Haughey added: "We heard from witnesses that the Scottish Government needs greater fiscal flexibilities and will undertake further work on this issue in the coming weeks to inform the upcoming fiscal framework review.

"Collectively, the recommendations in our report aim to strengthen fiscal sustainability and support the effective management of Scotland’s public finances."