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Scottish Government is not thinking about affordability in spending plans, MSPs say

The Finance and Public Administration Committee has questioned the sustainability of Scotland's finances. Image: PA/Alamy

Scottish Government is not thinking about affordability in spending plans, MSPs say

Affordability "does not appear to be a key factor in Scottish Government decision-making" and there is "little evidence" that ministers have a long-term approach to public money, MSPs say.

In a highly-critical report, the Scottish Parliament's SNP-majority Finance and Public Administration Committee says the Scottish Government's public service reform programme has "no overall strategic purpose".

The warning comes one month before finance secretary Shona Robison will deliver the Scottish Budget and follows a warning by the Scottish Fiscal Commission that the capital budget, used to fund long-term investment like infrastructure, hospitals and research and development, will be 16 per cent smaller in real terms in 2028-29 than it is this year.

The drop comes after UK Government ministers opted not to "inflation-proof" the capital budget, resulting in a fall of seven per cent between 2023-24 and 2027-28.

The Scottish Government has said it will use borrowing powers to bring in £250m for capital funding every year, on top of its Block Grant from Westminster.

But in a report released today, the cross-party committee calls the shortfall "particularly concerning during times of financial strain when governments should be investing in infrastructure to stimulate economic growth".

tough and decisive action must be taken

Convenor Kenneth Gibson said: "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.

"We therefore strongly recommend that the Scottish Government produces a full response to the Scottish Fiscal Commission's sustainability report, setting out the actions it will take to address the longer-term challenges ahead."

He went on: "We are also concerned that the UK Government's decision not to inflation-proof capital funding available to Scottish ministers will mean a 16 per cent reduction in 2028-29 compared to this financial year."

In its medium-term financial strategy, delivered in May, the Scottish Government said "tough and decisive action must be taken to ensure the sustainability of public finances and that future budgets can be balanced".

But now the committee says it fears affordability "does not appear to be a key factor" the SNP-Green administration's decision-making and the detail of spending announcements should be provided to parliament in future.

Economist Professor David Bell told the committee "there are too many demands on the public purse at the moment for them all to be simultaneously satisfied" and said ministers face "the danger of entering into commitments that have medium or long-term implications and then feeling that it is not possible to stop them" for fear of negative publicity.

The committee said there should be "explicit" detail in the Budget about any areas of spending the government which do not meant its "three missions" of equality, opportunity and community and information about "where funding will, as a result, be reduced or ceased entirely".

Public service reform is a key area in which ministers can act to "balance the books", the committee said.

However, it said that work "currently involves a collection of disparate workstreams and sectoral reforms, with no overall strategic purpose and with limited oversight and direction from government".

The committee stated that there is a "lack of clarity" on the "overall purpose, objectives, timetable, upfront costs required and anticipated savings and efficiencies to be delivered".

A "clear vision" must be set out with the Budget statement, it said, and there is "confusion" about Scottish Government policy over headcount numbers in the public sector, including within the most senior level of the civil service.

Gibson said: "We are concerned that the focus of the government's reform programme has changed multiple times since May 2022, as have the timescales for publishing further detail on what it will entail.

we will do all we can within our powers to ensure public finances are on a sustainable path

"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.

"The recommendations in our report aim to bring much-needed impetus, focus and direction to the Scottish Government's reform programme."

A Scottish Government spokesperson said: "The Scottish Government fully recognises that we face one of the most challenging financial situations since devolution, with the Covid pandemic, the war in Ukraine, and high inflation putting significant pressure on households, the economy and public finances.

"As we set out in the Medium-Term Financial Strategy, we will do all we can within our powers to ensure public finances are on a sustainable path.

"The Scottish Government will carefully consider the Finance and Public Administration Committee’s report and provide a full response to the committee after the Scottish Budget is published on 19 December."

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