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Scottish Government must ‘strike right balance’ with budget plans, say MSPs

A Holyrood committee has warned the Scottish Government that finances face significant challenges (Jane Barlow/PA)
A Holyrood committee has warned the Scottish Government that finances face significant challenges (Jane Barlow/PA)

The Scottish Government is “firefighting” through considerable financial challenges as it battles the cost-of-living crisis and the demand for improved pay deals, a Holyrood committee has said.

The Finance and Public Administration Committee has published its report on the 2023/24 budget after Deputy First Minister John Swinney set out the fiscal plans in December.

The committee has urged ministers to focus on striking the right balance between responding to the immediate financial pressures of high inflation and the cost crisis and addressing longer-term fiscal concerns.

Its report has also called for clarity on how the Scottish Government will deliver public service reform and from where in the public sector it intends to make reductions in headcount to pre-pandemic levels.

Scottish Government budget
John Swinney set out the draft budget in December (Jane Barlow/PA)

Ministers set out objectives to reducing the size of the public sector workforce back to pre-pandemic levels by 2026/27 – it would equal a cut of about 7.3% over the four years, or 1.9% per year, according to the Institute for Fiscal Studies (IFS).

Kenneth Gibson, committee convener, said: “The Scottish Government’s focus on addressing the cost-of-living impact is understandable given the scale and immediacy of the challenge.

“The committee also acknowledges the difficulties arising from soaring inflation this year and the knock-on implications for public sector pay and public spending overall.

“However, we would like to see evidence that the Government is suitably focused on striking the right balance between responding to the immediate financial pressures and addressing long-term fiscal challenges.

“On the basis of evidence we’ve heard, the committee wants to see more strategic long-term financial planning from the Scottish Government to ensure future fiscal sustainability. This includes how it will meet its public service reform and social security commitments.

“We also ask in our report, from where in the public sector reductions in headcount to pre-pandemic levels will be made, and to what timescales.

“Clarity and transparency around these issues are crucial, during what is an uncertain time for the public sector.

“It is clear from our scrutiny of the Scottish budget 2023/24 that the Scottish Government is firefighting on a number of fronts.”

Mr Swinney said: “We are committed to working closely with the Parliament on the 2023/24 Scottish budget and will carefully consider the recommendations of the Finance and Public Administration’s stage one report.

“These recommendations are an important step in the scrutiny of the budget.

“This year’s budget faces very significant challenges as a result of the current particularly turbulent economic period and we have had to take difficult decisions to focus on key priorities.

“The 2023/24 Scottish budget focuses on eliminating child poverty, investing in public services and supporting the transition to net zero.”