Holyrood’s Finance Committee “deeply concerned” about the Scottish Government’s strategic approach to public finances

In its pre-budget scrutiny report published today, the committee says there is “little evidence” that medium and long-term financial planning is taking place.

While some of the report’s conclusions are critical, the committee welcomes recent progress on the Scottish Government’s public service reform programme, saying it is encouraged by the focus on preventative and early intervention approaches.

The committee also welcomes the Finance Secretary’s commitment to consider what more can be done to support research and development within Scotland’s universities, with a view to boosting innovation and economic growth.

Finance and Public Administration Committee Convener Kenneth Gibson MSP said:

“Our committee is deeply concerned about the Scottish Government’s lack of strategic approach to managing Scotland’s public finances. There is little evidence of medium and long-term financial planning. Year-on-year budgeting has become increasingly challenging, with significant emergency controls being required in each of the last three years.

“We recognise devolved governments have fewer flexibilities to deal with ‘shocks’. However, many issues impacting the 2024-25 Budget – such as higher than anticipated pay settlements and increasing social security payments - could have been foreseen and mitigated when the Budget was set, last December.

“At the very least, scenario plans could have been put in place to allow spending commitments to be ‘flexed’ to adapt to fiscal strain.

“We also believe that if key strategy documents looking beyond the year - such as the Medium-Term Financial Strategy, Infrastructure Investment Plan pipeline reset, Tax Strategy, and multi-year plans - had been published when originally committed to, they would have ensured the Scottish Government was considering the medium to longer term approach as part of its budget planning.

“Repeated delays to key financial strategies have led to a perception of the government being in a state of indecision.

“Taken as a package, the recommendations in our report are designed to support the Scottish Government in achieving a much more strategic and coherent approach to managing Scotland’s finances. We urge the government to adopt these in full, placing our finances on a much more stable and sustainable footing.”

On public service reform, Mr Gibson added:

“Our committee is encouraged by the focus on preventative and early intervention approaches within the Scottish Government’s public service reform programme.

“We ask the government to consider and report back to us on the potential benefits, risks and costs of introducing a new category of public expenditure on preventative spend, which we were told will establish a benchmark and enable investment to be tracked over time. This would be a welcome development.”

Read the full report: Pre-Budget Scrutiny 2025-26: Managing Scotland's Public Finances: A Strategic Approach