Finance and Public Administration Committee
The Sustainability of Scotland's Finances
Background
This inquiry concluded in November 2023. The Committee's report is available at the bottom of this page.
Short to medium-term financial pressures
The Scottish Government’s Medium-Term Financial Strategy published in May 2023 set out the government’s expectations and broad financial plans/projections for the next five years. It stated that the Scottish Government expected its public spending to grow at a faster rate than its central forecasts of the funding it expected to receive.
This meant the government was forecasting that it would not have sufficient money to fund the spending it currently wishes to make.
Resource spending requirements could exceed the Scottish Government’s central funding projections by 2% (£1 billion) in 2024-25 rising to 4% (£1.9 billion) in 2027-28.
The Scottish Government also stated that its plans for capital spending were more than the funding it expects to be available, with a 16% gap forecast in 2025-26.
Longer-term financial challenges
The total Scottish population is projected to fall by 8% by 2072-73.
Based on current tax and spending plans, the Scottish Government expected an average budget gap (the difference between demand for services and revenues) of 1.7% in each year during that period, the equivalent of £1.5 billion in today’s prices.
Areas of expenditure such as health, social care, social security and education are influenced by the size and structure of the population.
The proportion of the population aged 65+ increases from 22% in 2027-28 to 31% in 2072-73, while the population aged 16 to 64 and under 16 is falling.
These changes in the age structure have implications for the demand for public services: with more demand for services used more by older people, such as health, and less demand for those used more by younger people, such as education.
Committee inquiry
The Committee examined the sustainability of Scotland’s finances in both the short and longer-term.
This inquiry formed the basis of the Committee’s pre-budget 2024/25 scrutiny, along with the evidence gathered from its Public Service Reform inquiry.
Remit of the inquiry
- to develop a greater understanding of, and to scrutinise, the Scottish Government’s plans to address the financial pressures on the Scottish Budget 2024-25 and beyond
- to establish how the Scottish Government balances its short and long-term financial planning and to identify any improvements in this area
- to influence the ‘refresh’ of the government’s multi-year spending plans for resource and capital to 2026-27, to be published alongside the Scottish Budget 2024-25
- to understand how the financial pressures might impact on the delivery of national outcomes and climate change targets, both in the short and longer-term, and to identify steps that the Scottish Government could take to alleviate these impacts.
Pre-budget scrutiny aims to:
- influence how the Budget is prepared
- improve transparency and increase public awareness of the Budget
- consider how the Scottish Government’s Budget for 2024-25 should respond to new fiscal and wider policy challenges
- lead to better results and outcomes when compared against the Scottish Government’s targets and goals.
Guidance for subject committees
Guidance for committees on the budget process 2024-25 highlights relevant supporting documents, work approaches and examples of good practice.
Budget Process 2024-25: Guidance for Committees (196KB, pdf) posted 11 December 2023
Committee Engagement Event
The Committee held an engagement event in Largs on 30 August 2023 to discuss the priorities of participants for the Scottish Budget 2024-25 and beyond, given the financial and demographic challenges ahead. You can read a summary note of the engagement event at the following link:
Summary Note of Committee Engagement Event, held in Largs on 30 August 2023 (178KB, pdf) posted 18 September 2023
Oral Evidence
The Committee took evidence on the following dates:
Tuesday 3 October 2023
The Committee took evidence from the Deputy First Minister and Cabinet Secretary for Finance, Scottish Government.
Read the agenda, papers and Official Report (substantially verbatim transcript) for this meeting
Tuesday 26 September 2023
The Committee took evidence from Federation of Small Businesses Scotland, Scottish Financial Enterprise and the Scottish Hospitality Group.
Read the agenda, papers and Official Report (substantially verbatim transcript) for this meeting
Tuesday 19 September 2023
The Committee took evidence from:
Panel 1: Fraser of Allander Institute, Professor David Heald and Professor David Bell;
Panel 2 (roundtable): Age Scotland, Children in Scotland, IPPR Scotland, Living Streets Scotland, the Poverty Allance, Public Health Scotland and Universities Scotland.
Read the agenda, papers and Official Report (substantially verbatim transcript) for this meeting
Your views
The Committee's call for views closed on 18 August 2023.
The Committee received 28 submissions to its call for views. Read the submissions received on Citizen Space:
Submissions received to call for views on the Sustainability of Scotland's Finances.
SPIce Summary of Written Submissions
The Scottish Parliament Information Centre (SPICe) has produced a summary of the written submissions received to the Committee's call for views. Read the SPICe summary:
SPICe Summary of Written Submissions (364KB, pdf) posted 20 September 2023
Committee Report
The Committee's report, Pre-Budget Scrutiny 2024-25: The Sustainability of Scotland's Finances, was published on 6 November 2023. Read the report at the following link:
Pre-Budget Scrutiny 2024-25: The Sustainability of Scotland's Finances
Scottish Government Response
The Scottish Government responded to the Committee's report on 19 December 2023. You can find the Scottish Government's response by expanding the Correspondence section below and clicking the link titled "Pre-Budget Scrutiny 2024-25 - Scottish Government response to Committee report".