Official Report 934KB pdf
The next item of business is a debate on motion S6M-20487, in the name of Kenneth Gibson, on behalf of the Finance and Public Administration Committee, on the Scottish budget 2026-27.
I advise members that, at present, there is time in hand for interventions, but that might change over the course of the afternoon. I invite members who wish to speak in the debate to press their request-to-speak button.
15:01
I am delighted to open today’s debate on behalf of the Finance and Public Administration Committee. The debate provides an opportunity to discuss the committee’s pre-budget reports and how they have influenced the Scottish budget for 2026-27. I thank our clerking team and all the other committees for their hard work.
The FPA committee’s recent inquiry into the Scottish budget process recommended piloting new approaches to deliver a more joined-up and interactive debate. We have therefore set a broad theme of fiscal sustainability for today’s debate, recognising the pressures on the Scottish budget and individual portfolio areas.
Building on its work to support the debate, the Scottish Parliament information centre has helpfully produced a briefing that identifies common themes across committee pre-budget reports, which I am sure many members will draw on in their contributions. I particularly look forward to hearing about what has worked well and not so well in influencing Government budgetary decisions and about the impact of a parliamentary session-long approach to scrutiny. SPICe suggested that
“Across committees, there is a shared expectation that accountability should extend beyond explanations of spend to include clarity on impact and delivery.”
From the Economy and Fair Work Committee’s call for clearer performance targets to the Education, Children and Young People Committee’s request for the Government to set out its priorities for the college sector and match resources to fund those priorities, it is clear that, through the budget process, committees are robustly holding the Government to account on how spending is achieving outcomes. Further, committees are seeking greater transparency of budgetary information and evidence that data and analysis are driving prioritisation and decision making while supporting effective parliamentary scrutiny.
Does Kenneth Gibson agree that, when it comes to transparency, it is not all about complicated stuff? Some of it is about simplicity and getting agencies to report on the same basis; some of it is about getting them to report in a timely manner. Our committee was faced with a situation in which some of the agencies that we were scrutinising had not yet published their annual report, for example. Does he agree that, on transparency, we need to get the basics right as well as addressing the complexity?
I completely agree with Daniel Johnson. That is very important. Some issues relating to the budget were even raised yesterday at our committee’s evidence session; no doubt some will also be raised at next Tuesday’s meeting.
Concerns over the clarity of Government policy feature highly in this year’s committee reports, with many requesting further work to be carried out to evidence the impact and sustainability of policies such as a growing social security budget. Other reports suggest that overlapping strategies, timelines and documents can hinder effective scrutiny. Across portfolios, committees are looking at whether prioritisation is clearly stated, justified and aligned with the Government’s stated objectives. More information is needed on the trade-offs between the spend that the Government is choosing to protect and the impact that that has on other funding areas. I note that the subjects of skills, climate change and social security have frequently been raised.
The FPA committee’s pre-budget scrutiny builds on the committee’s findings over successive years regarding the Scottish Government’s lack of strategic financial planning against a backdrop of fiscal pressures, including demographic trends. Ahead of the committee’s pre-budget scrutiny this year, the Scottish Fiscal Commission said:
“the Scottish Government will face significant challenges funding devolved public services in the future, particularly over the next twenty-five years … because the population in Scotland will age earlier than in the rest of the UK.”
In June 2025, the medium-term financial strategy confirmed that the gap between funding and resource spending would rise to £2.6 billion by 2029-30. In the shorter term, the Cabinet Secretary for Finance and Local Government warned that “difficult choices” would be needed for the 2026-27 Scottish budget.
There were challenging decisions for the United Kingdom Government in its autumn statement, too. The Office for Budget Responsibility noted that
“the scale and array of risks to the UK fiscal outlook remains daunting.”
In that context, and drawing on the SFC’s April 2025 “Fiscal Sustainability Report”, scrutiny was focused on responding to long-term fiscal pressures. After calling for views over the summer, we received 28 submissions, heard evidence in the autumn and published our report in October 2025. To inform our scrutiny, we visited the advanced manufacturing innovation district Scotland—AMIDS—in Paisley, as well as Vilnius in Lithuania to hear about the excellent futures thinking approach there and about policies on economic growth.
I will highlight some key findings, how they have influenced Government budgetary decisions and where commitments have not been forthcoming. One of our main recommendations was for much greater Government emphasis on longer-term financial planning to start mitigating the impact of future trends. We urge the Scottish Government to provide a full response to the SFC’s 2025 “Fiscal Sustainability Report”, repeating a previous recommendation relating to the SFC’s first such report in 2023.
The Government pointed to specific actions, such as its population strategy and Scotland’s migration service. However, that falls short of committing to produce a full response. Common to other committees, we ask for clarity in future documents on which areas of spending are being prioritised and deprioritised. The Scottish ministers replied that they recognise the need for clarity, explaining:
“Progress is being made to further improve this in our 2026-27 Scottish Budget, including clear references to how prioritised funding delivers the Scottish Government’s four priorities”.
We were not convinced that the Scottish Government has provided sufficient evidence of social security sustainability, and we repeated our calls for a review of the fiscal sustainability of social security spending, asking for outcomes arising from universal payments and services to be reviewed. The committee is unclear from the cabinet secretary’s response whether the Government will undertake that important work, because the response pointed to a previous report, a literature review and the development of its approach to public value.
On public service reform, we asked for a detailed plan on how the Government will meet its high-level targets on efficiencies and workforce, while minimising the impact on public services. We therefore welcome publication, alongside the Scottish budget, of the integrated public sector pay and workforce policy and of portfolio efficiency and reform plans. We look forward to examining those in detail.
An update was sought on progress with work that had previously been asked for in considering the potential benefits, risks and costs of introducing a new preventative spend category of expenditure. The Government’s work in that area is welcome, including the testing of a budget-tagging method for tracking preventative spend across portfolio areas of the budget, with publication of the results planned for summer 2026. I am sure that it will benefit all committees in the next session if they can clearly see where spending on prevention is occurring and making a difference.
The Government’s announcement of an extension to the invest to save fund to support portfolios, public bodies and local government to carry out reform projects is appreciated. Its response is also reassuring in confirming that projects are required to provide six-monthly reports, that outcomes are being monitored and that successes are being shared more widely across the public sector.
Our pre-budget report looked ahead to the Scottish spending review, which was published alongside last week’s budget. During a visit to Estonia in 2024, the committee noted the implementation of zero-based budgeting and asked Scottish ministers to reflect on how such an approach could be delivered in Scotland. We recommended that a zero-based budgeting approach should be taken to the Scottish spending review, and we requested in-depth information on the process for preparing, scrutinising and delivering that. In response, the Government said it already adopts
“the principles of zero-based budgeting”,
and that spending is reviewed in detail throughout the Scottish budget process. However, the Government has not provided the in-depth review process information that was requested.
With the UK Government’s autumn statement being four weeks later than it was in 2024, the timetable for Scottish budget scrutiny has been tighter this year. As a result, our committee agreed to carry out separate sessions on the spending review and the infrastructure delivery plan in February and March, although I expect both of those to be touched on when the Cabinet Secretary for Finance and Local Government gives evidence to the committee on Tuesday. I therefore urge the cabinet secretary to commit, in her closing speech, to providing that information on process in time to inform our spending review scrutiny.
The committee previously expressed concerns regarding recent funding settlements for the college sector, given its key role in developing a skilled workforce and in growing the economy. The uplift in funding for the sector in the Scottish budget is therefore encouraging, and I look forward to hearing more about the sustainability of the further education and higher education sectors from the convener of the Education, Children and Young People Committee later in the debate.
On capital funding, we asked the Government to set out the steps that it will take as part of its investment delivery plan to smooth out the “lumpy” capital budget over time. The Government suggests that
“through careful management of the pipeline, we can ensure a steady stream of investment in the infrastructure needed to deliver ministers’ priorities.”
It also continues to explore revenue finance models to expand capacity for infrastructure investment.
The spending review confirmed that a new £1.5 billion Scottish Government bond programme for infrastructure will launch in 2026-27 to support capital investment and diversify borrowing beyond the UK national loans fund. Our successor committee will want to keep a close eye on that to ensure value for money and the delivery of successful outcomes.
During our visit to Lithuania, the committee was impressed by the country’s approach to collectively developing and implementing Lithuania 2050, which is its national vision for the future. That includes buy-in from all political parties, its Parliament, public bodies and civic society, and a parliamentary committee is monitoring progress towards achieving the agreed national vision. The cabinet secretary told us that she was happy to consider that model, and we have asked for her conclusions by the end of January. We hope that she will look favourably on the approach, and we greatly anticipate receiving her response.
I commend the diligent and effective pre-budget work that has been carried out by committees.
I move,
That the Parliament notes the pre-budget scrutiny undertaken by the Finance and Public Administration Committee, and other parliamentary committees.
15:11
I thank the parliamentary committees and their clerks for the important work that they have undertaken in relation to pre-budget scrutiny.
The Government is committed to building broad support across the chamber, and I view the role of pre-budget scrutiny by parliamentary committees as a vital step in that process. Fiscal sustainability is essential to delivering the Government’s four priorities—eradicating child poverty, growing the economy, tackling the climate emergency and ensuring high-quality sustainable public services.
A sustainable fiscal position relies on having a clear view of the medium term, and not only the decisions that are taken each year. The medium-term financial strategy sets out the multiyear fiscal outlook and associated risks. This year, for the first time, we have complemented it with a fiscal sustainability delivery plan that sets out our approach to managing longer-term pressures.
I thank the cabinet secretary for taking my intervention. Yesterday, the majority of the Finance and Public Administration Committee’s evidence session with the Scottish Fiscal Commission and others dealt with the complexity of the fiscal framework, rather than the budget itself. If I can be cheeky, I will ask two questions. First, does the cabinet secretary have sight of that issue? Secondly, if the people giving evidence to the Finance and Public Administration Committee have an issue with the complexity of the framework, how on earth can other committees deal with it?
I agree with the general point that Michelle Thomson made. The fiscal framework is incredibly complex and needs to be reformed. That is the ask that we have made of the Chief Secretary to the Treasury. I hope that, during the next parliamentary session, we can build a degree of consensus about the need to reform the fiscal framework and, potentially, to simplify it.
I am grateful to the cabinet secretary for taking my intervention. There is a case for some measure of reform. However, the last time that was done, parliamentary scrutiny was left very incomplete because of the timing. It was a very awkward situation for the finance committee at the time, because we did not have the facility to scrutinise what had already been decided.
I have some sympathy with what Liz Smith said. However, what happened was largely outwith my control, because the United Kingdom Government and the Chief Secretary to the Treasury at the time were very insistent on what we would describe as a closed process. It was not ideal, and we were not particularly happy with it either. However, that is a lesson for the future in terms of transparency.
Alongside the MTFS and the fiscal sustainability delivery plan, the Scottish spending review and the infrastructure delivery plan provide the medium-term spending and investment context, giving Parliament greater visibility of strategic priorities. The spending review responds directly to committees’ calls for stability.
Will the member take an intervention?
I will make some progress and will come back after that.
The spending review responds directly to the Finance and Public Administration Committee’s calls for stability, providing multiyear certainty to local government, health boards and social security. It places fiscal sustainability at its core and provides clear links to Government priorities. The portfolio efficiency and reform plans detail how £1.5 billion in cumulative savings will be delivered, freeing up investment in public services. Similarly, the infrastructure delivery pipeline provides sectors with the clarity and confidence that they need for long-term planning by setting out an affordable and deliverable programme of projects alongside future projects. Taken together, those documents strengthen transparency and support more effective scrutiny of long-term choices. I recognise the Finance and Public Administration Committee’s call for stronger long-term financial planning, and I hope that those publications demonstrate our commitment to delivering sustainable public finances.
On public service reform, although those documents set out a clear path for future spending in Scotland against a backdrop of constrained resources and rising demand for public services, reform is essential. Our public service reform strategy, which was published in June last year, included an ambitious £1 billion efficiencies target that focuses on reshaping our public sector workforce so that we have the right number of people in the right roles. That is supported by the integrated pay and workforce policy that was published alongside the budget. The publication reflects the fact that 2026-27 is the second year of the three-year public sector pay policy. The Scottish Government recognises pay policy and workforce management as dual drivers of fiscal sustainability.
On the matter of pay, the Convention of Scottish Local Authorities has estimated that there is a £15 million funding gap in relation to meeting the cost of delivering the real living wage to adult social care workers. That will mean cuts to the service. Will the cabinet secretary clarify whether that is a result of the wrong baseline being used? If so, will that error be corrected?
The funding that is provided is for the real living wage. However, we have said that the national minimum wage, which is a statutory requirement, should be met by employers. We are topping up the funding for the real living wage, but the national living wage is the level of pay that they have to provide. I do not think that that is an unreasonable point to make to employers. They have a legal responsibility to pay that.
A managed reduction in head count will be supported, where appropriate, by intelligent automation to protect and improve front-line services. I know that that is an area of interest to the Finance and Public Administration Committee, which is encouraging the Government to go further in maximising opportunities in artificial intelligence.
In addition to the Finance and Public Administration Committee, other committees have been considering how public service reform can support fiscal sustainability. I know that the Local Government, Housing and Planning Committee focused on the invest to save fund this year, and I hope that it will welcome the budget’s increased investment in it of nearly £30 million. The fund catalyses efficiency, effectiveness and productivity by encouraging projects that will generate savings across the public sector.
We believe that prevention is central to long-term sustainability—a view that the Health, Social Care and Sport Committee shares. Investment now to mitigate the harms of poverty can reduce future demand on acute services and increase participation in the labour market. That is why we are developing a method to identify and track preventive spend through the Scottish budget, with work under way to develop pilots, and first results planned for publication in the summer.
We share the view of the Social Justice and Social Security Committee that prevention plays a critical role in ensuring the long-term sustainability of social security spend. We recognise the risks of increasing demand on public services and believe that investing in a fairer system today can reduce costs in the future. That is why, following the UK Government’s removal of the two-child benefit cap, the budget sets out how the Government will spend every penny of the £126 million that was released this year to keep more Scottish children out of poverty.
We believe that the budget also responds to and aligns with many other recommendations that came through in other committees’ pre-budget scrutiny. I thank the Education, Children and Young People Committee for welcoming the Government’s commitment to engage with the college sector on clarifying future priorities.
The cabinet secretary mentioned the Education, Children and Young People Committee, which I convene, and our views on the discussions with Colleges Scotland. Does she accept that the evidence session that we had today raises serious concerns about how her budget presented the £70 million uplift for Scottish colleges, to the extent that the Scottish Parliament information centre cannot find the figures in the budget document? Today, the Cabinet Secretary for Education and Skills acknowledged that that was not good enough and said that she will go away and look at it.
I acknowledge that Jenny Gilruth has today committed to clarifying the £70 million calculation, but let me be clear, as I am sure that Jenny Gilruth was, that the college sector got £694 million in last year’s budget and this year, it gets £764 million. That is a £70 million increase in core college funding available to the Scottish Funding Council to distribute across the sector, made up of £61.4 million of resource funding and an extra £8.2 million of capital. It is important to be clear about that, but Jenny Gilruth will absolutely come back to the committee on the point about the presentation.
I hope that members of the Education, Children and Young People Committee will welcome the budget’s support for skills through investing £2.4 billion in Scotland’s colleges, universities and skills system and providing capital investment of more than £480 million in key growth sectors over the spending review period through our enterprise agencies.
That investment complements the Government’s commitment to ensure that post-school provision is responsive to Scotland’s strategic skills needs, which is something that I know the Economy and Fair Work Committee has been focusing on. The investment and strategic approach to skills will support economic growth and productivity, as well as tackling poverty, all of which supports fiscal sustainability.
I hope that the Constitution, Europe, External Affairs and Culture Committee will welcome the additional £20 million in 2026-27 for the arts and culture sector through the Creative Scotland multiyear funding programme, with future year funding also committed. That investment strengthens financial stability for cultural organisations across the country, as recommended by the committee.
I trust that, equally, the Criminal Justice Committee will welcome the additional funding for justice organisations to support their delivery of essential front-line services, with the Scottish spending review supporting long-term planning and flexibility by providing indicative budgets.
I share the Net Zero, Energy and Transport Committee’s positive reflections on the development of the climate change taxonomy, which outlines a record of more than £5 billion of climate-positive spend in 2026-27.
Similarly, I welcome the Equalities, Human Rights and Civil Justice Committee’s activities on human rights budgeting. I am pleased that we have continued to strengthen our approach to equality budgeting. On 19 January, we published our first strategic integrated impact assessment.
I am aware that, although the Rural Affairs and Islands Committee did not hold a pre-budget evidence session, the Cabinet Secretary for Rural Affairs, Land Reform and Islands attended the committee today.
As I mentioned at the start of my speech, the Government values the pre-budget scrutiny work that is undertaken by all committees, and I recognise calls to remove challenges to parliamentary scrutiny. There have been unavoidable delays to publications in this parliamentary session, including this year’s budget. The compressed timeline has limited the time that is available for scrutiny, and we support the Finance and Public Administration Committee’s call for the UK Government to consider devolved impacts when setting fiscal event dates.
We also recognise our responsibility to enable effective scrutiny, and we will continue to improve the timing, quality and transparency of our fiscal publications. I hope that members recognise the substantial reforms that the Scottish Government has introduced to the fiscal and budgetary information that is available to Parliament and the public, including through the introduction of the medium-term financial strategy, the creation of the Scottish Fiscal Commission and, more recently, the publication of the fiscal sustainability delivery plan, as well as the package of fiscal documents that were shared with Parliament last week.
I thank the Finance and Public Administration Committee for recognising our progress, specifically on the level of information that is provided in the latest MTFS. I am proud that the budget represents further progress by baselining more than £750 million of level transfers between portfolios, which is a key area of concern for the Finance and Public Administration Committee. The Government is committed to working with Parliament to improve processes so that debates such as today’s enable meaningful cross-chamber engagement and add value.
Will the cabinet secretary take an intervention?
In closing—with apologies to Craig Hoy—we believe that the budget responds to calls for clearer prioritisation and better links between spending measures and outcomes by being explicitly driven by the Government’s four priorities. The budget also recognises the vital role of fiscal sustainability in delivering our ambitions and provides greater fiscal certainty through the spending review and the infrastructure delivery pipeline.
I am proud that the budget has received positive feedback from stakeholders across all areas of our society, which demonstrates that it is a well-balanced offer for Scotland. I welcome members’ views on the budget and look forward to engaging across the Parliament throughout the remainder of the budget bill process.
15:25
I am pleased to speak on behalf of the Criminal Justice Committee, and I thank the Finance and Public Administration Committee for bringing the debate to the chamber.
I thank everyone who works in the criminal justice sector for their commitment and support. We very much appreciate the work that they do, and we recognise the challenges that they face day in, day out. I also thank everyone who gave evidence to inform our budget scrutiny, and our clerks and SPICe colleagues for their support in preparing our report.
Justice impacts everyone; therefore, the importance of having an effective, well-functioning justice system in which the public trusts cannot be overstated. The aim of the committee’s scrutiny is to focus on how sustainable the fiscal situation is for the justice sector. The committee recognises that there are no easy budgetary choices currently facing the Scottish Government. However, it is clear from the evidence that we have taken that the alarm bells are now ringing across Scotland’s criminal justice system.
The justice budget for this year is £4.6 billion. That sounds like a lot of money, and it is, but—for context—it accounts for only 7 per cent of the total Scottish budget. Of the justice budget, 74 per cent, or £3.4 billion, is resource funding, which mostly covers pay and salaries. There is also a significant capital allocation of £643 million. However, taken out of the wider context, those figures mask a significant resource problem, in which, I fear, this budget will start to make only a small dent.
Can the convener say whether any stakeholders have expressed the same concerns that we are seeing across a number of portfolios: that the Scottish Government’s pay policy already looks like it is going to be breached over the cycle and that, in many areas—including, no doubt, in the Scottish Prison Service—there will have to be a real-terms cut in salaries in year 3? How does the convener think that that will go down with those stakeholders who make representations to our committee?
While there was a significant amount of discussion on pay and the impact of pay settlements, I do not recall that the specific point that Mr Hoy raises was part of the discussions that we had in our evidence sessions on the budget.
The committee heard from Police Scotland, the Scottish Fire and Rescue Service, the Scottish Prison Service, the Crown Office and the Scottish Courts and Tribunals Service. We also heard from community justice and third sector organisations working in the restorative justice space. They did not hold back when they told us what society demands of them in 2026, set against the impact that flat-cash funding has had on their organisations for the past three years. They painted a bleak picture; indeed, the justice secretary acknowledged that the warnings from the sector are “stark”.
Of the major justice organisations, only the Crown Office will receive a total settlement of the size that it said that it requires this year. In policing, the chief constable told us of the continuing escalating reporting of mental health-related incidents, alongside an alarming rise in social disorder, violence against the police and online-related crime and cybercrimes. She said that
“More than £2.5 billion ... should be invested back into policing”—[Official Report, Criminal Justice Committee, 5 November 2025; c 26.]
in Scotland, but that policing’s allocation is £1.7 billion for the coming year.
The Scottish Prison Service capital budget is set to grow by £103 million, but that increase is largely to fund the construction of the new HMP Glasgow and HMP Highland.
One of the concerns that is often raised with me by the police is that their capacity is very much used up by shortfalls in other public services, which mean, for example, that police officers have to attend accident and emergency departments or deal with missing persons. What lines of inquiry has the committee followed on that, what evidence has it taken and what assessment has it made of those sorts of pressures that the police face?
I thank Daniel Johnson for his intervention. He makes the point very well. In fact, the Criminal Justice Committee has spent quite a bit of time scrutinising the impact of, for example, mental health-related incidents on policing. Last year, we were told that it was the biggest policing challenge at that time. It is a hard nut to crack, but we will be revisiting it before the end of this parliamentary session.
There may be very limited budget left to address other crucial issues, such as modernisation, maintenance of ageing prisons, digital infrastructure such as drone detection, window grills and body-worn cameras, to name but a few. Severe overcrowding in our prison estate presents a potential challenge flowing from human rights compliance, which, in turn, could increase the risks of future costs in legal proceedings or compensation. There is also the risk of unrest in our prisons, exacerbated by overcrowding and increasing harm caused by substance use. Embedding new practices arising from new legislation—for example, trauma-informed practice—further shines a light on human rights-based budgeting principles.
As members will be aware, there is deep concern about the state of the Scottish Fire and Rescue Service, which now has a capital backlog of around £818 million. Last week, we heard about the enormous risk faced by our firefighters and their families from a lack of decontamination and showering facilities in fire stations. Many firefighters return home from their shift with hazardous particulate fire materials on their bodies and clothes.
The committee is particularly concerned about lack of funding to allow the fire service to respond to the public need. Restructuring what remains of it in order to meet new demands cannot obscure the uncomfortable fact that we first need to ask whether the challenges of climate change, flooding and wildfires mean that we need a larger or a different fire service, building towards funding the necessary structure. Members will be aware of the Scottish Fire and Rescue Service’s reform process that is currently under way, the focus of which is to reconfigure the service in line with the challenges that I have mentioned. Our committee will scrutinise the Scottish Fire and Rescue Service again in February on those challenges.
To conclude, we are hearing stark warnings from across the justice sector that further cuts and efficiency savings are not realistic and that new investment is needed. Aside from the funding for the Crown Office, the budget falls short of what the committee was told was needed. I urge the finance secretary to reconsider the spending review’s funding of the priorities in the vision for justice programme and the three-year delivery plan, particularly for our police, fire and prison services. I welcome the efforts that have been made in this year’s budget settlement, but it is time to respond to the alarm bells from the justice sector, and future budget settlements must do that.
15:33
It is a great pleasure for me to speak on behalf of the Economy and Fair Work Committee. Let me use this more reflective debate to express my thanks to the clerks, and particularly to my fellow committee members. The position that I have assumed was not necessarily expected, but I am very much enjoying it.
I will try to reflect broadly the contributions to the committee. Given that many of my fellow committee members are in the chamber, I invite them to intervene if they think that I could elaborate with further detail.
This is a useful debate, because committees are where we should properly be thinking about fiscal sustainability. I welcome the Finance and Public Administration Committee’s innovation in that regard, although I note that its approach to budgeting for foreign travel has become somewhat looser since I left that committee.
Given the scope of the Economy and Fair Work Committee, and the nature of the economy, many of the things that impact the economy fall outwith the economy budget lines. We reflected on that point this morning at committee when the Deputy First Minister was in front of us. Likewise, many of the time periods in which those things will happen fall outwith a single budget year, so it is perhaps not a surprise that the Economy and Fair Work Committee has focused on the impacts beyond single budget lines and on multiyear funding.
One good example of that is the housing budget, which is not just about housing; it supports jobs and helps local economies to grow. We note that the budget line has seen some changes year to year. We welcome the 19 per cent increase in cash terms, but that is only a 3.4 per cent growth rate over the past five years, given the changes that have occurred. Likewise, we note that, over the past five years, the total number of completions across all sectors has declined. We need to see greater focus on that perspective in the budget.
More broadly, the Economy and Fair Work Committee’s priorities have focused on supporting business, women’s enterprise and skills development. I will make some comments about the enterprise agencies in a moment.
One point to note is that, very often when it comes to economic discussion, the Scottish National Investment Bank is considered something of a catch-all solution to the issues in the economy that members identify. It is welcome that we see a continued increase in capital funding towards the target of £2 billion, but that is a finite total. When we had the Scottish National Investment Bank in front of the committee, one area that we focused on was how the SNIB could achieve the status of a perpetual fund, to allow it to reinvest its capital. If we are going to see sustained and sustainable investment, and see the Scottish National Investment Bank achieve the status that we all want it to achieve, especially given the finite target, we need a vision and we need the plans to be put in place.
On the enterprise agencies, we very much recognise the importance of their work.
Will the member take an intervention?
I am very happy to give way to the deputy convener.
I was a bit slow to get up there, but I want to flip back to the Scottish National Investment Bank. It is important to note that the rules that are applied by the Treasury have now been eased off, so the SNIB can reinvest profits that are made. Daniel Johnson made a point about wider and deeper investment, but it is even wider and deeper still.
The deputy convener makes an excellent point. In a positive step, the committee wrote to the Treasury to ensure that the Scottish National Investment Bank was included in its broad review relating to capital treatment.
We note that the enterprise agencies received something of a tight budget this year, which is not unique. We must consider whether that reflects our broad priorities for the economy. We must also keep challenging the enterprise agencies on whether they are actually focused and taking the right approaches, given their budgets. I think that that starts with reporting. I alluded to that in my intervention on the convener of the Finance and Public Administration Committee. We did not have up-to-date annual reports from each and every one of the agencies—indeed, we struggled to get a clear articulation of how much of their budgets was being spent on running costs, compared with funds that were going out the door, so to speak. We got that information subsequently, having asked for it.
For transparency, we must start with clear and consistent articulation of the fundamentals. Although the enterprise agencies do broadly similar work, they were not consistently reporting their outcomes. We exposed that some of those metrics are based on self-reported measures. There needs to be greater examination of that issue.
Given the changing focus and scope of the enterprise agencies, we were also concerned about the “missing middle” in some areas of the economy when it comes to delivery of support by our enterprise agencies, especially for older, more mature businesses in non-high-growth sectors. Moreover, it is hugely important that we ensure that there is support from our economic agencies for people from all communities who might seek to engage in business, particularly women who are seeking to start and grow businesses.
One key issue that we must highlight is that we received evidence of a huge amount of concern from businesses about rates. We note the 15 per cent rates relief that is in the budget, but that is against the background of a significant revaluation. It was useful to hear reflections from the Deputy First Minister this morning that more work needs to be done on methodology. The methodologies are far from clear and transparent, and there is an on-going question about the role of the valuation boards, which the Deputy First Minister also reflected on.
As the Cabinet Secretary for Finance and Local Government mentioned, we took a good deal of evidence on skills. We reflected on the fact that there is a sense of urgency and need from many industries, and that the agenda for upskilling and reskilling cannot wait. Rather than taking years to reform Skills Development Scotland and other agencies, such reform needs to be urgently brought forward. The changes that are being brought in by technology—
Mr Johnson—
—-and demographics are important. I will close there.
Thank you. We have some time in hand, but we need to share it around. I call Clare Haughey to open on behalf of the Health, Social Care and Sport Committee.
15:40
I refer members to my entry in the register of members’ interests, which states that I hold a bank nurse contract with NHS Greater Glasgow and Clyde.
First and foremost, I offer sincere thanks to all stakeholders who engaged throughout the Health, Social Care and Sport Committee’s budget scrutiny process. I thank the Cabinet Secretary for Health and Social Care, Neil Gray MSP, and his officials for giving evidence and responding to the committee’s subsequent pre-budget report. I also thank the committee clerks for their work in supporting the committee’s members. I look forward to welcoming the cabinet secretary to the committee next week to discuss the budget and its implications for health, social care and sport across Scotland.
Members will be aware that the health and social care portfolio is again a budget priority. It remains the largest budget area in the Scottish budget, with total planned spending in 2026-27 coming to £22.5 billion. As is highlighted in the latest SPICe briefing on the Scottish budget, the health and social care portfolio will grow at a faster rate than any other area of the Scottish budget, at 1.5 per cent in real terms, compared with 0.2 per cent across the budget as a whole.
However, it would be remiss of me not to acknowledge that the health capital budget remains constrained. According to recently published analysis, it is set to fall by 6.6 per cent in real terms. Despite that, the spending review in 2026 also sets out plans for further increases in health and social care spending. The committee welcomes the inclusion in the spending review of indicative health board budgets for a three-year period. Such indicative budgets have long been requested in previous budget letters and reports, and they should go some way towards helping boards with future planning.
On average, the budgets for health boards in 2026-27 are set to increase by 14.5 per cent. However, some of that increase reflects the fact that budget lines that were previously transferred in-year have now been baselined. That said, the committee nonetheless welcomes the additional funding that has been made available to meet the pay settlements that have been agreed for nurses and doctors. The committee commends the efforts on all sides to reach those settlements and avoid widespread industrial action by resident doctors, unlike in England.
The committee also welcomes the additional funding for primary care and community health services, which has increased by 10.1 per cent. That includes the £36 million that has been allocated for walk-in general practitioner clinics.
Furthermore, the mental health budget is increasing by 11.8 per cent, with further mental health spending now baselined in health board budgets. As members may be aware, the Health, Social Care and Sport Committee’s central focus in its pre-budget scrutiny was on mental health spending, and the committee has long raised concerns regarding the transparency of spend in that area. Although the additional investment is welcome, issues regarding transparency and the linking of spending to outcomes remain.
The Scottish Government has stated that NHS boards are expected to spend about £1.5 billion on mental health services in 2025-26. However, it remains impossible to break that down to any granular level of detail on specific services, which is an issue that many stakeholders raised during our pre-budget scrutiny. I am aware that the population health framework and the service renewal framework note that those links will be made clearer. However, I flag that, although the Government’s response to the committee states that it is “committed to improving transparency”, it has not yet given specific examples of how that will be achieved. To that end, the Health, Social Care and Sport Committee awaits a detailed plan as to how improvements in that area will be implemented, and it stands ready to assist where necessary.
Another interesting point that was raised during the Health, Social Care and Sport Committee’s inquiry was the tension between revenue and capital. However, how preventative spend could better achieve goals might be another factor that the Government considers when trying to balance the challenges on expenditure.
Mr Sweeney must have been reading my speech, because I am about to come on to the issue of preventative spend.
There are also similar challenges in relation to the social care budget. Although the committee welcomes the additional funding of £471 million that is identified in the budget, it remains difficult to get an overall picture of planned social care spending for 2026-27.
There is some clarity on future budgets for health boards, but the same multiyear planning is not set out for social care, which the committee and stakeholders have been highlighting as an issue for some time.
Does the member accept that the £400 million-plus figure that she quoted for social care will be spent entirely on salaries, and that there is very little for services? COSLA has estimated that it needs £750 million to ensure that social care continues to be provided in our communities.
I wish that the member had been as vociferous in her complaints about the increases to employer national insurance contributions that her Westminster colleagues have imposed on social care providers, which have caused huge issues across health and social care.
Similarly, the committee argued in its pre-budget report that there needs to be a clearer definition of what constitutes preventative spend and that the level of resources that are currently assigned to preventative activities needs to be identified. Although that information has not been provided, the committee nonetheless welcomes the response from the Government and the references to on-going work in that area to tag spending and enable tracking, and looks forward to seeing the initial outputs of that work.
On preventative spend, the committee welcomes the strong uplift for sportscotland and the active, healthy lives budget line, with planned spending in those areas set to double in 2026-27. The importance of physical activity has been a common theme throughout the committee’s work during this session of Parliament, and I cannot overstate the positive impact that it has on individuals of all age groups, from both a physical health and a mental health point of view.
That said, the committee seeks reassurance as to whether those levels of spending will be maintained in 2026-27. With major sporting events happening this year, such as Glasgow hosting the Commonwealth games and Scotland reaching the men’s FIFA world cup finals, it is vital that we harness the momentum that the events will bring and ensure that there continues to be adequate funding for sport and physical activity for future generations.
The additional investment for the health and social care portfolio that is contained in the budget is most welcome, particularly in the light of the immense challenges that the sector faces. However, it remains of paramount importance that we can efficiently track spending in those areas. It is the view of the committee and, I believe, across the chamber that there is more to do to improve transparency in spending decisions. It is only by making such progress that we can make the best use of the budget to ultimately improve the health and wellbeing of the people of Scotland.
15:48
I welcome the opportunity to contribute to the debate on behalf of the Rural Affairs and Islands Committee. Unfortunately, as the cabinet secretary said, our committee has not carried out pre-budget scrutiny this year due to time pressures on our work programme. However, we met the Cabinet Secretary for Rural Affairs, Land Reform and Islands this morning.
I plan to focus my remarks on some of the key budget announcements in the rural affairs portfolio, beginning with some of the headline figures. The rural affairs portfolio settlement is £1.2 billion in this year’s draft budget. According to independent analysis that was carried out by SPICe, that represents a 3.5 per cent real-terms cut compared with the 2025-26 autumn budget revision. That cut follows previous cuts to the portfolio’s funding in last year’s budget.
Although I understand why the Scottish Government is keen to emphasise the importance of fiscal sustainability when making its decisions on the budget, I am concerned that, when budgets are tight, the Government seems to go to this portfolio first in order to find savings. For at least the previous two budgets, it has been the only portfolio to see a real-terms reduction in budget, despite increasing pressure on rural areas to deliver on the Scottish Government’s climate and biodiversity targets.
I will turn to some of the specific budget lines. The SPICe budget briefing notes that the funding allocations for major agricultural payment schemes continue to be broadly frozen in cash terms. The £26 million in capital funding for the agricultural modernisation fund is a welcome development, and I look forward to hearing more about future spending plans for that funding. However, it is important to note that that is not additional funding; the £26 million that was taken from the ring-fenced budget in previous years is being returned.
A more welcome development in the draft budget is the increase in funding for the Crofting Commission. In its stage 1 report on the Crofting and Scottish Land Court Bill, the committee made it clear that an adequately resourced Crofting Commission, capable of effectively enforcing crofters’ duties, is essential to a healthy, thriving and sustainable crofting community. The additional funding will go some way towards ensuring that the commission has the tools to deliver on that promise.
On fisheries, the draft budget provides a settlement of £79.3 million for the marine directorate. That is the same settlement, in cash terms, as was provided last year, so that equates to a £1.7 million decrease in real terms. That means that the marine directorate’s budget has decreased in real terms for the third consecutive year.
Last year, the committee focused our pre-budget scrutiny on the marine directorate. As part of that work, we visited the directorate’s Aberdeen laboratories. The committee was concerned by the poor condition of the facilities and the impact that that was having on the scientists’ ability to carry out important science to inform fisheries management. We recommended that the Scottish Government prioritise a long-term solution to enable the restoration and modernisation of the facilities as a matter of urgency. Given that the site is in much need of upgrades and replacements and that there is a budget commitment to fisheries modernisation, it is disappointing that the marine directorate’s capital budget has been cut by £900,000 in real terms.
We were informed this morning that some capital work will be funded through the Scottish Government’s capital budget. Although there are no suggestions that it is a deliberate policy, there continues to be concern about the transparency of budget spending in relation to the marine directorate. I note that the Scottish Government has increased the marine fund Scotland by £2.1 million, which it says will support the delivery of outcomes for Scotland’s blue economy vision.
On forestry, the draft budget includes an increase in spending on woodland creation to support efforts to reduce carbon emissions in the land-use sector. The committee has heard consistently throughout our scrutiny of the draft climate change plan that public funding in the forestry sector could, if it is deployed effectively, help to crowd in additional private investment in the workforce and in the equipment that Scotland needs to achieve our climate and biodiversity goals. However, the budget for woodland creation still falls short of the budget in 2023-24, before large cuts were made the following year.
The draft budget allocates £7.1 million for support for our island communities, which represents a 13 per cent cut in funding compared with the funding that was provided in the 2025-26 autumn budget revision.
It is important to recognise that, alongside the islands plan, there will be three accelerator deals for Shetland, Orkney and the Western Isles. Those deals, which involve our supporting their borrowing capacity, have the potential to lever in hundreds of millions of pounds, so they must be considered alongside the money in the islands plan.
The 13 per cent cut includes a reduction in capital funding for both carbon-neutral islands and islands plan budgets. I am unclear how those cuts will help to deliver the ambitious commitments that the Scottish Government has made to our island communities, but I take on board what the cabinet secretary has said.
I think that it is fair to say that this year’s draft budget brings both good and bad news for people who live and work in rural communities. I hope that the Scottish Government will reflect on what I have said as the budget process continues, because I am sure that I speak for all committee members when I say that we want the Scottish Government to deliver a budget that is fit for purpose and enables our rural communities to thrive and prosper.
15:54
I welcome the opportunity to contribute to the debate as the chair of the Scottish Commission for Public Audit.
One of the commission’s main roles is to scrutinise Audit Scotland’s budget proposals and report to the Parliament on them. On Monday, we published our report on Audit Scotland’s budget proposal for 2026-27. Audit Scotland’s budget comes from two sources. It estimates that the fees that it charges to audited bodies will provide 62 per cent of its budget for 2026-27, and the remaining 38 per cent, which amounts to £16,207,000, will require to be funded from the Scottish consolidated fund.
Although that represents an 8.2 per cent increase in the funding required from the Scottish consolidated fund, equating to an additional £1,224,000, the budget proposal for 2026-27 includes one-off costs of £878,000 related to a project to modernise the approach to public audit. The underlying and recurring increase in funding from the Scottish consolidated fund is therefore £346,000, or 2.6 per cent. The budget will support the delivery of audits of around 230 public bodies, 30 performance audits and continued investment in audit modernisation.
Audit Scotland said that its budget proposal has been prepared in the context of significant cost pressures and operational risks. It underlined, among other risks, future audit procurement costs and a pay award yet to be agreed. We have asked to be kept updated should any of those risks materialise.
The overarching theme of the debate is fiscal sustainability. Throughout this parliamentary session, the commission’s enhanced scrutiny of Audit Scotland’s budget proposals has been central to strengthening the fiscal transparency required for sustainable public finances. By seeking greater clarity on Covid-19-related funding, proposed audit fee increases and the resources allocated to support the Accounts Commission, we have ensured that budget proposals contain the level of detail needed to assess their long-term affordability and sustainability.
Across the session, we also asked Audit Scotland for greater financial planning to allow year-on-year comparison. A detailed business case was sought for the audit modernisation project to ensure that investment decisions were grounded in evidence of long-term value. In addition, we strengthened our challenge function by holding extra informal meetings to explore financial assumptions in greater depth. Those actions have ensured that Audit Scotland has generated the comprehensive financial information needed to support informed judgments about fiscal sustainability.
The commission also sought clearer evidence on how efficiency savings are achieved and underspends avoided. Audit Scotland identified in the 2026-27 budget £2,135,000 in efficiency savings. Those savings represent 5.2 per cent of its overall budget and arise from a range of measures, including a 5 per cent vacancy factor and reductions in staffing numbers and property costs. The commission has rightly explored whether those savings contribute to fiscal sustainability, given that the largest elements, such as the vacancy factor and reductions in staffing, are non-recurring. Non-recurring savings can help to address short-term budget pressures, but they do not strengthen the underlying financial position. That creates a challenge, as achieving savings of a similar scale in future years may require new measures. Of the £2,135,000 in efficiency savings identified, only the reduction in property costs of £220,000 is recurring, meaning that just a small proportion of the savings improves the baseline financial position year on year.
In our report, we noted that that is a challenge faced across the public sector. We also recognised that the public sector reform process may make delivering public audit more challenging for Audit Scotland—for example, if there are delays in public bodies’ readiness to be audited, or if public bodies are merged, created or closed.
The final allocation rests with the Scottish Government, but I highlight our conclusion that we are, on balance, content with Audit Scotland’s 2026-27 budget proposal of £16,207,000.
I call Clare Adamson, who joins us remotely.
15:58
Thank you very much, Presiding Officer.
I am sorry to interrupt, Ms Adamson, but could you please put your camera on?
Thank you. Please continue.
My apologies, Presiding Officer.
I welcome the opportunity to speak today on behalf of the Constitution, Europe, External Affairs and Culture Committee. The committee adopted a cumulative approach to budget scrutiny over session 6. Consequently, our most recent budget report examines the current fiscal context, as well as evidence that we have received throughout the session. We have heard from the culture sector about the perfect storm of the impacts of Covid, budget pressures and reduced income, while participation and operating costs have also been challenging to the sector. On behalf of the committee, I extend my thanks to all those who provided evidence for their time and contributions, and to the clerks and SPICe for their support.
Before I proceed, I note that there was some disappointment that the Scottish Government’s response to the committee’s report was not received until after 6 o’clock last night, and that many of the questions that were asked in our pre-budget scrutiny have not as yet been answered. We will explore those issues further with the Cabinet Secretary for Constitution, External Affairs and Culture when we take evidence from him on the budget in a couple of weeks.
On the fiscal context for the culture and heritage sector, as is outlined in our report, we continue to welcome the Scottish Government’s commitment to increase funding for the sector by £100 million per year by 2028-29. As part of that commitment, culture funding was expected to increase by £20 million in 2026-27, and I note that that uplift had been included in the draft budget that was published earlier this month. I assure the cabinet secretary that that is welcome. However, despite additional funding, the culture sector remains under significant pressure. Witnesses have highlighted to the committee that the uplift in culture spend may, to some degree, be being used to help the sector to meet the on-going pressures of increased costs and falling participation, rather than going towards generating improved cultural outcomes.
Our report asked that COSLA and the Scottish Government respond to concerns that increased funding for the sector
“may be being offset by funding reductions by local government.”
Additionally, we requested that the Scottish Government respond to concerns about disparities in the provision of cultural services across Scotland. COSLA has stated that the increased culture budget has not benefited local authorities. It noted that local government has seen reduced funding and highlighted that there are increasing levels of ring-fenced and directed funding.
That makes it difficult to see how our ask for plans to support greater collaboration between partnerships across the Government and local authorities can be met. The Government did not respond to our request for it to set out how issues around local government culture funding and potential disparities in culture provision and access might be addressed.
We have asked the Scottish Government how it is addressing the skills shortages that are being faced by the historic environment sector in particular. We hope that that can be addressed in collaboration with the education system and the revision to apprenticeships that was contained in the Tertiary Education and Training (Funding and Governance) (Scotland) Bill, which was passed yesterday.
We would also like further information about how the upcoming spending review can consider a capital programme for the heritage sector to support the upkeep of cultural assets.
Throughout session 6, the committee has heard calls for greater provision of multiyear funding. We welcome the expansion of Creative Scotland’s multiyear funding programme, recognising the improved stability and confidence that that provides to the organisations that it supports. Given the programme’s progress and success, witnesses emphasised that multiyear funding should be expanded to a greater variety of cultural organisations. We have pressed the Scottish Government on its 2021 commitment and are hoping that the number of three-year funding settlements for directly funded organisations can increase.
We had concerns around strategic approaches to funding decisions. We welcome the Scottish Government’s response to our report, which recognises on-going calls for consideration and transparency around the strategic use of additional funding. We await its response to our request to set out what progress has been made towards adopting a strategic approach to funding over session 6.
Our report included several additional questions and recommendations to the Scottish Government in the area of culture. We need an urgent update on the delivery of the culture strategy action plan and an on-going review of the culture sector and Creative Scotland.
We also would like a clear set of metrics to assess the impact of cultural spend. We suggested that the on-going review of the national performance framework could offer an opportunity to increase budget alignment, particularly across portfolios, to achieve a more strategic approach to meeting goals.
Could you bring your remarks to a conclusion, Ms Adamson?
I will do, Presiding Officer. My apologies—it is difficult to time my speech at home.
We will take up several outstanding questions with the cabinet secretary. However, we welcome the progress towards the £100 million of additional funding for the culture sector, as delivered in the draft budget.
I call Edward Mountain to speak on behalf of the Net Zero, Energy and Transport Committee.
16:06
I will not spend much of my speech talking about this or that line of spending in the net zero, energy and transport portfolios or about this year’s direction of travel. There will be an opportunity for the committee to consider those matters when it takes evidence from the Cabinet Secretary for Net Zero, Energy and Transport next month. At those sessions, the committee will jointly consider the 2026-27 budget and the draft climate change plan—it makes sense to do so, because it is clear that the committee must read across those documents, from one to the other.
I will reflect on the extent to which what we might call net zero thinking has been fully embedded in the budget-setting process. Let us be clear that public confidence about Scotland’s net zero momentum and direction of travel has clearly been dented in this parliamentary session. One way for the Scottish Government to restore that confidence is for it to more convincingly show its workings on how it expects to achieve its spending decisions to drive emissions downwards.
The Net Zero, Energy and Transport Committee’s pre-budget representations were about the joint budget review, which was set up at the end of the previous session of Parliament to improve budget information on climate change and increase alignment between budgets and the climate change plan.
I do not need to remind everyone—but I will, because people might have forgotten—that that work had three main strands. The first was to include in each annual budget a climate change assessment narrative—an overview of the impact of spending decisions on the climate. That was an opportunity for the Government to go beyond the narrow confines of the balance sheet and to explain, for example, how second-order outcomes of the headline spend could have an impact on emissions and on the private finance that is needed for particular policies and projects that are linked to net zero—not in a vague and aspirational way, but by setting out concrete actions and any relevant modelling or estimates.
The second strand was a so-called taxonomy approach for budget spend lines, which the cabinet secretary mentioned, that would set out how those spend lines do or do not align with emissions reduction goals. The Scottish Government embarked on that approach in this session with a rather simple traffic light system, but it has undertaken to “deepen”—its word—the taxonomy and to expand its coverage to make it more useful.
The third strand was the development of a net zero assessment—a process to evaluate the climate impact of policies and their associated budgets early in the policy development stage.
In other words, I take that process to be somewhere upstream of budget setting and a process that might even, in some cases, filter out projects or policies that are simply too costly—to borrow a word from finance—with regard to their carbon output to go anywhere near the final budget.
In that connection, I remind the Parliament that what we are discussing today is not the only budget that the Parliament has to monitor. We are expressly bound to a carbon budget, with a spending limit of no more than 175 million tonnes of CO2 between 1 January this year and the end of 2031.
Turning back to the budget that we are debating, the Net Zero, Energy and Transport Committee has not yet collectively considered the 2026-27 offering, so I will be careful when I express a view. I simply say that, although the committee welcomes the start that the Scottish Government has made during this parliamentary session on implementing the three key recommendations of the joint budget review, the momentum needs to be kept up. I am not sure that I have seen much momentum this year on those three strands.
My concern is compounded by what I see as a lack of rigour in how the draft climate change plan sets out financial costs and benefits. I stress that that is a personal view, not a committee view, but it is shared by some of the experts we have heard from. For instance, the Auditor General found the costs in the draft climate change plan to be vague. He said that the plan
“includes limited information on how the cost estimates were calculated and what assumptions underpin them, and it recognises that there is significant uncertainty associated with many of the estimates.”
Will the member take an intervention?
Will I get my time back if I give way, Deputy Presiding Officer?
I will give you some of the time back.
At both of the committees that I sit on, I have mentioned several times the Scottish Fiscal Commission’s fiscal sustainability perspectives report. The reason that I have often asked about that is to check the knowledge and understanding of it. Fundamentally, that report makes it clear that Scotland cannot get to net zero because of the anticipated finance under the terms of the current fiscal framework and because of the critical dependency on fiscal transfers. Is your committee aware of that report from a financial perspective?
Always speak through the chair.
The Net Zero, Energy and Transport Committee certainly considers all the costs, and we have considered the implications. The climate change plan has been drawn up by the Scottish Government, which has put some fairly opaque costings and savings in it. It is for us to drill down into those, and I am sure that we will bear in mind the point that the member made.
This debate is about fiscal sustainability, but I will end by talking about parliamentary sustainability, by which I mean the doggedness that the Parliament needs in order to see things through to the end. It means holding on to institutional memory while individual parliamentarians come and go. I will not be here in May, but others who are listening to the debate will be. Whoever forms the next Government, it will be up to the members of the next Scottish Parliament to hold them to account on delivery of the joint budget review on climate change. There is still quite a way to go on that.
16:13
I am pleased to contribute on behalf of the Social Justice and Social Security Committee to the debate on the Scottish Government’s budget for 2026-27. I thank all those who engaged with our pre-budget consultation and provided oral evidence, and I thank the cabinet secretary for responding to our report. I also thank the clerks to the committee for their continued support throughout the process.
The Social Justice and Social Security Committee considered the affordability of Scotland’s social security system, the Scottish Government’s plans to fund the level of spending that it had forecast, the benefits of the increase in social security spending and how that compares with other budget priorities. We also considered whether specific benefits, such as the Scottish child payment and the adult disability payment, could be adapted. The cabinet secretary has confirmed the reduction in the additional amount that the Scottish Government will need to invest in social security assistance over and above the relevant block grant adjustments.
The cabinet secretary does not believe that spending levels for social security are unsustainable. However, the Fraser of Allander Institute told us that, despite that, the nature of social security expenditure still means that it can be less predictable and more volatile than other forms of spend.
We heard that, as benefits are demand led, the only ways to reduce costs are by limiting eligibility or by reducing the need for social security in the first place. That could be achieved by improving people’s health and wellbeing, for example. The Health and Social Care Alliance Scotland—the ALLIANCE—suggested Scotland’s health and population framework as a potential avenue for that.
Both the Scottish child payment and the adult disability payment were discussed extensively by stakeholders, given the proportion of spend that they account for, as well as the impacts that those payments have on people’s lives.
We were told at the Finance and Public Administration Committee yesterday that the proportion of people who are being accepted for claims has in fact reduced. It used to be about half; now it is only about a third. Is that having an impact on the costs?
Judging from the evidence that we have taken at the Social Justice and Social Security Committee, there is still insufficient data being provided. It is timely that Social Security Scotland representatives are attending our committee meeting tomorrow, so we will follow up on that information to see how effective the payments are in terms of people’s lives. I thank John Mason for that.
The forecast increase in social security payments for carers was described as significant. The Scottish child payment is widely supported among stakeholders for the role that it plays in reducing child poverty. We note the announcement that the payment will be increased to £40 for babies under the age of one from 2027-28. We also heard that the Scottish Government would have increased flexibility over the design of the payment if it were to become a form of childhood assistance as opposed to a top-up to universal credit. We asked the Scottish Government what scope there is for that, and we welcome the cabinet secretary’s confirmation that the Scottish Government is committed to reviewing the legislative footing on which the Scottish child payment is based.
We considered how the Scottish Government intends to spend the money that was allocated to mitigating the two-child limit, given that the UK Government has now withdrawn that policy. We welcome the confirmation from the cabinet secretary that the money will be invested in other initiatives to tackle poverty, including through additional funding for the Scottish welfare fund, Children First and Aberlour Children’s Charity, alongside a £49 million boost to the tackling child poverty fund.
We heard that crucial data that could inform policy for adult disability payment is lacking. Edel Harris OBE, chair of the independent review of adult disability payment, told us that there is not enough information on the impact of ADP on people’s lives, nor is there enough data on the number of disabled people in Scotland.
Data on what is driving demand for adult disability payment is vital to inform future spending. We are therefore pleased that the Scottish Government has confirmed that it will publish information on that by the end of next month. The impact of giving people cash payments versus improving public service provision needs to be properly evaluated if money is to be spent as effectively as possible. We welcome the Scottish Government’s confirmation that more analysis is needed and that that will be considered during the development of the third tackling child poverty delivery plan.
We also heard evidence about specific changes that could be made to improve people’s circumstances. Increased funding for advice services and improving the take-up of existing benefits were mentioned, especially in relation to pension credit, which can be a passport to other devolved support.
The relationship between universal and targeted benefits was raised in evidence, and I note the cabinet secretary’s confirmation that the Scottish Government has no plans to remove any benefits or entitlements from people.
We were pleased to hear that the Scottish Government’s chief statistician is working with the UK data-sharing team to streamline data-sharing processes in order to improve access to data about Scotland.
16:20
I am pleased to take part in the debate on behalf of the Local Government, Housing and Planning Committee.
Public service reform forms the first pillar of the fiscal sustainability delivery plan, and it was the focus of the committee’s pre-budget scrutiny. In particular, we looked at the invest to save fund, a £30 million pot that is aimed at supporting public sector efficiency projects.
During the conclusion to my speech in the debate last year, I noted that the committee agreed on the urgent need for transformational change in councils and expressed hope that, when I stood up today, I would be able to reflect on concrete evidence of a decisive shift towards preventing poor outcomes instead of having to deal with their consequences.
I welcomed the Scottish Government’s recognition of the need for that change. It had the opportunity to demonstrate that further when the public service reform strategy was published in June 2025. The strategy sets out commitments to changing the system of public services, based on three principles: prevention, joined-up services and efficiencies.
Local government has taken an active role in driving change. There are various organisations, professional networks and initiatives to support individual councils, and we were pleased to hear of many great examples of transformation projects and collaboration.
We called on the Scottish Government to address potential barriers to such projects, including workforce capacity, morale, resilience, leadership and lack of data. Two of the most prominent barriers were the lack of multiyear settlements and the high cost of initial action, which the invest to save fund sought to address.
Multiyear funding certainty is a long-held ambition of local government. The Scottish spending review, which was published alongside the Scottish budget, provides resource spending plans up to 2028-29 and capital spending plans up to 2029-30. Although that is welcome, it suggests that there will not be increases in local authority funding across the next three years. However, the cabinet secretary told the committee yesterday that we could expect the initial estimates in the spending review to change.
We welcomed the invest to save funding and recommended that the Scottish Government consider increasing the fund. Although the fiscal sustainability delivery plan recognises that
“releasing efficiencies often requires initial investment”,
the invest to save fund remains at £30 million in this year’s budget.
Our recommendation of the continuation and extension of the fund was in the context of some of the other suggested improvements. We thought that the fund could better incentivise collaboration between different parts of the public sector, and we asked the Scottish Government to consider how the fund could be accessed across local authorities without a bidding process. The response from the Scottish Government to our letter comments on our recommendation that the funding should continue, but not on our suggestions for improvement. I hope that, in her concluding remarks, the cabinet secretary will take the opportunity to provide the Scottish Government’s view on those proposals.
I will move on to funding for local government more generally. Although there has been real-terms growth in local government budget settlements in recent years, the overall financial situation of local government looks challenging. A primary factor is the significant increase in demand, particularly in areas of education and social care.
Although there has been a real-terms increase in overall revenue funding for local authorities, it falls short—by almost £1 billion—of what COSLA suggested was required. The capital allocation to local government is also reduced in the budget.
That leads me to how COSLA and the Scottish Government worked together in the development of the budget. Last year, I set out that it was pleasing to see evidence of a broader consensus between the spheres of government on the budget.
The much-anticipated fiscal framework between COSLA and the Scottish Government was published in October and, in evidence to us, COSLA was broadly positive about progress on that.
We can see from the recent budget a continuing reduction in the use of ring fencing by the Scottish Government. Around 7 per cent of the total revenue allocation to local government next year will be either ring fenced or transferred in-year from other portfolios. That is down from 18 per cent before the Verity house agreement was signed.
In conclusion, I will return to whether I was right to be optimistic in my concluding remarks last year. As I said, the fiscal sustainability delivery plan identifies that
“releasing efficiencies often requires initial investment”.
The continuation of the invest to save fund can, I hope, encourage and support continued transformation in local government. However, there is room for improvement. Access to that funding must be more flexible to suit the needs of local government. It is not yet clear whether the current funding that is provided to local authorities, or that is available through the invest to save fund, will allow them to realise ambitions for transformation and the public service reform strategy.
16:25
I am speaking on behalf of the Education, Children and Young People Committee, and I thank the committee members, the clerks, SPICe and our stakeholders, who all got involved in pre-budget scrutiny.
However, what I will say next I say not as convener of the committee, but as someone who is now sitting through a budget debate as a convener for the second time: it does not work. In my humble opinion, this is not a good use of parliamentary time. Ross Greer agreed with that last year—I do not know whether that is the reason why he is not here this year. He said, as a Finance and Public Administration Committee member, that it did not really work.
I accept that Mr Gibson and the committee have tried to change the process slightly by having a focus on fiscal sustainability, but I do not honestly think that anyone watching this debate would think that it has been a particularly good use—
No one is watching.
Yes—as Mr Hoy says, probably no one is watching.
Would Mr Ross agree that one area where we could improve things would be to have a finance bill process, whereby everybody who wanted to pitch into budget discussions could do so?
I agree with that suggestion. I also have another alternative, which I was just thinking about as I sat here, not particularly motivated by the debate. Is there an opportunity for either the Finance and Public Administration Committee or the Conveners Group to arrange for all the committee conveners to question the finance secretary, as we do with the First Minister and as the committee members will have questioned her?
The point is that this process is not working. We are having six-minute speeches from every committee and we are not really having a debate. We have an opening speech from the cabinet secretary and a closing speech from the minister in which, if we are lucky, they might touch on one or two points that we have made.
Will the member take an intervention?
I have not even got to the script that my clerks wrote for me; my point is that, in my personal view, this is not working.
I could not agree more. I completely agree with the statements that you are making, and I am sure that they will be picked up elsewhere. However, one important consideration is that the Finance and Public Administration Committee has worked very hard to encourage all the other committees to look carefully and closely at finance. We have found that people are almost saying, “It has nothing to do with us.” A case in point is that your committee was not sighted on a very important fiscal report. Of course, I appreciate that that will be up to the clerks, but I would like the member to reflect on that.
Again, always speak through the chair.
I will reflect on it, but I am in a slightly different position. In Mr Greer and Mr Mason, I have had two members of my committee who were also assiduous members of the Finance and Public Administration Committee—I now have just one, as Mr Greer has left that committee. As convener, I certainly felt that that helped, because we had robust questioning on the finance elements of many of the issues that came forward.
Will the member take an intervention?
I am two and a half minutes in and I have not even started my prepared speech yet, but I will give way to Mr Gibson.
I will try to be brief. One of the things that the Finance and Public Administration Committee has agreed and got some buy-in from the Parliament on is the idea of having a programme of fiscal literacy, not just for new MSPs but for all MSPs and ministers in the next session of Parliament. Do you feel that that would be beneficial?
Again, please speak through the chair.
I absolutely do feel that it would be beneficial, and that allows me to get into the points that I am keen to raise on behalf of the committee.
For our pre-budget scrutiny, we focused on the long-term sustainability of funding for colleges and universities. The challenges that those sectors face are significant, and it is imperative that we act decisively to secure their future.
The budget scrutiny for this year is built on themes that are similar to those that we have raised in previous years. That shows that this is an on-going problem. In fact, for our colleges and universities, the problem is only getting worse and more acute.
I will begin with colleges—although perhaps I should say that I will end with colleges, because I have taken up my time on other things. Throughout this parliamentary session, the committee has focused to a considerable extent on colleges, and we have repeatedly raised concerns about the extent and impact of the financial challenges that colleges are facing. Many of our colleges are having to deal with immense financial pressures, with a 20 per cent real-terms reduction in funding between 2021-22 and 2025-26.
The SFC said in a 2025 report that, by 2027-28, the sector is expected to face a negative cash balance, with 12 colleges forecasting cash deficits. The report concluded:
“These forecasts show that most colleges are not sustainable.”
That is a stark warning that the Parliament, this Government and future Governments cannot ignore.
In relation to Mr Gibson’s point about additional training, be it for MSPs or for Government, I want to highlight—as I think Mr Mason might also do in his remarks—the point that I made in my intervention on the finance secretary. On budget day, the finance secretary announced a 10 per cent increase in funding for colleges, which is equivalent to an extra £70 million in 2026-27. However, that specific figure simply cannot be replicated from any of the published budget figures, which leads to considerable confusion.
The Scottish Government provided additional information to SPICe, setting out that the 10 per cent increase is, in fact, based on excluding capital funding for the Dunfermline learning campus—a spend of £30.3 million in 2025-26, falling to £1.1 million in 2026-27. That is important, because individual capital projects are usually included in the net college capital total.
At today’s committee, our member who is also on the Finance and Public Administration Committee rigorously questioned the education secretary and officials. Jenny Gilruth acknowledged that the figure of a £70 million increase cannot be found in the published budget and said that the Scottish Government needs to reflect on that and on how it communicates any extra funding that it puts in as a Government. She undertook to write to the committee following her evidence.
Earlier, in responding to my intervention, the finance secretary said that it is really important to be clear. It is, because there is a lack of clarity. Our committee took up some of our time today in our budget scrutiny trying to understand a point that the Government thinks is clear when it absolutely is not clear in the budget documents.
I was going to say a lot more on colleges and universities, but I will use that one example as a plea to the Government to make the budget clear and readable and absolutely obvious to everyone who looks at it. If SPICe cannot work something out and the Scottish Government is struggling, and if John Mason has a problem, we should all have a problem. If he cannot find a figure in a budget document, it is almost certainly not there.
The committee has looked at considerable issues over the past few months and years, and we will continue to look at them over the remaining weeks and months of this parliamentary session. I welcome the opportunity to raise those issues in the chamber today, but I think that, going forward, there might be alternative ways of doing so.
We move to the open debate. I advise members that we have exhausted all the time that we had in hand, so I will have to be pretty strict with the speaking time allocations, which are of four minutes during the open debate.
16:32
I thank Douglas Ross for bringing the debate alive. I will try to keep it up, even though we are now back to the Finance and Public Administration Committee.
We have long laboured the point that we need a sustainable fiscal environment in Scotland, and we have consistently said that we need better-quality data, combined with more transparency from Government. That point came through loud and clear yesterday in our session with the Scottish Fiscal Commission. We also heard evidence that the Scottish Government is operating in an environment in which the lack of consideration from the UK Government meant that the Scottish Government was given little time to incorporate UK budgetary decisions into its process. We are at this point now because of the late UK Government budget.
We also have to operate within a UK tax system that is hugely complicated—we heard yesterday that there are more than 1,000 tax reliefs—and we have heard much comment in the debate today that we are living with a fiscal framework that is, frankly, not fit for purpose. I do not say that as a political statement. When I listen to what is happening in the process and hear about the additional spend and effort that are required to get to understanding and effective monitoring and measuring of spend, I know that we have a problem.
I will make a few remarks on productivity. We know that the recent forecasts have not been encouraging. At the recent UK budget, the OBR downgraded its central forecast of productivity growth to just 1 per cent, and the SFC has downgraded its forecast of trend productivity to 0.9 per cent. I reiterate—as I have done every year when I have spoken in the budget debate—the importance of productivity growth. I note the comments from the Institute for Fiscal Studies, which says that we need “heroic improvements in productivity”.
We know that multiple factors affect productivity, and I will make some brief remarks on two areas are affected by the budget: one in which productivity is constrained, and another that is encouraging productivity.
On the positive side, I go back to some remarks that we heard earlier. Increased investment in the college sector and skills is hugely welcome, but I add my voice to the voices of those who have talked about a lack of clarity around that. Is it £70 million or is it £40 million? Nevertheless, it is a critical area for enhancing labour market productivity. As we go forward, we need a focus on skills needs, particularly in the social care sector as a result of UK Government visa restrictions, as well as digital upskilling and management skills.
On the less positive side, some of the devolved taxes act as a barrier to productivity growth, partly due to the limited range of taxes that are under the Scottish Government’s control. For example, the land and buildings transaction tax makes it harder for people to move to get jobs or for businesses to get better premises, which harms productivity growth. I appreciate that the limited flexibility that the Scottish Government is afforded by the few devolved tax powers that it has makes that difficult, but I was pleased to see no further increases this year.
I want to raise another issue that is too often ignored. It is perfectly understandable—I suspect that we will do this next—that all parties argue for their spending priorities. However, I think that it was Liz Smith who said in committee that we also need to consider which areas can be deprioritised. Where we move resources from is as important as where we move resources to. If we do not tackle areas for deprioritisation, our landscape will become increasingly cluttered—where have we heard that before?—and we will increasingly call on one-off opportunities such as the revenues from ScotWind to fill revenue gaps instead of investing in the future.
16:37
I thank the convener of the Finance and Public Administration Committee for his efforts to make this debate more interesting than last year’s debate was. However, to echo Douglas Ross’s remarks, I fear that, for conveners, this debate has become the parliamentary equivalent of the last day at school, when children are allowed to bring Kerplunk or their gerbil along. It may be interesting for them and for some others but, ultimately, it is unproductive. I am not certain that it is a good use of parliamentary time, particularly in the late stages of this session of Parliament.
This debate was meant to be about fiscal sustainability, but when I heard the minister mention those words, I did not get any sense that there is a real and coherent strategy to deal with the £5 billion budget black hole that she is set to leave behind. Fiscal sustainability is meant to balance revenue and spending over time and not to burden future generations, nor future finance ministers, with an imbalanced budget.
I will deal with some of the issues that we have heard about during the debate. Across all areas of public expenditure and taxation, alarm bells are ringing, be it about the burgeoning benefits bill; lower productivity growth; projected higher inflation; higher pay settlements than the Scottish Government public sector pay policy can withstand; pay grade inflation in the civil service; some large negative tax reconciliations that are coming down the line; increased interest on increased Scottish Government borrowing; stubborn, albeit slightly reduced, levels of economic inactivity in the Scottish labour market; or infrastructure costs that are rising at an alarming rate at a point in time when capital expenditure is seriously constrained.
Does Craig Hoy recognise that, given that long list of very significant and serious challenges, it is a testament to the finance secretary that she has managed to balance the budget yet again?
She is balancing the budget by drawing down a whole series of non-recurring potential pots of money to fund recurring projects, with ScotWind being the latest attempt to try to balance the budget. Ultimately, however, we all know that the budget is unsustainable, as has been referred to throughout today’s debate. It is unsustainable—as we heard from Audrey Nicoll—for the police service, the justice system and the prison service. Equally, it is probably still unsustainable for the college sector, because, as we have seen, smoke and mirrors have been deployed in relation to funding for that sector as well.
That brings me to a subject that the committee has raised on several occasions and that the Government has in part addressed in this year’s budget, which is baselining and making sure that we are comparing apples with apples and pears with pears. We picked up some frustration yesterday from the Fraser of Allander Institute and the SFC in relation to the way in which the budget was presented.
Ultimately, the budget statement, which the cabinet secretary made last week, should be about delivering for Scotland and not about delivering headlines for the SNP, yet the partial way that some of the data was brought forward should be a cause of concern. Last Thursday, for example, local government was left with the impression that it was getting a 2 per cent increase, but it transpires that it will get only a 0.4 per cent increase this year and a net reduction in real-terms budgets in future years, which is not putting it on a sustainable footing. It has also given people the impression that they will not get higher council tax bills down the line, but it is now quite clear from councils across Scotland that that will be the case.
My appeal is that we do not repeat this debate in the next session of Parliament and that the Government learns the lessons that have been pointed out to it, not just by the Finance and Public Administration Committee but by a variety of stakeholders, who have put a lot of time and effort into making sure that they properly analyse this budget and future budgets. In order to do that job, they need the tools and the data, and they need the clarity that has been sadly lacking in this and previous budgets.
16:41
I welcome the chance to take part in the debate, having just recently rejoined the Finance and Public Administration Committee. Ross Greer decided not only to give up speaking in this debate but to give up his place on the Finance and Administration Committee in my favour, if I can call it that. Obviously, those decisions are now well above my pay grade, I am very happy to say, and I am sure that he is never wrong in those judgments.
However, I will be a tiny bit more glass-half-full about the debate, and I acknowledge the work that all the committees have done on their budget scrutiny. This debate might not be where the budget drama plays out—if there is to be any of that this year—but it brings a bit more light rather than the heat of party-political positioning, and I think that it shows some of the nuance that is understood across all portfolios.
On whether particular budgets are sustainable, I recognise that we need to look at that issue in the round, rather than in silos. It is not reasonable to ask whether social security spending, for example, is sustainable without asking what we are trying to achieve and how we are going to pay for it. I strongly believe in raising a bit more revenue through tax policy in order to be able to fund things such as the Scottish child payment and protect other spending, such as on social security or public services. It is clear that the Government still believes in the same thing—raising a bit more revenue through tax policy in order to spend a bit more. We need to be clear that the difference is important and has been significant, but it is not transformational and is not yet at the level to meet all the challenges that have been raised by all the individual committees.
On child poverty, I welcome the proposed improvements in the Scottish child payment for the youngest children, but they are not in place yet. Those have been welcomed, but with a caveat, by some of the stakeholder organisations.
On climate, I say very clearly that, even if the budget funds the Government’s current climate plan, that only means that it funds a slowdown on climate. Let us contrast the announcement today, finally, of a warm homes plan by the UK Government with the scrapping of the equivalent measure—the proposed heat in buildings bill—by the Scottish Government, which we will now not see. We need to recognise that we have to look at fiscal sustainability across the piece, rather than silo by silo.
After today’s debate, we will move on to the more party-political debates on the budget. I recognise that two measures that the Greens have argued for—the mansion tax and the private jet tax—are important but are limited in scale. However, if there is to be further progress towards a more progressive and more equal society, it is important that we make it clear to the public that we will target the super-rich first in order to justify the case for building that society.
I also welcome the additional support for workers affected by the closure of Mossmorran, and the increased investment in breakfast clubs and in just transition.
I do not have time to go into the number of other changes that we have argued for, and will continue to argue for, whether on expanding free public transport or improvements to childcare. However, I make the case that Greens have a strong track record of trying to achieve positive change by making workable and funded proposals to Government. The budget process would work much better if every political party was willing to do that instead of only demanding more spending and never saying how it is to be paid for.
16:45
This is not my final speech in the Parliament, which I will no doubt come to sometime in March, but I want to say some things about the scrutiny of budgets. What I have seen over my nearly 20 years in this place is that things are changing. Just as Douglas Ross intimated, I do not think that it is good enough. I am not casting aspersions on any one individual but on the process, because it is not strong enough. There is a frustration in the Finance and Public Administration Committee, for which I have the highest regard—not only for my colleagues but for the way in which the committee operates—that we spend much of our time going into considerable detail in budget scrutiny but that is not reflected in how the whole Parliament can contribute to the process.
I have argued time and again—and I continue to argue—that this place needs a finance bill process so that there is much more effective scrutiny by the whole Parliament as to exactly what each of the budget lines really means.
Fiscal sustainability is a huge issue just now. It does not matter which economic analyst we listen to; everyone is telling us that we have to get serious about the size of the gap between the projected expenditure and what we are going to take in. There is a really strong feeling and frustration, including among economic analysts, that we are not taking this sufficiently seriously. I worry about that, because budgets are the most important thing that Parliaments do. We have to get it right, but at the moment we are not able to do that.
To go back to Michelle Thomson’s point, we must understand not only what the Government’s priorities are—and not just through straplines about tackling child poverty, dealing with the climate crisis or ensuring that there is economic growth—but which policies will best deliver on those broad targets and which could be deprioritised. I am sure that I do not have to tell the cabinet secretary that very difficult choices have to be made. Such choices will be easier to make if we understand which policies are most effective at delivering on the outcomes that we all want to see and which policies are perhaps not in that bracket. I do not think that the Parliament is very good at making such decisions. As I said, that is no reflection on any one individual or committee; I just do not think that we have got this process right.
When it comes to budgeting and understanding what the longer-term finances of the country will be and how they will be challenged, we must remove the short-termism in our approach. There is far too much short-termism in the Parliament, and I think that we have got used to it. We are not planning ahead in the way that we should be. That is a frustration, especially in the Scottish Fiscal Commission, which feels that we are not taking sufficiently seriously major challenges such as economic inactivity, productivity, economic growth and how we will deal with the demographic time bomb. Those are serious issues that confront the Parliament.
The Parliament has a lot of thinking to do about how to better inspire the members in the next parliamentary session to work on budgets and to do things a bit better.
John Mason is the final speaker in the open debate.
16:49
I will touch on a range of topics in my speech. I will start on a positive note about preventative spend, which is a topic that the Finance and Public Administration Committee and others have spent considerable time on over the years. I fully accept that differentiating between preventative and reactive spend is not an exact science. However, I was pleased to see in the Government’s response to the committee that it is
“testing a budget tagging method for tracking preventative spend”
and that it hopes to have initial results this coming summer. That looks like progress to me.
I consider the current fiscal framework to be unfair and biased against Scotland. It requires us to compete with London and the south-east of England, which most nations and regions have historically struggled to do. The whole purpose of the Barnett formula is to reduce the extra spending that Scotland gets, which was initially based on need. Our needs continue to be greater than in other parts of the UK because of rurality, historically poorer health and an ageing population. However, that is totally ignored by the fiscal framework. Wales probably suffers even more than we do.
The previous review of the fiscal framework was minimalist, to say the least. It was not what we had expected and there was next to no parliamentary involvement in it, here or at Westminster. I fully support the Government in seeking a much fuller review with the current UK Government as soon as possible.
We should also be interacting much more with Westminster on financial issues. Clearly, our finances are closely interlinked—that includes the dates of budgets, block grant adjustments, income tax, the building safety levy and so on—and yet, over the past five years, it has proved incredibly difficult to get Treasury ministers to give evidence to the finance committee. I accept that they are primarily answerable to MPs, but that is not a reason to refuse to interact with the Scottish Parliament.
Raising taxes overall is essential if we want to have quality public services. That applies to the UK and to Scotland. Most European countries are raising taxes these days, and Scotland and the UK are far from being high-tax countries. I realise that raising taxes is not generally popular, although perhaps more of the public would be willing to support higher taxes if they could see that the money was going to care services, colleges and so on.
That brings me to the topic of the general understanding of Scotland’s finances, which has already been mentioned in the debate. The UK has a complex tax system and I accept that, because Scotland must add to an underlying complex system, things here inevitably become even more complicated. However, we need to make an increased effort regarding financial education, be that for young people in schools or for new MSPs after the election.
I will move on to a couple of more specific topics. Adding two more council tax bands is not nearly radical enough and will probably not raise a huge amount of money. We remain unclear about how any extra money will be shared out among local councils. Council tax is a regressive system and, at the very least, we need a complete revaluation. However, my preference is for a tax that is more progressive and closely linked to the actual value of peoples’ homes. Some property prices have increased more than others since 1991, and it remains my strong belief that poorer areas are losing out and increasingly subsidising richer areas.
The increase in housing investment is welcome. However, we are still facing a housing emergency, and I wonder whether some other capital expenditure should be trimmed back.
I was glad to see an increase in college funding, which was mentioned earlier. For once, I agreed with most of Douglas Ross’s comments, which were fair. There is a question about whether the increase will really be £70 million compared with the 2025-26 budget or whether there will be an increase of only £40 million. I note the cabinet secretary’s point that the core budget will increase by £70 million. However, the total budget that will go to colleges will increase by only £40 million, which is a bit unfair.
Will the member take an intervention?
Mr Mason is just concluding.
I have nearly finished.
Given the fiscal framework that we are subjected to, it is a reasonable budget and I will be supporting it.
16:53
On 13 January, the Government set out a budget that supports our four main priorities: eradicating child poverty, growing the economy, tackling the climate emergency and ensuring high-quality, sustainable public services. Alongside the budget, we published the Scottish spending review and the infrastructure delivery pipeline, which provide greater fiscal certainty and support long-term financial planning.
In the debate, we have heard from committees on a wide range of issues, and I will take a few minutes to reflect on the discussion.
Will the minister take an intervention?
If I can make some progress, that would be helpful.
I will begin by reflecting the Government’s—and my personal—commitment to reforming our public services so that they are fit to deliver the quality of service that the people of Scotland rightly expect, within the resources that are available.
The Finance and Public Administration Committee and the Local Government, Housing and Planning Committee both referenced the public service reform strategy. We know that PSR is essential to fiscal sustainability. Achieving that will require workforce reductions, a reshaping of the workforce, considered pay policies, smart use of technology, a shift towards prevention, and more efficient joined-up services. Indeed, achieving that will require the whole Christie agenda.
Although portfolio efficiency and reform plans demonstrate our progress towards achieving the 0.5 per cent annual workforce reduction, we have been clear that our approach is designed to protect and improve our front-line services.
Our PSR strategy sets out much of that and commits us to activities such as exploring preventative budget approaches and the invest to save fund, in which a further £29.9 million will be invested in 2026-27, through the budget, to encourage and support efficiencies in our public sector.
Some of today’s debate was about committees—rightly, from their perspective—focusing on their own portfolio interests and allocations. However, increasingly, the solutions will require reform that cuts across portfolio silos. Indeed, removing those silos is a key part of the reform agenda.
Will the minister take an intervention?
I will finish this part and then come back, if that is okay.
Likewise, shifting to a focus on preventative spending will necessitate an understanding of how spend in one area leads to savings in another. That direction of travel must accelerate, and it will raise additional challenges around tracking spend year on year and across budget silos.
In the debate, committee conveners have, understandably, focused on inputs, but it is important to recognise that that is only part of the story. The reform agenda and the adoption of efficiency measures should deliver improved outcomes and improved service delivery without necessarily a corresponding or proportionate increase in input resources. A shift to talking more about prevention across silos and on outcomes is a necessary part of taking the process forward.
On Douglas Ross’s remarks in his speech, I note that it is not up to the Government to comment; it is for the Parliament to decide and design how the budget debate takes place. However, that might provide an opportunity to focus more on some of the substantive issues that will increasingly come to the fore as we move forward to address the challenges.
The minister is making a case as to why we need a finance bill. It is so important that we can work across different portfolios and that all members in this Parliament can scrutinise that on a cross-party basis. Does the minister agree? The Finance and Public Administration Committee members are pretty unanimous on that.
The Government’s position has been that there could well be merit in having a finance bill, and we are very happy to continue to engage with the Finance and Public Administration Committee, and others, on that, to see how that could work. Clearly, it would require quite a bit of re-engineering of the process, and we would need to understand exactly how that would be taken forward. However, that is a conversation that we are very comfortable with having.
I will bring in Craig Hoy as he wanted to intervene earlier.
I understand that the minister does not necessarily want to dwell on portfolio spending, but will he comment on local government spending this year and in future years? Yesterday, when I asked Professor Graeme Roy about Shona Robison’s claim last week that there is a 2 per cent real-terms increase in the local government budget, he said that that was not the Scottish Fiscal Commission’s figure and that we would have to ask the cabinet secretary about that. He added that, under the current plans, the local government budget would be cut in real terms. Which is it—a 2 per cent increase or a cut?
The overall settlement for local government will increase by £650.9 million, which is a cash increase of 4.3 per cent or 2 per cent in real terms compared with the 2025-26 budget. I acknowledge that £144 million for ENICs was added to the 2025-26 budget following the budget’s publication. It is really important that we are comparing apples with apples and not comparing documents from different points in the cycle. Those figures are all clearly set out in the Scottish budget, in table 4.15.
I do not have time to go through inputs from every committee, but I will draw out some of the highlights. The intervention from the convener of the Health, Social Care and Sport Committee was very valuable, including the focus on prevention aspects. A huge amount of work has been done on that in health, and I have worked closely with health colleagues and officials on that work, particularly in the context of the two workstreams in the PSR strategy that focus on how we take forward prevention work in the budget. A tagging exercise will improve our understanding of that work as we continue to develop it. It is important to recognise that the work of health colleagues on the service renewal framework and the operational improvement plans could deliver significant improvements in delivery by refocusing the existing considerable resources in the budget to make them more impactful. That is a very important point.
I recognise the comments made by the convener of the Criminal Justice Committee. We are working to allow the Scottish Police Authority and the Scottish Fire and Rescue Service to hold reserves and expand their borrowing powers. Those rules sit with the UK Treasury, and the Scottish Government has been clear that we would welcome reform to improve flexibility in that regard and more widely across public services. I recognise the comments regarding how the SFRS could reform and refocus its activities.
I also recognise the comments that Michelle Thomson made about the importance of productivity. Growing the economy is a key focus of the Government, and productivity is a key metric in that regard. It is interesting that, over the medium to long term, Scotland’s economy, in relation to productivity, has grown at a significantly higher rate than that of the rest of the UK. The extra £70 million of investment in our colleges will support the skills agenda, which is critical to improving productivity.
The Government is proud of this budget, which focuses on our four priorities—
Will the minister take an intervention?
The minister is just concluding.
If Finlay Carson had asked to intervene earlier, I would have taken an intervention.
The budget strengthens our public services and invests in Scotland’s infrastructure and people. I thank members for their views and their on-going engagement in the budget process. I will watch with interest to see which format this particular debate takes in the next parliamentary session.
I call Michael Marra to conclude the debate on behalf of the Finance and Public Administration Committee.
17:02
I am pleased to sum up the debate on behalf of the Finance and Public Administration Committee. I thank all members who have contributed to the debate—however reluctantly on some people’s parts. I thank our committee’s outstanding clerking team for the real teamwork that takes place there.
One of the clear themes of today’s debate has been transparency, which many members have mentioned. Transparency is not an esoteric idea or principle; it is necessary. I will set out why that is.
The committee has had a long-standing concern about transparency. In the past few years, we have asked that routine in-year transfers be baselined in the Scottish budget. Some of the issues in that regard have just been played out in the exchange between Mr Hoy and the minister. In this year’s budget, the Government actioned £786 million of baseline transfers. However, it continues to resist baselining all routine in-year transfers, for reasons that, to be frank, are bewildering to members of our committee. Therefore, we ask that the Government explain why it is not making more progress in that area.
That was a significant area of concern at the committee’s meeting yesterday, when we took evidence from witnesses including representatives of the Scottish Fiscal Commission. It has taken action by providing its own figures in its documentation to try to illustrate the real picture, as it sees it, because the Government has not taken that action.
For 2025-26, £606 million of resource internal transfers, against the autumn budget revision, have not been baselined, but there is no explanation for that. That leads to some very misleading claims in relation to portfolio comparisons between 2025-26 and 2026-27. I will give a couple of the most egregious examples. The Scottish Government claims that there will be a 6.6 per cent real-terms increase in the education and skills portfolio, but the Scottish Fiscal Commission, which has done the work that I mentioned, says that there will be a 0.8 per cent real-terms increase. The Scottish Government claims that there will be an 8.9 per cent real-terms increase in the housing budget, but the Scottish Fiscal Commission says that there will be a 3.9 per cent real-terms cut. Those figures really matter when people are trying to understand the budget, and the Scottish Fiscal Commission has set out its figures.
In his role as the convener of the Education, Children and Young People Committee, Douglas Ross mentioned college funding, which is an issue that has received some scrutiny in recent days. The idea that there is a £70 million increase in such funding is true only if last year’s capital is removed from the baseline. The figure is, in fact, £40 million.
No, it is not.
I will set out for the cabinet secretary the response of Mairi Spowage, director of the Fraser of Allander Institute, to my question, put at this week’s meeting of the Finance and Public Administration Committee, on the accuracy of the £40 million figure. She said that she had seen the commentary and that, to be honest, she did not know whether the figure was accurate, but that we should know. She also said that the Government needs to work with the Parliament to reduce the confusion about this sort of issue, so that, when it presents its draft budget, we are much clearer about what we are spending money on.
I say again that the college sector has had a £70 million increase in core college funding available to the Scottish Funding Council: £61.4 million in resource and an extra £8.2 million in capital. Over the past five years, there has also been a significant investment of more than £150 million in the Dunfermline learning campus, which has been over and above the funding made available to the sector at large.
There is an issue about how those tables are set out, because they do not separate out the capital funding that the SFC can distribute across the sector from funding that is specific to a strategic project. That will be addressed—but the funding is £70 million extra.
Michael Marra, I can give you the time back.
You have to recognise, cabinet secretary, that if somebody as eminent as Professor Mairi Spowage—and the Fraser of Allander Institute and all its analysts—cannot interrogate the budget documents and come to the conclusion that you have, then something has gone badly wrong in that instance.
There is also a real challenge in relation to social care pay, which Jackie Baillie raised in the debate. In the cabinet secretary’s budget statement last week, she stated that it
“provides the resources that are needed to ensure that, where we commission services, those working in adult social care receive, at a minimum, the real living wage” —[Official Report, 13 January 2026; c 14.]
However, in today’s debate we have heard that the Government is refusing to meet the cost of the statutory increase but is prepared to meet the cost of the discretionary increase on top of that. There is no way that, having listened to the budget statement, people would come to that conclusion. That is absolutely not the case—and it is certainly not the conclusion that the sector came to. There is a real challenge around transparency in the way in which the budget is presented.
There was much less in the debate on the theme of fiscal sustainability. We are still, as a committee, seeking a full response to the Scottish Fiscal Commission’s fiscal sustainability report as part of the Government’s long-term planning. It is very difficult to claim that the budget documents have risen to the challenge of addressing sustainability. The committee and, more broadly, the independent institutions have significant concerns about the challenges that our public finances face. Some of that was highlighted by conveners who shared evidence from their committees.
I will illustrate how the issues relate to both transparency and sustainability. The financial sustainability delivery plan and the Scottish spending review promise £1.5 billion of portfolio savings, but it is impossible to determine how any of that relates to closing the gap that the Scottish Fiscal Commission has identified. The minister is looking at me quizzically, but that is the view of Professor David Bell of Stirling University. To use Professor Bell’s words, he is “completely confused” about how those two issues address each other. Perhaps we can hear evidence from the minister on that point at committee next week, because it is not apparent how those things interrelate.
The Institute for Fiscal Studies and the Fraser of Allander Institute have been absolutely clear that they retain significant concerns about the long-term trajectory and the sustainability of public finances. Michelle Thomson highlighted in her contribution the “heroic”—in their words—assumptions on productivity that are being made by the Government in that regard. Both those independent financial institutions predict that the budget may very well not reach the autumn without an emergency budget from the Government, given the heroic statements. That is the account that has been given, and it has become a habit of the Government over recent years—that is absolutely clear.
The committee also asked for the methodology of the Scottish spending review to be set out to committees, so that we could understand how the review was carried out. However, our committee is not the only body that has asked for that. Yesterday, we asked the chair of the Scottish Fiscal Commission, Professor Graeme Roy, what he knew about the methodology, and he knew nothing. He does not know how the review was carried out, or the means by which the assessments were made, or how the plans were produced. That is not acceptable. I hope that ministers can provide that information to the committee ahead of next week, so that there can be proper scrutiny of that very important process, given some of the headwinds that colleagues, including Liz Smith, have identified.
We note that the Government has not committed to providing the information on the sustainability of social security spending that we have asked for several times. That includes information on how the Government is assessing the effectiveness of outcomes, its approach to the delivery of benefits, and the impact on other parts of the budget. We believe that that must be provided without delay. It is absolutely critical that we have that information in front of us to enable us to scrutinise the process.
Last year, we asked the Government to set out the number of live strategies that it has in place. As of summer 2025, there were 100 of them. Anyone in the chamber would agree that, for a devolved Government that serves a nation smaller in size than London, that is far too many strategies. There are lots of strategies, but there is not much strategic intent.
Will the member take an intervention?
No, thank you, sir. I am just coming to a close, and I am in my last minute.
The Government confirmed that it will, as the committee requested, provide an update on the steps that are being taken to monitor and reduce the number of live strategies, in line with the Government’s priorities. It also plans to provide an updated list annually, which the committee welcomes. A new parliamentary session will provide the opportunity to rejig this kind of debate and, to be frank, a fresh start in the number of core strategies, which will improve understanding, transparency and alignment across the Government.
I thank all members who have contributed to the debate.
That concludes the debate on the Scottish budget 2026-27 on behalf of the Finance and Public Administration Committee.
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