Chamber and committees

What period is that for?

The current financial year?

The issue is that practically all local authorities—there are some exceptions—fit into both categories.

Good morning, and thank you for the invitation. I am really looking forward to the discussion. A key theme of our work on public service reform is engagement and partnership, and I welcome the value that committee members can add through such discussions as we take forward the programme.

The First Minister has made it clear that public service reform is a defining piece of work for the Government in this session of Parliament. The programme for government that was published at the start of the month made clear the scope and scale of our ambition to reform our public services. That is about delivering excellent public services that are fiscally sustainable. We believe that, through the work that we are taking forward, that can be delivered.

All of the work that we are doing is built on the public service reform strategy that we published in the middle of last year. It is a broad front of work across 18 workstreams, many of which are interconnected, so it is important that we take forward all that work in concert. There has been quite a bit of focus on workstream 4, on review and restructuring of the landscape, but it is important to stress that that is only one part, albeit a very important part, of the overall work.

The public service reform work is built on the Christie principles, which we recognise are enduring principles that form an effective basis on which to build the work that we are taking forward. The focus is on prevention and how we address the barriers that prevent a shift to investment in prevention, and on how we integrate and join up services so that service users see more effective and integrated services. It is also on how we deliver empowerment, which means empowerment of the workforce—that is hugely important, because people in the workforce usually have the best ideas on what we can do to improve things—empowerment of service users, through a focus on citizen-centred services; and, importantly with regard to this committee, empowerment of local communities, which we might come on to talk about more. Of course, there is also the fourth Christie principle, which is on efficiency. Like Christie, we are clear that all of those things can be delivered, so the choice is not about doing less to save money; it is very much about doing things better and saving money as a consequence.

We recognise that we have made progress, but there is much more to do, and we need to do it faster and more comprehensively. It is important that we understand the barriers that have prevented us from moving forward on Christie with the scope and scale that we would have liked. The strategy works hard to understand those barriers. That is about changing culture, people moving out of silos and thinking across the whole system, and aligning budget processes so that they support rather than hinder the work on prevention and integration that we seek to deliver.

We talk about rewiring, which is often taken to mean rewiring the structures of the delivery mechanisms of Government. That is part of it, but it is important to recognise that we are also talking about rewiring how money flows through the system and how data moves around it so that it is used most effectively and so that we remove barriers and silos. Frankly, it is also about rewiring the culture, so that people approach the work in a much more collaborative way. We put great store in addressing leadership behaviours so that leaders are empowered to behave in exactly that way, and in accountability mechanisms that support rather than hinder that.

As we move into an acceleration of the delivery phase, engagement and partnership are hugely important. We expect that there will be bumps in the road because, as with any transformation process, people will go through the various stages, of denial, disorientation, resistance, constructive input et cetera. I hope that that will settle down sooner rather than later into an environment in which everyone is pulling in the same direction and we are delivering what we need to as part of the overall programme.

I look forward to the discussion and to your questions.

We are tracking the head count reductions and the cost of the civil service monthly. I will get back to you on the specifics of that. However, across the piece, it is important to acknowledge that we have set the budget. You have talked to the Deputy First Minister about this already. We understand what the numbers are by portfolio and public body. They balance, as they do every year, so we will be on target to balance the budget this year, as we do every year.

As we move into next year’s budget process, the same will apply. We will take account of the efficiencies that we have asked public bodies and others to drive and will take on board the restructuring that will start to be rolled out over next year. That will be baked into the budget numbers and the budget will balance again.

I recognise the point. A lot of things are moving on the spend side and on the revenue side, such as consequentials that are not predicted, how the UK Government changes its spending patterns and how tax ends up. We are confident, as we always are, that we will balance the budget. We have done that for 19 years in a row.

We are working closely with all of our partners, including the trade unions. I meet them regularly. They have a job to do, and there will be things that they do not necessarily agree with in what we are doing. However, we are committed to engaging with them as early as we can in the process and informing them of what is happening.

I have written to public body leaders to make it clear that they should engage with public sector trade unions in their public bodies on the transformation work that is happening. However, the direction of travel is clear. We have been clear about the percentage reductions that we are seeking to achieve. As we move forward on that journey, we will work closely with trade union colleagues on it.

The empowerment of employees is a critical thing that is very close to my heart, because of how effective it can be when employees and organisations are empowered to come forward with opportunities to improve service delivery and make it more efficient. That is a big part of the work.

As I said, we are not going to agree on everything, but we work with trade unions to keep them informed. At the end of the day, as I mentioned in my opening remarks, various parts of the system will go through various phases of being unhappy about things, but the overall programme will move forward. I do not think that trade unions will be the biggest barrier that we will face. The bigger barriers are around culture, leadership and management in the public sector; we need to move towards greater collaborative behaviour, and base our thinking on system rather than on silos, and on joining things up and moving towards prevention. There are some excellent pockets of that, but more work needs to be done. It is also about the way that money flows through the system and the budget process. Those are the bigger challenges that we face, frankly.

There is a combination of reasons. As I said, environment is an example where we have got some clarity on what we think can be done—work has been done previously and a bit of thinking is being done. In other areas, we know that there are things that need to be looked at but, for a variety of reasons, we are not yet in a place where detailed proposals have been worked up. In effect, we have fired the starting gun on that and made it clear to leaders, partners and others in those areas that now is the time to come to the table with proposals. We are starting to see that, which has been very encouraging. It is great that people are starting to come forward and say, “I hear what you’re saying, but if you tweaked it slightly, we can get a better result,” or, “Here are some things you need to consider in how we take this forward.” That is good, because it has started the process.

As I said, the issue of local government is particularly specific, because we need to be cognisant of local government’s democratic mandate. The process that we have structured in local government to take that forward is very important.

I have been a public finance minister through three budget processes now, and the way that we set the budget is through a one-to-one process with each portfolio, followed by a discussion about which portfolio is the highest priority or most deserving. The portfolios get their allocations; we look at what the Government is committed to; we line all of that up; and then we work around all of that to get to a point where the numbers balance.

That is all fine up to a point, but the result is that people are in their silos with their budgets, and that money cascades down to the various public bodies that sit in those portfolios. Everybody has an accountable officer; they all jealously protect their individual budgets and make sure that their numbers add up, and they get audited on the basis of that. That means that, if we want to move to a prevention-focused system, it is difficult, because I need to spend money in one portfolio for another portfolio to save money, and the system does not reward that. If anything, it does the opposite.

If we look, for example, at digital spend across the piece, there will be duplication, people hiring the same staff to do the same job, people buying different systems and people buying the same systems but paying a different amount of money for them. It is like that all over the place. Unless we have clarity on that, and some control over the budget flow, it is difficult to address that.

It is the same with procurement and grants that we provide to third sector organisations. There is a whole list of areas in which, unless we get people into a place where the budget process is designed to support those moves, we ain’t going to unlock the savings that we need to.

To be clear, are the questions specific to operational aspects of Social Security Scotland, in terms of how it is managing benefits?

Again, there is a process that we are going through, but there are some clear principles.

Those of you with time on your hands can look back at previous reorganisations of local government—not just in the 1990s and 1970s; there were three or four before that, going right back to the middle of the 19th century—and see that it is a thing that happens periodically, to reflect the way in which society moves on and the services that we seek to deliver.

There are two things that we recognise need to be addressed at a conceptual level, leaving aside the detail of the structures that we will seek to work with partners to put in place. That has been clearly articulated in the line that the First Minister has used—although others have said that they used it before him. I do not know who said it first, but the line is that local authorities are

“too small to be strategic and … too big to be local”,—[Official Report, 1 September 2026; c 32.]

which effectively encompasses the situation, and everybody recognises that.

Increasingly, there are economies of scale that can be delivered at a regional or national level that it does not make sense not to take, for the fiscal reasons that we have talked about, and which, frankly, will have very little bearing on how services are delivered locally. There is also a huge level of recognition that there is a real issue with community empowerment—with individual citizens feeling part of the community and with citizens and communities feeling that they can influence decisions that are made close to where they live. The challenge that we have is to do both of those things: to provide economies of scale at a regional level and strategic oversight on matters such as economic development, transport and skills development—there is a lot that fits together in that regard, without those boundaries in place—while, at the same time, providing a mechanism that enables community empowerment at a much more local level, so that people feel that they have real influence over the decisions that affect them, close to them and their communities.