Chamber and committees

Good morning, and thanks for inviting me to the session this morning. I welcome the opportunity to speak to the committee about public service reform and how it supports the Government’s priorities, including the tackling of poverty.

Our vision is of a Scotland where citizens enjoy excellent public services that are delivered to meet their individual needs, and where the staff who provide those services feel valued and empowered to make a difference to people’s lives.

As I discussed with the Public Service Reform Committee last week, a broader perspective on PSR is required that looks across several individual portfolio budgets. I know that this committee will take that approach, given the similarly cross-cutting implications of your work.

I consider our approach to budgeting to be critical to how we progress the ambitions of public service reform, given the challenges that we face due to siloed budgeting and the need to think about how we change our approach to better focus on outcomes and collaboration. That is an area of common concern, I think.

It is fair to say that public services are not working consistently enough for people across Scotland, and change is required. The programme for government set an ambitious acceleration for the work that is set out in our strategy. It sets out our commitment to ensuring that decisions are made at the right level for the greatest impact in overcoming siloed organisational boundaries.

From the citizen’s perspective, it is about ensuring that public services are there when they need them. It is about better joining up across the delivery landscape, addressing preventable demand and driving efficiency. Every pound that is spend on unnecessary duplication is a pound that cannot be spent on front-line services.

I have carefully considered many of the concerns that have been raised. It is worth setting out the link between public service reform and fiscal sustainability. The PSR strategy, which was published in June last year, sets it out. Each pillar is designed to reduce cost on different timeframes.

First, the work on efficiency looks to reduce costs over the course of the parliamentary session while maintaining service quality and availability, and a number of the workstreams address that directly.

Secondly, by our better joining up services and taking out duplication and administrative costs, people get access to the help that they need more easily, while costs are reduced.

Thirdly, indicative analysis in the strategy shows that, overall, reducing poverty by a quarter by 2030 could avoid £2.9 billion of public spend. Through tracking, prioritising and investing in prevention, we can support people to live happier, healthier lives and save money at the same time.

I have considered the evidence relating to PSR with regard to the Public Service Reform Committee’s pre-budget scrutiny, including perspectives on equalities and the concerns raised. I have heard about the impact of service reductions on women, particularly those who experience poverty. It is important to underscore that reform and efficiency are not about doing less with less. They are about identifying genuine savings by addressing areas of duplication, improving procurement, exploring digital automation and better integrating services.

We have set out in detail in the strategy that better joining up of services can save money. There is a substantial human and financial cost to passing people from one siloed service to another. That can include having repeated and costly assessments and asking people to tell their stories time and again. It means that resources are not directed towards helping those people but towards assessment and administration. It is stressful and difficult for the people who access services, and it makes public sector workers’ jobs harder.

It is my view that improving those services—driving that better joining up and integration—is not in tension with efficiency but is part of the solution. I am therefore ambitious about whole family support and taking a wider approach to holistic service provision.

I am committed to achieving a meaningful move to prevention and to tackling long-standing barriers to doing so through the work that is set out in the PSR strategy and in the design of the new Scottish Government prevention unit, which contains a broad range of activities, including work on understanding drivers of demand, a new framework for investment, work on collaboration across sectors and budget tagging. As I said at the beginning, tackling siloed budgeting is a key component of that work.

For 2027-28, the preventative budget work will, for the first time, allow us to track the scale and shape of preventative intervention in Scotland and to do so in a way that is matched to outcomes. That will give us a baseline from which to monitor future activity and, along with the refreshed national performance framework, will provide a clear structure for monitoring the Government’s focus on improving outcomes for citizens.

In conclusion, public services are fundamental to the Government’s ambitions, and reform is about strengthening those services now and in the future. I look forward to discussing that in detail, and I can hand over to the Minister for Equalities and International Development for her introductory remarks.

The principles that I laid out are important. I have stated them repeatedly. It is important to understand them, and I expect that they would give reassurance about what will happen.

As the work advances, individual parts of the system, such as health—clearly, it will also be the situation in local government and elsewhere—will work through the details of the opportunities to redirect resources. However, the principle is important that, if you bring different organisations together, the people who deliver the day-to-day services should not be impacted but should continue to deliver those services. They might just have a different management structure over them that is more streamlined, is more efficient and allows more resources to flow to the work that they do.

The timeline will be a function of different bits of the system moving forward on that work, but I hope that that gives you, Carol, and those workers the reassurance that you seek.

It is important to understand and reinforce the point that I made earlier. It goes back to the Christie principles, and involves having a focus on prevention, integration and empowerment that can feed into the efficiency agenda. As can be seen from the examples that I have given, if people are spending more time having to engage with different bits of the system,

fill in various forms and communicate their information multiple times because services are not joined up, the system is not good for the service user or the staff who work within it, and it is more expensive.

Making the system more efficient by addressing those challenges allows us to allocate more resource to front-line services and support service delivery more effectively. The impact of that will be measured through the national performance framework when it is launched.

That will be much more comprehensive than what we have had in the past. It will link the outcomes to the United Nations goals, from the top-level indicators right down to the operational metrics that are driven across the system, and it will influence where resources are allocated. Over time, that will enable us to see more clearly where resources have been allocated, the impact that they are having and how we measure that through the new reformed national performance framework.

It is a good question. PSR is all about opportunity. We look at it through that lens.

On the specific question of where we are on the matter, obviously there is the ongoing work that Ms Kumar identified in relation to the existing structure. However, Fulton MacGregor is right that, as we move towards a new structure of a smaller number of regional authorities, we have an opportunity to look at council tax recovery through that lens. Conversations are ongoing at the moment as to what powers and what funding would lie where in that structure. Once they are complete, we will be able to understand where council tax recovery should best sit in that system and what opportunities there are for a standardised approach.

That is an important aspect. Officials will feed that into the work that we are doing at the moment to understand how that structure should best reflect improvements in service delivery.

That question covers several issues. I will let Ms Kumar address the disparity of pay more generally, as that relates to her portfolio responsibilities.

The funding mechanism will be worked out as part of the process of identifying what the landscape will look like as a consequence of the review work that we are undertaking. We will have to work out how, once we have reached a point at which we have regional and community authorities, the funding will flow through those bodies, what taxes will be raised, how those funds will be allocated and who should make those decisions.

The Government’s allocation of the general grant to local authorities is based on a series of assessments. Such a process is ongoing at the moment, and those factors will clearly be considered when we progress the governance review work. There is clearly work to be done.

When it comes to ring fencing, the funding has to go somewhere. The presumption has been against ring fencing, as articulated in the Verity house agreement. For the most part, unless there is a very good reason not to do so, you allow local authorities to decide how to allocate their budgets. Over time, more and more of the budget has been baselined as a consequence of that.

That is an excellent and very perceptive question. I will stick my neck out here and say that it would not be at the national level. We are very interested in hearing views on the issue, to understand people’s perspectives on where it should sit in the local structure—at either the regional or the community level. We are very interested in hearing perspectives at this stage.

It is an interesting question, because it goes to the heart of the points that were made earlier about looking at the entire Government spend across portfolios through that lens. Employability services and childcare support also have significant impacts, and the work that we are doing to join up those budget lines and understand how interventions across a range of portfolios can impact on that agenda is an important piece of the public service reform work.

It is important to recognise that the work that we are doing is about making that visible. The policy decision about how you want to make investments is exactly that—a policy decision—but the PSR and budget work is about making that visible, so that people have the information to understand what the impacts will be and make decisions accordingly. In principle, I agree with the gist of your question, but it will come down to allocation of resources based on information that, through the change to the mechanisms, PSR can make a bit clearer.

We need to look at the whole system. As I said, we have traditionally had a process in which we allocate money to portfolios, which then make decisions on how to spend it. Although I do not pretend that it is easy, we need to evolve to a process in which, in addition to that, we have a clear perspective on both how much money is being spent on prevention and how much is being spent on delivering impact across the Government’s priorities.

The national performance framework sits behind that. When the new NPF is published, you will see that it is much more of a framework than what we had in the past, which was simply a list of outcomes and indicators. Underneath that, it ties to the operational metrics that are used across the system and to the strategies that are in place to help join everything up.

Effectively, we have a link between the outcomes that we want to achieve, what we are measuring daily to help to deliver those, what strategies join up and what interventions drive the improvement in the metrics to drive the outcomes. All that sits underneath the work on how to allocate resources through the budget process.

There is a whole-system approach, and the various building blocks are being put into place that should make it easier, from where you are sitting, to look at the metrics that support reductions in inequality and poverty, where the resource has been allocated to support that, and what impact is being had.

Yes, I reassure you that that will absolutely not be the case. To go back to comments that I made earlier, the public service reform strategy and the work that we are doing is intended to ensure that we free up resources from other parts of the system so that there are resources to continue to fund the kind of front-line activity that you are talking about and that you are right to say can be predominantly low paid and women’s employment. The focus is on taking out directors and layers of management as we amalgamate organisations, because that is where the reductions are most effectively delivered. It is also about not having duplication as we join up services and—I am explicit about this—delayering structures so that there are fewer layers of management, which is more empowering for the staff and frees up more resources to go to the front line.