Scottish Government spending is set to decline in the next few years as public finances come under increasing pressure from the effects of the recession, according to a report published today by the Scottish Parliament’s Finance Committee.
The report focuses on the budget pressures and choices facing the Scottish Government and follows the committee’s inquiry examining the effects of the recession on Scottish public bodies, the anticipated pressures on the Scottish budget for 2010-11, and the longer-term prospects for government spending.
The committee concludes that 2009-10 will be the peak year for public spending for some years to come and it urges the Scottish Government to:
- make budget decisions for 2010-11 which take into account their longer term effects on future public spending
- have contingency plans in place to deal with the possibility that future budgets may be even tighter than expected
- consider how better information and decision-making processes could help the Scottish Government to control and manage the challenges of the budget.
The report also sets out a number of areas that the Finance Committee and subject committees should concentrate on when scrutinising the details of the 2010-11 budget later this year. These include:
asking for a robust analysis of the effects of recession and contingency plans for dealing with them
understanding the future cost trajectories of various fixed costs and other financial commitments and policy priorities
seeking a comprehensive and realistic evaluation of what can be achieved by using different approaches to make budget savings.
Committee Convener Andrew Welsh MSP said: “The effects of the recession were not predicted at the time the budget for 2010-11 was first set out in the Scottish Budget Spending Review 2007.
"The recession has undoubtedly affected the finances of individual public bodies. Some face particular issues due to increased demand for services and reduced income opportunities.
"But the recession has also had a major impact on overall UK public finances, and therefore on the budget likely to be available to the Scottish Government in the future.
"The result is that significant challenges and difficult strategic choices must be addressed in the 2010-11 budget. These choices have to prepare us for the possibility of even tighter public spending in Scotland in the future as the pressures increase.
"The committee’s inquiry provides a solid foundation to help prepare the Parliament for scrutinising the choices the Scottish Government makes. We have set out the challenges in detail. This is new territory for the Scottish Parliament and we have urged the Government to demonstrate strategic thinking in its response.”
It is expected that this report will now be the subject of a debate in the Parliament before the end of June.
The Scottish Government will then set out its detailed spending plans for its budget for 2010-11 in a Draft Budget document to be published by 20 September 2009. This will then be subject to the usual parliamentary scrutiny.
The Finance Committee is responsible for the overall scrutiny of the Draft Budget and for co-ordinating responses from the Parliament’s subject committees on the spending plans for their respective portfolios. This scrutiny will take place in the period September to November, leading up to a debate in the Parliament in late December on the Finance Committee’s report on the Draft Budget.
The Scottish Government will then publish the annual Budget Bill in January 2010 which will legislate for spending in the financial year 2010-11.
The full report and further details can be found at the homepage for the Finance Committee's Strategic Scrutiny of the Scottish Government's budget.