Scottish Parliament. Image © Shutterstock
In its report on pre-budget scrutiny 2025-26, the Scottish Parliament’s finance and public administration committee said there was “little evidence” medium and long-term financial planning was taking place, leaving the government to firefight emergencies with last-minute spending controls.
The committee also urged the government to start building a cross-party consensus on council tax reform – work it described as “long overdue”.
Its plea follows evidence from experts that paralysis over council tax is making reform of the local government funding system even more difficult and potentially weakening the autonomy and accountability of Scottish local authorities.
Calling on the Scottish Government to set out how it would “create the space for discussions and consensus-building” in this parliamentary session, the committee said lessons should also be learned from Wales and elsewhere on reform and revaluation.
Committee convener Kenneth Gibson said the recommendations in the report would help put Scotland’s finances on a stabler and more sustainable footing.
“Our committee is deeply concerned about the Scottish Government’s lack of strategic approach to managing Scotland’s public finances,” he said.
“There is little evidence of medium and long-term financial planning.
Year-on-year budgeting had become increasingly challenging, he said, with significant emergency controls being required in each of the last three years.
“We recognise devolved governments have fewer flexibilities to deal with ‘shocks’,” he said.
“However, many issues impacting the 2024-25 budget – such as higher than anticipated pay settlements and increasing social security payments – could have been foreseen and mitigated when the budget was set, last December.
“At the very least, scenario plans could have been put in place to allow spending commitments to be ‘flexed’ to adapt to fiscal strain.”
He argued that if key documents such as the medium-term financial strategy had been published earlier, they would have ensured that a longer-term approach was built into the budget planning process.
“Repeated delays to key financial strategies have led to a perception of the government being in a state of indecision,” he said.
In response, the Scottish Government said it had a strong record of balancing its budget every year.
“However, this has been increasingly difficult in the face of high inflation, the effects of Brexit and under-investment by the previous UK Government, so difficult choices have had to be made,” a spokesperson said.
“Ministers continue to do all they can to ensure public finances are sustainable, despite the significant uncertainty around funding from the UK Government in the medium to long term.”
Earlier today, auditor general Stephen Boyle said that the Scottish Government had responded to emerging financial pressures by opting for measures that gave “short-term relief”, but did not address the underlying financial challenges the government was facing.
There had not yet been enough progress on reforming and redesigning public services to make them more affordable, he said.
“The Scottish Government continues to face significant demands on its finances,” he told the Scottish Parliament’s public audit committee.
However, fiscal sustainability had long been dependent on non-recurring savings rather than a clear longer-term plan which reflected what the government wanted to achieve from public spending.
That meant failure to progress towards a preventative approach which would deliver benefits for individuals, communities and society more widely, he said, describing that outcome as “a pretty dark picture”.
