An ‘ambitious but realistic’ public spending framework has been published which outlines how more than £180 billion will be invested to deliver priorities for Scotland.
The Resource Spending Review, which is not a budget, outlines how the Scottish Government will focus public finances in the coming years to tackle child poverty, address the climate crisis, strengthen the public sector as Scotland recovers from Covid and grow a stronger, fairer and greener economy.
A targeted capital spending review has also been published to address a reduction in capital investment by the UK Government. As well as supporting the NHS and affordable housing, the capital spending review will invest around £18 billion up to 31 March 2026, with over half a billion of additional funding directed to net zero programmes compared to previous plans.
Finance Secretary Kate Forbes said: “We are of course still recovering from the Coronavirus pandemic. There is still acute pressure on the NHS, on business and the wider economy. The illegal Russian invasion of Ukraine is a humanitarian crisis, which is affecting the global economy. Rising energy prices and constrained supply chains have affected countries worldwide. While inflation is also impacting other countries, it is not impacting them equally.
“The UK currently has the highest inflation of any G7 country– almost twice the rate of France. Brexit has made this problem worse, with increases in food prices, hitting the poorest hardest. We are experiencing an unprecedented cost of living crisis. Inflation is at a 40-year high of 9 per cent with households facing considerable hardship.
“Today’s Resource Spending Review is not a Budget. However, it is essential to share high-level financial parameters with public bodies, local government and the third sector, so we can plan ahead together.
“Today I set out an ambitious but realistic public spending framework for the years ahead. It does not ignore the realities of our financial position, but neither does it roll back on our ambitions for change.”
Further changes to Scotland’s fiscal position and to tax and social security forecasts are expected to change the funding picture ahead of annual budgets.
The spending review however does prioritise sending in key policy areas.
These are:
Tackling child poverty and supporting households and businesses with the cost of living
- £22.9 billion for social security assistance
- increasing the Scottish Child Payment from £10 to £25 and expanding eligibility by the end of this year
- providing universal free school meals to primary school children in P1-5 and expanding provision beyond that
- uprating devolved benefits
Securing stronger public services
- investing £73.1 billion in health and social care including developing a National Care Service
- increasing investment in frontline health services by 20 per cent over this Parliament
- spending more on primary and community care to ensure people get the right treatment in the right place
- funding of £42.5 billion for local government for the delivery of services
- investing £11.6 billion in the justice system
Achieving net zero and tackling the climate crisis
- up to £75 million per year to deliver the Heat in Building Strategy, enabling £1.8 billion investment towards decarbonisation
- up to £95 million towards meeting woodland creation targets
- £46 million to introduce the community bus fund and an increase in funding for concessionary travel schemes
- investment of over £12 million in peatland restoration
- £4 million of resource spending alongside £150 million capital and financial investment for the North East and Moray Just Transition Fund
Building a stronger, fairer and greener economy
- capital investment of £581 million to support the economy, including our enterprise agencies and the Scottish National Investment Bank
- continuing through the Inward Investment Plan to attract high quality inward investment in areas such as energy transition and the space sector
- pushing forward with the export growth plan A Trading Nation to scale up Scotland’s international reach
- embedding entrepreneurship in education, to give young people opportunities to start and grow businesses
The spending review provides a platform for engagement ahead of the next budget on how best to reform Scotland’s high performing public sector to become more efficient, to deliver ambitious outcomes. That means rapidly digitalising the public sector, maximising revenue through public sector innovation, reforming the public sector estate and the public body landscape, and improving public procurement.
The annual Medium Term Financial Strategy has also been published to provide the economic and fiscal context for the Resource Spending Review and Capital Spending Review, including the fiscal challenges that lie ahead.
Read the Cabinet Secretary’s statement to the Scottish Parliament in full here.
COSLA has stated that the implications of the Scottish Government’s spending plans for the rest of the parliament are deeply concerning for communities across Scotland and fail to recognise the fundamental role Local Government has in addressing the Government’s own priorities of child poverty, climate change and a stronger economy.
The ‘Resource Spending Review’, published on 31 May, shows no prospect of an increase to Local Government’s core funding for the next 3 years, which is especially concerning in the current context of soaring inflation and energy costs.
This “flat-cash” scenario gives extremely limited scope for recognising the essential work of our staff, whose expectations around pay continue to be, quite rightly, influenced by Scottish Government’s decisions in relation to other parts of public sector. Put simply, the plans as they stand will mean fewer jobs and cuts to services. COSLA is seeking an urgent meeting with the First Minister and Cabinet Secretary for Finance to discuss this further.
COSLA’s Resources Spokesperson Gail Macgregor said “Every year at Budget time, COSLA argues for fair funding for Local Government to maintain the essential services our communities rely on.
“No increase in our core funding damages these services and yesterday’s announcement will see this continue for at least the next three years. Our communities are starting to see and feel the difference”
Yesterday, the Fraser of Allander Institute also immediately recognised the impact on councils – “The local government budget will decline by 7% in real terms between 2022/23 and 2026/27…….the real terms erosion of the funding allocations of local authorities represents the continuation of a longer trend”
Commenting on the resource spending review, a spokesperson for the Scottish Children’s Services Coalition commented: “The Scottish Government’s resource review, which highlights a spending gap of around £3.5 billion by 2026/27, points to highly challenging times ahead for our public services (1st June 2022).
“The Fraser of Allander Institute noted that, within this, councils will see real term cuts of 7 per cent between 2022/23 and 2026/27, the implications of which are highly disturbing for those with additional support needs (ASN) who we support.
“Those with ASN make up around a third of our children and young people, including autism, dyslexia and mental health problems, many of whom were already facing considerable barriers to support and not receiving the care they need when they need it.
“While we have witnessed a more than doubling in the number of these individuals over the last decade, putting an immense strain on services, there has been a cut in spending on additional support for learning and a slashing in specialist educational support.
“Covid-19 has had a further major impact, denying care to many, and with these latest swingeing public service cuts we are potentially facing a ‘lost generation’ of vulnerable children and young people.
“We would urge the Scottish Government and newly elected councils to work together to ensure that those children and young people with ASN are made a priority, able to access the necessary support to allow them to reach their full potential.”
The STUC have yet to comment on the Spending Review.
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