Tag: Finance Committee

Finance Committee launches inquiry into Scottish Government’s public service reform programme

A new parliamentary inquiry into the Scottish Government’s public service reform programme has been announced.

Holyrood’s Finance and Public Administration Committee wants to examine the detail of the reform programme, which is focused on digitalisation, innovation, estates, public body landscape and procurement. 

As part of this work, the committee will examine how public bodies are working to achieve the government’s plans to make efficiencies, while ensuring effective delivery of public services, in 2023-24 and beyond. 

It will also consider the government’s ambitions to:

  • keep the public service pay bill costs at 2022-23 levels and
  • return the public sector workforce “broadly to pre-Covid-19 levels”.

Finance and Public Administration Committee Convener, Kenneth Gibson MSP said: “The Scottish Government’s Resource Spending Review published in May 2022 set out its high-level spending plans up until 2026-27 to deliver on its ambitions. 

“Further information on the government’s plans for reform and workforce levels were expected in the Scottish Budget 2023-24 but did not materialise due to ongoing economic turbulence.

“Our committee therefore wants to look at how public bodies are working to put in place the government’s ambitions for reform.“We also want to establish from where in the public sector reductions in headcount to pre-pandemic levels will be made, and to what timescales.

“Clarity and transparency around these issues are crucial, during what is an uncertain time for the public sector.”

A call for views from public sector bodies, academics, think tanks and other interested parties has been launched today, with a closing date of 1 May 2023.

To inform this inquiry, the committee is seeking written views from Scottish public bodies on their plans for public service reform in their sectors, and others with a view on how the reform programme is working in practice and how it is delivering effective and efficient services. 

The committee is particularly keen to hear from: 

  • all types and sizes of public sector bodies from across the public sector 
  • others affected by the Scottish Government’s public service reform programme, and 
  • think-tanks, academics and commentators on progress with, and outcomes from, the reform programme. 

Submit your views

Difficult budget decisions needed to balance the books, warns Holyrood’s Finance Committee

A Holyrood committee has warned of difficult tax and spending decisions in the budget if the Scottish Government is to balance the books and address both the cost of living crisis and the lasting impact of Covid.

In a report published today, the Finance and Public Administration Committee’s says an ‘open and honest debate’ with the public needs to be fostered on how to balance spending priorities and taxation.

In its report, the Committee notes that public sector pay rises will be funded, at least in part, through a headcount reduction in the public sector, but calls on the Scottish Government to ensure this is done in a co-ordinated way that minimises the impact on public services.

The report adds it is also now time for the UK Government to concentrate on putting in place measures to bring more stability to the UK economy and recognise the impact of inflation on the Scottish block grant.

Finance and Public Administration Committee Convener Kenneth Gibson said: “Our Committee accepts that the Scottish Government faces difficult choices in balancing its approaches to spending and taxation – especially if it’s to maintain financial sustainability and support households and businesses through the cost of living crisis.

“An open and honest debate with the public about how services and priorities are funded is now needed, including on the role of taxation in funding wider policy benefits for society.”

On the challenges facing the public sector, Mr Gibson said: “We acknowledge the challenge the Scottish Government faces in identifying additional money to fund public sector pay rises which respond to inflation.

“The UK Government should also recognise the impact of inflation on the Scottish block grant.

“We ask for assurances from the Scottish Government that it will approach reducing the public sector headcount in a systematic, transparent, and co-ordinated way.  This should be done in tandem with the public service reform agenda, with a view to minimising any impact on the delivery of public services.

“As we say in our report, it is now time for the UK Government to concentrate on putting in place measures to bring more stability to the UK economy.”

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Finance Committee warns of more pressure on Scotland’s finances

Holyrood’s Finance and Public Administration Committee has warned that Scotland’s public finances are likely to face increased pressure next year and beyond.

While forecasts show increasing optimism that the Scottish economy will return to pre-pandemic levels by mid-2022, emerging evidence suggests that the recovery and economic performance in Scotland is not as strong as in the UK as a whole – primarily due to a reduction in oil and gas activity.
 
The effect is likely to put more pressure on Scotland’s public finances, according to the committee’s Budget Scrutiny Report.  

Furthermore, with UK Government capital grants down by 9.7%, borrowing to the £450 million maximum permitted is required to enable a 1.2% increase in infrastructure expenditure after inflation.

The Scottish Budget is limited by the forecasts of the independent Scottish Fiscal Commission (SFC), beyond which the Finance Secretary cannot go.

In evidence the SFC said: “The overall Scottish Budget in 2022-23 is 2.6% lower than in 2021. After accounting for inflation, the reduction is 5.2%.”   

The committee says more work is needed to understand what lies behind these economic and demographic trends and how best they can be addressed.

Today’s report explores the issues in more detail.  Next week sees the Stage 1 debate of the government’s Budget Bill.

Finance & Public Administration Committee Convener Kenneth Gibson MSP said:

“The Committee agrees with the Scottish Government that it faces a challenging year, with further decreases in resource expenditure in the two years that follow.

“It’s clear that with UK Government grants continuing to decline, further fiscal flexibility for Scotland must be considered. Borrowing limits are too constrained and are being eroded by inflation. Tax rates remain unchanged but, as in the rest of the UK, inflation will bring more people into higher bands. 

“To ensure Scotland’s public finances are placed on a more sustainable footing, productivity, wage growth, demographic change and labour market participation should be a key focus for Scottish Ministers.

“Transparency in the full and timely presentation of figures is also essential, particularly regarding COVID-19 funding, how it is allocated both by the UK Government and subsequently by Scottish Ministers, and the impact of this expenditure. 

“As part of the Fiscal Framework review, both the UK and Scottish governments must consider and agree a process by which Barnett consequentials are clearly communicated, to bring greater certainty over what is ‘new’ and what is ‘reprofiled’ money.”

Committee calls for ‘national conversation’ on tax policy

It is highly likely that Covid 19 has exacerbated existing structural inequalities in Scotland, according to the Finance and Constitution Committee’s budget report published today.

A fair and equal economic recovery should, therefore, focus support on lower income, less educated, younger workers and help their progression in the labour market, says the Committee in unanimously agreed findings..

The report also says a “fundamental examination” of the Scottish taxation system should be held in time for the 2023-24 Budget.

The committee calls for a ‘national conversation’ on what tax policy is designed to achieve – in particular its role in achieving a just, sustainable and strong economy as we recover from Covid 19.

Finance & Constitution Committee Convener Bruce Crawford MSP said: “Our Committee recognises that it is highly likely that Covid 19 has exacerbated existing structural inequalities – with people on low or precarious incomes, with fewer employment rights facing the harshest of consequences.  

“The pandemic has also had a devasting impact on the economy with some sectors and businesses being hit harder than others

“Our view is that a fair economic recovery from Covid will require a particular focus on supporting lower income, less educated and younger workers into the labour market.  It should also help them progress up the labour market while driving up standards of pay and workplace rights.

“If the reduction in jobs in hospitality and non-essential retail is to become a permanent feature, support for training in other sectors and industries is also likely to be important.

Calling for a ‘national conversation’ on the Scottish tax system, Mr Crawford added: “We now consider that a fundamental examination of what the Scottish tax system is designed to achieve must be undertaken.  In particular, it should look at the role of tax policy in achieving a just, sustainable and strong economy as we recover from Covid 19. 

“This would include the breadth and nature of the tax base, the impact of economic activity on the size of the tax base, and the relationship between local, Scottish and UK-wide taxes.

“The Committee’s view is that this requires a national conversation jointly led by the Government and Parliament and which includes a wide range of voices across Scotland.” 

The committee’s report says if the work was completed by September 2022 it would allow its successor Committee to consider the findings as part of its pre-budget scrutiny ahead of the Government preparing its 2023-24 Budget.

Find the full budget report of the Finance & Constitution Committee here..