Recently, John Swinney announced that he would bring the 2025-26 Programme for Government to 6th May, which will situate the PfG exactly one year before the Holyrood election in May 2026 ((writes Fraser of Allander Institute’s MAIRI SPOWAGE)..
Normally, the Programme for Government is the annual opportunity for the Scottish Government to set out its policy priorities and the legislation it plans to pass in the coming year. This is usually published just after the return from the Summer recess, setting out both political statements and policy priorities but also (importantly) the legislation that the Government wishes to progress during the parliamentary year.
The First Minister has said he is bringing the statement forward to “enable a full year of delivery” before the Holyrood election.
The PfG that was set out in September was the first opportunity for John Swinney and Kate Forbes to set out their agenda since taking the leadership in Spring 2024. Our thoughts at the time are here – but broadly we welcomed the clear statement of the government’s prioritisation and what they would put first (tackling child poverty) above all else. Whether the government’s spending and policy decisions have actually been consistent with that may be a matter for debate.
Given the relatively short time that have elapsed since John Swinney’s first PfG as FM, there will be significant scrutiny of the document published on the 6th May – how have the policy priorities changed? What was promised in September which has now been sidelined in the run up to the election? And, given the limited legislative time left between now and March, what legislation has a realistic chance of making it through before the parliamentary session comes to an end.
Look out for our analysis on 6th May on the PfG!
Further fiscal fun in May
The PfG won’t be the last opportunity fo the Scottish Government to set out policy priorities.
On the fiscal side, the SG will publish the Medium-Term financial Strategy (MTFS) on 29th May. This will be accompanied by new forecasts from the Scottish Fiscal Commission, and is the SFC’s opportunity to produce forecasts that are consistent with the OBR forecasts that were produced alongside the Spring Statement in March.
In terms of the forecasts, we can expect (probably) that the view of the SFC on growth prospects for this year are likely to have worsened. The OBR in their forecasts in March cut growth for 2025 from 2% to 1%, and a number of independent forecasters have cut the forecast for the UK significantly. This is because of the impact of global uncertainty and turmoil, but also due to policy decisions by the UK Government such as the employer national Insurance increase.
The MTFS itself aims to focus on the longer-term sustainability of Scotland’s public finances and support a strategic approach to financial planning. The publication of this document alongside the Spring forecast is supposed to support the year round budgeting process in Holyrood, allowing the pre-budget scrutiny of committees in the Summer and Autumn to be based on up to date and meaningful information.
However, the MTFS to date has not really been successful in achieving these aims. It appears to be a strategic document, but has more often than not felt like a political statement, more aimed at managing expectations of what might be funded than in setting out a credible central scenario.
One of the issues with the MTFS is that there is no detail on how the spending projections contained within it are arrived at, and therefore it is impossible to scrutinise the priority of each and how realistic they are. When we come to try and understand the net fiscal position, we are often unable to reconcile the MTFS with any in-year spending changes. This throws into question its usefulness as a document. It is also why it has largely been abandoned by those scrutinising the Scottish Government – especially when it has not always been published when it was due.
See our commentary on the last version of this published in May 2023.
In addition to the MTFS, The Scottish Government said it will publish a Fiscal Sustainability Delivery Plan alongside the MTFS 2025 for the first time. The Government say this will support fiscal transparency and a foundation for longer-term financial planning, and announced this in the Autumn in the run up to a debate about fiscal sustainability in the Scottish Parliament.
We can all be cynical about additional plans and strategies being produced by the government (especially given what John Swinney said in May 2024 after taking power about taking action rather than writing more strategy documents). Particularly in this case though it’s unclear why a different document is needed.
The MTFS is supposed to address fiscal sustainability, and the fact that the Scottish Government is creating a separate one casts doubt on the usefulness and the seriousness with which the SG treats the MTFS – and therefore how seriously we should treat it.
However, let’s see what it contains, and we will analyse the contents in detail when it is produced on 29th May. We would expect that it will say something about pay and the size and shape of the public sector in Scotland. Given that around half of Scottish Government current spending is on pay, any long-term-focussed document that does not have a specific view on the size of employment and rate of growth in payroll over a number of years cannot be regarded as credible.
We understand there are also other documents that are likely to come over the summer, such as a plan for Public Service Reform, and a plan for a shift to prevention, particularly on public health.
The issues on pay and public sector size are very relevant to Public Service Reform as well as fiscal sustainability, as it is likely that we will have to drive reform which delivers more productive public services with fewer people than work in the public sector today.
