Tag: Scottish Government

FRASER of ALLANDER ANALYSIS

John Swinney presented his first programme for government to parliament on Wednesday. John Swinney came to power as First Minister in May, but due to the UK General election, this was his first opportunity to set out his government’s programme (write MAIRI SPOWAGE and EMMA CONGREVE).

The Programme for Government has four key themes: eradicating child poverty, economic prosperity, improving public services and protecting the planet. So far, so familiar – and not a huge departure in the substance from the three priorities presented in the 2023-24 Programme for Government by his predecessor.

The speech, of course, focused on the upside and how each strand of what was set out will be mutually reinforcing. One thing we often comment on when looking at these high-level speeches is that some of these things might occasionally conflict with each other. So, what is good for business might not be good for tackling child poverty, and vice versa.

However, the FM made clear that child poverty is ‘first and foremost in these priorities’. This sounds like a clear signal that where there are trade-offs, child poverty concerns will win over. Some may disagree with putting that first above all else, but for those of us trying to understand why certain decisions are being made, it’s not unhelpful for the government to be setting out a clear steer.

We’ll be looking at what that means in practice when it comes to Budget allocations; to implement much of what he talked about – for example, a roll-out of the type of whole family support that has been piloted so far – will require new money.

Also, following on from the Finance Secretary’s grim statement on Tuesday, no amount of prioritisation can totally overcome fiscal constraints.

Despite the fact that more targeted (rather than universal) measures are probably sensible for targeting child poverty, the non-delivery of the pledge to roll-out free school meals to all children in primary 6 and 7 is likely to sit uneasily with the FM. More tough decisions in this mould are likely to need to be made.

Elsewhere in the Programme for Government, there are some interesting specifics in relation to the economy, particularly on planning. The government has committed the establishing Scotland’s first “Planning Hub”, the establishment of Masterplan consent areas, and a planning apprenticeship programme. Whilst this sounds like pretty dry stuff, one of the most common frustrations raised by businesses is about the planning system, so this is likely to be welcomed.

Other things were notable by their absence. The Human Rights Bill and the Learning Disability, Autism and Neorodivergence Bill were not on the list of Bills for this 2024-25 session.

Given the 2025-26 session will be cut short by an election, they aren’t likely to be passed this parliament. This has come as a shock to many given previous assurances and the substantial resources that civil servants and stakeholders alike have put into the pre-legislative process to get these ready.

We’re yet to hear a convincing explanation for why they’ve been delayed.

The fiscal statement casts a long shadow 

The statement on Wednesday was hugely overshadowed by the fiscal statement on Tuesday. Overall, as well as setting out fiscal “black holes” it felt like Tuesday’s statement sucked up most of the political energy around in the week, leaving Wednesday to feel like a bit of a low energy anti-climax.

We are still not sure after the statement exactly what the Finance Secretary sees as the gap in the budget. Given she has set out £500m of “direct savings” plus the use of £460m of use of Scotwind money, we assume it is roughly £1 billion. £800m of this has been tied to “pay pressure”, and the rest (we assume £100-200m?) has been described as “in demand-led activities like legal aid, police and fire pensions and the costs of accommodation for Ukrainian displaced people” plus COVID-related health measures.

After a bit more detective work, we’ve documented the “£500m of direct savings” in the table below, along with where we still have questions:

	Published description	What we’ve worked out
Savings
£65m	Pre-announced decisions: peak fare train fairs to return, no free bus travel for asylum seekers plus agreement with local government to draw on existing programmes to fund pay deals	According to Transport Scotland, the cost of the full year subsidy for the peak fares pilot was approximately £40m[i]. In theory then, not having it running for the last 6 months saves £20m, although it is unclear to us if this was budgeted for to begin with given the pilot was only expected to last for 6 months of the year.The BBC reports £2m had been set aside for free bus travel for asylum seekers[ii]BBC reports that Councils have been asked to redirect £5m of this year’s nature restoration fund to help fund pay deals[iii]. In addition, £10m has been redirected from the Connecting Scotland’s digital devices programme (free iPADs and laptops for people who were digitally excluded), £2m from the fund to expand free school meals to p6 and 7 pupils who receive the Scottish Child Payment (although they say it will still be delivered) and £26m from the Flood Risk Management Programme, on the basis that “councils do not need it in this year”.ivThese total £65m.
£188.4	New additional measures announced on 3rd September	Full table of figures are laid out in the Annex of the letter to the Finance Committee.As there are no figures to help put these reductions into context (i.e. in relation to the size of the original budget allocations) it makes it hard to judge whether these are likely to have a large or small impact.
£60m	Savings anticipated through emergency spending controls, in addition to savings set out as part of the £188.4 million.	They are linked to recruitment freezes, and reductions in costs of travel and marketing, as per the letter to Cabinet reported in the mediav. We have no information on how the number has been calculated.
£160m	The cost of universality in the Winter Fuel Payment.	The money for an equivalent to the UKG universal WFP was added to the Block Grant adjustment for 2024-25. The recent UKG decision to remove universality means that this money will need to be returned to UKG through the fiscal framework reconciliation process.SG could spend this money in 2024/25, but would then need to find savings in subsequent years to cover the reconciliation.We understand a decision on whether it will be spent this year is yet to be made.
Total savings
£473.5m	Up to £500 million saving measures	We understand from officials that the “up to £500m” is a rounding up of the total.

#i https://www.transport.gov.scot/news/scotrail-peak-fare-removal-pilot-report-published/

ii https://www.bbc.co.uk/news/articles/cjw3n63ypjwo

iii https://www.bbc.co.uk/news/articles/cwy7p2y1p1eo

iv https://www.bbc.co.uk/news/articles/cqxjqggnewro

 ^{v https://www.thetimes.com/uk/scotland/article/scottish-government-imposes-emergency-spending-controls-l2pnb7lsg} 

The fact that we are having to piece this together, including from media reports, is obviously not ideal. We don’t think it would have been too much to ask to have all this detail laid out, along with the evidence of impact that was cited in the letter to the Fiance and Public Affairs Committee.

We hope more information is released into the public domain in the coming weeks alongside the Autumn Budget Revision so help clear things up, as far as possible…

A look ahead to the budget

We now know the Scottish Budget will be on the 4th of December. The other important day to understand what the budget may look like for the rest of this financial year and the next will be the UK Budget on 30^th October.

We should at that point have much more clarity about the financial envelope which the Scottish Government is working with for 2025-26.

There are also likely to be significant changes to departmental allocations for the current financial year (2024-25). Rachel Reeves said in her fiscal statement as Chancellor in July that she expected some of these in-year issues to be soaked up by departmental budgets.

The extent to which this will actually be achieved will also impact the monies coming to the Scottish Government. Therefore we may be most of the way through 2024-25 before we actually understand how much of the Scotwind revenue is required to balance the budget in 2024-25. It may mean that this is not the last fiscal statement we have about the current financial year.

Given all these in-year movements we would like to call, yet again (like SPICe have done in their blog), for the Government to provide in the Budget next year’s plans alongside the current position for 2024-25.

The convention (for some reason) would be to present the budget plans for 2025-26 compared to the plans that were set out for 2024-25 in December 2023. The in-year movements we have seen over the last three years make a nonsense of this convention (which reduces transparency and hampers parliamentary scrutiny).

This may be a bit of a niche point but it would make analysis of these statements much easier. Here’s hoping that this is finally the year this change is made.