Financial hurdles confronting the Scottish Government, segment 96
In Scotland, the Scottish Government has unveiled its Fiscal Sustainability Delivery Plan, a comprehensive strategy aimed at ensuring the long-term sustainability of the country's public finances. The plan, outlined in the latest Medium Term Financial Strategy (MTFS), is structured around three strategic pillars: focusing spending on critical missions, supporting economic growth and tax revenue generation, and maintaining a strategic tax approach.
The plan emphasises maximising public value by focusing spending on Scottish Government priorities, such as addressing child poverty and the climate emergency. To achieve this, measures have been proposed to achieve efficiencies and productivity gains through workforce management and reduction in the public sector, with a commitment to reducing the Full-Time Equivalent (FTE) of the devolved public sector workforce by 0.5% "on average per annum over the next five years."
The MTFS provides central, higher, and lower scenarios for funding, with the central scenario showing a 1.0% average annual increase in day-to-day spending. In addition, the plan includes a commitment to delivering the Scottish Spending Review and the draft 2026-27 Scottish Budget by December 2025.
One of the key commitments in the plan is the aim to close the funding gap for ambitious capital investment plans through improved tax compliance and revenue growth. The Scottish Government has also set a target to deliver NHS Board 3% recurring savings against core funding. Increasing public value is also a commitment, with a savings target of between £0.3 bn and £0.7 bn per annum over the five years.
To ensure transparency, the Scottish Government is committing to publishing workforce and pay bill information on a regular basis. A period of stakeholder engagement will take place up to September, during which organisations can make the case about which services should be prioritised by the government in their decisions in December.
The plan also emphasises a strategic approach to taxation to support economic growth and stabilise public finances. The Scottish Government intends to set out the Scottish Government's indicative spending plans for 2027-28 and 2028-29 for resource, with an additional year (2029-30) for capital. These plans will provide a clear direction for the allocation of resources in the coming years, setting the stage for Scotland's continued financial sustainability.
Business leaders and politicians are closely following the Scottish Government's Fiscal Sustainability Delivery Plan, as it proposes ambitious strategies to strengthen the nation's economy. To achieve this, the plan focuses on improving tax compliance and revenue growth, aims to close the funding gap for capital investments, and sets a target for NHS Board recurring savings. Additionally, the plan promises increased transparency by regularly publishing workforce and pay bill information, and engaging stakeholders to prioritize services for funding.
