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

3 November 2022

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.”

On UK economic stability, Mr Gibson added:

“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.”