Public service reform must happen faster to protect budget, auditors warn

Reform of public services in Scotland must happen faster or financial choices will become even harder in future, auditors have told MSPs.

Audit Scotland said the approach of making small-scale budget cuts is no longer feasible and a more long-term approach is needed.

In written evidence to Holyrood’s Finance Committee, the auditors noted that budget pressures had grown even worse than when the Scottish Government carried out its last medium-term financial strategy in December 2021.

At that point, a £3.5 billion budget gap was expected to emerge by 2027.

The new report said: “In the face of the financial challenges, the pace and scale of reform needs to increase, and this will require a sense of urgency from the Scottish Government, at a time when it is also pressing to resolve short-term issues facing the budget.

“If this does not happen, it will become increasingly difficult for the Scottish Government to manage the pressures on the budget, meaning that larger cuts to spending and/or increases in taxes will be necessary to balance the budget, with an increased risk that the quality of public services will fall.”

As the Finance Committee met on Tuesday, Labour MSP Michael Marra quizzed Audit Scotland’s executive director Antony Clark on its report.

Mr Marra said there appeared to be consensus around the need for reform of the public sector, and he asked: “Why has this not happened?”

Mr Clark said the Scottish Government had so far only provided “statements of intent”, adding: “What we would expect to see hopefully in the relatively short term is a more worked-up plan.”

The Government’s last resource spending review noted there were 129 public sector bodies in Scotland and said “reform is inevitable”.

It also said the size of the public sector workforce needed to reduce to pre-Covid levels, and said services should be run more efficiently.