Government urged to make long-term plans to close near-£5bn black hole

The Scottish Government must focus on long-term planning to close a projected £4.7 billion budget black hole by the end of the decade, the country’s spending watchdog has said.

The Government’s consolidated accounts were published on Thursday, showing a £1 billion underspend in 2024-25.

But a report from the Auditor General, also released on Thursday, stressed the need for longer term thinking from the Government to close the projected black hole in day-to-day and capital spending, with current plans said to be lacking detail.

Auditor General Stephen Boyle said: “Although the Scottish Government reported a £1 billion underspend this year, it did so from a combination of additional funding from the UK Government and one-off savings.

“A forecast gap of nearly £5 billion remains between what ministers want to spend on public services and the funding available to them.

“The Scottish Government needs to prepare more detailed plans setting out how it will close that gap by the end of the decade.”

The watchdog also found there was a lack of certainty that the Government could balance the books this year as it is required to do.

A plan, the Auditor General said, has been put in place, but “significant further work is required to ensure delivery”.

He added: “I also understand that many of the actions being identified, and delivered for 2025/26, continue to be non-recurring.

“This approach impacts on the longer-term sustainability of the Scottish public sector.”

The report also criticised the hiring of a former staff member through an agency for four months at a cost of more than £85,000, while two further direct awards of work to the agency resulted in a £220,689 bill.

According to ministers, the role was a “technical” one, the report said, relating to the closure of the European Structural and Investment Funds.

The Auditor General said: “While I recognise the significant financial risks associated with this work, I do not agree that this level of public spending is appropriate without a more robust approval and monitoring process being in place.

“The audit team have recommended that the Scottish Government review the approval levels for agency staff appointments, and the arrangements to monitor and report on agency expenditure.

“This recommendation has been accepted by the Scottish Government.”

Responding to the publication of the consolidated accounts, Finance Secretary Shona Robison said: “These unqualified accounts show that the Scottish Government has once again demonstrated the firm grip we have on the public finances – despite the continued impact of inflation, pressure on public sector pay and wider geopolitical instability.

“In order to balance the budget whilst prioritising funding to protect public services and support the most vulnerable, consequential funding was carefully applied, emergency spend controls were introduced and savings measures were implemented.

“The Scottish Government cannot overspend on its budget and – as we do every year – we left a small underspend in 2024-25.

“There is no loss of spending power to the Scottish Government and our effective and prudent financial management means every penny has been reallocated for the current financial year so it is spent where it is needed most.”

Scottish Conservative finance spokesman Craig Hoy said the report delivered a “damning verdict” on the Government’s handling of public finances.

“John Swinney is still pursuing a completely unsustainable spending programme that the country simply cannot afford in the coming years,” he said.

“Even worse, the report points out the SNP Government are not even able to assess whether their policies are delivering for Scots.

“This report needs to be a wake-up call for the SNP to finally ditch their reckless policies which are damaging Scotland’s economic growth and undermining our public services.”

While Scottish Labour finance spokesman Michael Marra said the Scottish Government “cannot be trusted with your money”.

“The SNP has left £1 billion unspent while frontline services struggle, and another £1 billion disappeared straight into its budget blackhole,” he said.

“The truth is the SNP cannot be trusted with your money and we cannot afford a third decade of this financial mismanagement.”

And Scottish Lib Dem MSP Willie Rennie accused the Government of having “no serious plan” for public services.

“Instead, they have put them on the line by making one expensive blunder after another, from their disastrous bungling of the ferries to selling off the seabed on the cheap,” he said.

A Scottish Government spokesperson said: “We have published a comprehensive strategy and delivery plan which set out how we will close the gap between funding and spending by 2029-30, whilst ensuring we focus spending on frontline services such as the NHS, action to eradicate child poverty and other priorities.

“We are also taking forward a Public Service Reform strategy to deliver services that are preventative, better joined up and more efficient.”