MSPs 'unable to say' if Scottish government spending plans are affordable

A Holyrood committee says it has been unable to determine whether the Scottish government's tax and spending plans are affordable due to a lack of transparency from ministers.

MSPs on the Finance and Public Administration Committee said in a report that the government must provide "much greater transparency" on its progress in closing a forecasted £5bn gap in the nation's finances.

The committee warned of "substantial risks" to next year's Budget if ministers fail to deliver on plans to reform public services, boost economic growth and increase the tax take.

The Scottish government said it would consider the recommendations of the report, adding it had delivered a balanced budget every year.

The finance committee had taken evidence from public bodies, local authorities and economic experts to determine the affordability of the government's tax and spending plans, but said it was unable to do so due to a lack of answers from ministers.

The committee noted that the country faces "significant financial pressures".

It highlighted an anticipated budget shortfall of £2.6bn for day-to-day spending, such as paying public sector wages, and £2.1bn in capital funding, to pay for long-term infrastructure projects, by 2029-30.

The Scottish government has announced plans for major overhauls of public services, including proposals to drastically shrink the number of NHS boards and regional councils, in a bid to make savings and improve efficiency.

However, the committee noted that the country is facing economic pressures from inflation and rising energy prices.

Meanwhile, the Scottish government must contend with a £720m reduction in next year's Budget because of weaker-than-expected income tax receipts compared with the rest of the UK.

The finance committee also highlighted that the UK government's prioritisation of defence spending could reduce capital funding for Scotland by £87m.

As they deal with difficult financial conditions, the committee urged ministers not to "routinely" use cash from the ScotWind project - generated by the leasing of offshore wind farm options - as a "second reserve".

Finance committee convener Clare Haughey, an SNP MSP, acknowledged the "scale of the pressure on the Scottish Budget", which is due to be announced on 3 December.

"However, we have insufficient evidence to determine whether the Scottish government's tax and spending plans are affordable and sustainable," she said.

"We are also concerned that the Scottish Budget faces substantial risks if the three pillars of its Fiscal Sustainability Delivery Plan (FSDP) – including ambitious public service reform targets – are not delivered in full and on time.

"We therefore call on the Scottish government to provide much greater transparency on progress in closing the fiscal gap and meeting reform targets."

Haughey said "as a first step" the Scottish government should publish an updated FSDP alongside the Budget and resume the annual publication of the medium-term financial strategy while committing to regular spending reviews.

"We also urge the government to update its public sector pay policy and tax strategy at the earliest opportunity," she added.

Scottish Conservative finance spokesperson Craig Hoy said: "Even one of their own backbenchers who leads this committee says it is typically shrouded in SNP secrecy."

He added: "This reeks of more economic incompetence from the nationalists, who are already presiding over a £5bn funding gap in Scotland's finances."

A Scottish government spokesperson said: "This government has delivered a balanced budget every year and a comprehensive strategy and delivery plan has been published which sets out how we will close the gap between funding and spending by 2029-30, whilst ensuring spending is focused 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."

The Scottish government has said that its funding package from the UK government in 2027-28 will suffer a real-terms cut of £650m as a result of the measures announced in the chancellor's UK Budget.

The spokesperson said this would reduce "the money we have to spend on public services and supporting people with the cost of living".

They added: "Ministers note the committee's report and will consider the recommendations within our current fiscal constraints."

The government said it would respond to the report after Finance Secretary Jenny Gilruth announces the Budget next month.