Covid-19 support measures may lead to budget cuts, warn Audit Scotland

The Scottish Government said treasury rules are “not designed to deal with a global pandemic”.

Budgets may need to be 're-prioritised' due to Covid-19, warned Audit Scotland

The body responsible for checking whether public money is being spent appropriately has warned of potential cuts to services as part of inevitable budgetary challenges caused by the response to Covid-19.

Audit Scotland released their report into the implications of Covid-19 on public finances and said “deeper reprioritising" of the Scottish Government’s budget may be needed as the impact of Covid-19 continues to bite the public purse.

It broke down the £5.3 billion of spending announced by the Scottish Government in response to the pandemic up to July 31 and warns that the government “must look across all the services they fund” in considering what is “essential”.

The report adds: “Fluctuating levels of funding and continuing heightened levels of demand for services due to Covid-19 present risks to managing a balanced budget. These new budget pressures exist alongside other spending risks.

"These include pre-existing pressures on public finances, and other external events such as EU withdrawal, for which the effect on public finances is not yet fully known.”

Stephen Boyle, the Auditor General for Scotland, said cuts or ‘reprioritisation’ could be on the way and called on the Scottish Government to be “clear” about its choices.

He said: "The scale of the financial response to Covid19 has been significant, and the Scottish Government has made a good start to ensuring its spending is transparent. It must continue doing so.

"The unpredictable nature of the pandemic means more of the Scottish budget may need to be repriortised in the future to respond to Covid-19. And that means the Scottish Government and its partners need to be clear about which services are essential to delivering on national priorities."

A Scottish Government spokesperson said: “The coronavirus (COVID-19) pandemic is posing unparalleled challenges for countries around the world.

“Audit Scotland’s briefing paper underlines the scale of the Scottish Government’s financial response, including substantial extra spending on health services, supporting businesses and protecting and creating jobs.

“We endeavour to be fully transparent on where the money is being spent – including by producing an additional Summer Budget Revision – and welcome Audit Scotland’s recognition of these efforts. It is important we make every penny count.

“Significant budget challenges lie ahead as we work to stimulate a sustainable recovery. Other countries are funding their efforts by running large deficits, but the devolution settlement means the Scottish Government is prevented from borrowing to respond to the virus.

"The current Treasury rules were not designed to deal with a global pandemic and, as Audit Scotland notes, allow us only very limited room for manoeuvre during the year within our own budget.

“Along with the administrations in Wales and Northern Ireland, we are pressing the UK Government to urgently grant us limited and temporary new financial powers which would enable us to fully respond to this crisis. Our requests have so far been denied, but we continue to make the case.”

A message from the Editor:

Thank you for reading this story on our website. While I have your attention, I also have an important request to make of you.

The dramatic events of 2020 are having a major impact on many of our advertisers - and consequently the revenue we receive. We are now more reliant than ever on you taking out a digital subscription to support our journalism.

Subscribe to scotsman.com and enjoy unlimited access to Scottish news and information online and on our app. Visit https://www.scotsman.com/subscriptions now to sign up.

By supporting us, we are able to support you in providing trusted, fact-checked content for this website.

Joy Yates

Editorial Director