Scotland’s public sector bill hits £60 billion

Public spending has doubled to more than £60 billion and accounts for half the size of Scotland’s economy.

Government spending also accounts for a greater share of taxes in Scotland than across the UK, while almost one in four working Scots – about 554,000 – is in the public sector. This is a greater proportion than across the rest of the UK.

Industry leaders now say a “bolder approach” is needed to making savings and promoting competition in the delivery of public services.

Finance secretary John Swinney said yesterday that Scotland is going through the “most ambitious reform of public services” in more than a generation.

But the SNP Cabinet secretary admitted Scotland’s public services are facing the “toughest financial climate since devolution” and this is likely to continue in the years ahead.

A report by the Scottish Parliament Information Centre (SPICe) says public spending reached £64.5bn in 2011-12 – up from £31.8bn at the onset of devolution in 1998-99.

This is more than half the size – 51.7 per cent – of Scotland’s economy, but falls to 42.7 per cent if North Sea oil is factored in. Across the UK, the figure is 45.5 per cent.

There are now 554,800 jobs in the public sector such as councils, government positions and the NHS in Scotland. This has been falling steadily from a peak of 602,000 in 2006 but is still up by 9,000 on the 2012 figure.

These jobs account for about 22.5 per cent of the workforce in Scotland – significantly higher than the UK as a whole, where the figure is 18.9 per cent.

Scottish Conservative local government spokeswoman Margaret Mitchell said: “When the SNP is supposed to be looking at every penny, it’s a surprise to see the public sector expanding.”

CBI Scotland’s David Lonsdale said the Scottish Government has a “substantial remit” through its £30bn budget to be a more effective catalyst for growth.

He added: “A bolder approach to making savings and promoting competition in the delivery of public services is needed, in order to avoid any further tax rises on business and also to free up money for important GDP-enhancing investments in infrastructure, skills development and export support.”

Mr Swinney made a keynote speech yesterday to mark the second anniversary of a groundbreaking report by former trade union chief Campbell Christie on reforming public services.

The finance secretary said: “Changing the way we deliver public services helps to deal with the challenge of spending cuts, but it is all the more important for the transformational improvements we can bring to the services we deliver.”