Scottish Government facing 'real risk' of first budget overspend in history of devolution

Stephen Boyle warned the pace of public sector reform is too slow to offset the increasing pressure on the Scottish budget from increased pay deals and inflationary pressures. He said the upcoming Scottish budget, set to be outlined on December 15, will be “challenging”.

It follows warnings earlier this year from the finance secretary, Kate Forbes, that the public sector required a “reshape and refocus” as she set out staffing levels would need to drop by around 30,000 and that a blitz on the number of quangos was “inevitable”.

Mr Boyle said that reform was now “urgent” after the Scottish Government allowed “significant financial pressures” to grow for several years. He said: “The Scottish Government, like all governments, has to deal with the immediate challenges that external events bring.

“But to improve lives and protect services in the long-run, these challenges cannot distract from the need for broad reform of the public sector. Balancing short and long-term demands is always a difficult task. But the significant financial pressures on Scotland’s public bodies have been growing for several years, and there is now an urgent case for the reform of how services are delivered.”

Should the Scottish Government overspend on its in-year budget for 2022/23, Audit Scotland said it is understood this overspend would be deducted from the following year’s block grant. This could see an already depleted budget, pending the policy choices in the Autumn Statement, further reduced by failing to save enough money within the Scottish budget.

Public finance minister, Tom Arthur, said the budget is worth £1.7bn less due to inflation and that rules restricted the ability to borrow. He added that government support is “understandably increasing” with “tough decisions” needed.

He added: “The Scottish Government is committed to carrying out public service reform as outlined in the resource spending review in a sustainable and progressive way.

Deputy First Minister John Swinney will set out the Scottish budget in mid-December

“But the decisions we will have to take will only be exacerbated if there is a return to austerity by the UK Government.”

Critics said the SNP has got its spending priorities wrong. Scottish Tory finance spokesperson, Liz Smith, called on the government to ditch “pet projects” such as the constitution budget.

Labour’s finance spokesperson, Daniel Johnson, said years of “mismanagement” had left “public finances in chaos”.

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