Where the axe will fall - the Scottish Government is slashing spending in all these areas

Up to £500 million of cuts to areas such as health and sustainable travel have been announced by the Scottish Government as it battles to plug a funding black hole by slashing costs and raiding a climate fund.

SNP finance secretary Shona Robison said there were “enormous and growing pressure on the public finances”, with £800,000 of additional pay costs this year alone. Critics blamed the “incompetent and wasteful” Scottish Government for the “swingeing” cuts.

Addressing MSPs in Holyrood, Ms Robison pointed to the impact of “Westminster austerity”, Brexit, Covid, the war in Ukraine and the cost-of-living crisis, and outlined up to £500m of “direct savings”.

Finance Secretary Shona Robison walking into Parliament to deliver her statement on spending cuts. Picture: Lisa Ferguson | Lisa Ferguson

She said she was “reluctantly planning” to utilise up to £460m of cash raised via the ScotWind scheme, where parts of the Scottish seabed are leased out for offshore wind farms. This money was initially earmarked for tackling “the twin climate and biodiversity crises”.

Ms Robison told MSPs: “As we look ahead, it is clear that further significant action will be needed to reset the public finances on to a sustainable path.”

However, she hinted the Scottish Budget, due on December 4, will seek to prioritise economic growth rather than raising income tax. “On the application of taxation we can only go so far, given the scope of our devolved tax powers,” she said.

Ms Robison announced £188m of savings across all portfolios, with details set out in a letter to Holyrood’s finance and public administration committee.

Where the axe will fall

These included £115.8m of savings within the health and social care portfolio, with £18.8m cut from mental health services. Savings of £13.6 were identified within adult social care. In her letter, Ms Robison offered “assurances that the health portfolio will seek to protect key frontline emergency services”.

Meanwhile, £23.4m will be stripped from the net zero and energy portfolio, with areas such as nature restoration, energy efficiency and decarbonisation all affected, and £15.7m has been cut from the social justice portfolio. A total of £23.7m will be taken from the active and sustainable travel budget.

Speaking in the Scottish Parliament, Ms Robison said up to £60m of savings will come from emergency spending controls, targeting recruitment, overtime, travel and marketing. Recruitment freezes will be extended across the public sector.

Ministers previously confirmed they will reintroduce peak rail fares, while plans to roll out free bus travel for asylum seekers were scrapped. In addition, winter fuel payments will no longer be paid to all pensioners, mirroring a UK Government decision.

Ms Robison told MSPs public sector pay is a “significant driver” of the growing financial pressures the Scottish Government faces.

Her comments came after workers in Unison, the largest local government trade union, voted against the latest pay offer made to council staff in Scotland, raising the prospect of strike action.

Ms Robison warned the public sector workforce “will need to evolve”, hinting at further cuts. She said the Scottish Government already has a recruitment freeze in place “for all but the most essential roles”, adding that, “where appropriate”, she was looking to extend that, although she said steps would be taken to ensure bodies such as the NHS, police and fire can “recruit the staff they need”.

With Scotland facing a rising funding gap, Ms Robison insisted that “significant action will be needed to reset the public finances onto a sustainable path”. The gap between revenue and spending is already forecast to grow from £1 billion in 2024/25 to £1.9 billion by 2027/28.

Ms Robison sought to lay the blame at the door of the UK Government and “continued Westminster austerity”. She said the Scottish Government has a “largely fixed budget”, much of which is determined by the block grant received from the UK.

However, David Phillips, an associate director at the Institute for Fiscal Studies (IFS), said the Scottish Government “isn’t blameless here”.

He said: “It was already clear at the start of the year that things were going to be financially challenging, with public sector pay deals of 2 – 3 per cent likely insufficient to avoid industrial action. The Scottish Government could have held back funding to help meet additional pay and other cost pressures, rather than be forced to make in-year cuts to other spending. A decision to freeze council tax also cost almost double the amount raised from increases in income tax rates on higher earners. Tax policy decisions therefore reduced rather than raised revenues, increasing the pressure on Scotland’s public finances.

“As the Scottish Fiscal Commission has highlighted, the last few years have seen the Scottish Government increase public sector pay, and roll out new, more generous social security benefits. These are legitimate things to prioritise. But they do reduce the amount available for other areas of spending and add to budgetary pressures. Previous pay increases, which were more generous than in England, also mean higher pay levels – increasing the cost of further increases.

“More difficult decisions are likely next year and beyond given the different fiscal outlook.”

Tory MSP Liz Smith said the independent Scottish Fiscal Commission had made “abundantly clear” that much of the financial pressure came from the Scottish Government’s own decisions.

She said Scotland was losing out on £624 million in revenue because its economy is growing at a slower rate than the UK as whole – adding that this “just happens to be close to the swingeing expenditure cuts that the finance secretary is announcing today”.

Scottish Labour’s finance spokesman, Michael Marra, said Ms Robison’s statement was a “threadbare attempt to pass the buck”. He added: “This incompetent and wasteful SNP government has lost its way and is mismanaging public money.”

Scottish Green finance spokesperson, Ross Greer, claimed the proposals were a “disaster for our climate”. He said: “The SNP have chosen to slash spending on climate action and increase costs for commuters.

“Other options were available, but they’ve decided to cut the budgets for nature restoration and walking, wheeling and cycling, bring back peak rail fares and raid ScotWind funds originally intended for investment in our country’s future, especially in the green economy.”

Where the £188.4m in cuts has fallen

Deputy First Minister, Economy and Gaelic: £1.6m

£800,000 on reducing VisitScotland’s marketing in 2024/25;

£800,000 on provisions to manage anticipated losses from the European Social Fund.

Education and skills: £6.7m

Including £6m from higher education student support;

£300,000 from children’s rights, protection and justice;

£200,000 on early learning and childcare.

Health and social care: £115.8m

including £20.3m from Covid-19 funding;

£11m from general medical services;

£18.8m from mental health services;

£13.6m from adult social care.

Justice and home affairs: £100,000 from the safer communities programme

Net zero and energy: £23.4m

Including £16m from Scottish Water loans;

£2.5m from reviewing all zero waste activities, including the Circular Economy Bill;

£1m from nature restoration funds.

Rural affairs and islands: £1.4m

Including £800,000 from community-led local development funds.

Including £700,000 from cladding remediation;

£7m from Social Security Scotland recruitment;

£5m from universal winter fuel payments for pensioners.