Explainers

Fiscal sustainability spending projections

In our fiscal sustainability work we produce projections for devolved public spending over the next 50 years. As we assess the sustainability of current policies, we assume that the future level of the provision of public services remains in line with current levels.

In preparing the projections we divide devolved public spending into broad areas like education and health. In areas where spending is linked to demographics, for example in education where spending on schools affected by the number of children and young people, we factor in our projections of Scotland’s population. We also include real earnings growth as we assume wages in the public sector will rise in line with those projected for the private sector.

An important part of our spending projection is our inclusion of an additional growth rate for health. There has been a historical increase in health spending that cannot be explained by factors like demographics or real earnings growth. There are a number of possible explanations for this, such as technological advances and increased prevalence of chronic conditions. By including this additional growth rate in our projection, health becomes 50 per cent of all devolved spending by the end of our projection.

In the interim period to 2027-28, we assume that budgets will be balanced, and grow all spending in line with income. From 2028-29 onwards, we allow a budget gap to develop, demonstrating the scale of the response that will be required over time.  

Our spending projections incorporate all devolved Scottish Government and local authority spending, but we don’t differentiate between the levels of spending in our projections as we’re interested in the overall picture.

The balance between our projections of spending and funding allows us to assess the fiscal sustainability of the Scottish Government.