27 August 2024
Last December the Scottish Fiscal Commission stressed the pressures on spending the Scottish Government would face in 2024-25. The Commission has today confirmed that the Scottish Government will face persistent challenges in balancing its budget.
In advance of the UK Budget on 30 October, there is considerable uncertainty around the Scottish Government’s funding for 2024-25. While UK Government policies contribute to the pressures on the Scottish budget, much of the pressure comes from the Scottish Government’s own decisions. With public sector pay offers now exceeding the 3 percent metric in the Scottish Government’s May 2024 Pay Policy, the Cabinet Secretary for Finance has introduced emergency controls to try to balance spending against funding in 2024-25.
The Scottish Government’s Block Grant depends on UK Government spending in devolved areas, which can change throughout the year. While there will be more clarity on the Block Grant following the Budget, the Scottish Government will be under pressure to match policy commitments by the UK Government which increase spending doing little to ease the current pressure on resources.
The Commission’s Chair, Professor Graeme Roy, said:
“The past choices of the Scottish Government narrow its room for manoeuvre now and in the future. Previous pay settlements, the approach to social security payments, and the Council Tax freeze have all added to the in-year pressures that must be accommodated as it continues to negotiate pay with the public sector unions.”
“With pay making up more than half of the Scottish Government’s day-to-day budget, we need more transparency and planning around pay awards at Budget time to avoid disruptive spending controls being introduced part way through the year.”
The 2025-26 Scottish Budget will be published later this year and will set out a more complete picture of the funding and spending position. The Scottish Government will need to make difficult decisions to balance the budget and ensure decisions now are sustainable in the future.
ENDS
Notes for Editors
- The Scottish Fiscal Commission (SFC) has published three reports. Forecast Evaluation Report – August 2024, Fiscal Update – August 2024, Statement of Data Need – August 2024. Accompanying spreadsheets contain the data for tables and charts.
- The SFC would usually publish updated forecasts in May alongside the Scottish Government’s Medium Term Financial Strategy. As that did not take place, we have not published forecasts since December 2023. We are publishing a Fiscal Update to set out the economic and fiscal developments since December 2023. We discuss how these and other developments over the coming months will affect the Scottish Budgets for 2024-25 and 2025-26. We hope this will assist the Scottish Parliament as it undertakes its pre-Budget scrutiny.
- In the Forecast Evaluation Report we evaluate our December 2022 forecasts for the economy, fully devolved taxes, and social security in 2023-24. We also evaluate our December 2021 income tax forecast for 2022-23.
- The Statement of Data Needs is our biennial statement of the improvements in data and information that that we think would improve the quality of our analysis and help improve transparency. Most of the requests relate to funding and spending information published by the Scottish Government.
- The Scottish Fiscal Commission is the independent fiscal institution for Scotland, established by the Scottish Fiscal Commission (2016) Act. Our reports represent the collective view of the Scottish Fiscal Commission, comprising the Commissioners: Professor Francis Breedon, Professor Domenico Lombardi, Professor David Ulph, and the Chair, Professor Graeme Roy.
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