Responding to Long-Term Fiscal Pressures

Overview

The Scottish Fiscal Commission’s Fiscal Sustainability Report – April 2025 states that:

“The Scottish Government will face significant challenges funding devolved public services in the future, particularly over the next twenty-five years… because the population in Scotland will age earlier than in the rest of the UK”.

However: “… if improvements in population health can be achieved, pressure on health-related spending may be reduced in the future”.

The Commission suggests this could reduce the Scottish-specific fiscal challenges arising because of demographic change.

Questions

1. What actions should the Scottish Government be taking now to start to address these ‘Scottish specific fiscal sustainability challenges’?

The Scottish Government is publishing its 2025 Medium-Term Financial Strategy (MTFS), the first in two years, and a new Fiscal Sustainability Delivery Plan (FSDP) on 25 June 2025.

In recent years the Committee has reported concerns about a lack of strategic financial planning by the Scottish Government.

2. To what extent does the Scottish Government’s 2025 MTFS and its FSDP demonstrate effective medium- and longer-term financial planning? Can any improvements be made in future years?
    
3. How adequately does the MTFS and the FSDP address the Scottish-specific fiscal sustainability challenges?  

In a 2017 report, a Holyrood budget process review group recommended the Scottish Government publishes a framework document for the Scottish Spending Review.

The report said it should set out the economic and political context, the criteria which will govern the assessment of budgets, and the process and timetable for the review. 

A framework document is expected to be published on 25 June 2025.

4. To what extent does the 2025 framework document for the Scottish Spending Review meet the BPRG’s recommendations on content and timescales?
    
5. What should the next Scottish Spending Review prioritise?

Growing the economy

Scottish Labour Market Insights: February 2025 highlight that the economic inactivity rate for people aged 16 to 64 years in Scotland was estimated to be 22.9% during September to November 2024.

The proportion of inactive people who are long-term sick or disabled has been increasing in recent years in both Scotland and the UK, particularly since the pandemic. 

6. Faced with an ageing population, what actions should the Scottish Government take to increase labour market participation, with a view to growing the tax base?

According to The Productivity Institute “productivity growth in Scotland, mirroring the rest of the UK, has been very weak, registering a 1.0% annual increase in the 2008 to 2023 period”. 

7. Given the stagnation experienced in Scotland and the UK since the 2007/08 financial crisis, what lessons can be learned from countries that have experienced recent productivity growth?
    
8. In which areas should the Scottish Government prioritise its capital spend to best support economic growth?

Public service reform

The Committee shares the Auditor General for Scotland’s view that the Scottish Government needs to demonstrate stronger leadership and bring an overall vision to the Public Service Reform (PSR) Programme.

This will be necessary for real progress to be made, including changing models for public service delivery.

The Scottish Government is expected to publish its first PSR Strategy in June 2025.

9. To what extent does the Scottish Government’s PSR Strategy demonstrate the vision and leadership required to drive progress? How well does it enable progress to be tracked, and outcomes measured?

Strategies

At the Committee’s request, the Scottish Government is conducting an exercise across portfolios to identify the number of ‘live’ strategies it has in place, to provide a baseline for numbers to be monitored and reduced wherever possible.

The Scottish Government is due to report to the Committee on the outcomes of this exercise by the end of June 2025.

At the same time, the Scottish Government announced the publication of two entirely new strategic documents in 2025 (FSDP and PSR Strategy).

10. How transparent and ‘joined up’ are the Scottish Government’s key strategic financial planning documents? What improvements in this area can be made?

How to submit your views

Please submit your views using the online submission form, linked to below.

We welcome written views in English, Gaelic, Scots or any other language. 

The call for views closes on 11 August 2025.