Scotland's public finances in 2023-24: the impact of the cost of living and public service reform

Scotland’s Citizens Advice network is an essential community services empowers people in every corner of Scotland through our local bureaux and national services by providing free, confidential, and independent advice.

We use people’s real-life experiences to influence policy and drive positive change. We are on the side of people in Scotland who need help, and we change lives for the better.

CAS does not hold data to take a view on income tax rates. We welcome the commitment to prioritising social security and health spending given the cost of living crisis and the impact of the pandemic.

We would urge future spending decisions focus on preventative spend, solving problems for citizens before they get worse. This will ultimately mean more efficient spending in the long run. Well-funded and resourced spending on advice services can be a key factor here. Previous, independent analysis of the Citizens Advice network found the value of our advice is worth up to £245million in net benefits for Scottish society.

When someone gets advice from a CAB and has their problem solved they avoid further adverse consequences. For example someone who has their income maximised and no longer has to choose between heating their home and buying food avoids the ill health consequences as a result. The research found that the network saves the public purse tens of millions of pounds a year.

Our advice saves the health service millions of pounds a year, including savings of up to £7million in physical health spending and over £15 million in mental health spending.

We are also concerned about the potential impact of falling discretionary budgets for local government, which run the risk of a knock on impact for CABs. We go into further detail on this in our answer to question 4.

CAS does not hold data to take a view on wider macroeconomic or fiscal issues, but would reiterate the importance of inclusive growth and the growing risk that the cost of living crisis could push significant amounts of the population into debt, poverty and destitution.

Aside from the moral and social implications of growing numbers of people in poverty, policymakers must also understand the economic impact of such an outcome. People choosing between heating their homes and buying food, or struggling with unaffordable debt repayments every month, cannot contribute as consumers to wider economic growth and will ultimately need greater access to and use of social services.

People were already seriously struggling before the latest round of energy prices rise, with polling for CAS conducted by YouGov before the latest price cap increase finding 1 in 5 people regularly ran out of money before payday.

We should understand that we are still very much in the recovery phase after the pandemic, and there was broad, in fact arguably universal, support for an inclusive recovery that leaves no one behind. That is the right thing to do from a moral and economic perspective.

Support for citizens needs to be central to public spending plans during the cost of living crisis. Support packages already announced will offer some respite for citizens but many people are still likely to face very difficult household spending choices as the weather turns cold this winter.

As previously outlined, this will in turn increase pressure on public services. The simplest route for policymakers to deliver additional money to people is often not the most effective way and new and innovative ways of targeting resources to those who need them most should be found.

The Citizens Advice network can act as an example of good practice in many of these areas. In terms of digital and public service reform and innovation we have been working to embrace innovative tech solutions to ensure our services can be accessed by as many people as possible in a way that suits them. A recent successful example of this is our ‘Local Calls for Local CABs’ initiative, funded by the Scottish Government’s CivTech challenge and developed by the tech company SIDELabs.

This project means that anyone contacting a single phone number for the network is automatically routed to their local CAB to speak to a local adviser. Local advice delivered by people who know their local community is what makes Citizens Advice special and cannot be replicated by a centralised call centre approach. This project means that citizens can access our services in a way that suits them without having to compromise on the quality of advice they receive.

Further to this, we are piloting an AI chatbot function which will signpost people to relevant online advice before offering the opportunity to make an appointment if necessary.

We are working on two further CivTech challenges this year and will continue to evolve and develop our services with technology in order to supplement local, face to face services to as many people as possible within the envelope of resources available.
As mentioned above we believe embracing technology and digital innovation can help us deliver better services to more people, in a way citizens want them. Crucially however, we see them as additional and augmenting our existing advice offer, not replacing them. CABs helped over 171,000 people in 2020/21 with 2.5 million users accessing our online advice and information. The results here were significant, with £147 million unlocked for people and the average gain for those who saw a benefit being over £4,400. We anticipate increased demand not just as the cost of living crisis intensifies but also the legacy it will leave once inflation returns to a manageable level. For vulnerable clients with complex needs there is simply no substitute for local, face to face advice in person from a trusted, empathetic adviser so our technological reforms are about meeting increased demand and easing the strain on CABs by offering people who can self-help the opportunity to do so, not replacing existing services.

It is important to understand that this funding for research and development is very welcome, but does not cover the cost of long term delivery of new services. In short, there is money for new ideas and pilots that the voluntary sector can take advantage of, but not to maintain and develop them in the medium to long term. There is an obvious risk here that charities can engage with technological innovations at the first instance, but will struggle to keep pace with digitisation due to a lack of long term funding security.

See digitalisation answer

See digitalisation response, specifically the following

As mentioned above we believe embracing technology and digital innovation can help us deliver better services to more people, in a way citizens want them. Crucially however, we see them as additional and augmenting our existing advice offer, not replacing them. CABs helped over 171,000 people in 2020/21 with 2.5 million users accessing our online advice and information. The results here were significant, with £147 million unlocked for people and the average gain for those who saw a benefit being over £4,400.

We anticipate increased demand not just as the cost of living crisis intensifies but also the legacy it will leave once inflation returns to a manageable level. For vulnerable clients with complex needs there is simply no substitute for local, face to face advice in person from a trusted, empathetic adviser so our technological reforms are about meeting increased demand and easing the strain on CABs by offering people who can self-help the opportunity to do so, not replacing existing services.

On procurement, CAS has argued that we need to move to a more outcomes focused model of delivery, similar to the ‘Preston model’ with a focus on community wealth building and in line with the National Performance Framework.

Currently CABs, reliant on local authorities for core funding, often face the ‘potholes or poverty’ dilemma, where their funding is deprioritised behind statutory obligations, which while understandable leaves innovative, person centred services very vulnerable and at risk. We need a more flexible approach which unlocks greater and more secure funding will ultimately lead to better outcomes for people, with money unlocked in local communities going a way towards alleviating poverty, building community wealth and reducing the strain on social services.

We believe that the voluntary sector and specifically the volunteers of the Citizens Advice network across Scotland have a new and potentially increasingly vital role to play in making public services and local economies fairer and more just. In doing so this would strengthen community participation and co-creation of local democratic structures and processes.

Recent work on the Preston City Council model has focused on the distribution of "generative" benefits to the community to offset current structural economic inequalities which remove economic value from local economies.

However, there has been little work around how greater advice provision alongside more involved citizens can help prevent loss or detriment and therefore play a generative role in local economies. This would make the economy, society and environment more optimal in terms of the delivery of well-being through early intervention via involvement of citizens and be a Scottish model of Community Wealth Building quite distinct from other approaches.

We would again reiterate the value of preventative spend particularly within the advice sector, solving problems for people before they become too great ultimately saves money in the long term and leads to healthier, happier communities. Further details around the impact the CAB network has are available in this briefing: https://www.cas.org.uk/system/files/publications/essential_community_services_briefing_1.pdf

Demand continues to increase and we are unable to utilise our full potential of preventative and early intervention work through our CAB network across Scotland as the resources are simply not enough. A new and emboldened approach to spend to save could see voluntary sector partners augment current personal services to mitigate demand now and in the future from current poor health outcomes leading to chronic long-term health inequalities.

Failing to deal with poverty and deprivation now through short-term mitigation and long-term advocacy for system change, means we are storing up more problem for the most vulnerable communities across Scotland.

We think CABs have a clear and under-utilised place in the preventative and early intervention health and social care space. If these services aren’t in place the cost to statutory services only increases and this has a huge impact on local authority and health board budgets.

In a constrained fiscal environment governments should prioritise expenditure which will deliver outcomes, rather than focus on outputs and inputs which could see expenditure being wasted on services that don’t deliver change for people. To that end, preventative, relationship based services that actually solve people’s problems should be prioritised.

CAS believes that the financial processes and tenders for voluntary sector and other organisations to access funding should reflect this.

We would refer to previous comments on the National Performance Framework, with public spending, particularly procurement being more focused on outcomes than outputs, a move away from a transactional approach to service delivery and move back to one predicated on relationships to address real, long term and ingrained problems that have a strong focus on preventative spending targeting those most in need.

Net zero and the need for a Just Transition is arguably the biggest public policy challenge of this generation but should also be viewed as an opportunity to tackle the cost of living crisis and generate inclusive economic growth. Around 1 in 3 people in Scotland already found their energy bills too high before the latest round of energy price rises and this could rise to 50% of households in Scotland and around 500,000 people have cut back on food shopping to deal with unaffordable bills. We have previously made the case for greater investment in energy efficiency measures and believe this should continue to be a priority. This will have two major benefits – creating jobs and spurring economic growth, while also bringing bills down for consumers in the long run.

CAS does not hold data to take a view on this issue.