Report on Pre-Budget Scrutiny 2025-26 - Managing Scotland's Public Finances: A Strategic Approach

PDF Published: Thursday 07 Nov 2024 (FPA062024R9)

Expand
Overview
Report

Hide

Hide

Overview
Report
- Introduction
- Context for pre-budget 2025-26 scrutiny
- Economic and fiscal context
- A Strategic Approach?
  - Scottish Government priorities
  - Budgeting approaches
  - Sustainability of key spending decisions
    
    Public sector pay
    
    Social security spending
    
    ScotWind revenues
    
    Bonds
  - Approach to taxation
    
    Tax Strategy
    
    Income tax policy
    
    Other national taxes
  - Sustainability of local government finances
    
    Financial pressures and flexibilities
    
    Council Tax reform
  - Growing the economy
    
    Growing the tax base
    
    Labour market participation and productivity
    
    Capital expenditure
    
    EU Replacement Funds
  - Public service reform
    
    Scottish Government's Public Service Reform Programme
    
    Digitalisation
  - Conclusion
Sources

A mosaic of 4 photos showing the Committee meeting with young people, business and public sector organisations at the University of Dundee

Image: Photo 1: Committee's discussions with young people and business and public sector organisations in Dundee, 28 August 2024

A bar chart in descending order showing the outcomes of the Committee's pre-budget scrutiny event.

Image: Figure 1: Outcomes of Dundee engagement event

A photo showing Committee members listening to a scientist in a laboratory during the visit to the University of Dundee Life Sciences department as part of its business planning day.

Image: Photo 2: Committee visit to University of Dundee School of Life Sciences, 29 August 2024

A line graph of different colours showing reasons for economic inactivity in Scotland for ages 16 to 64 from 2006 to 2022

Image: Figure 2: Economic Inactivity by Reason, Scotland, 16-64

A photo of Committee members meeting parliamentarians in Estonia during the Committee's fact finding visit in September 2024.

Image: Photo 3: The Committee’s fact-finding visit to Estonia included discussions with Members of the Riigikogu Finance and Economy Committees

Scottish Fiscal Commission. (2024). Fiscal Update. Retrieved from https://fiscalcommission.scot/scottish-budget-pressures-unlikely-to-be-removed-by-uk-budget-decisions/#:~:text=Scottish%20Budget%20pressures%20unlikely%20to%20be%20removed%20by%20UK%20Budget%20decisions,-27%20August%202024&text=Last%20December%20the%20Scottish%20Fiscal,challenges%20in%20balancing%20its%20budget.

Scottish Government. (2024, September 3). News Release: Urgent action taken to balance budget. Retrieved from https://www.gov.scot/news/urgent-action-taken-to-balance-budget/#:~:text=%C2%A3500%20million%20in%20savings,pressure%20on%20the%20public%20finances%E2%80%9D.

Scottish Parliament. (2024). Finance and Public Administration Committee's pre-budget 2025-26 scrutiny - Managing Scotland's Finances: A Strategic Approach. Retrieved from https://www.parliament.scot/chamber-and-committees/committees/current-and-previous-committees/session-6-finance-and-public-administration-committee/business-items/managing-scotlands-public-finances-a-strategic-approach

SPICe. (2024). Managing Scotland's Finances: A Strategic Approach - Summary of written submissions received. Retrieved from https://www.parliament.scot/-/media/files/committees/finance-and-public-administration-committee/prebudgetscrutiny202526_spicesummaryofevidence.pdf

Scottish Parliament . (2024). Managing Scotland's Finances: A Strategic Approach - Written submissions received. Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/published_select_respondent

Scottish Parliament . (2024, September 10). Finance and Public Administration Committee, Official Report. Retrieved from https://www.parliament.scot/api/sitecore/CustomMedia/OfficialReport?meetingId=15987

Scottish Parliament . (2024, September 17). Finance and Public Administration Committee, Official Report. Retrieved from https://www.parliament.scot/api/sitecore/CustomMedia/OfficialReport?meetingId=16004

Scottish Parliament. (2024). Finance and Public Administration Committee. Retrieved from https://www.parliament.scot/api/sitecore/CustomMedia/OfficialReport?meetingId=16034

Scottish Parliament. (2024, October 8). Finance and Public Administration Committee, Official Report. Retrieved from https://www.parliament.scot/api/sitecore/CustomMedia/OfficialReport?meetingId=16043

Scottish Government. (2024, August 23). Correspondence from Cabinet Secretary of Finance and Local Government to Finance and Public Administration Committee, Key issues update. Retrieved from https://www.parliament.scot/-/media/files/committees/finance-and-public-administration-committee/correspondence/2024/budget_cabsecflgtoconvener_23aug24.pdf

UK Government . (2024, October 30). UK Autumn Budget 2024. Retrieved from https://assets.publishing.service.gov.uk/media/672232d010b0d582ee8c4905/Autumn_Budget_2024__web_accessible_.pdf

Office for National Statistics . (2024, October 16). Consumer Price Inflation, UK: September 2024. Retrieved from https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/september2024

UK Government. (2024, August 2). Fixing the foundations - public spending audit 2024-25. Retrieved from https://www.gov.uk/government/publications/fixing-the-foundations-public-spending-audit-2024-25/fixing-the-foundations-public-spending-audit-2024-25-html#:~:text=The%20government%20is%20committed%20to,to%20restore%20public%20spending%20control.

Scottish Government. (2024, August 14). News release: UK Government decision ends universal fuel payments. Retrieved from https://www.gov.scot/news/uk-government-decision-ends-universal-fuel-payments/

Scottish Government. (2024, September 3). Correspondence from the Cabinet Secretary for Finance and Local Government, Fiscal Statement. Retrieved from https://www.parliament.scot/-/media/files/committees/finance-and-public-administration-committee/correspondence/2024/budget_cabsecflgtoconvener_3sep24.pdf

Scottish Government. (2024, September 3). Cabinet Secretary for Finance and Local Government, Fiscal Statement to the Scottish Parliament. Retrieved from https://www.gov.scot/publications/fiscal-pre-budget-update-cabinet-secretary-for-finance-3-september-2024/

SPICe. (2024, September 3). Filling in the fiscal cracks ... again. Retrieved from https://spice-spotlight.scot/2024/09/03/filling-in-fiscal-cracks-again/

Scottish Parliament . (2024). Official Report, Fiscal Sustainability Debate. Retrieved from https://www.parliament.scot/api/sitecore/CustomMedia/OfficialReport?meetingId=16058

Budget Process Review Group. (2017, June 30). Final Report, June 2017. Retrieved from https://www.gov.scot/publications/budget-process-review-group-final-report/

Scottish Parliament . (2024, September 3). Correspondence from Finance and Public Administration Committee Convener to Cabinet Secretary for Finance and Local Government, Budget timetable. Retrieved from https://www.parliament.scot/-/media/files/committees/finance-and-public-administration-committee/correspondence/2024/budget_convenertocabsecflg_03sep24.pdf

Office for Budget Responsibility. (2024). Economic and Fiscal Outlook - October 2024. Retrieved from https://obr.uk/docs/dlm_uploads/OBR_Economic_and_fiscal_outlook_Oct_2024.pdf

Scottish Government. (2024). Priorities for Scotland: First Minister's Statement . Retrieved from https://www.gov.scot/publications/first-ministers-priorities-scotland/

Federation of Small Businesses. (2024). Written submission, Managing Scotland's Public Finances: A Strategic Approach. Retrieved from file:///C:/Users/s801047/Downloads/PreBudgetScrutiny_FSBScotland_12Aug24%20(3).pdf

Oxfam Scotland. (2024). Written submission, Managing Scotland's Public Finances: A Strategic Approach. Retrieved from file:///C:/Users/s801047/Downloads/PreBudgetScrutiny_OxfamScotland_14Aug24%20(5).pdf

Health and Social Care Alliance. (2024, August). Written submission, Managing Scotland's Public Finances: A Strategic Approach. Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/view_respondent?show_all_questions=0&sort=submitted&order=ascending&_q__text=ALLIANCE&uuId=825483212

Women's Economic Empowerment Project. (2024). Written submission, Managing Scotland's Public Finances: A Strategic Approach. Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/view_respondent?show_all_questions=0&sort=submitted&order=ascending&_q__text=Women%27s&uuId=5446277

Professor David Heald. (2024). Written submission, Managing Scotland's Public Finances: A Strategic Approach. Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/view_respondent?show_all_questions=0&sort=submitted&order=ascending&_q__text=Professor+David+Heald&uuId=941013795

Royal Society of Edinburgh. (2024). Written submission, Managing Scotland's Public Finances: A Strategic Approach. Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/view_respondent?show_all_questions=0&sort=submitted&order=ascending&_q__text=Royal+Society&uuId=772638160

Fraser of Allander Institute. (2024). Written submission, Managing Scotland's Public Finances; A Strategic Approach. Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/view_respondent?show_all_questions=0&sort=submitted&order=ascending&_q__text=Fraser+of+Allander&uuId=133058654

Scottish Parliament. (2024). Finance and Public Administration Committee, Report on the Scottish Budget 2024-25. Retrieved from https://bprcdn.parliament.scot/published/FPA/2024/1/31/eaa1438b-6a83-431a-857e-cc0a4f4bb58d/FPAS062024R1.pdf

Audit Scotland. (2024). Written submission, Managing Scotland's Public Finances: A Strategic Approach. Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/view_respondent?show_all_questions=0&sort=submitted&order=ascending&_q__text=Audit+Scotland&uuId=403702691

Scottish Parliament . (2024, October 1). Finance and Public Administration Committee, Official Report . Retrieved from https://www.parliament.scot/api/sitecore/CustomMedia/OfficialReport?meetingId=16034

Scottish Government. (2024). National Performance Framework. Retrieved from https://nationalperformance.gov.scot/

Statistics Estonia . (2022). Tree of Truth: indicators important for the country. Retrieved from https://tamm.stat.ee/tulemusvaldkonnad/heaolu/indikaatorid/103?lang=en#:~:text=Tree%20of%20Truth%20%2D%20Indicators%20important%20for%20the%20country&text=On%20a%20scale%20of%200,64%20(inclusive)%20needs%20improvement.

Princeton University. (2020). Improving consultaiton and cooperation to create a national strategic: drafting Estonia 2020. Retrieved from https://successfulsocieties.princeton.edu/sites/g/files/toruqf5601/files/EL_STRATEGY_Estonia.pdf

Scottish Government. (2024, May 17). Economic Approach: First Minister's Speech. Retrieved from https://www.gov.scot/publications/economic-approach-first-minister-speech-17-2024/

Institute of Chartered Accountants of Scotland (ICAS). (2024). Written submission, Managing Scotland's Public Finances: A Strategic Approach. Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/view_respondent?show_all_questions=0&sort=submitted&order=ascending&_q__text=chartered+accountants&uuId=91668761

Scottish Government. (2024). Public Sector Pay Policy 2024-25. Retrieved from https://www.gov.scot/publications/scottish-government-public-sector-pay-policy-2024-25/

Scottish Fiscal Commission. (n.d.) Fiscal Sustainability Report, March 2023. Retrieved from https://www.fiscalcommission.scot/publications/fiscal-sustainability-report-march-2023/

Scottish Fiscal Commission. (2023). Economic and Fiscal Forecasts . Retrieved from https://fiscalcommission.scot/publications/scotlands-economic-and-fiscal-forecasts-december-2023/

The Scottish Government. (2024, February 16). Response to the Finance and Public Administration Committee Report on the Scottish Budget 2024-25. Retrieved from https://www.parliament.scot/-/media/files/committees/finance-and-public-administration-committee/correspondence/2024/budget_dfmtoconvener_16feb24.pdf [accessed 4 November 2024]

Scottish Government. (2023). Investor Panel: Mobilising international capital to finance the transition to net zero. Retrieved from https://www.gov.scot/publications/investor-panel-mobilising-international-capital-finance-transition-net-zero/

Scottish Government. (2023). Investor Panel Recommendations: Scottish Government response. Retrieved from https://www.gov.scot/publications/scottish-government-response-investor-panel-recommendations/

Scottish Government. (2021, December 16). Framework for Tax 2021. Retrieved from https://www.gov.scot/publications/framework-tax-2021/ [accessed 15 December 2022]

Scottish Retail Consortium. (2024). Written submission, Managing Scotland's Public Finances: A Strategic Approach. Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/view_respondent?show_all_questions=0&sort=submitted&order=ascending&_q__text=retail+consortium&uuId=1005238608

Scottish Government. (2024). 2024-25 Income tax bands and rates in Scotland. Retrieved from https://www.mygov.scot/scottish-income-tax/current-income-tax-rates

Scottish Government. (2024, April). News release, income tax changes. Retrieved from https://www.gov.scot/news/income-tax-changes/#:~:text=From%20Saturday%20(6%20April%202024,will%20be%20taxed%20at%2048%25.

Estonian Government. (2024). Companies contribute to security with a profit tax. Retrieved from https://www.fin.ee/uudised/ettevotted-panustavad-julgeolekusse-kasumimaksuga

Aberdeen and Grampian Chamber of Commerce. (2024). Written submission, Managing Scotland's Public Finances: A Strategic Approach. Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/view_respondent?show_all_questions=0&sort=submitted&order=ascending&_q__text=Grampian&uuId=48603189

Scottish Chambers of Commerce. (2024). Written submission, Managing Scotland's Public Finances: A Strategic Approach. Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/view_respondent?show_all_questions=0&sort=submitted&order=ascending&_q__text=Chambers&uuId=597163709

Fraser of Allander Institute. (2024). Scottish Business Monitor Q2 2024: Scottish income tax. What do firms think?. Retrieved from https://fraserofallander.org/publications/scottish-business-monitor-q2-2024-scottish-income-tax-what-do-firms-think/

Scottish Parliament. (2024). Summary note of engagement event in Dundee. Retrieved from https://www.parliament.scot/-/media/files/committees/finance-and-public-administration-committee/prebudgetscrutiny_engagementeventsummarynote_28aug24.pdf

Scottish Government. (2023). Scottish tax ready reckoners: direct effects of illustrative tax changes for 2024 to 2025. Retrieved from https://www.gov.scot/publications/scottish-tax-ready-reckoners-direct-effects-illustrative-tax-changes-2024-25/pages/4/

COSLA, CIPFA and Directors of Finance. (2024). Written submission, Managing Scotland's Public Finances. Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/view_respondent?show_all_questions=0&sort=submitted&order=ascending&_q__text=COSLA&uuId=447861152

Scottish Borders Council . (2024). Written submission, Managing Scotland's Public Finances . Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/view_respondent?show_all_questions=0&sort=submitted&order=ascending&_q__text=Scottish+Borders+Council&uuId=298157871

BBC. (2024). Council tax freeze. Retrieved from https://www.bbc.co.uk/news/uk-scotland-scotland-politics-68400696

Fraser of Allander Institute. (2023). Modelling the council tax freeze in Scotland. Retrieved from https://fraserofallander.org/wp-content/uploads/2023/10/Council-tax-briefing.pdf

South Lanarkshire Council . (2024). Written submission, Managing Scotland's Public Finances. Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/view_respondent?show_all_questions=0&sort=submitted&order=ascending&_q__text=South+Lanarkshire&uuId=148067126

Scotish Hospitality Group. (2024). Written submissions, Managing Scotland's Public Finances: A Strategic Approach . Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/view_respondent?show_all_questions=0&sort=submitted&order=ascending&_q__text=Hospitality&uuId=402593499

Scottish Parliament. (2024). Summary note of fact-finding visit to University of Dundee. Retrieved from https://www.parliament.scot/-/media/files/committees/finance-and-public-administration-committee/businessplanningdaysummarynote_29aug24.pdf

Office for National Statistics. (2024). Labour market in the regions of the UK. Retrieved from https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/regionallabourmarket/october2024

Scottish Government. (2024). Economic inactivity in Scotland - supporting those with longer-term health conditions and disabilities to remain economically active . Retrieved from https://www.gov.scot/publications/economic-inactivity-scotland-supporting-those-longer-term-health-conditions-disabilities-remain-economically-active/pages/2/

Scottish Government . (2024). Labour productivity statistics: 2023. Retrieved from https://www.gov.scot/publications/labour-productivity-2023/

Construction Industry Training Board. (2024). Written submission, Managing Scotland's Finances: A Strategic Approach. Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/view_respondent?uuId=618591214

Transform Scotland. (2024, August). Written submission, Managing Scotland's Public Finances: A Strategic Approach. Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/view_respondent?show_all_questions=0&sort=submitted&order=ascending&_q__text=transport&uuId=573697238

BBC. (2024). Argyll and Bute Growth Deal put on hold by UK Government. Retrieved from https://www.bbc.co.uk/news/articles/cevyd3glx4ro

Scottish Government. (2024). Public service reform programme; 2nd update. Retrieved from https://www.parliament.scot/chamber-and-committees/committees/current-and-previous-committees/session-6-finance-and-public-administration-committee/correspondence/2024/update-on-progress-with-the-public-service-reform-programme-letter-of-23-september-2024

Scottish Trades Union Congress. (2024). Written submission, Managing Scotland's Public Finances. Retrieved from https://yourviews.parliament.scot/finance/managing-scotlands-public-finances/consultation/view_respondent?show_all_questions=0&sort=submitted&order=ascending&_q__text=Congress&uuId=167485388

Last Updated: 9/4 2:11pm

Image: Photo 1: Committee's discussions with young people and business and public sector organisations in Dundee, 28 August 2024

Image: Figure 1: Outcomes of Dundee engagement event

Image: Photo 2: Committee visit to University of Dundee School of Life Sciences, 29 August 2024

Image: Figure 2: Economic Inactivity by Reason, Scotland, 16-64

Image: Photo 3: The Committee’s fact-finding visit to Estonia included discussions with Members of the Riigikogu Finance and Economy Committees

An error occured while loading, please try again in a few minutes.