Setting Spending Priorities For A Stronger Scotland......BUT

29th May 2022

Resource Spending Review to be published.

Prioritising public spending is essential to grow a stronger economy as Scotland recovers from the pandemic and faces up to the cost of living crisis, Finance Secretary Kate Forbes has said.

Speaking ahead of the publication of the Resource Spending Review, Ms Forbes said more focused government and public sector funds would achieve ambitions to tackle child poverty, reach net zero and deliver sustainable services for the future.

The Spending Review, which is not a budget, will give broad parameters for spending for the next four years and set out a series of government reforms.

Finance Secretary Kate Forbes said, "These are challenging times, and we need to be canny with our spending, but I'm confident that if we work together we can get through this cost of living crisis and still achieve our ambitions.

"That means tackling child poverty, driving our economic recovery from COVID and achieving net zero, while building a stronger public sector that is sustainable for the future.

"We face a very difficult financial position over the next few years with funding increases below inflation levels and the challenge of recovering from the pandemic without the financial tools available to every other government in the world. That means while the spending review is not a budget, it will include difficult decisions, to ensure we can really focus on supporting households and services at this time.

"The Resource Spending Review will detail the funding available over the coming years to achieve these goals, and it will be published alongside the Medium-Term Financial Strategy (MTFS) which gives economic context to the challenges and opportunities which lie ahead."

The Cabinet Secretary for Finance and the Economy will outline the Resource Spending Review to Parliament when it is published on May 31.

The Scottish Government is doing everything within its powers and fixed budgets to ensure people, communities and businesses are supported as far as possible, including investing almost £770 million this year in cost of living support and doubling the Scottish Child Payment to £20 per week. Earlier this year it increased eight Scottish benefits by 6%, the rate of inflation at the time, and introduced a range of benefits not available elsewhere in the UK.

Expanding free school meals and providing £150 council tax payments to low income families are included in further actions to put money back into people's pockets at a time when they need it most.

Note
It is also worth looking at the Scottish budget Deficit. The deficit has been growing the past few years and will restrict Scottish governments choices in he future.

Scotland's net fiscal balance has weakened since last year, reflecting the impact of the coronavirus (COVID-19) pandemic on public finances and economies in Scotland, the UK, and globally, according to statistics published by Scotland’s Chief Statistician Roger Halliday.

The latest Government Expenditure & Revenue Scotland (GERS) statistics show the first estimate of the full impact of the pandemic on public finances. However, the final impact is not yet known and the estimates will continue to be improved in future publications.

Net Fiscal Balance 2020-21

This is the difference between total revenue and total public sector expenditure including capital investment. The net fiscal balance:

Including an illustrative geographic share of North Sea revenue, was a deficit of 22.4% of GDP (£36.3 billion).
Excluding North Sea revenue, was a deficit of 23.8% of GDP (£36.9 billion).
For the UK, was a deficit of 14.2% of GDP.
Total Public Sector Revenue 2020-21

Including an illustrative geographic share of North Sea, Scottish public sector revenue was estimated as £62.8 billion (7.9% of UK revenue). Of this, £0.5 billion was North Sea revenue. Scottish non-North Sea revenue was £62.3 billion (7.8% of UK revenue).
Non-North Sea revenue fell from £65.3 billion in 2019-20, a fall of 4.6% as the pandemic decreased revenue, particularly non-domestic rates, VAT, and fuel duties.
Scotland’s illustrative geographical share of North Sea revenue was £0.5 billion in 2020-21, down from £0.8 billion in 2019-20, as the fall in the oil price during the pandemic reduced revenue.
Including an illustrative geographical share of North Sea revenue, Scotland’s public sector revenue is equivalent to £11,496 per person, £382 less than the UK average. Excluding North Sea revenue, it is £11,395 per person, £477 less than the UK average.
Total Public Sector Expenditure 2020-21

Total expenditure for the benefit of Scotland by the Scottish Government, UK Government, and all other parts of the public sector was £99.2 billion. Spending increased by 21.0%, reflecting the costs of the health and wider economic interventions in response pandemic. This is equivalent to 9.1% of total UK public sector expenditure, or £18,144 per person, which is £1,828 per person greater than the UK average.
Government Expenditure & Revenue Scotland 2020-21
Published 18 August 2021