Submitted by Bill Fernie
19th September 2026
Something important is happening in Scotland's public services, and it goes considerably further than another round of annual budget cuts.
The Scottish Government is now talking about changing the way public services themselves are organised.
The reason is fairly straightforward. The demands on health, social care and local government are rising, while the money and workforce available to provide those services are under increasing pressure.
The question is whether changing the structures can release enough money and capacity to make the system sustainable.
For Highland, the consequences could be particularly significant.
From savings to structural reform
The Scottish Government's Programme for Government published in September 2026 sets out an ambitious programme of public service reform.
It proposes replacing Scotland's 14 territorial NHS boards with just two Strategic Health Boards. It also wants to reach agreement on substantial reform of local government, including the possibility of a more regional system.
Social care is another major part of the proposed reform, with the Government looking at how responsibility, funding and accountability could be simplified.
There is also a wider programme to reduce duplication among Scotland's more than 130 public bodies, including possible mergers and consolidation of functions such as procurement and estates.
This is therefore not simply about asking organisations to spend less next year.
It is an attempt to ask whether Scotland can afford to continue organising public services in much the same way as it has done for decades.
Why the money matters
The financial pressure behind the reforms is substantial.
The Scottish Spending Review requires NHS boards collectively to deliver recurring savings equivalent to at least 3% of their baseline funding each year.
The planned NHS and social-care efficiency programme is worth £384 million in 2026/27, £374 million in 2027/28 and £303 million in 2028/29. Of that, NHS boards are expected to deliver £247 million, £290 million and £220 million respectively through the 3% recurring savings requirement.
The Government argues that this can be achieved through productivity improvements, better use of technology, changing the way services are delivered and moving more care into communities.
But there is an important question.
How much can be saved by becoming more efficient before the changes start affecting the services people actually receive?
That is one of the central questions behind the restructuring.
Highland starts from a difficult position
Highland Council is already dealing with a significant financial challenge.
Its revenue budget is around £805 million and it is forecasting budget gaps of £16.3 million in 2026/27, £16.2 million in 2027/28 and £14.2 million in 2028/29.
The Council also points out that its circumstances are different from those of many other authorities.
It has more than 4,000 miles of roads to maintain and more schools per head of population than any other mainland Scottish council. Its population is widely dispersed, making the delivery of many services more expensive.
That geographical problem does not disappear because the organisational chart changes.
Indeed, it raises an important question about regional government.
A larger organisation may have greater purchasing power and be able to remove duplicated administration. But it could also become more distant from the communities it serves.
That matters particularly in places such as Caithness and Sutherland.
Then there is NHS Highland
NHS Highland has its own long-standing financial pressures. That makes the proposed NHS restructuring particularly relevant.
The Government's argument is that fewer, larger strategic health boards could reduce duplication, improve coordination and make it easier to plan services across larger areas.
The First Minister has also linked health and social-care reform directly to the financial problem, pointing out that decisions made by councils about social care can affect the NHS through delayed hospital discharge and other pressures.
This is an important point.
The NHS and councils do not operate in separate financial worlds.
If someone cannot get the social care they need at home, they may remain in hospital longer. If community care is reduced, hospital demand can rise.
If councils face pressure to reduce spending on preventative services, some of the consequences may eventually appear somewhere else in the public sector.
That is why the Scottish Government is increasingly talking about the whole system, rather than individual organisations.
Highland could become an interesting test case
Highland illustrates both the attraction and the difficulty of the proposed reforms.
There are obvious opportunities to share services, combine back-office functions, improve procurement and reduce duplication.
There may also be opportunities to redesign health and social care so that more people are supported at home rather than in hospital.
Technology could make some services less dependent on physical offices and long journeys.
But Highland also has a problem that cannot be solved by administrative reform.
Distance matters.
A patient in Thurso is not geographically equivalent to a patient in central Glasgow.
A Highland school cannot necessarily share services with a neighbouring school in the way an urban school might.
A road in Sutherland cannot be maintained more cheaply simply because the authority responsible for it has been reorganised.
And moving decision-making to a larger regional body could create a new concern about whether remote communities retain enough influence over decisions affecting them.
Could bigger mean cheaper?
This is ultimately the gamble behind the reforms.
The Scottish Government believes larger and better-integrated organisations can remove duplication and release resources for frontline services.
That is a reasonable proposition to investigate.
But reorganisation itself costs money.
There can be new IT systems, management changes, redundancy costs, property changes and years of disruption before any savings appear.
And there is no guarantee that economies of scale will always translate into better services.
The Government itself says the objective is not simply structural change. It wants resources to reach frontline services more directly and decisions to be made at the level best able to understand people's needs.
That will be the real test.
The bigger question for Highland
The debate about Highland's future public services may therefore become much bigger than whether the Council can find another £10 million or £20 million of savings.
It may become a question of whether the entire system can continue to operate in its present form.
There are potentially several changes arriving at roughly the same time: NHS restructuring, local government reform, social-care reform and the wider rationalisation of Scottish public bodies.
For Highland, the implications could be considerable.
A new regional structure might bring economies and greater capacity.
It could also mean fewer locally based decisions.
A larger health organisation might reduce duplication.
It could also make local accountability more difficult.
And integrating health and social care could remove some of the gaps between services, while creating its own questions about who controls the money and who is ultimately responsible.
None of this means that reform will necessarily make services better or worse.
It means that the financial pressures have become sufficiently large that simply carrying on as before is itself becoming difficult to sustain.
That may be the most important change of all.
For communities in Caithness, Sutherland and the wider Highlands, the debate over public spending is therefore becoming a debate about something much more fundamental:
Who will provide local public services, how will they be organised, and how much local control will remain when the money gets tight?
Those questions could shape Highland public services for decades to come.