Submitted by Bill Fernie
9th October 2026
With another difficult financial year approaching, Scotland’s health boards and councils face growing pressure to find savings. But can they do so without reducing services or losing staff?.
Scotland’s councils and NHS health boards are heading towards another difficult budget season, with growing signs that the pressure to save money will continue into 2027/28.
The Scottish Government will set out its spending plans in the Budget on 3 December. Until then, the precise amounts available to individual councils and health boards remain uncertain. But the financial challenges are already clear, and there is little reason to expect local public services to escape them.
For people living in Caithness and Sutherland, the consequences could be particularly important. NHS Highland and Highland Council must balance their budgets while providing services across a huge geographical area, where travelling to an alternative hospital, office or support service can be far more difficult than it is in a city.
The question is whether the next round of savings can be achieved through genuine efficiencies, or whether residents will once again be asked to accept reduced services and longer waits.
The money is getting tighter
The Scottish Fiscal Commission has warned that the outlook for 2027/28 is more difficult than the current financial year.
One issue is a £720 million adjustment arising from the reconciliation of earlier Scottish income tax receipts. The Commission has also forecast that the Scottish Government’s resource funding will fall by around 1.2% in real terms in 2027/28.
These figures do not mean that £720 million will automatically be cut from council or NHS budgets. Nor do they mean every public service will see its funding fall by 1.2%. The final outcome will depend on the UK Government’s funding decisions and how the Scottish Government allocates the money it receives.
Nevertheless, they illustrate the scale of the challenge. Even where the cash allocated to a service increases, inflation, pay awards and rising demand can leave that service with less purchasing power than before.
A council receiving more pounds than last year may still be unable to provide the same level of service if its costs have risen faster.
The NHS has already been told to find savings
The health service is under particular pressure.
Scottish Government spending plans require NHS boards to deliver recurring savings of around 3% a year. These are not simply temporary economies that can be made once and forgotten. Recurring savings must continue year after year.
The Scottish Fiscal Commission has highlighted how difficult boards have found this task. In 2024/25, only 15% of territorial NHS boards achieved the required recurring savings.
That raises an obvious question. If boards are already struggling to meet existing targets, what happens if their financial position becomes more difficult?
There are several possible responses. Boards can reduce agency staffing costs, leave some vacancies unfilled, reorganise management, combine services or change how treatment is delivered. Some changes may improve productivity without harming care. Others may mean fewer appointments, longer waits or less convenient access for patients.
The distinction between an efficiency saving and a service cut is therefore important. A board may describe a change as a more efficient way of working, but patients will judge it by whether they can still obtain the care they need.
Will NHS jobs be lost?
Staffing is likely to be one of the most closely watched issues.
The Scottish Government has set a target to reduce the devolved public-sector workforce by an average of 0.5% a year between 2025/26 and 2029/30. The public-sector workforce grew during the first year of that plan, meaning greater reductions would be needed in later years if the overall target is to be met.
This does not mean every health board must cut 0.5% of its staff annually. Nor does it automatically mean compulsory redundancies.
Numbers can be reduced through retirement, natural turnover, recruitment restrictions, voluntary departures and redeployment. These measures can reduce payroll costs without the immediate disruption associated with large-scale redundancies.
But they still have consequences. If a departing employee is not replaced, the remaining staff may have to carry a heavier workload. If the post provides an essential clinical service, the saving may prove difficult to achieve without affecting patients.
There is also a limit to how far staffing can be reduced before the pressure becomes counterproductive. A service that saves money by employing fewer people may find that waiting lists grow, staff become overstretched and the cost of temporary cover increases.
The challenge for NHS managers is to distinguish between posts that can genuinely be removed and those that are necessary to keep services running safely.
Councils face a similar squeeze
Local government is not in a much more comfortable position.
Audit Scotland has warned that council funding is failing to keep pace with rising costs and demand. COSLA, the organisation representing Scotland’s councils, has also highlighted substantial budget pressures.
Councils must pay for everything from schools and social care to roads, waste collection, planning, libraries, leisure facilities and environmental services. Many of these costs are rising, while the demand for help from vulnerable residents continues to grow.
When the money does not stretch far enough, councils have a limited range of options.
They can increase council tax, reduce spending on services, reorganise departments, delay maintenance, change the way services are delivered or reduce staffing costs.
Some of these measures are less visible than others. A library may not close, for example, but its opening hours might be reduced. A service may continue to exist but have fewer staff available to deal with enquiries. Road repairs may be postponed until the deterioration becomes more expensive to address.
These changes can accumulate over time, gradually reducing the level of service available to residents without any single announcement appearing particularly dramatic.
Social care is an especially difficult area. Councils must support older people and those with disabilities, while meeting wage costs and responding to increasingly complex needs. Reducing provision may simply transfer pressure to unpaid family carers or, eventually, to the NHS.
What could this mean for Caithness?
For Caithness and Sutherland, the national funding debate has a practical local dimension.
Highland Council and NHS Highland must decide how to distribute resources across a large and often sparsely populated area. Providing services over long distances is not necessarily as cheap as serving a concentrated urban population.
A service that is relatively easy to access in Inverness may require a substantial journey for someone living near Wick or Thurso. If a service is centralised to save money, the organisation may reduce its own costs while transferring travel expenses, inconvenience and lost time to patients and families.
This is one reason why apparently sensible savings on paper can have a different effect in remote communities.
Health services have already been the subject of difficult debates over maternity provision in Caithness and Moray. Residents will understandably want to know whether further financial pressure could lead to more changes in how and where care is delivered.
It would be wrong to claim that particular new cuts to services in Caithness have already been decided as part of the forthcoming Budget. That is not established. But the financial pressures make it reasonable to ask what plans NHS Highland and Highland Council are preparing, and what safeguards will exist for remote communities.
Are councils and health boards being given enough money?
There is a wider issue here. Ministers can announce additional funding for the NHS or local government, but the important question is whether that money is enough to cover the costs organisations are actually facing.
Pay awards, inflation, energy bills, demographic change and growing demand all affect the amount required simply to maintain existing services.
If funding rises by less than those costs, organisations must make up the difference somewhere. Efficiency improvements can help, but there is no guarantee that repeated savings of several percentage points can be achieved indefinitely without affecting staffing or services.
Nor can councils and health boards rely on one-off savings every year. Selling an asset or delaying a project might help balance one budget, but it does not necessarily provide a permanent solution to a recurring financial problem.
Ultimately, ministers must decide what level of service they expect public bodies to provide and supply funding consistent with that decision. Local managers can make difficult choices, but they cannot eliminate a structural funding gap simply through better administration.
December will bring some answers, but not necessarily all of them
The Scottish Budget on 3 December should clarify the overall resources available for 2027/28 and the priorities ministers intend to fund.
The important details will be the funding allocated to health and local government, the savings expected from NHS boards, and whether councils receive enough flexibility to meet local needs.
Staffing plans will also deserve close attention. If public-sector workforce reductions remain an important part of the Government’s financial strategy, the question will be how those reductions are achieved and which services are expected to absorb them.
The Budget will not necessarily identify every local cut. Many difficult decisions will be taken later by individual councils and health boards as they prepare their own budgets.
That can leave residents waiting to discover what the national figures mean for their own communities.
The real test is what happens to services
There is no escaping the financial pressure facing Scotland’s public services. The Government must balance competing demands, while councils and NHS boards have to live within the budgets they are given.
But there is a difference between reducing unnecessary expenditure and reducing the ability of public services to do their jobs.
A smaller workforce is not automatically more efficient. A centralised service is not automatically better value if it makes access more difficult. And a delayed repair is not necessarily a saving if it leads to a more expensive problem later.
For Caithness, the concern is that another round of savings could further weaken services in communities that already have fewer alternatives close at hand.
The question ministers should be prepared to answer is straightforward: if councils and health boards are expected to deliver more savings, what level of service can the public realistically expect in return?
The December Budget should provide a clearer indication of the money available. The decisions that follow will show whether Scotland can meet its financial challenges through genuine improvements in productivity, or whether residents will once again pay part of the price through reduced services and tighter staffing.