Investing in Scotland’s Future: Resource Spending Review, an overview

The Scottish Government published Investing in Scotland’s Future: Resource Spending Review on 31^st May. This is the first resource spending review since 2011. Much is made of the challenging and volatile context, across social and economic factors, in which this review appears.

This review begins a journey of reform to meet the most pressing issues facing Scotland over the medium-term. This means that rather than a uniform increase across portfolios, this spending review prioritises delivery of the commitments made in the Programme for Government and Bute House Agreement, specifically:

• Reform to improve outcomes for children currently living in poverty;
• Reform to help achieve the just transition to a net zero and climate resilient society where we play our part in tackling the global climate crisis;
• Reform in the way we experience our public services as we recover from the COVID-19 pandemic; and
• Transformation of our economy to enable growth, opportunity and a sustainable outlook for our future. (p3)

Kate Forbes in her role as Cabinet Secretary for Finance and Economy was keen to stress in her statement that this is not a Budget. However, to provide any form of rapid assessment of what this this Review may mean, we sought comparisons, where possible, with the previous budget figures. There has been much rearrangement of portfolio aspects, this means there is difficulty in finding direct comparisons, but some bigger picture thinking can appear to be drawn out.  BEFS strongly recommends that the document is examined in full before any more detailed conclusions are drawn. BEFS will only highlight areas with greatest direct relevance across the sector.

The Strategic Overview section (1) – notes the Spending Review background, and principles, as well as highlighting Public Service Reform which mentions drive for innovation and efficiency; as well as discussing Public Service Delivery which stresses the need to return the public service to pre-pandemic size. These areas for reform (generally excluding local government) include:

• Changes to working practices/hybrid arrangements
• Fresh consideration of the public body landscape
• A multi-year estates programme to make the best use of public sector property and other assets
• A programme of digital reform, focused on inclusion and connectivity
• The development of a strategy for public procurement that will drive greater collaboration and value for money.

Section 2 addresses delivery of strategic outcomes. This includes many measures related to the cost-of-living crisis, including: Providing £336 million in 2022-23 to heat, energy efficiency and fuel poverty measures. (p18) Addressing Nature and Climate crises also feature, with measures, such as:

• Up to £75 million per year increased resource spend to support delivery of our Heat in Buildings strategy, enabling £1.8 billion (including capital and financial transactions) of overall public investment across this parliament towards decarbonisation of over a million homes and 50,000 non-domestic buildings by 2030.
• £95 million of further investment across the spending review period to support the scaling-up of activity to meet our annual target of 18,000 hectares of woodland creation target by 2024-25, alongside delivery of ambitious programmes focused on nature restoration and addressing biodiversity loss.
• Investment of over £12 million for peatland restoration across the spending review period, supporting delivery of £62 million of capital 23 spend to double current restoration rate of 6,000 hectares to the 2023 target of 12,000 hectares per year and then on to the 2024-25 target of 20,000 per year. (p21)

The Stronger, Fairer, Greener Economy will, implement the next phase of the Green Jobs workforce academy to make sure people have the skills they need as part of a Just Transition. (p25)

There are multiple key reforms set-out within the document, some of which include:

• Innovation and Revenue Raising – with particular focus on public bodies who charge for services identifying ways to recover more of their costs. Initial conclusions on consultation from this will be included in the 2023-24 Scottish Budget.
• Digital Public Services – including digital planning; and wider approaches to adopt common platforms.
• Levers to Drive Greater Efficiency including new approaches to: Shared Services, use of estates, effective procurement and grant management.

With regard to the estate, this includes:

• Reduce the public sector estate footprint and costs and have fewer, better buildings which support our people and our service delivery to the public.
• Increase co-location, collaboration and the interoperability of offices across the Scottish public sector incorporating flexible location models.
• Reduce public sector office carbon emissions.
• Increase on-site joint administrative services in public sector offices.  (p39)

The Portfolio within which Culture sits is currently described as follows: The Constitution, External Affairs & Culture (CEAC) portfolio engages at home and internationally to enhance Scotland’s reputation, increase economic success, prosperity and wellbeing, support Scotland’s diverse and evolving culture and major events sectors, promote access to our historic environment, and promote Scotland as a great place to live, visit, work, study and do business.(p57)

Headlines for this portfolio include (but are not limited to), the Resource Spending Review supporting:

• Scotland’s culture and historic environment with investment of £925 million over the spending review, to ensure our diverse and world class cultural scene and rich heritage continue to thrive.
• Our International Development Fund, with an increase in funding to £15 million per year by the end of this spending review period to make a real difference to some of the world’s poorest people. […]
• Creative Scotland and our world class museums, collections and National Performing Companies.
• Delivery of a referendum on independence. (p57) 

Spending Plans for this portfolio are outlined in the table below (taken from the Review document, p58)

Historic Environment Scotland (HES): The total mentioned within the Scottish Government December 2021 Budget for HES was £70.1 with £60.6 of this being Fiscal Resource, this would appear to be similar (as resource, not capital, is the focus here) to the above. The tapering reduction (after 2024) to arrive at the figure listed for 2026-27 would be a return to budget HES had set-out from Scottish Government in 2020-2021(pre-pandemic). Given the expected state of inflation, rising costs, as well as the scale of works implied by the ongoing examination of all high-level sites relating to the Properties in Care, it could be suggested that this budget presents constrained conditions; particularly with domestic budgets squeezed and the return of international tourism far from certain.

Clearer comparisons become trickier at this point, because, as stressed this is not a Budget – so some high-level figures have been pulled together into various pots as can be seen below.

Until further detail is available there are only a few assumptions that can be made.

• Building Standards appears to have a significant budget reduction, from £11.8M to £4M, this could reflect a reduction in current programmed activity. (Review p45)
• The section within the Review stated as covering Cities Investment, Regeneration and Planning sits at around £30-36M over the following 5 years. This is dramatically less than either the Cities Investment or the Regeneration Budget separately given at the December Budget (2021); and considering that Planning is also included within this represents a significant potential area of diminished budget and capacity across the sector. £30M would reflect less than 10% of the current budget pot across the areas listed currently, however this revision may also take into account the UK Shared Prosperity Funding directed from UK Government. (Review p47)
• Culture and Major Events is not given any explicit detail, but if it was to cover the previous areas of: Creative Scotland, Cultural Collections, Major Events, Staffing and National Performing Companies as previously, the budget of £177-183M would reflect at least a 10% reduction – but where reductions could fall is also unclear. (Review p58)
• Enterprise, Tourism and Trade – this has been expanded as a descriptor to include all the Enterprise Agencies and Visit Scotland; whilst figures are a little tricky to unpick (and Scottish Enterprise was used extensively in delivery of Covid measures) this also appears to be a significant reduction; but to which Agencies, and to what extent, remains unclear. (Review p47) The December Budget previously stated, £370.5 million to support our enterprise agencies and £49.2 million for VisitScotland . The Review 2022-2023 envelope would reflect only around 60% of that intent, and this is before taking Tourism into account.
• In the Budget overview in December we commented on Registers of Scotland funding, noting that: “A reduction in the Registers of Scotland budget also suggests that access to data (such as through ScotLIS) will not be taking the necessary steps forward in the timeframes many of us would advocate. Without access to data about our existing housing stock, delivering net zero will be an almost impossible task.” At that point funding was listed as reducing down to £8.5M in 2022-23. In this Review they have no distinct budget-line set against them, and are described as: broadly self-funded by fees they charge for their services.(p47) Without further detail this appears to detract from, and undermine, the broader digital aims presented earlier in the Review document.
• The Skills and Training Budget also appears frozen at around £270M per year for the life of this review, this is also concerning given the investment in skills necessary across multiple areas to enable an effective transition to net zero.
• Scottish Funding Council Budget in December was listed as £1,973M – funding now appears to be frozen at £1.501M for the coming five years.

Any budget freezes, at this point – and with the threat of increasing inflation and growing costs – represents significant cuts, by any other name. That these freezes appear to sit within skills and SFC funding brings direct and serious threats to the future skills and knowledge markets of all sectors.

Overall, more detail is needed to know: where the resource has reduced, what significant changes will occur, and how the detail of reforms to our public services will impact people and place. This currently feels like ‘only the headlines’ which fails to give a sense of certainty.

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