Holyrood’s Finance Committee calls for Scottish Government to begin long-term fiscal planning now

The committee’s report on Responding to Long-Term Fiscal Pressures is published today, in advance of the government’s Budget being announced in January 2026.

The committee says it is “in the dark” over the detail of government’s plans and is urging the Scottish Government to use the Scottish Spending Review, also in January, to bring clarity to its priorities and how substantial savings will be made.

Finance and Public Administration Committee convener Kenneth Gibson said:

“We agree with the Scottish Fiscal Commission (SFC) that the spending review provides an opportunity for the Scottish Government to set out how it will address Scotland’s long-term fiscal sustainability challenges.

“We seek further details of how the government is directing spending toward its priorities and what areas are being deprioritised.

“We’d also like to know how Ministers plan to meet their ambitions for public sector workforce reductions and efficiencies worth £1billion over the next five years. Evidence and trends suggest these targets will be incredibly challenging to meet.”

In the dark

Mr Gibson added:

“We asked the Scottish Government to provide a full response to the SFC’s Fiscal Sustainability Report on demographics in March 2023, but are still waiting. We, therefore, remain in the dark on the Scottish Government’s longer-term financial plans.”

A credible plan?

While the committee welcomed recent improvements in the level of information provided in the Scottish Government’s Medium Term Financial Strategy on the ‘challenges ahead’, it questioned why a separate document was needed by the government to explain how it is responding to medium-term pressures.

Mr Gibson said:

“We do not share the Government’s view that the two documents “set out a credible plan” to deliver its priorities. Ministers must put greater emphasis on longer-term financial planning now, in order to mitigate the potentially significant impact of future trends within Scotland’s economy and population.”

On economic growth

The report asked the government to maximise opportunities for better aligning skills with the needs of Scotland’s economy, including supporting fit-for-future funding models for colleges and universities, and careers advice. And, how it is supporting organisations to retain and attract older workers and those with disabilities to increase labour market participation and grow the tax base.

On productivity

The committee requested further details of how the Scottish Government is creating the right conditions for businesses in Scotland to grow, take a long-term view, invest in capital and leadership, and change attitudes to risk – all of which the committee heard are key barriers to productivity growth.

The committee also wants more information on how high-value businesses, such as in the FinTech sector, are being supported to ‘scale up’ including into unicorns.

Lastly, on social security spending Mr Gibson said:

“Our committee is not convinced that the Scottish Government has set out sufficient evidence to support its argument that the future social security budget is sustainable.

“We are disappointed the government’s Medium Term Financial Strategy did not include the information we requested on the fiscal sustainability of social security spending.

“Nor did the government say how it is assessing the effectiveness of, and outcomes from, its approach to benefits delivery in Scotland - or how this impacts upon other parts of the Budget.

“We’ve therefore asked the government again to carry out this work and report back without further delay.”

Read the Report on Responding to Long-Term Fiscal Pressures