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The Public Service Reform Programme was established in December 2023. Through the programme we are working to address both the efficiency and effectiveness of services, whilst also working to move the public services system to prioritise prevention.

The update to Parliament in September 2024 set out the details of Scottish Government’s key efficiency programmes and projected savings. These programmes include: Commercial Value for Money (CVfM), Collaborative Procurement, Central Government Procurement Shared Services, Single Scottish Estate, The Shared Services Programme, the Intelligent Automation Centre of Excellence and the Digital Programme.

These programmes are securing significant cost avoidance and cash releasing savings, expected to reach up to £280 million over a two-year period (by end 2024-25), with further projected savings of nearly £300 million over the following two financial years to the end of 2026-27.

In terms of further detail, examples include:

• An overall total of £36M direct Scottish Single Estates benefits have been secured in the first year of the programme. This includes cash savings of £5.5M in 23-24 and £15M in 24-25
• The Commercial Value for Money programme has delivered almost £7m of cashable and £600k of non-cashable savings.
• The Intelligent Automation Centre of Excellence has delivered 143 automations with a further 469 in the pipeline. £3.9M in cost-avoidance benefits have been achieved to date.

As the programme develops further, building on the data and capacity around savings, and the embedding of reform and efficiency in the budget process, we will look to drive and quantify other savings opportunities.

The Scottish Government cannot deliver reform alone and is working with local government, public bodies, third sector and the private sector to build a consensus and common vision for achieving sustainable public services and establishing the infrastructure that enables us to collectively make progress.

The Scottish Government has not engaged any consultancies in developing or progressing the Public Service Reform Programme.

Every ‘scheduled’ award review carried out by Social Security Scotland is a light-touch review.

This means that Social Security Scotland do not require clients by default to provide information again that they already provided, that is not relevant to the changes they have reported, or that we can gather through other means.

Instead, Social Security Scotland will consider information they already hold about the client, where still relevant, and make use of appropriate decision-making tools, where needed, to reduce the need for further questions. They only ask for new supporting information in specific scenarios and take their usual supportive approach to gathering this information.

Our approach differs when a client’s circumstances or changes are more complex, or their reported level of need is unexpected. This is not light touch and Social Security Scotland will decide on a case-by-case basis what additional steps are required and appropriate to better understand the client’s needs, and to ensure they have the information needed to make a robust determination on the client’s entitlement.

Table 1 shows annual inflation as at September between 1999 and 2024 using the Consumer Price Index (CPI), as well as the annual change in the Basic, Intermediate and Higher Property Rates between 1999-2000 and 2025-2026. The rateable value threshold up to which different rates are charged has changed over time. In Scotland, there is no legislation linking the maximum possible uprating of the rates to inflation of the preceding year. Given that Scottish Ministers have chosen to set the Basic Property Rate in order to match or be below the Small Business Multiplier in England since 2007-2008, up until 2016-2017, September Retail Price Index (RPI) acted as a cap on inflationary increases in poundage in Scotland because in England, legislation used to link the maximum possible uprating of the Small Business Multiplier to September RPI of the preceding year. The independent Barclay Review of Non-Domestic Rates published in 2017 noted calls for increases in the poundage to be linked to the CPI rather than the RPI. Since 2017-18, annual changes in the rates in Scotland have been lower than the CPI increase. Revaluations are also typically designed to be revenue-neutral in real terms so both inflation and the growth in the tax base (taking into account expected appeals losses in that cycle) is taken into account when setting the rates.

Table 1: Annual CPI change as at Sept (1999-2024) and annual change to the Basic, Intermediate and Higher Property Rates (1999-2000 to 2025-26)

The Scottish Government keeps a range of measures under consideration as it develops and finalises its Budget. Final decisions are communicated with the Scottish Fiscal Commission (SFC) as soon as is practicable. The Scottish Fiscal Commission is undertaking work to cost the proposal to mitigate the impact of the two-child cap in Scotland for 2026-27. The SFC plan to publish their supplementary costings on 7 January 2025.

The Scottish Government routinely increases the Local Government budget in-year, including through transfers from other portfolios. The anticipated transfers for 2025-25 are as shown in Table 4.12 of the Scottish Budget and indicate that at least £1,438.3 million of resource and £25 million of capital will be transferred into the General Revenue and General Capital grants at the 2025-26 Autumn or Spring Budget Revisions. Further funding outwith the Local Government Settlement is outlined in Table 4.15 and paid directly by the relevant portfolio.

As with all previous years, any unanticipated transfers in year will also be given effect at the relevant budget revision and processed in the Local Government Finance Order 2026-27.

As outlined in Tables 4.12 and 4.15, it is anticipated that most Scottish Government portfolios will transfer additional funding to Local Government in 2025-26.

The Level 4 tables that were published with the draft Budget 2025-26 provide a summary of the changes from the previous year but it is not practical to list the full detail of all the changes associated with the Local Government Settlement, particularly where that detail is already available to the Scottish Parliament.

The specific details of the £1.5 billion of Local Government transfers processed at the Autumn Budget Revision 2024-25 are published in Schedule 3.1 of the Autumn Budget Revision 2024-25: supporting document.

The Finance and Public Administration Committee recommended that the Budget (Scotland) Act 2024 Amendment Regulations 2024, which give effect to the Autumn Budget Revision, should be agreed at their meeting on 12 November 2024. The regulations were subsequently approved by the Scottish Parliament on 4 December 2024.

As outlined in Table 4.12 of the Scottish Budget, on a like with like basis, the Local Government Settlement will be £15,035.2 million following the conclusion of the Spring Budget Revision 2025-26 compared with £14,027.1 million following the conclusion of the Spring Budget Revision 2024-25. It is therefore estimated that the difference in local government funding provided in 2024-25 and 2025-26 will be £1,008.1 million.

As with all previous years, any unanticipated transfers in year will also be given effect at the relevant budget revision and processed in the Local Government Finance Order 2026-27.

The Scottish Government relies on independent forecasts produced by the Scottish Fiscal Commission in arriving at policy decisions on Income Tax. These forecasts include the impact of any possible behaviour change that may result from policy decisions.

The impact of Income Tax policy decisions taken at the 2025-26 Scottish Budget on taxpayers and households is presented in the following publications:

• Scottish Income Tax Factsheet: Income Tax Policy Proposal: Scottish Budget 2025-26 - Scottish Income Tax 2025 to 2026: factsheet - gov.scot
• Distributional analysis of the Scottish Budget: Scottish Budget 2025 to 2026: distributional analysis of the Scottish Budget - gov.scot

Regarding consultation, in advance of the Scottish Budget, the Scottish Government conducts annual research on public attitudes to tax.

This research also includes information on where people find information on tax and their knowledge of the tax system. The information which has been collected is available online: https://www.gov.scot/publications/scottish-budget-2025-26-pre-budget-engagement-summary/pages/1/

This year, we also conducted a broad programme of business engagement on tax policy, used to inform the Tax Strategy, which gave businesses the opportunity to express their views regarding behavioural responses to Scottish Income Tax policy.