The Scottish Government must “move beyond making short-term savings to balance its budget” and “urgently reform” to address the public sector’s unsustainable finances, said Audit Scotland.
The warning came as the Scottish Government said its accounts for 2023-24 “have been given an unqualified audit opinion.”
The Scottish Government said ministers were required to make tough choices to navigate the “most challenging financial situation since devolution.”
Its accounts record total spend of £53.98 billion. An underspend of £277 million – around 0.5% of the overall budget – has been carried over in full to be spent in 2024-25.
“There has not been enough progress made in reforming public services over the past year,” said Audit Scotland..
“Public sector budget shortfalls of more than £1 billion are forecast, and repayments on borrowing continue to grow.
“The Scottish Government needs to urgently reform, including looking at the size and structure of the public sector workforce.
“The Scottish Government’s consolidated accounts for 2023/24 show it responded to large and ongoing financial pressures through a range of short-term measures such as cutting spending across transport, net-zero and education to balance its £54 billion budget.”
Audit Scotland said that in September 2024, the Scottish Government announced more actions to balance the 2024-25 budget, including:
- a recruitment freeze on non-essential posts
- means testing winter fuel payments
- emergency spending controls
- and using ScotWind revenue previously earmarked for addressing the climate and biodiversity crises.
“These were largely one-off, non-recurring savings being used to meet recurring costs,”said Audit Scotland.
“They do not address the underlying factors affecting the public sector’s unsustainable financial position, such as the design and delivery of services, and the workforce.”
Stephen Boyle, Auditor General for Scotland, said: “For some time, myself and others have called for urgent reform of Scotland’s public services to address the public sector’s unsustainable finances and the threats these pose to services.
“The Scottish Government continues to work hard to balance its annual budgets. But making in-year, one-off savings to fund recurring costs doesn’t tackle the issue, it exacerbates it.
“It’s critical that the Scottish Government moves at pace to reform the design and delivery of public services. This includes being clear what the public sector workforce needs to look like to sustainably achieve the outcomes that Scotland’s leaders want for citizens.”
Finance Secretary Shona Robison said: “Since this government took office, we have consistently managed our fixed budget responsibly and I am pleased the annual accounts have been given an unqualified audit opinion for every one of those years.
“The last financial year was among the most challenging since devolution, and we have responded to higher inflation and cost of living pressures by making tough decisions to protect the most vulnerable in society.
“The Scottish Government cannot overspend on its Budget, and in 2023-24 we left a small underspend to ensure we could manage any unexpected funding pressures. Every penny of this has been allocated for spending in 2024-25.
“We will continue to work to ensure the sustainability of Scotland’s finances as we prioritise our spending towards eradicating child poverty, growing the economy, tackling the climate emergency and improving Scotland’s public services.”