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Scottish government confirms £500m in cuts ahead of budget


Getty Images Shona RobisonGetty Images

Finance Secretary Shona Robison says she is looking to extend a government recruitment freeze to public bodies

Scotland’s Finance Secretary Shona Robison has announced up to £500m of funding cuts as the government seeks to make savings in this financial year.

Ms Robison told parliament the country was facing “enormous and growing” financial pressure, including additional costs of £0.8bn in this financial year.

She cited public sector pay deals, “prolonged” Westminster austerity, inflation, the pandemic and the war in Ukraine.

As well as direct cuts, the government will draw down up to £460m from an auction of seabed plots for offshore wind projects.

The finance secretary told parliament: “We cannot ignore the severe financial challenges we face.

“We will continue to be a fiscally responsible government and balance the budget each year – as we have done every year for 17 years and we will do again this year.”

The Scottish government introduced emergency curbs on all “non-essential” spending last month, including a recruitment freeze.

It said cost-cutting measures were necessary amid pay negotiations involving council workers, doctors, train drivers, nurses and teachers.

Ministers had already announced they would implement means-tested winter fuel payments, reintroduce peak rail fares, scrap free bus travel for people in the asylum system and delay a digital devices programme.

In addition to these measures, Ms Robison vowed the government would “maximise efficiencies” in public bodies.

She also said she would look to extend a recruitment freeze to public bodies, while “ensuring that frontline services in the like of our NHS, police and fire can recruit the staff they need”.

The finance secretary also signalled cuts in the public sector workforce, noting that it was larger relative to other UK nations and telling MSPs it would need to “evolve”.

Spending controls and cuts

Ms Robison said up to £60m will be saved through emergency spending controls imposed on government departments, particularly those relating to recruitment, overtime, travel and marketing.

A further £65m is to be saved by reintroducing peak rail fares, axing concessionary travel for asylum seekers and allowing local authorities to finance pay deals by drawing on funds from existing programmes.

She said £188m would be cut across government departments – including a reduction in spend on sustainable and active travel, and increased interest income on Scottish Water loan balances.

Ms Robison said the government would draw down £460m from the ScotWind leasing auction of seabed plots for major offshore wind projects – which raised more than £700m in 2022.

At the time, the government pledged the funds would be used to “help tackle the twin climate and biodiversity crises”.

Getty Images Offshore wind turbines Getty Images

The Scottish government is drawing down money it raised by leasing seabed plots for energy projects

Ms Robison said public pay was a “significant driver” of the in-year financial pressures but warned it “remains to be seen” whether the UK government would fund deals in line with recommendations from pay review bodies.

The Scottish government spends more than half of its day-to-day budget on public sector pay. For 2024-25, it budgeted for a 3% increase, insisting that was all it could afford.

But it is now reallocating cash from its in-year budget to fund offers of more than 3%.

Council workers have been offered a pay rise of 3.6% – or £1,292 per year if that is higher. That has been rejected by the country’s largest union, meaning the government may have to find additional funds if it wants to avert strikes.

ScotRail train drivers have been offered an increase of 4.5%, while NHS staff – including nurses, midwives, paramedics, allied health professionals and porters – have been offered a 5.5% pay rise, which would cost £448m.

The government also set aside £29m to fund a pay proposal to teachers, who have been offered a uniform 4.27% uplift.

PA Media John SwinneyPA Media

First Minister John Swinney is set to announce his first Programme for Government this week

Ms Robison’s announcement comes the day before First Minister John Swinney is due to unveil his first Programme for Government, setting out his administration’s policy goals.

In his keynote speech to the SNP conference last weekend, Mr Swinney said the government needed to work “smarter and harder”, but denied the party was imposing austerity.

The Scottish government will announce more comprehensive spending plans for 2025-26 in its budget later this year.

It has warned it will face uncertainty until the new UK Labour government announces its first budget next month.

SNP ministers do expect to receive more money from the Treasury, but they do not anticipate it will be enough to cover Holyrood’s spending commitments.

The UK Labour government has said it will make “tough decisions” to address a £22bn hole in public finances left by the previous government – a claim that is disputed by the Conservatives.

Ms Robison said: “While it is welcome that the new UK government has accepted the diagnosis that we have given for years on the UK’s public finances, their solution is sadly looking like an extension of the folly of austerity.”



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