Finance committee demands greater transparency as Budget debate looms

The Scottish Government has been urged to provide greater transparency around areas including where its Covid recovery spending is coming from as parliament prepares to debate the Budget for 2022-23 next week.

Having taken evidence from experts including David Eiser at the Fraser of Allander Institute and Professor Graeme Roy at the University of Glasgow at the end of last year, the parliament’s Finance and Public Administration Committee said more information is required in a number of areas in order for the government’s spending plans to be properly assessed.

In its Budget Scrutiny report, the committee noted that the post-pandemic recovery is likely to be more muted in Scotland than in the UK as a whole and that “more work is needed to understand what is behind these trends in Scotland and how they can best be addressed”.

“While [Scottish Fiscal Commission] forecasts show increasing optimism that the Scottish economy will return to pre-pandemic levels by mid-2022, there is some evidence emerging that the recovery and economic performance in Scotland is not as strong as in the UK as a whole, which is likely to put more pressure on Scotland's public finances,” the report said.

“The SFC has advised that the Scottish Budget 2022-23 is 2.6 per cent lower than in 2021-22. After accounting for inflation the reduction is 5.2 per cent.”

Finance secretary Kate Forbes made her budget announcement in December, after the Covid Omicron variant had been discovered but before any Omicron-related financial packages were announced. A series of support packages have been unveiled since, including £100m in self-isolation grant funding and £100m for hospitality and culture businesses impacted by cancellations in the run-up to Christmas.

The committee noted that Forbes indicated that would in part be funded by health consequentials being repurposed, but stressed that more information is required on where the money has come from and how it has been allocated.

“With the Covid-19 pandemic continuing to require financial interventions, it is imperative that the Scottish Government continues to provide full, transparent and timely information on all Covid-19 allocations,” the report said.

“The committee also asks how the Scottish Government is assessing the effectiveness of its Covid-19 interventions.

“This type of information not only allows proper scrutiny of where, and how effectively, the money is being spent, it also enables us to identify any effects of diverting funds from other areas, and to learn lessons for any future health emergency.”

In terms of income, the committee said the expectation that growth in income tax receipts would be lower than elsewhere in the UK in the next financial year was “deeply worrying”.

“We consider that evidence showing that Scotland is lagging behind almost all other areas of the rest of the UK in key indicators of economic performance is deeply worrying,” the report said.

“We are particularly concerned to note the latest SFC forecasts showing Scotland’s income tax receipts falling behind the block grant adjustment, which we consider could, if they come to pass, put Scotland’s future fiscal sustainability at risk.”