Long-term view on public spending needed

Public bodies have coped well so far with reduced budgets but need to focus more on priorities and develop longer-term financial plans, according to spending watchdogs.
A report, published by the Auditor General for Scotland and the Accounts Commission, provided an update on the financial position in the public sector.

It stated that faced with considerable and ongoing financial challenges, public bodies’ main method of lowering spend was to reduce staff costs but this is “not sustainable”. The report added that longer-term spending plans focusing on priorities and risks must be created to assess spending needs and options and their implications for affordability.

Auditor General for Scotland, Caroline Gardner, said: “With further pressures expected and the demand for services increasing, public bodies need to look again at how they set budgets and focus on their priorities.

“There is a clear need for effective longer-term financial plans which identify potential risks and to ensure spending decisions are affordable.”

Accounts Commission chairman, Douglas Sinclair, said organisations cannot afford to take a short-term approach to spending if they are going to protect services.

“It’s crucial that councillors, and others who approve  budgets, get the information they need to make informed decisions about how best to use the money that is available. The checklists aim to help those involved ask key questions about the approach to dealing with continuing financial pressures,” he added.

The report, entitled Scotland’s public finances: Progress in meeting the challenges, said increasing demand from an ageing and expanding population will continue to put considerable pressures on public bodies. It added that rises in energy prices, and a need to maintain fit-for-purpose facilities such as hospitals and schools, also have to be considered against a backdrop of further budget reductions.

This report provides a high-level summary of the main themes arising from local audit work carried out during 2013. The report is aimed at public bodies including councils, NHS boards and central government bodies such as executive agencies and non-departmental public bodies. 

It said: “The Scottish public sector has undergone significant changes in recent years. The Scottish Government’s public service reforms aim to provide more effective and efficient public services that make best use of public finances. The reforms centre on four key components: prevention, performance, people and partnerships. 

“Since 2007, these reforms have resulted in the number of public bodies reducing from 199 to 113. In addition, there have been significant reforms in the police, fire and further education sectors and more recently in the approach to health and social care services.

“Scotland’s public sector continues to face significant financial challenges. The Scottish budget has fallen nine per cent, in real terms, from £31.9 billion in 2009/10 to £28.9 billion in 2014/15 and is expected to reduce further. Public bodies have coped well so far but face increasingly difficult choices in reducing spending while maintaining service standards and meeting rising demand. 

“In setting budgets, public bodies need to focus more on their priorities, making clearer connections between planned spending and the delivery of outcomes.”