Investing in Scotland's Future: resource spending review framework

3. Our Approach

This chapter outlines the proposed approach for the Scottish Government’s Resource Spending Review process, including our priorities for the spending review period. It outlines how we will consider public spending and optimise outcomes within the funding and fiscal levers available to us.

3.1 Our priorities

The choices made around the allocation of funding will profoundly shape the nature and impact of public services and policy interventions in Scotland. It is important that we define the core priorities against which to appraise potential spending plans.

As noted previously three core priorities have been identified for the 2022-23 Budget and the Resource Spending Review:

• To support progress to meet our child poverty targets
• To address climate change
• To secure a stronger, fairer, greener economy

It is our assessment that delivery of these three priorities will be at risk unless this Resource Spending Review prioritises spending more explicitly in support of activity to advance the achievement of their targets. Therefore we will apply criteria in support of these three priorities through our process.

Further pragmatic criteria will need to be deployed in the analysis of spending plans – particularly in the case of spending to sustain the NHS or to meet legal or statutory commitments. However, these three priorities will remain at the core of our work.

3.2 Our principles

Given the challenges facing the public purse outlined in the previous chapter, it is imperative that public spending is deployed as efficiently and effectively as possible. Setting multi-year financial plans generates the opportunity to move towards longer term delivery planning which is necessary to support deeper reform. Across our portfolios, we hear consistently from stakeholders that annual budgeting restricts them to short-term decision making. We are hopeful that the resource spending review will support the ambition to drive reform programmes of change for better outcomes across the policy landscape.

To do this, we will structure our work around three principles:

• Outcomes focused: Our review will focus on how the delivery of positive outcomes for the people of Scotland are best supported. Budgets are often framed as input mechanisms, but as we examine the effectiveness of spend across portfolios, we will maintain a longer-term outcomes focus to inform decisions. We shall consider the impact of spending and specifically how it contributes to tackling inequality and realising human rights. We recognise that in developing plans for public spending that we are not all starting from an even playing field. Ultimately this focus on outcomes supports the National Performance Framework which set out the National Outcomes that Scottish Government seeks to deliver. These outcomes have been developed to reflect the values and aspirations of the people of Scotland, are aligned with the United Nations Sustainable Development Goals and help to track progress in reducing inequality. Our mission and Resource Spending Review priorities sit within this context.
• Evidence informed: Our work will be underpinned by an evidence-based assessment of how well our spending delivers for the core priorities of the Scottish Government, and how our spending meets the central principles of fiscal sustainability. This will include identifying where there is a need to develop further tools for monitoring and evaluating spend over the longer term.
• Consultative: We will adopt a consultative approach to ensure that citizens’, stakeholders’ and delivery partners’ voices influence our spending plans, and that this review is part of a longer-term journey to better public engagement on Scotland’s fiscal future (see Chapter 4 for more details on the Resource Spending Review Conversation).

3.3 Funding our priorities

As Chapter 2 demonstrated, we will need to adapt and future-proof our public spending to meet the changing needs of the people of Scotland, and deliver our mission. As already noted, the Scottish Government faces significant challenge in relation to its funding position. In order to provide additional funding towards our priorities we need to ensure that our public funds are used to optimal effect. Therefore efficiency, effectiveness and value for money will be crucial to how we review spending across the Scottish Government, and central to the robust challenge process we will undertake.

Preparatory work during 2021 has identified a number of ways to approach this challenge. They are heavily informed by the principles of the Christie commission’s report on the future of public services^[18], which was published in 2011:

• Empower individuals and communities
• Integrate service provision
• Prevent negative outcomes from arising
• Become more efficient by reducing duplication and sharing services

The ways of considering public spending that we have identified are:

• Cross-government collaboration: we will identify where there may be shared interest, duplication or overlap in intended policy outcomes over multiple portfolios. Where there is, we will look to develop a more effective and efficient cross-government solution.
• Public service reform: as well as challenging portfolios, we will also examine discrete opportunities for longer-term, large-scale public service reform and transformation that leads to both beneficial outcomes for our citizens and the realisation of more fiscally sustainable delivery mechanisms.
• Prevention: we will consider options to redirect funding towards demonstrable preventative approaches. Effectively targeted preventative programmes can improve service delivery and achieve outcomes whilst reducing demand on public services and, consequently, costs to the public purse.
• The public sector workforce: we will consider the capacity and distribution of our public service workforce in Scotland to ensure that it is fit for purpose and is future-proofed. We will consider public sector reward to ensure that our valuable public servants are rewarded fairly.
• Better targeting: we are investigating whether there are opportunities to refine the targeting of some policies in order to focus on achieving outcomes for those most in need, whilst releasing funding to be put towards other measures.
• Targeted revenue raising: we will investigate discrete opportunities to raise revenue, for example, options for fees and charges associated with spending decisions. Any ideas identified will be carefully considered to ensure they are proportionate.

Any changes to devolved taxation will be considered in line with the Scottish Approach to Taxation, as set out in Scotland’s Framework for Tax, which will be published shortly. The revenues generated from devolved and local tax powers play an increasingly important role in determining the overall funding for the Scottish Budget.

We will continue to progress these opportunities throughout the process of the Resource Spending Review, alongside any others identified through engagement or in the process of the internal review. Any viable opportunities will be assessed for potential equality impact and included in the findings of our final publication.

3.4 Equality

The Resource Spending Review’s process and findings will be subject to appropriate impact assessments, taking into account the Scottish Government’s responsibilities under both the Public Sector Equality Duty and the Fairer Scotland Duty as well as our human rights commitments.

We will work with the Equality Budgeting Advisory Group to ensure that a proportionate and robust approach is taken across the whole of the process.

Q4. In Chapter 3 we have identified a number of ways in which we will be exploring how to get best value out of Scotland’s public spending, including:

• Improving cross-government collaboration
• Public service reform
• Prevention and invest to save initiatives
• The public sector workforce
• Better targeting
• Targeted revenue raising

We welcome your views on these, and other ways to maximise the positive impact of public spending.

Q5. In Chapter 3 we have shared that we will be conducting an equality assessment of the Resource Spending Review’s findings.

We welcome your views on any particular equality and human rights impacts which we should consider in the context of the priorities (question 1) and primary drivers of public spending (question 2) we have set out.