Resource Spending Review Framework: Analysis of consultation responses

3. Drivers of public spending

The second section of the Framework document outlined the fiscal and economic context for the spending review, including the challenges faced due to the pressures on public spending.

Q2. In Chapter 2 we have identified the primary drivers of public spending over the Resource Spending Review period including:

• Changing demographics
• Demand on the health service
• Public sector workforce
• Inflation

We welcome your views on these and any other public spending drivers you think we should consider.

This question was intended to focus on the overarching drivers of public spending faced by the Scottish Government over the remainder of the parliamentary term. While a number of respondents engaged on this basis, many outlined a case for further investment in particular areas. Where a call for further investment was made, this has been reflected in Section 9of this report.

Several respondents agreed with the drivers of public spending listed in the review and recommended the inclusion of other drivers of public spending, with an emphasis on climate adaptation and mitigation. The Convention of Scottish Local Authorities (COSLA), however said that it was not immediately clear how the four drivers linked with the three priorities.

Some respondents indicated that the cost implications of the climate crisis should also be included as a driver of public spending (for example Community Transport Association, Cycling UK in Scotland and the Royal Society of Edinburgh). The RSE noted "that the costs implications of the climate crisis and associated increases in energy prices should be recognised as a fifth primary driver to account for the public, inflationary, and household finance implications of striving to achieve net-zero emissions by 2045."

Other primary drivers listed by respondents were the demand on social care and its workforce, failed projects and future initiatives, and land ownership.

Participants at the Academic / Think Tank Roundtable specifically addressed the drivers of public spending, noting that it was useful to consider the drivers of spending over the medium to longer term, the pressures that might be created, and to allocate funding accordingly. Participants also emphasised the need to build in resilience to respond to volatility against any unforeseen changes.

Respondents provided a broad range of recommendations around future drivers of public spending (and responses to mitigate / manage those drivers) ranging from fiscal and financial measures to issues around health and social care, the public and private workforce, and the third sector, among other areas discussed below.

Health and social care

Some organisations emphasised the importance of health and social care, especially as Scotland recovers from the COVID-19 pandemic. Covid Aid commented: "demand on the health service should be emphasised, recognising that Covid-19 has at times stretched health-service capacity to its very limits – and its ongoing effects could exert a long-term impact on staffing and other critical factors."

COSLA said that there was a "compelling need" to drive a focus on greater investment upstream to reduce demand on health and social care services, and that "prevention is the key". COSLA also said that recovery from COVID-19 should be listed as a driver.

ENABLE Scotland suggested that investment in high-quality social care can alleviate the pressure on the health service. The RSE called on the Scottish Government to acknowledge the need to invest in social care to empower community-based services and mitigate increased delayed discharge figures. The Royal College of Psychiatrists in Scotland called for the implementation of sustainable investments and staffing decisions for mental health service provision.

The Royal College of Nursing Scotland highlighted what they saw as deficiencies in the health system including workforce shortages and high vacancy rates, recruitment challenges, poor staff treatment, and a compromise to the overall quality of care provided.

Specific fiscal/financial measures

Individuals provided a broad range of recommendations including levying climate change drivers, incentivising green energy, placing a tax on tourism, and incentivising population growth with appropriate measures in place to support children.

A number of responses focused on income and cost of living considerations as drivers of public spending. For example, the Poverty and Inequality Commission said the Scottish Government should take action to mitigate the worst impacts of inflation to meet child poverty targets. Similarly, the Child Poverty Action Group in Scotland (CPAG) called on the Scottish Government to ensure that low-income families are not disproportionately affected by inflation, rising energy costs, and universal credit cuts. In the same vein, the RSE called for a revision of the 2% per annum increase in public sector pay to account for inflation in light of recent international events.

Renfrewshire Council called on the Scottish Government to develop innovative funding approaches to strongly reinforce its commitment to addressing the climate emergency.

Some organisations emphasised the importance of preventative investment in addressing the drivers of public spending, in particular relating to the pressures on social care and health. The Scottish Partnership for Palliative Care called for an investment in palliative and end of life care over a sustained period while Scotland's Learning Partnership called for an investment in preventive measures and lifelong learning to combat cognitive decline and degenerative conditions. The Mental Welfare Commission for Scotland emphasised the preventative nature of investment in social care.

The Scottish Property Federation also urged the Scottish Government to work closely with UK colleagues and UK Government to maximise the strength of public sector investment and policy decisions.