Programme for Government 2022 to 2023

First Minister's Foreword

This Programme for Government is published against a backdrop of the most severe economic upheaval in a generation, already impacting people, businesses, public services and the third sector across Scotland.

It is hard to overstate the gravity of the situation we face. This cost crisis puts livelihoods – and lives – at risk.

The figures are stark. At the end of last summer inflation was 2%. This week it stands at 10.1%, the highest UK rate since 1982, and is expected to be the highest in the G7 group of leading economies for the next two years.

The Bank of England is now forecasting that the UK will enter recession later this year. Interest rates have been pushed to their highest level since 2009.

The energy price cap – which places a limit on what households pay for each unit of their electricity and gas – was set at a level equivalent to an annual energy bill of £1,277 for an average home before April 2022. At that point, it rose to £1,971. In October, it will rise to £3,549, with some forecasts suggesting a further rise to over £5,300 in January.

These cost increases will impact everyone – for a household reliant on Universal Credit or in poverty these higher energy costs could exceed a quarter of their income.

By October, even with previously announced UK Government mitigations, we estimate that around 1 million Scottish households (40% of all households) will be in fuel poverty. Around 920,000 (37% of households) will be in extreme fuel poverty.

This cost crisis is only likely to grow in scope and scale through the coming winter. It demands leadership and action from government.

As a responsible government, in order to support people over the winter, we are determined to act to mitigate the impact of the crisis to the maximum extent possible within our limited powers and resources. We will do all we can, as we seek to weather the coming storm together, to work for and secure a better, sustainable future for people and their families: tomorrow, next month and in years to come.

While there is no doubt Russia's illegal invasion of Ukraine has had a global economic impact, particularly on commodity prices, the economic situation has been exacerbated in the UK by Brexit and by the refusal of the UK Government to address rising prices with the same force as other developed nations.

The most significant powers and resources to tackle this crisis rest squarely with the UK Government which is currently refusing to exercise the reserved powers it holds over the economy, the energy market, borrowing and economic stimulus that could tackle inflation, ease the cost crisis and reform the energy market for the longer term.

As we prepared this Programme for Government, neither the outgoing nor the incoming Prime Minister had set out an adequate response; and this is not for want of pressing by the Scottish Government and many others. We have outlined actions which the UK Government could take now – indeed, should have already taken – to begin to address the crisis. These include an immediate cancellation of the October price cap rise for domestic consumers, action on energy costs for business, more cash help for the most vulnerable, and extra funding for public services.

It is also right that, in a situation where lives and livelihoods are at stake, government has the resolve and confidence to act differently where that is needed.

For that reason, the nature and immediate focus of this Programme for Government is different. As well as facing uncertainty created by the inaction of others, we face difficult choices ourselves, both as a nation and as a government.

The Scottish Government must deliver a balanced budget. Our funds are finite. We have to make choices about where we direct our spend to deliver the best outcomes for people.

In the current financial context, where the power of our spending is being eroded by inflation of over 10% and we are spending an increasing percentage of our budget on energy costs for essential public services like hospitals and prisons, these choices become even more stark.

The impact of inflation means that the Scottish Government budget for this year is already worth £1.7 billion less than it was in December. And the UK Government's existing spending plans, coupled with Bank of England inflation forecasts, mean that the Scottish Government's funding will fall by 4.5% in real terms next year. If inflation rises significantly higher, the resources available to us will erode even further.

Taken together with proposals for a UK Government emergency budget in the autumn, this means the Scottish Government faces a significant degree of uncertainty and volatility affecting our Budget in 2022‑23 and the funding available to deliver the Programme for Government in the financial year 2023‑24 and beyond.

We have already chosen to allocate almost £3 billion of investment this year to support people throughout Scotland, with over £800 million for businesses.

We are also supporting pay offers which put money into people's pockets, for example with an investment of more than £250 million on a recurring basis into local government pay. This means those paid £20,000 or less get a rise of £2,000, others £1,925 or 5%, and the increase for the best paid is capped in order to boost the lower paid.

While it is right that we do everything possible to maximise pay increases at a time of soaring inflation, it comes at a cost. All governments must make hard choices, but without the full set of fiscal levers that other governments have at their disposal, including borrowing powers, our choices are additionally constrained. Resources we commit now come from our finite already allocated, budgets. In addition, these budgets may be impacted, adversely, as a result of decisions taken by the UK Government over the autumn. Right now, to help those who need it most, this means we have to choose just as much what not to do as what to do. Choosing what to do in response to this crisis means choosing what we must reduce, delay or stop in other programmes.

We have already set out our plan for an Emergency Budget Review, the results of which will be published within two weeks of any UK budget. This Programme for Government is necessarily therefore subject to the outcome of our Emergency Budget Review and our Budget for 2023‑24.

Last year we published a Programme for Government which, alongside the Bute House Agreement, set out our plans for the whole parliamentary term. Although we cannot guarantee our plans will be unaffected by the uncertainty and rising costs that we face, they remain in place and our ambition to deliver them is undiminished: the more so since we are clear that much of the answer to the current cost crisis and the poverty it will cause lies in our journey to net zero, investment in a strong economy, and in building a fairer society.

Our journey to net zero is not just part of the solution to this crisis: it is also critical to minimising the impending climate crisis, the impact of which will be even more significant than what we expect to see in coming months.

The extreme weather this year across the world – most recently in Pakistan – demonstrates that the climate and nature emergency is becoming more urgent. Our response to the cost crisis must also deliver for the climate.

This Programme for Government builds on ambitious, long-term commitments made in the Bute House Agreement and restates our commitment to the importance of delivering on our ambitions for the climate. These commitments range from our consultation on legislation to transform how we heat our buildings to continuing our record investment in active travel.

While we are determined to take the actions we can, we also set out clearly in this Programme for Government those things where, at the moment, we are forced to rely on the UK Government to act for us. So far, its actions have fallen well short of what we need.

That is why this Programme for Government also makes clear our commitment to giving people a choice about their constitutional future, and why we believe the best choice is an independent Scotland.

Were we to have the full powers of an independent government, those powers could be exercised to mitigate further the impact of the crisis; and, crucially, to act to build a Scotland more resilient to the challenges we face now and in the future: not just the cost crisis, but the climate emergency, and building a greener, fairer future.

We will continue to plan for a referendum next year and make the case for independence – for a future in which Scotland is not left waiting for action from a UK Government we did not vote for, but can instead chart our own future based on policies and values that command support here. Independence would give our own democratically elected Scottish Parliament and Government the powers to act in the face of crisis and build a better future.

Indeed, this Programme for Government also sets out our ambition to create a better future beyond the cost crisis. We remain determined to deliver not just an immediate response to the cost crisis, but action to support our individual and collective resilience to future shocks, and to create a progressive future for Scotland. That is why this Programme for Government highlights a number of key areas where we have embarked on a programme of reforms that will improve lives for people and communities across Scotland.

As an example, in the coming months we will set out the future of Scotland's energy system: how we will meet future demand, realise the economic opportunities of moving to a net zero energy system, and secure a just transition, while continuing to engage with the UK Government, regulators and energy companies on improvements that can be made now.

We will prepare an updated Climate Change Plan, keeping Scotland on track to meet our target of net zero by 2045.

We will deliver the first stages of our National Strategy for Economic Transformation, which will lay the foundations to transform our economy and help to protect it from the effects of any recession.

Our legislative agenda will bring significant reform to health and social care, with the creation in law of a new National Care Service for Scotland – the most significant development in health and social care since the creation of the National Health Service. We will also legislate to improve safety and champion the voice of patients through a Bill to create a Patient Safety Commissioner.

We will progress major reforms in the justice system through consultation on Baroness Helena Kennedy's recommendations for offences related to misogynistic conduct, continued reform of bail and remand, and a Criminal Justice Reform Bill that will propose the end of the not proven verdict in Scots Law and provide anonymity for complainers in sexual offence cases. Through our Police Complaints and Misconduct Handling Bill we will improve the way in which complaints about the police are dealt with, bringing greater openness and transparency. We will also introduce a bill on Legal Services Regulation Reform, improving transparency and accountability in the sector. Our Children's Care and Justice Bill will improve the experience for children who have to engage with the justice and care systems and will help Scotland Keep The Promise.

Other legislation will help to reform our education system, improve public health, protect our environment, and make our economy more sustainable. The Scottish Government will also support Gillian Mackay MSP with the development and drafting of her proposed Member's Bill to protect safe access for women to healthcare facilities that provide abortion services, subject to the detail of a forthcoming Supreme Court judgement. And we will consider what further actions we need to take to embed women's rights to safe access to healthcare in the future.

While there are hard choices to be made in the short and medium term, this Programme for Government sets out our determination to mitigate the impact of the crisis where we can, to be clear what we ask and expect of others, and to continue to work for a stronger and more resilient Scotland, facing the future with confidence and optimism.

Rt Hon Nicola Sturgeon MSP

First Minister of Scotland