Emergency Budget Review: 2022 to 2023

The outcome of the Emergency Budget Review 2022 to 2023.

4. 2022-23 Financial Management

Work has been undertaken across the Scottish Government to generate savings options to support the achievement of a balanced budget and enable consideration of further cost of living initiatives including enhancing public sector pay. The initial EBR work, coupled with robust in-year financial management practices, enabled the package of £560 million of savings which were announced to Parliament on 7 September 2022. These include (full list included at Annex B):

  • Spend reductions of £53 million in the budget for employability schemes
  • Increased in-year funding of up to £56 million generated by the ScotWind clearing process – funding that will be reinstated in future years and used, as planned, to invest in addressing the climate and biodiversity crises
  • Spending reductions of £33 million through deferral of ring-fenced agriculture funds, to be returned in future years, and whilst not impacting eligibility, taking a risk based forecasting approach based on demand, a reduction of £37 million in concessionary fares spend

It was made clear in announcing these and other savings that the scale of the challenge faced is both so important and so severe that further work would be required. This has been ongoing across Scottish Government, considering the scale, value and deliverability of further options that could be progressed. This process has identified additional options for spending reductions and reprioritisation in order to support the urgent priorities of enhancing public sector pay and cost of living support. These amount to around £615 million and fall across the government including (full list included at Annex A):

  • Reprioritisation of spend within the Health and Social Care Portfolio (£0.4 billion) to support a fair pay offer of approximately 7% to NHS Agenda for Change staff and to manage wider pressures in the Health and Social Care sector. Whilst lower than planned, we have continued to support overall increases to mental health spending, as well as delivery of dementia, learning disability and autism services, and cross-cutting trauma work. The portfolio has also been required to manage a number of financial pressures, including from Covid following the UK Government's unilateral decision to remove Covid funding, increased inflation and increased demand. These decisions recognise that supporting a fair pay offer for NHS staff is critical to delivering NHS services. The full balance of Health and Social Care reprioritisation will remain within the portfolio.
  • Further resource savings of £33 million from across the Scottish Government, to add to the £440 million announced on 7 September to enable a balanced budget, support Government priorities and the policy measures set out in this document.
  • Around £180 million of capital and Financial Transaction reductions to support wider financial management, taking account of the market outlook for demand-led investment, global supply chain issues and construction capacity.
  • All budget changes will be reflected in budget revisions as part of our annual budget process and will be subject to the normal parliamentary scrutiny.

Unlike the UK Government, the Scottish Government is extremely constrained by a combination of the Fiscal Framework, a requirement to balance the budget and limitations on our ability to borrow or increase tax revenue. The current level of uncertainty is the highest faced since devolution and as a result there remains a risk to balancing the 2022-23 budget. A careful and prudent risk management approach is critical in progressing both the responsibility to support those most in need in Scottish society, and the duty to robust fiscal management.


Email: mairi.cameron@gov.scot

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