Public service reform strategy: impact assessments

Fairer Scotland Duty Summary

1.7 Summary of aims and expected outcomes of strategy, proposal, programme or policy

The vision for the PSR Strategy is:

A Scotland where everyone has access to services that are efficient, good quality and effective.

For most people, this will mean you can access the everyday services you need, with the confidence that public money is spent wisely and with clarity on how well services are performing.

For people who need more support, particularly those experiencing disadvantage, public services will come to you. These services will be person-centred, accessible and you will not be required or expected to navigate different organisations or complex systems.

For communities, this will mean shaping local places, with public services organisations sharing power and resources with you to deliver what is needed for individual communities.

For public service staff, you will be empowered to provide tailored support, and be trusted to work with people to deliver beyond organisational boundaries to best support the person or family in front of you.

For public service leaders, this will mean you lead as part of a collective, shaping a system that puts people, communities and places at its heart to meet their needs and maximise public value and ensure fiscal sustainability. Beyond leading your own organisation and sector, you will work collaboratively, forging partnerships that drive lasting change, address root causes and provide support early to avoid long-term, complex and expensive interventions later, rising above individual, organisational and sectoral interests.

We will achieve this through a focus on three pillars: prevention, joined up services, and efficient services.

The PSR strategy focusses on tackling system-wide issues that must be addressed, and barriers that must be removed, to enable our vision (outlined above) to be achieved. This means creating a system that is collaborative and integrated by default.

We have set out that the system should be efficient, empowering and preventative in order to improve lives, reduce inequality and ensure fiscal sustainability. This forms the three pillars of the strategy: prevention, joined-up services, and efficient services.

The evidence below demonstrates that inequality is often experienced as poverty and that numerous protected characteristics are over-represented in those facing disadvantage.

In particular the following are key features in the relationship between poverty and inequality:

• Research reveals evidence of poverty persistence, poverty traps, and recurrent episodes of poverty^[27]. This indicates that individuals who fall into poverty are likely to remain there for extended periods or experience repeated bouts of poverty.
• Public services can shape the relationship between economic inequality and poverty^[28]. The quantity and quality of available resources and services available to tackle poverty are crucial in mitigating the effects of inequality.
• Inequality can lead to social exclusion, where marginalized groups have limited access to essential services and opportunities, further embedding poverty².
• Through life, individuals can accumulate advantages or disadvantages based on their socioeconomic status, which can increase inequality and poverty.

PSR is about reducing inequalities of outcome, in all experiences of services including transactional and intensive, and this is clear in each pillar:

Changing our system to intervene early to prevent poor outcomes at population level. The root cause of that preventable demand is often poverty and inequality

Improving services, particularly for those facing most disadvantage

Protecting existing services through improving efficiency of the public services system. Those experiencing inequality are more likely to be more reliant on public services.

1.8 Summary of evidence

The PSR Strategy focusses on fiscal sustainability and improving outcomes for all users of services through a series of workstreams. We are committed to ensuring the PSR strategy is targeted to achieve the greatest impact without adverse impacts.

In particular, this document therefore focuses on the experience of inequality through poverty, as those currently experiencing poor outcomes and disadvantage centres around poverty which is a driver for demand of services through the following aspects:

• Healthcare Costs: Poverty is associated with poorer health outcomes, leading to higher healthcare costs. Individuals in poverty are more likely to suffer from chronic conditions and mental health issues, which require frequent medical attention.^[29]
• Social Services: The demand for social services such as housing support, unemployment benefits, and food assistance programs is higher among those living in poverty. These services require significant funding from the state.³
• Education and Employment: Children from impoverished backgrounds often face educational disadvantages, leading to lower educational attainment and reduced employment opportunities. This results in higher costs for remedial education and job training programs.^[30]
• Crime and Justice: Poverty is linked to higher crime rates, which can increase costs related to policing, legal proceedings, and incarceration.³
• Economic Productivity: Poverty can reduce overall economic productivity. Individuals in poverty may contribute less to the economy due to lower employment rates and reduced consumer spending.⁴
• Long-term Effects: The cost of living crisis has left a legacy of higher household debt, public and third sector services under significant strain, increased inequality, and poorer mental and physical health.^[31]

Over the last decade, socio-economic inequalities in Scotland have remained a significant issue, affecting various aspects of life, including poverty, health, education, and access to public services. Despite efforts to address these disparities, many challenges persist.

Poverty and Income Inequality

Child poverty in Scotland has remained stable, with 23% of children living in relative poverty after housing costs from 2021 to 2024. Similarly, 20% of working-age adults and 15% of pensioners were living in relative poverty during the same period. Persistent poverty, defined as being in relative poverty for at least three out of the last four years, continues to be a significant issue.^[32]

Ethnicity and Socio-economic Deprivation

Ethnic minorities in Scotland are disproportionately affected by socio-economic deprivation compared to their white Scottish/British counterparts. This inequality has worsened over time, highlighting the persistent and growing challenges faced by these communities.^[33]

Health Inequalities

Health disparities are stark, with people in Scotland's poorest areas dying more than ten years earlier than those in the wealthiest areas. Factors such as poor-quality housing, low-paid work, unhealthy environments, and unstable jobs contribute to poor access to health services and overall health disparities. ^[34]

Education and Social Care

Educational attainment gaps between students in deprived and non-deprived areas remain significant. Access to high-quality social care services is also uneven, with those in poorer areas facing more substantial barriers.^[35] These disparities underscore the need for targeted interventions to ensure equitable access to education and social care.

Public Services

Public perception of public services in Scotland has declined, with 74% of Scots believing that public services in their local area have deteriorated over the last five years. Many attribute this decline to the Scottish Government and the previous Conservative UK government. Economic challenges, including rising prices and tightening public sector budgets, exacerbate inequalities in access to public services.^[36]

Trends Over the Last Decade

Life expectancy disparities between the wealthiest and poorest parts of Scotland have remained largely unchanged. Average household incomes grew by only 4% in real terms over the decade, indicating stagnation. Population growth, driven by immigration, has slowed compared to the previous decade.^[37] More people in Scotland are in relative poverty now than in the pre-pandemic period, and average living standards, measured by household incomes, have fallen since 2019, not returning to pre-2010 levels of growth. Educational inequality remains high, with the pandemic leading to temporary changes in attainment inequality, but the gap has now broadly returned to pre-pandemic levels.^[38]

The above evidence highlights the relationship between socio-economic disadvantage and demand on public services in Scotland.

1.9 Summary of assessment findings

The PSR Strategy has been informed by evidence highlighting the unequal effects of poverty and experience of public services across the country. The strategy stems from the Christie Commission^[39], the Covid Recovery Strategy^[40] and the programme for PSR set out to parliament in December 2023^[41]. Tackling inequalities was central to each of these as a core objective and therefore has been at the forefront of the strategy since its initial development.

The strategy’s focus on prevention (pillar 1) will have a positive impact on inequalities as it aims to improve the approach to long-term interventions to break cycles of disadvantage. Tackling inequalities is the key to this pillar as the associate workstreams focus on how the cumulative impact of disadvantage can be stopped through better understanding of the drivers of demand and how to effectively budget for prevention.

The approach to joined up services (pillar 2) will change our model of service delivery, particularly for people with the greatest disadvantage or most complex circumstances, to integrate support, and empower the front line to bring together all the resources people and families need to thrive. Inequalities is also therefore at the core of this pillar.

Although likely to have a less direct impact, the commitment to ensure services are more efficient (pillar 3) will therefore ensure they are fiscally sustainable long-term and therefore mean services are able to support those who need them effectively for as long as they are required.

As improving outcomes and reducing inequalities is a key objective of the strategy, we are committed to continuing to assess our impact and to measure our success against this aim. This will be a core element of the monitoring and evaluation framework for the strategy.

Overall, the strategy aims to transform public services to better support individuals and families facing socio-economic disadvantage. It reaffirms a commitment to a person-centred, whole-system approach to reform. This involves enabling more effective collaboration across government, public, private, and third sectors, and designing services based on lived experience.

Sign Off Name: Simon Mair

Job Title: Deputy Director, Place Based Service and Reform

Date: 27 June 2025