Fiscal sustainability delivery plan

Overview

Sustainable public finances are fundamental to achieving the Scottish Government’s four key priorities of eradicating child poverty, growing the economy, tackling the climate emergency, and ensuring high quality and sustainable public services. In 2023, we set out our Medium-Term Financial Strategy (MTFS)^[1] aimed at ensuring we continue to deliver a balanced budget each year alongside strengthening the public finances over the medium term. The Strategy was built around three pillars: focusing spending decisions on achieving our three critical missions; supporting sustainable, inclusive economic growth and the generation of tax revenues; and maintaining and developing a strategic approach to tax.

This year, we are reinforcing our commitment to deliver this strategy, ensuring the public finances remain sustainable over the medium term to support delivery of this government’s priorities. In the 2025 MTFS^[2], we retain the focus on the three pillars (Figure 1) updating them to recognise progress and where further action is needed.

Figure 1: Three pillars of the 2025 Medium-Term Financial Strategy

Pillar 1: Ensuring public money is focused on delivering government objectives, underpinned by reform and prioritisation to maximise impact.

Pillar 2: Supporting sustainable, inclusive, economic policies with the greatest potential to grow Scotland's economy, expand and broaden the tax base to fund public services.

Pillar 3: Ensuring a strategic approach to tax revenues which considers the longer-term impact of our tax choices and competitiveness.

As part of strengthening our strategic approach, this year we are publishing a Fiscal Sustainability Delivery Plan (the ‘Delivery Plan’) alongside the MTFS. This Delivery Plan brings together the range of activity currently underway, and further actions this government will take, to deliver our Strategy. It sets out the key actions we are taking over the next five years, expanding on, and bringing further transparency to, the range of activity underway as part of the three-pillar approach.

The MTFS and this Delivery Plan provide the basis for the 2026-27 Scottish Budget and the forthcoming Scottish Spending Review, the Framework for which is included in the MTFS. The Scottish Spending Review will focus on allocating multi-year budgets in the best way to deliver against the core priorities of this government. We intend to publish the conclusions of the Scottish Spending Review alongside the 2026-27 Budget.

Updates on progress with this Delivery Plan will be provided on an annual basis, as part of the annual update of the MTFS.