Top civil servant issues warning to Swinney over need for cuts

SCOTLAND’S top civil servant has warned new First Minister John Swinney of the need for cuts to balance the books.

John-Paul Marks, the country’s Permanent Secretary, appeared before the Finance and Public Administration Committee yesterday for his annual wide-ranging evidence session, where he said the Scottish Government’s budget-setting process this year was “one of the hardest experiences of prioritisation” required since devolution.

The appearance came just hours after the committee received a letter from Finance Secretary Shona Robison confirming the publication of the medium-term financial strategy and tax plans would be delayed to June 20 due to the change in First Minister.

In recent years, Scotland has found itself in a dire financial situation, with the Scottish Fiscal Commission saying the country faced a deficit of £1 billion by the end of this year and £1.9bn by the end of 2027-28 if changes are not made.

A shift in tax policy by former first minister Humza Yousaf’s administration was used as part of measures to plug a £1.5bn gap this year, but it is not yet clear how this will impact upon future budgets.

Scottish Labour MSP Michael Marra – questioning the Permanent Secretary – asked if he had communicated to Swinney there would need to be “significant spending reductions” as the First Minister lays out his vision for the country.

“I have already done that, yes,” the Permanent Secretary said.

He added: “It is a risk, and it needs to be carefully addressed and I expect the Finance Secretary will say a lot about this in June when she sets out her medium-term fiscal strategy.”

Marks went on to say: “I have been very open that I consider fiscal sustainability to be a significant risk that needs active mitigation now, and that has been under way through 2022-23 with the emergency budget review, through 23-24 as well where we used a set of very significant set of controls to reduce our outturn.”

The Permanent Secretary pointed to high inflation, backlogs caused by the pandemic and a real terms fall in the capital block grant, meaning the “right choices” had to be taken to balance the budget.

“Budget 24-25 did that, but it was, I’m sure for all concerned, one of the hardest experiences of prioritisation that we’ve been through under devolution,” he added.

The announcement that the first fiscal event of Swinney’s administration will take place just over a week before the summer recess drew the ire of committee convener Kenneth Gibson.

In her letter, the Finance Secretary said she would be available to appear before the committee the following week.

“I think there will be disappointment across the committee ... surely sending something along the lines that the strategy will not come out until Thursday, June 20, is not really acceptable from a scrutiny point of view?” Gibson said.

“It makes it extremely difficult for clerking teams to get papers out to members, let alone for members to absorb it to have any meaningful strategy in our last committee meeting on the Tuesday before recess.”

Marks said that he would “take that message back” to ministers, adding: “Events in the last two weeks are such that we have a new First Minister, a new Deputy First Minister, a new Cabinet.”

Swinney is understood to be making a statement to Parliament this week on the direction of his government, which – taken with other announcements in the coming weeks – will impact on the strategy, Marks said.