Warning To Public Bodies

A long-term view on public spending is needed to protect services.

Public bodies have coped well so far with reduced budgets but need to focus more on priorities and develop longer-term financial plans.

Scotland's public finances: Progress in meeting the challenges, published today by the Auditor General for Scotland and the Accounts Commission, provides an update on the financial position in the public sector.

The report is aimed at supporting those leading and managing public services in making increasingly difficult choices about how to make best use of the money that is available. Alongside the report, Audit Scotland has published checklists designed to help non-executive directors and councillors with their crucial role in budget-setting and financial planning.

Faced with considerable and ongoing financial challenges, public bodies' main method of lowering spend was to reduce staff costs but this is not sustainable. Longer-term spending plans focusing on priorities and risks must be created to assess spending needs and options and their implications for affordability.

Increasing demand from an ageing and expanding population will continue to put considerable pressures on public bodies. Rises in energy prices, and a need to maintain 'fit-for-purpose' facilities such as hospitals and schools, also have to be considered against a backdrop of further budget reductions.

Auditor General for Scotland, Caroline Gardner, said: 

"With further pressures expected and the demand for services increasing, public bodies need to look again at how they set budgets and focus on their priorities.

"There is a clear need for effective longer-term financial plans which identify potential risks and to ensure spending decisions are affordable."

Accounts Commission chair, Douglas Sinclair, said: 

"Public bodies cannot afford to take a short-term approach to spending if they are going to protect services.

"It's crucial that councillors, and others who approve budgets, get the information they need to make informed decisions about how best to use the money that is available. The checklists aim to help those involved ask key questions about the approach to dealing with continuing financial pressures."

RCN Scotland Director Theresa Fyffe said:

"For long enough, we've been saying that the Scottish Government needs to be more transparent and have a longer-term approach to financial planning. Yet today we have another audit that, once again, shows there is limited evidence of longer-term financial planning across Scotland’s public sector.

"In the NHS, the focus is on health boards breaking even each year and achieving efficiency savings.  And although health boards and local councils who are responsible for health and social care spending have done well and coped with the pressures facing them so far, with demand for services increasing and continued real decreases in funding for some time to come, alongside rising energy prices and ongoing strains on building maintenance and repairs – this short-termism is just not sustainable.

"The public sector needs to set out clearly what services it is to prioritise, based on clear evidence of what works and improves people's lives and their health, if we are to get the most out of the considerable money that’s spent on health and social care.

"The Scottish Government cannot simply continue to say that we're spending more on health and that we have more nurses and doctors working in our NHS. This misses the point. We have an opportunity with the integration of health and social care to change how we make decisions on what to fund to achieve the best results for the people of Scotland, but we need action now by the public sector to make sure decisions taken on funding are affordable in the longer term."