Difficult decisions lie ahead due to Covid spending, watchdog warns

The Scottish Government will face “difficult decisions” on spending plans as a result of the pandemic, an Audit Scotland report has said.

The watchdog produced a report into Covid-19 spending north of the border on Wednesday, with Scottish Government estimates putting spending last year at £8.3bn, with at least £4.9bn to be spent by the end of the 2021/22 financial year.

But “difficult decisions lie ahead”, the report said, on budgetary planning issues due to pre-pandemic spending pledges and volatility in the country’s finances.

“With increasing pressures on public revenues and spending, and the Scottish budget subject to ever more volatility, uncertainty and complexity, it will be challenging to match spending to the available funding in the coming years,” the report said.

“This will need to be done in a way that minimises the disruption to individuals, public bodies and services, ensures value for money is maintained and avoids unintended consequences.”

Auditor General Stephen Boyle, the head of the agency, stressed the need for medium-term planning to deal with uncertainty in the budget.

“As Scotland moves into the recovery phase from the pandemic, it will likely become increasingly difficult to define what is, and what isn’t, Covid-19 spending,” he said.

“The Scottish Government is managing financial pressures which predate the pandemic, such as spending on health and social care.

“That means difficult decisions lie ahead and, despite the challenges, it increases the need for a medium-term plan to manage the levels of uncertainty and volatility facing the Scottish budget.”

Transparency has also suffered due to the pandemic, the report claimed, with it becoming harder for Government to be fully open about spending decisions due to the fast paced nature of the emergency.

The report said: “The Scottish Government published its latest medium-term financial strategy alongside the 2021/22 Scottish budget.

“This sets out its assessment of Scotland’s economic and fiscal outlook, as well as a broad spending outlook considering the effects of changing funding levels for government spending.

“It will be important that the Scottish Government continues to update this to ensure that the wider context for the 2022/23 budget and beyond is understood.”

But the report claimed the Scottish Government was reviewing past spending decisions to collate all Covid-19 related pledges, and says it will become harder to classify coronavirus-specific spending as the country moves into the recovery phase.

Audit Scotland also stressed the need for effective communication at all levels of Government to understand the impact measures are having.

“Having a clear picture of how initiatives at each level of Government are working together to respond to and recover from the pandemic is needed to properly understand the effectiveness of Covid-19 measures and to support budgeting and financial planning,” the report said.

“Effective communication and cooperation between governments will be central to this.”