SCOTLAND’S Finance Secretary was forced to explain the “absolute basics” of how the country’s budget works to a Tory MSP during a committee session on Tuesday.
Kate Forbes appeared frustrated as she told frontbencher Liz Smith that there is “no black hole” in Scotland’s finances as has been reported.
Last week, the Institute for Fiscal Studies (IFS) said that the Scottish economy could be facing a £3.5 billion shortfall by 2026/27.
According to a spokesperson for Forbes, this was primarily a result of rising inflation and uncertain UK Government funding choices – which can dramatically reduce the country’s budget “at the drop of a hat”.
The Scottish Government can only spend the funds it brings in, as it has minimal borrowing powers and therefore cannot operate a deficit. With the block grant given to Scotland by the UK Government “remaining flat” for the next few years, inflation at a predicted 10% will have a major impact on the cash available to ministers.
With this in mind, Forbes provided a spending review to the Scottish Parliament in which a series of cuts were made.
“We are doing all we can in response, prioritising additional funds to help households in need, but the limits on our fiscal and economic powers limit in turn the support we can offer,” the minister explained.
During a Finance Committee session on Tuesday, Scottish Tory economy spokesperson Smith challenged Forbes on the supposed deficit situation.
“What is the figure that you are using for the black hole in the public finance?” she asked the SNP minister.
“There is no black hole in public finances,” said a frustrated Forbes. “This is the most basics of a budget.
“I don’t know how else to explain the absolute basics of Scottish Government budgets which I must balance. I can only spend to the penny what I am predicted or forecast to either raise or receive.
“You cannot have a position in a resource spending review or in a budget where I am overspending,” she said.
Meanwhile at the committee, the Finance Secretary assured MSPs that reducing Scotland’s public sector workforce to “pre-pandemic levels” is unlikely to prompt job cuts in healthcare.
Scotland’s public sector staff numbers have grown from around 410,000 to 440,000 in the last five years, and estimates suggest 30,000 jobs may need to be cut by 2026/27 to reduce the pay bill of more than £21 billion.
In her spending review Forbes outlined plans to reduce the overall public sector workforce, with the aim of keeping the total pay bill at 2022/23 levels.
At the finance committee on Tuesday she told MSPs that healthcare – which makes up half of the public sector growth – was not likely to be affected.
However she said she “has not put a figure” on how many jobs need to be cut from the public sector.
