ICAS calls for bold action to secure Scotland’s public finances

Panellists at an event hosted by the Institute of Chartered Accountants of Scotland (ICAS) warned that without a coherent roadmap, efforts to secure Scotland’s economic future risk falling short. 

Held on 19 June, the event – Scotland’s Fiscal Future – marked 10 years of devolved taxation and brought together economists and policymakers to discuss the country’s fiscal outlook. A summary of the Scottish Fiscal Commission’s latest economic and fiscal forecasts was followed by panel discussions on taxation, public services, reform and growth.

David Bell, professor of economics at the University of Stirling, said the proliferation of overlapping strategies made planning difficult.

He said: “We need to have a long-term roadmap going forward. We’ve got the medium-term financial strategy, the programme for government, the national strategy for economic transformation, the national performance framework, as well as the budget. Trying to align all of these things and figure out exactly what track we need to go down is quite difficult.”

Stephen Boyle, auditor general at Audit Scotland, said the country faced “difficult choices” due to a widening gap between public spending and income. He said: “The Fiscal Commission and others are pointing out that we have a significant gap in the way we spend public money compared to the money that we’re receiving.”

Meanwhile, Fiona Bennett, deputy director at NHS Scotland Finance, highlighted the budgetary pressures caused by rising staffing costs. She said: “In terms of the health and social care portfolios budget over the past six years, the increases we’ve had, 80% of that has gone on paying bills.”

Karen Scholes, ICAS president, said a five-year rolling tax and fiscal strategy was essential. She added: “ICAS has been calling for a rolling five-year roadmap and tax strategy setting out the objectives and proposed timeline of devolved taxes policy. We believe that a long-term approach to financial management and planning is good financial practice – it enables flexibility to respond thoughtfully to changes and shocks whilst keeping alignment, focus and momentum on the priorities.

“Tax is not a silver bullet. It will not, on its own, solve the funding gap. The government therefore also needs to look at reducing expenditure, generating efficiencies, improving productivity and fueling public-sector reform – both small and large-scale. Fuelling economic growth and promoting inward investment is an essential element of diversifying and growing revenues.”

Speakers at the event included representatives from the Institute for Fiscal Studies, Audit Scotland, NHS Scotland, and the Federation of Small Businesses.