Audit Scotland: Public spending must adapt to COVID-19

Audit Scotland: Public spending must adapt to COVID-19

Audit Scotland’s latest briefing paper has found that the coronavirus pandemic will have significant consequences for public spending in Scotland now and well into the future.

Analysis of the financial implications of the pandemic and the uncertainty it has brought notes that more of the Scottish budget may need to be reprioritised to cover COVID-19 costs.

The briefing found that expected devolved public spending has increased by around 15% since the 2020/21 Scottish budget was first agreed in February 2020 and is subject to significant and continuing revision.

Before the pandemic hit, the budget had faced unusual uncertainty with the UK budget being delayed due to the general election, and remains subject to unprecedented uncertainty, volatility and complexity.

The speed at which financial changes have had to be made due to COVID-19 is highlighted by the fact that the Scottish budget, announced 6 February, included no reference to the pandemic. The UK budget, on 11 March, included spending of £12 billion to tackle COVID-19.

Significant additional spending was announced later in March once the UK entered lockdown, including the Coronavirus Job Retention and Self-Employment Income Support Schemes, forecast to cost £65bn this year. The Scottish Government announced spending of over £2.5bn in March, including £2.2bn of business support and £350 million for supporting communities.

The briefing paper breaks down the £5.3bn announced by the Scottish Government up to the end of July 2020 to tackle the impact of coronavirus. And it highlights the extra risks posed to the public finances by the pandemic.

The report found that as at the end of July, comprehensive information on the amounts paid out to third parties by public bodies was not available to us. In some key areas the current levels of actual spending reported include:

  • 89,000 grants valuing over £998 million (out of nearly £1.2 billion) have been awarded through two Business Grant Schemes
  • £160m of grants have been distributed through the funds for the Pivotal Enterprises Resilience Fund, the Creative, Tourism and Hospitality, Enterprises and Hardship Fund and the Newly Self-employed Hardship Fund. Originally worth £144m at the time of the Summer Budget Revision, this has since increased to £184m
  • All £620m of the Health and Social Care spending included in the Summer Budget Revision has now been committed.

Audit Scotland has said it and the Accounts Commission are currently reviewing its work programme to reflect the changing context of COVID-19 and its implications for public finances, public services and outcomes for citizens.

It said that it will respond to the risks to public services and finances from COVID-19 that have been identified in the paper.

Audit Scotland said: “The dynamic and unfolding nature of the COVID-19 pandemic means that we will need to remain flexible and agile. Our work programme may continue to change at short notice as new issues emerge, or current risks reduce or increase in significance.

“The First Minister has confirmed there will be a public inquiry into Scotland’s response to the coronavirus pandemic, and we will ensure that our work will add value alongside the work of this and any other inquiries.”

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