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SCDI’s Recommendations for the Emergency Budget Review and Scottish Budget

As forecasts point to a recession ahead SCDI has provided evidence on the Scottish Budget and the cost of living crisis to the Scottish Parliament’s Finance Committee.

Scotland’s ability to retain, grow and attract businesses, and retain and attract key workers, is pivotal in generating the rates of growth which will make its public finances sustainable and fund improvements in public services and spending. Working with industry to increase productivity, raise wages and attract more people to work in Scotland would be the most robust way of generating revenue.

The Scottish Budget can help the response to this emergency by limiting further costs for employers where possible to allow them to maintain levels of employment and increase pay rates, and by helping people with the cost of living and access to jobs, for example through provision of flexible and affordable childcare, and support for people to reskill and upskill more quickly. This will also tackle skills shortages.

Revenue spending in Scotland will marginally increase in real terms over the next four years while rapidly rising inflation will significantly increase costs of public services. There are major pressures on health and social care as services recover from the pandemic and cope with rising demand from an ageing population. The Scottish Government’s decision to prioritise health and social care and social security means large real terms reductions in funding for enterprise, tourism, and trade, colleges and universities, and local government. This will reduce their ability to help sustain economic activity, and support recovery and expansion.

Digitalisation of businesses and public services must be a focus. Recent SCDI reports have highlighted the potential of health and social care data, and ClimateTech, and how to unlock the opportunities. EdTech is another priority.  In a digital world, the use of many buildings and places can be rethought. While important, efficiencies should not be the only driver. There is the opportunity to be innovative and integrative, not only across the Scottish public sector estate, but rather across public, private, education and third sector organisations, to repurpose buildings as flexible/mixed use hubs and meeting places for communities.

New public procurement measures should be used to drive innovative solutions. This should include removing barriers for SMEs and third sector organisations across all elements of the procurement system, piloting innovation-led procurement by government departments or public bodies in which government acts as their first customer, and business purpose-driven partnerships and fair value chain relationships.