20 December 2024

Scotland must tame its bloated state

Having spent prodigiously, the SNP is recognising the need to make government leaner and more efficient.

There are more quangos in Scotland than there are MSPs. Government sources estimate there are around 140 state-funded public bodies, compared to 129 elected members at Holyrood.

With the public purse empty, ministers are looking at where they can make savings, and they have the quangos in their sights. Each has its own expensive army of staff, covering IT, HR, events and more. That is about to change.

In February next year, the public finance minister Ivan McKee will bring together the various chief executives and chairs and order them to save money. Organisations that work in the same sector, be it culture, education, health, the economy or whatever, will be told where possible to merge their back-office functions. McKee also intends to publish a public sector reform strategy early in the new year, setting out the various ways in which the state will be made leaner and more efficient.

This might seem unremarkable, but coming from the SNP, a party that has spent prodigiously during its long reign in government, it marks a significant change of approach. Sources say that McKee, a close ally of the reform-minded Economy Secretary Kate Forbes, is determined to secure more bang for the taxpayer’s buck and draw a firm line between the present and the Nicola Sturgeon era. In this, he has the support for First Minister John Swinney.

The Scottish public sector is vast. It represents around 50 per cent of the nation’s GDP and there are estimated to be 550,000 state employees, accounting for 10 per cent of the UK total.

It is also, unsurprisingly, hugely inefficient. The government has been generous in its pay settlements but has failed so far to match this with the kind of reforms seen south of the border. The outcomes across the sector are far from good, and the state has run out of money. Earlier this year, ministers were forced to announce a fiscal emergency.

A freeze has been instituted on public sector recruitment, and it is estimated that the size of the workforce has fallen by 3 per cent this year and will fall by a further 3 per cent in 2025. These are hardly numbers to set the heather alight, however, and the savings won’t make much of a dent in the spending crisis.

Audit Scotland says that “the scale of public sector workforce reform that will be required to deliver sustainable public services in coming years is greater than that seen in recent years.” The government will need “to deliver change quickly given the scale of the challenge ahead. Historically, there has been an implementation gap between public sector reform ambitions and the ability of the Scottish Government to deliver change on the ground.”

McKee accepts this – in truth, he has little choice. But the change of attitude is welcome none the less. There is also a focus on getting better value for money from the annual £16 billion spent on public sector procurement, using the purchasing power of the state to drive down prices. And the government intends to radically reduce the physical space it takes up, ensuring that as building leases run out they are not renewed, and staff are herded into shared accommodation.

Ministers are looking at introducing single island authorities, covering Shetland, Orkney, the Western Isles and Argyll and Bute. The geographical neatness of these territories means that services can be centralised, with local government, health, education, social care, housing and fire and rescue being run by a single body. Again, this will mean significant savings in back-office and operational functions.

There are political as well as governance reasons behind these steps. Scotland’s politicians are alarmed by the rise of Reform UK, with polls predicting that Nigel Farage’s party could win as many as 14 seats at the 2026 Holyrood election. The electorate has cottoned on to the fact that they are being taxed more than elsewhere in the UK, and that the state is an outsize presence in national life, but that it does not deliver outcomes commensurate with its cost and scale.

Disillusionment with the mainstream is setting in, as it is across the West, which might mean that the outcome of the election is unsatisfactory for all the main parties. The poll numbers suggest that neither the big unionist parties nor the independence-supporting ones will be able to form a governing coalition, which could leave Reform with the whip hand.

McKee and his colleagues believe the best way to prevent this happening is for the state to show it is delivering. “The big win in this is that people see a genuine difference in the services they are using – not just a bunch of words but change actually happening,” a government insider told me. That may be a tall order in the time left before the election, and after 17 years of SNP power, but it is hard to see what the alternative is. SNP ministers are open to talking with Scottish Labour, which is also promising public sector reform, about how both parties can agree on some long-term policy goals, whichever of them is in government after 2026.

It’s clear that radical steps are needed if Scotland is to avoid being plunged into a democratic crisis. Our political leaders must prove they are up to the challenge.