Podcast transcript – Scotland’s public finances
What’s this report about?
The report looks at Scotland’s financial situation and how the Scottish budget is scrutinised and decided. It provides an overview of the financial pressures and challenges facing the public sector during a recession and looks at how the Scottish Government manages it finances. The report makes a number of recommendations for the Scottish Government, and raises issues for the Parliament and the wider public sector to consider when planning the delivery of public services in a time of severe resource constraints.
What have you found?
The report describes where we’re at at the moment, in terms of growing financial pressures caused by a smaller budget at the same time as an ageing population, the rising costs of free public services, the backlog of maintenance and repair of buildings, roads and other assets, and the extra pressures on public services as unemployment rises during the recession.  
In terms of where we go from here, the Scottish Government needs to adapt its current approach to budgeting to ensure limited resources are reaching key priorities. The current method of deciding expenditure only allows for changes to be made at the margins of existing budgets and does not provide the flexibility required to prioritise spending.
We highlight that the current Scottish Government efficiency programme will not be enough to bridge the gap that would emerge should spending continue on the same basis. A more fundamental approach is needed. There is also an urgent need to improve the efficiency and productivity of Scotland’s public services. 
The Scottish Government and the wider public sector need to work together to develop better service delivery, cost and performance information. This information is needed to allow informed choices to be made between competing priorities and to encourage greater efficiency and productivity. Better information will also support the Scottish Parliament in fulfilling its scrutiny role.
What is the impact/importance on the public?
Having better information linking spending with priorities would help decision-makers direct money to the services where it is needed most.
We’ve found that the Scottish Government has set clear priorities but the information to demonstrate how these are being met is limited. 

Are we looking at a situation where basically services are going to have to be cut?
What our report says is that the public sector needs to identify new and innovative ways of working in order to sustain current levels of service. This goes beyond generating efficiency savings and therefore a fundamental review is needed to look at how services are delivered. 
What is it that you would like to see happen now?
The report highlights a number of questions for the Scottish public sector in planning for the financial challenges ahead. Public bodies need to use these questions as a basis for planning the delivery of services in a time of severe resource constraints. We have also made a number of recommendations for the Scottish Government and raised issues for the Scottish Parliament to consider, in particular, in relation to the budget scrutiny process. 
Some of the areas that we’ve highlighted include:
•	The need for the Scottish Government to ensure that the Parliament receives information which demonstrates clear links between the draft budget, government priorities and the performance of public services
•	We also recommend that the Scottish Government should ensure that performance information is considered alongside financial information when budgets are being monitored
•	Thirdly, the report suggests the Parliament’s Finance Committee and the Public Audit Committee should organise wide-ranging performance reviews of major service areas.