Thinking long-term about public finances

The Scottish Fire and Rescue Service report coverSince the last Scottish Parliament election in 2011, there have been major changes to Scotland’s public sector landscape. Thirty-seven colleges have become twenty, the NHS and councils have begun integrating adult health and social care services, and national police and fire services have been established.

Audit Scotland has commented on all these developments. In April this year, we published a report on Scotland’s college sector. My colleague, Claire Sweeney, has blogged on progress in integrating health and social care services and we will report on progress in early 2016.

Most recently, Audit Scotland published a report on the creation of the Scottish Fire and Rescue Service. Our report concluded that the service and the Scottish Government managed the merger eight predecessor fire and rescue services effectively.

Yet what is clear from our report is that, in some respects, the hard work of reforming the fire and rescue service is still to come. Importantly, the service has started work to assess:

  • where, from its perspective, the current and future risks to the public are;
  • how it does its work and how it contributes to making communities safer; and
  • where and how its resources should be deployed.

This will help it rethink, reshape and redesign what it does and how it does it, whilst ensuring that continues to respond effectively to emergencies, wherever and whenever they occur. And this will all have to happen within what will likely be a much tighter financial context.

publicfinances_coverOne of the key tools for responding to this challenge is the development of a long-term (5-10 year) financial strategy. In our report, we recommended that the Scottish Fire and Rescue Service develop such a strategy by the end of March 2016. We set out the necessary components of a long-term financial strategy in our follow-up report on Scotland’s public finances which we published in June last year (see Exhibit 3 in that report).

Public bodies have to operate with annual budgets. These annual budgets exist within a 1-3 year financial framework provided by government spending reviews. We think there are powerful reasons for public bodies to think about their finances on timescales that extend beyond this. Long-term financial strategies can provide:

  • a perspective on the financial sustainability of the organisation and its strategic direction
  • an opportunity to examine different future scenarios for an organisation
  • a place to examine long-term risks to the successful delivery of public services; and
  • a means of linking together other corporate strategies such as workforce, estates, ICT and procurement.

Inevitably, the further one looks into the future, the more uncertain things become. That does not mean that thinking about it and planning for it should not happen.

About the author

mrobertsMark Roberts, senior manager in Audit Scotland since 2008, has worked for a range of public sector organisations throughout his career.

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