Scottish Budget 2023/24: We’ve heard things like this before

Budget day is a strange one at SCVO.  Having contributed to several pre-budget scrutiny inquiries over the last few months, the budget feels like it should be the culmination of lots of work; but in reality, a combination of a lack of transparency, the complexity of the budget, and the way voluntary organisations are funded, makes it incredibly hard for us to draw many conclusions about what the budget really means for the sector. 

The budget does give a good sense of the Scottish Government’s priorities, and when we heard in advance that this budget had child poverty, net zero and sustainable public services at its heart, I allowed myself to believe that this would also mean that the contribution of the voluntary sector, which plays such a crucial role in all three of those areas, would be recognised within the budget.    

Yet when the Deputy First Minister took to his feet last week, the voluntary sector was mentioned twice in passing, while explicit commitments were made to investment in helping the public and private sectors deal with the increasing costs and rising wages which are also crippling our sector. 

No doubt some of the investment that Mr Swinney announced in key areas like The Promise, No-one Left Behind or the prevention of drugs deaths will flow through or into the sector, but as the Scottish Government doesn’t centrally collect information on how and where it funds the voluntary sector, we aren’t really able to analyse that.  As we laid out in our briefing on the budget, greater transparency about the Scottish Government’s funding of the sector is crucial in allowing us to understand and analyse the impact of any changes on the sector overall.  

The clearest proxy we have to measure government support for the sector within the budget is the Third Sector budget line.  This is used primarily to fund vital third sector infrastructure, but at £21.8m, is just a small part of the government’s overall investment in the sector, which our analysis suggests was around £460m in 2018. 

We welcome the interest and support of the MSPs from across the chamber who raised during the debate that there is an overall reduction of £4m in the third sector budget line.  As just one example of how difficult it is to understand the complexity of the information provided about investment in the sector, when we unpick this top line figure we think that the investment which appears to have been cut is in fact loan finance, which is being ‘recycled’ within the system and therefore doesn’t show in the budget. 

Removing the loan finance and considering only the fiscal spend, the third sector budget line appears to be the same for next year as it was last year.  If we take this budget line as a proxy for how the sector has fared in the budget, it is far from encouraging. At a time when costs and salaries are rising at pace, a standstill budget suggests that, once again, the sector is expected to do the same - or more - work with less resources. The urgent need for inflation-based uplifts within sector funding has not been recognised. In a budget that recognises the need for Fair Work and provides additional money into public services to meet rising wages and cost pressures, it is disappointing that the rising costs the sector faces, including the ability to meet our shared Fair Work aspirations, are once again invisible.  At a time when many voluntary organisations are facing increased demand and rising costs (Scottish Third Sector Tracker), it is imperative that they are also supported with the increased investment required. 

Increased investment in line with inflation is particularly important if, as suggested in the budget, the Scottish Government are looking to increase their use of muti-year funding agreements with the sector. 

In responding to the Scottish Parliament Social Justice and Social Security Committee’s calls for multi-year funding for the sector (to which SCVO was a key contributor), the budget states that the government intends to adopt Fairer Funding practices over the next year.  We don’t currently have detail on what these fair funding principles contain, but if we assume that they are similar to those developed in consultation with the sector at The Gathering earlier this year, this move is to be warmly welcomed. 

It is important to remember, however, that we’ve heard things like this before, and there is no way to tell from a one- year budget how this on paper commitment might be implemented.  To truly achieve Fairer Funding, as an example, it is imperative that multi-year funding agreements contain provision to increase at the rate of inflation. Standstill multi-year funding is effectively a pre-arranged series of cuts. 

I choose to stay hopeful that this time it’s a genuine commitment which will be followed by action, and look forward to working with the Scottish Government to bring about the changes the sector so desperately needs across all government departments and areas of sector activity.   

Find out more about the impact of the Scottish budget on the voluntary sector by signing up for our webinar with analysis from Fraser of Allander Institute, COSLA and SCVO on 10 January 2023.