Image source, Getty Images

• The Scottish government has set out how it plans to protect health and welfare spending while balancing its budget over the coming years
• Finance Secretary Kate Forbes told MSPs that the public sector would have to be more efficient in light of a challenging economic outlook
• She also accused the UK government of sitting on their hands amid the cost of living crisis
• Ms Forbes said there was limited support she could give people in Scotland struggling with rising prices

• She gave a diagnosis of the challenges facing the Scottish economy - from rising inflation, price increases and what she termed as austerity from the UK government
• She said this would be addressed with a range of reforms to the public sector
• The budgets for health, social justice and the environment were to be prioritised over the next five years, but other departments including local government will stand still, which amounts to a real-terms cut
• The Scottish Conservative's Liz Smith accused the Scottish government of financial incompetence highlighting a "glaring £3.5bn black hole in the public finances"
• Daniel Johnson, speaking for Labour, said there was a lack of context and insight and a lack of detail and depth compared to the last spending review 11 years ago
• Lib Dem MSP Liam McArthur slammed plans for a National Care Service and said councils faced a real terms cut

That's all from the live page team today. Have a lovely evening.

The Scottish government says the spending review prioritises spending in key policy areas.

These are:

Tackling child poverty and supporting households and businesses with the cost of living

• £22.9bn for social security assistance
• Increasing the Scottish Child Payment from £10 to £25 and expanding eligibility by the end of this year
• Providing universal free school meals to primary school children in P1-5 and expanding provision beyond that
• Increasing devolved benefits at a similar pace to inflation

Securing stronger public services

• Investing £73.1bn in health and social care including developing a National Care Service
• Increasing investment in frontline health services by 20% over this parliament
• Spending more on primary and community care to ensure people get the right treatment in the right place
• Funding of £42.5bn for local government for the delivery of services
• Investing £11.6bn in the justice system

Image source, PA

Achieving net zero and tackling the climate crisis

• Up to £75m per year to deliver the Heat in Building Strategy, enabling £1.8bn investment towards decarbonisation
• Up to £95m towards meeting woodland creation targets
• £46m to introduce the community bus fund and an increase in funding for concessionary travel schemes
• Investment of over £12m in peatland restoration
• £4m of resource spending alongside £150m capital and financial investment for the North East and Moray Just Transition Fund

Building a stronger, fairer and greener economy

• Capital investment of £581m to support the economy, including our enterprise agencies and the Scottish National Investment Bank
• Continuing through the Inward Investment Plan to attract high quality inward investment in areas such as energy transition and the space sector
• Pushing forward with the export growth plan A Trading Nation to scale up Scotland’s international reach
• Embedding entrepreneurship in education, to give young people opportunities to start and grow businesses

Mind the gap - 'painful' real terms cuts await in some areaspublished at 15:53 British Summer Time 31 May 2022

15:53 BST 31 May 2022

Glenn Campbell
BBC Scotland Political Editor

In recent days, the Institute for Fiscal studies has warned of a potential gap of £3.5bn opening up in the Scottish government’s finances over the next few years.

It is the finance secretary’s job to close that gap - to make sure that the books balance - and that’s what Kate Forbes has tried to do in her spending review.

So what’s the trick when spending on key priorities like the NHS and social security benefits including the new child payment are being protected?

There’s little or no new cash planned for local government, higher education, the courts and many other areas - which amounts to real terms cuts, the painful details of which are yet to be decided.

There are also plans for so-called efficiencies - reducing the overall public sector workforce to pre-Covid levels, reducing the number of government buildings and potentially reducing the number of devolved public bodies.

Much could yet change in the public finances before the next Holyrood election and the Scottish government still hopes there will be an independence referendum next year, for which £20m has been earmarked.

'Bonfire of the quangos'?published at 15:32 British Summer Time 31 May 2022

15:32 BST 31 May 2022

Kirsten Campbell
BBC Scotland political correspondent

It looks like we could be set for a bonfire of the quangos as well as a cut in the number of civil servants.

The Resource Spending Review outlines plans to reduce the overall size of the public sector workforce to pre-Covid-19 levels.

The aim is to keep the total pay bill, as opposed to pay levels, at 2022-23 levels.

There is also talk of a "fresh consideration of the public body landscape " ahead of a programme of reform.

Opposition politicians have pointed out that the cost of government has increased under the SNP, and it seems ministers see this as an area where savings can be made.

That includes spending on government buildings where the advent of hybrid working during the pandemic may allow some properties to be disposed of.

Image source, Getty Images

Liam McArthur casts doubts on the promises made by the SNP and the Greens on local government at the recent election.

The Lib Dem MSP highlights "real terms cuts" to council funding and local services.

He says the SNP intends to spend countless millions stripping powers from councils and creating a National Care Service and he asks what the SNP's response would be if it were treated in a similar way by the UK government.

Kate Forbes insists she is giving local government clarity going forward.

The finance secretary points out she can only spend the money allocated to her by the UK government.

"We have treated local government fairly," she says.

Kate Forbes responds by saying she is happy to answer as many questions as people want to ask, and it is not her job to set the amount of time for the debate.

The finance secretary says she doesn’t need to bring forward any additional analysis on productivity – she says Scotland’s grew by 10.7% from 2007 to 2019, the latest period for which figures are available, compared to an estimate of 5.2% for the UK as a whole.

She defends the government's taxation policy, which she insists is "far more progressive" than the UK government because the "lowest paid pay less and the highest paid pay more".

Ms Forbes points out that ministerial salaries have been frozen since 2008, while public sector workers received 7% higher wages in Scotland than the rest of the UK.

Labour MSP Daniel Johnson complains that after "waiting 11 years for this review", members have been given less than 60 minutes to digest it, and only 30 minutes to debate it.

He says this doesn't reflect well on a government that "seeks to deflect accusations of a lack of transparency".

There are three big problems with the minister's statement, Mr Johnson says:

1. A lack of context and insight – citing the fact that Scotland typically has higher wage growth than the UK average, but for the last decade it has been below it, plus no acknowledgement of an income tax deficit forecast by the Scottish Fiscal Commission.
2. No sense of a government getting better - citing a doubling of ministerial salaries, a rise in the number of quangos and the cost of government increasing by £2bn to £4.5bn.
3. A lack of detail and depth compared to the last spending review 11 years ago.

The Scottish Fiscal Commission forecasts income tax revenue shortfallpublished at 15:06 British Summer Time 31 May 2022

15:06 BST 31 May 2022

Douglas Fraser
Scotland business & economy editor

The Scottish Fiscal Commission says income tax revenue will fall short by £265m next year and then there will be a block grant gain from Westminster’s planned income tax cut in 2024-26.

It sees inflation rising to 8.7% at the end off this year, before falling sharply.

Real earnings are on course to fall 2.7% this year, back to 1% growth in 2024, and remaining very weak to 2027-28.

Social security spending up from £4.2bn this year to £6.8bn; welfare spending beyond Westminster’s allocation goes from £500m this year to £1.3bn by 2026

Resource and capital budget falls next year, and only gets back to this year’s budget, at current prices, in 2026-27.

Gross Domestic Product forecast at 2.1% during this year (meaning less chance of recession than some have forecast for the UK as a whole), falling to 1.1% growth next year, and very weak 1% in each of the next four years

Kate Forbes hits back by pointing to a Glasgow University investigation which she says confirms that UK Tory austerity is the reason behind stagnating life expectancy across Scotland and the UK.

The finance secretary suggests Liz Smith read the Resource Spending Review and the Mid-term Financial Strategy to get more up-to-date figures.

She says the Resource Spending Review balances the budget available with the priorities of the Scottish government.

The budget has been cut by 5.2%, insists the finance secretary, as well as growth of only 2% over the next few years.

She also says Scotland has attracted more foreign investment than the rest of the UK.

"This Resource Spending Review outlines our commitment to tackle child poverty, transition to net-zero and to ensure that we have the resources to help families who are dealing with the cost of living crisis."

Scottish Conservative MSP Liz Smith says today's "glaring £3.5bn black hole in the public finances" is proof of the SNP's mismanagement of the economy.

Ms Smith insists the SNP have had record pay-outs from Westminster.

She accuses the SNP government of "incompetence" and of having no idea as to how to manage the public finances.

She asks for a commitment to ensuring Scottish income tax levels are put back on a par with UK levels, so that Scotland is no longer the highest taxed part of the UK.

The Tory MSP also asks if Kate Forbes agrees indyref2 should be taken off the table and will admit failing to address low productivity, the imbalances in the labour market and skills shortages.

In concluding her initial statement, the finance secretary says she has set out an "ambitious but realistic" framework for public spending in the coming years.

"It does not ignore the realities of our financial position, but neither does it roll back on our ambitions for change," she says.

Ms Forbes adds that her review balances a need to shift resources "so we achieve the greatest impact for our economy, environment and well-being, with the need to continue improving public services, as we build back from Covid-19 and respond to the challenging economic and financial outlook for Scotland".

Douglas Fraser
Scotland business & economy editor

Spending plans for this year and the next four years, without accounting for inflation:

• A freeze or very close to a freeze for local government, rural affairs and islands, the Crown Office and prosecution service: constitution, external affairs, culture
• The big growth is for health, from £17.1bn to £19bn by 2025-26
• Education up from £2.9bn to £3.5bn
• Social justice and housing up from £4.6bn to £7bn.

Ms Forbes says the Scottish government will continue to prioritise spending allied to its stated objectives around child poverty, reaching net zero, a growing economy and improved public services.

This review funds the Scottish Child Payment, which will more than double to £25 per child per week over the course of this year, and universal free school meals to primary school children in P1-5.

It will also deliver increased investment in frontline health services by 20% over the course of this parliament, plus community care, the finance secretary says.

Capital investment of around £18bn over the same period will fund improvements in Scotland’s transport network, the NHS and public sector estate, affordable housing and the shift to a low carbon economy.

An additional £500m will be directed to net zero programmes that meet the climate challenge, she adds.

Ms Forbes says reform will focus on:

• digitalisation
• maximising revenue through public sector innovation
• reform of the public sector estate
• reform of the public body landscape
• improving public procurement.

This will include “continued engagement” with trade unions and public sector employers about pay, amid the backdrop of rising inflation.

The Scottish government, despite a “severely limited budget”, intends to take a “more progressive” approach than the UK Government - which the finance secretary says has “chosen not to act on public sector pay”.