Scottish Government Admits Public Sector Reform Efforts Off Course, Warning of Service Cuts

Cuts to frontline services may be necessary as the Scottish Government's plans to reduce the size of its public sector workforce have fallen "off course," Deputy First Minister Jenny Gilruth has admitted.

Gilruth, who also serves as Finance Secretary, acknowledged that the number of people employed in Scotland's public sector has continued to grow, presenting a risk to service delivery and undermining efforts to address a projected £5 billion budget deficit.

The Scottish National Party (SNP) government had previously set targets to reduce the public sector workforce by an average of 0.5% annually through the end of the decade. However, official statistics revealed that the workforce actually increased by 6,640 people in the year leading up to June 2026.

During a meeting of Holyrood's finance committee, Liberal Democrat MSP Liam McArthur questioned the effectiveness of the government's efficiency strategies, stating that the rising workforce indicated they were "off course and unrealistic."

Gilruth accepted this assessment, stating, "I accept the first point, they are off course at the current time and it would be remiss of me not to say that because the data tells us." She attributed some of the increase to growth within the National Health Service (NHS) but also emphasized the need for the Scottish Government to "get our own house in order" and drive reductions across the public sector.

When asked directly if the rising staff numbers increase the risk of service cuts, Gilruth responded, "Yes it absolutely does, which is exactly why we need to shrink that headcount figure." She assured that the issue is a priority in her discussions with Public Service Reform Minister Ivan McKee ahead of the upcoming budget, acknowledging that the current trajectory is "not the right direction."

Gilruth also noted that the matter was discussed at a Cabinet meeting, with every secretary having a role to play in addressing the workforce growth.

The exchanges occurred as Gilruth faced repeated questions about specific actions taken to address a £4.7 billion spending gap projected by 2029/30. Under the previous efficiency plan, the aim was to achieve a 2.5% workforce reduction by 2029/30.

Scottish Labour leader Michael Marra pressed Gilruth on whether the government was off track, to which she replied, "We're not where we should be." However, when pressed by Conservative MSP Liam Kerr for details on additional headcount reductions planned to get back on track, Gilruth stated only that the government needs to "revise and consider how we drive that progress."

Scottish Conservative public service reform spokesman Murdo Fraser expressed concern over the admission, stating that it "will set alarm bells ringing." He criticized the SNP for what he described as a "refusal to get a grip on Scotland’s increasingly bloated public sector" and questioned whether the government "still don’t have the stomach for the fight to make it more efficient."

Official statistics show the public sector workforce in Scotland stands at 603,800, making up 23% of all jobs in the country. The increase of 6,640 represents a 1.1% rise from June 2025. The devolved public sector saw a 1.1% increase, with employment in the NHS rising by 2%, local government by 0.9%, the devolved civil service by 1%, and public corporations by 2.7%.

During the committee meeting, Gilruth was unable to provide details on "spend to save" investments intended to tackle the funding gap, which includes £2.6 billion for day-to-day resource spending and £2.1 billion for capital by 2029/30. She indicated that the resource spending gap would be addressed through public service reform, including workforce reform, reprioritization, and strategies for economic growth and taxation.