Cuts to frontline services may be needed because plans to reduce the size of the public sector workforce have fallen ‘off course’, the Deputy First Minister has admitted. 

Jenny Gilruth accepted that there is now a risk of major cutbacks to services because the number of staff working in the public sector has continued to grow.

The SNP Government had set out plans to reduce the workforce by an average of 0.5 per cent per year until the end of this decade as part of efforts to plug a £5billion black hole in its finances.

But the number of people working for Scotland’s public sector increased by 6,640 in the year to June 2026.

During a meeting of Holyrood’s finance committee, Liberal Democrat MSP Liam McArthur said the rising workforce undermines confidence and indicates that the strategies to deliver efficiencies ‘are off course and unrealistic’.

Ms Gilruth, who is also Finance Secretary and will present her Budget in December, said: ‘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.’

Deputy First Minister Jenny Gilruth appears before committee on Wednesday

She said the rising numbers were partly down to increases in the NHS but also admitted it was important that the Scottish Government itself should ‘get our own house in order’ and drive reductions. She also said there needs to be ‘a collective endeavour’ across the public sector on ‘the need to shrink the size of the public purse’.

When asked if she accepts that numbers of staff going up when there is a plan to reduce them increases the risk of cuts to service delivery, she said: ‘Yes it absolutely does, which is exactly why we need to shrink that headcount figure.’

She said she can ‘guarantee’ the issue is at the forefront of discussions she is having with Public Service Reform Minister Ivan McKee ahead of the Budget ‘because we’re not going in the right direction currently and we need to reset some of that work’.

Ms Gilruth said there was a discussion of the issue at Cabinet on Tuesday as ‘every Cabinet secretary has a role to play in that regard’.

The exchanges came during a meeting when she was repeatedly unable to give detail of any action taken to address the spending gap of £4.7billion facing the Scottish Government by 2029/30.

Under the previous efficiencies plan, the Scottish Government aimed to reduce the public sector workforce by an average of 0.5 per cent per year, providing a 2.5 per cent cut by 2029/30.

Scottish Labour leader Michael Marra asked the Cabinet Secretary: ‘You admit you’re off track?’

Ms Gilruth said: ‘We’re not where we should be.’

But when asked by Tory MSP Liam Kerr what additional reduction the Scottish Government is wanting to make to headcount over the remaining four years of its plan in order to get back on track, Ms Gilruth only said that ‘we need to revise and consider how we drive that progress’ to deliver the 2.5 per cent reduction as planned.

Scottish Conservative public service reform spokesman Murdo Fraser said: ‘This frank admission from the SNP’s Finance Secretary will set alarm bells ringing.

‘The nationalists’ have spent two decades refusing to get a grip on Scotland’s increasingly bloated public sector, and now it seems like they still don’t have the stomach for the fight to make it more efficient.

‘The SNP must be upfront about their plans for public sector reform and whether the costs will finally be brought under control and deliver value for the taxpayer.’

Official Scottish Government statistics on public sector employment revealed that the workforce of 603,800 now accounts for 23 per cent of all jobs in Scotland and the 6,640 increase was 1.1 per cent higher than June 2025.

It includes 553,600 working in the devolved public sector, which was an increase of 6,060, or 1.1 per cent, on a year earlier.

Employment in the NHS increased by 2 per cent in the year to June, while there was a 0.9 per cent increase for local government, 1 per cent for the devolved civil service and 2.7 per cent for public corporations.

During yesterday’s meeting, Ms Gilruth was unable to provide any details of ‘spend to save’ investments to tackle the funding gap, which is £2.6billion by 2029/30 for day-to-day resource spending and £2.1billion for capital.

She said: ‘We need to look and take action on these, so the £2.6billion I set out will be delivered from public service reform, so that includes things like workforce reform, reprioritisation, it includes our approach to economic growth and it includes our approach to taxation as well.’