"In the post-devolution era of buoyant public expenditure, many of the design shortcomings of public services - for example: complexity, duplication and weak accountability for outcomes - were manageable. To a large extent, they were masked by rising inputs and the willingness of staff to work around system imperfections… In this new and more challenging environment, it is essential that maximum value is wrought from every pound of public money spent in Scotland and, furthermore, that the public can be assured that this is so."
Commission on the Future Delivery of Public Services
We will take action on a range of fronts to ensure that public money is spent wisely to achieve better outcomes and improve value for money. Where structural reform is required it should proceed but leadership and culture change matter more than organisational structures.
We are committed to: embedding an open and rigorous performance culture within Scotland's public services; ensuring greater clarity around the objectives of public organisations; and establishing clearer lines of accountability that help to bolster standards of service and improve outcomes.
We will encourage a stronger and more reliable set of approaches to public service improvement through an improvement framework that emphasises the importance of the following:
- clear aims;
- improvement priorities designed explicitly to achieve those aims;
- transparent measurement of progress and benchmarking;
- building stronger improvement capability; and
- spreading innovation and best practice across the public sector.
Openness and Transparency
At a time when households' own finances are under such intense pressure, those who fund public services are entitled to know how public resources are used and to expect that services strive constantly to attain maximum value from every pound.
We have asked all parts of the public sector to report publicly on their plans to improve the efficiency of public services, actions undertaken and results achieved. It is clear that the scale of the fiscal challenge that now confronts us means we will need to continue a programme of efficiency and public service reform over many years.
We will continue to promote and extend Scotland Performs as the vehicle for transparent reporting on progress towards the Government's Purpose and National Outcomes, and will encourage the rest of the public sector to contribute to this monitoring framework through Single Outcome Agreements.
Renewing Police and Fire & Rescue Services
After extensive engagement with partners and stakeholders over the last year and detailed consideration of all the available evidence, Ministers have decided that the creation of a single police and a single fire & rescue service is the best way to safeguard the vital frontline services communities depend on.
The case for reform is clear - single services for Scotland are the best way to protect communities from cuts by freeing up resources for frontline policing and fire & rescue services. The planned reforms retain local services for local communities while giving all parts of Scotland access to national expertise and assets whenever and wherever they are needed.
Estimated savings of £130 million per year can be achieved by making sure money is spent on the frontline and not on unnecessary duplication across eight services.
The new services will establish strong, formal relationships between each service and each of Scotland's 32 local authorities, creating designated local officers for each council area who will work with them and other partners to meet local priorities. At the same time, we will ensure more local councillors have a say in shaping services in their area. The Scottish Parliament will also have more opportunities to scrutinise services and hold them to account.
An eight-week consultation on the Government's proposals for new single Scottish services was launched on 8 September 2011.
Digital Public Services
With improvements in the affordability and availability of digital tools ( PCs, laptops, netbooks and mobile telephones), citizens increasingly expect to be able to access public services in the same way as they can manage their finances through internet banking or shop online at their own convenience.
Digital technology allows greater scope for people to access the services they need at a time and place that suits them. It offers the opportunity to develop new delivery models that are not only easier and more convenient for people to use but can also improve outcomes while reducing costs and ensuring services remain affordable and sustainable.
However, as the McClelland Review of ICT Infrastructure in the Public Sector in Scotland  highlights, the public sector, at all levels, can do more to transform how it procures, manages and uses digital technology to drive better public service delivery. We need to ensure that services are tailored to meet the needs of individuals and communities - exploiting the full potential of ICT will be critical in achieving this transformation.
For the Scottish public sector to reap the benefits of such a transformation, the Scottish public will need to be fully engaged and so the move to increase digital public service delivery is accompanied by a drive to increase digital participation, as set out in Scotland's Digital Future: A Strategy for Scotland. 
There is a great deal of activity in this area and the challenge ahead will be harnessing good practice and ensuring public services, citizens and businesses can benefit from transforming our services and enabling digital public services. Alongside this document we have published a response to the McClelland ICT Review that outlines our priorities for action.
During the last Parliament, we made significant progress towards a more transparent culture of public service innovation and delivery to improve standards of performance. For example, we have:
- enhanced public accountability and sharpened the focus on the delivery of better outcomes for the people of Scotland, replacing a proliferation of disjointed targets and organisational objectives with Scotland's first National Performance Framework;
- surpassed our Efficient Government targets to free up resources for re-investment, delivering efficiencies in 2010-11 of £2.2 billion against a £1.6 billion target;
- generated savings of over £800 million since 2006 through the Public Procurement Reform Programme, using collaborative contracting to maximise the buying power of the public sector;
- consistently achieved our 10-day target for paying bills to businesses that supply Government - over 98 per cent in 2010-11 - helping support firms' cash flow and economic recovery;
- reduced the number of national devolved public bodies through the Simplification Programme from a baseline of 199 in October 2007 to 145 and reduced the number of scrutiny and complaints-handling bodies by 25 per cent;
- introduced the Public Services Reform (Scotland) Act 2010 that includes order making powers to facilitate further reform and simplification measures and put in place statutory duties of user focus and cooperation for scrutiny bodies;
- established National Records of Scotland, bringing together the former National Archives of Scotland and the General Register Office for Scotland;
- improved transparency by publishing details of all items of government expenditure over £25,000 and will soon make available additional information highlighting our annual spend on areas including public relations, consultancy, hospitality and entertainment; and
- introduced a consistent, transparent, proportionate and risk-based approach to corporate scrutiny across local government whilst reducing the burden of that activity by over 30 per cent.
Renewing Scottish Water
Scottish Water has transformed its performance radically through management's determination to outperform efficiency targets set by an independent economic regulator. Performance improvements have included:
- a 76 per cent improvement in the standards of service provided to customers;
- around £1 billion of net savings between 2002 and 2010 through a 35 per cent reduction in operating costs;
- total investment of over £4 billion between 2002 and 2010 to improve water quality and environmental discharges - an investment programme delivered for £2 billion less than originally forecast; and
- delivering additional efficiencies and benefits to customers to the value of £175 million in the period 2006-10 by outperforming Scottish Water's regulatory contract.
These substantial achievements have produced a saving of £105 on a typical household's annual water and sewerage bill. Average household water and sewerage charges in Scotland, at £324, are now nearly ten per cent lower than in England and Wales.
We will advance the improvement agenda further in this Parliament by intensifying our efforts to recognise and spread the benefits of good practice in service delivery while also tackling any remaining sources of unexplained performance variation.
Specifically, we will:
- create a single Scottish Police Service and single Scottish Fire and Rescue Service to maintain our commitment to put 1,000 extra police on the beat and ensure both services remain receptive and accountable to the varied and diverse communities they serve;
- reduce running costs of the core Scottish Government by £42.5m per annum by 2014-15 and reduce management costs within the devolved Senior Civil Service and NHS management by at least 25 per cent by 2014-15;
- deliver net savings of around £125 million by 2013 through simplification projects and deliver net recurring savings of around £39 million per annum thereafter;
- establish Children's Hearings Scotland which will see a move from 32 separate Children's Panels to a new national body;
- build on our successful programme of scrutiny reform to drive out savings of at least 20 per cent on the direct costs of scrutiny between 2011 and 2015, and ensure complaints-handling becomes more consistent and external scrutiny becomes more proportionate, risk-based and better coordinated;
- work with partners to take forward our strategy for digital public services, as set out in Scotland's Digital Future, so that an increasing proportion of services are delivered online;
- take forward the recommendations in the McClelland Review of Public Sector ICT Infrastructure which includes potential savings of £870 million, as set out in our response, published in parallel with this paper;
- consider a range of delivery mechanisms ( e.g. online, smartcard) that may be used for digital service delivery, taking into account the needs of citizens; launch the DirectScot portal prototype and seek feedback from the public to shape its further development; and
- work with local authorities to more efficiently manage our road network through the sharing of services and adopting international road management best practice.