Think tank review

Scottish budget ‘misled’ public over spending plans

Shona Robison
Shona Robison’s forecasts have been challenged by the IFS

Scottish Budget documentation gives a “misleading impression” of the funding available for the health service, councils, and many other services, according to a think tank.

The Institute for Fiscal Studies found that by omitting “top-ups” such was wage rises, spending on the health service would be cut by 0.7% in real terms while the budget states that there would be a 1.3% year-on-year increase in real terms.

Similarly, ministers say funding for councils would increase by just 1.8% in real terms compared with the 6.2% stated in the budget.

“This gives a seriously misleading picture,” the IFS stated in one of two reports into the first Scottish budget delivered by Deputy First Minister and Finance Secretary Shona Robison.

It explains that “the actual situation facing the Scottish NHS and councils is likely to be even tougher than these figures suggest, as their costs are set to rise faster than general inflation.”

For example, the National Living Wage is due to increase by 10% and the Scottish Fiscal Commission is forecasting overall public sector pay growth of 4.5%.

The IFS said that even accounting for the council tax freeze, there would be an average fall of 0.4% across all household income in Scotland.

First Minister Humza Yousaf’s tax rises will also hit Scottish households.. Scottish workers will see the 42% rate of income tax rate start at £43,663 and from and a new 45% advanced rate is being introduced between £75,000 and £125,140. The top rate goes up from 47% to 48%.

David Phillips, an associate director at IFS and an author of the reports, said: “By omitting in-year top-ups to spending plans this year, the official Scottish budget documentation gives a misleading impression of how the amounts of funding available for the health service, councils, and many other services are set to change next year.”

The Scottish government blames the tight allocation of funding from the Treasury, but the IFS says the Treasury may have to “ride to the rescue” with additional funding for Holyrood.

Among the Scottish budget “winners” identified by the IFS were education, up 5.7% in real terms, transport, net zero and just transition, which was increased by 4.8%, and spending on the constitution, external affairs and culture, up 2.1%.

However, there was a large and controversial cut to the housing budget, while funding of the wellbeing economy, fair work and energy portfolio is also down.

Liz Smith, the Scottish Conservative finance spokeswoman, said: “The IFS analysis makes it clear that the impact of the SNP’s savage tax-and-axe budget will be even worse than it first appeared. They point out that omitting in-year top-ups misleads the public, and will lead to a real-terms cut in health spending.”

Michael Marra, Labour’s finance spokesman, said: “The SNP is planning to axe public services and is trying to dupe the public about it — but no one is fooled.”

A Scottish government spokesman said: “Scottish ministers have provided a real-terms increase in health funding when comparing the opening position for 2024-25 with 2023-24. This includes fully passing on all health consequentials received for 2024-25.

“As ministers have said, this budget was delivered against the backdrop of a UK autumn statement that prioritised tax cuts at the expense of spending on public services. As this IFS report acknowledges, additional in-year funding is crucial to maintaining that real-terms growth, requiring the UK government to prioritise additional funding for health over the course of the year.”

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