Scottish ministers are being warned that “stretched” public finances mean they will have to either “pare back their manifesto pledges” or else make “tougher trade-offs” in other areas, according to a new briefing paper from the Institute for Fiscal Studies (IFS).
IFS warns of very tough trade-offs
The think tank’s analysis highlights the “already stretched Scottish budget” and emphasises that the SNP Government “will need to be very clear about their priorities” when it comes to providing existing services and meeting the party’s manifesto pledges. The IFS states: “There is unlikely to be the fiscal or political space to deliver every pledge, which together the SNP estimate would cost 1.4 billion pounds a year by 2030.”
During the election campaign, the SNP made a range of commitments, including increased support for childcare, help for first-time buyers, and rolling out a 2 pound cap on bus fares. David Phillips, head of devolved and local government finance at IFS, warned that implementing these could result in either tax rises for Scots or “deeper cuts” than already planned to “lower priority” spending areas.
Childcare pledge alone could cost 540 million pounds a year
The SNP’s childcare pledge alone could cost 540 million pounds a year. While the think tank said this is “not an impossible amount”, it warned that the “severe fiscal pressures” facing the country mean there would need to be “some combination of reductions in planned increases in healthcare spending, deeper cuts to other spending, or increases in devolved taxation”. The IFS added: “New ministers will therefore need to decide whether to make such choices, or to pare back their plans for childcare to ease trade-offs elsewhere.”
Mr Phillips said: “The returning SNP Government will face financial, logistical and political challenges as it seeks to implement its various tax, spending and economic policy pledges.” He noted that these “financial challenges largely reflect the wider UK public finance outlook”, but was clear: “Finding the money for a range of new entitlements and service expansions, including expanded subsidised childcare and cheaper bus fares, will require either tax rises or deeper cuts to lower priority spending than already planned.”
Price tag for pledges may be even higher
He also stressed that the 1.4 billion pound price tag for the SNP’s manifesto commitments does not include either the cash that would be needed to make progress towards meeting Scotland’s child poverty targets, or the commitment to increase social housing supply. Mr Phillips said: “New ministers therefore face a choice: to pare back their manifesto pledges or to make even tougher trade-offs elsewhere in an already stretched Scottish budget. They will also have to work with other parties where policies require legislative change – although the parliamentary arithmetic means that the SNP could work with different parties on different issues if it chooses to.”
Political reactions
Scottish Conservative finance spokesman Craig Hoy said the report is “yet more evidence that the SNP’s sums don’t add up”, warning: “Scots are in for eye-watering tax rises or savage cuts to public services – or both. John Swinney is pushing ahead with an unsustainable programme that will plunge Scotland into an even worse financial crisis – especially when his Finance Secretary and deputy, Jenny Gilruth, has point-blank refused to cut welfare spending.”
Scottish Liberal Democrat Willie Rennie MSP said: “The IFS is correct to highlight the weakness of the Scottish Government’s financial management. John Swinney will have to work exceptionally hard to recover from the poor choices made by his party in Government.”
Potential for cross-party cooperation on council tax reform
One area where the IFS suggested the SNP could work with other parties is on council tax reform. Noting that Labour, the Lib Dems and the Scottish Greens also back this, the think tank said “there would appear to be scope for such an agreement” – as it added that “revaluing and reforming council tax would make a key part of the tax system fairer”. The Scottish Government has been contacted for comment.
