The Institute for Fiscal Studies (IFS) has accused Scotland's political parties of a "lack of realism" regarding how they will fund their election manifesto commitments. A new report claims that all major parties do not appreciate "just how tough the fiscal challenges" will be for the next Scottish government.
Fiscal pressures ahead
The IFS highlighted that a slowdown in funding from the UK Government, combined with rising demand for health and social care, devolved Scottish benefits, and "bad budgeting habits" from the previous administration, will place the next government's budget under significant strain. The think tank published its analysis ten days before the Holyrood election on May 7.
Manifesto analysis
The IFS examined manifestos from six major parties: the SNP, Scottish Labour, Scottish Conservatives, Reform UK, Scottish Liberal Democrats, and Scottish Greens. David Phillips, IFS head of devolved and local government finance, stated: "Unfortunately, while differing in their visions, the major parties share a common shortcoming – a lack of realism regarding just how tough the fiscal challenges facing the next Scottish government are."
He noted that the outgoing government has already planned cuts to funding for councils, police, and further and higher education in 2027–28 and 2028–29, and relies on large efficiency savings, including a 20% reduction in administration costs and 3% annual savings in the NHS.
Tax cuts and spending plans
Phillips argued that neither expanding the welfare state without tax rises nor cutting taxes without spending reductions is "fiscally credible." He described proposals from the Scottish Conservatives and Reform UK for tax cuts as "feasible – but only with a cutback in frontline service provision." He dismissed Reform UK's claim that tax cuts would boost growth enough to pay for themselves as not standing up to scrutiny.
Regarding the Scottish Greens, Phillips said new taxes would only cover part of their spending increases, including free bus travel and expanded childcare. The SNP relies on efficiencies and growth to fund spending, while manifestos from Scottish Labour and the Liberal Democrats would create the least additional pressure. However, Phillips called Labour's claims of boosting the economy by over 2% in five years "bullish at best, and more likely unrealistic."
Political reactions
Scottish Labour finance spokesperson Michael Marra blamed the SNP for "wreaking havoc" with public finances and promised to fix the mess. Scottish Conservative finance spokesman Craig Hoy said their tax cuts are deliverable through cutting benefits and reducing quangos. Scottish Liberal Democrat leader Alex Cole-Hamilton said they have a "realistic plan" focused on healthcare and the cost of living.
Phillips urged parties to prepare voters for a "dose of cold, hard fiscal reality," warning that not doing so could backfire after the election.
