THE SNP Government will cut spending by £2.6 billion per year through a package of “efficiency and reform”, the Finance Secretary has said.
Speaking in Holyrood, Shona Robison said that the Scottish Government’s plans would save the equivalent of “4.4% of the forecast resource budget” by 2029/30.
Her speech came as the Scottish Government published both its Medium-Term Financial Strategy and its first Fiscal Sustainability Delivery Plan.
Opening, Robison said that the Scottish Government had been left facing a “£400 million shortfall” after Chancellor Rachel Reeves declined to provide full funding for the additional costs of Labour’s increases to employers’ National Insurance contributions.
She went on: “Further, in the UK Spending Review, had the resource funding being provided to the Scottish Government for day-to-day priorities matched the average increase for UK departments, we would have £1.1 billion more to spend over the next three years.
“And, last week, they set out proposals that will deliver deep cuts to disabled people’s support – pushing more people into poverty. With a real life negative funding impact in Scotland of £440m by 2029-30, based on the Office for Budget Responsibility’s estimates.”
Robison said that the allocations "simply do not reflect the unavoidable realities of the demands that will be placed on public services by the demographic changes we face – not least through an ageing population".
The Finance Secretary said that the £2.6bn would be found through four key routes:
- A multi-year spending review and infrastructure investment plan.
- Reductions to staff “by an average of 0.5 per cent per year until 2030” as part of a wider drive to cut service delivery costs.
- Reform of public services.
- Investing in prevention “to reduce demand on services in the medium to long-term”.
The experts' response
The Institute for Fiscal Studies (IFS) warned that the estimate of £2.6bn may underplay the scale of the challenge, and that £3.5bn may be more accurate.
“Current forecasts for the contribution of devolved tax revenues to the Scottish Budget are likely optimistic, as they assume earnings grow significantly faster in Scotland than in the rest of the UK from 2026–27 onwards,” the IFS said.
“All else equal, if earnings instead grew at the same rate as in the rest of the UK, the ‘funding gap’ for day-to-day spending would be closer to £3.5bn.”
It went on: “Together with some projected revenues from efforts to grow tax bases and improve tax compliance, the Scottish Government says its plans would allow it to close its funding gap. But most of the detail remains to be worked out. And the proof of the plans will be in their delivery – largely after the next Scottish elections in May 2026.
“The fiscal challenge facing Scotland is large and real. So as the current government and opposition parties begin to set out their election pitch to voters, it will be vital to scrutinise what their plans would mean for Scotland’s finances.”
“With the Scottish Government’s Medium-Term Financial Strategy highlighting a ‘fiscal gap’ between spending and funding, it is vital that this review carefully assesses the priorities across all areas of their spending," he said. “The Government have today set out their broad intention on how they intend to manage some of these fiscal pressures.
"But with growing commitments on public sector pay and social security, alongside longer term pressures from an ageing population and climate change, it is important that these ambitions are turned into concrete action.”
STUC general secretay Roz Foyer said that although the plans were "dressed up" as efficiencies, the true strategy was "scything cuts to Scotland’s public services". "Over the next five years, more than 10,000 workers could be tossed on the scrapheap," she went on.
“We know Scottish Ministers face fiscal constraints, but we need vision and political courage to build a better Scotland. Unfortunately, today ministers have chosen to cut public services rather than use their powers to help redistribute wealth, tackle inequality and invest in our collective future.”
The opposition
Labour hit out at the SNP Government's plans, with finance spokesperson Michael Marra claiming it was "SNP ministers and their choices that have created a structural resource deficit of £2.6bn".
“The SNP’s plans mean a funding cut of at least 12 per cent to Scotland’s NHS and huge reductions in frontline workers – cuts to mitigate their incompetence," he added.
In the chamber, Robison challenged Labour to outline where they would find savings if they were in power, and questioned why Marra believed it was OK for the Labour Government in London to pursue cost-cutting measures, but not the Scottish Government in Edinburgh.
Scottish Green MSP Patrick Harvie challenged the claim that the "envelope is fixed", calling on the SNP to further use its taxation powers to raise funding.
