Scotland's political parties have been accused of a 'lack of realism' regarding how their election promises will be funded, with the Institute for Fiscal Studies (IFS) warning that none of the major parties fully appreciate the severity of the fiscal challenges ahead.
Fiscal Pressures on the Next Scottish Government
The IFS report, published ten days before the Holyrood election on May 7, highlights that the next government will face a budget under significant strain. This is due to a slowdown in funding from the UK government, rising demands and costs for health and social care, devolved benefits, and lingering effects of poor budgeting from the previous administration.
The outgoing government has already planned cuts to services such as councils, police, and further education for 2027-28 and 2028-29. It also relies heavily on efficiency savings, including a 20% reduction in administration costs and 3% annual recurrent savings in the NHS.
Party Proposals Under Scrutiny
The IFS examined manifestos from 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.'
Plans to expand the welfare state, as proposed by the SNP and Scottish Greens, or to cut taxes, as advocated by Reform UK and the Scottish Conservatives, would require difficult decisions elsewhere in the budget. Phillips noted that neither expansion without tax rises nor tax cuts without spending reductions are fiscally credible.
Tax Cuts and Spending Increases
Tax cut proposals from the Conservatives and Reform UK are feasible only if frontline services are reduced, Phillips argued, adding that back-office efficiencies alone cannot fund these cuts. 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 their proposed new taxes would only partially cover their large spending increases, which include free bus travel for all and expanded childcare. The SNP relies on efficiencies and growth to fund their spending, while Labour and Liberal Democrat manifestos would create the least additional pressure. However, Labour's claim that policies could grow the economy by over 2% in five years was described as 'bullish at best, and more likely unrealistic.'
Call for Fiscal Realism
Phillips urged parties to prepare voters for a 'dose of cold, hard fiscal reality.' He acknowledged that politics is easier when fiscal conditions allow for spending increases or tax cuts without tough choices, but stressed that the next government must face these challenges. He warned that not preparing the public for difficult decisions before an election can backfire once the electoral dust settles.
