SNP decisions caused spending squeeze, says official forecaster

Public spending pressures have largely been caused by the Scottish government’s own decisions, Scotland’s independent forecaster has warned.
The Scottish Fiscal Commission said that above-inflation public sector pay deals, a council tax freeze and Holyrood’s social security reforms had contributed to the constraints.
A series of increased pay offers for public servants have come in well above 3 per cent since May, the commission said.
Local authority workers have been offered 4.27 per cent, nurses and NHS workers 5.5 per cent and ScotRail train drivers are believed to be considering a 4.5 per cent hike.
Anas Sarwar, the Scottish Labour leader, accused SNP ministers of taking a “sticking plaster approach” to public finances in which important decisions have been deferred, leading to a spending crisis.
The commission said that budgets based on an assumption that pay deals would be lower than those that were eventually offered had made it difficult to manage finances and this had required the government to reduce its planned spending on services. The commission said: “The recent emergency spending controls the Scottish government has put in place for 2024-25 are the result of those challenges.”
The cost of devolved public sector pay in 2023-24 is thought to have reached about £25 billion, more than half of the government’s resource budget, so above-inflation deals are likely to further reduce spending options.
Professor Graeme Roy, the fiscal commission chairman, said: “The past choices of the Scottish government narrow its room for manoeuvre now and in the future. Previous pay settlements, the approach to social security payments, and the council tax freeze have all added to the in-year pressures that must be accommodated as it continues to negotiate pay with the public sector unions.
“With pay making up more than half of the Scottish government’s day-to-day budget, we need more transparency and planning around pay awards at budget time to avoid disruptive spending controls being introduced partway through the year.”
Earlier this month Shona Robison, the finance secretary, ordered a halt to spending and the cancellation of key projects under “emergency controls” to allow the pay agreements to be struck. Money will be released only if the expenditure is essential to meet legal requirements or to prevent an economic crash.
Ivan McKee, the public finance minister, failed to deny that the Scottish government was considering rolling back some universal benefits including free prescriptions, university tuition, bus travel and school meals. “We are looking at the budget just now,” he told Good Morning Scotland on BBC radio.
He defended the council tax freeze and argued that people paying higher taxes had led to more teachers and nurses as he attempted to shift the blame for the Scottish government’s financial struggles on to the new Labour UK government.
“What they have decided to do is to follow an austerity programme like the Conservatives have done and cut public spending,” McKee said.
The fiscal commission, which provides independent economic forecasts to help to inform the Scottish government’s budget process, suggested it was “uncertain” how much additional money might come from the UK government once Labour lays out its budget on October 30.
It also estimated that social security spending for 2023-24 exceeded the block grant funding from Westminster by about £900 million.
It stated that the gap was the result of policy choices at Holyrood such as the introduction of the Scottish Child Payment. Spending on devolved social security is expected to exceed the block grant by £1.1 billion in 2024-25 with the amount widening to about £1.5 billion in 2028-29.
Schemes to be axed or paused include free iPads and laptops to people who are “digitally excluded”; extending free school meals to pupils in P6 and P7; a flood risk management programme; a fund for restoring nature; and a pilot scheme that abolished peak rail fares.
Sarwar said: “We’ve had the sticking plaster approach in Scotland now for 17 years and it’s partly related to the constitutional argument. You’ve had an SNP government that’s working to pretend it’s one heave away from a big constitutional decision so has not wanted to make serious decisions in government.”
Liz Smith, the Scottish Conservative finance spokeswoman, said: “Despite their hollow protestations, it’s clear that the drastic cuts the SNP government are continuing to impose are the product of their own decision-making and mismanagement of Scotland’s finances.”