SNP’S £6bn spending plans ‘will require tricky trade-offs’, say IFS
NICOLA Sturgeon’s plans for £6 billion of increased spending over the next Parliament will require “tricky trade-offs” and potentially cuts or tax rises, a leading think tank has said.
The Institute for Fiscal Studies (IFS) said freezing income tax rates and bands – the main tax currently under the Scottish Government’s control – and cutting business rates “could make this an especially difficult circle to square”.
It also said the SNP’S “transformational” proposals to boost frontline NHS funding lagged behind plans down south as well as what may be required to keep pace with demographic pressures.
The SNP’S manifesto, launched yesterday ahead of the Holyrood election on May 6, promises to increase frontline NHS spending by at least 20 per cent if the party is re-elected – rising by £2.5 billion by the end of the next Holyrood term.
It also outlines a £10bn programme of investment in NHS facilities, combined with a minimum 25% rise in mental health spending and the establishment of a National Care Service.
The party vowed to abolish all NHS dentistry charges to ensure “cost is not a barrier to accessing health care”.
Ms Sturgeon said her intention is to freeze income tax rates and bands for the next five-year parliamentary term.
She said the move would “provide stability to the economy and to household budgets during this period of recovery”.
Asked how all the pledges would be paid for given the income tax freeze, Ms Sturgeon told journalists the commitments are “based on assessments and forecasts about the growth in our tax revenues”.
She said: “Scotland’s tax revenues are estimated to grow over that period by around 20%.
“Our overall budget is estimated to grow by around 14% because the growth in the block grant will be slower than the growth in our tax revenues.
“So all of the spending commitments we are making, which by the last year of the Parliament will amount to around £6bn more than spending today, come in within the central scenario of that medium-term financial strategy.”
David Phillips, an associate director at the IFS, said: “The SNP’S manifesto continues with a trend of greater universality in public service provision – providing services free to everyone, rather than using means-testing to focus support on those with the lowest incomes.
“The plans set out would also mean substantial gains for certain groups of households: many families with, particularly younger, children; households that would benefit from the exemption of all 18 to 21-year-olds from council tax; and those paying for home care, for example.
“Paying for all of these pledges in what could be a tight funding environment over the next few years will require tricky trade-offs though – tax rises or spending cuts in at least some other areas.
“The tougher fiscal situation an independent Scotland would face in at least its first few years would make the challenge of delivering these commitments even harder.”
The IFS said the frontline NHS funding plans “would represent a realterms increase of around 2.1% per year, over and above expected inflation – similar to the average annual real-terms growth in Scottish health spending over the past five years, but slower than the 3.4% per year promised to NHS England in its most recent longterm funding plan, and slower than what previous analysis – produced prior to the Covid-19 pandemic, which will likely add to medium-term healthcare pressures – has suggested might be needed to keep pace with demographic and cost pressures”.
Scottish Labour leader Anas Sarwar said that the SNP has been in government for 14 years and has a record “that doesn’t stand up to scrutiny”. He added: “Despite the promises they may be making today, you’ve got 14 years of SNP failures and seven years of directly Nicola Sturgeon as First Minister failures.”
He said the SNP was responsible for a “litany of broken promises” around the NHS.
Scottish Liberal Democrat leader Willie Rennie said: “We are still waiting on the SNP delivering promises they made in 2007.
“They have a one-track mind for independence that prevents them getting anything else done.”
He said that on issues such as “class sizes, council tax, superfast broadband, delayed discharge” it had been “promise after promise broken” by the SNP, adding: “It will be even worse if the SNP get a majority.”