Scotland’s political parties have been accused of a “lack of realism” over how commitments made to voters ahead of next week’s election will be funded – with a new report claiming all the major parties do not appreciate “just how tough the fiscal challenges” will be for the next government.
The Institute for Fiscal Studies (IFS) said that a slowdown in cash from the UK Government, combined with growing demands – and costs – for health and social care and devolved Scottish benefits, together with a “hangover from some bad budgeting habits” by the last Scottish government means whoever is in charge after May 7 will find their budget “under significant pressure”.
In a paper published 10 days before polling day, the IFS said that plans to either expand the welfare state, as proposed by both the Scottish Greens and the SNP, or alternatively to cut taxes – as put forward by both Reform UK and the Scottish Conservatives – would require “difficult decisions elsewhere in the Scottish budget”.
The think thank examined the manifestos from the six major parties running in next week’s election – the SNP, Scottish Labour, the Scottish Conservatives, Reform UK, the Scottish Liberal Democrats and the Scottish Greens.
IFS head of devolved and local government finance David Phillips said: “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 added: “The combination of a slowdown in increases in UK Government funding, growing demands and costs for health and social care and devolved benefits, and a hangover from some bad budgeting habits of the last Scottish government will mean a Scottish budget under significant pressure.
“The outgoing government has already pencilled in cuts to funding for a range of services – including councils, the police, and further and higher education – in 2027–28 and 2028–29.
“And its plans bank on big efficiency savings – including a 20% reduction in overall administration costs and 3% recurrent savings each and every year in the NHS – to try to make constrained funding go further.”
Under these circumstances he insisted that “neither expansions of the Scottish welfare state without commensurate tax rises, nor definite tax cuts without similarly definite reductions in spending, are fiscally credible”.
Mr Phillips added that in both these situations “in reality, there would need to be difficult decisions elsewhere in the Scottish budget to square the circle”.
Proposals from both the Tories and Reform UK for tax cuts were described as being “feasible – but only with a cutback in frontline service provision”, Mr Phillips said.
The money needed to pay for these cuts could not just come from “back office efficiencies”, he added.
Here's the key lines from our final @theIFS assessment of what the different Scottish parties propose.
— David Phillips (@fiscalphillips) April 27, 2026
Tax cuts are possible, as is a bigger state doing more.
But there are inevitable trade offs - and they are stark given the huge pressures already in the Scottish budget. pic.twitter.com/XEW8mCleRA
Mr Phillips was also clear that the claim from Reform UK that tax cuts would “boost growth enough to pay for themselves does not stand up to scrutiny”.
Turning to the Scottish Greens, he said that the new taxes outlined “look like only paying for part of their big spending increases” – with the party planning on making bus travel free for everyone at the same time as offering expanded childcare.
The SNP is relying on “efficiencies and extra growth paying for their spending increases”, Mr Phillips said, adding that the manifestos from both Scottish Labour and the Scottish Liberal Democrats would “create the least additional pressure on the Scottish budget”.
However Mr Phillips said: “Labour’s claims that its policies would increase the size of the economy by more than 2% in just five years is bullish at best, and more likely unrealistic.”
He concluded by urging the political parties to prepare voters across Scotland for an upcoming “dose of cold, hard fiscal reality”.
Mr Phillips added: “One can have sympathy with the situation Scotland’s political parties face.
“Politics is easier when fiscal conditions allow for spending increases or tax cuts without such difficult choices elsewhere in the budget.
“Voters, already unhappy after years of only slow economic growth, a rising cost of living, and public services that have failed to recover from the Covid-19 pandemic, may not warm to a dose of cold, hard fiscal reality.
“But the next Scottish government will have to face up to it.
“And as the current UK Government has found out, not preparing the public for difficult choices prior to an election can come back to bite you when the electoral dust has settled.”
Read MoreSwinney vows to ‘hit the ground running’ on independence in next Parliament
British Open to return to Royal Lytham in 2028 as Trump's Turnberry course made to wait
Push for indyref 2 powers would begin after government formed – Swinney
Swinney to outline 100-day plan for SNP government if re-elected
Crime fiction meets real-world fraud as authors help to raise awareness of scams
Pope says churches must overcome differences at Archbishop of Canterbury meeting
