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Rather than parse the fine detail of the budget (others, including our friends at FAI, are already doing this very effectively) this blog will zoom out to address some of the broader issues arising from Tuesday’s announcement.

Connecting spending to priorities

IPPR Scotland commissioned polling last autumn in advance of our tenth anniversary conference. It confirmed that there is very little faith in the next Scottish government to deliver on the public’s priorities. Such pessimism over the potential for genuine change in areas such as the cost of living and improving public services is undoubtedly feeding more general discontent with mainstream political parties. The same polling showed Reform in second place for the Holyrood 2026 elections.

Throughout his time in office, First Minister John Swinney has, quite laudably, consistently highlighted his four main priorities of eradicating (not just reducing) child poverty, growing the economy, addressing the climate emergency and improving public services. You would therefore expect the Budget to draw very clear lines between these priorities and government spending.

This is especially true because it will be very difficult to make progress on these priorities without significant additional spending. Eradicating child poverty isn’t cheap. Supporting parents to get into and get on in work is an important step, but by itself this will not bring child poverty rates down to the government’s 2030 target, even with some heroic assumptions on employment, wages and hours. There’s no escaping the conclusion that relative child poverty can only be eradicated with major increases to child benefits.

The UK government’s decision to remove the 2-child limit saved the Scottish government around £125 million and it was widely anticipated that these savings would be spent on measures to directly reduce child poverty. But beyond the welcome commitment to increase the Scottish Child Payment for families with babies under one year old – to be implemented in 2027-28 at a cost of under £10 million – there was a worrying lack of detail. It isn’t yet clear how much genuinely additional spending is included in the £50 million ‘Whole Family Support’ package to get parents into work or the £49 million boost to the Tackling Child Poverty fund.

Spending in the economy portfolio fails to reflect the status of ‘growing the economy’ as a key priority with cuts coming for the Scottish National Investment Bank, Scottish Enterprise and Highlands and Islands Enterprise.

Similarly, the government’s figure of £5 billion of “climate positive spend” rings hollow. Huge chunks of this spend (such as £1 billion on rail or £900 million on affordable housing), while welcome, are items that would need investment even if climate change were not an issue. The relevant measure, which the budget does not calculate, is the additional spending on climate mitigation relative to business as usual. Meanwhile, climate does not appear to constrain business-as-usual choices in the Budget, with spending on areas with a highly negative climate impact increasing by £110 million (including expanding capacity of the A9 and A96).

And in some climate areas, spending plans are clearly falling short. For example, clean heat – an area that needs massive cost sharing across society if the transition is to be fair – has seen a reduction, from the Heat in Building Strategy’s commitment to £1.8 billion over the current parliament to yesterday’s announcement of £1.3 billion over the next four years. This is substantially lower than Scottish Fiscal Commission’s (conservative, in our view) estimate that £2.1 billion is needed to 2031 in this area.

IPPR Scotland is also very sceptical that the quality of public services can be maintained – let alone improved – with settlements across the board looking eye-wateringly tight. Even health, relatively protected in recent years, will receive a real terms increase of only 0.7 per cent in the coming year. The Spending Review (we’re still studying the detail) published alongside the Budget includes real terms cuts for local government and Justice.

The prospects for the Scottish government ever delivering on the Christie Commission recommendations (i.e. a significant and enduring shift to more preventative spending) look increasingly remote.

A serious long-term tax strategy is desperately needed

Yet again, the Budget failed to set out a serious long-term tax strategy for Scotland, one that sets out a credible plan to generate sufficient revenues to deliver on the First Minister’s priorities. Instead, short-term politically driven tax changes with minimal real impact are prioritised. This can’t go on.

Relative to rUK, Scots earning between £16,438 and £29,526 will pay £40 less tax next year. So while it may be technically true that the majority of taxpayers pay less than they would elsewhere in the UK, the point is close to meaningless for family finances. Those earning over £50,000 pay at least £1,496 more. The median Scottish taxpayer pays much less in personal taxation as a proportion of income than counterparts in the Nordic and Benelux countries that Scottish government ministers consistently point to as exemplars for an independent Scotland.

The general lack of seriousness is also apparent in the approach to Council Tax. While the commitment to introduce two new bands at the top-end is welcome as far as it goes, it is no substitute for the genuine, far-reaching reform of local taxation that is long overdue. The revenue boost to local authorities from the new bands is likely to range from small to negligible.

Nobody is pretending that meeting Scotland’s fiscal challenges will be easy. But it is entirely reasonable to expect the Scottish government to deliver budgets that properly connect public spending to the effective delivery of its policy priorities. The implementation of a coherent and credible long-term tax strategy for Scotland must be an urgent priority if the First Minister’s ambitious priorities (largely shared by other progressive parties) are ever to be delivered. Post election, the next Scottish government, whatever its complexion, desperately needs to get a grip on these issues.