Scottish Budget: The starting gun on the Holyrood election

Scottish Finance Secretary, Shona Robison, today set out her tax and spending plans for 2025/2026 to the Scottish Parliament. Against a highly charged political backdrop – and with recent decisions by UK Chancellor Rachel Reeves looming large – the SNP sought to use today’s set-piece event as a reset moment. Following a bruising election night in July, when Scotland’s long-dominant political party lost 38 Westminster seats, the Finance Secretary placed poverty eradication, public services and green growth front-and-centre of plans for the year ahead. A bitter row over winter fuel payments had dominated debate in the lead up to today’s Budget and, sensing an opportunity to put clear blue water between themselves and Labour, the SNP today confirmed that the Scottish Government will reinstate the Winter Fuel Payment in full. In a similar vein, Robison lamented Labour’s decision to increase National Insurance Contributions (NICs) on employers and announced to MSPs that basic and intermediate income tax thresholds will increase this year by 3.5%.

?Again, this was presented as a clear political choice mere months after Chancellor Rachel Reeves chose to freeze all income tax thresholds elsewhere in the UK. Anas Sarwar’s Labour, by contrast, pointed to the fact that the UK Budget provided upwards of ￡3.4bn in Barnett consequentials to the Scottish Government. Anticipating Labour attacks about a lack of ambition in the context of additional fiscal headroom, Robison also took the Chamber by surprise by announcing that the SNP will scrap the ‘two-child cap’ on universal and tax credits introduced by the previous Conservative government. As the SNP seeks to pass its budget as a minority in the Scottish Parliament – something which is far from a given - this was an audacious and entirely unsubtle challenge to Scottish Labour to back ‘progressive’ measures and lend its support. The ball, according to Robison, is now firmly in the court of the opposition.

Green growth and sustainability have remained a constant in Scottish Budgets of recent years and today was no different. The Finance Secretary announced an additional ￡4.9bn to tackle the climate emergency and confirmed the establishment of a new Hub for Offshore Wind in the North East. Investment in onshore wind is to be tripled, and, with this, Scottish Ministers hope to attract in the region of ￡1.5bn of private investment in this proven technology. ￡1.1bn was announced in infrastructure and there will be a clear focus on rail and road maintenance and renewal, including in electrification, with Scottish Ministers pledging to work with public bodies and the private sector to deliver on this ambition. Elsewhere, ￡25m of investment was announced in green skills and significant measures on domestic heating and insultation were announced. ￡100m will be spent on digital connectivity and local authority funding will increase by ￡1bn.

?If the SNP benches looked pleased as Robison resumed her seat, the opposition benches were undeterred. Scottish Labour lamented a lack of ambition with Shadow Finance Secretary, Michael Marra, saying the measures amounted to little more than the ‘same’ which ‘sends Scotland in the wrong direction’. A bullish Robison once more laid down the gauntlet, daring Labour to vote ‘against winter fuel payments for pensioners for the third time in a row’. The Finance Secretary appeared to be enjoying the moment when the reality of parliamentary arithmetic hit home; the Scottish Green Party – which had propped up the SNP in coalition until an unceremonious falling out last year – welcomed ‘positive measures’ before adding ‘significant changes’ would be required to secure their support. Therein lies the problem for the Robison and Swinney; today’s Budget was as much about reinjecting momentum into the electoral fortunes of the SNP as it was the mere formality of setting out spending plans for the year ahead. If the Scottish Government cannot secure support from the opposition, then the Budget will fall. In this scenario an early Scottish election becomes a very real prospect.

?Regardless of when the next Holyrood election takes place – and note it is currently scheduled for May 2026 – today represented the opening salvo in what will be the first competitive election north of the border for many years. The fallout from today’s Budget could well influence the outcome of that election and, in turn, the outcome of that election could set the political tone across the UK for years to come. Sir Keir Starmer is acutely aware that the upcoming Scottish Parliament election will be a crucial mid-term litmus test for his government; only time will tell if today marked a decisive moment in the lead up to that election in the eyes of Scottish voters.