Analysis of the Scottish Budget by IFS researchers has shown that the proposed budget for 2024–25 currently entails a 0.6% real-terms cut in spending on public services compared with the latest revised plans for the current financial year. In this new briefing, published as we present the full findings of our Budget analysis,we argue that there may already be scope to top up spending plans by around £210 million. This is the result of Barnett consequentials from recently announced top-ups to English council funding, together with increases in the amount likely still available to draw down from ScotWind offshore windfarm licence fees.
It is possible that the UK government will top up its planned spending for 2024–25 – particularly for the English NHS, where funding is currently set to fall year-on-year. If this happens, it would also generate extra funding for the Scottish Government during the course of the coming financial year. And if rates of income tax were cut in the rest of the UK – as may happen in the UK Budget on 6 March – that too could generate additional funding for the Scottish Government.
However, just how much funding will become available is highly uncertain, and depends on both economic and political factors. This makes planning by both the Scottish Government and the services it provides challenging. The UK government could make this task easier by announcing any top-ups to its spending plans as soon as decisions have been made. Limited extensions to the Scottish Government’s borrowing powers would also provide it with more flexibility to respond to uncertainty about UK government funding.
David Phillips, an Associate Director at the Institute for Fiscal Studies and editor of the IFS’s Scottish Budget Report, said:
‘The figures set out in the Budget Bill currently going through the Scottish Parliament are unlikely to be the final say on what is spent on different devolved services in the coming year, 2024–25. As the Scottish Government has highlighted, plans can and often do change during the year, and in particular may be topped up if further funding becomes available.
‘It’s pretty clear there will be scope to do just that – indeed, some additional funding has likely already become available. However, just how much more money there will be to play with remains highly uncertain, making financial planning difficult for both the Scottish Government and the services it funds.
‘The Scottish Government can be more transparent over the budgetary choices and trade-offs it is making. But the UK government should also consider whether it can provide the Scottish Government with earlier information about any changes in its spending plans, and provide additional flexibility to respond to uncertainty about funding via borrowing and reserves.
Top-ups to the Scottish Budget for 2024–25 are likely – but huge uncertainty on their scale is an IFS comment by David Phillips, published as part of our analysis of the Scottish Budget for 2024-25.
It can be read on the IFS website here.
Today we have also published the full IFS Scottish Budget Report, combining all of the chapters from the last couple of weeks, on the IFS website here, and will be presenting all of our analysis at a public webinar at 10am today.
