MSPs are poised to approve Scotland’s budget for 2025-26, clearing the way for a £63 billion spending plan that promises record funding for the NHS and councils. With backing from the Greens, Liberal Democrats, and Alba, the minority SNP government has secured the votes needed to push the budget through, despite strong opposition from the Conservatives.
Political Deals Secure Budget Passage
Winning support for this budget wasn’t easy. After Humza Yousaf’s resignation and the breakdown of the SNP-Green power-sharing agreement, new First Minister John Swinney faced an uphill battle. Opposition parties held the key to passing the bill, and even a snap election loomed as a remote possibility.
That uncertainty faded when Scottish Labour leader Anas Sarwar announced his party would abstain, ensuring the budget would pass. Swinney then secured commitments from the Greens, Liberal Democrats, and Alba, cementing the numbers needed for approval. However, the process was far from smooth, with Swinney even making the bizarre claim that opposing the budget was akin to supporting Elon Musk’s “populist” agenda.
Tax Plans: Who Pays More and Who Pays Less?
Tax changes in this budget have sparked considerable debate. While most bands remain unchanged, fiscal drag—where earnings rise but tax thresholds stay the same—means more Scots will be paying higher rates.
- The basic rate threshold (20% tax on earnings between £14,876 and £26,561) and intermediate band (21% tax on earnings between £26,562 and £43,662) will rise by 3.5%.
- Those earning below £30,300 will pay slightly less tax than their counterparts in the rest of the UK, but the difference is minimal, amounting to just £28 a year.
- A taxpayer earning £50,000 will pay around £1,500 more per year than they would elsewhere in the UK.
Finance Secretary Shona Robison has defended the system, saying it will raise a record £25 billion, with forecasts suggesting Scotland will be £838 million better off compared to using the UK tax model. However, critics argue the increased burden on higher earners could push talent and investment elsewhere.
Key Budget Commitments
The budget includes several high-profile spending commitments:
- An additional £2 billion for the NHS and £1 billion more for local councils.
- £800 million extra for social security benefits, including a winter fuel payment for pensioners.
- Plans to scrap the UK government’s two-child benefits cap in Scotland by April 2026, though no funding has yet been allocated.
- Expanded eligibility for free school meals in eight council areas.
- Increased funding for drugs and neonatal services.
- A 12% real terms rise in capital spending on infrastructure projects.
Despite these allocations, independent analysts warn that prioritizing low earners and pensioners may mean other areas face a financial squeeze.
The UK Government’s Role and National Insurance Dispute
A boost from the UK government helped ease some of Scotland’s financial headaches. Chancellor Rachel Reeves’ funding settlement for the coming year was the largest on record. But the situation was complicated by the UK government’s planned rise in employers’ National Insurance contributions.
Scottish ministers estimate they need about £550 million to cover the increased costs for public sector workers, rising to £750 million when factoring in indirect employees like childcare and higher education staff. So far, they expect only £300 million in compensation from the Treasury, a figure Robison has called “unacceptable.”
To cushion the impact, the Scottish government has pledged an extra £144 million to councils to cover 60% of the National Insurance increase. But with councils facing a £100 million shortfall, many have already announced the largest council tax hikes in 20 years.
| Key Budget Figures | Amount (in billions) |
|---|---|
| Total Budget | £63bn |
| NHS Funding | £21.7bn |
| Local Authorities | £1bn |
| Social Security | £800m |
| Infrastructure | £30m |
Political Reactions: Divided Opinions
The budget has drawn mixed reactions from across the political spectrum:
- Scottish Conservative finance spokesperson Craig Hoy: Described the budget as “dire and damaging,” saying the Tories were the only ones “showing common sense” by voting against it.
- Scottish Labour finance spokesperson Michael Marra: Criticized the government for failing to “transform public services and make them fit for the future.”
- Scottish Green finance spokesperson Ross Greer: Argued the budget would mean “more children will be fed and lifted out of poverty, buses will be cheaper, and nature will be protected.”
- Scottish Lib Dem leader Alex Cole-Hamilton: Backed the budget, citing the inclusion of “a wide range of Liberal Democrat priorities.”
With the next election set for May 2026, today’s fragile alliances could crumble as quickly as they formed. But for now, the budget is on track to become law, shaping Scotland’s financial future for the year ahead.
