Scotland faces service cuts under Labour or Tory government, report suggests

The Scottish Government will have to make cuts to services after the general election – no matter who wins, research suggests.

The Institute for Fiscal Studies (IFS) found investment funding is likely to be cut regardless of whether Labour or the Conservatives form the next UK Government, based on the proposals laid out by the parties.

And it said Scotland would see only “modest” increases in day-to-day spending.

UK funding arrangements mean tax and spending choices by the Westminster government largely determine how much money is allocated for Scotland’s devolved administration.

David Phillips, IFS associate director and head of devolved and local government finance, said: “Under both the Labour and Conservative parties’ plans, the Scottish Government would see cuts in funding for investment and only modest increases in funding for day-to-day spending. 

“It would be up to the Scottish Government how to allocate these budgets between services. 

“With the same sorts of pressures on the NHS as in England, it would likely need to make cuts to at least some ‘unprotected’ services. 

“These cuts would be somewhat bigger under the Conservatives’ proposals than under Labour’s.”

The picture for Wales is broadly similar, IFS said. 

Labour has pledged to “deliver economic stability with tough spending rules, so we can grow our economy and keep taxes, inflation and mortgages as low as possible”.

And the Conservative Party has said it will deliver “over £3bn of investment in levelling up in Scotland”.

First Minister John Swinney said: “The independent IFS have been warning about this for months, and they’ve now written it down in black and white – Sir Keir Starmer and his Labour government are planning massive cuts to the Scottish budget and Scotland’s public services.

“At least £18bn of Labour cuts, on top of 14 years of Tory austerity, is a price Scotland’s public services simply can’t afford to bear. We now have six days left in this election to stop those Westminster cuts from becoming a devastating reality.”

On the SNP’s tax and spending plans, Phillips said: “The SNP propose some pretty big top-ups to spending on public services, green investment and benefits, funded by a combination of tax rises and substantially higher borrowing. 

The Scottish Parliament | Alamy

“At a UK-wide level, these would probably be enough to avoid cuts to ‘unprotected’ services. 

“But the biggest single tax measure the SNP propose – changes to UK Government income tax rates and bands – would largely not apply in Scotland, and so the boost to public spending in Scotland would be less than in the rest of the UK. 

“While rejoining the EU could be expected to boost growth and therefore tax receipts, as the SNP suggest, such a move seems a rather unlikely prospect in the next parliament.”