Scottish Government's Ambitious Budget Passes Amidst Political Tensions

The Scottish Parliament has approved the 2025-26 Budget proposed by the minority SNP administration, receiving support from the Greens, Liberal Democrats, and Alba, while Labour chose to abstain. This Budget totals £63 billion, aiming to provide substantial funding for the NHS, local councils, and initiatives to alleviate child poverty, alongside a winter fuel payment for pensioners. Conversely, the Scottish Conservatives opposed the budget, labeling it a historical tax burden.

The Budget passed the final vote with a tally of 73 to 29, paving the way for formal Royal Assent and implementation in the upcoming financial year starting in April. Finance Secretary Shona Robison emphasized the collaborative efforts involved in crafting the Budget, which includes measures like increased NHS investment, social security support, and a commitment to establish a just transition fund in light of the impending Grangemouth refinery closure.

Amidst political fallout from losing their parliamentary majority, the SNP managed to secure support through careful negotiation, quelling fears of a snap election. Labour’s Michael Marra acknowledged the foundations of the budget being laid by UK Chancellor Rachel Reeves’ progressive fiscal policies.

In terms of taxation, MSPs agreed on income tax structures, ensuring the thresholds rise in accordance with inflation. However, due to ‘fiscal drag’, more individuals will find themselves in higher tax brackets without a corresponding adjustment in band structures. Robison claimed Scotland’s tax system would yield a record £25 billion, indicating a fiscal advantage compared to the rest of the UK.

A key element of the Budget is the pledge to mitigate the UK government’s two-child cap on benefits from April 2026, although no funds have been directly allocated yet. Additional funding for the NHS and local councils outstrips previous allocations, indicating an intentional focus on supporting low-income families and elderly citizens, despite ongoing concerns about squeezing funds from other sectors.

Robison has also addressed challenges brought about by a planned UK tax hike on National Insurance, allocating extra funds to help local authorities manage these costs. Still, local councils report facing a significant shortfall due to limited support from Westminster, resulting in drastic council tax hikes across the region.