Scottish Budget will do nothing for growth – except grow dependency culture

Budget gaffe over ‘driving out efficiencies’ instead of ‘inefficiencies’ says it all about the SNP government track record on building a stronger economy

There was barely a murmur in the Scottish Parliament when Finance Secretary Shona Robison announced her plan to make the Scottish Government less efficient. Nor were there gasps of amazement when she revealed she was going to spend £30 million to do it.

Now, cynics might say the Scottish Government squanders over £40 billion on inefficient services, but on Wednesday Ms Robison spelt it out. It wasn’t a slip of her tongue, because it’s there in the official text and parliamentary record, but her new £30m “invest to save” fund is designed to “drive out efficiencies”.

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Oh dear, it could be quite the search, which might explain the hefty allocation. OK, so she and her speech writers meant to say “drive out inefficiencies” so maybe the communications team is the place to start, but in a Budget which was a massive downpayment on the 2026 Holyrood election campaign, it institutionalised inefficiency because the £3.4bn boost to Scottish coffers through Barnett consequentials from Rachel Reeves’ Budget took the heat from the need for reform.

Blackpool rock

Even the independent Scottish Parliament Information Service said it was “hard to see how £30m will really shift the dial” because of existing strains in health and social care. Together with the likelihood of resistance from increasingly powerful unions, such a vague plan to improve public sector productivity at the same time as guaranteeing nine per cent pay public sector rises over the next three years exposed contradictions which went through the programme like Blackpool rock.

And indeed Blackpool is now in the unenviable position of having the lowest male life expectancy in the UK, at 73.1 years, but it has only just pipped Glasgow at just under 74, and across Scotland’s deprived communities, low life expectancy is inextricably linked to worklessness. Tragically, Glasgow has retained its place as at the top of the mortality league for women, with an average female lifespan of just over 78.

So while Ms Robison proudly announced a £2bn increase for health and social care, a reflection of the level of long-term sickness and decline experienced by so many, she also increased social security payments by £800m which will do nothing to get more people back on their feet. A further unfunded £200m is needed to cover the headline-grabbing pledge to end the two-child benefit cap.

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30% on sickness benefits

An investigation for the Channel 4 Dispatches programme this week revealed that in Easterhouse, Drumchapel, Greenock, Ardrossan, Methil, and Alloa, around 30 per cent of the working-age population are on sickness benefits, compared to a UK average of seven per cent. Ms Robison’s answer is that £800m social security budget rise. The Scottish Government also wants to make it easier to claim benefits but, at a time of labour shortages, is putting little thought into how that wasted workforce ─ many of whom would like nothing better than a job ─ can be put to good use, both for their own well-being and that of the wider economy.

No matter how much money Ms Robison spends on housing ─ and despite reversing last year’s £200m cut to the affordable housing budget, the Chartered Institute of Housing Scotland estimates a further £3bn will be needed to hit targets over the next seven years ─ if builders continue to struggle to find labour, then the homes cannot be built. It is, almost literally, a bit rich to blame immigration control for skills shortages when a third of working-age people in some areas are paid to do nothing, actively disincentivised from breaking their dependency on benefits and encouraged to claim more.

Both Labour in Westminster and the SNP in Holyrood claim to be prioritising economic growth, professing a new understanding that paying for strong public services relies on a strong economy and thriving businesses to generate wealth, but both governments still seem wedded to the belief that somehow the higher taxes can come first, and the growth will still follow.

Labour shortages

The Scottish Fiscal Commission has improved its forecast for growth, but it’s predicated on higher public spending, not an expanding private sector from where the money comes. It also predicts higher wage settlements, at 3.7 per cent compared to three per cent across the UK, but it puts that down to, guess what, a greater shortage of labour.

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So, while the Scottish Government pours millions into a benefits system which keeps capable people idle, the result is to push up costs for businesses at a time when they are under extreme pressure thanks to the increase in employers’ National Insurance (NI) contributions.

Like Ms Reeves’ plan, the only growth Ms Robison’s approach will encourage is dependency on the state. Ultimately that’s bad news for everyone, and a few hours on it was clear that an intensely political Budget was unravelling. The boost to health spending was largely a retread of a policy which should already be in place and the supposed generosity of non-domestic rates relief for the hospitality sector mostly applied to businesses which don’t pay anyway. Claims that half the working population will pay less in income tax than in the south amounted to £28 a year, while the other half face bills easily running to four figures more.

High-risk approach

Strathclyde University’s Fraser of Allander Institute (FoAI) also pointed out a permanent £200m shortfall in funding public sector NI increases had not been accounted for, which might need emergency action in the next financial year. Like not setting aside resources to fund the end of the two-child benefit cap, it’s possibly a deliberate move to lay the groundwork for a political row with the Labour government. But, as the FoAI says, it’s a high-risk approach with real consequences for those on the end ofwhatever emergency measures need to be taken.

That £30m reform fund might be used up earlier than Ms Robison expected. And she needn’t worry about driving out efficiencies… that’s been a work in progress since the Scottish Parliament opened.

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