How SNP has used our money to create ‘client state’ of public sector workers and benefit claimants
“Where has all the money gone?” is the fair question we are being asked following the publication of the Scottish Government’s Budget last week. The backdrop to the Finance Secretary’s choices is an unprecedented uplift in the Scottish Government’s block grant from Westminster of some £3.4 billion for the coming year, following policy choices made by the UK Labour government. Those same policy choices mean that the tax burden across the UK is now at the highest level in our history.
In view of this, there was a reasonable expectation that the SNP would be able to meet the demands across a variety of sectors, both for appropriate tax reliefs and additional spending. Yet the response to the Budget was that too many groups were left disappointed.
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Hide AdHospitality is a sector facing significant challenges, with premises closing virtually every week due to rising costs. Over the past two years, the previous UK Conservative government granted 75 per cent rates relief to retail, hospitality and leisure premises; a choice not taken by the SNP at Holyrood despite them having the Barnett consequentials to fund it.


Budget ‘will kill people’
Last week, Finance Secretary Shona Robison announced 40 per cent rates relief for hospitality businesses for next year. A welcome move, but with a cap at rateable value of £51,000, therefore excluding more than 2,000 licensed premises above the cut-off point. This led Allan Henderson, owner of Aberdeen’s McGinty Group, to say the sector had been “completely shafted” by the policy. Paul Waterson, of the Scottish Licensed Trade Association, had similar sentiments, warning many larger licenced premises were wondering if they could now survive.
It is not just in the business community that there is anger about the SNP’s Budget choices. Dr Donald Macaskill, of Scottish Care, was outspoken in his response: “This is a Budget that kills. It will kill any reassurance that the Scottish Government truly values social care, it will kill essential community services which are forced to close and leave workers without employment. And ultimately, it will kill people.”
Business was more pleased that there was no expansion in the income tax differential between Scotland and the rest of the UK, but the SNP’s modest tax cuts for the lowest earners – amounting to the grand sum of £1 per month (less than the cost of a first-class stamp) were met with derision. Any savings in this area will be more than offset by what look like eye-watering increases in council tax currently being proposed.
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Hide AdCouncil tax rises, service cuts
On the same day that Ms Robison was making her statement to Parliament, Perth and Kinross Council agreed council tax increases over the next three years of 10, 10 and 6 per cent – a cumulative uplift of 28 per cent. In this, they are not alone with Aberdeenshire Council, for example, being projected to have to raise council tax by a staggering 67 per cent over the next four years.
It is not as if these eye-watering increases will fund better services. The same councils having to take these decisions are those closing libraries, shutting down public toilets, reducing teacher numbers, spending less on parks and verge maintenance, along with a host of other cost-cutting measures. People really are paying much more and getting less in return.
So if we are all paying more in tax, yet are seeing services around us being slashed and businesses not getting the support even being offered by the UK Labour government down south, where exactly has all the money gone? The answer to this is that there are two significant areas of growth in the Scottish Budget, the first being public sector pay, and the second being welfare spending.
Public sector pay
Public sector workers in Scotland have been awarded above-inflation pay increases, meaning many are better paid than their counterparts south of the Border (although the latter will pay less income tax). No one would object to rewarding public sector workers better in exchange for higher productivity, but these increases have been awarded unconditionally.
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Hide AdAnd this is in a context of public services underperforming, as was made very clear in last week’s damning Audit Scotland Report on the NHS. Our health service in Scotland is now spending much more money than ever before, not least on staff salaries, and yet is treating fewer patients than before Covid, with waiting lists at all-time record levels.
The second growth area has been welfare spending, with some £800 million extra in the Budget for benefits. The Scottish Fiscal Commission has calculated that Scotland now pays out £1.3bn more in benefits than prior to the devolution of welfare. And those figures take no account of the additional £150m to £200m likely cost of scrapping the two-child benefit cap, should that be introduced from 2026.
Generous with taxpayers’ money
On the one hand, this looks like clever politics from the SNP. Some 22 per cent of Scotland’s workforce are in the public sector, much higher than the figure in England. That means that in around half of Scottish households there will be, on average, at least one public sector employee, no doubt grateful for their pay increases. Add to that the growing number of benefit recipients, and we see the creation of an SNP client state of individuals very happy with the status quo of a struggling public sector, higher taxes, and generous handouts.
These groups might be content to vote for an SNP in government which has made these choices but none of this is sustainable, long-term. Unless we have a more productive and faster-growing economy in Scotland, the money is going to run out. In future years, the UK block grant will rise nowhere near as fast as it has done for 2025-26, meaning there will be tough choices to be made. In the long run, we will all be the poorer for the SNP’s generosity with our money.
Murdo Fraser is a Scottish Conservative MSP for Mid-Scotland and Fife
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