Paying for our promises

DELIVERING FISCAL COMPETENCE

The next Parliament must mark a change from the chaotic decision making and short-termism that have characterised the SNP’s fiscal management in the last five years. Public services have suffered from consecutive in-year cuts while a lack of focus on economic and industrial strategy has impacted on revenues. Scotland’s finances face an economic performance gap, equivalent to a loss of £800m in 2026/27 alone.

Scotland’s public finances need change.

To fix the mess of the past five years, get the basics right for taxpayers and build a better future for all, Scottish Labour will take a new approach. Delivered by our new Scottish Treasury, it will be guided by the following objectives.

1. Growing businesses, wages and the economy must be a top priority

Supporting business to attract investment, grow, and create well-paying jobs also increases individuals’ incomes. Within the fiscal framework, improving Scotland’s comparative economic performance and median salaries within the wider UK also increases the revenues available for spending on Scottish public services.

Combined, we estimate that Scottish Labour’s economic proposals have the potential to increase Scottish GDP by between 2.1%-2.4% over five years. This could close the economic performance gap and deliver between £600m-£700m more to spend on public services by 2030/31.

This economic growth would be delivered through our plans to transform skills and employability, overhaul planning, increase innovation, and improve productivity through adoption of new technologies. This would all be underpinned by our new industrial strategy and a relentless focus on business growth from the Cabinet down to refocused government agencies.

Our ambition is to reduce tax rates on Scottish taxpayers over the course of the Parliament, but this will be contingent on delivering growth and closing the economic performance gap. Any initial reforms will focus on taxpayers who face the highest marginal tax rates as a result of the interaction between UK and Scottish taxes.

We will work with the business sector and local authorities to develop our local business levy as a replacement for current unfair business rates. Changes would be revenue neutral but better balanced to support retail and hospitality in town centres, and promote local economic growth.

2. Government funding can and should work harder

While the SNP have set out public sector reform plans, there has been a lack of focus on how those efficiencies will deliver improved results for public service delivery. We anticipate that our reforms could unlock up to £200m to support spending by 2030/31.

Our new Scottish Treasury will cut wasteful spending and ensure that every penny delivers for the Scottish people. Cutting quangos by a third will reduce duplication across government and ensure decisions can be implemented swiftly.

Reforms, such as NHS funding following the patient and speeding up digitisation work in the justice and health sectors will unlock productivity improvements. Preventative spending will also reduce costs elsewhere, such as supporting young people into work or improving social care to reduce delayed discharge.

Economic agencies will be focused on crowding in private investment and delivering returns for the public purse. A new approach to procurement will ensure public money supports local jobs and stricter central coordination of critical infrastructure projects will end spiralling costs and delays.

3. Agreement over long-term funding plans is needed for stability

After years of disruption, organisations reliant on Scottish Government funding need stability. The return to a cycle of three-year spending reviews at UK level has unlocked the opportunity to make similar settlements in Scotland and bring greater certainty to public spending.

Local authorities and tertiary education will be key partners in delivering economic growth, so an early priority of a Scottish Labour government will be to put these sectors on a genuinely stable footing by negotiating new sustainable funding agreements for the long term.

Predictable funding also allows for better long-term planning of services. Our New Deal for the Third Sector will support better value for money, with multi-year funding settlements and agreements on shared outcomes. Using long-term agreements, we will also establish a sustainable and coherent approach to public sector pay as required by the Scottish Fiscal Commission.

Despite repeated commitments to scrap or reform council tax by the SNP, 19 years on it remains in place with valuations unchanged since the early 90s. Progressive reforms are required but any transition will need buy-in from across the Parliament. A Scottish Labour government will work cross-party to build political and public consensus on how reforms can be fairly designed and implemented.

WORKING IN PARTNERSHIP

A productive partnership with the UK Government can open more opportunities for Scotland. Hence, Scottish Labour’s proposals for an industrial strategy that builds on Scotland’s strengths within the UK plan, utilising the UK Governments global networks to promote Scottish produce and working with GB Energy and the National Wealth Fund to deliver a fair energy transition.

Scotland’s Fiscal Framework is also due for review in 2028. We will work closely with the UK Government in advance of this to ensure that any review and reform delivers for Scotland. An initial priority will be ensuring that the Scottish National Investment Bank is designated a public finance institution under the UK Treasury’s Financial Transactions Control Framework.

PRIORITY SPENDING

The policy commitments set out in this manifesto are all funded from within the existing forecasts for the Scottish budget. Where commitments extend beyond the Spending Review period, the Scottish Government’s likely resources have been estimated based on spending in the final year of the Spending Review, appreciating that eventual funding may differ. Further revenue raised through economic growth or realising savings will be additional to the planned spending on our policy commitments.

Over the next Parliament our priority areas of spending include:

To deliver an NHS there when Scots need it, we will raise Health and Social Care spending to at least £25bn by 2030/31. As part of this we will:

Invest over £200m annually to reduce waiting times and improve productivity.
Increase social care pay to £15 per hour.
Spend £680m on digital and technological improvements.
By 2030/31 we anticipate that our productivity reforms could release an additional £90m and reduce spend on delayed discharge from the current £440m annual cost.

To transform education into a system that sets young people up to succeed we will:

Spend £630m on increasing classroom teachers by 1,500 and recruiting 2,000 education recovery teachers.
Make permanent the annual budget of £130m for Pupil Equity Funding and ensure it is focussed on tackling poverty and improving attainment.
Increase funding for colleges by over £120m to deliver employability schemes and more apprenticeships.

To get transport that works for people and the economy we will:

Invest £350m to repair roads and fix potholes.
Commit up to £2bn to upgrading rail infrastructure and delivering faster intercity travel.
Set aside £200m to support franchising of local bus services.
Create a £5m air route development fund.

To deliver investment into our economy we will:

Direct at least £220m annually into government backed business loans.
Create a £15m digital adoption fund.
Create a £100m Community Energy Fund from ringfenced ScotWind revenue.
Spend £30m on a Creative Entrepreneurs Allowance.

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