Scottish parties making unrealistic spending promises, warns IFS

Institute says health and social care manifesto pledges affordable only by increasing taxes or service cuts

First published on Mon 26 Apr 2021 06.45 EDT

Scotland’s main political parties have made unrealistic spending promises as they battle for votes in May’s Holyrood election, the Institute for Fiscal Studies has warned.

The IFS said the Scottish National party, Conservatives and Labour were pledging billions of extra pounds in health and social care funding that was affordable only by raising taxes or cutting other public services.

It accused all three parties of relying too heavily on UK government funding increases next year and beyond, which were unlikely to be anywhere near as high as they were leading voters to believe.

David Phillips, an IFS associate director, said neither the SNP, which is on course to comfortably win the election on 6 May, or Labour, had made a serious attempt to cost their manifesto pledges or explain properly how they would be paid for.

Their manifestos offered a “smörgåsbord” of headline-grabbing promises, including the SNP’s offer to increase NHS spending by £2.5bn while freezing income tax, and Labour’s undertaking to spend £4.5bn on an expansive Covid recovery programme.

The Conservatives had shown greater prudence overall yet had underestimated their pledge to protect NHS spending by at least £600m or a quarter of future funding increases. Even though all three parties’ NHS funding pledges looked very generous, in reality they would not keep pace with rising costs and demand, and would be lower than NHS funding increases in England.

Phillips, a specialist in devolved nations’ finances, said the parties had “failed to level with voters on the challenges ahead”. All three manifestos shared “a disconnect from the fiscal reality the next Scottish government is likely to face.

“Rising demand for, and costs of, health and social care could easily absorb three-quarters of the projected cash increase in the Scottish government’s budget over the next few years, substantially more than the SNP and Conservatives have budgeted for.

“[If] the hope was that fiscal devolution would improve the financial accountability of Scottish politics, the evidence of this election is that it a hope that has not yet been fulfilled.”

The IFS analysis, funded by the University of Glasgow’s Scottish Policy Foundation, is its first comparative critique of Holyrood election manifestos. It did not analyse the Scottish Greens and Liberal Democrats’ manifestos because it did not have the capacity to do so.

Phillips said the biggest problem with all three manifestos was it were they relied heavily on the UK government keeping Treasury funding at current levels: that was extremely unlikely next year. Instead, Treasury support could increase by only 1%, leaving huge holes in their spending plans.

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