Latest news with #ScottishFiscalCommission
The National
5 days ago
- Business
- The National
Scottish Government 'will need to find extra £2bn for welfare bill'
Spending on social security in Scotland totalled just over £6.1bn in 2024-25 but is forecast to grow to more than £9.4bn by 2030-31. With the rise coming at a time when the UK Government is trying to cut its own welfare bill, economist Professor Graeme Roy, chairman of the Scottish Fiscal Commission (SFC), said that would leave Holyrood ministers increasingly having to fund more of the spending for this from its own budget. The SFC revealed the amount the Scottish Government spends on social security, above what it receives from Westminster towards the cost of benefits, is 'expected to increase from £0.9bn in 2023-24 to £2.2bn by 2030-31'. Roy said: 'In other words the government have to find £2bn either from taxation or other areas of spending to make the budget balance.' Professor Graeme RoyHe highlighted this 'widening gap on social security' as one of the financial pressures the Scottish Government will have to face. Roy also said ministers will likely 'have to find additional resources' to pay for public sector pay, with awards being made to workers already higher than the level set in the Government's public sector pay policy. He stated: 'That means essentially money is going to have to be found from elsewhere in the budget in order to pay for pay awards coming in above the pay policy.' Meanwhile, an 'economic performance gap' means the Government is raising less from income tax than it would if Scotland's economic performance matched that of the UK. The SFC found that Scotland's different policies on income tax should raise just over £1.67bn this year, but its report said the 'actual projected income tax net position in 2025-26 is £616 million'. As a result, Roy noted there was a 'performance gap of about £1bn'. He added: 'That is an additional £1bn that is being foregone within the overall funding of the Scottish budget because of that relatively weaker economic performance.' READ MORE: Labour's immigration stance poses 'critical economic threat' to Scotland, says FM Roy noted that overall the funding to the Scottish Government 'continues to increase'. But he said: 'Once you take into consideration things like social security commitments, when you take into consideration pay awards running ahead of the pay policy, when you take into consideration things like the national insurance increase, and the general pressure we are seeing on public service delivery, while funding is going up the spending pressures are continuing to go up at the same time. 'So the Government is continuing to work in a situation where they have really quite limited fiscal headroom to manage the pressures that they face.' He added: 'Funding is going up, but once you start to look at some of the commitments the Government have made it is going to be a really challenging period for the short and medium term.' READ MORE: The 44 Scottish firms named and shamed for failing to pay minimum wage Finance Secretary Shona Robison said the report 'recognises the challenging financial environment that Scotland continues to face as a result of global uncertainty and higher inflation'. She added that the Scottish Government's position was made worse by the 'failure' of UK ministers to fully fund the increase in employers' national insurance contributions in the public sector, as well as by the welfare reforms being pursued by Labour at Westminster. Robison said the UK Government 'must change course on these welfare cuts, as well as removing the two-child limit and reinstating the winter fuel payment'. Speaking for the Scottish Government, she added: 'By contrast, our social security policies are providing vital assistance to enable older people to heat their homes, help disabled people to live independent lives and keep thousands of children out of poverty.' The Finance Secretary added: 'Our investment in this area over and above the money we get from the UK Government is projected to be less than 3.5% of the total Scottish Government Resource Budget by 2029-30.'
The Herald Scotland
30-04-2025
- Business
- The Herald Scotland
Is the UK Government preventing Scotland from acting on child poverty?
The Scottish Government has said they want to put an end to this. Announcing the Scottish Government budget in December, the finance secretary Shona Robison said 'be in no doubt- the cap will be scrapped' by 2026. Scrapping it, however, comes at a significant cost. The Scottish Fiscal Commission has said the Scottish Government's policy of mitigating the cap comes with a £155 million price tag in 2026-27 before rising to £198 million in 2029-30. The charity Action for Children has told The Herald if this mitigation wasn't required the money could pay the majority of the £256m funding gap the Scottish Government says is stopping them from rolling out meals as a right to every primary school pupil in Scotland. At the moment, pupils in primary 1 to primary 5 currently have access to universal free school meals. Action for Children additional funds would allow ministers to 'add the provision of P6 to P7', leading to 'a first step in removing the stigma of receiving school meals.' READ MORE: Scottish Government statistics show school meal provision saves families around £400 a year and following a stark rise in the cost of living, the charity argues, it 'takes vital resources away from a family's budget'. Action for Children points to other countries, such as Finland, which has made the choice to invest in school meals as a right and has consistently achieved high scores in the Programme for International Student Assessments. In Finland, all pupils from pre-primary to upper secondary schools get a free-of-charge, nutritious meal each day. In February, the cabinet secretary for Social Justice, Shirley-Anne Somerville, said Scottish minister's efforts to tackle child poverty are being 'undermined' by the social security policies of the UK Government, 'not least the two-child cap'. The Child Poverty Action Group estimates that scrapping the two-child cap in Scotland could lift 15,000 children out of poverty and the Scottish Fiscal Commission estimates that 42,000 children in Scotland will benefit from mitigation of the policy in 2026-27. However, Scottish ministers' plans to scrap the two child benefit cap by 2026 may be put on further hold if they are unable to get the first mitigation payments system up and running safely. If the UK Government does abolish the cap, the First Minister has said the money spent on mitigating this policy will 'continue to be used on measures to eradicate child poverty in Scotland.' Yet, recent reports suggest the cap will remain in place even when the UK Government announces their child poverty strategy in June. This month, one Labour source told The Guardian: 'If they still think we're going to scrap the cap then they're listening to the wrong people. We're simply not going to find a way to do that. The cap is popular with key voters, who see it as a matter of fairness.' This comes despite the Child Poverty Action Group estimating the number of children in poverty across the UK would increase from 4.5m to 4.8m by 2029 unless urgent action is taken. The UK Government has said it is creating a new Fair Repayment Rate, which caps debt repayments made in Universal Credit, which it claims will allow 1.2m households to keep more of their Universal Credit award. UK ministers claim around 700,000 of the poorest families with children will benefit as a result of this change. A UK Government spokesperson said: 'No child should be in poverty - that's why our Ministerial Taskforce is exploring all levers available across government to give children across the United Kingdom the best start in life. 'As we fix the foundations of the economy to make everyone better off, our Get Britain Working plan and the landmark Employment Rights Bill will help people find and maintain better paid and more secure jobs with stronger rights. We have increased the National Living Wage and are capping how much Universal Credit can be taken for debt repayments to put more money in people's pockets and help families build a brighter future. 'Both of Scotland's governments must work together to help more people into work, while always supporting those who cannot.'
The Herald Scotland
29-04-2025
- Business
- The Herald Scotland
STUC: Two-child benefit cap ‘will cause explosion' in poverty
At the moment, the two-child benefit cap prevents parents across the UK from claiming universal credit for more than two children except in some limited circumstances. The Scottish Government has said they will mitigate this policy by 2026, however, the Scottish Fiscal Commission has said this will come with a £155 million price tag in 2026-27 before rising to £198 million in 2029-30. Asked by The Herald if she could pin-point specific policies she believes are making life harder for working class people in Scotland, Ms Foyer said: 'The two child cap on benefits is something that is of deep regret. That was brought in by the Tory government. "I would have expected that to be lifted by an incoming Labour Government and I think that's really quite shocking that we've not seen that happen and that will cause an explosion in child poverty because it needs to be urgently lifted.' Despite rumours the cap could be lifted, recent reports suggest it will remain in place even when the UK Government announces their child poverty strategy in June. This month, one Labour source told The Guardian: 'If they still think we're going to scrap the cap then they're listening to the wrong people. We're simply not going to find a way to do that. The cap is popular with key voters, who see it as a matter of fairness.' READ MORE: This comes despite the Child Poverty Action Group estimating the number of children in poverty across the UK would increase from 4.5 million to 4.8m by 2029 unless urgent action is taken. Asked if this is a barrier to the Scottish Government meeting their own targets on child poverty, Ms Foyer said : "Yes, I think it is. Ultimately, the Scottish Government have the ability to mitigate it but they also need the budget to mitigate it. "Partly, that relies on the UK Government upping their spending on things like welfare, public spending to get the money coming through to the Scottish budget. But the Scottish Government also has a responsibility, they according to our figures, could by inputting about £3.7 billion more resources into the budget through progressive taxation that they have the power to deliver." The Scottish Government has previously said they are "proud" that Scotland has "the most progressive income tax system in the UK, protecting those who earn less and asking those who earn more to contribute more." Ms Foyer also pointed to a rise in energy bills and council tax across Scotland impacting those facing poverty: 'It was ironic to see that we got a minimum wage hike from the UK Government which was welcome but it was pretty much wiped out by the council tax rises we've seen and energy bill rises we saw coming in. 'We need at a UK-level to have a serious discussion about bringing our energy into public ownership and tackling now the unaffordable energy bills that people are having to pay. It's just not appropriate that we allow the free market to set these levels. Government should be intervening and taking control of these levels." Ms Foyer also pointed to action the Scottish Government could take to help those struggling in terms of a total upheaval of the council tax system. "The Scottish Government needs to take action on our council tax. It is unaffordable, it is a regressive tax, it disproportionately impacts on low-paid working people and we need to see action taken to completely review that whole system and replace it." Responding to criticism over the two-child benefit cap, a UK Government spokesperson said: 'No child should be in poverty - that's why our Ministerial Taskforce is exploring all levers available across government to give children across the United Kingdom the best start in life. 'As we fix the foundations of the economy to make everyone better off, our Get Britain Working plan and the landmark Employment Rights Bill will help people find and maintain better paid and more secure jobs with stronger rights. "We have increased the National Living Wage and are capping how much Universal Credit can be taken for debt repayments to put more money in people's pockets and help families build a brighter future. 'Both of Scotland's governments must work together to help more people into work, while always supporting those who cannot.' The UK Government's new Fair Repayment Rate caps debt repayments made in Universal Credit and ministers say it will allow 1.2m households to keep more of their Universal Credit award.
Telegraph
08-04-2025
- Health
- Telegraph
Scotland's ageing and unhealthy population could shatter SNP budget
SNP ministers are facing a multi-billion pound shortfall in their budget thanks to costs of dealing with Scotland's older and less healthy population, an official report has warned. The Scottish Fiscal Commission (SFC) warned that spending will outpace funding by the equivalent of £1 billion per year. The SFC, which provides ministers with their official spending forecasts, highlighted that Scotland's population is older than the rest of the UK's and is less healthy. It Scotland could be facing an average budget gap of £16 billion a year over the period 2030/31 to 2074/75 if Scotland's poor health continues. This would reduce to £9 billion if there is an improvement. In addition, the proportion of public spending devoted to health is forecast to surge from 40 per cent in 2029/30 to almost 55 per cent in 2074/75. A third of Scots who are 'inactive in the labour market' do not work because of ill health, the report said, while there is also 'also a share of the population that is caring for these individuals'. An improvement in Scotland's healthy life expectancy (HLE) – the number of years a person lives in good health – would also ease the 1.2 per cent gap between the SNP government 's spending and funding, the report said. But it warned the financial black hole would worsen if the country's health continues to deteriorate and noted that 'several indicators' point to this happening. These include life expectancy in Scotland having 'stagnated' since around 2012, HLE having declined since 2018 and a surge in mental illness. The report also warned of 'long-term funding pressures' if the SNP continues with its more generous welfare system, and diverges from the UK Labour Government's plan to crack down on disability benefits. It was published as SNP ministers offered an 8 per cent pay rise to NHS staff over two years – 1 per cent more than inflation – at a cost of more than £700 million to the taxpayer. Neil Gray, the SNP Health Secretary, said the affected workers would continue to be the best paid in the UK and urged their trade unions to accept. But Graeme Roy, the SFC's chairman, said: 'Our assessment suggests that future Scottish Governments will face significant challenges funding devolved public services as a result of an ageing population and rising health pressures.' 'The Scottish population ageing earlier than the rest of the UK will result in health spending over the next 25 years growing faster than the funding provided through the Barnett formula.' David Phillips, head of devolved and local government finance at the Institute for Fiscal Studies, said: 'Today's report makes clear that improving health and the performance of the healthcare system is vital to Scotland's finances. 'However, unfortunately, even substantial improvements in health won't be enough to avoid difficult decisions on tax and spending.' He said the analysis 'makes clear that households either side of the Scottish border will likely face substantially higher taxes or a state that does relatively less in the decades ahead'. 'This is another damning verdict on the SNP' An independent Scotland would face 'trade-offs at least as difficult, unless it could significantly boost economic growth', he added. Alexander Stewart, the Scottish Tories' Shadow Public Finance Minister, said: 'This is another damning verdict on the SNP government's inability to live within its means. 'The Nationalists' failure to get a grip on public spending threatens Scotland's future financial sustainability and with it the funding of our public services.' The SFC analysis predicted that Scotland's population will rise until around 2050, thanks to inward migration, before stabilising. The median age is projected to rise from 43 in 2029/30 to 49 in 2074/75. Mr Gray said: 'While there are obvious limits to long-term projections of this nature due to our rapidly changing world, we are cognisant of the anticipated change in Scotland's demographics.' Mr Gray said the Scottish Government plans to 'strengthen Scotland's NHS including measures to make it easier for people to see a doctor, alongside increased investment to improve access to treatment and to work proactively with people to prevent illness'.
Yahoo
08-04-2025
- Health
- Yahoo
'Significant challenges' for health funding, warns report
The Scottish government will face extra pressure funding health care as the country's population ages, a new report has warned. A study by the Scottish Fiscal Commission found more effort is needed to help people stay healthy as they age, or else spending levels could become unsustainable in the future. The assessment cautioned there will be "significant challenges" in funding devolved to public services, particularly over the next 25 years, due to spending outpacing funding by an average of 1.2% per year - or £1bn in 2024-25 prices. Scotland's population is also expected to grow, reversing a prior prediction from the commission that numbers would decline after 2030. Health is the largest area of spending in the Scottish budget and grows faster than any other area, meaning while health and social care spending is estimated to make up around 40% per cent of devolved public spending in 2029-30, by 2074-75 it will have jumped to just under 55%. The SFC, which is the official economic forecaster, found that as health spending tends to rise with age, an ageing population would lead to more health spending in the future - unless healthy life expectancy also improved - meaning there would be "upward pressure" on budgets. Healthy life expectancy (HLE) is the number of years a person can expect to live in full health, without being hindered by disabling illnesses or injuries. An improvement in HLE would also ease the 1.2% gap between spending and funding, but if the population's general health was to worsen, that gap would then grow. The SFC report provided two scenarios for the future, one based on positive improvements to the nation's health and the other negative. The study states "several indicators point to a decline in Scottish population health", citing life expectancy in Scotland having stagnated since around 2012, a general decline in healthy life expectancy since 2018 and a rise in mental illness. The country faces "significant health inequalities" due to factors like location or socio-economic position, and these are "wider in Scotland than in England." SFC chairman Prof Graeme Roy said: "With this budget gap the Scottish government can't borrow. So that budget cap means cuts to public spending or increased taxes. "Scotland faces a real challenge in terms of its overall fiscal sustainability because of this twin challenge of an ageing population and also an unhealthy population." David Phillips, head of devolved and local government finance at the Institute for Fiscal Studies think tank, said households are likely to face a choice between higher taxes or a state investing less in public services. Mr Phillips said this trade-off would remain an issue even if Scotland became independent at some point in the study's time frame. He added: "Improving health and the performance of the healthcare system is vital to Scotland's finances. However, unfortunately, even substantial improvements in health won't be enough to avoid difficult decisions on tax and spending." The Scottish government's Health Minister Neil Gray said he was " cognisant" of the anticipated changes and that the NHS in Scotland would be strengthened through plans to make it easier for people to see a doctor and increased investment in improving access to treatment. Tory public finance spokesman Alexander Stewart claimed the report was "another damning verdict on the SNP government's inability to live within its means". Jackie Baillie, Scottish Labour's health spokesperson, said: "This report is a stark reminder that 18 years of SNP complacency is leading our NHS and social care services towards disaster." Figures in the report showed the overall population in Scotland is expected to rise, due to migration numbers increasing at a "higher than expected" rate. The SFS expect this to continue, resulting in the population increasing until around 2050, when they forecast it will stabilise. During that time the population's median age is projected to rise from 43 in 2029-30 to 49 in 2074-75, despite deaths being expected to outnumber births across the country.
