Exclusive:Health, education and justice set for deep SNP cuts after 'years of ignoring problems'

SNP ministers are bracing for “painful cuts across the board” amid warnings that “years of ignoring problems” has come back to bite Scotland’s finances.

Finance secretary Shona Robison has warned of a “very challenging environment” amid speculation that all major government departments, including health, education and justice could bear the brunt of spending cuts.

It comes as the Scottish Fiscal Commission warned that much of the financial pressure facing SNP ministers is down to decisions made in Holyrood, not Westminster - raising the alarm that “past choices” made by the Scottish Government “narrow its room for manoeuvre now and in the future”.

Read more: SNP decisions to blame for Scotland Budget 'pressures', say independent expertsIt is believed Ms Robison’s spending black hole could be in excess of £1.5 billion - putting flagship SNP policies such as free prescriptions and tuition fees, championed under the Alex Salmond era, at risk of being cut or limited.

Ms Robison has already matched a UK cut to winter fuel payments, reinstated peak rail fares, slashed budgets for arts and nature funds as well as a freeze on public sector recruitment for everything except “essential frontline” posts.

This warning comes as Prime Minister Sir Keir Starmer admitted the UK government’s October budget will be “painful”.

SNP finance secretary Shona Robison (Picture: Jeff J Mitchell/Getty Images)

In a change of strategy from previous years, Ms Robison will set out the bleak financial picture to Holyrood before First Minister John Swinney presents his programme for government, the set-piece that establishes his administration’s aims over the next 12 months.

The finance secretary is expected to use the first day that MSPs return from summer recess on Tuesday to reveal the gloomy financial backdrop, setting up the FM to sell the limitations of what his government can realistically achieve over the next 12 months.

Ms Robison is also expected to issue a stark warning of the fiscal restrictions facing the Scottish Government when she leads a “discussion” on the state of public finances at the SNP conference in Edinburgh at the weekend.

A government source told The Scotsman that “there are going to be painful cuts across the board”.

They added: “All departments are being squeezed - the health, justice and education directorates are facing particular headaches to balance the books.

“The lead-up to the next election is going to be difficult for the UK and Scottish governments - it all looks pretty bleak.

“We’ve had years of ignoring problems or putting things off and there’s now not any space to delay any further, so we’re looking at an incredibly difficult situation.”

Reports have emerged that Caroline Lamb, the Scottish Government’s director-general for health and social care, has told officials that £750 million is needed this year before £357m is also required to fund above-inflation public sector pay deals.

According to the Times, Ms Lamb told civil servants it would be “pretty challenging” to make the savings in a way that “feels fair” but described the process as a “reset moment” across the Scottish Government.

Ms Robison’s task has been further compounded by new analysis from the Scottish Fiscal Commission that warned higher than expected public sector pay deals, the controversial council tax freeze and social security reforms are all straining public finances.

The SFC said: "While UK government policies contribute to the pressures on the Scottish budget, much of the pressure comes from the Scottish Government’s own decisions."

More than half of the government’s resource spending is allocated to public sector pay, and the commission warns the public sector pay deals will lead to cuts elsewhere in the public service.

The commission said: “If a budget is set based on pay assumptions which are lower than those that materialise, this creates challenges with in-year management of the budget, requiring the Government to reduce its planned spending on services. The recent emergency spending controls the Scottish Government has put in place for 2024/25 are the result of those challenges.”

Professor Graeme Roy, chair of the Scottish Fiscal Commission, said better planning for pay deals was needed to make sure mid-year financial restrictions are avoided by SNP ministers.

He said: “The past choices of the Scottish Government narrow its room for manoeuvre now and in the future.

“Previous pay settlements, the approach to social security payments, and the council tax freeze have all added to the in-year pressures that must be accommodated as it continues to negotiate pay with the public sector unions.

“With pay making up more than half of the Scottish Government’s day-to-day budget, we need more transparency and planning around pay awards at budget time to avoid disruptive spending controls being introduced partway through the year.”

Scottish Labour leader Anas Sarwar told journalists at Holyrood that the Scottish Government was guilty of “deliberate misinformation” for claiming the decision made by his party colleagues in Westminster has forced SNP ministers to make cuts from this year’s budget - accusing Ms Robison and her team of a “blatant lie”.

Labour is drawing a distinction between the £22bn in-year budget black hole identified by Chancellor Rachel Reeves and the £20bn figure highlighted by the Institute for Fiscal Studies before the election, saying the latter figure relates to wider pressures on UK Government finances.

The party said that with the exception of the winter fuel allowance, Ms Reeves’ decisions have had “no detrimental impact on the Scottish Government’s budget”.

Mr Sarwar said: “I think people across the country recognise that the Labour Party doesn’t have a magic wand, it can’t fix every problem straight away.

“But it can start the process of changing our country for the better.”

Mr Sarwar added: “The Cabinet ministers know it’s chaos, they privately say it. MSPs know it’s chaos, they privately say it. MPs know it’s chaos.

“They know it’s not working. There’s no plan, no strategy and it’s just trying to live day by day, week by week.”

Amid speculation over limits or cuts being made to free prescriptions or free tuition for Scottish students, Mr Sarwar said those policies would not be touched under a Labour government, insisting he was “not going to re-open those discussions”.

He also claimed a Labour government at Holyrood would alleviate the NHS backlog and fix the “broken” relationship between local and central government.

Pressed over how a Labour government would pay for his vision, Mr Sarwar claimed growing the Scottish economy, despite being partly out of any government’s hands, and reducing waste would mean cuts would not have to be found elsewhere in 2026.

He said: “If we do not increase growth and increase revenues into government, then we are not going to be able to achieve what Scotland can achieve.

“In the longer-term, I would argue we need to reduce the tax burden on Scots as well.”

Responding to the IFS report, Ms Robison said: “I welcome this report, which provides useful independent analysis. As it says, there is significant uncertainty on the level of funding we will receive from the UK government ahead of the UK budget on October 30.

“The First Minister and I have both made clear that, following the UK Chancellor’s July statement, the Scottish Government continues to face the most challenging financial situation since devolution. I will be providing an update to parliament on the urgent action being taken to address these profound financial pressures.”