SNP ministers face spending pressures amid tax shortfall, says forecaster

SNP ministers need to give "serious thought" to how to pay for a significant hike in social security spending while facing an income tax shortfall, the Scottish Government's official forecaster has warned.

The independent Scottish Fiscal Commission (SFC) said this needed to be "tackled sooner, not later".

It forecasts that by 2024/25, spending on social security in Scotland will be £750 million more than the corresponding funding received from the UK Government.

At the same time, Scotland’s income tax revenue next year is likely to be £190 million less than the lump sum taken off the block grant by Westminster following the devolution of some tax powers to Holyrood.

Finance Secretary Kate Forbes

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The SFC said it expected this “shortfall” to increase over the next few years – and that it could amount to £417 million by 2026/27.

In a briefing for journalists, Dame Susan Rice, chair of the SFC, said: "The reason for showing this picture is simply because the government and the parliament need to plan and they need to look ahead, and they need to think how to do this."

She added: "There need to be plans now to anticipate how those social security programmes will be funded."

It comes after Finance Secretary Kate Forbes presented her budget in Holyrood, where she came under fire for ending the SNP's long-standing policy of freezing or placing a cap on council tax rises.

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The SFC said total earnings have grown more slowly in all of Scotland's regions when compared to the UK as a whole, indicating a "wider Scottish problem".

The income tax shortfall comes as the Scottish Government faces paying out more in social security, parts of which are also now under the control of Holyrood ministers.

This has seen “significant reform” of the system north of the border, with the budget containing a commitment to double the Scottish Child Payment – a weekly payment made to low-income parents – from £10 to £20 in April.

A new Adult Disability Payment is also due to be launched in 2022, with the SFC saying that spending on social security is forecast to rise from £4.1 billion in 2022/23 to £5.5 billion in 2026/27.

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Referring to the looming pressures, Ms Rice said: "The worst of the numbers, if you will, are five years ahead, but it grows in that direction.

"The reason we've pointed this out is simply to trigger for those involved in the discussion, which is the parliament and the government, to give some really serious thought to how to manage this very progressive social programme that the government is putting out.

"There has to be a way to pay for it. They have some time, but that needs to be tackled sooner, not later."

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