John Swinney has been warned he may need to hike taxes to pay for his flagship commitment to scrap the two-child benefit cap.

SNP ministers have been warned by the government’s independent financial forecasters they may need to hike taxes or make spending cuts to pay for their flagship vow to abolish the controversial two-child benefit cap.

Shona Robison set out her Government’s pledge to mitigate the cap in her draft Budget, with £3 million set aside to set up infrastructure for the policy over the next two years.

First Minister John Swinney walks alongside Finance Secretary Shona Robison ahead of the Scottish Budget being delivered. Picture: Jeff J Mitchell/Getty Images | Getty Images

Introduced by the Conservatives in 2017, the cap means families can only claim some benefits for their first two children, with no additional money awarded to them for subsequent children they may have.

Ms Robison confirmed to The Scotsman that if data is shared promptly by the Department for Work and Pensions (DWP) and systems get online quickly, money will be found in the next financial year to start making payments to families - with an ambition to begin handing out support “as early as we can in 2026”.

SNP social justice secretary Shirley-Anne Somerville has written to UK work and pensions secretary Liz Kendall calling for “co-operation” around “systems development and data sharing”.

She said: “ We will also want to work with you to ensure that any mitigation payments are disregarded as income for benefit calculations. The Scottish Government is keen to progress this work as soon as possible.”

But Graeme Roy, chairman of the Scottish Fiscal Commission (SFC), has warned the policy poses a “fiscal risk”, and could require tax rises or cuts to public spending in the 2026/27 financial year.

Speaking to journalists, Mr Roy said: “We think it will cost £150m in ‘26/27, so the Government have got to set out where that is going to come from - whether that is going to be paid for though higher taxes or it’s going to have to require additional savings elsewhere in the budget in that year.

“It’s just another commitment that has to be paid for. The Government hasn’t set out where that is coming from.”

The SFC was unable to properly assess the policy to scrap the cap after only being informed about it on Thursday last week, which Mr Roy warned was “exceptionally late”.

He said: “We think it will cost around £150m when it comes in in 2026/27, rising up to about £200m by the end of the forecast. But these are still illustrative.”

The commission has warned the policy to scrap the cap will “further contribute to what was already forecast to be a growing pressure on the Scottish Budget”.

Ms Robison told journalists the Scottish Government believes the policy will cost around £100m. A Scottish Government source refuted that tax hikes or spending cuts will be needed, stressing the policy would make up “a very small part” of the Government’s wider budget.

The source added: “We will find the money for it. We have committed to do that.”

Speaking at First Minister’s Questions on Thursday, John Swinney branded the two-child cap a “heinous” policy that was “causing misery for children and families in Scotland”.

He added: “We will take that action because, to date, the UK Labour government has failed to do so.

“I will certainly use every opportunity I have to persuade the Prime Minister to take the similar action that we are taking to relieve the burden of this particular pernicious part of the welfare system from inflicting poverty on children and families in the United Kingdom.”

The Prime Minister has suggested that lifting the two-child benefit cap is not a “silver bullet” in tackling child poverty.

Prime Minister Keir Starmer talks with First Minister John Swinney Picture: Andy Buchanan-WPA Pool/Getty Images

The Scottish Government has pointed to analysis by the Child Poverty Action Group that shows 15,000 children could be lifted out of poverty if the cap is abolished.

Asked about the pledge by SNP ministers, Sir Keir said: “I don’t accept that this is just one thing that needs to happen. If you’re really going to tackle child poverty, you’ve got to look at housing, you’ve got to look at health, you’ve got to look at education, you’ve got to look at so many aspects of a child’s life, in order to take it seriously and in order to bring it down.

“So I know it’s easy to think there’s one silver bullet and if you just do that one thing, that will change everything. I don’t accept that.”

The vow heaps pressure on Scottish Labour leader Anas Sarwar, who has long supported the removal of the two-child cap, with the SNP’s policy potentially being rolled out ahead of voters going to the polls in the 2026 Holyrood election.

Asked by The Scotsman whether the SNP had boxed him into a corner, Mr Sarwar insisted it was “a policy without a penny”.

He said: “What’s announced in the Budget actually doesn’t lift the two-child benefit cap. It’s a policy we would welcome, we’re happy to work constructively with the Scottish Government to deliver that.

“There’s an approach here from the Government where they’re trying to pretend they’re doing something they’re not in this Budget.

“We will work constructively with the Scottish Government on a policy that ultimately we agree on in terms of removing the two-child limit. But I think we have to do that separately to this Budget, which is actually taking Scotland in the wrong direction on the huge challenges facing our country.”

Asked about the prospect of fighting an election against the SNP committing to scrap the two-child cap and defending UK government policies, Mr Sarwar said: “I’m looking forward to fighting a Scottish Parliament election because I think more and more people across the country realise the out-of-touch SNP Government lacks a vision, lacks a plan and has 17 years that they will have to defend going into that election campaign.

“I’m confident that if the choice is between more of the same and a focus on the past with John Swinney or a new direction for our country with the Scottish Labour party. I’m confident we will win that election.”

SNP warned tax rises or spending cuts needed to pay for scrapping two-child benefit cap

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