Spending Review: Scotland ‘facing impossible choices’ amid £3.5 billion funding black hole

Scotland is facing "impossible choices" to address a £3.5 billion black hole in its finances, it has been warned.

Scottish Labour sounded the alarm ahead of the publication of the Scottish Government’s resource spending review today, which will set out its broad spending plans for the next four years.

The Institute for Fiscal Studies (IFS) previously warned ministers face “tough decisions” as revenues are unlikely to keep pace with spending pressures.

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Finance Secretary Kate Forbes and First Minister Nicola SturgeonFinance Secretary Kate Forbes and First Minister Nicola Sturgeon
Finance Secretary Kate Forbes and First Minister Nicola Sturgeon
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It said the Scottish Government will either have to “take the axe to certain areas of spending, plan for higher levels of taxation – or ignore the issue for now, hoping instead for extra funding or borrowing powers from the UK Government”.

The latter would be unlikely to plug the hole, it said.

Speaking ahead of the review’s publication, Scottish Labour finance spokesman Daniel Johnson accused the SNP of “catastrophic incompetence”.

He said: “The SNP have been in charge of Scotland’s finances for 15 years, and they have left our economy vulnerable and our public finances in a state.

“We are facing impossible choices to patch over the £3.5bn black hole they have created by failing to grow our economy and boost wages.

“The SNP have always delivered plenty of rhetoric, but a dearth of detail – [today] must be different.

“We need real answers on how they will fix the mess they have created and get Scottish finances back on steady footing without breaking the promises they have made.

“As the cost-of-living crisis piles pressure on to households, it is all the more urgent that we see an end to the SNP’s catastrophic incompetence.”

Scottish Conservative finance spokeswoman Liz Smith said the SNP had “wasted billions of taxpayers money on their pet projects during their 15 years in office”.

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She said: “That has left them facing a £3.5bn black hole ahead of their spending review and we must see the finance secretary take responsibility for her Government’s costly spending errors.”

Ms Smith added: "The SNP need to use the spending review to drop their spin and lay out the economic reality facing Scots going forward as a result of their shambolic handling of the public finances.”

There were reports over the weekend that health, environment, social care reform and tackling child poverty would take priority in the four-year spending plan, with speculation this could leave areas such as justice and education facing cutbacks.

Scottish Liberal Democrat finance spokesman John Ferry said: "Government sources are already suggesting that justice and education spending will be in the firing line.

"That's despite the worst ever figures for criminal justice cases completed within six months, and two years of disruption to schooling.”

SNP finance secretary Kate Forbes said the review “will set out how we can best focus Scotland’s public finances in the coming years to tackle child poverty, address the climate crisis, strengthen our public sector as Scotland recovers from Covid, and grow a stronger, fairer and greener economy”.

She said: “While we face challenges, this does not mean we cannot achieve our ambitions of a fairer, greener and more prosperous society if we are prepared to make the difficult decisions now which will bring about the changes needed to achieve this.”

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