Scottish ministers are being warned that “stretched” public finances mean they will have to either “pare back their manifesto pledges” or else make “tougher trade-offs” in other areas.
A new briefing paper from the Institute for Fiscal Studies (IFS) warns of “very tough trade-offs” for ministers given the “already stretched Scottish budget”.
It said the SNP Government “will need to be very clear about their priorities” when it comes to providing existing services and meeting the party’s manifesto pledges.
It added: “There is unlikely to be the fiscal or political space to deliver every pledge, which together the SNP estimate would cost £1.4 billion a year by 2030.”
During the election campaign, the SNP made a range of commitments, including increased support for childcare, help for first-time buyers, and rolling out a £2 cap on bus fares.
David Phillips, head of devolved and local government finance at IFS, warned implementing these could result in either tax rises for Scots or “deeper cuts” than already planned to “lower priority” spending areas.
The SNP’s childcare pledge alone could cost £540 million a year – and while the think tank said this is “not an impossible amount”, it warned the “severe fiscal pressures” facing the country mean there would need to be “some combination of reductions in planned increases in healthcare spending, deeper cuts to other spending, or increases in devolved taxation”.
The think tank added: “New ministers will therefore need to decide whether to make such choices, or to pare back their plans for childcare to ease trade-offs elsewhere.”
🚨My final @theIFS ScotElection comment highlights the hugely difficult fiscal outlook - and hence policy trade-offs - facing new Ministers.
— David Phillips (@fiscalphillips) May 27, 2026
📉Funding set to⬇️1.3% in 2027-28
💷£1.4 billion of spending & tax pledges
👨👩👧👦No plan to meet child poverty target
https://t.co/5EjyJFVfhu
Mr Phillips said: “The returning SNP Government will face financial, logistical and political challenges as it seeks to implement its various tax, spending and economic policy pledges.”
While he added that these “financial challenges largely reflect the wider UK public finance outlook”, he was clear: “Finding the money for a range of new entitlements and service expansions, including expanded subsidised childcare and cheaper bus fares, will require either tax rises or deeper cuts to lower priority spending than already planned.”
He also stressed the £1.4 billion price tag for the SNP’s manifesto commitments does not include either the cash that would be needed to make progress towards meeting Scotland’s child poverty targets, or the commitment to increase social housing supply.
Mr Phillips said: “New ministers therefore face a choice: to pare back their manifesto pledges or to make even tougher trade-offs elsewhere in an already stretched Scottish budget.
“They will also have to work with other parties where policies require legislative change – although the parliamentary arithmetic means that the SNP could work with different parties on different issues if it chooses to.”
Scottish Conservative finance spokesman Craig Hoy said the report is “yet more evidence that the SNP’s sums don’t add up”, warning: “Scots are in for eye-watering tax rises or savage cuts to public services – or both.
“John Swinney is pushing ahead with an unsustainable programme that will plunge Scotland into an even worse financial crisis – especially when his Finance Secretary and deputy, Jenny Gilruth, has point-blank refused to cut welfare spending.”
Scottish Liberal Democrat Willie Rennie MSP said: “The IFS is correct to highlight the weakness of the Scottish Government’s financial management.
“John Swinney will have to work exceptionally hard to recover from the poor choices made by his party in Government.”
One area where the IFS suggested the SNP could work with other parties is on council tax reform.
Noting Labour, the Lib Dems and the Scottish Greens also back this, the think tank said “there would appear to be scope for such an agreement” – as it added that “revaluing and reforming council tax would make a key part of the tax system fairer”.
A Scottish Government spokesperson said: “The Scottish Government has delivered a balanced budget every year despite the challenging financial environment and will continue to take a responsible approach to managing the public finances, prioritising investment in frontline services.
“As the First Minister set out, the Scottish Government will act according to the commitments on which he was elected, focused on delivering on the things that matter most to the people of Scotland, including more efficient public services, easier access to the NHS and supporting people with the cost-of-living crisis.”
