Humza Yousaf has signalled more tax hikes on the middle class, telling his finance secretary to ensure Scotland’s tax system is “the most progressive in the UK” at next year’s budget. 

The First Minister, who backed another income band during the SNP leadership contest, gave the instruction to Shona Robison as part of his first Programme for Government, which he hailed as "unashamedly anti-poverty and pro-growth".

Mr Yousaf told Holyrood his SNP-Green joint administration would “maximise every lever at our disposal to tackle the scourge of poverty in our country”.

He added: “We have adopted progressive tax and spending policies… I will never shy away from the belief that those who earn the most should pay the most.”

READ MORE: Humza Yousaf under fire for lack of climate crisis action and delays

The speech contained little about how the policies would be paid for, as detailed tax and spending policies are a matter for the budget which will be finalised in the New Year.

However there was a clear signal in a “mandate letter” Mr Yousaf issued to Ms Robison setting out her objectives, an innovation in this year’s Programme for Government.

In it, Mr Yousaf said his deputy FM had agreed the 2024/25 Scottish budget would be underpinned by tax measures which improved “fiscal sustainability”.

He said she would “use our tax powers in the setting of the 2024/25 Budget to further progress delivery of the most progressive tax system in the UK by making tax policy choices that are informed by public and stakeholder views”.

During the SNP leadership contest, Mr Yousaf said he was attracted to an STUC proposal for a new 44p income tax band on income between £75,000 and £125,140, raising £200million a year.

The Programme for Government also confirmed councils would be given the power to charge double the normal council tax rate on second homes. 

The Scottish Chambers of Commerce said it was essential to “avoid the temptation to increase the burden of taxes on businesses and employees”.

Liberal Democrat MSP Willie Rennie said: “In the middle of a cost-of-living crisis, the SNP are threatening to squeeze middle income Scots harder and harder.

“The nationalist failure to grow the economy means less money for overwhelmed public services, but rather than admit they have made a mess, they are picking the pockets of average Scots to plug the gap."

Tory MSP Liz Smith said: “This document gives very clear hints that further income tax rises are in the pipeline. 

“The reality is that the SNP has already made Scotland the highest taxed part of the UK. That has provided a huge disincentive for people who might want – and whom we desperately need – to come to live and work in Scotland.

“The SNP has damaged Scotland’s competitiveness and we urgently need a new economic approach. Yet Humza Yousaf’s solution is to double down and threaten to impose even more taxes.”

Scottish Labour leader Anas Sarwar said the Government had “lost its way, has no clear direction, no sense of purpose and no central mission”, adding: “It is just another tired and rehashed programme from a party that has clearly run out of ideas.” 

Scottish Tory leader Douglas Ross called Mr Yousaf “a poor Nicola Sturgeon tribute act”.

Government sources downplayed tax rises, but admitted there would not be clarity until the budget. 

The Programme for Government contained 14 Bills for the coming year at Holyrood, including legislation on rent controls, human rights, land reform, cladding remediation, electoral reform, and Scottish languages. 

However the First Minister said tackling poverty was the government’s driving mission.

Mr Yousaf, who was privately educated, told MSPs: “Tackling poverty is deeply personal to me. Growing up in the Islamic faith, I was always taught that you are not a true Muslim if you have a full stomach while your neighbour goes to bed hungry.”

He promised to “accelerate” the expansion of free childcare, with six “early adopter” councils getting funding to offer it to children from nine months old to the end of primary school.

He also vowed to speed up the rollout of 1,140 free hours to all two-year-olds. 

To help with provision, the Government wanted 1,000 more childminders by the next Holyrood elections in 2026, while staff in private, voluntary and independent nurseries providing funded childcare will be paid at least £12 an hour from next April.

Mr Yousaf described free childcare as “a perfect example of a policy that is both anti-poverty and pro-growth”, with the Scottish system the most generous in the UK.

He also said the Best Start Foods programme, which provides prepaid cards to pregnant women and the mothers of infants to buy healthy foods, such as fruit and milk, would no longer be means-tested, expanding it to around 20,000 women. 

The Scottish Government will also provide funding to boost pay for social care staff working in direct caring roles to at least £12 an hour, with some staff getting £2,000 more from April.

He pledged a Housing Bill would “introduce long term rent controls and new tenants rights”.

Speaking about the “multiple miscarriages” he and his wife Nadia had suffered, he vowed better care, including an end to women waiting until a third miscarriage for tailored support.

The Government would also consult on banning single-use disposable vapes. 

Despite the emphasis on tackling poverty, the Government backtracked on extending free school meals to P6 and P7 pupils, delaying it from next year until 2026.

There was stinging criticism of Mr Yousaf from some anti-poverty campaigners, particularly increasing the £25-a-week Scottish Child Payment for low income families by inflation, rather than to the £30 he promised in the SNP leadership race.

Poverty Alliance acting director David Reilly said the Programme for Government was a “critical missed opportunity” and he was “bitterly disappointed”.

He said: “Raising the current £25 with inflation is nowhere near enough. 

“Although welcome, an inflation increase won't keep pace with the cost of essentials, meaning it will cover less food, less clothes, and less energy.”

John Dickie, director of the Child Poverty Action Group in Scotland, said: “It is really disappointing not to hear any further detail on the First Minister’s commitment to look to increase the Scottish child payment. It is now vital that he uses the forthcoming Budget to deliver on campaign commitments. 

“There is no credible route to meeting the government’s child poverty targets that does not involve further investment in social security alongside action to transform childcare and the employment opportunities available to parents.”

However both groups welcomed the pledges on wider childcare provision.

STUC General Secretary Roz Foyer also welcomed parts of the package, but added: “We cannot pretend this was the radical, redistributive prospectus Scotland desperately needs.

“The First Minister… sets out a misaligned Programme for Government that promotes economic growth through a pro-business, profit-driven prism and gives very little detail, if any, on redistributing wealth from the top of our society to those most in need.” 

Alison Watson, director of Shelter, said: “Last week, figures showed record levels of homelessness, child homelessness in particular, and the First Minister announced his government will be adopting a business-as-usual approach – that is simply not acceptable. 

“Once again, he repeated his commitment to fight poverty in Scotland – how hollow that sounds when his government has no new plans to tackle homelessness, when underfunded local services are crumbling, and funding for new social homes has been cut.”

However business groups were more positive about the PfG, welcoming efforts to mend fences after relations between the government and business nosedived under Ms Sturgeon.

Andrew McRae of the Federation of Small Businesses said: “We called for an unashamedly pro-growth, pro-small business statement and the First Minister was right to acknowledge that his government can’t deliver on any of its priorities - from net zero, to child poverty and more - unless we have a functioning, growing economy."

UNSPUN: Can Humza Yousaf’s Programme for Government bring unity to SNP?

Dr Liz Cameron CBE, chief executive of the Scottish Chambers of Commerce, said: “The First Minister was right to start the critical task of resetting the relationship with business but there is a long journey ahead for both government and business before this is achieved. 

“We can take solace that the First Minister has moved economic growth further up the agenda but clearer action on reforming the business taxation system and introducing growth incentives are still missing and must be prioritised for the December budget.”

Earlier, Mr Yousaf’s statement had been undermined by news that half the board of the body that advises Scottish ministers on tackling poverty had quit in an unrelated row over reappointments.

The chair and three of the seven members of the Poverty and Inequality Commission resigned last month, the Daily Record reported.

Commissioners Linda Bamford, Lindsay Graham and Shona Stephen handed in their notice on August 9 after a “loss of confidence” in chair Bill Scott.

Mr Scott resigned on “health grounds” two days later.

The three commissioners told Social Security Secretary Shirley-Anne Somerville they had been nominated for reappointment by Mr Scott without their knowledge in the summer.

That led to an “an extremely stressful and anxious period”, they said in correspondence published by the Scottish Parliament’s social security committee.

They also revealed that, while Ms Somerville had accepted the resignations, she was obliging them to work three months' notice, otherwise the Commission would be inquorate.