IFS warns of cuts ahead regardless of election result

In their analysis of the parties’ spending plans, published on Friday, the IFS also criticised SNP for skirting around the “significant public finance challenges an independent Scotland… would face in at least their first few years, necessitating tax rises or spending cuts.”

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The researchers at the institute have looked at each party’s commitments on taxes, spending, borrowing and benefits.

Most of the changes proposed by the Tories and Labour would apply nationwide, including Rishi Sunak’s promise to cut National Insurance and Sir Keir Starmer’s plans to levy VAT on private school fees.

The IFS say taxes would “rise as a share of national income under both, but by a bit more under Labour than under the Conservatives.”

Both Labour and the Tories are committed to have government debt fall as a share of national income by 2028–29.

The IFS warns that there “little more than a 50:50 chance of debt actually falling in that year.”

They also warned that Tory plans to reduce benefit spending would affect the Scottish Government’s funding.

“This would mean that, unless it cut the generosity of its own benefits, it would have to raise taxes or cut other spending.”

They also describe as “surprising” the SNP’s biggest proposed tax change - that UK government adopt the Scottish Government’s existing income tax bands and rates - as it would largely only apply outside of Scotland.

The party says this would raise £16.5 billion a year and pay for an increase in public spending and investment, and would generate an extra £1.6bn in Barnett consequentials which could then be spent on the NHS in Scotland. 

However, as the tax hikes would largely not apply in Scotland, the IFS warns that “the boost to the Scottish Government’s funding would be proportionately less than the boost to public spending in the rest of the UK.”

They say this would leave a £1.1bn shortfall in the SNP's plans. 

READ MORE: IFS: SNP ignores major fiscal challenges in independence plans

David Phillips, an associate director at IFS and head of devolved and local government finance, said: ‘Under both the Labour and Conservative parties’ plans, the Scottish Government would see cuts in funding for investment and only modest increases in funding for day-to-day spending.

“It would be up to the Scottish Government how to allocate these budgets between services.

“With the same sorts of pressures on the NHS as in England, it would likely need to make cuts to at least some ‘unprotected’ services.

“These cuts would be somewhat bigger under the Conservatives’ proposals than under Labour’s.

‘The SNP propose some pretty big top-ups to spending on public services, “green” investment and benefits, funded by a combination of tax rises and substantially higher borrowing.

“At a UK-wide level, these would probably be enough to avoid cuts to ‘unprotected’ services.

“But the biggest single tax measure the SNP propose – changes to UK government income tax rates and bands – would largely not apply in Scotland, and so the boost to public spending in Scotland would be less than in the rest of the UK.

“While rejoining the EU could be expected to boost growth and therefore tax receipts, as the SNP suggest, such a move seems a rather unlikely prospect in the next parliament.”

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First Minister John Swinney said: "The independent IFS have been warning about this for months, and they’ve now written it down in black and white – Sir Keir Starmer and his Labour government are planning massive cuts to the Scottish budget and Scotland’s public services.

"At least £18bn of Labour cuts, on top of 14 years of Tory austerity, is a price Scotland’s public services simply can’t afford to bear. We now have six days left in this election to stop those Westminster cuts from becoming a devastating reality."

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