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Institute for Fiscal Studies turns focus to Holyrood for the first time

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THE Institute for Fiscal Studies (IFS) is, for the first time, publishing a range of briefing notes on the Holyrood election and what the various political parties are proposing for the coming parliamentary term.

Co-funded by the Scottish Policy Foundation, the briefings will cover what has happened with Scottish tax, benefits and public spending, as well as parties’ manifesto commitments.

The IFS said with fiscal devolution and the growing differences in policies compared to the rest of the UK, along with the starkly different visions of Scotland’s future set out by the different parties, meant independent, impartial analysis is more important now than ever before.

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It will host a live webinar on April 26 in partnership with the University of Glasgow, where it will present the main findings of its analysis ahead of the elections. Two presentations will be made – the first, on the trends and choices made in recent years, the second looking at what the biggest parties propose for tax, benefits and major areas of public spending.

David Phillips, an associate director at the IFS, has published a briefing that considers the changes to the level and composition of the Scottish Government budget over the past 10 years.

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His report said that the period between 2010-11 and 2017-18 was one of austerity, with real-terms, day-to-day funding falling by almost 6% over the seven years. However, since then funding has been increasing and had almost returned to 2010–11 levels by 2019–20. Excluding the additional temporary funding provided by the UK Government to address the Covid-19 pandemic, the plans suggested “core” funding will be around 3% higher in 2021–22. 

After accounting for population growth, though, it will still be around 2% lower per person. 

The report said these trends largely reflected changes in funding from the UK Government, although the use of devolved tax, borrowing and reserve powers has also had a growing impact on the Scottish Government’s overall funding.

Phillips told The National: “We have started this work because the Scotland Act 2016 has led to growing divergences in tax and benefit policy and means more of the sorts of issues we typically analyse at UK elections are now being decided in Scotland. 

“Scottish Government decisions are having a growing impact on overall funding levels, but UK Government decisions are still the big drivers – explaining both the high relative levels of funding and the cuts seen in the early-to-mid-2010s (not yet fully-undone) and the tight outlook for 2021-22.”

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He added: “And there are issues with the fiscal framework and devolution settlements that have come to the fore with Covid-19 and Brexit and, for example, the Internal Market Bill that we will be looking at this year, with an initial piece before the election on May 6 too. 

“Scrutiny of tax, benefit and public spending trends and issues – and the role of the devolved and UK governments in these – is increasingly important as policies both interact and diverge more.”

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