A triple whammy of public spending warnings, and a call for political honesty

Jamie Livingstone is the Head of Oxfam Scotland, a member of Tax Justice Scotland.  

Tax Justice Scotland is seeking to promote a better conversation on tax policy. As such, the views expressed in this blog are those of the author and do not necessarily reflect the views of Tax Justice Scotland and its diverse supporters. 

In recent weeks, not one, not two but three respected economic think tanks have issued strikingly similar warnings about Scotland’s public finances.  

They’ve landed at a pivotal moment, as parties shape their election manifestos. Because promises without a commitment to properly fund them aren’t plans; they’re wish lists. 

The most recent warning comes from Future Economy Scotland (FES), a member of Tax Justice Scotland, which focuses on financing the transition to net zero.   

They warn that “efficiency savings” – including reducing the public sector workforce and productivity drives – will not plug the gap. Demand for services is rising and with it the price tag, especially in health and social care as our population ages. 

Their message is blunt: delivering a just transition needs more money. Current tax changes fall well short, with forecasts showing a £4.7 billion gap by 2029-30 just to stand still. 

Near-term, the Scottish Government is leaning on ScotWind revenues, a finite pot, to shore up spending, while banking on higher UK spending to lift Scotland’s funding. This approach carries significant risk. 

It might be tempting to dismiss this warning, but it echoes two other recent reports.  

The Fraser of Allander Institute says parties must “be honest” about the challenge. With an ageing population and sluggish forecast growth in the Block Grant from Westminster, they warn the pressures aren’t going away. 

While honesty should be a given, their call reflects the political conspiracy of silence over how to make the numbers add up while delivering on policy ambitions and legal commitments.  

The Institute suggests recent Spending Review settlements for individual government departments “raise some eyebrows” before saying some are “implausible”. 

Enter, stage left, the Institute for Fiscal Studies. 

It identifies changes in UK Government funding as the biggest factor impacting Scotland’s public finances. 

And it warns that without higher devolved revenues, delivering public services more efficiently or wider spending cuts, universal entitlements – like funded prescriptions and university tuition – and additional social security spending in Scotland, like payments to some unpaid carers and low-income families, will be harder to maintain. 

Putting tax justice at the heart of Scotland’s response  

Thankfully, Future Economy Scotland hasn’t just identified the problem, it also points to tax reforms within the Scottish Parliament’s powers that could raise £2.3 billion a year.  

The focus is on ensuring those with more resources contribute more. Yet with fewer high earners in Scotland, the report delivers an “uncomfortable truth”: most Scots would need to pay a little more tax.  

Most of the additional revenue would come from a modest rise in Income Tax: 1p more for lower bands, up to 2p more for the top three bands, plus lowering the threshold for higher rates. This alone could generate around £1.5 billion a year. 

Pre-election candour on future tax rates may be politically uncomfortable. But this is a debate parties can’t continue to hide from. 

The actions needed to hit Scotland’s child poverty targets won’t pay for themselves, nor will those to tackle the social care crisis and housing emergency. Last week, Scotland’s climate watchdog identified “significant risks” to the delivery of emissions cuts from buildings, in part due to a lack of long-term commitment to grants to support households to switch to low-carbon heat. Such realities underpin Oxfam Scotland’s backing for fair tax reforms. 

Future Economy Scotland also proposes replacing Council Tax and Land and Buildings Transaction Tax with a Progressive Property Tax based on updated property values. While the recent Scottish Government consultation focused on revenue-neutral tweaks, Future Economy Scotland argue deeper reform could generate £222 million more annually for local services under strain. 

This aligns with Tax Justice Scotland’s calls and campaign polling showing that five times as many Scots support urgent Council Tax reform as oppose it, with overwhelming support for a fairer system.  

FES also say a further £482 million could be raised per year by replacing Non-Domestic Rates with a new Green Land Value Tax while broadening who needs to pay. To incentivise sustainable behaviours, it also recommends a tax on frequent flyers to complement the planned Private Jet Tax.  

While a 2% wealth tax on Scottish households over £10m could raise around £86 million a year (more if the threshold drops), it says practical challenges mean it’s best explored UK-wide. Wider modelling suggests that a national version could generate £24 billion a year for the Treasury, growing further with broader wealth-tax reforms, some of which would flow to Scotland.  

Polling for Oxfam Scotland shows nearly four out of every five people in Scotland support a wealth tax. 

Scotland is at a crossroads 

The triple whammy of warnings from independent think tanks makes it clear that business as usual isn’t an option.  

Fairer taxation isn’t a magic wand but would help us invest in the healthy, well-educated, cared for and sustainable society that underpins a prosperous economy.  

Without it, ambitions on poverty, public services and climate will remain just that – ambitions. 

With an election approaching, the people of Scotland deserve honesty about the choices ahead. 

Read Tax Justice Scotland’s priorities for the Scottish Parliament, which were published in October 2025, in the paper – Scotland Demands Better on Tax. This calls on all political parties to outline their Tax Justice Plan.