Abstract:
The funding available to a government determines the choices available to it - including what public services and benefits to provide, whether to charge co-payments for services, and if so at what level. Such choices especially affect households on low and middle incomes, and particularly those in poverty or with higher needs, for whom public services and benefit payments generally represent a larger share of their overall consumption. This makes government spending - and the funding which pays for it - a more important determinant of low- and middle-income households' living standards and life chances. In contrast with most of the 2010s, the period since 2020 has seen real-terms increases in the Scottish Government's funding for both day-to-day (resource) spending and investment (capital) spending. But the so-called 'Barnett squeeze' means that funding has grown less quickly than in England, somewhat narrowing the funding advantage from which Scotland has historically benefited. Looking ahead to the coming parliament, funding increases are set to slow, while the squeeze on funding relative to England will continue. If the next Scottish Government wishes to maintain the more comprehensive set of public services and benefits that residents of Scotland have enjoyed relative to their counterparts elsewhere in the UK, this will require some combination of higher devolved revenues and/or marked improvements in public service productivity.