How the nation is planning to tax and spend: Scotland’s budget for 2025- 2026 in brief 

The actual windfall from Scotland’s offshore wind bonanza – worth several billion over the coming years – will not be used to pay for Scotland’s short term annual needs.

This promise was made by the Scottish finance secretary, Shona Robison, when she announced her Scottish budget to the Scottish Parliament on 4^th December.

“No-one wanted to do this. This money was meant to be used for long term investment to help transform our economy. So, I was very clear that I didn’t want us to use that cash to fund day-to-day spending. And we haven’t.”

She said MSP will be pleased to hear that the ScotWind bonanza has not been used up in this financial year.

“Instead, I am able to deploy over £300m of ScotWind revenues in 2025-26 for exactly the kind of long-term investment it should be spent on.”

ON INFRASTRUCTURE

There will be tripling of investment in offshore wind to £150m in 2025. This is expected to leverage private investment of £1.5bn in the infrastructure and manufacturing facilities.

On Scotland’s infrastructure, she announced capital spending will total over £7bn in the budget with the ambition of a ‘green reindustrialisation of Scotland’.

£1.1bn will be spent to maintain and renew our rail infrastructure, while £237mi will be invested to maintain and improve our ports, and deliver a resilient ferry fleet for the islands.

Scotland’s trunk road network will get £1bn, including money to continue the dualling of the A9. 

ON TACKLING PROVERTY

This will be used to create jobs and meet Scotland’s climate change challenges.

She went on to say that eradicating poverty is the Scottish Government’s number one priority. Her budget is investing £800m more in social security benefits, and has vowed to scrap the UK’s two-child benefit cap which has been imposed by Labour.

“Over recent years, our nation has faced an unprecedented range of challenges: Covid, Inflation, Austerity and Brexit. Today, we can show that we understand the pressures that people are facing.  

“We can choose to come together to bring hope to people, to renew our public services, and deliver a wealth of new opportunities in our economy.

“This budget invests in public services, lifts children out of poverty, acts in the face of the climate emergency, and supports jobs and economic growth.

It is a budget filled with hope for Scotland’s future.

She said that an increase in the funding from the Barnett formula was welcome, but that taking into account inflation, it represents only a 1 per cent year on year increase.

“The UK Government has actually added to the pressures Scotland faces with the increase in employers’ National Insurance Contributions. This hike will add well over £700 million to the cost of delivering public services,” she told the parliament.

ON HOUSING

The Scottish Government is ramping up action on housing, investing £768m in affordable homes. That will enable over 8,000 new properties for social rent, mid-market rent and low-cost home ownership to be built or acquired. This included 800 new, net zero homes at Edinburgh Councils’s Granton development. 

ON EDUCATION

£120m will be given to Scotland’s headteachers to support initiatives designed to address the poverty-related attainment gap. There will be expansion in free school meals to primary 6 and 7 children from low-income families. There will also be more ‘Bright Start’ breakfast clubs.

Many Scottish children are faced with ASN – Additional Support Needs. A fund of £29m will be used to delivering training so that more teachers can become ASN teachers.

ON THE NHS

The budget provides a record £21bn for health and social care in Scotland. This represents around one third of the total budget for 2025-2026.

An increase of £2bn. This is make it easier for people to access GP appointments, and improve A&E waiting times, and ensure more Scots get the care they need in good time.

£200m has been set aside to reduce waiting times and improve capacity, to reform the service and make it more efficient.

“By March 2026 no one will wait longer than 12 months for a new outpatient appointment, inpatient treatment or day case treatment. The extra funding we are providing will see over 150,000 extra patients treated as a result,” she said.

The Hospital at Home service will be extended with more than 600 extra beds.

There will be an extra 20,000 cataract and other optometry procedures, and over 6,000 additional hip replacements or similar procedures each year.

There will be funding for the replacement of the Eye Pavilion in Edinburgh, the Belford hospital in Fort William, and Monklands General hospital in Airdrie.

ON LOCAL AUTHORITIES

Scotland’s beleaguered local authority will get funding increases of more than £1bn.

It will take their total funding to over £15bn, including £289m to give real terms protection to the General Revenue Grant.

She said:  “While it will be for councils to make their own decisions, with record funding, there is no reason for big increases in Council Tax next year.”

ON JUSTICE

Scotland will spend £4.2bn across the justice system in 2025-26.

“This will maintain police numbers and continue policies that have seen levels of crime fall by 40% since we came to office.” 

A particular area of concern to retailers is shoplifting. An additional £3m will be available to help tackle retail crime.

The funding of replacements for HMP Inverness and Barlinnie will be made with £355m capital budget.

ON TECHNOLOGY

The Scottish Government is to invest £321m in Scotland’s enterprise agencies supporting emerging tech, including AI and robotics, and programmes such as Techscaler initiative.

ON STUDENT FEES AND HIGHER EDUCATION FUNDING

Scottish university tuition will remain free and there will be increase total investment in Higher Education by 3.5%. Colleges, universities and the wider skills system will get over £2bn.

ON SMALL BUSINESS RELIEF

The Small Business Bonus Scheme will be protected. In addition, the budget will provide for 40% non-domestic rates relief in 2025-26 for the 92% of hospitality premises liable for the Basic Property Rate, capped at £110,000 per business. In the islands, that relief will be 100%. 

HOW WILL THIS ALL BE FUNDED?

The latest Scottish Fiscal Commission forecasts show that Scottish taxes will raise £24.6bn in 2025-26. This is £777m more than had been forecast in December 2023, due mainly to an increase in forecast income tax revenue.

The UK Government has frozen all income tax thresholds. In Scotland, the basic and intermediate rate thresholds will increase this year by 3.5%.

The 19 per cent starter income tax rate goes on earnings between £12,571 and £15,397. The basic 20 per cent band applies from £15,398 to £27,491 with the 21 per cent intermediate rate between £27,492 and £43,662. The higher 42 per cent rate threshold was unchanged at £43,663 and runs to £75,000.

No change for the advanced 45 per cent rate, between £75,001 and £125,140, and the top rate 48 per cent rate, above £125,140.