Two narratives of Scotland’s policy performance
A pre-election budget is always a fraught time for governments, but particularly so for John Swinney’s current Scottish Government (SG). It cannot keep the election date up its sleeve and manipulate the Budget accordingly. The Holyrood election is set by statute for 7 May 2026, and Anas Sarwar’s rather inexplicable announcement on 8 January that Scottish Labour would abstain on the Budget before even knowing its contents, removed the last possibility that the SG would fall and the election be brought forward. Focus will now shift to the policy performance of the SNP in government, as they pursue independence but have to operate within a complex structure of devolution much modified since the referendum of 2014.
These complexities were to the fore in Shona Robison’s fiscally cautious budget on 13 January (for a useful summary, see the Scottish Fiscal Commission’s Economic and Fiscal Forecasts January 2026). The removal of the two-child limit on Universal Credit (a UK reserved responsibility) allowed the SG to reallocate what it had been spending in compensation (a net £126 million) but only £7 million was spent, in the form of a Scottish Child Payment premium for children under one (p6), and that not until 2027-28. Inflation-beating increases to the lowest two income tax thresholds (costing £50m) allowed the SG to continue to claim that most taxpayers in Scotland are better-off than they would be in England while the freezing of upper-rate thresholds grabs revenues (rising to over £200m by the end of the 2020s (p5)). A tight local government settlement foreshadows council tax hikes just before the election.
How did we reach this point? It is eleven years since Scotland went through a political reorientation – not just voting against independence, but obtaining from pro-Union parties an extension of devolved powers they had previously resisted. Through the bipartisan Smith Commission, the Scotland Act 2016, and finally an agreed new Statement of Funding Policy in 2023, the devolved system was extended into the tax-benefit area, with complex interactions between reserved and devolved decisions.
For instance, the UK Budget on 26 November 2025 froze the personal allowance (not devolved) until the 2030s and increased tax rates on savings and dividends (not devolved) by 2p - undermining the apparent political clarity of the devolution of income tax rates and bands on other kinds of personal income to Scotland. The concept of the ‘block grant adjustment’, designed to ensure that English taxpayers do not pick up the tab for any lack of tax effort or policy parity by Scotland compared with England, is conceptually hard to explain and is a constantly shifting destabilising factor (although in 2025-26 moving in Scotland’s favour in the light of latest data on income tax receipts and on the relative cost of Scottish benefits compared to their English equivalents). The SG is now spending over £1 bn a year more on enhanced social security benefits than in a parity with England situation (p9).
We face two competing pre-election narratives on Scotland’s present position. The SNP’s strongest case for independence is that it is the very structure of mark 2 devolution that is dragging Scotland down. It denies the SG full control even of taxes that are devolved, like personal income tax, let alone those that are not; locks Scotland into delivery patterns that are politically structured through comparison with England; and stifles debate about the overall balance of resource transfers between government and citizens.
In its latest reset of the case for independence, the SG published A Fresh Start with Independence on 8 October that could not help reiterating many of the themes of its much longer Building a New Scotland series of papers. Much of the case rests on the evidence of good economic performance by smaller independent European countries, but only Ireland is a really useful comparison in terms of history and geopolitical position in the world economy. Hopes that the special Brexit arrangements for Northern Ireland might provide a precedent for a soft English border for an independent Scotland that joined the EU have receded. Generally speaking, the political stasis on EU expansion, concern over EU border security, and the assertiveness of the European Commission about access to EU benefits betoken a difficult two-step in which both the UK Government and the Commission would be unhelpful negotiating partners on the road to independence within the EU. Brexit has surely been a huge blow to the SNP’s aspirations.
The competing narrative is that it is the SNP’s pursuit of independence that stands in the way of Scotland’s policy success. Jim Gallagher’s report of December 2025 for Our Scotland Future, Fixing Broken Government, draws on interviews with recently retired SG officials and current leading non-SG actors in the public and third sectors. Gallagher suggests that ‘short-term political advantage and maintaining support for a constitutional cause seems to have overwhelmed every other instinct’ (p17). The problem as he sees it is that ‘so long as SNP politicians can persuade voters that they represent Scotland and Scottishness, idealised in independence, they’re guaranteed around 30% of the vote…they do not pay a noticeable electoral penalty for poor performance in government’ (p28).
Gallagher – a former senior official in both the Scottish and UK Governments - expresses the frustration of actors in the Scottish system who are unsympathetic to the SNP. His picture of ‘short-term politicking’ (p4) demand for ‘announceables’ (p16), ‘ruthlessly centralising: a hunger for control’ (p19) and ‘a view that it is officials’ job to ‘delight’ ministers’ (p32) is unfortunately for his case a characterisation that in large part applies to Whitehall as well. It is the way that modern government works and is a cause of anguish to older-school public servants.
The SNP cannot rely on blame-shifting to shore up support if in voters’ perceptions Scottish government and public services are losing their esteem. Refuelling the independence trajectory is hard after Nicola Sturgeon’s disastrous two-stage approach in 2022: referring the Scottish Parliament’s power to call a referendum to the Supreme Court for an advisory opinion rather than passing a bill and having it challenged, and then saying that the 2024 UK election would be a ‘de facto’ referendum (result: 34% for the three pro-independence parties). John Swinney’s later test of independence legitimacy, an absolute majority of 65 Holyrood seats in 2026, is unambitious (they were only one short in 2021) but highlights that even a small falling-back in SNP seats or votes would surely put paid to Indyref2 for another term – while also opening up the possibility of a coalition or arrangement with unionist parties in order to stay in government.
After nearly 19 years in power the SNP has attracted blame for more general pathologies of public sector management – inflexible workforce patterns, high and unchallenged costs of fees, contracts and maintenance, and a well-meaning but potentially over-reaching embedding of environmental, social and governance (ESG) norms into processes and regulations. ESG awareness became strong during the Scottish Greens’ ministerial presence in the SG (2021-24) but was subsequently reined in, as if the SNP were not sure about their ideological focus in areas other than the constitution. In Jim Gallagher’s view, it is the pursuit of independence that causes these pathologies, in the SNP’s view, it is the lack of it.
Latest polls show the SNP around 30% and other parties in the 10-20% range. With opposition parties fragmented, Gallagher’s ‘electoral penalty’ to the SNP is even less. When the SNP took power as a minority government in 2007 they won 47 seats on such a vote share, but unless there is a pre-poll bounceback by a Scottish Labour Party dragged down by the perceived performance of their UK partners, the SNP will do better in seats in 2026 and survive in government. The effect would be to postpone resolution of the debate about whether SNP government is responsible for poor policy performance, or has correctly diagnosed a fundamental instability in the current devolution arrangements.