The UK’s Institute for Fiscal Studies (IFS) has published its first Scottish election briefing, funded by the Nuffield Foundation and the Robertson Trust.

The IFS said that funding the Scottish Goverment’s more generous provision will increasingly need some combination of higher devolved tax revenues and more efficient public service delivery.

The IFS said the Scottish Government funding for day-to-day (resource) spending is forecast to amount to £52.2 billion for 2025–26.

“Just over half of this (51%) is provided by the UK government, largely in the form of a block grant that the Scottish Government is free to allocate across devolved services and benefits in line with its own priorities.

“Devolved funding sources – the most significant of which is revenues from the Scottish rates of income tax – make up the remaining 49% of Scottish Government funding.

“While devolved revenues make up a growing share of funding, changes in UK government funding continue to be the biggest factor in driving trends in the overall level of resources available to the Scottish Government.”

The IFS warned that after a period of growth, Scottish Government funding “is set to flatline, forcing tough trade-offs on taxes, benefits and public service spending.”

The institute said funding for the benefits newly devolved to Scotland has grown more quickly than has overall funding, but spending on these benefits has grown more quickly still.

“Since the devolution of significant benefit spending responsibilities in 2020–21, the ‘block grant adjustments’ to help pay for these benefits have increased by 49.6% in real terms, driven by significant increases in spending on disability benefits in England and Wales … ” said the IFS.

“Scottish Government spending on benefits has increased by 58.5% in real terms over the same period, as it has introduced new benefits to help reduce poverty, and reformed disability processes to aid access and reduce stress for claimants. This faster growth in spending has absorbed around £0.6 billion of the increase in the Scottish Government’s other funding.”

Martin Brogaard, Research Economist at IFS and co-author of the report, said: “Without substantial increases in devolved revenues, improvements in public sector efficiency or cuts to other spending, it will be increasingly difficult for future Scottish Governments to continue to provide a wider range of free services – such as university tuition and personal care – than their counterparts elsewhere in the UK.”