Holyrood’s Finance and Public Administration Committee says the Scottish Government must provide fiscal and economic clarity.
In a wide-ranging report on the Scottish Budget 2025-26 published today – ahead of two parliamentary debates on the Scottish budget – the committee emphasises the need for more detail on behavioural responses to tax policy, the impact of Employer National Insurance Contributions and rising social security spending.
The cross-party committee also highlights the need to help Scotland’s educational institutions and businesses drive investment and growth, while urging the Scottish Government to publish its over-due infrastructure plan and ‘hit the ground running’.
Repeated delays and unanswered concerns are indicative of a lack of medium and long-term financial planning, says the committee’s report.
Finance and Public Administration Committee Convener Kenneth Gibson MSP said: “As the Scottish Government is aware, we are strongly of the view that more research is needed on behavioural responses to tax policy.
“We also set out in this report recommendations which we consider would help to support growth in earnings and revenues in Scotland.”
On Employer National Insurance Contributions, Mr Gibson added: “The Committee is aware that the expected shortfall in UK funding for increased Employer National Insurance Contributions for the direct costs to the public sector will be significant and we ask what plans the Scottish Government has in place to meet these.”
Rising social security costs are of concern. He commented: “Given that the Scottish Government has not included any funding in the 2025-26 Budget to cover the lifting of the two-child cap, the Committee asks for details of where this funding will be found if it’s introduced early, as well as potential impacts on other areas of spend.
“The Committee also seeks greater transparency around the overall public sector pay bill.”
On growing the economy and capital spending, the convener said: “We look forward to receiving evidence from the Cabinet Secretary on the sustainability of higher education and work to improve the flexibility and responsiveness of the college sector to enable skills to match the needs of business and the economy.
“We note the creation of a Cabinet Sub-Committee on Investment and Economy to ‘help create a business environment that drives investment and growth.’
“The Committee ask the Scottish Government how it is maximising opportunities to enable Scotland’s universities and the high-performing sectors of the economy to be globally competitive.
“The significant increase in capital spending in 2025-26 allows the Scottish Government to restart paused capital projects and make some new commitments.
“We strongly urge the Scottish Government to prioritise its capital commitments to ensure it’s in the best possible position to ‘hit the ground running’ with infrastructure projects from the start of the next financial year.”
On delays to key strategic financial documents, Mr Gibson concluded: “Regarding delays in publishing key strategic financial documents, the committee repeatedly expressed concerns. This is indicative of a wider problem where vital medium and longer-term financial planning within the Scottish Government is lacking.”