SNP Exhibits Renewed Political Confidence with Strategic Budget

The Scottish National Party (SNP) appears to be regaining political confidence following its most challenging period since assuming power at Holyrood. Over the past two years, the party’s independence strategy has encountered significant obstacles, it has faced internal divisions regarding gender reform, and its relationship with the Scottish Greens has fluctuated. This period has seen three First Ministers, with one still subject to police investigation as the Branchform inquiry into SNP finances continues. The party’s concerns persist, and it still confronts substantial challenges, notably considerable underperformance in vital public services such as the NHS. Furthermore, its selection process for the Holyrood election could potentially lead to intense internal disputes. Nevertheless, following the week in which First Minister John Swinney’s government presented its draft Scottish Budget, his administration appears more optimistic than at any point in at least two years. This shift might seem unexpected, considering the SNP entirely lost control of the political discourse in Scotland and suffered a decisive defeat by Labour in the general election held in July. There has been a discernible inclination to discount the party. For some time, it appeared that Labour was positioned to overcome the SNP in the upcoming Holyrood election and reclaim devolved power after 19 years in opposition. However, the most recent opinion polling introduces doubts regarding that assessment. Labour’s “change” mantra during the general election appeared to align with a public desire for such a shift, and their victory remains entirely possible. The crucial point is that a change of government at Holyrood is not predetermined. The SNP intends to mount a strong challenge and continues to be a formidable political entity. The budget formulation process effectively illustrates the party’s strategic acumen. In late October, UK Chancellor Rachel Reeves provided an advantage to Labour in Scotland by declaring a substantial increase in funding for the SNP government for both the current and upcoming years. This development, as noted previously, created political room for Labour to concentrate on the provision of improved public services in Scotland, which has been under SNP administration since 2007. With the release of the draft Scottish Budget this week, the SNP has succeeded in reclaiming some political momentum. The party has readily incorporated the additional £1.5bn in spending from the UK Treasury for the current year and an extra £3.4bn for the next year. A significant portion of these funds is allocated to cover increasing expenses for the NHS, social welfare, and public sector wage bills. Nevertheless, the SNP has managed to allocate a portion of these funds towards policy priorities designed to exert political pressure on Labour. The Scottish government has committed to partially reversing reductions to winter fuel payments for older individuals not receiving pension credit. These reductions were initially implemented by the UK government and are being mirrored by the Scottish government this winter, prior to the introduction of a new payment next year. Additionally, the Scottish government has pledged to abolish the two-child cap on access to benefits within Scotland, an objective that Scottish Labour had previously indicated a desire to accomplish. It is evident that this policy was a very late inclusion in the budget statement. Its full cost has not yet been determined. The Scottish Fiscal Commission’s preliminary estimate places the cost at £150m in the initial year, and the commission has characterized the policy as a “fiscal risk.” Scottish Labour leader Anas Sarwar initially characterized the SNP’s proposal as a “policy without a penny,” citing the absence of the first installment of payments in the budget for 2025/26. SNP ministers are suggesting the implementation of this change from spring 2026, immediately preceding the Holyrood election. However, they maintain that £3m is allocated within their budget plans for the requisite preparations. They have also formally sought assistance from the UK Department for Work and Pensions (DWP) to obtain the data necessary to ascertain eligibility for additional funds. Furthermore, they might require the UK government to amend legislation to ensure that any supplementary payments disbursed in Scotland are not subsequently recovered by another component of the system. The DWP has stated its intention to “engage constructively with the Scottish government where necessary,” an assertion that may or may not signify a readiness to provide assistance. On Thursday, Prime Minister Sir Keir Starmer commented that abolishing the two-child cap was not a “silver bullet” for addressing child poverty and that the policy would be unaffordable across the UK. On Friday, he conducted private discussions with John Swinney in Edinburgh, following which Mr. Swinney reported that the Prime Minister had consented to collaborate with him on the two-child cap. Having re-established relationships with the devolved governments since assuming power at Westminster, Labour’s dedication to partnership politics is now being scrutinized by the SNP. At Holyrood, Scottish Labour also confronts a budgetary predicament. While entirely within its rights to critique the SNP’s stance on taxation and public spending, the central question is whether Labour can afford to withhold support for a Scottish Budget that incorporates winter fuel payments for pensioners and a strategy for abolishing the two-child cap. The SNP is not relying on their votes, but should it not secure them, the party will consistently remind voters of Labour’s decision not to endorse these measures. In this context, the budget presented by John Swinney’s administration is politically astute. The budget additionally incorporates policy proposals from the Greens, the Liberal Democrats, and the Alba party, which are considered more probable allies. There is no anticipation of Conservative support, as they strongly oppose the SNP’s taxation strategy, which necessitates higher earners contributing more than they would in England to generate additional funds for public spending. All political parties are aware that a budget agreement is essential before crucial votes scheduled for February. Without such a deal, there could be significant disruption in the allocation of public funds for bill payments and the delivery of promised wage increments to public servants. It is uncertain if any party would be willing to risk being held accountable for such an outcome, or for the potential of an early Holyrood election.