Scottish Budget: Who will broker a deal with the SNP government?

For the first time this parliamentary session, the Scottish Government is about to deliver a budget without built-in majority support.

Since the scrapping of the Bute House Agreement earlier this year, it’s been a pretty turbulent ride for the SNP minority administration. Ministers have suffered their fair share of defeats in parliament and had to U-turn on policies the government knows it can no longer pass. That has set the scene for some difficult budget negotiations.

First Minister John Swinney was out the gate early when he attempted to put to bed any concern that his government would not be able to do a deal. Speaking to reporters back in September – the same week he delivered the programme for government and his finance secretary, Shona Robison, confirmed £500m of in-year cuts – Swinney pointed to his “wee bit of experience” in securing parliamentary support for budgets in years gone by.

After a bit of prodding, he accepted “there could be an election” if no deal could be reached. And in that particular week, that possibility very much seemed on the table.

We will not risk passing a budget only for the SNP to drop the Green parts later on

Robison’s statement had been roundly slammed by the opposition, with the Scottish Greens – considered at the time to be the most likely budget partners – having reason to be particularly aggrieved, as the cuts tended to fall on policies the party had secured in government, such as the end of peak rail fares or cash for active travel programmes.

Doing the media rounds, finance spokesperson Ross Greer asked: “If we can’t even get previous agreements delivered, how can we possibly trust them to deliver on any new agreement that we would reach later this year?”

Cue Robison’s fixer and public finance minister, Ivan McKee. He’s been chatting informally to all parties since early September to ascertain what could be possible. Working on the assumption that an SNP-Labour or SNP-Conservative deal was unrealistic, the focus was on the Liberal Democrats or Greens. At first, the prospects looked slim.

A source close to McKee told Holyrood the Lib Dems were holding a lot of the power, but it was far from clear they would use it because an election might suit them – all the polling suggests the party will gain a good number of seats. As for the Greens, the source said it didn’t seem like the party was interested – and even if it were, there was no money to meet its asks.

Fast-forward a couple of months, and with formal negotiations now started, the mood music has changed. The word repeatedly used by politicians involved is “constructive”. In part, that is thanks to a UK Government budget which will see the block grant next year increase by £3.4bn – an announcement which was hailed as a “step in the right direction” by both Swinney and Robison, and provides the Scottish Government with room to manoeuvre.

The Greens appear to have warmed to the idea of another deal, though their MSPs are still wary of the potential for broken promises. As well as free school meals for all primary school children, more money for local government, the reversal of cuts to the Nature Restoration Fund, free bus travel for asylum seekers, and a series of tax changes – a demolition levy, a mansion tax and a private jet tax – the party is seeking a mechanism to ensure the government cannot renege on commitments.

Speaking at the party’s conference at Greenock in late October, Greer said: “Our MSPs will only support a budget if the government agrees that we are involved in its delivery. We will not risk passing a budget only for the SNP to drop the Green parts later on.”

However, the SNP may prefer to pursue other options. There are concerns about the optics of scrapping the Bute House Agreement, then needing to go back to the Greens, tail tucked between legs.

I’m not going to cause the country unnecessary pain because an impasse has happened here

That leads ministers to the door of Alex Cole-Hamilton, the Scottish Lib Dem leader. “There are still big gaps and barriers to a deal between us and the SNP, but we’re talking,” he tells Holyrood. The party did back an SNP budget back in 2021, having secured extra funding for mental health and local government.

Those same asks are on their wish-list again, as is putting a stop to any spending on independence-related matters – “we believe that the public rendered a judgement on 4 July on the SNP’s fixation with the constitution. We would not expect to see any budget lines around independence,” says Cole-Hamilton – and redirecting money being spent on the National Care Service to the frontline of social care delivery.

The shelving of the National Care Service earlier this month was welcomed by the party, and it removes one of the bigger barriers to gaining Lib Dem support. Further, in the First Minister’s Question session that followed the announcement, Cole-Hamilton called for the raising of the earning limit for carers allowance – as secured by UK leader Ed Davey for England – and was told by Swinney that his government was “engaging constructively” with the proposal as part of budget negotiations.

Doing a deal with the Scottish Government feeds into the Lib Dems’ election strategy. It wants its MSPs to be seen by the public as “grown-ups” willing to do the hard graft and avoiding petty party politics. They are “prepared to put differences aside and try and have a grown-up discussion on what’s best for Scotland,” Cole-Hamilton adds.

He is relaxed about the prospect of a snap election, but he also points to the dangers that would present. Due to the nature of the Scotland Act, the parliament has to agree to income tax rates and bands before the beginning of the new financial year. If the Budget Bill were to fall in February, that leaves a matter of weeks for an election to take place and then a rates resolution motion to be passed, putting parliament in an even more difficult position.

Cole-Hamilton says: “I think this government has run its course. It’s marking time. It’s clear they’re tired, the mistakes they’re making are legion, whether that’s the ferries, whether that’s the deposit return scheme, whether that’s the assault on mental health spending, all of these are bad decisions. They need to make better decisions, and sometimes the government just runs out of road, and we are up for going back to the country.

“However, my anxiety is that in the time it takes to do that, what happens with the budget? What happens with the local government funding assessments? People’s pay cheques? There’s a balance there.

“I’m not going to cause the country unnecessary pain because an impasse has happened here. I think the country would expect us to start acting like grown-ups and do our jobs.”

I’ve been very clear with the government that I want to vote for their budget, I want to be able to support them

It is this fact – plus the unspoken truth that no party is truly ready to go to the polls – that will sharpen minds. One option that could help all political parties save face is, short of doing a deal, some MSPs could abstain. This would mean SNP votes outnumber opposition votes without any other party having to defend backing it.

Another option is ministers effectively buying the support of a couple of MSPs by offering to bung cash to a constituency issue. Lib Dem MSPs Liam McArthur and Tavish Scott lent their support in 2018 after securing extra funding for Northern Isles ferries, for example.

Ash Regan, as the parliament’s sole Alba representative, would seem one likely target if the government pursued this strategy. Alone, her vote would not be enough – but it would move ministers a step closer. And she is open to supporting her former party. “I’m very much coming at this from a perspective of being a pro-independence party that wants to work with other pro-independence parties. I’ve been very clear with the government that I want to vote for their budget, I want to be able to support them – but I obviously do have requests for that support, as you would expect.”

Those requests are threefold: delivering on the free school meal promise; supporting pensioners who will miss out on winter fuel payments; and backing for her Prostitution (Offences and Support) (Scotland) Bill to make it an offence to pay for sex. That latter ask would not come with any financial implications for the next year, though it could prove to be a barrier to any Greens also supporting the deal, given the party backs decriminalisation of prostitution.

Regan says the government “need to decide where they think that they can realistically get support from, and also how getting that support might look to the public”. And that’s not just in reference to the Greens’ view on her bill. She suggests if the government has to go to a unionist party for a deal, “I think it would be very useful then for them also to get support from another pro-independence party because then you can show you’re getting support across the parliament”.

Beyond the constitutional implication, ministers may wish to prove they can still command the strength of the parliament and find political consensus. The notion has occurred to Scottish Labour’s finance spokesperson Michael Marra, who says: “If they have to do little deals here and there to buy off factions, that in itself tells a story that’s worth talking about.”

Rumours about a deal between the SNP and Labour have been circulating throughout Holyrood in recent weeks. In part that’s due to the much-improved relationship between the two governments since July, as well as the UK budget being much more generous than SNP ministers were anticipating. Robison, when asked directly about a possible deal, said: “My door is open to everybody, and I’ve said I want to build as broad a coalition for the budget as I can. I think that would be a positive thing actually, and there’s hopefully a lot that people will agree on.”

Such a deal would be unprecedented – indeed, Labour is the only major party never to have done a deal with the SNP. But the idea they might this year is more or less dismissed by a senior Labour source, who tells Holyrood that “I don’t want to say never, ever” but the “chances are incredibly low”.

When they say, ‘every year we set a balanced budget’ – well, they just don’t

Marra, while a bit more measured, shares that view. “The reality is the huge investment that Labour has made, in a really challenging budget in terms of the fiscal circumstances, has to be an opportunity for them to turn the page for the country. If [the Scottish Government] choose to do so, then they’ll find somebody they can speak to in this office. But I’d say the signs aren’t great.”

More than just cash being directed towards priority areas, Labour’s budget request is about a wholesale review of how the budget is set. The party has been particularly critical of Scottish Government spending decisions, accusing it of “financial mismanagement” and not properly addressing the need for public sector reform.

“Things have to change – outcomes for people in terms of the National Health Service, education, and right across our public services, they are nowhere near good enough given the money that they’ve had from the block grant. It’s not just about inputs, it’s what you get out at the end,” Marra explains.

Before he will even consider recommending Labour MSPs back a budget, he wants transparency from the finance secretary. He says there’s been “no clarity” on what the baseline is and a “mismatch between what they’ve promised and what they’ve had the resources to deliver”. That, he says, has resulted in a “paper budget” in previous years, which gets ministers through negotiations but then leads to in-year revisions.

“When they say, ‘every year we set a balanced budget’ – well, they just don’t,” Marra says. “Three years in a row they’ve not set a balanced budget, and they’ve come back and made massive adjustments in-year. They’re setting it from a completely false premise at the outset and not being transparent about it.

“They need to come clean if we’re going to actually have confidence in their ability to manage the public finance. At the moment I have no confidence in their ability, but I’m willing to see what they produce.”

When we mentioned tax cuts, they didn’t look as though they were necessarily in the similar spot

If the chances of an SNP-Labour deal are low, then the chances of one between the SNP and Tories is almost non-existent. While the two parties have found common ground in the past – when Swinney was the one at the negotiation table as finance secretary – it would be politically impossible now.

The Conservatives’ finance spokesperson Craig Hoy says he is putting forward “bold and ambitious” proposals on tax. His party want to see the tax burden reduced in three main areas: income tax; rates relief for leisure, retail and hospitality businesses; and raising the threshold for land and buildings transaction tax. These are “the issues that people are bringing up on the doorstep”, he says.

But he admits, following his meetings with Robison and McKee, a deal is unlikely. “When we mentioned tax cuts, they didn’t look as though they were necessarily in the similar spot, politically.”

The government’s response to such calls in recent years has been about the reduction in revenue for public services. Hoy argues it would be possible to reduce taxes without doing damage to frontline services, in part because of the increased sum of money coming from the UK Government, but also his party would overhaul some spend.

“The Scottish Government are spending money on things we wouldn’t spend money on. Some of those are big ticket items – the National Care Service. There will be government departments that obviously require the full uplift in line with inflation, but we’ll be looking across the portfolio of government departments. But make no mistake, once we’ve got the Scottish Government budget on 4 December, our plans won’t just be tax cuts.”

Many in parliament believe the Greens remain the most likely to get the SNP over the line. Hoy says this would result in “a budget that wasn’t in Scotland’s interests”. “If the Greens have undue influence on the budget, and the government’s forced to go down certain routes, then I think that would be bad for Scotland,” he says.

However, he also thinks ministers are “putting in quite a lot of effort” with the other opposition parties to avoid a stalemate.

And there is also a feeling in parliament more broadly that this year’s negotiations are about more than securing just enough votes. With a public clearly tired of blatant politicking, particularly as the cost-of-living remains high, all parties are trying to prove they can engage seriously and responsibly. And for the SNP in particular, after a series of high-profile missteps and U-turns, it will want to show the electorate that it can find consensus and deliver on people’s priorities.