Scotland’s finances must serve more than the “unpalatable dish” of chasing economic growth

Simple GDP growth alone does not deliver a fair, human rights respecting society and public services.

Taxation and budgeting might not be the first thing you associate with the Health and Social Care Alliance Scotland (the ALLIANCE). Yet we have long taken a keen interest in matters of public finance, for example through our consistent advocacy for a human rights budgeting approach. Without fair finances, Scotland cannot fund the vital public services a rights-respecting society requires. 

Recent policy work has pushed back on simplistic narratives around the desirability of economic growth measured by Gross Domestic Product (GDP). It’s not that the ALLIANCE are “anti-growth”, but instead we recognise it has failed as a solution to global problems. If it was effective in the past, in the modern era it has widened inequalities, entrenched human rights breaches, and accelerated the climate crisis.

We are not alone in this view of GDP’s shortcomings. The United Nations Special Rapporteur on extreme poverty and human rights has explicitly called for an end to “the dangerous fixation with GDP as way to eradicate global poverty.” In a scathing assessment accompanying a report this year, Olivier De Schutter stated:

“For decades we have been following the same, tired recipe: grow the economy first, then use the wealth to combat poverty. This has served up an unpalatable dish: a world on the brink of climate collapse in which a tiny elite possesses an outrageous fortune while hundreds of millions of people wake up every day to the horrors of extreme poverty.”

Clearly, an alternative approach is urgently needed. In his report, De Schutter explicitly identifies Scotland’s National Performance Framework (NPF) as an example of measuring social progress apart from GDP. In true Scottish fashion, I was thrilled our wee country got a positive reference in an international context. Yet as someone working in Scottish policy, I know the NPF isn’t a simple success story.

As part of the ongoing review of the NPF, the ALLIANCE submitted evidence to the Scottish Parliament’s Finance and Public Administration Committee. We noted our feeling that the NPF wasn’t as firmly embedded throughout government as it should be. Take the rise and fall of a Cabinet Secretary for the Wellbeing Economy, discussed previously by my colleague Charlotte. When Humza Yousaf became First Minister, this amended brief was a clear sign of intent. Yet when John Swinney succeeded Yousaf, the position reverted simply to Economy, and classical economic growth was declared a top priority.

As I noted giving further evidence to the Committee, there’s an inconsistency here. Why is the NPF, supposed to underpin government decisions, moving further towards a wellbeing economy whilst Cabinet appears to be turning away? That is especially odd when we consider the balance of powers under devolution. The Scottish Government has much more control over day-to-day public services that impact wellbeing than it does traditional economic levers that drive growth.

When everyone knows how constrained Scotland’s public finances are, we need to be clear-eyed about that balance. A focus on traditional economic growth is likely to be to the detriment of public services and overlook the value of contributions such as unpaid care, further widening health and economic inequalities that blight society. Instead, we could choose to make intelligent use of powers over tax to fund health, social care, education, housing and social security.

Investment in these areas drives the progressive realisation of human rights, puts more money directly into local economies, and supports greater participation of women and carers (often one and the same) in the workforce. That would be growth, not in the form of impressive sounding but extremely unevenly shared GDP figures, but instead in meaningful quality of life improvements for people and communities.

That’s why the ALLIANCE chose to join a diverse coalition of organisations as a founding member of the recently launched Tax Justice Scotland campaign. The campaign calls on the Scottish Government to transform their approach across devolved taxation, to secure funding for essential services and our human rights and climate obligations. Reform is especially urgent in local taxation, where the current Council Tax system is a particular barrier to sustainably funding social care.

In this context, the draft Scottish Budget 2025-26 is a mixed bag. Increased funding for those high priority areas, including the NHS, is certainly welcome. So too is the Finance Secretary’s explicit acknowledgement that Scotland’s differing approach to income tax has been an enabler for funding services, framing that rejects the idea tax is a bad thing.

On the other hand the explicit ruling out of further changes to Income Tax in this parliamentary term, and a long-awaited Tax Strategy that is light on concrete proposals, is disappointing. This is far from the kind of wholesale rethink of Scotland’s tax system, beyond simply tweaking the UK Government’s framework, called for by Tax Justice Scotland.

Over the course of 25 years, devolution has made meaningful changes to so many people’s lives in Scotland. Yet much more remains to be done. Room for manoeuvre will be limited so long as the Scottish Government continues to chase economic growth it has little power over, and which has often delivered little benefit for most people. If we’re to develop and sustain the kind of high-quality public services everyone should be entitled to, we’ll need to go so much further than this Budget and Tax Strategy seem willing to.

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