Scottish Budget 2026-27 published

Progress in many areas is welcome, but the budget must go further on social care, mental health and third sector support.

The Scottish Government have today (13 January) set out their draft budget for the 2026-27 financial year. In the final budget of this term of the Scottish Parliament, the Scottish Government have stated their priorities include a stronger NHS, investment in infrastructure, and easing pressures on family budgets.

Amongst the proposals in this year’s budget are:

• A total investment of £17.6bn in the NHS, £2.4bn for GPs, primary care and community services, and over £2.3bn for social care
• A 2% real terms increase in local government funding
• Inflationary uplifts for social security payments plus a commitment to increase the Scottish Child Payment to £40 per week next year, with an earlier rollout of that value for children under 1 year old
• Freezing the upper and higher rate income tax thresholds, whilst increasing the thresholds for the basic and intermediate rates by 7.4%, alongside new council tax bands for properties valued above £1mn and a new tax on private jet flights.

Achieving significant improvements in the health, wellbeing and rights of disabled people, people with long term conditions, and unpaid carers are also the ALLIANCE’s key priorities. As part of our response to this year’s Pre-Budget Scrutiny by Scottish Parliament committees, we had called for investment in mental health services and social security. We welcome the inflationary increase for devolved social security payments though continue to urge the Scottish Government to review the basis for disability payments, with a view to ensuring they are adequate.

However, we are disappointed that it now seems unlikely this budget will meet the target of 10% of the frontline NHS budget being spent on mental health, and that the Scottish Government have also not met their commitment to abolish non-residential care charges in this term of parliament.

The financial security and stability of the third sector is a key priority for the ALLIANCE and our members. Given the vital role that the third sector plays as a service provider and employer, the growing crisis must be addressed. We recently conducted research amongst our third sector organisational members, finding that nearly two thirds (64%) felt financially insecure, up from roughly half (49%) 18 months earlier. 60% of members had reported that they had experienced cuts to their core grants, whilst 25% had cuts to their contracts.

We are concerned that the commitments set out in this budget do not go far enough, whilst noting the positive impacts that were already apparent six months into the two year Fairer Funding pilot that the Scottish Government launched last year. Although we understand a full analysis will follow the conclusion of the pilot, it is essential that this year’s budget builds on this early progress by offering more secure funding to a wider range of third sector organisations.

Commenting on the draft budget the ALLIANCE’s Chief Officer, Sara Redmond, said:

“The Scottish Government’s prioritisation of health and social care services is very welcome, but more work needs to be done. The ALLIANCE is particularly concerned about the long term sustainability of the third and charitable sector, which delivers essential public services on behalf of or that complement statutory organisations including the NHS.

“Our members have told us how Scotland’s third sector is now stretched beyond its limit. If immediate, substantial progress is not made on fair funding for the sector, the Scottish Government risks undermining its own aspirations on health, wellbeing and public service reform, as well as negatively impacting on the human rights to health and participation in society.”

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