THE Scottish Budget delivered by John Swinney overstates the amount of money going to public services and hides likely cuts to schools, a leading thinktank has said.

The respected Institute for Fiscal Studies (IFS) said the budget documents published by the deputy First Minister left out £1.3billion of recent changes.

It meant that figures showing an apparent increase of 1.9 per cent in spending in 2023/24 actually implied a cut of 1.6%.

The funding for councils was especially badly hit. 

On Thursday, Mr Swinney boasted that he had given councils £540million more than the flat-cash settlement they had been told to expect in May.

But the IFS said this would be swallowed up by existing pay awards and rather than falling by 0.2% in real terms, council budgets - which pay for schools - would fall by 5% or more.

It said council tax rises - which will be uncapped next year - would “only be able to offset a small part of these differences”. 

The thinktank also said that the situation in Scotland was worse than in England, where funding for councils and schools is set to rise next year.

Although funding for the NHS, justice and transport looked set to increase by more in Scotland than south of the border, “local government and schools appear to be the big losers relative to England,” it said.

The analysis coincided with the council leaders meeting at the umbrella group Cosla and issuing a scathing cross-party criticism of the budget .

Shona Morrison, the SNP president of Cosla, said: “The reality of the situation is that yet again, the essential services councils deliver have not been prioritised by the Scottish Government. 

“Cosla asked for £1bn [extra] but from our initial assessment of the budget, we believe that Local Government will see an uplift of only £71m once policy commitments are taken into account. W

“Whilst the decision to allow councils the freedom to set their own council tax rates is welcomed, scope will be extremely limited this year, as councils seek to protect the most vulnerable in our communities, recognising the cost-of-living crisis.”

IFS research economist Bee Boileau said more funding from the UK government and a better showing from Scotland’s devolved taxes meant funding for many public services had been topped up in the course of the current financial year, 2022/23.

Yet the budget compared the original, smaller funding levels with next year’s levels, implying a bigger increase in funding than was the case on the ground.

She said: “The Scottish Budget suggests that funding for health and social care will now grow by 2.9% in real terms between 2022/23 and 2023/24, compared to the 0.2% real-terms growth planned in May, that the budget for justice, policing and veterans will grow by 2.5% in real terms, compared to the 2.4% cut set out in May, and that cuts to local government budgets will be only 0.2%, compared to the 2.4% cut previously planned.

“But these figures overstate the funding increase from this year to next for many services. 

“That is because the Scottish Budget compares plans for next year with what was originally budgeted to be spent this year, and in many cases budgets for this year have since been topped up. 

“Local government is a notable case in point, where a sizable £540m extra has been found for pay awards this year: the costs of these awards will continue into next year, but this funding has been excluded from the year-to-year comparisons quoted by the Scottish Government. 

“Taking this into account suggests that rather than falling by 0.2% in real terms, as suggested by the Scottish Budget, funding for local government will actually fall by 5%, and perhaps more. 

“In all, around £1.3 billion of in-year top-ups to funding this year have been excluded from the figures. 

“This means that rather than increasing by an average of 1.9%, as reported in the Budget, Scottish Fiscal Commission figures imply real-terms spending on devolved public services will be 1.6% lower next year compared to this year.”

In his budget, Mr Swinney increased the higher and top rates of income tax by a penny to 42p and 47p respectively, saying the £129m raised from half a million earners would contribute towards an extra £1bn of funding for the NHS and care, taking it to £19bn.

SNP health secretary Humza Yousaf said today that the tax rises were essential to support the NHS as it recovered from its most “challenging” period and the Covid pandemic.

Higher earners would “understand” the role they had to play to improve the NHS, he said.

“What they want to see is a commitment from the government to continue to invest in that health service, to improve. We cannot improve the health service without that additional funding and that’s why it’s so important.”

He said the additional funding would help tackle surgery and mental health backlogs.

He added: “I expect to see improvements in A&E performance as we get past the winter and the worst of it. I expect to see improvements right across the system and this additional investment will help with that.”

Public Health Scotland found only 63.4% of patients were seen within the four-hour A&E target last week, despite the 95% target set by ministers.

Cancer treatment targets are at their lowest ever recorded percentage of patients starting treatment within the 62-day target, with the standard falling to 74.7%.

Mr Yousaf said he understood the “anxieties” facing people around increased taxes.

He said: “I do understand those anxieties, but I hope people will understand that we’re not raising taxes willy-nilly. It has to be done to invest, particularly our NHS and social care, which will get a £1 billion boost in the next financial year.”