Reform’s economic plan for Scotland: The austerity myth

SINCE DEVOLUTION in 1999, Scotland has been governed by left-leaning political parties (Labour & SNP). The result is that the percentage of state spending to GDP has increased from 43 per cent in 2000 to 55 per cent in 2025 (UK 44 per cent). This compares to New Zealand with the same population where state spending is only 42 per cent and yet GDP per head is higher.

How absurd that the SNP has consistently peddled the myth that Scotland is subjected to austerity from Westminster when the figures tell a different story. In summary, in 1999 the state spent £34bn in Scotland; today that figure is £118bn. That equates to a compounding growth rate of 5 per cent per annum. So, no austerity there!

What these figures really tell us is that we have failed to grow our economy in line with our spending, which is why creating a new, vibrant economy around our ten leading business sectors is at the very heart of Reform’s plan for prosperity in Scotland.

It’s time now for the government to incentivise our very own creative and hardworking people to grow this new economy which will create opportunity and prosperity for all.

Workers and owners in Scotland are paying too much tax. Those with the broadest shoulders are now shrugging their shoulders and saying, “what’s the point?” Of working longer hours, of expanding the business, of hiring more staff, of launching new products?

First, Reform will immediately scrap Scotland’s six income tax bands and mirror rUK’s three bands which will be set at 1p below each rUK band. Thereafter, Reform will restore the principle of a 3p variation in income tax in Scotland below rUK as an objective within the first five year term.

Work should always pay more

Second, we will use our first two budgets to abolish the many cliff edges in the tax system that punish people for working more and creating value for their families and communities. The carer support payment, for example, is withdrawn entirely when people earn over £10,192 meaning that, by taking a pay rise of £1 above it, they actually end up losing almost £4,000.

Likewise, a Scottish graduate with children and a maintenance loan to repay can expect to see marginal rates as high as seventy to eighty per cent on incomes between £60-80,000 and between £100-125,000. These are precisely the salaries paid to experienced medical professionals and other senior public sector officials (e.g. in planning), which leads them to restrict their hours resulting in staff shortages among frontline services and cratering morale.

We should never put people in the absurd situation where getting a pay rise means you lose more than you gained. Work should always pay more. So, where devolved powers allow, we will minimise marginal tax rates with an objective of you keeping at least half of any extra £1 earned.

Third, as economic growth returns to Scotland, on a revenue-neutral basis, we will phase out Land and Buildings Transaction Tax (LBBT) and reform Non- Domestic Rates (known as business rates) to make them consistent, fair and proportionate.

LBTT is a tax on aspiration, clogging up the property market and penalising people for moving to the place that works best for them. It penalises workers for moving to the best job opportunities; it penalises empty-nesters for downsizing; and it penalises new parents wishing to accommodate their growing families. LBTT is restraining growth and making housing unaffordable, and it is higher in Scotland than the equivalent Stamp Duty Land Tax in rUK.

Meanwhile, non-domestic rates leave businesses, both large and small, in constant fear of revaluation every three years, making them work harder just to stand still. The more successful they are at raising their revenues, the more they are punished by their rates being revalued, with all the added uncertainty of how assessors will rate their particular property, bringing with it the stress and hassle of appeals, often incentivising businesses to stay small, purposefully curtailing their growth so as to avoid higher bills.

The business rates revaluation scheduled to take effect from April 2026 will immediately be reversed by Reform. And we will also immediately cancel the planned increase in council tax (the two additional bands labelled a “mansion tax” but in reality a terrace tax) which will otherwise hit many hard-working families with mortgages and pensioners enjoying their forever homes in semi-detached and terrace houses in Scotland’s towns and cities.

By reforming and reducing the SNP’s onerous tax regime, Reform will ensure that aspiration and success are never again punished in Scotland. Every one per cent of economic growth delivers £8bn of cumulative additional tax revenues over 10 years. By reducing the tax burden on hard-working Scots, they will repay us all by generating higher tax revenues.