The Finance and Public Administration Committee at Holyrood has opened a wide-ranging inquiry into Scotland’s fiscal position, asking whether existing tax and spending plans can be sustained in the face of mounting pressures on the public purse. It is the first formal inquiry by the newly constituted committee and is explicitly framed around “pre-budget scrutiny”, aiming to influence the Scottish Government’s spending plans later this year.
Committee members will examine the Scottish Government’s Medium-Term Financial Strategy and other core fiscal documents to assess how realistic ministers’ plans are for closing the anticipated £4.77 billion gap by 2029-30. They will also look at how the current mix of tax policies aligns with longer-term ambitions on economic growth, public service delivery and fiscal sustainability.
A central concern for the inquiry is how ministers intend to address an expected £4.77 billion shortfall in Scotland’s public finances over the medium term. The committee wants to test both the assumptions underpinning that figure and the credibility of the Scottish Government’s proposals to manage it through a combination of tax measures, spending restraint and use of fiscal flexibility.
MSPs are also keen to understand how inflation and the ongoing cost of living pressures will interact with the Scottish Budget, including the risk that higher wage settlements and rising demand for public services will erode already tight spending plans. The inquiry will consider whether current projections adequately capture these risks and what contingency plans are in place to respond to economic shocks.
Alongside headline questions about the overall fiscal gap, the committee will examine how the Scottish Government is using its devolved tax powers and borrowing tools. This includes the role of income tax, the “mutual finance model”, bonds, and the Scotland Reserve in smoothing volatility and managing short-term pressures on the budget.
Finance and Public Administration Committee convener Clare Haughey MSP has signalled that the inquiry will ask whether the government is striking the right balance between raising revenue, supporting economic growth and protecting public services. The committee also wants to ensure there is sufficient transparency over how tax policy choices affect different groups of taxpayers and the wider economy.
To support the inquiry, the committee has issued a call for written evidence posing eleven detailed questions to organisations, experts and members of the public. The consultation runs from 29 June until 14 August 2026, giving stakeholders the opportunity to influence the direction of fiscal policy before the next Scottish Budget is finalised.
Finance and Public Administration Committee convener Clare Haughey MSP said: “Our first inquiry of the new parliamentary session involves asking fundamental questions about Scotland’s public finances.
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“Are the government’s tax and spending plans affordable and sustainable? How will Ministers bridge the £4.77 billion fiscal gap that’s anticipated by 2029-30. And how will the government respond to inflationary pressures on the Scottish Budget, including in relation to the cost of living?”
“We’ll also want to look at how the Scottish Government should use its financial flexibilities – such as borrowing, bonds, the ‘mutual finance model’ and the Scotland Reserve – to manage budget pressures.”
The evidence gathered will inform a formal committee report, which is intended to shape the Scottish Government’s budget proposals and provide MSPs with a clearer picture of the health of Scotland’s public finances. The committee emphasises that its goal is to improve transparency and ensure that parliament and the public fully understand the choices and trade-offs embedded in Scotland’s tax and spending plans.
