Six weeks ago, Sir Keir Starmer stood outside 10 Downing Street and announced the formation of the new Labour government. He promised to lead a British national reset and “a rediscovery of who we are”. A new relationship between the component nations of the United Kingdom was expressly a key part of that, particularly between the UK and Scottish governments.
Labour’s promise of a more collaborative approach with the devolved nations was welcome. It involves a sharp turn away from the relentless confrontations and absence of constructive strategy of the recent past. But it raises plenty of other questions, not least about the role that the UK Treasury will play in Scotland’s spending plans. What Labour wants to create remains unclear – though its good intentions do not.
This week’s publication of the annual government expenditure and revenue Scotland report highlights some of the key issues. Under the Scottish National party’s strategy of positioning itself to the left of the UK government, Scotland’s public spending deficit of expenditure over revenue has grown to nearly £23bn. This is the equivalent of 10.4% of Scottish gross domestic product. It contrasts with a 4.5% figure for the UK as a whole. The Scottish figure would be larger still if North Sea oil and gas receipts were excluded.
One way of looking at this is that Scotland has been more generous in its spending, especially on welfare and on public sector wages, because, within the devolution settlement, the UK Treasury and taxpayers allow it. There is nothing wrong in principle with the UK and Scotland making that choice. But some of the music is about to stop, as the first Labour budget draws near and UK public spending continues to be under the cosh. As a result, the SNP decided to make the unpopular decision this week of ending Scotland’s previously universal system of winter fuel payments.
The electoral battering that the SNP suffered six weeks ago seemed to turn the last decade of Scottish politics on its head. The SNP collapsed from 48 Westminster seats five years ago to a mere nine. Labour, meanwhile, rocketed from one seat to 37. But this does not mean that all the initiative now rests with Labour and that this week’s decision on winter fuel payments is simply another self-inflicted SNP wound. Far from it.
The SNP still runs a minority government in Scotland. Its term has nearly two years still to run before the next Holyrood elections. The 2026 Scottish elections will not be a simple repetition of what happened in the 2024 UK contest. Many Scottish voters may choose Labour at Westminster rather than the Tories. But it does not follow that they will automatically hand power to Labour at Holyrood too. Holyrood elections are conducted on proportional representation, not first past the post. Support for independence, the SNP’s principal aim, remains broadly similar to the past decade. The likelihood is that Scotland will have another minority government after 2026, SNP or not.
Labour has won itself time to try to sort a better relationship with Scotland. Sir Keir is trying to invent a form of Britishness and British governance that Scotland can see as something other than a provocation. But the details remain extremely sketchy. Meanwhile, the SNP is down but not out. The reset and self-rediscovery of the UK still has a very long road to travel.
