Meeting of the Parliament 25 February 2026 [Draft]
Around three quarters—74 per cent—of taxpayers are expected to be unaffected by our maintaining the higher rate threshold at the same level. The resources that are raised as a result of our taxation policy go into public services. That would be put at risk by the £1 billion of unfunded, unaffordable tax cuts that the Tories want to inflict on Scotland.
The social contract is very important, and we have continued to protect the core elements of it that the people of Scotland rely on every day—the foundations that help to support wellbeing, opportunity and connection across Scotland. We have kept prescriptions free; we have maintained free tuition; we have continued to expand free school meals; we have protected free bus travel for under-22s and over-60s; and we have provided free baby boxes to give every child the best start in life. Those commitments help to make daily life a little steadier and a little fairer, and they reflect the values that we share as a nation.
Many members take pride in Scotland’s progress on child poverty, and I share that pride. During my time as Cabinet Secretary for Social Justice, and in the years since, we have continued to see real improvements as we work towards the 2030 child poverty targets that were unanimously endorsed by this Parliament. In 2026–27, the Scottish child payment will rise with inflation, supporting the families of around 330,000 children. From 2027–28, we will increase the payment for families with a baby under one to £40 per week.
The impacts of targeted benefits spending are borne out by the evidence that we see. Relative child poverty is at its lowest level since 2014-15, and absolute child poverty at its lowest annual rate in 30 years. In 2023-24, both were nine percentage points lower than the UK average. As a result, 90,000 fewer children in Scotland are in poverty than would otherwise be the case. That investment in our children is investment that is worth making.
However, progress is not measured only in statistics. Across Scotland, local partnerships are making a real difference. The Dundee fairer futures partnership is one example of that. It brings key services together in trusted community spaces and takes a targeted approach to supporting the families who need it most. I saw that at first hand during a visit that I made some time ago to the Brooksbank Centre in Linlathen, in my constituency, where the partnership model has delivered more than £2 million in employment and income maximisation support. Since then, the approach has been expanded into Douglas and Stobswell, and families consistently highlight how convenient and accessible it is. As one parent said,
“they’re able to do it all in one place … it’s great that it’s on my doorstep.”
The budget strengthens that wider support. This summer, all primary school pupils will have access to free swimming lessons as part of our wider summer of sport, and, by August 2027, every primary and special school will have a breakfast club.
The budget backs Scotland’s economy, with targeted investment in skills, infrastructure and business growth. For housing, it delivers a record-breaking settlement of £926 million for affordable housing supply—the strongest support for affordable housing in decades. On non-domestic rates, reliefs are forecast to provide more than £870 million of support in 2026-27, including the small business bonus scheme and retail, hospitality and leisure reliefs, which will give certainty during a period of cost pressure. Transitional relief will continue to support those who face the largest increases following revaluation.
That approach sits within a wider economic package. We are investing more than £31 million to drive innovation, enterprise and entrepreneurship, sustaining £326 million for our enterprise agencies and committing more than £215 million to city and regional growth deals, alongside support for regional partnerships and community wealth building.
On climate, the budget recognises the significant and serious impacts of the climate emergency and the cost of inaction. The budget delivers practical action through more than £5 billion of climate-positive investment in 2026-27. That includes £316 million for sustainable travel and low-carbon transport and £47.5 million to support a just transition in the industrial sector, including £15.6 million of capital for the Grangemouth industrial cluster strategy. We are restoring Scotland’s natural environment by maintaining the nature restoration fund at last year’s level, with £26 million to halt biodiversity loss and ensure that Scotland becomes nature positive by 2030.