Nicola Sturgeon said Scotland’s growing devolved welfare bill is “unsustainable” and argued the answer was not cuts but wider powers to raise revenue, as forecasts show benefits spending set to rise sharply over the next decade.
Speaking at a "Policy Live" event on the lessons of devolution on 11 September 2025, the former first minister said Scotland had "gone probably as far as we sustainably can on income tax" and needed "a greater basket of tax levers" to align revenue with new social security commitments.
Sturgeon cited figures from the Scottish Fiscal Commission showing spending on devolved social security rising from about £6.9 billion in 2024–25 to an estimated £9.4 billion in 2030–31. The commission has warned that the Scottish Government already spends around £1.3 billion more on devolved welfare than the funding it receives from the UK Treasury, largely because of policies such as the £27.15-a-week Scottish Child Payment and the removal of the two-child benefit cap.
The fiscal watchdog projects that by 2030–31 welfare spending will run about £2.2 billion ahead of related funding, forcing ministers to redirect funds from other public services. That excess accounts for almost half of a £4.7 billion shortfall the commission expects in Scotland’s public finances by the end of the decade.
"One of the problems there is, and it will become increasingly unsustainable, is that in Scotland we effectively have unlimited power to create any welfare benefit we want, but we don't have corresponding power to raise the revenue to support it," Sturgeon said. "Bluntly, we've gone probably as far as we sustainably can on income tax in Scotland. So without a greater basket of tax levers, that misalignment and unsustainability is going to become ever more acute."
Her comments drew criticism from the Scottish Conservatives. Finance spokesman Craig Hoy said Sturgeon was "completely detached from reality in refusing to accept the SNP need to rein in their ballooning welfare bill," adding that it was "incredible that having imposed the highest income taxes in the UK, her first instinct is still to look for another tax to hike to pay for these policies. The legacy of her and her party’s financial mismanagement is one of endlessly hammering Scots taxpayers and spending their money without any thought for the consequences."
Sturgeon framed her intervention as an argument for using further devolution to balance responsibilities with revenue-raising powers. Devolved social security powers have allowed the Scottish Government to top up UK-wide benefits and introduce new payments targeted at children and other groups; these policy choices have increased spending relative to the funding delta with Westminster, according to the fiscal commission.
The Scottish Fiscal Commission's forecasts underline the scale of the fiscal pressure as demographics and policy choices push devolved social security costs higher. The commission’s projections, repeatedly cited by ministers and opposition parties, form part of regular assessments used to inform Scotland’s budget decisions.
Separately, media reporting noted that since January Sturgeon had taken £30,000 in dividends from her one‑woman media company. The reporting said that arrangement may have reduced her Scottish income tax liability by about £3,600 because the dividends were taxed under UK rules. Sturgeon’s remarks at the event focused on the broader fiscal question facing Scotland rather than on her personal finances.
Scottish ministers will face decisions about whether to curtail devolved benefits, seek additional tax powers from Westminster, or make offsetting savings elsewhere in public services as forecasts point to widening gaps between spending commitments and revenues. Discussions about the balance of devolved powers and funding have been a recurring feature of Scotland’s fiscal debate since the transfer of certain social security responsibilities to Holyrood.
The event at which Sturgeon spoke brought renewed attention to the trade-offs involved in devolved policymaking: choices to expand social supports can increase pressures on the budget if corresponding revenue-raising powers are constrained. Her call for a broader suite of tax levers sets out a clear demand for further fiscal devolution ahead of next year’s fiscal planning in Edinburgh.