Taxpayers could face further hikes to pay for 'free' SNP policies such as tuition fees and prescriptions

The bill for policies such as free tuition fees and free prescriptions has now risen to more than £2 billion a year, the Institute for Fiscal Studies (IFS) said, with warnings this is putting increasing strain on the Scottish Government’s budget.

The IFS said it would be “harder and harder” for the Government to maintain these flagship policies as it continues to grapple with funding shortfalls.

The institute’s associate director David Phillips told The Sunday Times an ageing population coupled with the rising costs of health and social care were a global problem, but Scotland had specific issues because of Barnett consequentials.

He said: “This will make it harder and harder for the Scottish Government to maintain the wider range of ‘free’ services on offer than in England – personal care, prescriptions, university tuition and bus passes, to name a few.

“While historically these were paid for by much higher levels of funding than England from the UK government, if it wants to keep them in future the Scottish Government will increasingly have to pay for these via higher taxes on Scottish residents.

“Alternatively, it could decide to pare back universal free provision and focus spending on lower-income and needier residents.”

Scotland’s finance secretary Shona Robison introduced tax rises, including the creation of a brand new income tax band, to plug a £1.5 billion black hole in the Government’s budget.

In her 2024/25 Budget, she also cut more than £200 million from housing funding, despite three councils declaring housing emergencies, and reduced funding for universities and colleges by around £100 million.

Previous analysis from the IFS found the Government spends £900m a year on free tuition fees for Scottish students, as well as around £85m on bursaries and grants. Free personal care costs around £702m, free prescriptions £224m and free bus passes £370m.

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The think-tank Reform Scotland said “difficult decisions” would need to be made on the free tuition fees policy.

Alison Payne, research director at Reform Scotland, said: “Some so-called ‘free’ policy programmes can represent important preventative spending programmes, but others, such as tuition fees, are unsustainable and unfair.

“The reality is that in the face of shrinking budgets and a cost-of-living crisis, difficult decisions need to be made. Targeting help where it is needed most has to be considered.”

Ms Robison said: “We are proud to offer the most comprehensive social contract in any part of the UK. This includes free tuition, free prescriptions and bus travel, and the Scottish Child Payment, which is estimated to keep 60,000 children out of relative poverty this year.

“However, we have been open about the challenging economic and fiscal situation we face – something that has been worsened by the UK government’s failure to invest in public services.

“We are addressing these challenges through our programme of public sector reform and by making difficult choices to target spending. We are also continuing to work on our medium-term financial strategy to ensure Scotland’s finances are on a sustainable footing.”