Scottish Budget 2026-27, Spending Review and Infrastructure Delivery Pipeline: strategic integrated impact assessment

1. Executive Summary

The Scottish Government is committed to making Scotland a leader in equality and human rights, increasing fairness, tackling inequality and removing societal and cultural disadvantages. Fundamental to this is an assessment of how the Scottish Government is proposing to raise and spend money. This helps us consider if decisions are likely to benefit some people more than others and how resources can be used in ways that reduce inequality and support the fulfilment of rights.

Since 2009, the Scottish Government has published an annual Equality Impact Assessment, and more recently the Equality and Fairer Scotland Budget Statement (EFSBS), and it has strengthened how impact assessments are integrated into the budget process.

Building on these improvements, this year’s EFSBS has been replaced by a Strategic Integrated Impact Assessment (SIIA). The SIIA combines multiple statutory duties into a single process and publication, providing a clearer view of the strategic and cumulative impacts of decisions. It also presents new and emerging findings from enhanced distributional analysis and pilot study activity on budget tagging and intersectional analysis. We intend to evaluate the approach and publish the results by the end of 2026.

This year the SIIA approach has been used to assess a fiscal programme that includes the ‘Scottish Budget 2026 to 2027’,^[1] the ‘Scottish Spending Review 2026’^[2] (SSR) and the ‘Infrastructure Delivery Pipeline 2026’^[3] (IDP).

The analysis and evidence collected shows that:

• The Scottish Budget redistributes from high-income households to those further down the income distribution, through both the tax and social security system, and through the delivery of public services.
• Devolved benefit payments primarily provide targeted support to low-income families to alleviate poverty and financial support to disabled people. Overall, social security spend is redistributive, with the Scottish Child Payment the largest single contributor to the improved financial resources of low-income households relative to the rest of the UK.
• The Income Tax policy package maintains Scotland’s progressive tax system and helps ensure that we meet our commitment that more than half of taxpayers are expected to pay less Income Tax than they would in the rest of the UK. Distributional analysis shows that lower-income households gain slightly from increased Basic and Intermediate Rate Thresholds, while higher-income households see reduced post-tax income in real terms due to the freeze of the Higher, Advanced and Top Rate Thresholds.
• The resource allocations for the Budget and the SSR prioritise Health and Social Care and Social Security spending with above inflation increases over the period 2026-27 to 2028-29, recognising their role in supporting living standards, addressing inequality and reducing poverty.
• Eradicating child poverty remains the Government’s top priority. It is key to improving health, education, and economic outcomes across generations and fulfilling the UN Convention on the Rights of the Child commitments on children’s rights. Evidence shows this approach is working. Scottish Government analysis estimates that relative child poverty is around seven percentage points lower than it would have been without current policies.^[4]

Overall, the decisions taken at the Budget, SSR and IDP are expected to have a positive or neutral impact across the five statutory duties considered:

• Budgeting decisions in line with the Public Sector Equality Duty (and the related Scottish specific duties) and the Fairer Scotland Duty ensure that people with relevant protected characteristics and those experiencing socio-economic disadvantage benefit equitably from public services and support. No disproportionate impacts, positive or negative, have been identified for some of the relevant protected characteristics, including religion or belief, pregnancy and maternity, sexual orientation and gender reassignment.
• The substantial investment in the child poverty package and spending that benefits all children is likely to be positive for child rights. This includes: investment in social security; measures to support families with the cost of living such as the universal free breakfast offer and the Summer of Sport; free school meals; free bus travel for those under the age of 22; early learning and childcare; Employability programme; additional investment in further education colleges; and above inflation uplifts to Health and Social Security expenditure.
• The overall impact on consumers is also broadly neutral with both positive and negative impacts and reflecting the dual role consumers play as taxpayers and service users.
• For island communities, there is no significant differential impact between island communities and the mainland or between different island communities.

Preliminary findings from the pilot study activity, which ‘scored’ the contribution of budget lines against relevant duties, and against child poverty, alongside some intersectional analysis, include:

• The impact database, currently based on a subset of Level 4s covering 66 per cent of the value of the Scottish Budget, rated 18 lines as having an ‘exceptional’ impact on at least one of the relevant protected characteristics or duties. This included large scale programmes such as further education colleges and Concessionary Fares but also more targeted programmes such as Fair Work or the Baby Box. Some budget lines were scored as making exceptional contributions across several characteristics (such as Employability and Workforce Skills).
• This approach allows us to look beyond individual budget lines and instead assess the bigger picture and overall trends. For example, when taken together, spend on all lines rated as exceptional is increasing by £184 million compared to the 2025-26 Autumn Budget Revision (excluding lines where the Autumn Budget Revision is not the correct comparator). This is explained further in Annex B.
• The child poverty tagging pilot study found that high-impact lines span multiple portfolios and cluster around a small number of primary child poverty drivers including social security and household income support; income from employment and parental employability; early learning, childcare and early intervention; reducing school-related costs and supporting attainment pathways; and affordable housing.
• Another pilot exercise tested a potential approach to intersectional gender budgeting using the example of minority ethnic women. Evidence shows that minority ethnic women experience discrimination, racial prejudice and bias in recruitment, education, training and development, pay, under-employment, workplace culture, and their caring responsibilities. While many budget measures will benefit this group, some – including investment in the child poverty package and continued funding in victim and witness support – are expected to have a disproportionately positive impact on this group.