The David Hume Institute has called for a more strategic approach to Scotland’s economic spending, arguing that public investment must be judged by the economic capacity it creates, not simply the amount of money spent.
In its submission to the Scottish Parliament’s Economy, Tourism and Energy Committee’s pre-Budget scrutiny for 2027–28, the Institute argues that constrained public finances make it more important than ever to prioritise investment that strengthens productivity, encourages business investment and innovation, supports employment and improves living standards.
With public spending under pressure and funding for the economy, tourism and energy portfolios expected to fall in real terms, the Institute argues that across-the-board reductions risk overlooking investments that could deliver significant long-term benefits.
Instead, the Government should assess major programmes against clear criteria: what problem are they intended to solve, why is public intervention necessary, what would happen without it, and what lasting economic benefits will they generate?
The submission identifies five priorities:
Improving productivity and business investment
Developing infrastructure that enables economic activity
Making better use of people’s skills
Strengthening innovation and economic resilience
Ensuring Scotland’s energy transition creates lasting benefits for domestic businesses and workers.
It also calls for a more rigorous approach to evaluating public spending. Counting businesses supported, projects delivered or visitors attracted tells only part of the story. Policymakers must also establish what changed as a result of spending, whether benefits would have occurred anyway, and how much economic value was retained in Scotland.
Crucially, the Institute argues that economic performance cannot be considered in isolation from other policy areas. Housing, transport, skills, financial wellbeing, energy and planning all influence productivity and investment.
The submission’s central message is that Scotland needs a longer-term perspective on public finances, recognising the trade-offs between immediate spending pressures and investments whose benefits may take years to emerge.
As the Institute concludes, the question for Scotland’s 2027–28 Budget should not simply be how much the country can afford to spend, but what can Scotland afford not to invest in?
