Scotland is refashioning social provision in the UK. Already the state provides free personal homecare for older people alongside free NHS prescriptions for all. With local councils and housing associations, it has begun building 30,000 social homes over a five-year period and, unlike England, it has abolished the sale of council houses to tenants. Under new legislation, it is moving to align health and social care through 31 integration authorities charged with delivering a £8.5bn budget tailored to local areas. And last week Scotland became the first country in the world to introduce a minimum price per unit of alcohol – with high-strength cider and own-brand vodka facing the biggest rises – in a tough drive against problem drinking and its attendant ills.

Over the next two years, Scotland will move to set its own social security agenda with around £2.8bn annually of a Department of Work and Pensions budget devolved to a new Scottish agency, covering 11 benefit areas from disability living allowance to attendance allowance for the elderly and the infirm. It promises a more humane regime than England, with “dignity, fairness and respect” as the watchwords – and “welfare”, with its pejorative undertones, consigned to history. All that is before the impact of a new devolved income tax system, with an extremely modest income tax rise for the better off, is factored in to fill a gap left by a falling block grant from Westminster. It hit pay packets last month.

But whether Scotland is ready for Nordic-style cradle-to-grave provision – and the impact of substantially higher taxes to sustain it – is an open question. While the SNP government is gambling that Scots will display more enthusiasm for a bigger, interventionist state than the English, some senior Scottish economists aren’t so sure. “The differences can be exaggerated,” said one.

Scotland awaits minimum alcohol pricing with mixed emotions Read more

At long last, it has the means to become at least partially self-sufficient thanks to the Scotland Act of 2016, which transferred control over the rates and the bands of income tax to Holyrood. UK government spending per head in Scotland, through the annual block grant from Westminster, is already higher than the English average.

How far will ambition take the SNP minority government, which relies on the Scottish Greens to get key legislation through? Nicola Sturgeon’s keynote speech to the SNP’s last annual conference gave a clue. It headlined a commitment to create a publicly owned Scottish energy company by 2021. It will buy electricity and gas either wholesale or generated directly from national sources to give choice to people, “particularly those on low incomes”, according to the first minister.

All this came alongside a pledge to double spending on early years education to £840m annually by 2020 – “a commitment unmatched anywhere in the UK”, she proclaimed – as well as doubling free nursery provision for under-fives. At last she had a chance to underpin her self-proclaimed social democratic credentials with hard policy, if not cash – after 10 years of SNP power.

You might wonder why the SNP has been so cautious up to now. After all, in a 1997 referendum that endorsed Scottish self-government, the electorate also approved new legislature powers to vary tax by 3p in the pound. In the run-up to the first Scottish parliamentary election, the then SNP leader Alex Salmond proposed a modest 1p income tax rise to fund public services. But his party then fell well short of a majority. The issue of a supplementary “tartan tax” was quietly forgotten. The SNP’s heartland was then largely in north-east Scotland and other former rural Tory bastions, where higher taxation does not always play well on the doorstep.

The tax-varying powers were never used by either the Labour-Liberal Democrat coalition Scottish government from 1999 or by its SNP successors. A slightly lighter form of austerity soon began to bite in Scotland, compounded by a lengthy – and regressive – council tax freeze imposed by a government seemingly opposed to meaningful localism. Fast-forward to last month. Twenty years after that devolution referendum, 1p in the pound was finally added to higher tax rates, with two new bands. The tax is projected to raise several hundred million pounds.

We are waiting to find out whether the SNP government in Holyrood does anything more dramatic Professor David Bell

What has changed? Ironically, losing 21 Westminster seats last year, largely to the Tories, might have helped. The SNP power base is now the old Labour heartland of west-central Scotland, rather than the conservative north-east. In truth, the modest tax hike will buy the SNP government just a little time. The Institute for Public Policy Research Scotland thinktank has warned that the rise will simply protect key departments from spending cuts in 2018-19. “We do not know what is happening to spending beyond this,” says its director, Russell Gunson. “But it has set a precedent. The option after this year is either government cuts or tax increases again.” By how much is anyone’s guess.

The IPPR notes that Sturgeon’s administration is committed to increasing NHS spending and protecting the budget of a beleaguered Police Scotland – a national force created in 2013 – whose record of achieving economies of scale has fallen well below expectations amid a series of controversies surrounding its operations and senior staff.

Then it has to plug a hole in health service finances. Scotland’s NHS is distinctly different from its English counterpart, having eschewed foundation trusts and an internal market. Operating mainly through 14 regional boards, with a central procurement and services board, it was hailed last year by the Nuffield Trust health thinktank as a system that has benefited from trusting clinical staff to deliver and from continuity rather than – as in England – “constant change and reorientation”.

Yet it faces “serious financial problems” because savings more than 4% higher than England and Wales are needed to balance the books of struggling boards. Integration between health and social care aims primarily to deliver better services, rather than to save money. Those financial problems are compounded by the continuing public health challenges in greater Glasgow, where life expectancy generally is the lowest in the UK. English regions, with a similar demographic, are doing better.

With so many funding pressures, the Sturgeon government faces its toughest test: throwing political caution to the wind by going beyond its tentative “tartan tax” for the better off to fund its many commitments. A Scottish government has at least some power to deliver – if it has the political courage to take new fiscal and social security freedoms into uncharted tax-raising territory.

David Bell, professor of economics at the University of Stirling, a former adviser to the Scottish parliament’s finance committee with a long record in social policy, says the Holyrood government has at last dipped its toe into the water “and we are waiting to find out whether it does anything more dramatic”.