The Scottish Parliament’s budget will see an average annual increase of £2.9 billion, according to Treasury officials, following Chancellor Rachel Reeves’ spending review.
Reeves announced a rise in the block grant from Westminster to £52 billion by 2029, described as the “largest real-terms settlement since devolution”.
The UK’s first multi-year spending review since 2021 also confirmed investments in defense, carbon capture, and computing initiatives.
However, Scotland’s Finance Secretary, Shona Robison, asserted that the government had been “short-changed” by over £1 billion, citing a smaller block grant increase than the overall rise across UK government departments.
The review confirmed funding for several Scottish projects, including development funding for the Acorn Project carbon capture scheme in Aberdeenshire (though the exact amount remains undisclosed).
A £750 million investment is earmarked for a supercomputer project at Edinburgh University, alongside £250 million for Faslane nuclear submarine base facilities.
Increased NHS and housing funding in the rest of the UK will also impact the Scottish government’s annual Westminster funding via the Barnett Formula.
The Scotland Office stated an additional £9.1 billion for the Scottish government over the spending review period. However, Ms. Robison argued for a larger increase in day-to-day funding.
Ms. Robison stated: “This settlement is disappointing, with real-terms growth of 0.8% annually for our block grant, lower than the UK departmental average. Had our resource funding increased in line with UK government spending, we would have £1.1 billion more over three years. Scotland has been short-changed.”
Reeves announced UK defense spending will reach 2.6% by April 2027, aiming to establish Britain as a “defence industrial superpower”.
This includes an initial £250 million over three years for the Faslane base, supporting jobs and growth in the west of Scotland. Specific investments are yet to be detailed, but Defence Secretary John Healey confirmed “long-term, sustained investment for HMNB Clyde”.
The review also allocated £4.5 billion for munitions across the UK, including Glasgow. Further funding was announced for the Acorn Project in Aberdeenshire, a carbon capture and storage scheme, although the exact figure remains unannounced.
Following calls from business leaders, this long-delayed project is now slated for development, with a final investment decision pending.
The review also plans for the construction of the UK’s most powerful supercomputer at the University of Edinburgh, with up to £750 million pledged. This reinstates funding previously dropped after the Labour party’s election victory.
This new supercomputer will significantly exceed the capacity of Archer2, the current national supercomputer housed at the university.
Professor Sir Peter Mathieson, principal and vice-chancellor of the University of Edinburgh, welcomed the investment, highlighting its positive impact on the UK’s global standing.
The university has already invested £31 million in the necessary infrastructure. The £52 billion Holyrood budget figure cited by the chancellor represents the total budget after years of increases, not solely the result of this review. This figure also accounts for devolved taxes.
Shona Robison’s concerns center on a £1 billion gap between the average day-to-day spending increase across Whitehall departments and the increase in Holyrood’s block grant. This likely reflects increased spending in reserved departments, particularly defense.
Increased direct Whitehall spending in Scotland will bypass Holyrood, such as green freeports funding and the Edinburgh supercomputer project.
Key figures to note are the 0.8% annual real-terms increase in Holyrood’s block grant, compared to 1.5% for day-to-day spending and 1.8% for capital spending across Whitehall. The review expects greater efficiency from government spending.
The Scottish government’s medium-term financial strategy, postponed until after the Spending Review, will provide further clarity. The Scottish government’s response to the Spending Review is expected several months before the next Holyrood election.
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