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 Scottish block grant 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 detailed investments in defense, carbon capture, and computing.
However, Scotland’s Finance Secretary, Shona Robison, argued the government had been “short-changed” by over £1 billion, citing a smaller block grant increase than that seen across other UK government departments.
The review confirmed funding for several Scottish projects, including development funding for the Acorn Project carbon capture scheme in Aberdeenshire (amount unspecified), £750 million for a supercomputer project at Edinburgh University, and £250 million for Faslane nuclear submarine base upgrades.
Increased NHS and housing funding elsewhere in the UK will also impact the Scottish government’s annual Barnett Formula-calculated funding from Westminster.
The Scotland Office stated an additional £9.1 billion would be allocated to the Scottish government over the review period. Despite this, Ms. Robison emphasized the need for a greater increase in day-to-day funding.
Robison stated: “Today’s settlement is disappointing, with 0.8% annual real-terms growth for our block grant—lower than the UK average. Aligned growth would have provided an additional £1.1 billion over three years. Scotland has been short-changed by over a billion pounds.”
Reeves announced a rise in UK defense spending to 2.6% by April 2027, aiming to establish Britain as a “defense industrial superpower”. This includes an initial £250 million over three years for Faslane, supporting jobs and growth in the west of Scotland.
Further details regarding this investment are pending, though Defence Secretary John Healey confirmed long-term investment in HMNB Clyde for continuous submarine maintenance and operations.
The review also allocated £4.5 billion for munitions across the UK, including Glasgow, and development funding for the Aberdeenshire Acorn Project carbon capture scheme, although the exact amount remains undisclosed. A final investment decision is pending, subject to project readiness and affordability.
The review also funds the creation of the UK’s most powerful supercomputer at Edinburgh University, with up to £750 million pledged. This reinstates funding previously dropped after the last general election, providing scientists with enhanced computing power for research.
The new supercomputer will significantly surpass the capacity of Archer2, the current national supercomputer also housed at the university. Professor Sir Peter Mathieson, principal of Edinburgh University, welcomed this “profoundly 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 accumulated amount over several years, not solely the result of this review, and includes devolved tax revenues.
Ms. Robison’s criticism centers on a £1 billion gap between the average increase in day-to-day Whitehall spending and the Holyrood block grant increase, potentially reflecting increased spending in reserved areas like defense. This suggests increased direct Whitehall spending in Scotland.
Examples include funding for green freeports, the Edinburgh supercomputer, and Faslane upgrades, all bypassing Holyrood. Key figures for assessing Holyrood’s budget impact include a 0.8% annual increase in the block grant, compared to 1.5% for day-to-day Whitehall spending and 1.8% for capital spending.
The review anticipates increased government efficiency, targeting areas like HMRC and the Department of Transport. The Scottish Government’s medium-term financial strategy, postponed pending this review, will be released later this month, with a full Scottish government response expected closer to the next Holyrood election.
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