The Scottish Parliament’s budget will receive 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. Read more here.
However, Scotland’s Finance Secretary, Shona Robison, claimed a shortfall exceeding £1 billion, citing a smaller block grant increase compared to the overall UK government departmental rise.
The review confirmed funding for several Scottish projects, including development funding for the Acorn Project carbon capture scheme in Aberdeenshire (exact amount unspecified), a £750 million 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 Scottish government finances via the Barnett Formula.
The Scotland Office stated an additional £9.1 billion for Scotland across the review period. Despite this, Ms. Robison argued for a larger increase in day-to-day funding.
Robison stated: “This settlement is disappointing, with real-terms growth of 0.8% annually for our block grant—lower than the UK average. Aligned growth would have provided an extra £1.1 billion over three years. Scotland has been short-changed by over a billion pounds.”
Reeves announced a UK defense spending increase to 2.6% by April 2027, aiming to establish Britain as a “defence industrial superpower”. This includes an initial £250 million three-year investment in Faslane, supporting jobs and growth in western Scotland. Further details are pending, but Defence Secretary John Healey confirmed long-term investment for HMNB Clyde.
The review also allocated £4.5 billion for munitions across the UK, including Glasgow. Development funding for the Aberdeenshire Acorn Project carbon capture and storage (CCS) scheme was announced, although the specific amount remains undisclosed. A final investment decision will be made later in the parliament, subject to project readiness and affordability.
The review also commits up to £750 million for the construction of the UK’s most powerful supercomputer at the University of Edinburgh. This reverses a previous decision to drop the project. The supercomputer will vastly improve upon the capacity of Archer2, also located at the university. University of Edinburgh principal, Prof Sir Peter Mathieson, welcomed the investment and its impact on research and innovation.
The £52 billion Holyrood budget figure cited by the Chancellor represents a cumulative total after years of increases. It doesn’t reflect this specific Spending Review’s impact, nor the effects of tax devolution. The final figure includes Scottish income tax revenues.
Robison’s criticism centers on the £1 billion gap between the average increase in Whitehall day-to-day spending and the block grant increase for Holyrood, likely due to increased spending in reserved areas like defense. This suggests increased direct Whitehall spending in Scotland bypassing Holyrood, including funding for green freeports and the Edinburgh supercomputer.
Key figures to understand the impact include the 0.8% average annual growth for Holyrood’s block grant, compared to 1.5% average growth in Whitehall day-to-day spending and 1.8% in capital spending across the next three years. This reflects expectations of increased government spending efficiency. The Scottish Government’s medium-term financial strategy, postponed until after the Spending Review, will offer further insight.
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