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 Westminster 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 investment in defense, carbon capture, and computing initiatives. Further details are available here.
However, Scotland’s Finance Secretary, Shona Robison, claimed a shortfall exceeding £1 billion, asserting the block grant increase lags behind the overall rise across UK government departments.
The review confirmed funding for several Scottish projects, including the Acorn Project carbon capture scheme in Aberdeenshire (exact figures undisclosed).
A £750 million investment was allocated to Edinburgh University’s supercomputer project, alongside £250 million for Faslane nuclear submarine base upgrades.
Increased NHS and housing funding across the UK will also impact Scottish government finances via the Barnett Formula.
The Scotland Office reported an additional £9.1 billion for Scotland over the review period. Despite this, Ms. Robison argued for a larger increase in day-to-day funding.
Robison stated: “Today’s settlement is disappointing, with real-terms growth of 0.8% annually for our block grant, lower than the average for UK departments. Had our funding grown in line with UK government spending, we would have an extra £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 Scotland’s west. While specifics remain unreleased, Defence Secretary John Healey confirmed “long-term investment for HMNB Clyde.”
A £4.5 billion investment in munitions across the UK, including Glasgow, was also announced. Further funding was allocated to the Aberdeenshire Acorn Project for carbon capture and storage (CCS).
This follows industry calls for investment in the delayed project, previously on a reserve funding list. While the exact funding amount remains unannounced, a final investment decision is pending.
The review also plans for the construction of the UK’s most powerful supercomputer at the University of Edinburgh, with a pledged £750 million investment. This reinstates funding dropped after the last general election.
The new supercomputer will significantly exceed the capacity of Archer2, the current national supercomputer also located at the university. Learn more about Archer2 here.
University of Edinburgh principal Sir Peter Mathieson welcomed the “profoundly positive impact” on the UK’s global standing.
The university has already invested £31 million in infrastructure for the supercomputer. The £52 billion Holyrood budget figure cited by the chancellor represents a cumulative total over several years, not solely this review’s impact, and includes devolved tax revenues.
Robison’s claim of a £1 billion gap highlights the difference between average day-to-day spending increases across Whitehall departments and the Holyrood block grant increase. This discrepancy reflects increased spending in reserved areas, such as defense.
Significantly, more funding will bypass Holyrood for direct Whitehall spending in Scotland. This includes funding for green freeports and projects like the supercomputer and Faslane upgrades.
Key figures for understanding Holyrood’s budget include a projected 0.8% annual increase in the block grant, compared to 1.5% for day-to-day and 1.8% for capital spending across Whitehall.
The review emphasizes greater government spending efficiency, targeting HMRC and the Department for Transport. Robison faces similar pressure for efficiency improvements in Scotland.
The Scottish government’s medium-term financial strategy, postponed until after the review, will offer further insights later this month. A Scottish government version of the spending review is expected several months before the next Holyrood election.
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Council tax bills in England are predicted to increase by the maximum amount annually until 2029.
Documents within the spending review suggest a 5% annual increase in council tax to fund local services.