The chancellor has pledged the “largest settlement in real terms since devolution” for Scotland as part of the UK government’s spending review.
Rachel Reeves promised £52bn for Scotland as she unveiled a raft of investments for north of the border, including increased spending on defence, development funding for a carbon capture project, and money to reboot plans for the UK’s most powerful supercomputer.
The Scottish government will receive an average block grant of £50.9bn per year between 2026-27 and 2028-29.
Ms Reeves told MPs: “This spending review provides the largest settlement in real terms since devolution was introduced.”
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The UK government said the money will allow the Scottish government to be able to “spend more on its priorities such as funding NHS Scotland, education, transport and welfare”.
However, Scotland’s finance secretary Shona Robison said it “fails to deliver” and has “short-changed” the nation by more than a billion pounds, as she warned spending levels for public services will “fail to offset the impact of proposed cuts to welfare support and the rise in national insurance contributions”.
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Ms Reeves announced a £250m investment for HM Naval Base (HMNB) Clyde.
The Royal Navy base – commonly known as Faslane – houses the UK’s nuclear submarines.
The funding, part of the Clyde 2070 programme, will be injected over the next three years.
‘Next industrial revolution’
The chancellor also pledged development funding for the Acorn carbon capture project in Aberdeenshire in a bid to aid “Scotland’s transition from oil and gas to low carbon technology”.
However, it is yet to be confirmed how much money will be allocated to the project – which will store carbon emissions from across Scotland under the North Sea.
Aberdeen-headquartered Great British Energy and Great British Energy – Nuclear will invest more than £8.3bn over the parliament in homegrown clean power, alongside establishing a new government campus for energy.
Ms Reeves stated: “These are investments to make sure the towns and cities which powered the last industrial revolution will play their part in our next industrial revolution to reduce our reliance on overseas oil and gas and protect working families from price shocks.”
Scotland will also receive £452m over four years to continue the delivery of City and Growth Deals across the nation.
In addition, the Scottish capital will also become home to the UK’s most powerful supercomputer.
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Ms Reeves had earlier revealed up to a further £750m would be allocated to the University of Edinburgh project.
The funding reinstates a scheme that was scrapped last year by Labour as it had not been funded by the outgoing Conservative government.
It is hoped the cash injection will “kickstart economic growth” and is part of efforts to strengthen “Britain’s position as an AI-maker and research power”.
The supercomputer will aid scientists in cutting-edge research, whether that’s personalised medical treatments, sustainable air travel, or modelling climate change.
The government said the new supercomputer will “vastly exceed” the capacity of the UK’s current national supercomputer, ARCHER2.
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The Brand Scotland programme will receive £2.25m between 2026-2029 to continue promoting the nation’s investment opportunities and its globally celebrated products around the world.
‘Game-changing’ review
Scottish Labour leader Anas Sarwar praised the spending review as “game-changing”, adding: “The plans set out today will bring billions of pounds of investment to Scotland, on top of the record budget settlement delivered in the budget.
“From the Acorn Project to a national supercomputer in Edinburgh to our defence industry, this Labour government is investing in Scotland’s future while the SNP carps from the sidelines.”
Ms Reeves had earlier this week announced a partial U-turn in the cut to the universal winter fuel payment.
The payment, worth up to £300, will be restored to pensioners in England and Wales with an income of less than £35,000 a year.
In Scotland, ministers had previously revealed plans to ensure all pensioners north of the border receive a payment in 2025/26.
Under the Scottish government’s proposals, those in receipt of pension credit or other benefits will receive a £200 or £300 payment, depending on their age. All other pensioners will receive a reduced payment of £100.
The change in policy from the UK government will bring additional money to Holyrood.
The Scottish government has not ruled out making changes to its planned scheme, but First Minister John Swinney said his ministers were “trying to understand the fiscal implications” of Westminster’s decision.
Settlement ‘particularly disappointing’
Finance secretary Ms Robison said: “Today’s settlement for Scotland is particularly disappointing, with real terms growth of 0.8% a year for our overall block grant, which is lower than the average for UK departments.
“Had our resource funding for day-to-day priorities grown in line with the UK government’s overall spending, we would have £1.1bn more to spend on our priorities over the next three years. In effect, Scotland has been short-changed by more than a billion pounds.
“This all comes on top of the UK government’s failure to fully fund their employer national insurance increase, depriving us of hundreds of millions of pounds in funding, and their proposed cuts in support for disabled people that will push 250,000 people into poverty, including 50,000 children.”
Ms Robison also said that “despite apparent briefing to media in advance”, the Scottish government was still “awaiting clarity” on funding for the Acorn carbon capture project.
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The finance secretary added: “We made extensive representations to the UK government on our priorities for the spending review, including calls for an end to spending that bypasses devolution, but there has been limited opportunity to engage with them.
“It appears that the continuation of local growth funding – which fails to match the European structural funds it was supposed to replace – will come directly from Whitehall, yet again bypassing devolved governments.
“We will now take the time to digest the detail of this statement and will set out our formal response on 25 June as part of the medium-term financial strategy.”
