CHANCELLOR Rachel Reeves set out her spending plans for the next three years on Wednesday, pledging to increase funding for housing and the NHS south of the border – which will have an impact on Scotland.
She also announced development funding for the long-awaited Acorn carbon capture and storage facility in Aberdeenshire, as well as the reinstatement of up to £750 million to build the UK’s most powerful supercomputer at Edinburgh University.
In a briefing for Scottish journalists, chief secretary to the Treasury Darren Jones said on average, the increase will mean £2.9 billion extra for Scotland each year – £2.4 billion of which will be revenue spending up to 2028-29 and around £510 million in capital for the slightly longer period of four years.
The funding will take effect from April next year, just weeks before Scots go to the polls in the Holyrood election.
Here's everything you need to know in five minutes.
The “largest settlements in real terms since devolution was introduced”?
Rachel Reeves announced £52 billion for Scotland, £20 billion for Northern Ireland, and £23 billion for Wales, as she pledged the “largest settlements in real terms since devolution was introduced”.
However, the Scottish Government has claimed Reeves's review has “short-changed Scotland by more than a billion pounds”.
In May, the UK Government said the 2025/2026 block grant was worth £50bn, meaning the £52bn pledge would represent an increase of around 4% over four years. Using a baseline of 2023/2024, the Labour have said the Scottish Government will receive “an average extra £2.9 billion across the duration of this Spending Review”.
Responding to the announcements, Scotland’s Finance Secretary Shona Robison said the SNP Government had been “short-changed”.
She explained: “This Spending Review is business as usual from the UK Government, which is yet again treating Scotland as an afterthought and failing to provide us with the funding we need.
“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.”
Funding for Edinburgh's supercomputer
Reeves also announced funding for projects including £750 million for a supercomputer in Edinburgh and £250m for Faslane nuclear base.
The supercomputer funding comes after a back-and-forth on whether the UK Labour Government had shelved the plan to build it.
The high-tech exascale supercomputer was part of £1.3 billion of funding promised by the previous Tory government for tech and artificial intelligence (AI) projects which were announced in the Autumn Statement in 2023.
The Department for Science, Innovation and Technology (DSIT) said the money was promised by the Conservatives but was never allocated in its budget.
A spokesperson for the UK Government confirmed in August 2024 that the plans for the world-class technology at the Scottish university would not be taken further.
Prime Minister Keir Starmer then set out his AI action plan in January and announced his Government’s pledge to increase the UK’s computer capacity 20-fold by 2030, including building a new supercomputer but did not mention the location.
Later, Reeves added there would be “additional funding to support up to 350 communities, especially those in the most deprived areas”. However, the Poverty Alliance warned that the investment figures “mask cuts to day-to-day spending”.
Acorn carbon capture project
The Chancellor said the Government would also support the Acorn project for carbon capture in Scotland, but did not attach nay figures to the announcement.
She said: “These are investments to make sure the towns and cities which powered our 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.
“A new generation of energy industries – for a renewed Britain. That is my choice. That is Labour’s choice. And that is the choice of the British people.”
Responding to the announcement, Rosemary Harris, North Sea senior campaigner at Oil Change International, said: “CCS [carbon capture and storage] has been failing for half a century and its only significant success has been the billions pocketed by industry in public subsidies.
"With the decision to grant funding for the Acorn and Viking carbon capture projects, Rachel Reeves has added to that track record. Instead of funding real transition policies like training for workers, port upgrades and investments in the UK wind industry, the Chancellor chose to funnel more money to the oil and gas industry’s latest distraction tactic.
"The government still has an opportunity to get serious about a just transition and put money where it is really needed, which is not the pockets of oil and gas bosses.”
Munitions spending in Glasgow
Defence spending will rise to 2.6% by April 2027, Rachel Reeves confirmed, as she said Britain will become a “defence industrial superpower”.
“That uplift provides funding for the Defence Secretary, with a £11bn increase in defence spending and a £600m uplift for our security and intelligence agencies. That investment will deliver not only security, but also renewal in Aldermaston and Lincoln; Portsmouth and Filton; On the Clyde and in Rosyth. Investment in Scotland. Jobs in Scotland. Defence for the United Kingdom, opposed by the Scottish National Party, delivered by Labour.”
Reeves said £4.5 billion would be invested in munitions in Glasgow, Glascoed, Stevenage and Radway Green. £6 billion will be spent on upgrading nuclear submarine production in Barrow, Derby and Sheffield.
She added: “We will make Britain a defence industrial superpower. With the jobs, the skills and the pride that comes with that.”
Hotels to house asylum seekers to be scrapped
The Government will end the “costly” use of hotels to house asylum seekers in this Parliament, Rachel Reeves told the Commons.
The Chancellor said: “To support the integrity of our borders I can announce that funding of up to £280 million more per year by the end of the spending review for our new Border Security Command.
“Alongside that, we are tackling the asylum backlog. The party opposite left behind a broken system: billions of pounds of taxpayers’ money spent on housing asylum seekers in hotels, leaving people in limbo and shunting the cost of failure onto local communities. We won’t let that stand.
“So I can confirm today that, led by the work of … the Home Secretary, we will be ending the costly use of hotels to house asylum seekers in this Parliament.
What are the opposition saying?
The SNP has said that it will become clear that "cuts are in every detail’ of today’s review.
The SNP’s economy spokesperson, Dave Doogan MP, said that while capital investment for the future is sensible and welcome - including some progress on the Acorn Project and Labour's u-turn on funding Edinburgh University's supercomputer - the gaping hole is that it "singularly fails to help hard pressed families in the here and now".
Doogan added that the review also reaffirmed that Labour’s priorities were "slashing support for disabled people, doubling down on a jobs tax that is already increasing unemployment and imposing massive real-terms cuts to departmental spending that have already suffered austerity".
Responding to the Chancellor’s review, Plaid Cymru Westminster leader, Liz Saville Roberts MP said: “The announcement of £44.5 million a year for Welsh rail over the next decade is Labour’s flimsy fig leaf to excuse the multi-billion-pound, multi-decade scandal that is the Welsh rail injustice. Today’s funding is only meaningful if it matches what Wales will continue to lose from HS2 and all other English rail projects in the future.
“Labour hopes a few token projects will distract from deep cuts to vital services that hit the most vulnerable hardest, all while shifting the goalposts on Welsh funding. The unfair Barnett formula remains open to manipulation, just as the recent example of the Oxford-Cambridge line displayed, with the Treasury bizarrely claiming that a railway line in the south-east of England would benefit Wales.
"For Wales, today's statement was more smoke and mirrors. It’s time to deliver the fair funding Welsh communities desperately need and deserve.”
