Douglas Fraser
Business and Economy Editor, Scotland
Reuters
HMNB Clyde at Faslane is among the beneficiaries of the Spending Review
Increased spending for Scotland on defence, computing and the development of carbon-capture technology have been promised in the chancellor’s Spending Review.
Rachel Reeves has found £250m for the Royal Navy’s nuclear submarine base on the Clyde, £750m to bring the most powerful supercomputer in the UK to Edinburgh, and funding for the Acorn Project in St Fergus.
Acorn would take greenhouse gas emissions and store them under the North Sea, in a process known as carbon capture and storage (CCS).
The news comes as Reeves announces the budgets for all UK government departments over the next few years.
Getting the review right is a tricky balancing act.
Anyone can see ways that public funds could be used more efficiently or even cut. Everyone has their top priority for spending more.
So what happens if there’s a root and branch review, with every spending line scrutinised, new priorities set and given more funds and others squeezed or cut?
We should find out later. But it may not be as radical a review as sometimes presented as too much is already committed by contract or by government manifesto to make really radical changes.
What spending is being reviewed?
The clue is in the name. This is not about taxation, and it’s not about balancing the books. That’s for the Budget, and one of them is expected in autumn, to cover 2026-27.
The review takes the spending totals already set by the Office for Budget Responsibility (OBR), and chooses how to allocate the day-to-day spending (also known as current or revenue spending) for the next three financial years.
It also plans capital spending for four years on projects with a lifespan beyond the year, such as buildings.
That includes the spending in Scotland by Whitehall departments, such as work and pensions and defence. It does not include funds spent by Holyrood.
How tight will it be for day-to-day spending?
We already know, at least roughly, the total numbers the chancellor has to allocate. The increase in day-to-day spending is an average 1.2% per year over the three years to 2028-29.
Extra funds have been front-loaded by the Labour government. In other words, most of the extra spending it gets from big tax increases on business and the wealthy are being used to lift spending in its first two years. Then it gets tighter.
If every department were to retain the same share (which would suggest the review effort has been wasted), it would get the average increase.
But we already know the defence budget is getting a significant lift, to confront growing challenges and new types of warfare.
No 10 Downing Street
Prime Minister Sir Keir Starmer and Defence Secretary John Healey have made defence spending a priority for their government
We also know the NHS requires more than a standstill budget to meet rising demands on it. And the Westminster government has committed to increasing the amount of childcare it provides. That implies an estimated cut of 1.3% in real terms for other items of expenditure.
Local government and justice have taken the brunt of such cuts in the five spending reviews since they started 27 years ago,
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