Spending Review: Scotland to get £52billion, Rachel Reeves says as figure sparks row with SNP

The Chancellor has been accused by the SNP of leaving the Scottish Government “short-changed” - despite announcing a record £52 billion funding package for Holyrood in her Spending Review.

Rachel Reeves unveiled the devolution settlement during her speech to MPs, in which she also finally confirmed funding for the Acorn carbon capture project in Aberdeenshire.

However, the announcement prompted a row with ministers at Holyrood, where Finance Secretary Shona Robison claimed the Scottish Government had been “short-changed by more than a billion pounds”.

The Chancellor 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 lead to an increase in funds coming to Scotland.

She also announced development funding for the long-awaited Acorn carbon capture and storage facility in at St Fergus in Aberdeenshire, as well as the reinstatement of up to £750 million to build the UK’s most powerful supercomputer at Edinburgh University.

£9.1bn increase over next three years

According to the Treasury, the Scottish Government will see an increase of £9.1 billion over the next three years.

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.

In the same briefing, Scottish Secretary Ian Murray asked: “The question then becomes, who do you trust to spend that?

“The record of the SNP Government of the last 18 years has not been beneficial in terms of how they would spend it.

“In fact, I think there’ll be broad support for the view that the £4.9 billion that they got in the budget last year has not been spent wisely either.”

He said Wednesday’s spending review was “great” for Scotland.

The Chancellor had been expected to announce support for the Acorn Project, which will take greenhouse gas emissions and store them under the North Sea, in a process known as carbon capture and storage (CCS).

She said: “Today I can announce support for the Acorn Project in Aberdeenshire, supporting Scotland’s transition from oil and gas to low carbon technology, a challenge and an opportunity well understood by the Scottish Labour leader, Anas Sarwar, and my right honourable friend, the Scottish Secretary.”

The Acorn project, which would be based near Peterhead, has been in the pipeline for years and would allow fossil fuels to continue to be burnt without, in theory, releasing harmful carbon emissions.

The project is seen as key to scaling up the low-carbon hydrogen sector in Scotland and future plans for Grangemouth, but the technology has not yet been demonstrated at commercial scale.

However, in documents published after Ms Reeves had finished speaking, the nature of the funding was not clear.

Final Acorn decision ‘later this Parliament’

It said: "A final investment decision will be taken later this Parliament, subject to project readiness and affordability".

In the briefing with journalists, Mr Jones was asked for clarity on how much cash the project will receive, but was unable to say.

The 136-page document also said that while the Government supports Acorn, “a final investment decision will be taken later this Parliament, subject to project readiness and affordability”.

Mr Murray said: “We’re working with the Acorn partners and have been for some time now about what they need for the development of it and that’s what this commitment is for.”

Chancellor of the Exchequer Rachel Reeves delivers her Government's spending review to MPs in the House of Commons, London. Photo: House of Commons/PA Wire

Ms Reeves also confirmed a boost for defence spending, which will go to 2.6 per cent by April 2027.

Ms Reeves had opened her statement by saying austerity under the coalition government was a “destructive choice” for society, as she said spending would rise for departments by 2.3 per cent in real terms.

Beginning the spending review statement in the House of Commons, the Chancellor said: “In this spending review, total departmental budgets will grow by 2.3 per cent-a-year in real terms. Compare that to the Conservative choice for austerity. In contrast to our increase of 2.3 per cent, they cut spending by 2.9 per cent per year in 2010.

“So let’s be clear, austerity was a destructive choice for the fabric of our society. And it was a destructive choice for our economy too, choking off investment and demand, creating a lost decade for growth, wages and living standards.”

She added: “My choices are different. My choices are Labour choices. The choices in this spending review that are possible only because of my commitment to economic stability and the decisions that this Government has made. The Conservatives’ fiscal rules guaranteed neither stability, nor investment. And that is why I changed them. My fiscal rules are non-negotiable and they are the foundation of stability and of investment.”

Scottish Finance Secretary Shona Robison said the overall funding increase does not match that of Whitehall departments, claiming Scotland has missed out on more than £1 billion.

“Today’s settlement for Scotland is particularly disappointing, with real-terms growth of 0.8 per cent a year for our overall block grant, which is lower than the average for UK departments,” she said.

“Had our resource funding for day-to-day priorities grown in line with the UK Government’s overall spending, we would have £1.1 billion more to spend on our priorities over the next three years. In effect, Scotland has been short-changed by more than £1 billion pounds.

‘Spending that bypasses devolution’

“It is also disappointing that despite apparent briefing to media in advance, we are still awaiting clarity on funding for the vital Acorn project in the north-east of Scotland.

“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.”

On Acorn, she said: "We have no figure whatsoever and we don't know the timeframe."

She said officials had been pursuing the Treasury "to get a handle on what the figure is, and what it's for and what the time frame is, because we need confirmation of that because giving confidence around this project is really important and we don't have that".

The Scottish Government will formally respond to the announcement in the medium-term financial strategy on June 25, the Finance Secretary said.

Scottish Conservative finance spokesman Craig Hoy described the spending review as a “spend-now-tax-later statement” which will result in the Chancellor “almost certainly” having to raise taxes.

But Scottish Labour leader Anas Sarwar praised the 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.”