Holyrood bracing for £700m Westminster cuts in Labour's Budget as SNP demands 'change of direction'
The Scottish government is calling on the UK Labour government to rethink forecast cuts to Holyrood’s funding settlement
SNP ministers are bracing for upcoming spending cuts set out in Chancellor John Healey’s Budget this week - amid an appeal for a “change of direction” from Westminster.
Social Justice Secretary, Shirley-Anne Somerville has called for for more than £700 million of cuts to frontline services to be “scrapped” and has called for “new investment in public services” by Andy Burnham’s government.
The stark warning comes after the Scottish Fiscal Commission warned in August that the Scottish government’s budget is facing the £700m reduction from Westminster.
The body said the cut, to correct a difference between forecast and real income tax revenues, would lead to public services having funding reduced in the next financial year.
Analysis shows that SNP ministers had an extra £831m to spend in this financial year compared with earlier forecasts, largely due to a one-off boost from education spending south of the border. But the SFC has warned there is "very little" new funding available for the 2027-28 financial year, alongside a gloomier economic outlook, higher inflation and weak household income growth.
Speaking on the BBC’s Sunday Show, Ms Somerville called for a rethink from the UK government ahead of SNP Finance Secretary Jenny Gilruth publishing her draft Scottish budget in December.
“What we really need is a change of direction from this supposedly-new Labour government”, Ms Somerville said.
“The forecast that we have shows that the Scottish government is about to have a real-terms cut in our block grant. That basically means that we will be having less that we can spend on our public services than we would like to.”
She added: “So if the Chancellor and indeed, the Prime Minister is serious about devolution and about this being a new government, we need to see those forecasts being scrapped.
“We need to see new investment in public services to allow the Scottish government, and indeed our local authorities to make the decisions that we want to make on public services.”
Pressed over the Scottish government’s settlement from Westminster having gone up in the long-term, Ms Somerville argued that was due to “the devolution of social security”.
She added: “As we have devolved powers to the Scottish government, of course, we’ve seen a change in the block grant because of that.
“What concerns me now that devolution of social security has been completed and the transfer of those funds has been completed is that next year we will see a real-terms decrease in our funding.
“A few percentage points in the forecast can mean tens of millions, hundreds of millions of pounds coming. It depends on how the block grant is established and how the UK government chooses to spend its money between what’s devolved and what’s reserved.”
Ms Somerville warned that “we need to keep a very close eye on that”.
She added: “We also need to keep a close eye on the capital budget because there is an expectation that there will be a reduction in the Scottish government’s capital budget as well.
“The fact that we’re sitting here with a Scottish government budget due to be announced at the start of December and we still don’t know what’s happening makes it very difficult for us to plan. But also, for our local government partners and our third sector partners too. They (Westminster) could give multi-year certainty to the Scottish government budget.”
Ms Somerville was also pressed over the Scottish government’s funding pressures to pay for social security, which has been a priority, alongside health spending, for SNP ministers.
Holyrood’s spending on social security is forecast to rise from almost £7 billion this financial year to more than £9 billion by 2030-31 - with critics arguing the trend is unsustainable. The spending has increased by 11 per cent, by around £700m in the space of one year - including £428m in extra funding on adult disability payment which has increased across the UK.
“The vast majority of expenditure on Scottish government social security follows the same increases as throughout the whole of the UK”, Ms Somerville stressed.
“One of the reasons the benefit expenditure has been increasing is because the retirement goes up. So of course the number of people on adult disability payments are increasing.”
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