Scottish ministers are set to experience almost £1 billion in spending cuts by the end of the decade, according to an expert analysis of the Chancellor’s Spring Statement. While Treasury figures show the Scottish Government’s total expenditure will rise from £48.2 billion in the upcoming financial year to £53.5 billion by 2029-30, the Fraser of Allander Institute has highlighted that these increases are overshadowed by anticipated budget reductions. The analysis predicts the Scottish Budget will be approximately £900 million smaller by the decade’s end due to UK-wide spending cuts.
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Joao Sousa, deputy director of the Fraser of Allander Institute, explained that the Chancellor’s reductions to UK departmental spending will result in £435 million worth of cuts for Scotland via the Barnett formula. Additionally, a further £455 million in cuts is expected by 2029-30, partly as a result of Labour’s austerity measures concerning benefits. As welfare benefits are partially devolved to Scotland, concerns have emerged over the impact on the Scottish Government’s finances, particularly given the more generous welfare policies introduced by the SNP.
The SNP Finance Secretary, Shona Robison, voiced her criticism, stating that the Chancellor’s statement imposes further austerity on vulnerable people. She accused the UK Government of trying to balance its finances at the expense of disabled individuals and argued that public sector bodies were short-changed over National Insurance contributions. However, Labour’s Scottish Secretary, Ian Murray, pointed out that the Spring Statement provided an additional £28 million in spending for Scotland, calling it the largest financial settlement since devolution.
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Despite these budgetary increases, Mr Sousa warned of significant challenges for Scotland’s finances in the longer term. Cuts to departmental spending in the rest of the UK will result in large reductions in Scotland’s block grant in the late 2020s. However, the Chancellor’s decision to increase capital spending on infrastructure will lead to a £250 million rise in Scottish funding for projects like roads and buildings by the decade’s end, offering a silver lining amidst the anticipated cuts.
