Joint Statement from the G7 Foreign Ministers of Canada, France, Germany, Italy, Japan, the UK, the USA and the High Representative of the EU
We, the G7 Foreign Ministers of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States of America, and the High Representative of the European Union, express support to our partners in the region in the face of the unjustifiable attacks by the Islamic Republic of Iran and its proxies.
We condemn in the strongest terms the regime’s reckless attacks against civilians and civilian infrastructure, including energy infrastructure, in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, Jordan, and Iraq, in line with UNSC Resolution 2817.
The Iranian regime’s unjustifiable attacks against these states also threaten regional and global security. We call for the immediate and unconditional cessation of all attacks by the Iranian regime.
We reaffirm the importance of safeguarding maritime routes, and safety of navigation, including in the Strait of Hormuz and all associated critical waterways, as well as the safety and security of supply chains and the stability of energy markets. We stand ready to take necessary measures to support global supply of energy such as the stockpile release decided by International Energy Agency members on March 11.
The G7 has repeatedly stated that Iran must never obtain a nuclear weapon and that it must halt its ballistic missile program, end its destabilizing activities in the region and around the globe, and cease the appalling violence and repression against its own people.
We support the right of the countries unjustifiably attacked by Iran or by Iranian proxies to defend their territories and protect their citizens. We reaffirm our unwavering support for their security, sovereignty, and territorial integrity.
We condemn the brazen attacks in Iraq by Iran and its militias against diplomatic facilities and energy infrastructure, particularly in the Iraqi Kurdistan Region, and against U.S. and Counter ISIS Coalition forces, and the Iraqi people.
Scotland’s first Center Parcs resort will create 1,200 permanent new jobs First Minister John Swinney announced today, as he visited the site near Hawick in the Scottish Borders where the resort will be built.
The Scottish Government has committed up to £30 million over five years to deliver the essential infrastructure needed to make the resort possible. The funding, which will be delivered via South of Scotland Enterprise, unlocks more than £420 million in private funding from Center Parcs, which could not proceed without it.
Work is expected to begin on site in spring 2026, with the resort set to open in summer 2029. The development is expected to increase tourism to the area by 38%, generating £87 million annually for the Scottish economy.
The resort will offer families across Scotland a high-quality staycation option closer to home, reducing the need to travel abroad for short breaks.
First Minister John Swinney said: “Economic growth must reach the people and places that need it most. Investing in the South of Scotland through this project is a direct expression of our belief that every part of Scotland deserves to benefit from a growing economy.
“Investing here is a deliberate statement that we are serious about reducing regional inequality and creating genuine opportunity for young people — 30% of these 1,200 jobs are targeted at 16-to-24-year-olds.
“It is a privilege to be here with local school children to start planting new trees for the site and I look forward to seeing the development of the project before the resort opens in 2029.”
Center Parcs CEO Colin McKinlay said: “We are very grateful for the support of the Scottish Government, as well as South of Scotland Enterprise, Scottish Borders Council, and the many other partners who have worked with us to unlock the potential of this project.
“Center Parcs will have a transformational effect on the South of Scotland, bringing jobs, tourism, supply chain opportunities and significant economic benefits. It is incredibly exciting for work on site to now be getting underway and we were delighted that the First Minister could join us to commemorate this key milestone.”
Chair of South of Scotland Enterprise Russel Griggs said: “This is a significant moment for the South of Scotland, with Center Parcs being one of a number of big investments we are currently welcoming to our region.
“Center Parcs presents massive opportunities and will help diversify the visitor economy, attract new people, deliver inclusive growth and provide significant supply chain opportunities for SMEs and entrepreneurs.
“This investment also provides a chance to tackle head-on the economic challenges of the past which still impact communities such as Hawick.”
Planning permission for Center Parcs was granted by Scottish Borders Council in December 2025.
Over £2.5 billion of new finance can be available to businesses across Scotland in 2026, helping them grow, invest and create new jobs.
This forms part of Lloyds Banking Group’s plan to make over £35 billion of new finance available to companies operating and investing across the UK in 2026.
Businesses look to invest and grow in 2026
New research from Bank of Scotland’s Business Barometer reveals Scottish businesses identified their top target areas for growth as introducing new technology such as AI, automation or digitalisation (51%), investing in their team such as training (35%) and entering new markets (32%) in the next six months.
Martyn Kendrick, Scotland Director at Bank of Scotland Commercial Banking, said:“Bank of Scotland is proud to make £2.5 billion of new finance available to local firms in Scotland, helping them grow their businesses, invest in innovation and create new jobs.
“Whether it’s supporting a small company taking its first step into exporting, or a larger firm scaling up to meet growing demand, we’re committed to helping businesses turn their potential into growth.”
This comes as Lloyds and CBI convene business leaders, policymakers and experts from across the financial services sector in Scotland to explore how to drive sustainable growth under the UK’s Industrial Strategy.
Backing ambitious businesses across Scotland
Organisations across Scotland are already benefiting from Bank of Scotland’s support. Albyn Housing Society, one of the largest housing associations in the Highlands, has received a £10 million funding package.
The business has begun work on the first 125 homes as part of its mission to build 600 affordable homes over the next five years.
The development responds directly to Highland Council’s 2024 Housing Challenge, which calls for 24,000 new homes to be built across the region by the end of the decade.
Andrew Martin, Executive Director at Albyn Housing Society, said: “Albyn was established over 50 years ago to provide housing for workers at the Invergordon smelter.
“While the challenges have changed, our purpose hasn’t. We’re here to make sure people across the Highlands have access to good, affordable homes in the communities they live in.
“Our five-year plan is ambitious, and it reflects what local people have told us they need. Support from Bank of Scotland means we can start right away – putting plans into action and delivering the kinds of places people want to live.”
Tracy Gilbert, MP for Edinburgh North and Leith, has welcomed the Chancellor’s confirmation that the Scottish Government will receive an additional £921 million in funding through Barnett consequential in the Spring Statement.
Since the General Election in July 2024, the Scottish Government has received nearly £12 billion in extra funding.
Commenting, Tracy Gilbert MP said: “The Scottish Government has received £12 billion in additional funding since 2024. People in Edinburgh North and Leith will rightly ask what that money has delivered for them.
“With pressures on our NHS, housing and local services, this funding must be used to improve people’s day-to-day lives. It’s time to focus on getting the basics right and delivering for communities across Scotland.”
Scotland is in the absurd position of producing more electricity than we need, while families and firms here face some of the highest bills in Britain. Fuel poverty is rampant, reaching nearly 50% in the northernmost parts of the country, despite Scotland’s renewable capacity only set to grow, with projects like Berwick Bank expected to generate power for more households than exist in Scotland.
One practical approach is zonal pricing, setting electricity prices by geographic region so that areas with abundant local generation benefit from lower supply costs and reduced transmission costs.
In plain terms, power produced on and off Scotland’s shores should not cost Scottish households and businesses a premium once it reaches the meter.
Zonal pricing reflects local supply and demand, and recognises that the real expense lies in grid infrastructure, pylons, cabling, and reinforcement, rather than in “sending” electrons down the line.
Instead, we are currently being forced to accept a vast expansion of pylons across our land because the grid is inadequate for the volume of generation, with “curtailment” running into billions, paying wind operators to switch off while consumers still pay through the nose.
A new pylon network is planned from the north of Scotland down the east and through the Borders to supply demand further south, bringing long-term visual and environmental damage, disruption to arable land and watercourses, and little or no benefit to the communities affected.
As an ALBA Glasgow List Candidate, I, Dhruva Kumar, am calling for a fair deal, implement zonal pricing so Scots can finally share in the value of the energy we produce, cut fuel poverty in a cold country, and make Scotland competitive again for manufacturing, hospitality and the green supply chain.
If Westminster will not act, then Scotland’s councils and government should refuse consent for pylons that export our energy while leaving our people paying the price.
Foysol Choudhury has warned that rising business rates and limited government backing are placing increasing strain on small, community-driven businesses.
Following a visit to Time Twisters Edinburgh in Sighthill on Monday, Mr Choudhury met founder Andy Hixon and staff to see first-hand how the business supports young people, creates jobs, and brings learning to life for school pupils.
He praised the company’s work supporting young people and said more must be done to protect businesses that deliver real local impact.
Time Twisters delivers hands-on educational experiences linked to the Scottish Curriculum, giving students the opportunity to explore Ancient Egypt in an interactive and engaging way.
Founded 20 years ago, the business now employs 23 people and has helped hundreds of young people take their first steps into work, often offering their very first job opportunities.
Speaking after the visit, Foysol Choudhury MSP said: “Time Twisters is a brilliant example of how small businesses can inspire young people, create local jobs, and strengthen communities. But right now, too many businesses like this are being pushed into survival mode.
“The last two budgets have made it harder than ever for small businesses to thrive. Instead of investing, expanding, and creating more opportunities, many are simply trying to stay afloat.
“These pressures are hitting the hospitality and leisure sectors particularly hard, sectors that should be driving local regeneration and economic confidence, not being held back.”
Mr Choudhury reaffirmed his commitment to supporting local enterprises and called for policies that enable businesses like Time Twisters to continue contributing to the community and the local economy.
The 2026-27 Budget will support a stronger NHS, with a record £22.5 billion for health and social care, expand cost of living support and invest in Scotland’s infrastructure.
Published alongside the latest multi-year Scottish Spending Review, Infrastructure Strategy and Infrastructure Delivery Pipeline, the draft Budget invests almost £68 billion including direct support for families and household budgets.
The 2026-27 Budget includes:
a cost of living package to: help families with funding to trial a programme of activities in a range of primary schools between 3-6pm; a Summer of Sport – free children’s sporting activities, including lessons on how to swim for every primary school child in the country; and a breakfast club for every primary school by August 2027
continued investment in Scotland’s existing cost of living measures, including free prescriptions, free eye examinations, removal of peak rail fares on Scotrail, free tuition fees for young Scots, free school meals for thousands of children, including all pupils in P1 to P5, and free bus travel for under-22s and over-60s
funding to increase Scottish Child Payment to £28.20 per week and investment to allow the introduction of a premium payment of £40 per week for eligible children under 12 months from 2027-28, bolstering efforts to drive down child poverty
extra funding to keep more children out of poverty from funds initially set aside to mitigate the UK Government’s two-child cap, including £50 million of whole family support and a further £49 million for measures to be announced in the Child Poverty Delivery Plan in March
tax choices which increase the Basic and Intermediate rate income tax thresholds to put more money in the pockets of low and middle income earners, maintain current income tax rates and bands, and provide a competitive non-domestic rates relief package worth an estimated £864 million, including measures for pubs, restaurants and retailers
a record £22.5 billion for health and social care, including a record £17.6 billion for NHS boards and resources to begin the national rollout of walk-in GP clinics, making it easier to access same-day appointments
an almost £15.7 billion record settlement for local government to support the services communities rely on including social care and education
significant extra funding for universities and colleges, with colleges seeing a combined increase of £70 million in resource and capital funding, equivalent to a 10% uplift, targeted support to help retrain workers in the oil and gas sector and ongoing commitment to Scotland’s apprenticeships, which this year will provide more than 31,000 Scots with a pathway to sustainable, well-paid jobs
over £5 billion to tackle the climate emergency, reduce carbon emissions and increase resilience as well as backing regenerative and sustainable skills in food and farming
£4.3 billion transport funding including investment in railways, the renewal of the ferry fleet, removal of peak season fares for residents of Orkney and Shetland on Northern Isles ferries and nearly £200 million for the dualling of the A9
record investment in new affordable homes
Ms Robison said:“This Budget delivers for families across the country, for a stronger NHS, and for a more prosperous future.
“It will fund landmark policies to continue efforts to eradicate child poverty – investing in a brighter future for Scotland and the children growing up here.
“Almost £68 billion is being invested in 2026-27 and almost £200 billion through the Scottish Spending Review and Infrastructure Investment Pipeline, demonstrating the scale of our ambition for our nation.”
Other measures include:
from April 2027, an Air Departure Tax (ADT) will come into force and the framework offered by the new ADT will be used to introduce a private jet supplement
the introduction by April 2028 of two new council tax bands for the most expensive properties in Scotland, those worth more than £1 million, on an up-to-date valuation
support for high-growth firms to attract private investment and connect entrepreneurs
£200 million for the Scottish National Investment Bank – delivering on the commitment to invest £1 billion in the Bank by the end of the parliamentary term
record funding for police and fire services and an additional £10 million investment in community justice services
a £20 million increase in the culture budget, recognising Scotland is richer because of its world-famous culture and creative sector
support for the creation of a diverse and sustainable supply chain for offshore wind, to boost the economy.
Responding to today’s proposed Scottish Budget, Poverty Alliance Policy & Campaigns Manager Ruth Boyle said: “People in Scotland want a just and compassionate society – but too many feel the system is rigged against them.
“There was some good news today – but we can do much more to make sure that every child in Scotland gets the investment they need for a decent life and a better future.
“Ensuring that every child in primary school gets a healthy breakfast is an excellent investment, because no child should go to school hungry.
“Increasing the Scottish Child Payment to £40 for eligible households with a baby under 1 is welcome and will help families at a time when they face increased costs. However, this must be a first step towards boosting that payment to £40 for every eligible child in the country.
“That is the kind of fundamental investment the Government needs to make if they are serious about meeting the 2030 child poverty targets.
“With Scotland not on track to meet those legally binding targets, we need all political parties to set out their plans to invest in country where no child lives in poverty. Our children can’t wait any longer.
“We can make that kind of investment in Scotland – and there is support for it. In among the Budget documents is new polling from YouGov showing that 54% of people in Scotland believe that Government should redistribute income from the better-off to those who are less well off. Just 29% disagree.
“The Scottish Government must raise revenue to invest in our shared national priorities, like tackling child poverty and reducing the cost of living. It’s right that the Government has turned to those with the biggest assets to contribute more with a tax on private jets and increased council tax for the highest value homes.
“This has to be the start of long-promised, fundamental reform of council tax so that our local councils can provide the services that all of us need, and that are a vital lifeline for so many households in poverty.
“The Poverty Alliance will continue to call for the measures we need to provide a Minimum Income Guarantee that no-one will fall under – including increasing wages, investing in strong public services, and providing a social security system that gives everyone in Scotland a secure foundation to build a better future.
“Today’s budget has some positive steps towards that ambition – but we need to go further and faster if we are to build a Scotland free from poverty.”
Commenting on today’s draft Scottish Budget, Mary Glasgow, Chief Executive of Children First, Scotland’s national children’s charity, said: “It’s hugely positive to see child poverty being made a top priority in today’s budget.
“The significant funding boost to whole family support and extra resources for third sector organisations will provide a lifeline to families who need help most, right across Scotland.
“But we can’t afford to slow down. Scotland’s legal target to eradicate child poverty demands bold, accelerated action. Life is tougher than ever for many children and families and at Children First we witness this first-hand every day.
“That’s why we urgently need a National Front Door that offers a simple accessible way for families to get the help they need when they need it.”
Children First’s manifesto for the 2026 Holyrood elections calls on the next Scottish Government to deliver a comprehensive offer of whole family support to tackle child poverty and give every family the emotional, practical and financial support they need.
Trussell’s Cara Hilton said: ‘While we welcome the @scotgov‘s £40 SCP rate for babies under 1, we continue to call for an increase to £40 a week for all.
‘Our @TrussellUK data shows food parcels for families with children aged 12-16 in Scotland rose by 7% over the past 5 years. #ScotBudget‘.
Responding to the Scottish Budget and Scottish Spending Review, Anna Fowlie, Scottish Council for Voluntary Organisations (SCVO) Chief Executive, said: “Too often and for too long, voluntary organisations that provide vital services to people and communities across Scotland are treated as the poor relation to mainstream public services.
“They have had to contend with budget cuts, short-term funding cycles, late payments, incoherent decision-making, poor communication, inadequate grant management, and more.
“Reform of the voluntary sector funding landscape is long overdue. The Scottish Spending Review is welcome, giving the Government the long-term outlook to make progress on its commitment to deliver improvements, including multi-year funding for Scotland’s voluntary organisations.
“Welcome too is the Scottish Government’s commitment to multi-year funding for sections of the voluntary sector—this shows, again, what is possible.
“Today we had hoped for more than a recommitment to the ‘first step’ announced last February—the Scottish Government’s ‘Fairer Funding’ pilot.
“We know the benefits of multi-year funding: better staffing, stability, and future planning for the services people and communities rely on. The Government’s own research confirms this.
“Multi-year funding alone, however, will not provide the sustainable funding environment the voluntary sector so desperately needs, funding that is flexible, sustainable, and accessible.
“We need to see real progress and recognition of SCVO’s Fair Funding asks beyond multi-year funding. Wider reforms are, unfortunately, now unlikely to be seen before the next parliamentary term.
“In the meantime it is essential that in the weeks following the Scottish Budget the Scottish Government support local authorities and voluntary organisations by meeting their commitments to timely notifications and payments.
“We look forward to further engagement on both Fair Funding and charity regulation in the next parliamentary term.”
Shelter Scotland Director, Alison Watson said:“Social housing delivery in Scotland remains too slow, too little and too late for the more than 10,000 children homeless tonight. Today’s budget doesn’t do enough to change these facts.
“Shona Robison’s budget was an opportunity for Ministers to put their money where their mouth is. On the face of it an additional £34 million for social housing, compared to the most recent budget, is a step in the right direction – but it is not enough.
“The extra money will only deliver 36,000 affordable homes by 2030 – more than 26,000 short of where they say they would need to be to deliver their promise of 110,000 affordable homes by 2032.
“The new Parliament will need a new approach and new money to deliver the social homes needed to reduce homelessness. Homes that the government promised, that academics say we need but for which there is still no credible plan to deliver.
“We must be honest about the real costs of failure. Failing to build the social homes we need means rising homelessness, rising child poverty, rising costs for councils, health boards and the taxpayer.”
Responding to the Scottish Government’s Budget, Debbie Horne, Scotland Policy and Public Affairs Manager at Independent Age said: “It is disappointing to see nothing new in this Budget to adequately respond to the growing number of older people in poverty.
“One in six pensioners now live in poverty across Scotland, a total of 160,000 older people, and we must see more action to support them.
“We want the Scottish Government to set out a clear, targeted strategy to bring down the alarming number of older people in poverty, increase access to the vital Discretionary Housing Payments that can help older renters meet shortfalls in rent, and increase the social security support available to those on a low income in later life.
“With pensioner poverty at its highest level in nearly 20 years, and likely to continue to rise as our population ages, it’s vital all political parties include measures to bring down the levels of poverty in later life in their manifestos’ ahead of May’s Holyrood elections. In a compassionate and wealthy society, we should all be able to live a financially secure, dignified later life.”
Responding to the Scottish Government’s Budget statement which slashed the 40% discount on business rates bills for pubs at the same time as a rates revaluation will lead to higher bills from 1 April, Stuart McMahon, Director of pubgoers group CAMRA Scotland said: “Pubgoers and publicans simply won’t stand for a Budget which will force more of our locals to go to the wall by landing them with bills they simply can’t afford.
“I fear that slashing the 40% discount on business rates bills for pubs to just 15% at the same time as these bills are increasing will be absolutely disastrous.
“Transitional reliefs may sound good but if this Budget still means higher business rates bills than pubs are paying now then this will be the straw that breaks the camel’s back for many hard-pressed licensees.
“Pubs need permanently lower business rates bills so that they can survive, thrive and play their part as vital community hubs.”
The Scottish Government’s budget announcement of further funding for the college sector, which includes a combined increase of £70 million in resource and capital funding, received a qualified welcome. Principal of Edinburgh College, Audrey Cumberford said: “While this is a welcome step in the right direction for college funding, there is still more that needs to be done.
“This increase will help to undo some of the damage done by years of real terms cuts, but more is needed if we are to ensure the future sustainability of our sector.
“There is now a clear consensus across the political spectrum for better funding for colleges.
“I would urge parties to continue to work together to make sure we unleash the true potential of our sector so we can continue to drive economic growth and improve the lives of Scots across the country.”
Responding to the Scottish government’s 2026-27 budget, announced today by Finance Secretary Shona Robison, RCEM Vice President for Scotland Dr Fiona Hunter said: “Scottish Emergency Departments are in the midst of a crisis born of political apathy towards tackling the difficult problems of social care capacity, delayed discharges and the overall issue of hospital flow.
“Today’s budget indicates once again that the Scottish government understands what the issues are. £2.3bn extra for social care, an uplift in frontline NHS spending, specific targeted action on delayed discharge and local engagement – these are all measures we warmly welcome from the government.
“As well as this, our members will be pleased to hear about improvements to training, retention and working conditions.
“However, we’ve been here before. Time after time the reality in our A&Es has got worse, not better, despite claims from the government that the NHS has been on ‘the path to recovery’ in recent years.
“We are seeing more and more patients waiting alone on trolleys in hospital corridors for hours on end, getting sicker and being put at risk of harm.
“This has happened because exit block has not been tackled, despite promises to the contrary from the government.
“The devil will be in the detail and I will reserve judgement for when myself, and the members I represent, see improvements in our Emergency Departments.
“We look forward to continued engagement with the government on how it seeks to tackle hospital flow, and await further information on how the Health Secretary will take today’s promises and turn them into action and, ultimately, improvements for our patients.”
Jonathan Carr-West, Chief Executive, LGIU, said: “This Budget offers some short-term stability for councils, but it ducks the bigger questions about how local government is funded.
There is still no meaningful move towards multi-year settlements, which councils overwhelmingly say they need in order to plan sustainably. Our annual State of Local Government Finance in Scotland research, launched last week, reinforces this.
Incentivising a council tax freeze risks further undermining local fiscal autonomy, while adult social care remains the single biggest pressure on council finances without clear, dedicated funding.
Housing investment is welcome, but spreading it across the country without enabling local flexibility limits its capacity to tackle the areas of greatest need.
Overall, this is a Budget that manages immediate pressures but avoids the structural reform required to put local government finance on a sustainable footing.”
The Existing Homes Alliance (EHA) is a coalition of over 20 housing, environmental, fuel poverty, consumer and industry organisations calling for urgent action to transform Scotland’s existing housing stock.
Lori McElroy, Chair of the Existing Homes Alliance said:“While we welcome the ongoing support to help homeowners, landlords and tenants to make their homes warmer, healthier and more affordable to heat, this remains a drop in the ocean when we have over 800,000 households living in fuel poverty and 44% of Scotland’s homes falling below Energy Performance Certificate band C.
“Scotland has excellent fuel poverty and energy efficiency programmes such as Warmer Homes Scotland, Area-based Schemes and the Social Housing Net Zero Heat Fund, as well as generous grants through the Home Energy Scotland Grant and Loan Scheme, but the gap between what is needed and what is currently being delivered is wide.
“This Budget, as it stands, is a missed opportunity to significantly scale up these programmes which would reduce fuel poverty, improve public health by tackling damp and mould, and prepare the workforce and supply chains needed to deliver our climate change targets – supporting thousands of jobs and economic opportunities across Scotland.”
Joanne Smith, Policy and Public Affairs Manager for NSPCC Scotland, said: “For children to thrive, it’s vital that they have the best start in life, and so we are heartened by the Scottish Government’s commitment to increase the Child Payment for under ones. But we are disappointed that young families now will not reap those benefits, with it starting in more than a year’s time.
“We also welcome the Scottish Government’s renewed investment in the whole family support fund and its work to continue to deliver the Promise. But it is so important that in this it recognises the fundamental need for support for very young children, just like the Scottish Child Payment does, so that families get the help they need right from the start.”
Scotland’s Chief Constable Jo Farrell has responded to the Scottish Government’s tax and spending plans for 2026 to 2027.
Chief Constable Farrell said: “I recognise a £90m cash-terms uplift to revenue funding and an improved capital allocation for policing against a challenging public finance picture.
“I set out the funding requirements for policing in evidence during the Criminal Justice Committee’s pre-budget scrutiny work.
“Police Scotland will continue to engage with the Scottish Police Authority and the Scottish Government to understand the full implications of the budget and develop our planning for the year ahead.
“My focus continues to be on prioritising our frontline to deliver safer communities, less crime, and supported victims as part of our vision for policing.”
Budgets reflect the choices and priorities of our Governments. Our political leaders have a responsibility to use them to build an economy and society in which all people the income necessary to live in decency and dignity.
In October 2025, thousands of people from across Scotland took to the streets of Edinburgh in the Scotland Demands Better campaign march and rally, the largest anti-poverty demonstration our country has seen in decades.
They stood together to demand that politicians build a Scotland free from poverty, creating the conditions for better jobs, better investment in life’s essentials and vitally, better social security.
In this briefing, we set out how MSPs can build a better future for Scotland’s children:
The Chancellor will deliver a Budget later today [26 November] that takes the fair and necessary choices to deliver on the Government’s mandate for change.
It will include action to cut NHS waiting lists, cut debt and borrowing, and cut the cost of living to secure a strong future for the country, built on fairness and fuelled by growth.
Action to keep prescription costs under £10 (in England – Ed.), freeze rail fares for the first time in 30 years and increase the National Minimum Wage and National Living Wage by £1,500 and £900 respectively has already been confirmed to put more money in people’s pockets at this Budget.
Investment for 250 Neighbourhood Health Centres (in England – Ed.) has also been confirmed as part of the Chancellor’s commitment to slash NHS waiting lists further and end the postcode lottery of healthcare access.
Ahead of her Budget speech, Rachel Reeves said:“Today I will take the fair and necessary choices to deliver on our promise of change.
“I will not return Britain back to austerity, nor will I lose control of public spending with reckless borrowing.
“I will take action to help families with the cost of living…cut hospital waiting lists…cut the national debt.
“And I will push ahead with the biggest drive for growth in a generation.
“Investment in roads, rail and energy. Investment in housing, security and defence. Investment in education, skills and training.
“So together, we can build a fairer, stronger, and more secure Britain.”
“GENERATION DEFINING” BUDGET MUST DELIVER FOR WORKERS
Scotland’s largest trade union body has issued a stark warning ahead of the Chancellor’s budget calling on Rachel Reeves to “deliver for workers” as the UK Government sets out, what the STUC call, a “generation defining” budget.
The Scottish Trades Union Congress (STUC) has set out five tax demands ahead of the statement, including actions on wealth taxes, bank profits and a “settling up” tax for those moving wealth and assets abroad.
The trade union body, as part of the wider Scotland Demands Better campaign, has also reiterated the call to scrap the two child-benefit cap in a move STUC General Secretary Roz Foyer said was “long overdue”.
The STUC is further calling for increased investment in publicly owned energy as well as direct support for workers in carbon intensive sectors such as those in Grangemouth and Mosmorran.
Commenting, STUC General Secretary Roz Foyersaid: “The upcoming statement from the Chancellor is generation defining. It will signal to all whether the UK Government will continue to adhere to self-imposed financial rules and chaotic quick fixes, or whether they will invest in the public services and the industries and jobs of the future, delivering for workers with bold, radical policies to redistribute wealth.
“We’ve set out how the Chancellor can target those with wealth and assets and use it for the public good. For too long Labour Government policy has been about meeting self-imposed fiscal rules rather than setting out a bold plan for public sector-led growth.
“That must change. We must see, once and for all, the long overdue scrapping of the two-child benefit cap in addition to targeted action on reforming Capital Gains Tax. The Chancellor must also reign in the wild-west of banking profits, raising the surcharge from 3% to 35%, potentially netting £50 billion over four years.
“The people of Scotland and the wider United Kingdom voted for change. It’s high time it was delivered and the Chancellor simply cannot afford to waste this opportunity come Wednesday.”
One of the key decisions that UK Ministers will be making ahead of Rachel Reeves announcing the Budget later this month is what to do about the two-child limit (write Fraser of Allander Institute’s SPENCER THOMPSON and HANNAH RANDOLPH).
This policy, which limits Universal Credit to the first two children in a family, has been widely criticised for driving up child poverty rates. And given that the UK Government has pledged to reduce child poverty, with the publication of its child poverty strategy expected sometime around the Budget, the pressure is on to abolish the policy.
The Scottish Government has committed to mitigate the two-child limit by introducing a new benefit, the Two-Child Limit Payment (TCLP). If the two-child limit is abolished, this payment would no longer be needed, freeing up resource for the Scottish Government. The First Minister has pledged that the savings would be spent on additional measures to tackle child poverty, which he has stated is the Scottish Government’s top priority.
How much would the Scottish Government save?
The Scottish Fiscal Commission has forecast the TCLP will cost £155m in 2026-27. This represents the amount that the Scottish Government will directly save if the two-child limit is abolished.
There would however be some offsetting costs to the Scottish Government, coming through two main channels. First, removing the two-child limit would push more families onto the Benefit Cap – unless this was also abolished – which the Scottish Government mitigates through Discretionary Housing Payments.
And second, it would bring more families onto Universal Credit, namely those whose incomes are just too high to be entitled with the two-child limit in place.
These families would in turn become eligible for devolved benefits that are linked to receipt of Universal Credit, including the Scottish Child Payment, raising spend on these benefits.
We estimate that these spillovers would amount to around £34m in 2026-27.
Whether this cost is met from within the £155m pot or counted separately is a political question. The fiscal context, which will become even more challenging if the UK Government chooses to raise income tax in the rest of the UK, may encourage the former choice. But this would likely be seen by campaigners as penny pinching at a time when urgent, ambitious action is needed to tackle child poverty.
Even with the two-child limit abolished, we would still be a long way off meeting the statutory child poverty targets in 2030 – and these are approaching quickly, with the final Delivery Plan due in March.
How could the savings be spent?
If the spillover costs from the abolition of the two-child limit (£34m) were funded from within the TCLP budget (£155m), that would leave £121m to be spent on other policies. We have modelled the child poverty impacts of five illustrative policy options, all of which we estimate will cost about this much in 2026-27 assuming no changes in behaviour or administrative costs. Clearly, a £155m policy could go further than a £121m one, so this represents a conservative scenario.
Impacts of policy options on relative child poverty after housing costs, 2026-27
Option
Raising the Scottish Child Payment to…
…and…
… would reduce child poverty by about…
1
£35
–
1ppt
2
£31
extending Scottish Child Payment from children under 16 to include dependents aged 16-19
1ppt
3
£34
increasing Best Start Grants and Best Start Foods by the same proportion
1ppt
4
£30
extending universal Free School Meals from P1-P5 to include P6-P7
–
5
£34
increasing the maximum discount on water and sewerage charges from 35% to 100% for families with children
1ppt
Source: FAI modelling using UKMOD. Notes: Dash indicates that impact is too small to report. Scottish Child Payment is currently projected to be about £28 per child per week in 2026/27. Free School Meals count as income for purposes of measuring poverty. Technical details of modelling available on request.
The impacts of these policies would be over and above the impacts of the two-child limit being abolished, which we estimate to be around 1 percentage point in 2026-27. All else equal, each of the options would reduce relative child poverty after housing costs by a further 1 percentage point in 2026-27, representing an additional 10,000 children who would be kept out of poverty.
The exception is Option 4: extending universal Free School Meals to all primary school students would not have a measurable impact on aggregate child poverty levels, even when coupled with an increase to Scottish Child Payment of around £2 per child per week.
Although most of the policies are similar in terms of their aggregate impacts, under the surface there are some important differences:
Option 1 is the simplest, but does involve steepening the so-called ‘cliff edge’, whereby households lose their entire Scottish Child Payment award if their incomes increase beyond the point at which they are entitled to Universal Credit – which could incentivise them to forego opportunities to earn more. This option also increases Scottish Child Payment for recipients who are not in poverty, including those kept out of poverty by the payment at its current rate.
Option 2 is arguably preferrable in these respects, since it extends Scottish Child Payment to families who are not currently eligible while also benefitting many multi-child families who currently are, with the overall cliff edge not steepening as much. However, it does favour older children, when families with young children have been identified as a priority group.
Option 3 targets younger children specifically – Best Start Foods is available until the child turns three, while Best Start Grants are paid to children at various points until the child starts school. This option would also channel some of the TCLP savings into one-off grants as opposed to recurring payments, which may be less distortionary when it comes to work incentives even though they have similar eligibility criteria as the Scottish Child Payment. By the same token, their one-off, targeted nature limits their direct impacts on overall levels of child poverty.
Option 4 removes a cliff edge of sorts in the form of the means test for Free School Meals that applies to children in Primary 6 and 7, who are typically between 10 and 11 years old. Although this policy would benefit some households that lie just above current eligibility, it would primarily benefit those with higher incomes. On the other hand, the distributional impacts would depend on take-up, and there could be wider benefits such as a reduction in stigma.
Finally, Option 5 is unique in featuring a gradient across households – both because discounts on water and sewerage charges are proportionately linked to Council Tax Reduction, which tapers with income, and because these charges themselves vary by council tax band. Other changes to Council Tax Reduction would also be possible, but these will tend to extend entitlement to higher-income households rather than just benefitting current recipients, most of whom already receive a 100% reduction.
These are by no means the only options available, but they highlight some of the factors that the Scottish Government will need to weigh up when reallocating the TCLP budget, along with the potential impacts of doing so, in a scenario where the two-child limit is abolished.
Time will tell
Whether or not that that scenario will transpire remains unclear. It is possible that the UK Government will take an intermediate approach by relaxing the two-child limit in some way without abolishing it entirely – for example by exempting certain groups, moving to a three-child limit, or introducing a taper.
Mitigating the remainder of the limit would cost less than the planned TCLP – meaning there would still be some savings – but may require more time to be designed and implemented. It is also possible that the Budget will include a commitment to eventually abolish the two-child limit, but not in the coming year, meaning the TCLP would be needed temporarily.
For now, all eyes are on Rachel Reeves – but the focus will quickly turn to the Scottish Government. Keep an eye on our website and social media for more analysis of the UK and Scottish Budgets over the next few months!
