The Chancellor is today [WEDNESDAY 11 JUNE] expected to announce the biggest boost to social and affordable housing investment in a generation.
As part of the Spending Review Rachel Reeves is expected to confirm £39 billion for a new Affordable Homes Programme over 10 years. This will turbocharge the Plan for Change commitment to get Britain building and deliver the 1.5 million homes this country needs.
This investment will be significantly higher than what the previous government spent on affordable housing. The last five year 2021-26 programme was only £11.5bn, averaging £2.3bn per year.
This means the government will be spending almost double this on affordable housing investment by the end of this Parliament (£4bn in 2029/30).
This is the first time in living memory that the government has set out a programme that provides ten years of certainty. This provides the sector with the confidence to deliver for now and the future, making it easier for those on low incomes to access a safe, high-quality home.
This comes on top of a ten-year social rent settlement that will set a rent policy for social housing from 2026 that enables providers to borrow and invest in new and existing homes, while also protecting social housing tenants. This ten year settlement will see rents rise at CPI+1% from 2026, alongside a consultation to follow shortly on how to implement social rent convergence.
It also builds on ambitious reforms to the planning system that the Government has already announced, which were judged by the OBR to add £6.8bn to the economy and boost housebuilding to its highest level in 40 years by 2029/30.
A government spokesperson said: “The Government is investing in Britain’s renewal, so working people are better off.
“We’re turning the tide against the unacceptable housing crisis in this country with the biggest boost to social and affordable housing investment in a generation, delivering on our Plan for Change commitment to get Britain building.”
RACHEL REEVES: “WE ARE INVESTING IN BRITAIN’S RENEWAL”
Chancellor vows to ‘invest in Britain’s renewal’ as she lays out the Government’s Spending Review.
Reeves to announce the Government’s plans to invest in Britain’s security, health and economy to make working people better off.
Billions of pounds of new capital investment will boost British business and create British jobs to kickstart economic growth and drive up living standards in line with the Plan for Change, including the biggest ever local transport investment in England’s city regions outside of London and the South East.
The Chancellor will today publish the Government’s Spending Review to ‘invest in Britain’s renewal’ as she vows to make all parts of the country better off.
Rachel Reeves will announce plans for billions of pounds of investment in projects across the United Kingdom that will create jobs, prosperity, and put more money in people’s pockets.
The Chancellor will say detailed spending plans come after the Autumn Budget and Spring Statement fixed the foundations of our economy to deliver stability, outlining: “The choices in this Spending Review are possible only because of the stability I have introduced and the choices I took in the Autumn.”
The Chancellor will confirm the Government’s commitment to delivering for every part of Britain, by announcing reforms that will guarantee towns and cities outside London and the South East can benefit from new investment. This will include the biggest ever local transport infrastructure investment in England’s city regions, which will truly connect people to opportunities that improve their quality of life, a key objective of the Government’s Plan for Change.
Ms Reeves is also expected to spell out the Government’s plans to invest in the British people’s priorities of security, health and economy.
The Spending Review comes on the back of the Government’s announcements in recent days to invest £15.6 billion in local transport projects, £86 billion to boost science and technology, and create ten thousand jobs by building Sizewell C Nuclear Power Station – which will drive forward Britain’s status as a clean energy superpower, as outlined in the Plan for Change.
Speaking in the House of Commons, the Chancellor is expected to say:“This Government is renewing Britain. But I know too many people in too many parts of the country are yet to feel it.
“This Government’s task – my task – and the purpose of this Spending Review – is to change that. To ensure that renewal is felt in people’s everyday lives, their jobs, their communities.
“So that people can see a doctor when when they need one. Know that they are secure at work. And feel safe on their local high street.
“The priorities in this Spending Review are the priorities of working people. To invest in our country’s security, health and economy so working people all over our country are better off. That is what this Spending Review will deliver.”
She will add:“I have made my choices. In place of chaos, I choose stability. In place of decline, I choose investment. In place of retreat, I choose national renewal.
“These are my choices. These are this Government’s choices. These are the British people’s choices.”
It’s less than a week until the Spending Review announcement, and rumours abound about what departments will get in funding and how it ties in with the Government’s priorities (write Fraser of Allander Institue’s João Sousa) .
But how did we get to this system in which departments depend on settlements with the Treasury as part of a broad review of what the government spends its money on? Does it work? How has history influenced it? And what can we expect from next week?
We have today published a paper looking at all this in detail – but here’s a shorter version of the history and a preview for Chancellor Rachel Reeves’ statement.
The Treasury has long been at the centre, and that has not always been great
The system that preceded post-Second World War changes to spending planning and control was set up by William Ewart Gladstone’s Treasury, and had a strong focus on ensuring that expenditure was kept on a tight leash. Parsimony with public funds, annual control of cash and using taxation to balance the needs on public spending were the driving forces of the Treasury, and remained so until the 1950s.
By then, however, Parliament had come to largely ignore its previously central role in setting public spending envelopes. Successive governments had made control of public spending a matter of confidence, and even large changes largely went through on the nod. The Plowden Committee in 1961 proposed a more collective way of deciding on public spending, and its recommendations were largely accepted.
This became the Public Expenditure Survey (PES), which intended to devolve responsibility for planning to departments and to think about what was needed rather than what the envelope as a whole would be. The intention was to limit the Treasury’s influence, which in large part it did.
The 1970s crises bring the Treasury back into the driving seat
But although the PES was well intentioned, it had implementation and incentive problems.
On the implementation side, it was extremely complicated. It required controlling the volume of public services provision, which is as difficult as it sounds. But the lack of constraint on overall spending was its biggest downfall. Although it was meant to reflect economic conditions in the medium-term, there was no mechanism for doing so.
The system was stressed to breaking point during the mid-1970s inflation crisis. The focus on volumes meant that the Government was expected to find additional funds to inflation-proof programmes, but that became impossible with inflation running well above 20% and market participants jittery about sterling and the Government’s finances. From 1976-77 onwards, hard cash limits were introduced, much to the chagrin of many in Harold Wilson’s Cabinet. 1 Horse Guards Road was back in charge of spending.
Cash limits were extremely successful in combating unabated growth in public spending, although of course that came at the expense of being able to deliver all that the Government might have liked to do. The PES formally stayed in place until Gordon Brown’s time in Number 11, but it was for all intents and purposes no longer the tool it had been.
We’re still living with the 1970s spending control architecture
Cash limits are essentially the basis on which Gordon Brown’s Spending Review framework for departmental expenditure limits (DEL) would stand. Since their introduction and success, they have been the way Chancellor after Chancellor has found to push back against demands from departments, and they work in a remarkably simple way. The risk of future demands on spending, particularly for ongoing programmes and costs, is transferred to departments, which then have to trade them off against other pressures that might arise.
Of course, in many cases spending ministers end up in a stalemate with the Chancellor, and end up appealing to the Cabinet or Number 10. But the system is designed for stooshies of this kind – imposing a high bar on ministers to get additional spending, and therefore maintain Treasury control over most areas of spending.
Spending Reviews are big Whitehall events, but they decide less than might appear at first
Since the first spending review in 1998, these have been all-consuming affairs for departments of the UK Government. But they are only a way of divvying up an envelope that’s already been decided: the Chancellor sets it out at the previous fiscal event, and then it’s very much a zero-sum game.
On the other hand, one might ask to what extent these limits really are as hard as they seem at first, and therefore to what extent they actually constrain public spending. Even if we exclude the 2019 and 2020 Spending Reviews, for which spending took place during the pandemic and obviously required time-sensitive increases in spending, there is evidence that the Government has topped up budgets significantly during spending review periods.
Chart 1 shows the annual increases in limits set to departments in nominal (i.e. in cash) terms. This is what spending reviews should be good at: passing on the risk to departments by setting cash budgets, which mean that each area needs to then manage competing demands within a set limit.
Instead, what we see is that apart from the austerity years – in which cuts actually exceeded plans – spending growth has been consistently higher than that projected in each spending review. The gap has grown over time, with spending in the SR 2015 period more than three times that planned by George Osborne, largely as a result of Philip Hammond’s looser policy. Growth in the SR 2021 period has also been twice as fast as Rishi Sunak intended as Chancellor, even with him eventually stepping into Number 10.
Chart 1: Nominal annual increases in departmental expenditure limits in each SR period
Source: HM Treasury, OBR, FAI analysis
This consistent pattern of top-ups and policy between spending reviews is not really surprising. In some sense, it merely reflects the fact that the spending review process – for all the work it generates in Whitehall – is not actually a major macroeconomic event. That place is taken by Budgets and Summer/Autumn/Fiscal Statements (Winter has so far been avoided in the title, presumably to avoid headlines writing themselves in the case of bad news), in which the Chancellor does actually have to balance tax, spending and borrowing in line with political, economic and market conditions. All that is absent from a spending review.
What about real-terms spending?
When the PES was introduced, it was meant to be a solution to the excessive control exercised by the Treasury, which created a barrier to expansion based on population demands for additional government provision of goods and services. In particular, the planning system was changed to be on the basis of volumes rather than prices; the Government would decide what it needed to do in terms of quantities, and would then provide funding for any inflation effects.
This is largely what caused the loss of control over spending in the 1970s, resulting in the imposition of cash limits. Of course, what this actually meant was that if inflation was below forecast, departments would be able to increase spending within that envelope and provide more goods and services. But if it were higher than forecast, then departments would have to live within their limits and cut provision. Essentially, the inflation risk was outsourced to departments.
Chart 2: Real-terms planned and actual spending by departments during each SR period
Source: HM Treasury, OBR, FAI analysis
In fact, that is largely the pattern that we see since the 1998 CSR. Chart 3 shows this in more detail, breaking down the difference between planned and actual real-terms spending into an inflation effect and the provision of additional funding by the government in periods after the spending review. Note that the inflation effect is positive when inflation is lower than forecast – that is, lower inflation frees up funding for higher increases in real-terms government spending.
Chart 3: Breakdown of difference between planned and actual real-terms increases in spending during SR periods
Source: HM Treasury, OBR, FAI calculations
In the period after the 1998 and 2000 spending reviews, inflation was significantly lower than forecast, which allowed the UK Government to increase spending considerably above what it had planned originally. But even then it also engaged in significant top-ups during the SR period, meaning that the pattern of not sticking to the announced limits has been a feature of the system since its introduction.
The austerity years also show that the Osborne Treasury used lower than predicted inflation to slash spending more aggressively, essentially offsetting any loosening that could have come from that inflation surprise. It also cut aggressively the totals for 2015-16 after the SR 2013.
The Hammond loosening is very evident in this chart as well, bringing annual growth in spending to 2.3 percentage points above Osborne’s plans from 2015. And finally, the return of the inflation erosion of the purchasing of departmental budgets is clear from the SR 2021 bars. Jeremy Hunt increased totals in his budgets, but not by enough to mitigate the inflation effect: spending fell by 0.7% a year in real terms, compared to the already significantly tight 0.1% fall pencilled in by Rishi Sunak.
What can we expect next week?
As we’ve outlined above, the envelope for the 2025 Spending Review has been set since March. There may be some small movements either way, but ultimately it will be very close to what the Chancellor included in her plans at the Spring Statement and the OBR scored in its Economic and Fiscal Outlook.
We’ll focus on RDEL, which is day-to-day spending and therefore the most crucial allocation for public service delivery in the short-run. Table 1 shows just how uneven the profile is for growth in spending: slower in 2026-27 already, and down to only 1% a year from 2027-28 onwards.
Table 1: RDEL allocations from the Spring Statement 2025 and Main Estimates 2025-26
2024-25
2025-26
2026-27
2027-28
2028-29
RDEL (£bn)
487.5
514.8
535.5
551.6
567.7
Assumed RDEL excluding international aid (£bn)
476.5
502.6
529.0
544.9
560.8
Real-terms growth
2.9%
2.3%
1.0%
1.0%
Real-terms growth excluding international aid
2.8%
3.5%
0.9%
1.0%
Source: HM Treasury, OBR, FAI analysis
The totals in the Spring Statement already had the shift from international aid to defence spending, which when we put it all together actually leaves slightly more room for manoeuvre in the first year of the Spending Review on the resource side for all other departments than might seem at first.
But that is very much short-lived. And with the health service, schools and defence likely to be boosted in real terms, it leaves a very difficult settlement for the final years of the Spending Review.
Chart 4 illustrates a plausible scenario in which the English NHS sees an increase of 3.6% a year in real terms, with schools and defence also seeing around a 2% boost a year. None of these are historically large, but even this mild scenario would leave unprotected departments having to cut spending significantly, by 1% a year in real terms. This would fall disproportionately on 2027-28 and 2028-29, as there is a significant boost in the first year. It might mean 2.5% to 3.5% cuts a year in real terms in two consecutive years.
In this scenario, the Scottish Government’s block grant would mechanically move similarly to the overall envelope. This is because many of the changes to unprotected departments lead to Barnett consequentials, but so do the larger boosts to health and education, which offsets those changes.
Chart 4: Illustrative RDEL scenario for the Spending Review based on announced policy and total envelope
Source: FAI analysis
It is of course for the Chancellor and the UK Government to decide on the path of public spending – and it might well choose different paths for spending. But chart 5 is not an implausible extrapolation of the figures that are already in the OBR forecasts and which guide the Spending Review totals.
And it does not look like a particularly deliverable plan. It promises a sort of ‘mañana austerity’, with strong growth in spending for another year while continuing to promise to cut spending at pretty heroic rates in a few years’ time. In fact, it’s almost a perfect reverse image of what then-OBR Chairman Robert Chote termed George Osborne’s spending ‘rollercoaster.’ Maybe we’re just on a different section of the ride.
Chart 5: Implied annual real-term growth rates from the illustrative RDEL scenario for the Spending Review
Source: FAI analysis
But as chart 3 showed, spending reviews are far from the only time at which fiscal policy is announced. A cynic might suspect that the Chancellor knows this and is planning on finding a way of not having to deliver those planned cuts in 2027-28 and 2028-29 – perhaps by hoping for economic growth to bail her out, or raising taxes significantly at a coming budget. Either way, she’ll want to avoid trade-offs on public services that are hard to stomach.
But that seems to be for another day, may even another year. Augustinian fiscal policy is alive and well.
Councillors agree record spend on primary schools and extra support for social care
Millions of pounds will be spent on protecting and improving schools and crucial frontline services in Edinburgh.
Setting Edinburgh’s budget today (Thursday 20 February) councillors identified a £1.8bn spending programme focused on investing in services for children, older residents and those most in need of support.
Labour’s Budget plans were passed with Conservative and Lib Dem support.
An increase in Council Tax rates will be used to balance the budget and to increase spending on frontline services like education, social care and road safety around schools; in direct response to calls from local residents during extensive budget consultation.
Council Leader Jane Meagher said: “Together we’ve been able to deliver a balanced budget and prioritise spend on the areas residents have told us they care about most, while staying true to the Council’s core commitments of tackling poverty and climate change and ‘getting the basics right’.
“We’ve updated our plans at every step, taking stock of the thousands of responses gathered during our public consultation calling for us to invest in our frontline services.
“Residents and community groups have been loud and clear that people want spending on schools and roads to be protected, sharing concerns about the local impact of the national social care crisis, and that they’d be willing to see Council Tax raised to make this happen.
“We’ve listened and we’ve gone further – agreeing record spend on over a dozen new and existing school buildings, specific funding for road safety around schools and substantial extra money for the Edinburgh Health and Social Care Partnership.
“We’ll be tackling Edinburgh’s housing and homelessness emergencies and investing in our communities, including money towards roads and a new Blackhall Library.
“For all that, we have had to make many difficult decisions to make substantial savings and I’m grateful to all Councillors for their input. We remain the lowest funded local authority in Scotland, and I will continue to call for fairer funding for Edinburgh.”
Finance and Resources Convener Cllr Mandy Watt said: “Residents are aware of the financial challenges we face following years of underfunding, and they’ve told us in their thousands that they want to see vital services protected and enhanced. I’m pleased that we’ll be able to use the £26 million raised from an 8% increase in Council Tax to protect and improve these services.
“Huge pressures on health and social care and housing remain unaddressed nationally and while this Budget does everything within our power to protect local services, we need greater action to be taken at a government level.
“A huge amount of work has taken place to consider our budget options, with detailed proposals reported to Committees and tweaked in the months leading up to today’s final decision. I’d like to thank Council officers for all their work on this.”
Lib-Dem votes ensured the Labour budget was passed. Group leader Cllr Kevin Lang said after the meeting: “Very proud of what the LibDems on Edinburgh Council have just achieved.
“Thanks to us , cuts to teachers and pupil support have been stopped, there’s a record budget for road safety projects and SNP plans to cut money for road and pavement repairs have been blocked (again).”
The SNP criticised the administration’s budget as lacking any vision for Edinburgh. SNP group leader Simita Kumar said before the meeting: “It’s pretty damning.
“Labour are just rubber-stamping officer proposals without adding any political direction, what’s the point of them being in power? Zero accountability, zero vision, and zero leadership.”
Substantial spend on schools
In the highest spending on school buildings in recent years, £296m will be invested towards five new campuses (Granton Waterfront, Newcraighall, St Catherine’s, Gilmerton Station and Builyeon), five extensions (Hillwood, Queensferry and Frogston primaries, plus Castlebrae and Craigmount high schools), plus a replacement building for Fox Covert.
The council will invest an additional £30m towards upgrading special needs schools, with improvements designed to allow as many pupils as possible to see their needs met locally.
An additional £6.6m will be spent on road safety, particularly around schools. A further £0.5m will be used to drive improvements in educational attainment and £1m will be invested in Holiday Hubs, with options to make this scheme more sustainable to be explored.
Funding will also be protected around enhanced pupil support bases, pathways for pupil support assistants, transition teachers and devolved school budgets.
Extra support for social care
Up to £66m will be spent on Health and Social Care facilities in light of increasing demands for services, a growing and aging population and the rising costs to the EIJB of delivering these services.
As part of this, councillors have agreed to set up a new Innovation and Transformation Fund – subject to match-funding by NHS Lothian – to leverage additional capital investment worth up to £16m.
Additional funding will provide support for Adult Health and Social Care worth £14m plus £5.6m will be put towards adaptations, to help people to live in their own homes independently.
Up to £2.5m from a Reform Reserve will be allocated to third sector support, plus income maximisation of £1m, following challenges with reduced funding available to charities and voluntary organisations from the EIJB.
More budget spent on roads
Responding to the results of the council’s budget consultation – where people said they’d like to see money spent on roads, Edinburgh will spend £40m on roads and transport in the year ahead.
Focusing on areas identified by a Women’s Safety survey, where certain parts of the city were described as feeling unsafe, as part of this spend the council will invest £12.5m this year and next improving roads, pavements, streetlights.
A further £6.6m will be invested in Safer Routes to School and travelling safely.
Prioritising our communities and climate
Councillors have committed to climate remaining a key priority and over the next 12 months and an additional £2.9m will support actions with city partners to address Edinburgh’s climate and nature emergencies.
Supporting a Just Transition, affordable, net zero housing including 3,500 new, sustainable homes in the £1.3bn transformation of Granton Waterfront will be taken forward.
An additional £15m is planned to sustainably replace Blackhall Library, which has been closed due to RAAC, while £0.5m will be used to increase enforcement to keep the city cleaner and safer. Around £0.5m will also be used to create better data to support local decision making.
Focused poverty prevention
Councillors have committed to accelerate the work of the End Poverty Edinburgh Action Plan, tackle the city’s Housing Emergency and review the way the council supports the third sector in Edinburgh.
Councillors agreed to continue to support the Regenerative Futures Fund which will help local communities to lead poverty prevention and deliver change.
The council will invest £50m in purchasing and building suitable temporary accommodation for people experiencing homelessness.
Following agreement of the Housing Revenue Account budget, Edinburgh will continue work to retrofit high rise blocks and spend £14.8m towards new affordable housing and upgrades to void properties, to get them back into use as homes.
Council rents will be raised by 7% to raise much needed new funds to upgrade housing, with Councillors also agreeing to increase the city’s Tenant Hardship Fund by 7% in line with this rent rise.
Changes to Council Tax
All Council Tax rates will rise by 8% from April 2025 to allow the above investment to take place. The new rates will be:
COSLA is clear that the proposed funding from Scottish Government won’t cover additional Employers National Insurance costs, and councils still face an extremely challenging financial position as they set their budgets.
COSLA Resources Spokesperson, Councillor Katie Hagmann, commented: “We note that the Scottish Government has announced it will fund £144m of the additional direct staffing costs that will result from the UK Government’s policy decision rise to Employers National Insurance. However, this leaves a gap of £96 million Councils will still need to fill within their budgets.
“While we acknowledge that the UK government is still to announce additional resources, it is important to note that there has been no additional funding for commissioned services, the biggest of these being adult social care, which are also vital services and will see significant impacts.
“Given the mounting challenges for local government, this additional funding will not solve the crises councils and communities are facing, which are exacerbated by the Employers National Insurance increase.
“Difficult decisions will still need to be made as councils look to protect essential frontline services.”
Councillor Mandy Watt, Finance and Resources Convener, looks ahead to Council Budget day on Thursday 20 February:
Very soon, councillors will be making tough financial decisions to balance the council’s budget and set the rate at which Council Tax will be charged.
Given the increasing need for investment in infrastructure and services, we’ll have to raise Council Tax, parking charges and other fees to fund the delivery of services we all rely on. We are considering a recommended 8% rise in Council tax.
An 8% increase adds £9.65 per month to a band D property and would provide a total of £26 million across all bands for investment and service priorities.
A huge amount of work has already been done to consider options, with detailed proposals considered yesterday at a Special meeting of the Finance and Resources Committee. This has been informed by a huge consultation exercise with residents, and I want to thank all 3,260 people who took part.
We know from the consultation responses that people are aware of the financial challenges we face following years of underfunding, and many are open to a fair rise to Council Tax after last year’s freeze.Other councils are proposing increases of 10% and above, but we’re trying to keep Edinburgh’s increase lower because that’s what the majority of residents would prefer.
Residents also told us they’d like to see Councillors focus on several key priorities when setting this year’s budget. These include spending on education, investing in local facilities and upgrading our roads and pavements. We’ll use the money from an increase in Council Tax to protect and improve these services.
Investment proposals include continuing the extra £12.5 million for roads and pavements that was added last year, with a further £5 million for road safety, especially around schools. There will be five new schools and five extensions of existing schools and £26 million for special needs infrastructure. Fox Covert Joint Campus will be replaced and there’s £15 million for permanently replacing Blackhall Library.
The decision to recommend an 8% Council Tax increase was not taken lightly. Over the last decade cuts in core grant funding of over £400 million have been mitigated by council staff continually delivering more with less resources.
This year’s financial challenges are the UK Government’s increase in national insurance, costing the council £9 million and the Scottish Government changing the stability funding floor, taking away £6.3 million. Fortunately, the UK Government passed on £18million of pEPR (‘producer pays’) funding, which filled those gaps.
While we can expect a slightly better government grant this year following yesterday’s Scottish Parliament budget, the consequences of last year’s cuts to affordable housing remain clear to see.
Huge pressures on health and social care remain unaddressed by national governments. Yet again, Edinburgh is expected to be the lowest funded local authority in Scotland per head of population and we’ll still need to find best value efficiency savings to deal with service pressures of £40million and keep the books balanced this year.
Budget Deals, Budget Revisions, and Budget Pressures
There was a lot of focus this week on the Budget deal struck by the Scottish Government, which will allow the Budget to be supported by the Scottish Green Party and the Scottish Liberal Democrats (write Fraser of Allander Institute’s MAIRI SPOWAGE and SANJAM SURI).
In early January, Anas Sarwar announced that Scottish Labour would abstain on the Budget as the Scottish Government were likely to secure support from the budget from one or other of these parties. Of course, this meant that the Scottish Government did not need to secure support from other parties to ensure that the budget would pass.
However, no doubt John Swinney will be pleased that he can demonstrate working across the chamber, and particularly constitutional boundaries, to come to a deal.
On the face of it, the price paid for the support of these parties seems pretty cheap (in the scheme of the SG Budget!), totalling £16.7m.
With the Scottish Liberal Democrats (TOTAL £7.7m):
Increase Drugs and Neonatal Service Investment. +£2.5m
Strengthen support for Hospices. Increase the funding from £4m to £5m. +£1m
Invest in targeted support for the College sector. +£3.5m in creating an Offshore Wind Skills Programme and College Care Skill Programme.
Support the continuation of Corseford College. + 0.7m
Offer flexibility to Orkney Island Council in terms of capital and resource funding.
With the Scottish Greens (~£9m):
Establish a £2 bus fare cap pilot in a regional transport partnership area. +£3m in 25-26 (£10m in total)
Increase Nature Restoration funding. increase from £23 million to £26 million. +£3m
Extend free school meal eligibility in S1-S3 in 8 local authority areas – covering pupils in an urban, rural, semi-urban and island authorities in receipt of Scottish Child Payment. +£3m (although it looks like most costs will fall in 2026/27, so not sure about the exact cost in 2025-26)
The Scottish Government say that this will be funded by another draw down from the Scotwind fund (more on Scotwind below) of £3 million to support the capital spending on nature restoration, and the remaining amendments are funded through debt servicing costs which they expect will be lower than they expected at the Draft Budget in early December.
The Spring Budget Revision changes the picture for 2024-25 considerably
Getting less coverage this week is the Spring Budget Revision, which was laid before parliament on Thursday. This is a pretty technical document, with the “supporting notes” document running to 146 pages. This is for the current year, and now reflects the additional Barnett consequentials which were announced through the UK Budget for 2024-25
[By way of background, these revisions happen twice a year, once in the Autumn and once in the Spring, to update the parliament to changes in the funding positions for the current fiscal year. The Budget bill will normally be passed by late February. The ABR comes in roughly Oct/Nov, then the Spring one in Jan/Feb]
The Government did not include any of these announcements in the baseline comparisons for the Budget in December. When asked about the uplifts for 2024-25 in the wake of the UK Budget, they said that the £1.4bn extra in resource funding for 2024-25 was “in line with internal planning assumptions”. This was in the context of the clear budgetary pressures earlier in the financial year, which lead to the emergency budget announcements in September 2024.
The Scottish Fiscal Commission were not please with this, saying “This is a material limitation to information available to the Scottish Parliament for its scrutiny of the Budget and in the spending analysis we can do.”
The SBR published yesterday shows how this money has been allocated in the current year.
The highlights for us are:
The £338m resource borrowing that had been planned to cover for a forecast error reconciliation will not be necessary (so they had planned that borrowing into the 2024-25 budget due to this negative reconciliation from previous years, and now do not need to use it because of the funding received)
That the planned £424m drawdown for the Scotwind licencing fund will all now be returned (they had already announced that they would reduce this drawdown by £300m at the Budget but now they are returning all of it because of the funding received)
That £103m more than planned will be put into the Scotland reserve.
Two things are demonstrated by where the money has gone – first, that it does not seem credible that it was in line with “internal planning assumptions”, in the context of emergency budget measures prior to the UK Budget followed by cancelling of already planned borrowing. Second, it would have helped scrutiny for the 2025-26 Budget if this had been included in the baseline presented at the Scottish Budget, given the SFC role in assessing borrowing and use of the reserve and the role of the Finance and Public Administration Committee.
The restoration of the Scotwind fund is welcome – let’s hope now it will be exclusively committed to capital/infrastructure spending to support the energy transition. It would be good if this could be formally done so the money cannot be used in this way in the future.
Employer NICs likely to cause more budget pressures
We’ve covered the impacts that the employer NICS rises could cause to public services in Scotland.
As a reminder, the Chancellor increased both the rate of employer NICS (from 13.8% to 15%) and lowered the threshold at which employers have to start paying NICS (from £9,100 to £5,000). At the time of the Budget, the Treasury said that public sector employers will be compensated – but no amounts were confirmed, which caused the Scottish Government to (quite rightly) raise concerns about the uncertainty that this would cause.
We’ve heard from the Scottish Government that the expected impact is expected to range anywhere between £550m (for public sector workers), and £750m (including indirect employees such as childcare, higher education, social care). We estimated around £500 for the direct public sector. The rumoured amount on the table from the Treasury is £280-300m. Our blog explains the reasons behind these different amounts.
[But, in short, the difference between the SG and the Treasury is what “compensating” the public sector means – the actual cost, or the actual cost if the size and pay bill of the public sector in Scotland was proportionately the same as the UK.]
Whatever the final amount, it is unlikely the whole cost to the public sector will be covered. We said at the time of the Budget that the Scottish Government hadn’t budgeted for this likely shortfall.
Kate Forbes said this week that the public sector in Scotland will have to “absorb” the shortfall- which basically means that the public sector would have to find savings or efficiencies elsewhere to absorb the budgetary impacts of higher NICS.
The confirmation of the compensation will not come until the Supplementary Estimates are published (which might be as late as the end of February). This means that bodies like councils, who are currently trying to set their budgets, will likely have to plan on the basis of absorbing maybe 40-70% of this additional cost until they get confirmation.
Smart Data Foundry (SDF) has been awarded £3 million funding to operate a new Financial Data Service, enabling more researchers to study the financial health of millions of households across the UK, by providing secure access to financial behaviours, economic resilience, and regional economic activity.
The funding is made by Smart Data Research UK, which is part of UK Research and Innovation (UKRI).
The new service, which will operate from SDF’s base at Edinburgh Futures Institute, will be part of a network of five other data services across the country.
Together, they will put the UK at the forefront of smart data research and innovation. Providing safe and efficient ways for researchers to access and use the smart data generated through everyday interactions with the digital world, including via mobile apps, navigation systems, social media and shopping.
Led by SDF’s Dougie Robb and Professor Chris Dibben from the University of Edinburgh, the new Financial Data Service will provide unprecedented insights into the economic health of the UK through secure access to de-identified banking and finance data from millions of households and businesses.
Since its establishment in 2022, SDF has earned national recognition for its work using anonymised financial data for public good, including research in partnership with NatWest Group into how Covid-19 affected how people earned, spent and saved during and post pandemic and its work with Sage and CEBR on their quarterly SME tracker.
Dougie Robb, SDF’s Interim CEO, said: “We look forward to joining five of the most forward-thinking data service organisations in the UK in this groundbreaking network. It will foster data sharing partnerships between academia, public institutions and private enterprise leading to public good outcomes which will improve the lives of people across the UK.
“In partnership with the University of Edinburgh (UoE) we’ve made great progress in holding and making available for public benefit research financial data resources. We have forged fruitful data partnerships with NatWest Group, Virgin Money, SAGE, and Equifax, and built a team of transdisciplinary experts with expertise across finance, banking, digital technology, product, data science, and information governance.”
Professor Chris Dibben added: “Understanding the financial situation of households across the UK is a vitally important for social and economic research. However this key aspect of economic life is often poorly measured in our research datasets or even absent.
“This investment by Smart Data Research UK in a Financial Data Service will allow us to change this situation, enabling more public benefit social and economic policy research. I am really excited to be working with Smart Data Foundry and SDR UK to deliver this significant new resource over the next three years.”
By partnering with financial institutions and leading research institutes, the new Financial Data Service will deliver insights into productivity, prosperity and health and wellbeing, providing access to detailed evidence about financial behaviours, economic resilience, and regional economic activity.
This data will enable researchers to tackle urgent policy challenges including the cost-of-living crisis, financial inclusion, the changing nature of employment, and productivity in different economic sectors and geographic places.
The service will enable a transformation in the UK’s understanding of how economic shocks and policy interventions affect different communities, helping policymakers design more targeted and effective responses to economic challenges.
Magdalena Getler, Head of Academic Engagement at Smart Data Foundry, said: “With the new Data (Use and Access) Bill currently going through Parliament, we are at the beginning of a new age for data.
“If successful, the new legislation will empower safe data use, access, and sharing for the good of society like tackling challenges such as the impacts of poverty and economic inactivity.”
Also awarded funding in this latest tranche was Smart Energy Data Service, part of the Energy Systems Catapult. All six will work collaboratively as part of the Smart Data Research UK programme.
These two new data services join four others previously announced:
· Imagery Data Service (Imago)
· Smart Data Donation Service
· Geographic Data Service
· Healthy and Sustainable Places Data Service
A strategic hub based within the Economic and Social Research Council (ESRC) will provide leadership and coordination. It will also offer common services and ethical guidance.
Joe Cuddeford, Director of Smart Data Research UK, said: “Our six interconnected services will enable researchers to access unprecedented insights across finance, energy, health, geography, and beyond – empowering innovative solutions to complex societal challenges facing the UK today.”
Stian Westlake, Executive Chair of the Economic and Social Research Council, added: “This investment in a new network of smart data services helps put the UK at the forefront of data-driven innovation.
“Data infrastructure is as critical to our shared prosperity as transport, water or power networks. When we invest in data infrastructure we are investing in economic growth, improved public services, and a more sustainable future.”
The Global Fraud Report 2024 witnessed not only a marked increase in fraud, but also genuine concern from research with 1,200 fraud professionals: 96% of the professionals are worried about the industrialisation of fraud, while 79% have seen a significant increase in the sophistication of fraud attacks in the past 12 months.
“Fraud is always evolving and with criminals now exploiting AI and machine learning, our expectation is that scams will be increasingly more sophisticated,” comments Metro Bank’s Head of Fraud & Investigations, Baz Thompson.
“Our systems have to constantly evolve to protect our customers, but we would remind all consumers and businesses to be wary of anything that seems too good to be true and think twice before sharing any financial or personal information to help protect themselves.”
We are predicting the five scams to be wary of in 2025:
Facebook Marketplace purchase scams
Impersonation of reputable organisations e.g. bank staff/police/courier firms/HMRC
Peer to peer selling on Facebook Marketplace has been targeted by scammers offering goods that simply do not exist. Be wary of any deal that seems too good to be true and be cautious of new profiles.
Ideally, only pay on collection when you have had a chance to review the goods in person. In the last 12 months we have seen an increase in fraudulent merchants offering goods for sale at attractive prices and then convincing the customers to purchase with card payments being accepted.
So, not only do you need to be mindful of sellers asking for you to make a payment, but there are also sellers who accept card payments that you need to be aware of.
Impersonation of reputable organisations e.g. bank staff/police/courier firms/HMRC
Consumers are being bombarded by phone, text or email from “trusted” organisations such as their bank, the police, HMRC, delivery companies and utility providers asking for payment or personal and financial details – but these requests are all scams.
Ahead of the new financial year in April, this time of year HMRC scams are rife. Threatening calls from HMRC asking you to act quickly to pay an outstanding tax bill should be a red flag to pause. Contact HMRC directly if you have concerns and do not respond to any urgent demands, share any personal information, or click on any links provided.
Investments in Crypto via a rogue broker
However attractive this type of investment may seem, it is inherently risky as online platforms can be breeding grounds for fraudulent schemes, so thorough research and caution are crucial.
Off platform ticket sales
Popular sporting events and major music tours are natural targets for scammers. Be wary of any tickets not offered through known, reputable sites.
Car finance reimbursement scandal
Lenders and dealers have been accused of hiding commission payments made when cars were bought on finance deals. Motorists are being encouraged to sign up for compensation – be wary of sharing your bank details with a random text or email about this compensation scheme. Instead, check out the form and tool guide on Martin Lewis’s MoneySavingExpert.com website.
Ensure you use the correct link to this site as opposed to any links sent via email or other means as the fraudsters do impersonate well known celebrities to make the scam look more attractive.
Consumers can find more information on the Take Five to Stop Fraud website. Take Five is a national campaign that offers straightforward and impartial advice to help everyone protect themselves from financial fraud.
Three easy steps can help prevent a scam from being successful:
Stop -Take a moment to stop and think before parting with your money or information. It could keep you safe.
Challenge – Ask yourself, could it be fake? It’s OK to reject, refuse or ignore any requests. Only criminals will try to rush or panic you.
Protect – Contact your bank immediately if you think you’ve been scammed and report it to Action Fraud at actionfraud.police.uk or call them on 0330 123 2040.
Commercial real estate investor, developer and asset manager, Firethorn Trust, has secured a £29.95million debt package from Leumi UK to deliver its first purpose-built student accommodation (PBSA) scheme.
The financing will support the delivery of a 230-bed PBSA project in Leith, which Firethorn acquired in February 2024.
Forming part of the Leith Walk redevelopment scheme, the site has planning permission to deliver a six-storey building featuring high quality accommodation and generous amenities, including a fully-equipped gym, modern study spaces and student common rooms.
Edinburgh’s PBSA market is materially undersupplied, with a student-to-bed ratio of 3.13:1 and a limited development pipeline. The Leith Walk development will help to address demand by creating much-needed bed spaces, while a modern and sustainable design specification will contribute towards BREEAM ‘Excellent’ and EPC ‘A’ ratings.
Richard Whitby, Chief Financial Officer at Firethorn Trust, commented: “The Leith Walk project required a partner that could provide a tailored financing solution to meet our bespoke needs, which is precisely what Leumi delivered.
“We are delighted to be working with Leumi on this development and are excited about the potential for collaboration on future projects as we grow our Firethorn Living platform.
“With our established track record in developing high-quality assets and generating strong returns, we are confident that this development will play a key role in addressing the critical need for modern student housing in Edinburgh’s vibrant university district.”
Dan Whiteman, Relationship Director at Leumi UK, added: “In many ways, this transaction epitomises what sets Leumi UK apart, as we were able to complete this transaction with great focus on ensuring the lending solution met the specific needs of the sponsor.
“Firethorn Trust has a strong track record of creating attractive and sustainable spaces, and we look forward to expanding our relationship as it grows its Living platform.”
The Leith Walk development is expected to complete in time for the 2026/27 academic year.
Firethorn Trust was advised by Brotherton, BCLP and CMS. Leumi UK was advised by Osborne Clarke and MFMac.
MSPs’ EXPENSES INFORMATION FOR 2023/24 PUBLISHED ONLINE
Latest details of all MSPs’ parliamentary expenses have been published . Quarter 4’s expenses from the financial year 2023/24 are now available online via the Parliament’s searchable database facility.
A briefing paper setting out end year total expenditure figures has also been published (7th November).
The end year total for the financial year 2023/24 is £25,359,035. This represents an increase of £1,891,082 or 8.06% on the previous year’s corresponding figure of £23,467,953.
A Scottish Parliament spokesperson said:“As with every year, staff salaries comprise the largest single expense, with £20.60m covering staff employment in MSPs parliamentary and local offices – that’s 81.25% of the total cost.
“The remainder covers the cost of running those offices, travel, and support for party leaders who are not in government.”
“The 8.06% rise in expenses reflects that the Retail Price Index was running at more than 13% in January 2023, and Average Weekly Earnings was above 5%.”
Search function:
Details of all MSPs expenses claims can be viewed on the Parliament’s searchable database:
Quarterly expenses information is also published in an open data format that is machine-readable and enables the user to manage raw information and re-present in different ways.
The data sets can be accessed via our API or as a single downloadable item which is around 60-70MB in size.
Quarters 1-3 for 2023/24 are already available. Note: Quarter 4 will be available in open data format from Monday 11 November.
