Petroineos, the company which runs the refinery, has informed staff that all oil refining work at Grangemouth had ended.
Workers were told by email yesterday: ‘With the shutdown of CDU2 today, Grangemouth Refinery will cease processing crude oil and the era of refining at Grangemouth comes to an end.’
The news of the final confirmation of the site has come as a hammer blow to staff and is the latest nail in the coffin of Scottish industry.
Reacting to the news that oil refining at Grangemouth has ended Alba Party Leader Kenny MacAskill said:“This is a dark day for Scotland and a betrayal of the workforce by Labour. At the election, they promised to save the refinery but have gone back on that pledge whilst at the same saving British Steel in Scunthorpe.
“Labour have cynically pocketed the votes of the workers and then abandoned them once elected. This is a betrayal for which Labour will never be forgiven.
“Scotland is now the only major oil producing nation in the world not to have its own refining capacity.
“The skills of the workforce have been sacrificed and Grangemouth reduced to an import export terminal.
“This is the cost of the Union and demonstrates how Scotland is powerless without Independence.
“Independence is required so we can protect what is left of Scottish industry and put Scottish workers first.”
The UK Labour Westminster government and the SNP Holyrood government have yet to make an official statement on the end of oil refining at Grangemouth.
Chancellor ‘delivers security and national renewal in a new era of global change’
Chancellor vows to bring about “new era of security and national renewal” as she delivered a Spring Statement to kickstart economic growth, protect working people and keep Britain safe.
People to be on average £500 a year better off by the end of this parliament compared to under the previous government, putting more money in people’s pockets.
OBR forecast concludes government’s landmark planning reforms will result in a £6.8 billion boost to the economy and housebuilding at its highest level in over 40 years by 2029-30
Growth at the heart of Plan for Change as £13 billion of additional capital spend allocated alongside £2.2 billion defence funding boost next year.
THE Labour government said people will be on average £500 better off from 2029, relative to OBR’s autumn forecast, helping to deliver the Plan for Change as the Chancellor yesterday (Wednesday 26 March) announced a Spring Statement to grasp the opportunities in a changing world.
THEY WON’T. From November 2026, 370,000 people who already get PIP will lose it and another 430, 000 who would qualify now no longer will. These people will lose £4500 a year each. And 150,000 carers who look after them will no longer receive their £83.30 a week Carer’s Allowance.
The OBR has also concluded that the government’s landmark planning reforms will result in UK housebuilding reaching its highest level in over 40 years, bringing the UK one step closer to its Plan for Change mission to build 1.5 million homes.
The government says economy will be 0.2% larger in 2029-30 because of the reforms – worth around £6.8 billion in today’s money – growing to 0.4% over the next ten years. This represents the biggest positive growth effect it has ever forecasted for a policy that comes at zero-cost to taxpayers. The reforms will secure over 170,000 new homes for hard working families and leave borrowing £3.4 billion lower in 2029-30.
The Chancellor also set out how the government is protecting national security and maximising the growth potential of the UK defence sector by confirming a £2.2 billion increase in the defence budget in 2025-26 while ensuring UK defence is on the cutting-edge of technology and innovation.
But growth is still not where it should be, so at this Spring Statement, this government has gone ‘further and faster’ to kickstart growth by training up to 60,000 young people to get Britain building again; increasing capital investment by £13 billion over this parliament; and fixing public services by tearing out waste from its roots.
Growth
Kickstarting economic growth is the number one mission of this government, putting more money in people’s pockets. The government has already made considerable progress; supporting a third runway at Heathrow; revitalising the Oxford Cambridge Growth Corridor, launching the National Wealth Fund and making the right choices on public investment to drive growth across the UK.
The actions of this government across the Autumn Budget and Spring Statement, if sustained, lead to a 0.6% rise in the level of real GDP by 2034-35, signalling the government’s growth plan is working.
The OBR concluded that the stability rule is met by £9.9 billion and the investment rule is met by £15.1 billion. Both rules are met two years early, meaning from 2027-28 the government is only borrowing for investment and net financial debt is falling.
The government is not satisfied with short-term growth figures, and is going further and faster today to improve this:
To go further and faster to get Britain building, the Chancellor has today announced a further £13 billion of capital investment over the Parliament to go further on growth, on top of the £100 billion uplift announced at Autumn Budget. This will deliver the projects needed to catalyse private investment, boost growth and drive forward the UK’s modern industrial strategy – unlocking the potential of the Oxford Cambridge Growth Corridor which could add up to £78 billion to the UK economy by 2035.
Taken together, this greater capital investment more than offsets the modest savings on day to day spending and means the total departmental spending will increase over the next five years, when compared with plans in the Autumn.
Over this Parliament, the government is funding a £625 million package to boost skills in the construction sector, which is expected to provide up to 60,000 more skilled construction workers to support the government’s plans to deliver 1.5 million homes in England over the parliament and progress vital infrastructure projects.
As part of this, the government is providing further support to scale up existing construction skills pathway over this Parliament through £100 million for 35,000 additional training places in construction-focused Skills Bootcamps, supporting trainees, ‘returners’, and existing employees to succeed in the sector. Building on the £40 million investment in the new Growth and Skills Levy at Autumn Budget 2024, the government is also providing a further £40 million to support up to 10,000 more young people to access new construction Foundation Apprenticeships, which will provide a key entry route into a thriving industry.
The government is ensuring there are enough skilled construction workers in the system, with £100 million to deliver 10 Technical Excellence Colleges specialised in construction across every region in England, and £165 million to increase funding for training providers delivering construction courses for 16-19-year-olds and adults.
The government is committed to supporting employers to unlock further investment in training to deliver more skilled construction workers, and is providing £100 million, alongside a £32 million contribution from the Construction Industry Training Board to deliver up to 40,000 industry placements in construction each year.
Supported by the construction skills package, the government confirmed this week that there will be a £2 billion injection of new grant funding to deliver up to 18,000 new social and affordable homes. The new funding will only support developments on sites that will deliver in this Parliament, getting spades in the ground quickly to build homes in places such as Manchester and Liverpool.
Defence
The world is changing before our eyes, reshaped by global instability, including Russian aggression in Ukraine. Europe is facing a once-in-a-generation moment for its collective security, with conflicts overseas undermining security and prosperity at home.
A month ago, the PM announced the biggest sustained increase in defence spending since the Cold War as a result of the changing global picture, now reaching 2.5% of GDP by April 2027, and with an ambition to reach 3% in the next Parliament subject to economic and fiscal conditions.
We are going further and faster to protect our national security and maximise the economic growth potential of the UK defence sector:
Increasing the defence budget by £2.2 billion in 2025-26, taking additional spending on defence to over £5 billion since the Autumn Budget.
This raises spending on defence to 2.36% next year and will be invested in fitting Royal Navy ships with Directed Energy Weapons five years earlier than planned, providing better homes for military families and modernising His Majesty’s Naval Base Portsmouth.
Setting a minimum 10 percent ringfence for equipment spending on emerging technologies like drones and autonomous systems, dual-use technology, and AI-powered capabilities, so that British troops have the tools they need to fight and win in modern warfare.
Getting this new tech into the hands of our armed forces quicker by cutting away bureaucracy, with a new UK Defence Innovation unit within the Ministry of Defence spearheading efforts to identify promising technology and ensure these get to the frontline at speed, while also bolstering the UK tech sector and crowding in private investment.
Creating bespoke procurement processes for different types of military equipment, learning lessons from our rapid support for Ukraine to drive faster timescale targets for operationalising new tanks, aircraft and other essential tools for modern warfare.
This government is determined to transform the defence sector into an engine for growth by focusing this investment on where it boosts the productive capacity of the economy such as investment in innovation and novel technologies. As a result of the increase in defence spending to 2.5%, the government estimates this could lead to around 0.3% higher GDP in the long run, equivalent to around £11 billion of GDP in today’s money.
The government’s investment in defence will also support its number one mission to deliver economic growth. UK citizens will be protected from threats at home whilst creating a stable environment in which businesses can thrive, and supporting highly skilled jobs and apprenticeships across the whole of the UK.
Reform
The government is determined to make the public sector more productive and to improve services for working people. But the changing world means we need to go further and faster to ensure we can deliver the public services that working people care most about.
The government has shown its commitment to taking the difficult decisions required to drive efficiencies and reform the state – including announcing that the world’s largest quango, NHS England, will be brought back into the Department for Health and Social Care, reducing bureaucratic inefficiencies and duplication; and driving out wasteful government spend through cancelling thousands of government credit cards.
Getting more people into jobs is also central to the government’s growth mission. This broken welfare system that is letting people down by asking them to prove what they can’t do, rather than focusing on what they could do with the right support – trapping people due to fear of trying work, lack of support and poor financial incentives.
The social security system will always protect those who can never work, that is why this government is proposing an additional premium that will safeguard their incomes. And will end reassessments for people with the most severe, life-long conditions to give them dignity and security.
Helping more people into work is a central aim of these reforms and which is why the government is tackling incentives to be inactive by abolishing the WCA, rebalancing Universal Credit, and investing more into employment support.
We will always support those with long term health conditions through the Personal Independence Payment, which will remain an important non-means tested benefit for disabled people and people with long term health conditions. But these reforms will make the system more targeted and sustainable to ensure the safety net is there for those who need it most.
The OBR have now set out their final assessment of costings and confirmed this welfare package will reduce welfare spending by £4.8 billion in 2029-/30.
The government will modernise the Civil Service into a more productive and agile organisation that can effectively deliver the Plan for Change, underpinned by a digital revolution, while cancelling thousands of government procurement cards.
Today, the Chancellor has gone further:
The Chancellor has confirmed the creation of a £3.25 billion Transformation Fund to support the fundamental reform of public services, seize the opportunities of digital technology and Artificial Intelligence (AI), and transform frontline delivery to release savings for taxpayers over the long-term.
The Fund will invest in vital public services and accelerate the modernisation of the state by taking the next step to reform the children’s social care system through an additional £25 million for the fostering system. This will include funding the recruitment of a further 400 new fostering households, providing children with stability and addressing cost pressures on local government.
The fund will also support the managing offenders in the community, by providing £8 million for new technology so probation officers can focus on reducing reoffending, rather than filling out forms.
In addition, it will provide £42 million for three pioneering DSIT-led Frontier AI Exemplars. These Exemplars will test and deploy AI applications to make government operations more efficient and effective and improve outcomes for citizens by reducing unnecessary bureaucracy.
To create an agile and productive state we are also providing £150 million for government employee exit schemes. This will support a leaner and more efficient Civil Service, helping to reduce administration costs by 15% by the end of the decade. The Chancellor also announced a package of measures to close the tax gap, raising £1 billion per year by 2029-30. The UK tax gap was estimated to be around £40 billion in 2022-23.
The Spring Statement earmarks around £80 million in new money for third party debt collectors to bring in £1.3 billion over the next five years – a return of around £16 for every pound spent for UK public services and investment projects. HMRC will also receive £4 million in new funding to pilot a new test and learn programme with the private sector to improve the tax collection agency’s approach to recouping older unpaid tax debt. Ministers will decide whether to proceed with a larger exercise later this year based on the results of this test.
An additional 600 staff will also be recruited into HMRC’s debt management teams. This means that for every £1 spent on these staff, over £13 of debt is expected to be recovered. The staff will work with the private sector to make collecting tax debt more efficient including through automating admin processes.
The Spring Statement also announces £100 million in new funding for HMRC to recruit a further 500 compliance officers from April 2025. This will raise £241 million in unpaid tax over the next five years.
Late payment penalties for VAT and Making Tax Digital for income tax Self Assessment will increase to incentivise taxpayers to pay on time. This will be from 2% to 3% at 15 days, 2% to 3% at 30 days, and 4% to 10% from day 31. This will take effect from April 2025.
As announced in the autumn, Making Tax Digital for income tax Self Assessment will be extended to sole traders and landlords with income over £20,000. The Spring Statement confirms that this additional group will join Making Tax Digital from April 2028. This will build on the existing plan which will see sole traders and landlords with income above £50,000 joining from April 2026, and those with income above £30,000 joining from April 2027. Around 4 million businesses have an income below the £20,000 threshold.
Looking Forward
This Spring Statement builds on the Autumn Budget and the decisions taken since required to deliver stability to the British economy and kickstart economic growth.
The government will set out its plans for spending and key public sector reforms at the Spending Review which will conclude on 11 June 2025.
This will not be a business-as-usual Spending Review. The government has fundamentally reformed the process to make it zero-based, collaborative, and data-led, in order to ensure a laser-like focus on the biggest opportunities to rewire the state and deliver the Plan for Change.
At the Spending Review, the Budget in the autumn and across the Parliament, the government will continue to prioritise growing the economy to deliver change.
RESPONSES:
UK spending cuts ‘risk harm to most vulnerable’
Finance Secretary responds to Spring Statement
Spending cuts announced by the Chancellor risk harming some of the most vulnerable people in society, Finance Secretary Shona Robison has said.
Responding to the Spring Statement, Ms Robison said: “Today’s statement from the Chancellor will see austerity cuts being imposed on some of the most vulnerable people in our society. The UK Government appears to be trying to balance its books on the backs of disabled people.
“Not content with these cuts, the UK Government is still expected to short-change Scotland’s public services on additional employer National Insurance costs to the tune of hundreds of millions of pounds. This will be felt in public services that people rely on up and down the country – services such as our NHS, GPs, dentists, social care providers, and universities.
“The UK Government’s choice to increase defence investment is welcome, but its choices to shortchange public services and deliver austerity cuts to some of the most vulnerable are deplorable.”
TRUSSELL:
Trussell responds to ‘catastrophic’ Spring Statement
Cara Hilton, Senior Policy Manager at Trussell in Scotland, said: “Today’s announcement has incredibly worrying implications for disabled people in Scotland.
“The insistence by the Treasury on driving through record cuts to disabled people’s social security to balance the books is both shocking and appalling. People at food banks are telling us they are terrified how they’ll survive.
“These brutal cuts to already precarious incomes won’t help more disabled people find work, but they will risk forcing more people to skip meals and turn to food banks to get by.
“Cuts come at a cost. Driving up hunger and hardship means more spending on already struggling public services, with increased hospital and GP visits a very likely outcome of these actions.
“Disabled people are already three times more likely to face hunger, and over three quarters of people in receipt of Universal Credit and disability benefits are already struggling to afford the essentials like food. This will only get worse.
“These cruel cuts are out of touch with what voters want from this government. The government says people voted for change in Westminster, but we know that seven in ten voters across political parties agree the social security for disabled people should at least be enough to cover essential living costs. This is a change for the worse, and it is disabled people who will pay the price.”
David, 46, has a bone disease and is terrified by the prospect of cuts to his disability benefits. He has recently been forced to turn to a Trussell food bank for support.
He said: “I am terrified now that the Chancellor has confirmed that my disability benefits will be cut. The bone tumours in my hips cause me pain everyday and force me to use crutches, and in the cold weather my symptoms worsen but I already can’t afford to put the heating on.
” I don’t know how I’ll survive. It’s not my fault I’m disabled, and I shouldn’t be punished for it.
“Life costs more if you’re disabled. Things like specialist equipment and travel to healthcare appointments all add up. PIP – which the government is brutally cutting – is there to account for these extra costs. It is not a luxury, and I shouldn’t need to use a food bank or turn to charities like Trussell for support.
“Cutting my benefits won’t get me back to work – it will just push me deeper into poverty.”
JOSEPH ROWNTREE FOUNDATION
“The Chancellor said today that she would not do anything to put household finances in danger Yet the government’s own assessment shows their cuts to health related benefits risk pushing 250,000 people into poverty, including 50,000 children.
“Their assessment also found:
800,000 will lose PIP according to the OBR
3m will lose money from changes to the main health element of UC, £500 a year for existing claimants, and £3000 for new claimants
£500m will come out of the carers benefits bill as 150,000 lose carers allowance or UC care element.
“The Chancellor said the world has changed, and today’s announcements places the burden of that changing world on the shoulders of those least able to bear the load. These cuts will harm people, deepening the hardship they already face.”
CHILD POVERTY ACTION GROUP:
Responding to today’s Spring Statement, chief executive of Child Poverty Action Group Alison Garnham said: “Stealth social security cuts bring neither stability nor security to struggling families and will push child poverty even higher.
“Growth and better living standards are not achieved by taking money from families with the least.
“Government must invest in social security support – not cut it – for the most vulnerable, or risk being remembered as the Labour administration under whose watch child poverty continued to rise.”
CARERS UK:
STUC:
INDEPENDENT ALLIANCE MPs:
KIM JOHNSON MP:
OCTOPUS ENERGY:
Greg Jackson, CEO of Octopus Energy, said: “It’s good to see the focus on planning and other reforms that can unlock investment to help make Britain more productive and drive growth.
“We were also pleased to see the receipts from the Government’s sale of Bulb to Octopus funding 36,000 homes for armed forces families. It’s a sign of how business and Government can work together for the good of the country.”
FRONT PAGES:
MOMENTUM:
NEW ECONOMICS FOUNDATION:
JEREMY CORBYN:
PRIME MINISTER KEIR STARMER:
THE NATIONAL:
TRADES UNION CONGRESS (TUC):
Responding to today’s (Wednesday) Spring Statement, TUC General Secretary Paul Nowak said: “Labour inherited a toxic economic legacy from the Conservatives. But at the Budget the Chancellor took the right call to invest in repairing our public services and infrastructure.
“To rebuild Britain this approach must continue long-term. In the face of strong global headwinds, we need to keep building stronger foundations at home. That must include protecting the most vulnerable.
“As the last 14 years have shown us – you cannot cut your way to growth. UK taxes are low as a share of GDP. Those with the broadest shoulders must continue to contribute more through a fairer tax system.
“And the Tories’ botched Brexit deal must be improved to boost growth and trade.”
On the government’s social security reforms, Paul said:“Ministers need to rethink their plans. Decisions that affect millions of people’s lives must be made with care – not as a last-minute response to changed fiscal forecasts.
“These changes mean many disabled people – whether they are in work or not – will be pushed into hardship.
“And removing support could even make it harder for some people to stay in their jobs.
“Disabled people need timely access to high quality healthcare, and accessible jobs – particularly in the towns and communities where there are fewest opportunities.”
On the public sector workforce, Paul added:“Public sector workers are key deliverers of national renewal.
“But after 14 years of Tory chaos and ruin, many feel burnt out and demoralised.
“It’s vital the government invests in these workers and recognises the key role they play in improving the services we all rely on.
“Any approach to transforming our public services must include clear workforce plans for every part of our public sector, developed in partnership with staff and unions.”
On the OBR’s growth forecasts, Paul said: “It is time to review both the role of the OBR and how it models the long-term impacts of public investment. Short-term changes in forecasts should not be driving long-term government decision-making.”
UNITE THE UNION:
UK FINANCE:
David Postings, Chief Executive Officer, UK Finance said: “The chancellor’s Spring Statement focused on stability and growth in the UK. We welcome the government’s continued commitment to growing the economy and the financial services sector is committed to playing its part in support.
“Building on recent positive regulatory reform plans, we now look forward to the upcoming Industrial Strategy, which will be key to unlocking further investment and delivering growth through various sectors, including financial services.”
MENTAL HEALTH FOUNDATION:
LLOYDS BANKING GROUP:
Charlie Nunn, Chief Executive Officer, Lloyds Banking Group said: “A safe and lasting home is the foundation for good lives and livelihoods, and we welcome this boost to building much-needed social and affordable homes.
“As the UK’s biggest commercial supporter of social housing, we’re working across the private, public and community sectors to help increase provision of good quality, genuinely affordable housing for those in need.”
UNITE HOSPITALITY:
DAILY MIRROR:
POVERTY ALLIANCE:
Responding to the Spring Statement, Poverty Alliance chief executive Peter Kelly said: “People in the UK voted for change at the last election because they were desperate for a government that delivers a just and compassionate country. Today’s announcements undermine that ambition.
“It is completely unjust to, once again, balance the books on the backs of the those on the lowest incomes. Today’s statement layered additional cuts to our social security system on top of those announced last week. That will have a devastating impact for households across the country.
“The Government’s own analysis shows that these changes will push at least 250,000 people, including 50,000 children into poverty, undermining the forthcoming child poverty strategy before it’s even published.
“These cuts will push people into debt and destitution. They will continue the need for food banks. They will stop people heating their homes, or charging essential medical and support equipment.
“People know that there is no justification for these cuts. It does not have to be like this. The Chancellor could scrap her self-imposed fiscal rules or use our taxation system to raise the revenue needed for the better future we all want to see.
“The UK Government is re-running a failed experiment – austerity will not deliver economic growth. And it certainly won’t deliver a just and compassionate society.”
SCOTTISH HUMAN RIGHTS COMMISSION:
Deep concern about impact of UK Government’s Spring Statement
The Scottish Human Rights Commission (SHRC) is deeply concerned about the impact of announcements on the future of the UK welfare system in the UK Government’s Spring Statement, especially for disabled people and their families and communities.
Plans to cut the health element of Universal Credit will have a direct effect on the human rights of those disabled people in Scotland who are unable to work. Although payments to support people with the additional costs of disability are devolved in Scotland, the UK Government’s proposals will have negative consequences for the Scottish Budget.
Severe economic hardship
Earlier this month, the UN Committee on Economic, Social and Cultural Rights, which holds governments around the world to account for their record on human rights, warned that changes to the UK welfare system introduced since 2012 have “eroded the rights to social security and to an adequate standard of living, disproportionally affecting persons with disabilities, low-income families and workers in precarious employment” and warned that these changes have resulted in “severe economic hardship”.
Last year, the UN Committee on the Rights of Persons with Disabilities reiterated its position that the UK welfare system is leading to ‘grave and systematic’ violations of disabled people’s rights. Over the past week many disabled people, Disabled People’s Organisations and civil society organisations have expressed shock and fear about what further changes to the system could mean for people.
Professor Angela O’Hagan, Chair of the SHRC, says: “With these announcements, the UK Government is not only disregarding the expert findings and recommendations of human rights bodies, but actively pursuing regressive changes that further deteriorate the rights of disabled people in Scotland.
“Indeed, these steps may potentially represent a breach of the UK’s obligations under international human rights law, particularly its duty to progressively realise the rights to social security, an adequate standard of living, and non-discrimination.
“Social security, an adequate standard of living, and non-discrimination are not optional benefits — they are binding human rights that the UK is required to respect, protect, and fulfil for everyone.
“These proposals fly in the face of both the letter and the spirit of the UK’s human rights obligations.”
VOLUNTEER SCOTLAND:
We share the concerns voiced by many third sector organisations regarding the Chancellor’s Spring Statement on Wednesday (writes Volunteer Sotland’s SARAH LATTO).
The significant cuts to health-related benefits have the potential to push more people into financial difficulty. This would create significant additional demand for third sector services and the volunteers that support them.
This comes at a time when the third sector is facing unprecedented pressures, and volunteer participation is in significant decline. Given the reported challenges many organisations are experiencing in recruiting new volunteers, this could add considerable pressure to existing volunteers who give their time to support people in crisis. This is not sustainable and could contribute to a further decline in volunteer participation.
This same research also found that the effect of volunteering on mental wellbeing for people with a disability or long-term health condition was seven times larger than for people without.
Despite these clear benefits, we are concerned that the announced reduction in welfare spend will prevent many people in receipt of benefits from pursuing volunteering.
This is because of competing demands on their time and rising stress or anxiety regarding their finances. The planned changes to welfare spend will likely exacerbate this situation further, meaning many people in receipt of health-related benefits may feel unable to participate in an activity that is likely to improve their health and wellbeing.
As a result, we join many voices from the third sector in urging the Chancellor to rethink her plans around welfare spend.
FRASER OF ALLANDER INSTITUTE:
Spring Statement reaction: a second fiscal event of the year after all
It was also one where the forecasting process was nowhere as smooth as we hoped it might be given how much hay the Chancellor made out of strengthening the role of the OBR in the Autumn. Instead, we have seen a number of measures either uncertified or included only on a provisional basis, and with no time to evaluate their supply-side effects.
Given how long these measures have been speculated about, the last-minute tweaks and the scramble to announce further welfare reforms to make the sums add up to the £5bn in savings are pretty disheartening. It also makes us wonder about the reasons for announcing the headline amounts last week, before ultimate certification by the OBR.
It is not credible that the Chancellor or the Work and Pensions Secretary were not aware of the OBR’s concerns at the time of the announcement, and so we are left to wonder why figures that weren’t final were bandied about beforehand instead of being left for the appropriate fiscal event.
The underlying picture deteriorated significantly, and so spending cuts have filled the gap
As widely predicted, the Chancellor would have seen her fiscal rules broken had she not made significantly policy decisions, which collectively cut current spending by nearly £9 billion a year by 2029-30.
Chart: How the Chancellor restored her headroom
Source: OBR
Debt servicing costs are the main reason for the deterioration. Higher market interest rates raised the cost of servicing government by just over £10 billion by the end of the decade, more than wiping the starting headroom. Faced with this, and after staking her credibility on complying with the fiscal rules, the Chancellor decided to mostly lean on the spending side of the ledger to essentially get back to where she started.
This means a heavily backloaded set of policy decisions, with spending cuts coming from 2027-28 onwards. Changes to incapacity and disability benefits mostly affect spending from then on, by £1.8 billion in that year and rising to £4.6 billion by 2029-30.
Changes to the path of day-to-day departmental spending also rise to over £5 billion by 2029-30, although some of that is offset by specific investment programmes such as employment support, DWP delivery and HMRC compliance. On net, current departmental spending has been cut by £3.6 billion by 2029-30 relative to plans.
There have also been some increasing in the tax take. Much of it is from compliance activity and tax debt collection, although there are also additional council tax increases allowed in England and increases to passport and visa fees. Receipts are higher by £2.3 billion by 2029-30 because of measures.
But the Chancellor has had to run just to stand still. She is just as close to missing her fiscal rule as she was in October, and that leaves her exposed to any weaknesses or market movements between now and the Autumn. Things may well turn out for the better – but that is far from guaranteed, and it’s as close to a 50-50 bet as it gets.
Chart: Headroom against the main fiscal target since 2010
Source: OBR
What do the announcements mean for the Scottish Budget?
In the very short-term, there is a small amount of additional funding (£28 million) for the Scottish Government in 2025-26 due to a small increase in departmental spending at UK Government level.
Towards the end of the forecast, however, the picture is significantly more challenging in terms of what it means for Holyrood’s finances. The cuts in departmental budgets announced by the UK Government – even after accounting for some consequentials from employment support programmes and DWP delivery of welfare reforms – mean significant reductions in funding for the Scottish Government relative to what was previously included in the forecasts. Of particular significance are the £200 million and £435 million cuts in implied funding for the Scottish Budget in 2028-29 and 2029-30.
The current forecast points to the PIP reforms reducing the block grant adjustment for social security devolution by increasing amounts, from £177 million in 2027-28 to £455 million in 2029-30. This is in line with what we discussed in recentblogs.
Put together, and in the absence of any other changes, the Scottish Budget would be around £900 million worse off on the current side in 2029-30 than previously projected. On the other hand, some additional capital spending on areas which are devolved in Scotland – so aside from the defence spending increases – are expected to raise the Scottish Government’s capital budget by nearly £250 million by 2029-30 relative to current plans.
Chart: Effects of the Spring Statement measures on the Scottish Budget
Source: OBR
There’s still much we don’t know about the welfare reforms
One key policy change from last week’s Green Paper that the OBR have not been able to cost is the removal of the Work Capability Assessment (WCA) that currently determines whether a person is eligible for the Universal Credit (UC) health element. The UK Government have proposed that the PIP assessment will be used instead.
The OBR note the absence of key policy detail, including how entitlement will operate in Scotland where PIP is being phased out. They do state that they expect the policy to have a “material” fiscal impact, both on spending on UC but this could be offset by an increase in people claiming PIP. The labour market response of this (as with most of the other Green Paper policies) is also yet to be analysed by the OBR.
These changes will directly impact on people in Scotland as UC is a reserved policy, but as already noted, how this will happen given that PIP will soon not exist in Scotland, is unknown. The number of people impacted could be significant. The Scottish Government could mitigate this impact through its own social security top up powers but, as with the recently announced mitigation of the two-child limit in UC, would need to be able to find the money to do so from within its own budget.
But distributional analysis shows significant numbers of people will be worse off
Alongside the Spring Statement documents, the UK Government also update their distributional analysis (the differential impact of policies on poorer, middle, and higher income households). The impact of the Spring Statement, the policies from the Spring Statement are added to the policies from the Autumn Statement, making it difficult to isolate the impact of the Spring Statement, although the regressive nature of the welfare measures is clear to see: those in the lower half of the income distribution are facing most of the cuts.
This makes for sobering reading. The impact of changes to the eligibility for PIP will affect 800,000 people who will no longer be eligible for the Daily Living component. They note a further 150,000 people will not receive Carer’s Allowance of the UC Carer element as a result. These numbers are for England and Wales only given that disability benefits are devolved.
These results, on their own, will increase the number of working age people in poverty by 250,000 and 50,000 children. The UK Government are careful to say that these estimates do not account for any employment impact of those who lose benefits subsequently moving into work, and we will need to wait for the OBR to judge on the strength of these employment effects to understand the potential for offsetting of these numbers.
The reduction and or freezing of the UC health element will affect Scottish claimants as well as those in England and Wales. 2.25 million people who are current claimants will be affected by the freeze and 730,000 new claimants will receive the new lower rate and freeze. A further 50,000 working age people will be in poverty as a result of these changes.
There is as yet no analysis of the impact of the abolition of the Work Capability Assessment in UC, and the only impact that is shown is the reversal of a 2023 change to the descriptors in the Work Capability Assessment, which will not apply given the decision to abolish it.
We’ll have to wait until the OBR has been able to look at the whole policy package in aggregate before we understand the full scale of the impact both on the UK and Scotland. But it is clear from what we know so far that this is a package of measures that will raise poverty across the UK.
How does departmental spending look in historical context?
In October, the Chancellor announced significant increases in departmental spending. But we and others also noticed how frontloaded some of those announcements were.
This has been made even more so by the changes at this forecast to the latter years of the projections. Day-to-day departmental spending per person is now forecast to grow by a strong 3.4% in real terms in 2025-26, slowing to 1.5% in 2026-27 and remaining at 0.6% a year for the rest of the decade.
We’ll leave others to decide on words to characterise this path of spending. We’ll instead note that this leaves spending per person only 8% higher than it was in 2007-08. And as a share of national income – a better measure of affordability and of the Government’s prioritisation of the country’s resources – there is a slight increase in spending in the short-term. But day-to-day departmental spending then falls back by 0.4 percentage points by the end of the decade relative to its peak of 16.1 per cent of GDP in 2025-26 and 2026-27.
Chart: Resource departmental spending per person in real terms and as a share of GDP since 2007-08
A new initiative to unite Scotland together against extremism
First Minister John Swinney will convene a pivotal gathering of Scottish society to work together and unite Scotland against the “increasingly extreme far right”.
Representatives from key organisations across Scotland including churches, trades unions and charities will be invited to attend a gathering in April, alongside the leaders of Scotland’s parliamentary parties.
Speaking at a press conference at Bute House, following the passage of the 2025-26 Budget, the First Minister said the new gathering will be an opportunity renew public trust in politics and unite Scotland in a common cause – “for democracy and respect.”
The First Minister said: “At the start of the year, I warned that failure to pass the budget would send a signal that Parliament and politics could not deliver. That failure would only serve the interests of an increasingly extreme far right and leave devolution dangerously exposed.
“But the budget has passed, and a different story can be told. Yesterday’s vote demonstrated that partnership and collaboration are possible. And that is something precious, something vitally important itself.
“But we must do more. It is time to come together to draw a line in the sand. To set out who we are and what we believe in.
“The threat from the far right is real. But that leaves me all the more convinced that working together is not only the right choice, but the only choice.
“That is why I want to share a new initiative to bring Scotland together in common cause. I want us to work together to agree a common approach to asserting the values of our country, to bringing people together and creating a cohesive society where everyone feels at home.
“It was a mobilisation of mainstream Scotland that delivered our parliament a quarter of a century ago. And I have no doubt, it is only by mobilising mainstream Scotland that we can protect those things we care most about, those things that are most important to us today.”
The First Minister will write to all party leaders and the leaders of civic organisations with the details of the upcoming gathering in due course.
To attendees and those who wished to be kept in touch about conference developments:
Hi,
Thank you for attending the workshop on Saturday or for expressing an interest in campaign developments. We will produce a written report on the conclusions arising out of the discussion at the plenary session of the workshop.
Attached is the agenda for the workshop on Saturday,
One of the key issues to be discussed at the workshop is the City Council’s response to the proposed cut in funding to third sector organisations.
The cut will take effect on 30/6/25. However, we understand that Council action to mitigate the effects of the cuts will be discussed during the Council’s budget setting meeting on 20/2/25.
There may need to be a lobby of the Council meeting.
Regards,
Des Loughney Secretary Edinburgh TUC
EDINBURGH SOCIAL CARE CAMPAIGN – THE WAY FORWARD
Unitecd Augustine Church, George IV Bridge, Edinburgh EH1 1EL
Workshop Saturday 18th January 2025
AGENDA
Chair: Ian Mullen (UNISON City of Edinburgh Council Branch)
9.30 am – 10.00 am: Tea/ coffee and biscuits.
10.00 am – 11 am. Introduction to workshop
Des Loughney – Secretary, UNITE Edinburgh Not For Profit Branch (1)
Councillor Tim Pogson – Vice Chair of the Edinburgh Integration Joint Board (2)
Denise Ritchie: Fair Work Project Officer, Scottish Trades Union Congress (3)
Linda Sommerville: Deputy General Secretary, Scottish Trades Union Congress. (3)
11am to 12.30pm Working Groups ( two)
12.30 pm to 1.00 pm – Plenary Session and summing up.
Speakers:
Des Loughney will comment on the impact of the proposed EIJB cuts on services and third sector worker terms and conditions. The impact includes compulsory redundancies and downgrading of contracts of employment from guaranteed working weeks to zero hour contracts,
Councillor Tim Pogson will update us on the response of the Council to the proposed EIJB cuts. The City Council is seeking to mitigate the impact of the cuts on the third sector.
Denise Ritchie and Linda Sommervile will brief the workshop on proposed campaigning activity at a local level and a Scottish level.
Preliminary Notice of Anti Cuts Conference – Saturday 18th January 2025
Augustine United Church – George IV Bridge Edinburgh
9.30 am – Doors Open – Tea/Coffee and Biscuits
10.00am – 1pm Conference
The Conference is being convened by Edinburgh Trade Union Council and the Scottish Trades Union Congress (STUC).
The purpose of the Conference is to consider how best to fight the social care and health service cuts that are being planned by the Edinburgh Integration Joint Board (EIJB).
Crucial budget decisions are going to be made by the Scottish Government and the City Council over the next two or three months which will determine the level of cuts.
The conference will discuss how best to lobby to obtain the resources needed to meet service demands. This will include the services provided by the 64 third sector organisations Edinburgh that are threatened with cuts and redundancies.
The conference is open to the public. The agenda will be an introductory session, workshops and a final plenary session. The conference will have input from speakers from the STUC. We will invite a speaker from amongst the Councillors on the EIJB and a speaker representative of Edinburgh community health organisations.
We hope the conference will be able to draw up a City wide plan for lobbying and campaigning.
More details of the conference will be circulated on Monday 6th January 2025. Any comments or queries in the meantime will be responded to on 23/12/24 and 27/12/24.
‘INVEST IN SCOTLAND: INVEST IN SCOTLAND’s WORKERS‘
The Scottish Trades Union Congress (STUC) has called on the Finance Secretary to “invest in Scotland” as the Scottish Government unveil their Budget for 2025/26 today.
Ahead of the Budget, the STUC has called upon Shona Robison to deliver a “budget for communities” by scrapping the council tax, increasing pay for social care workers, improving public transport and keeping the promise to Scotland’s school pupils on free school meals.
Evidence cited by the STUC shows local authorities in Scotland are facing a £780 million funding black hole due to successive council tax freezes. The union body are further calling for the Small Business Bonus Scheme to be scrapped with the Scottish Government making business support conditional on organisations adhering to Fair Work practices.
Despite Scottish Government commissioned research showing no evidence the policy delivers positive economic outcomes, more than £3 billion has been squandered on the scheme since it was introduced in 2008.
The call comes after the STUC lobby of the Scottish Parliament last week whereby STUC General Secretary Roz Foyer implored government ministers to “keep their promises” following the UK Chancellor’s statement and the almost £5 billion of extra resource spend allocated to the Scottish Government.
Commenting, STUC General Secretary Roz Foyer said: “Within this budget, the Scottish Government can choose to invest in Scotland. For too long, our public services have struggled under the weight of austerity, compounded by ill-judged decisions from the Scottish Government on council tax freezes and a refusal to properly use the revenue raising powers of the Parliament.
“There is no doubt the Finance Secretary is facing tough choices as a result of 14 years of Tory austerity. However, with almost £5 billion of extra resource funding being allocated to the Scottish Government, her budget could signal a clear break from the past.
“We can build a sustainable nation where public services are well resourced and public sector workers are paid fairly. We are committed to this vision and would ask the Scottish Government to join us on that journey.
“This can be a budget for the future. The Scottish Government can begin a process to scrap the council tax and replace with it a proportionate property tax to give councils a fighting chance of fair funding. They can make their commitment to end child poverty a reality by ensuring every pupil gets a free school meal and low paid social care workers, mostly women, get the pay increase they deserve.
“They can deliver on a Just Transition for Scotland’s energy workforce whilst ensuring a more sustainable, greener future for workers through better, more affordable public transport.
“These decisions rest with the Finance Secretary. We know there is a strain on government finances but that is no excuse for poor choices. Workers are desperate for investment in their futures, their public services and their communities.
“The Finance Secretary can deliver that and more within her budget and the trade union movement will be watching on with interest.”
Join the national demonstration in Glasgow this Saturday 23 Novemberagainst Israel’s escalating war in the Middle East!
The UK Labour Government continues to support Israel despite condemnation at the United Nations and the massive anti-war movement on the streets around the world.
We need to make this protest as big as possible to say Not in Our Name and put pressure on the Scottish government to implement a policy of divestment and end financial support to companies in Scotland which supply the Israeli war machine. We demand that our leaders do everything they can to stop the ongoing escalation of this war.
The demonstration, scheduled for 23rd of November in Glasgow, has been called jointly by Stop the War Scotland, Scottish CND and the Scottish Trade Union Congress.
It will bring together communities, trade unions, faith groups, and peace activists from across Scotland to stand united against the genocide in the Middle East under the following slogans:
– Stop All Arms Sales to Israel – Hands off Gaza and Lebanon – No war with Iran – Welfare not Warfare
The demonstration will be assembling from 11.30am at the Mclennan Arch at Glasgow Green following a route through the city centre and returning to Glasgow Green for the main rally where we will be hearing from a range of speakers from across the movement.
Speakers include:
Jeremy Corbyn – Independent MP and Deputy President of Stop the War Coalition Lynn Jamieson – Chair of Scottish CND Aamer Anwar – Human Rights Lawyer Dave Moxham – STUC Deputy General Secretary Richard Leonard – Scottish Labour MSP Chris Nineham – Vice Chair Stop the War Coalition
The Scottish Trades Union Congress (STUC) has written to Cllr Cammy Day, City of Edinburgh Council Leader, urging the Council to urgently re-open the People’s Story museum.
The museum has been closed in advance of a debate on a proposal for the temporary closure of the museum.
STUC General Secretary Roz Foyer said: ““The People’s Story is unique in Edinburgh, the only place in Scotland’s capital city that documents the experience and conditions of working class people in the city.
“We are deeply concerned that the council has pre-empted the debate on a proposed temporary closure and has already closed the museum’s doors, depriving locals of access to one of the only free attractions in the city centre.
“The old town has been laid bare by corporate developers and over tourism, driving locals out as prices soar. This museum documented the experiences of working class Edinburgh and needs investment. Instead, it has been abandoned by the Council.”
Lothians MSP Foysol Choudhury, Shadow Culture Minister for Scottish Labour, has urged the First Minister to protect Scotland’s museums and culture sector, following the proposed closure of The People’s Story Museum in Edinburgh until April 2025.
“The People’s Story Museum is the only museum in Edinburgh dedicated to teaching the history of working-class people, it would be a great loss to the city and Scotland, depriving the public of a chance to discover history they can identify with.
“I have written to Councillor Cammy Day, Leader of Edinburgh City Council, following the proposed closure of the People’s Story Museum for seven months due to an “urgent” need to cut costs.
“I am asking the Council to delay its decision on this proposal to look at all alternatives to ensure The People’s Story can remain open.
“For years Scottish Labour has pressed the Scottish Government to resource our councils properly, we are now seeing the consequences with more and more being forced to close museums and cultural venues. I will continue to press the Scottish Government to ensure there is sufficient investment in our museums.”
The People’s Story Museum was opened in 1984 in the Canongate, to create a collection which reflected the working-class history of Edinburgh and the city’s proud history of protest and organising for the rights of people at home and around the world.
£500 million in savings to ease ‘enormous’ pressure on public finances
Holyrood’s Finance Secretary Shona Robison has outlined the urgent action being taken to balance the 2024-25 Scottish Budget in the face of “enormous and growing pressure on the public finances”.
Highlighting the continuing effects of Brexit, the COVID-19 pandemic, the war in Ukraine and the cost of living crisis, alongside UK Government spending decisions, Ms Robison said difficult decisions were required.
The total savings, worth up to £500 million, include:
Implementing emergency spending controls across the public sector, particularly targeting recruitment, overtime, travel and marketing
Ending the ScotRail Peak Fares pilot
Mirroring the UK Government’s policy to means test Winter Fuel Payment
Making additional savings across portfolios, including in sustainable and active travel and in health and social care
The Finance Secretary said she was also currently planning to use up to £460 million of additional ScotWind revenue to address in-year pressures in 2024-25.
Ms Robison said: “This Government has consistently warned of the significance of the financial challenge ahead.
Prolonged Westminster austerity, the economic damage of Brexit, a global pandemic, the war in Ukraine, and the cost of living crisis have all placed enormous and growing pressure on the public finances.
“In the last three years alone cumulative CPI inflation has seen prices increase by 18.9%, diminishing how far money will go for households and governments alike.
“In the face of these challenges, the Scottish Government has stepped in to support people and services where it has been needed most: on social security, health and public services. But we have done so without equivalent action from the UK Government, which has repeatedly failed to properly review the adequacy of funding settlements.
“We cannot ignore the severe financial pressures we face. We will continue to be a fiscally responsible government and balance the budget each year, as we have done every year for 17 years and as we will do again this year. But this will mean we must unfortunately take difficult decisions along the way.”
Responding to today’s statement by Scottish Government Finance Secretary Shona Robison, Poverty Alliance chief executive Peter Kelly said: “People in Scotland believe in justice and compassion. They know that we need a strong social foundation so we can look out for each other and help people build a life beyond the injustice of poverty.
“But we’re now being left with holes in the fabric of Scottish society that will likely make life even harder for people on low incomes who are already being pushed towards debt, hunger, homelessness, and destitution. That is completely unjust, irresponsible and unnecessary.
“We are a rich country, and our collective wealth has grown massively over the decades. Past generations used that wealth to plan and budget for the public good, and MSPs and Ministers must now urgently use their powers over tax and investment to build a better, fairer future for all of us – and especially those in poverty. Economic growth will not fix the holes in society, unless it comes along with increased social investment.
“We are very concerned about the effect of cuts to mental health support and adult social care. We know that people in poverty are more likely to need that support, and data shows a growing risk of poverty for disabled people.
“We are deeply disappointed that plans to expand concessionary bus travel to people in the asylum system have been scrapped, along with a return to peak fares on ScotRail. We all need the freedom to travel, but too many of us simply can’t afford the fares.
“Organisations like the STUC and IPPR Scotland have published concrete plans that show how the Scottish Government can use powers over tax to invest billions of pounds every year in our shared society.
“We can build better budgets that give people the means to build a better future, to create a true wellbeing economy that supports fair work, and a just transition to the net zero future that we urgently need.”
Reacting to the Scottish Government’s Pre-Budget Fiscal Statement, STUC General Secretary Roz Foyer:“With every cut announced by the Scottish Government today, workers and communities across Scotland will be scarred for generations to come.
“For over two years now, we’ve told the Scottish Government they had almost £3.7 billion worth of untapped revenue at their fingertips through increasing tax on the rich. They could have acted. They chose not to. We are in no doubt that brutal Tory austerity has had an undeniable impact on Scotland’s finances. But the Scottish Government must take responsibility for their own cuts. They cannot be allowed to escape scrutiny.
“Public sector workers have faced more than a decade of falling real wages, lagging far behind those in the private sector. Those workers not only have the right to demand above inflation pay rises, but, if our public services are to improve, improvements in pay are non-negotiable.
“All eyes now turn to the Chancellor but it’s a shambles that we’re awaiting some form of salvation, if any is forthcoming, from the UK Government when our government in Holyrood could have done so much more.
“The people of Scotland do not want a Scottish Government that administers cuts while annunciating the droopy mantra of ‘it wizny me’. They want politicians that choose to govern – and that means taxing the rich to invest in the services that we all rely on.”
Ms Robison also proposed that the next Scottish Budget takes place on the 4th December, subject to the agreement of FPAC and the Scottish Fiscal Commission.
