By stewartb

The BBC News website on June 11 covered the Spending Review announcements in separate articles, in its Wales and Scotland sections. The BBC Wales article had this cautionary headline: ‘Spending review could mean cuts in Wales – experts’.

Critical views ares shared by BBC Wales on the significance of the SR and not just from politicians opposed to the British Labour Party government but from ‘experts’ too: Here we learn: ’On Wednesday, the chancellor announced a real-terms increase of 3% to day-to-day funding for the NHS in England. That will result in extra funding for Welsh ministers to spend as they wish.

‘However, Guto Ifan from the Wales Governance Centre, warned: “If the Welsh government decided to transfer that money to the health service in Wales, which would still be below the historical growth in health spending, it would mean difficult settlementsfor everything else in the budget.’ Concluding: “I would imagine that the Welsh government would have to make cuts to services outside health under this settlement.” (my emphasis)

“Still below the historical growth in health spending”

Of course, this is the funding settlement for an NHS that is creaking or worse!

On the SR’s uplift on spending on health in England, this response from the independent health think tank, the Nuffield Trust (June 11) is noteworthy as it provides crucial context: ‘Spending pressures including inflation and increased planned treatment capacity mean that the funding announced at the Autumn Budget has been more than wiped out. DHSC starts the period covered by this Spending Review £1.3bn in the red.

‘Compared to the settlements for other departments – from policing to education – the NHS deal looks generous.But seen in the context of all the promises made by the government to the British people – to drive down waiting lists, shift care closer to home, rapidly improve tech – and the commitments to meet staff pay demands and rising costs of new drugs, today’s settlement soon melts away. With capital funding staying flat in real terms for the rest of the spending review period, it will be difficult for the NHS to invest in the technology and facility upgrades it needs to meet the government’s ambitious productivity targets.

That other authoritative, England-focused health think tank, The Kings Fund had this response to the SR (June 11): ‘A 2.8% average increase in total health department spending – 3% for day-to-day NHS spending – will have been hard fought for in the spending round negotiations, despite still being lower than the historical average the NHS has received over recent years.’

Adding: ’The Chancellor said she wants the public to have ‘an NHS there when they need it’. It is hard to see how all the things she mentions – faster ambulance times, more GP appointments, adequate mental health services, and more – can be met by this settlement alone, particularly when large parts of this additional funding will be absorbed by rising costs, such as the higher cost of medicines which are currently being negotiated, and staff pay deals.’)

Coverage by BBC Scotland

The equivalent of the BBC Wales piece from BBC Scotland (June 11) had this headline: ‘Scotland to get extra £2.9bn from spending review, says Treasury’.  Four positively framed paragraphs later, we get a ‘but’ and a ‘claim’: ’But Scotland’s Finance Secretary Shona Robison claimed her government had been “short changed” by more than £1bn, with a block grant increase which is smaller than the overall rise across UK government departments.’ The BBC fails to explain, confirm or refute this ‘claim’ when raised in the article.

Way, way down in a long article listing the alleged ‘goodies’ coming to Scotland as a consequence of the SR, BBC Scotland’s Business and Economy Editor in an ‘analysis’ piece offers some insights.

On a matter of accuracy: ’The chancellor talked in her speech about a £52bn Holyrood budget after three years of rises. That is not the result of this Spending Review, but the total amount reached after many years. It doesn’t include the effect of reducing the block grant, by the amount that would have been raised if some taxes had not been devolved to Holyrood.’

And then on the status of devolved government: ‘It seems there will be a lot more money by-passing Holyrood for direct spending in Scotland by Whitehall departments than used to be the case. For instance, where there is money allocated to the tax breaks to be found for businesses setting up in green freeports in Scotland – the ones in the Firth of Forth and the Cromarty Firth – that funding by-passes Holyrood.’

Finally and perhaps surprisingly given the source – but then how many will read to the end?: ‘The numbers that might be useful to understanding the scale of increase or of challenge for Holyrood’s budgets are:

• an average 0.8% real terms increase in day-to-day (or current) budget in the block grant, over three years, and
• a 0.3% increase in the capital budget, averaged over the next four years.

‘That’s against an average increase of 1.5% for day-to-day spending across Rachel Reeves’ review of the next three years, and 1.8% for capital.’’

So why is this comparative analysis not linked back to the ‘claim’ reportedly made by Scotland’s Finance Secretary Shona Robison?  Why fail to point out her ‘claim’ has merit?

What experts say?

The BBC Scotland piece referred to above – unlike the one by BBC Wales – eschews any ‘expert’ contribution to the assessment of the significance of the SR for Scotland. Has the Fraser of Allander Institute become less favoured by BBC Scotland?

See ‘2025 Spending Review: the spending rollercoaster is well and truly back’  (https://fraserofallander.org/2025-spending-review/ )

This Fraser of. Allander article notes: ‘the profile of capital spending has been brought forward even further. We are now looking at a one-off boost to investment budgets of 6% in real-terms next year, followed by falls in each year.’

And: ‘In fact, the figures only get starker once we take into account that so much of the boost to investment is on defence. Non-defence capital spending falls by -0.9% a year in real terms going forward, meaning it’s nearly 4% lower by 2029-30 than this year.’

And: ‘This pattern is broadly reflected in the Barnett consequentials for Scotland. The Scottish capital block grant increases by £0.6 billion (7.7% in real terms) next year, but then fall back to below 2025-26 levels by the end of the decade.

Adding, on this front-end loading: ‘One big risk to this plan is whether the capacity will be available to deliver all these capital projects at once’

And on recurrent spending, the Fraser of Allander notes: ‘Here too the pattern is for bigger spending increases in the short-run. The big exception is the NHS in England, which sees a nearly flat 3% boost in real terms, and which generates significant Barnett consequentials. Budgets other than health, schools and defence see a relatively healthy 1.4% increase next year, but this is followed by 1.5% and 1.1% falls in each subsequent year, meaning that their budgets are 1.2% lower in real terms by 2028-29 than this year.’

‘On the day-to-day spending side, funding grows at an average of 0.8% a year after accounting for inflation. This is slightly below the average for overall resource spending, so a bit less than we thought it might in our preview blog – largely because schools in England have done less well than we expected.’

(Don’t forget the ‘expert’ view in the BBC Wales article and elsewhere on the SR’s commitment to health spending: ‘below the historical growth in health spending’!)

Back to the Fraser of Allander analysis: ’This allocation is also slightly lower than what the Scottish Fiscal Commission included in their outlook just a couple of weeks ago. The capital allocation is also less generous than the SFC had predicted’.

Fraser of Allander on British Labour Party spin!

‘We have seen some Labour MPs and MSPs describing this event as increasing the block grant by £9.1 billion over the Spending Review period. While it is true that Barnett consequentials add up to this figure (across different periods for resource and capital), this doesn’t seem like a particularly transparent or helpful way of describing the changes. It essentially assumes that no additional funding would have been made available for the Scottish Government in cash terms relative to that in 2025-26 – which is not a credible baseline.’

‘A much more insightful – though perhaps less cheery – conclusion from looking at the SFC’s forecast is that by 2028-29, funding will be £0.7 billion lower than their central estimate published on 29 May.’

To sum up, might these responses to the SR from the Fraser of Allander Institute explain the absence of its ‘expert’ contribution in the BBC Scotland article?

And finally, more duplicity over GB Energy?

To accompany the publication of its SR, the British Labour Party government in Westminster issued a press release with this title: ‘Spending Review: Billions to back Scottish jobs – UK Government’s Plan for Change delivers record settlement for Scottish Government with an extra £9.1 billion over the SR period to deliver public services’.

The second paragraph of the statement has this: ‘The UK Government has confirmed £8.3 billion in funding for GB Energy-Nuclear and GB Energy in Aberdeen.”

The clear purpose of this press statement is to explain the Westminster government’s commitment to spending to benefit Scotland. How this £8.3 billion for GB Energy-Nuclear and GB Energy in Aberdeen is framed here is also clear: £8.3 billion will be invested to create employment in Aberdeen and Scotland. But of course unless this £8.3 billion is used for the direct benefit of Scotland’s economy – i.e. it is actually spent in Scotland – then this government statement is grossly duplicitous.

The main SR document states this in para 4.57: ‘Great British Energy and Great British Energy – Nuclear will invest more than £8.3 billion over this Parliament in homegrown clean power.’ No mention of where the spend will be made!

There is something else noteworthy on GB Energy within the main government document – see https://assets.publishing.service.gov.uk/media/6849171796e63bce58e4e705/E03349913_HMT_Spending_Review_June_2025_Elay.pdf

Box 4.A: Financial transactions: ‘The government is fostering an entrepreneurial state, which will support business investment and catalyse growth. FTs allow government to invest alongside the private sector, through equity investments, loans and guarantees.’ And then there is this table:

In particular, see footnote 3 in the table: ‘This FT capacity is part of the £8.3bn of funding for Great British Energy and Great British Energy – Nuclear. Great British Energy is not currently a designated Public Financial Institution. The government plans to designate it as a Public Financial Institution once it is established in line with the FT Control Framework.’ The same £8.3bn for Aberdeen?

Is a ‘Public Financial Institution’ really the same as a publicly-owned, energy operating company?

From a UK Government statement (July 24, 2024): ‘What is Great British Energy and what does it mean for me?’ – ‘Great British Energy will be a publicly owned, clean-energy company. It will own, manage and operate clean power projects, such as wind farms, up and down the country. It will be headquartered in Scotland and paid for by a windfall tax on oil and gas giants.’

And from July 18, 2024, from the TUC: ‘GB Energy: what did the King’s Speech reveal about the government’s plan?’:

‘What has the Labour government promised in the GB Energy Bill? The briefing notes for the King’s Speech give important details on the Labour Government’s plans.’ The TUC concludes: .’… that GB Energy will be an energy generation company focused on clean power, and have a more active role than a back-seat investor. Similar to other public energy companies like French EDF or Danish Orsted, the government’s intentions seem to be for it to develop new clean power projects, and then manage and operate them.’

An energy generation company owning and operating assets it owns and/or a ‘Public Financial Institution’ like the British Business Bank? The mystery deepens?