Robison facing £1bn black hole ahead of Scottish budget

Finance secretary Shona Robison faces a £1bn hole in her capital spending plans ahead of next week’s budget, according to analysis.

Robison will set out the Scottish Government’s tax and spending plans for 2026/27 in a statement to parliament on Tuesday.  

The University of Strathclyde’s Fraser of Allander Institute said the finance secretary had “her work cut out” to plug a £1bn gap in capital spending plans set out just over six months ago.

The Institute said the government would use Barnett consequentials and additional funding from tax receipts to offset its resource deficit, continuing a practice of using exceptional items and non-recurring revenues to finance day-to-day spending.

But on capital spending, money used to fund major projects and help encourage economic growth, the analysis said the gap was “too large to fill” with the £7.1bn available falling £1bn short of the spending plans that had previously been set out.

Dr João Sousa, deputy director of the Institute, said: “The Scottish Government’s job has been made easier on the resource side this year, mostly due to Barnett consequentials and some unexpected additional funding. But this boost masks the fact it will still be in underlying deficit, which means this approach cannot be relied on indefinitely.

“There is no such news on capital [spending], and there something will have to give. We hope the long-awaited Infrastructure Investment Plan will explain to the public how projects have been prioritised – and crucially, which ones will no longer be going ahead and why.”

The report also noted that attempts by the UK Government to reduce health spending in future years would leave its Scottish counterpart with a “daunting” funding gap due to the reliance of health consequentials to help balance the budget.

Scottish Labour finance spokesperson Michael Marra MSP said: “The SNP’s total mismanagement of the public finances and failure to grow Scotland’s economy has created a black hole in Scotland’s finances.

“Since coming to power, the UK Labour Government has delivered an additional £10.3bn for Scotland’s budget, but Scots will rightly be asking where all that money has gone.”

At yesterday’s First Minister’s Questions, John Swinney sidestepped questions from Scottish Conservatives leader Russell Findlay about cutting income tax in the budget and the size of the welfare bill which Findlay said was “unaffordable, unfair and unsustainable”.

Swinney said cutting taxes meant making cuts to public spending.

“I know that Mr Findlay doesn't care about child poverty,” he said.

“The implications of Mr Findlay's policies are to reduce support for vulnerable people in our society and a consequence more children will be subjected to poverty…”

A Scottish Government spokesperson said: “The Scottish Government has delivered a balanced budget every year, despite facing a challenging financial environment, and remains committed to delivering sustainable public finances.

“The Infrastructure Delivery Pipeline, which will be published alongside the draft Budget on 13 January, will set out an affordable, deliverable portfolio of infrastructure investments over the next four years.”