The Scottish Government is pressing the Chancellor of the Exchequer to reverse a projected real-terms cut in Scotland’s block grant for 2027-28, warning that the reduction set out in the UK Spending Review would undermine spending on public services at precisely the moment households are absorbing energy bills hundreds of pounds higher than when the UK Government came to office.
Shirley-Anne Somerville, the Social Justice and Housing Secretary, framed the demands in explicitly fiscal terms ahead of Wednesday’s Budget. In her view, the Chancellor faces a pair of financial tests: restore the funding Scotland was promised under the Spending Review baseline, and deliver substantial relief on living costs. Failure on either count, she argues, would leave Holyrood trying to sustain services and support low-income households with diminished resources.
The block grant sits at the centre of the dispute. It is the core funding stream through which the UK Treasury finances devolved public services, and the projected real-terms reduction for 2027-28 translates directly into tighter budgets for health, education and anti-poverty programmes in Scotland. Somerville said the Scottish Government wants to drive NHS waiting times down further, keep improving schools and lift more children out of poverty. But it would be doing so, she warned, with one hand tied behind its back if the planned cut proceeds.
Her sharpest economic argument concerns energy. Scotland, she noted, is one of the most energy-rich nations in the world yet pays some of the highest bills in Europe, a combination she described as not adding up. At the same time, she argued, the Treasury stands to benefit from even more of Scotland’s energy resources, which in her judgement leaves the Chancellor with no option but to act. Bills are already hundreds of pounds above the level the UK Government promised when it took office and are set to grow further. On that trajectory, she called any failure to bring them down substantially in this Budget unforgivable.
Beyond the grant and the energy market, Somerville pressed for changes to welfare economics that she said are pushing families into poverty. She called for an end to the bedroom tax, the benefit cap and the so-called young parent penalty in Universal Credit, arguing that scrapping these measures would make a significant difference to household incomes. She also urged the removal of the freeze on Local Housing Allowance rates, which she said is preventing people on the lowest incomes from accessing safe and affordable housing, a constraint that carries costs for both tenants and the wider housing market.
The timing matters for the Scottish Government’s own fiscal planning. Spending Review projections for 2027-28 set the envelope within which Holyrood must budget years in advance, and a real-terms reduction would force trade-offs between competing service priorities regardless of which party holds power at St Andrew’s House. Somerville’s intervention is an attempt to shift that envelope before it hardens into the baseline for future years.
Meanwhile, she coupled the financial case with a political one, aimed squarely at the credibility of the government in Westminster. If the UK Government does not take the action required this Wednesday to boost living standards, she said, it will be clear that little has changed under the new Prime Minister, and that Scotland should choose what she called the fresh start of independence.
Whether the Chancellor meets the tests she has set will be judged on three measurable fronts: the trajectory of the block grant for 2027-28, the direction of energy bills, and the fate of the welfare policies she wants scrapped. For households across Scotland already paying more to heat their homes, and for a devolved administration bracing for a smaller settlement, the arithmetic of Wednesday’s Budget will speak for itself.