Autumn Budget Revision 2025-2026: supporting document

Funding Changes

6. Following the completion of the 2025-26 Budget Act, additional funding has become available. Analysis of all funding movements is set out in tables 1.7 c, d and e. This funding has come from a number of sources. These include:

• £488 million of additional Barnett consequentials confirmed at the UK Mains Estimates and Spending Review are being applied in the Autumn Budget Revision. The majority of this relates to additional funding provided in relation to the increase in employers’ national insurance contributions (‘eNICs’).
• £556 million of underspends, as set out in the 2024-25 Provisional Outturn have been carried forward in the Scotland Reserve, with circa £150 million of this required annually for post year-end audit adjustments, with the remainder to be utilised in 2025-26
• Revised tax and block grant adjustments and forecasts, including an assumed £120 million increase in the Social Security block grant adjustment following UK Government change in eligibility for Winter Fuel Payments.

7. The largest element of funding deployed in the budget revision is being provided to the Health and Social Care portfolio, totalling £697.1 million, of which £620.1 million relates to resource. Alongside the £100 million being carried forward through the Scotland Reserve from 2024-25, £300 million of additional funding has been provided to support health services, driven by additional demand, inflationary pressures and increased eNICs costs not funded by consequentials.

8. In addition, £134.7 million of consequential funding is being provided to support the increased eNICs costs, with £85.4 million being provided to support pay. £77 million of Capital budget is being provided to support resource to capital switches.

9. The Finance and Local Government portfolio will receive £204.3 million of additional funding. Within this, £173.7 million is being provided to Local Government, of which £144 million relates to eNICS. The remaining £29.7 million relates to funding for 2025-26 pay deals.

10. Funding of £15 million has been provided to aid with Corporate Transformation projects and £14.1 million is being provided to help alleviate corporate running costs pressures. The balance has been provided to support eNICs pressures across the portfolio.

11. The Education and Skills portfolio reflects a net increase of £48.5 million at ABR. This comprises £53.4 million of additional allocations, offset by £4.9 million of reductions. These allocations meet known requirements, including £32.6 million for operational costs within the Scottish Qualifications Authority, £3.5 million to support staffing pressures in the Student Awards Agency, and £3 million for operational requirements in Education Scotland. Provision was also made at ABR to address eNICs pressures across the portfolio.

12. The Justice and Home Affairs portfolio is increasing by £122.6 million. £72.2 million has been provided to Police and Fire Pensions to reflect latest forecast costs. Police and Fire pensions are a volatile demand led scheme with costs dependant on a number of factors including numbers of retirals.

13. Funding of £31.4 million has been allocated to the Scottish Police Authority, £15.2 million of which relates to eNICs funding, £10 million to support Police Scotland with its reform and modernisation programme and £6.2 million for pay awards. Scottish Police Authority have also returned £5 million of capital budget. Additional funding has been provided to Legal Aid (£10.1 million) to cover latest forecast costings, Scottish Prison Service (£6.9 million) and Scottish Fire and Rescue Service (£4.8 million) including amounts for eNICs.

14. The Social Justice portfolio is being increased by £65.1 million. The majority of this movement relates to Social Security Assistance, with £50.4 million being provided for the enhanced Pension Age Winter Heating Payments. This is an internal projection of costs and will be revised at the Spring Budget Revision following forecasts from the Scottish Fiscal Commission. Funding of £11.3 million is provided to support fund the Two Child Limit mitigation. The remaining funding changes relates primarily to the application of eNICs consequentials.

15. The Climate Action and Energy portfolio is being reduced by £4.3 million. Funding reductions total £8.3 million, including £4.6 million of additional interest being collected on Scottish Water loans. There has been a further reduction of £3.8 million across Environmental Services budget lines. This reduction is offset by £4 million of additional funding for eNICs.

16. The Transport portfolio has been reduced by £21.7m. This is due to a reprofiling of vessel procurement and harbour works (£41 million) and £12 million relating to reductions in the pension liability for Caledonian Maritime Assets Limited (CMAL) within capital. This is partially offset by increased resource to fund the removal of Peak Rail fares (£24 million).

17. The Rural Affairs, Land Reform and Islands portfolio is being reduced by £3.1 million. Forestry and Land Scotland have reduced their capital budget by £5 million having reprofiled spend Woodland Creation project. The portfolio has been provided with £2.4m of funding to cover additional eNICs costs.

18. The Deputy First Minister, Economy and Gaelic portfolio has been increased by £38 million. The largest element of relates to Scottish National Investment bank, which have been provided with additional Financial Transactions funding of £25 million which had been carried forward within the Scotland Reserve to support investments which conclude beyond the financial year-end . Ferguson Marine have been provided £8.3 million of additional resource funding to cover FMPG's under recoveries, post-delivery and warranty works. The remaining allocated funding has been provided to assist with the increase in eNICs.

19. The Housing portfolio has been reduced by £17.5 million, which mainly relates to a reduction in Heat in Buildings capital budgets.