Scottish Government capital spending budget 2024-2025: FOI release

Information requested

An explanation of how the Scottish Government arrived at the figure referenced in the 2024-25 Budget statement that: "Our capital spending power is due to contract by almost 10% in real terms over 5 years"'. You asked for this information to include details of which sources of capital funding were included and which inflation forecast was used.

Response

The capital funding sources used for the purposes of this calculation are the Core Block Grant from the UK Government, as well as Ring-fenced and City Deals funding. Capital borrowing, which must be repaid, is excluded, as are the technical accounting adjustments for IFRS16. The 5 year period referred to is from 2023-24 to 2027-28.

For the purposes of the projections Ring-fenced and City Deals funding were estimated to remain flat at 2023-24 levels of £632 million and £100 million annually for the next five years. The figure for ringfenced funding was subsequently revised to £670 million.

The Core Block Grant amounted to £4.701 billion at the time the 2024-25 Scottish Budget was set. The 2021 UK Spending Review period concludes at the end of 2024-25 and we have currently had no indication of funding levels for the financial years which follow. 

For the purposes of future year projections of the Core Block Grant we have used the Office of Budget Responsibilities figures for Public Sector Gross Investment in CDEL Growth, as at Autumn 2023. A copy of the report can be found online here. The PGSI figures for the relevant years are as follows:

	2024-25	2025-26	2026-27	2027-28
Public Sector Gross Investment in CDEL Growth	99.2	97.2	97.5	97.6
PGSI movement in percentage terms	-	(1.99%)	(0.30%)	0.09%

The estimated impact on the capital block grant in cash terms is therefore forecast to be:

	2024-25	2025-26	2026-27	2027-28
Capital Block Grant (£'m)	4,701.0	4,607.4	4,621.0	4,625.2
Movement in cash terms (£'m)	-	(93.6)	13.6	4.2

	2023-24	2024-25	2025-26	2026-27	2027-28
Capital Block Grant (£'m)	4,820	4,701	4,607	4,621	4,625
Non Barnett ring-fenced (£'m)	632	632	632	632	632
City Deals (£'m)	100	100	100	100	100
Total	5,552	5,433	5,339	5,353	5,357

For the purposes of calculating the real terms impact we used the GDP deflators provided by HM Treasury at the Autumn Statement utilising data provide by the Office of National Statistics and the OBR. A copy of these figures can be found online here.

	2023-24	2024-25	2025-26	2026-27	2027-28
GDP Deflator	6.098668	1.677214	1.712068	1.624478	1.774388
Index, 2023-24 = 1	1.000	1.017	1.034	1.051	1.070

	2023-24	2024-25	2025-26	2026-27	2027-28	Total
Capital Budget	5,552	5,433	5,339	5,353	5,357
At 2023-24 prices	5,552	5,343	5,163	5,093	5,008
YOY Change, £'m	-	(209)	(180)	(70)	(85)
YOY Change, %	-	(3.8%)	(3.4%)	(1.3%)	(1.7%)
Cumulative Change, £'m	-	(209)	(389)	(459)	(544)	(1,601)
Cumulative Change, %	-	(3.8%)	(7.0%)	(8.3%)	(9.8%)

I note that you have raised a separate Freedom of Information request (202400404698) which references the revised calculation of this figure as 8.7% following the UK Spring Budget.

The revised 8.7% figure has been calculated on the same basis as outlined above using the revised OBR PSGI figures and GDP deflators as at March 2024. A copy of these reports can be found here and here respectively. 

The 2023-24 and 2024-25 funding positions have been revised since the original projections were made to reflect the UK Government's Supplementary Estimates process. The assumed ring-fenced
funding was updated from £632 million to £670 million for 2024-25 onwards. The table below outlines the figures:

	2023-24	2024-25	2025-26	2026-27	2027-28	Total
Capital Budget	5,616	5,486	5,419	5,428	5,428
At 2023-24 prices	5,616	5,442	5,307	5,227	5,130
YOY Change, £'m	-	(174)	(136)	(80)	(97)
YOY Change, %	-	(3.1%)	(2.5%)	(1.5%)	(1.9%)
Cumulative Change, £'m	-	(174)	(309)	(389)	(486)	(1,358)
Cumulative Change, %	-	(3.1%)	(5.5%)	(6.9%)	(8.7%)

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