Autumn Budget Revision 2025 to 2026 guide: finance update
Background information provided to the Finance and Public Administration Committee (FPAC) to help with members' scrutiny of the Autumn Budget Revision (ABR) 2025 to 2026.
B. Scotland Reserve and Funding Position Details
51. Tables 1.7a to 1.7e of the Budget Revision document sets out the Funding position that supports the revised Scottish Budget. The table below breaks this down by the HM Treasury budget classifications of Fiscal Resource, Capital and Financial Transactions.
52. Annexes A and B detail the funding envelopes for each of the three key budget classifications at the Budget Bill along with the changes allocated within the Autumn Budget Revision.
53. The totals reconcile to the breakdown set out above, which in turn reconciles to table 1.7 in the supporting document.
B.1 Fiscal Resource
54. The Fiscal Resource funding position has increased by £1,095.9 million since the Scottish Budget was set in December 2024. The key changes are set out in detail below.
55. There have been three UK Government fiscal events since the 2025-26 Scottish Budget was set. These have resulted in £488.8 million of additional Barnett consequentials which have been allocated as part of the Autumn Budget Revision.
56. Following the UK Spring Statement 2025, £23.7 million of consequentials were generated.
57. A further £456.1 million of resource consequentials were generated following the conclusion of the UK Government’s 2025-26 Main Estimates process. Of this, £339.1 million relates to consequentials as a result of the increase to employers national insurance contributions that was announced at the last UK Budget. The remaining consequentials relate to additional funding provided to the Department for Education to support core pressures.
58. £9 million of resource consequentials were confirmed in June as part of phase 2 of the 2025 UK Spending Review.
59. As was outlined in the Minister for Public Finance’s statement to Parliament on the 2024-25 Provisional Outturn on 24 June 2025, there was an underspend of £500.7 million against the resource budget for 2024-25. This amount has been carried forward within the Scotland Reserve and applied in full at the Autumn Budget Revision. Any revisions to the Final Outturn for 2024-25, and the associated Reserve carry forward will be reflected in the Spring Budget Revision.
60. At the time the budget was set in December 2024 assumptions were made on the level of capital and resource borrowing that would be undertaken for 2024-25. These impacted the assumed cost of borrowing in 2025-26. Final decisions on the quantum borrowed in 2024-25 as well as the interest rates applied have resulted in a reduction of £11 million for capital borrowing costs.
61. £14.4 million of budget cover transfer have been received as part of the Main Estimates process. These amounts reconcile to the amounts outlined in the Whitehall transfers section above.
62. The Social Security Block Grant Adjustment has been amended as part of the Autumn Budget Revision. Ordinarily the BGA would only be adjusted following revised OBR projections at a UK fiscal event. However, the decision by the UK Government to increase eligibility to Winter Fuel Payments is a fundamental change of policy, rather than reflecting refinements to forecast uptake of benefits, and will have a material impact on the funding received by the Scottish Government. The exact impact on the BGA will not be confirmed until after the UK Budget on 26 November however our internal estimates indicate this will be in the region of £120 million and we’ve chosen to reflect this movement in the budget revision.
63. A similar approach was undertaken as part of the 2024-25 Autumn Budget Revision following the UK Government’s decision to reduce eligibility to Winter Fuel Payments.
B.2 Capital
64. Changes to the capital position since the Budget was set in December 2024 have also been reflected in the Autumn Budget Revision. These increase overall capital funding by £38.8 million.
65. The Provisional Outturn statement in June noted there were capital underspends of £30.9 million in 2024-25. These amounts are utilised in full within this budget revision. Any further changes to the 2024-25 figures will be reported as part of the Final Outturn and will be reflected in the Spring Budget Revision if the process has concluded by this point.
66. The capital block grant position declined by £1.1 million overall, primarily due to net negative consequentials. This reflects positive consequentials of £3.8 million received at the Spring Statement, which were subsequently offset by negative consequentials of £3.2 million in the Main Estimates for 2025-26 and a further £1.7 million in negative consequentials arising from the UK Spending Review.
67. £ 9 million of non-Barnett budget cover transfers are also applied at the ABR, the largest of which is the £5.2 million in respect of Green Freeports. £2.9 million of this funding is carried forward from 2024-25 or corrects for historic comparability factor errors.
B.3 Financial Transactions
68. Adjustments to the Financial Transactions position since the Budget was published in December 2024 have also been incorporated into the Autumn Budget Revision.
69. The Provisional Outturn statement in June noted there were Financial Transactions underspends of £25 million in 2024-25. These amounts are fully allocated within this budget revision, with the entire sum designated for the Scottish National Investment Bank.
70. A small negative budget cover transfer is also applied for an amount of £362k to correct for a Phase 1 Spending Review comparability factor error. As a consequence there is a small over-allocation on the FT budget which is almost entirely offset by the corresponding small under-allocation in capital.
B.4 Scotland Reserve
71. The current forecast Scotland Reserve following the provisional outturn is detailed below.
| Resource £m | Capital £m | FT £m | Total £m | |
|---|---|---|---|---|
| 2024-25 Opening balance | (264.6) | (142.8) | (4.2) | (411.5) |
| 2024-25 Drawdowns | 264.6 | 142.8 | 4.2 | 411.5 |
| 2024-25 Provisional Additions | (500.7) | (30.9) | (25.0) | (556.7) |
| 2024-25 Closing balance | (500.7) | (30.9) | (25.0) | (556.7) |
| 2025-26 Opening balance | (500.7) | (30.9) | (25.0) | (556.7) |
| 2025-26 Drawdowns | 500.7 | 30.9 | 25.0 | 556.7 |
| 2025-26 Provisional Additions | 0.0 | 0.0 | 0.0 | 0.0 |
| 2025-26 Closing balance | 0.0 | 0.0 | 0.0 | 0.0 |
72. In general terms the Scottish Government will always plan to drawdown any Scotland Reserve availability in full each financial year, with at least £150 million being required to be held annually to cover audit adjustments post year-end. As previous iterations of the Medium-Term Financial Strategy have set out this ensures that maximum fiscal flexibility is maintained without compromising the Scotland Reserve’s capacity to absorb any volatility in spending late in the financial year.
73. Following the conclusion of the Fiscal Framework Review the Scotland Reserve cap will now grow in line with the inflation (as measured by the GDP deflator) from its previous £700 million threshold. The limit for 2025-26 is £734 million.