Scotland's fiscal outlook: medium-term financial strategy

Annex E: The Scottish Spending Review Framework

Context

The allocation of public funds is one of the most impactful levers available to governments; it pays for the essential elements of our public services. Scottish Ministers are clear that public spending must be carefully prioritised to drive progress against the Scottish Government’s core priorities and deliver for our citizens. Ministers are also clear of the benefits of setting out multi-year spending plans to support effective organisational planning across the public sector and more widely in Scotland.

The UK Government published a multi-year spending review on 11 June 2025. This provides the Scottish Government with key information to develop our own multi-year spending plans. Work has already begun on these plans, with the intention that Scottish Ministers publish the conclusions of the spending review exercise in December 2025, alongside the 2026-27 Scottish Budget. These conclusions will supplement the annual budget and we intend to set out the Scottish Government’s indicative spending plans for 2027-28 and 2028-29 for resource, with an additional year (2029-30) for capital. We will confirm the exact timeframe covered in due course. Our aim is to provide as much certainty as possible to support planning by citizens and organisations across Scotland. As with the 2026-27 Scottish Budget, there is, however, a risk that these plans may be adjusted by the next administration, as well as needing to change as a result of changes in economic circumstances.

The Medium-Term Financial Strategy and Fiscal Sustainability Delivery Plan set out the financial and economic context for the next Scottish Spending Review. The Scottish Government faces a challenging financial settlement over the coming years and, given our current fiscal levers, we must make effective prioritisation decisions to balance the budget.

Approach

Our focus in the Scottish Spending Review will be allocating budgets in the best way to deliver against the four core priorities of government:

• Eradicating child poverty;
• Tackling climate change;
• Growing the economy; and
• Ensuring high quality and sustainable public services.

These four priorities will provide the basis for the analysis and prioritisation of spending plans and proposals. Our spending review will seek to allocate funding in ways that effectively and efficiently deliver on these core areas.

In addition, our approach will be underpinned by fiscal sustainability and will progress the actions set out in the Fiscal Sustainability Delivery Plan to ensure the medium-term security of our public finances. Using the four priorities as a basis, we intend to prioritise where funding is deployed to ensure the greatest impact, using evidence and performance data to support this decision-making.

We will integrate the Scottish Spending Review with the work to develop our 2026-27 Scottish Budget in order to ensure strategic coherence and streamline our processes. In line with our standard approach to the Scottish Budget, Scottish Ministers and their officials will undertake engagement with stakeholders to inform the development of our multi-year spending plans.

We will build on the impact assessment approach that we have deployed in previous Scottish Budgets and Spending Reviews to ensure that spending plans continue to be properly considered and our legal duties continue to be met.

Timeline

Our proposed timeline for the Scottish Spending Review is set out below:

• June: Fiscal Sustainability Delivery Plan and Medium-Term Financial Strategy (including the Scottish Spending Review Framework) published.
• June – September: Analysis of portfolio spending and development of proposed spending plans. Programme of stakeholder engagement.
• October – November: Ministerial discussions on the spending plans. Budgets will be reviewed in light of the UK Government Autumn Budget. Ministers will engage with Parliament on the Scottish Spending Review as part of the pre-budget scrutiny sessions.
• December: 2026-27 Scottish Budget and Conclusions of the Scottish Spending Review published, alongside supporting documents.