Scottish Public Finance Manual

The Scottish Public Finance Manual (SPFM) is issued by the Scottish Ministers to provide guidance on the proper handling and reporting of public funds.

Spending reviews


1. This section provides guidance on the spending review process during which Scottish Ministers undertake a detailed examination of portfolio budgets to set future spending plans and targets over a multi-year period.

2.  The aim of a spending review is to develop a longer term spending plan for Scotland. A spending review will be tailored in its approach including the period which it covers. In the past, spending reviews have commonly covered a three year period although they can cover shorter or longer periods.

Funding arrangements for Scotland

3.  The UK Government provides funding to the Scottish Government via a “Block Grant”. This is derived by applying the population-based Barnett formula to changes in planned spending on comparable services by UK government departments. This funding arrangement is detailed in the HM Treasury “Statement of Funding Policy”.

4. The Scottish Government can also raise income through devolved taxes. Under the Fiscal Framework agreed with the UK Government, the Block Grant provided to the Scottish Government is reduced to account for any revenues the UK Government foregoes by devolving these taxes. Further detail on the operation of the Fiscal Framework is set out in the Scottish Government’s “Fiscal Framework Outturn Report”.

5.  When the UK Government provides Scottish Ministers with a firm indication of funding over a multiple year period, this enables Scottish Ministers to plan their spend priorities over a longer period. A spending review is part of this planning process. 

Key points

6. The spending review process in Scotland is managed by Scottish Government officials who scrutinise and challenge portfolio expenditure proposals across the Scottish Government and provide advice to portfolios and Ministers.

7. The spending review process helps Scottish Ministers identify their key spend priorities over a multiple year period. This can result in Scottish Ministers developing a Scottish Budget for more than one year. However, these are separate activities. When Scottish Ministers undertake a spending review, they have a choice on how to approach the determination of future Scottish Budgets including whether they wish to set a Scottish Budget for more than one year.

Contact Details

8. If you have queries on the Scottish approach to spending reviews please contact:

Page reviewed: September 2021



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