Spending Review 2025: Scotland

Kirsty McNeill Excerpts

Wednesday 2nd July 2025 Westminster Hall

[The Parliamentary Under-Secretary of State for Scotland (Kirsty McNeill)]

It is a pleasure to serve under your chairmanship, Sir John. I congratulate my hon. Friend the Member for Dunfermline and Dollar (Graeme Downie) on securing this debate on the impact of the spending review on Scotland, on all his advocacy on behalf of his constituents and on gifting us his deep experience, expertise and commitment to defence and national security.

This was, indeed, a historic spending review for Scotland. The UK has faced a decade and a half of poor productivity, weak economic growth and deteriorating outcomes in public services. The first job of this Government was to stabilise the British economy and clear up the public finances. The decisions this Government have taken since taking office have been tough but have been proven to be the right ones. Now that the economy is on a more stable footing, the task of the Government is to ensure that the British economy delivers for working people once again, and the spending review continues this renewal.

The Chancellor has unleashed a new era of growth for Scotland. Our economy is integral to unlocking growth across the whole UK, with Scotland’s economy already worth £204 billion per year. The spending review announced targeted investment in Scotland’s most promising sectors to grow the economy and put more money in working people’s pockets.

In the first instance, I will focus on the areas that Members have asked direct questions about today. The hon. Member for Arbroath and Broughty Ferry (Stephen Gethins) asked whether we can bring a Home Office Minister to Scotland to hear directly from higher education. Newsflash: we already have. The immigration Minister, my hon. Friend the Member for Feltham and Heston (Seema Malhotra), came earlier this year at my invitation and met Universities Scotland and representatives of our farming communities, which led very quickly to changes in the seasonal agricultural workers visa. That is what happens when Scottish Labour MPs are at the beating heart of Government and are able to issue invitations to a Government who are entirely committed to delivering for Scotland.

[Stephen Gethins]

I know the Minister was asked a lot of questions, and I thank her for that answer, but what I asked was whether she would come to the University of Dundee to see for herself the profound impact of these policies. There has been a good Scottish bail-out from the Scottish Government, which is welcome, but will a Home Office Minister come to Dundee?

[Kirsty McNeill]

I would be delighted to come to Dundee and hear from people directly, but I say gently to the hon. Gentleman that problems at the University of Dundee are a function of the decision making of a number of people, not least the university itself and the Scottish Government. I would of course be delighted to be in ongoing dialogue with it.

The hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) is a welcome new convert to the trade union cause. I would be delighted to pass on his best wishes to Sharon Graham and my fellow members of Unite, and I look forward to his backing for the new deal for working people. As he knows, the job of trade unionists and all those who are pro-trade union in the Government is to make sure the economy delivers for working people. That is exactly what we intend to do.

The hon. Gentleman acknowledged that we live in challenging times. The Prime Minister has said that we will up our game on defence, and the Chancellor reaffirmed the Government’s commitment to increase defence spending to 2.6% of GDP by April 2027. We are backing our armed forces, creating British jobs in British industries and prioritising the security of Britain when it is most needed.

Scotland is playing a leading role at the beating heart of the UK defence policy. The long-term future of the Clyde has been secured through an initial £250 million investment over three years, which will begin a multi-decade, multi-billion-pound redevelopment of HM Naval Base Clyde through the Clyde 2070 programme. HM Naval Base Clyde will play a crucial role for decades to come as we restore Britain’s readiness, deter our adversaries and help drive economic growth across the UK, including in Scotland, as part of our plan for change. As Members know, Scotland is already a centre of excellence for shipbuilding. The increased defence spending will see investment in UK sovereign capability, including in shipbuilding and naval technology. Further details will be set out in the defence investment plan later in the year.

My hon. Friend the Member for Dunfermline and Dollar made an important point about a defence growth deal. The forthcoming defence sector plan will outline how we will reform, grow and innovate to build our defence industrial base, scale small and medium-sized companies and create industrial leaders. The Secretary of State and I are of course working closely with colleagues across Government and in the Cabinet to maximise the benefits for Scotland.

I received a number of questions and representations about local growth. I assure hon. Members that the UK Government intend to ensure that every single part of Scotland benefits from the spending review. We are investing £1.7 billion in local communities over 10 years. The Government are investing £160 million over 10 years in investment zones in the north-east of Scotland and the Glasgow city region. At the spending review, the Chancellor confirmed £452 million over four years for city region and growth deals across Scotland, including a £100 million joint investment for the Falkirk and Grangemouth growth deal with the Scottish Government —£50 million from the UK Government and £50 million from the Scottish Government. That demonstrates the UK Government’s continued commitment to the Grangemouth industrial area.

The growth deal for Argyll and Bute was signed on 10 March, which means that every part of Scotland is now benefiting from our city, region and growth deal programme. A new local growth fund and investments in up to 350 deprived communities across the UK will maintain the same cash levels as in 2025-26, under the shared prosperity fund.

The Ministry of Housing, Communities and Local Government and the Scotland Office will work with local partners and the Scottish Government to ensure that money goes to projects that matter to local people. That investment will help drive growth and improve communities across Scotland. I am delighted that the spending review also confirmed in-flight commitments, including for Drumchapel town centre regeneration, and as well as funding for the Tour de France and Tour de France Femmes in 2027, when the Grand Départ will take place in Scotland.

The hon. Member for Strangford (Jim Shannon) asked whether we will ensure that areas that have been historically underinvested in will get their fair share. I assure him that we are looking at both need and potential in allocations. I also repeat an undertaking that I gave on the Floor of the House: we are looking at increasing trade between Scotland and Northern Ireland, and I am delighted to be looking at that in the coming weeks.

My hon. Friend the Member for Glasgow North (Martin Rhodes) asked what is to be done about devolution not to Scotland, but inside Scotland. I say to him that devolution is a habit of mind—one that the Scottish Government never acquired. They have been a hugely centralising Government, to the detriment of the Scottish people. I am delighted to reconfirm Scottish Labour’s commitment to further devolution inside Scotland today.

This spending review delivers support for Scottish businesses. The National Wealth Fund is trialling a strategic partnership with Glasgow city region, providing enhanced, hands-on support to help it develop and finance long-term investment opportunities. I was delighted to hear from my hon. Friend the Member for Paisley and Renfrewshire North (Alison Taylor) about how people are taking advantage of that in her constituency.

The settlement for investment in the spending review allocated £750,000 each year to champion Brand Scotland trade missions to make sure that we are getting inward investment and exporting. Last year, the Secretary of State for Scotland made successful trips to Norway and south-east Asia; in April, he travelled to Washington DC and New York. In the United States, he met with business leaders and investors, promoted our world-class culture and took part in Tartan Week with members of the Scottish diaspora. In May, the Secretary of State launched the Brand Scotland fund, offering the UK’s international network grants of up to £20,000 for innovative and creative activities to market Scotland overseas.

It was my privilege to be in Spain at the start of June with 16 Scottish female entrepreneurs to maximise the benefits of the recent UK-EU deal, tackle the Scottish gender export gap, promote Brand Scotland’s iconic goods and services, and encourage Spanish investment into Scotland. The Scotland Office director also recently supported a Glasgow chamber of commerce trade mission to Shanghai and over the next financial year will deliver a number of overseas trade missions and collaborations with the Scottish Chambers of Commerce and other key industry stakeholders.

My hon. Friend the Member for Dunfermline and Dollar asked about US immigration pre-clearance at Edinburgh airport. The Scotland Office is aware of that issue and has supported Edinburgh airport in discussions with the Home Office, Department for Business and Trade and US authorities. We have also engaged directly with the US Government officials on this issue. Although I agree it would be a welcome development for Edinburgh airport, it is not currently US policy to extend pre-clearance arrangements in this way—but we will continue to engage with them going forward.

My hon. Friend the Member for Dunfermline and Dollar also raised Rosyth and Dunkirk shipping routes. My officials are in touch with the company behind the new proposed route and relevant Scottish Government and Department for Environment, Food and Rural Affairs officials. They are looking to arrange a meeting as early as next week to look at possible solutions that would allow the project to go ahead. Scotland is playing a key role as part of our industrial strategy. We have demonstrable strength in eight of the key sectors. The accompanying industrial strategy sector plans will promote Scotland’s wide-ranging strength to investors.

I turn to energy. Working people from across Scotland will benefit from significant investments in clean energy and innovation, creating thousands of highly skilled jobs and strengthening Scotland’s position as the home of the United Kingdom’s clean energy revolution. As my hon. Friend the Member for Glenrothes and Mid Fife (Richard Baker) pointed out, the UK Government have confirmed £8.3 billion in funding for GB Energy in Aberdeen. That is alongside an increased commitment to the Acorn carbon capture usage and storage project, which—I am pleased to confirm for the hon. Member for Arbroath and Broughty Ferry—will receive £200 million in development funding, and the wider funding will be announced in due course. We believe that carbon capture and storage is critical for the UK’s future energy security and industrial ambitions, and recognise the importance of the role that it can play in securing growth and our clean power future.

My hon. Friend the Member for Livingston (Gregor Poynton) and the hon. Member for Gordon and Buchan (Harriet Cross) asked about the future of oil and gas. This Government have been clear that that will be part of the mix for decades to come, but that we have to invest in the transition so that people can get renewable jobs of the future. That is why I was pleased earlier this year to launch the energy skills passport when I was in Aberdeen.

The spending review also allocated significant investment in Scotland’s trailblazing innovation, research and development sectors, including—say it with me— £750 million for the supercomputing facility at Edinburgh University. To clear up any confusion for the record, what happened last year was not that this UK Labour Government cancelled the project; they put it on pause, because the previous Conservative Government had announced the project and not allocated a single penny to its realisation. Taking the responsible course, we took a year to make sure that it could be funded in full, and I believe Edinburgh University is delighted that we have now secured that funding.

Like the hon. Members for Caithness, Sutherland and Easter Ross (Jamie Stone) and for Edinburgh West (Christine Jardine), I am a committed devolutionist, and I share their despair that the Scottish Government are absolutely addicted to wasting money. That notwithstanding, this Government are responsibly committed to resetting the relationship, so that we can make representations to ensure the best results for the people of Scotland.

[Stephen Gethins]

I thank the Minister for giving way; she is being generous with her time. She talks about resetting the relationship, but I have one thing in particular to ask. I am sure that she and her colleagues think that last night was a triumph with the welfare reforms, but they will have a direct impact on the Scottish Government by pushing people into poverty. What assessment has the Minister made of last night’s vote and its impact on the devolution settlement?

[Kirsty McNeill]

We are in ongoing conversation with the Scottish Government on all manner of policies where there is an interplay between reserved and devolved matters. The Scottish Government have been offered all manner of briefings, including—I repeat my disappointment about this—a briefing for the First Minister on the strategic defence review, which he refused because he wanted to go campaigning in Hamilton—and a fat lot of good that did him.

The UK Government’s plan for change has delivered a record settlement for the Scottish Government. There is more money than ever before for them to invest in Scottish public services such as our NHS, police, housing and schools. The Scottish Government will continue to get more than 20% more funding per head than the equivalent UK Government spending in the rest of the UK. The hon. Member for Arbroath and Broughty Ferry cited a phrase from the Fraser of Allander Institute, but I note that he did not cite it saying that “you’d be hard pressed” to say that Scotland has been short-changed compared with

“UK Government departments with comparable responsibilities”.

The Fraser of Allander Institute recognises a record settlement when it sees one.

While I am responding to the hon. Member, I almost felt that there was a dare when he said that we do not want to talk about Labour’s record. I would be delighted to do that. As we approach the first anniversary of this Labour Government, I am proud of the new deal for working people, GB Energy, three trade deals, four interest rate cuts, record investment in Scotland’s devolution era into the Scottish Government and the protection of jobs for which this Government have been responsible, including at the behest of our colleagues in Arnish and Methil. I am proud that this is a Government with Scotland at its beating heart.

In conclusion, the UK Government are delivering for people and communities in Scotland. This is a truly historic spending review for Scotland, choosing investment over decline and delivering on the promise that there would be no return to austerity with Labour. It puts Scotland at the heart of our growth missions, creates huge opportunities for us in the industries of the future and helps us to rebuild Britain. It invests in Britain’s renewal and prioritises the UK’s security, health and economic growth. This spending review delivered investment in Scotland’s communities and industries that the Conservatives never would, and the SNP never could.