Chancellor Rachel Reeves will promise to “invest in Britain’s renewal” as she reveals her spending plans on Wednesday.
The UK Government’s spending review is expected to include a £113bn investment package, boosted by looser borrowing rules.
Reeves will announce significant increases in funding for the NHS, defence and education, alongside changes to Treasury rules aimed at directing more investment outside London and the south-east of England.
STV News understands that funding will also be confirmed for a major carbon capture and storage scheme in Aberdeenshire.
The Acorn Project, based at St Fergus near Peterhead, is designed to reduce greenhouse gas emissions by capturing carbon and storing it safely beneath the North Sea.
The project has been on the reserve list for government investment since it lost out to two English bids in 2021, but calls for funding have intensified in recent months.
Business leaders, including oil tycoon Sir Ian Wood and organisations like the Scottish Chambers of Commerce, have urged Westminster to back the development, saying it’s vital for decarbonising Scottish industry.
Reeves is also expected to outline plans to bring the most powerful supercomputer in the UK to Edinburgh, as well as a boost for Scotland through the Barnett Formula due to big increases to health and housing budgets in England
The Chancellor will say the spending plans are “possible only because of the stability I have introduced” since the October budget, adding the review will “ensure renewal is felt in people’s everyday lives, their jobs, their communities.”
“The priorities in this spending review are the priorities of working people,” Reeves is set to say.
“To invest in our country’s security, health and economy so working people all over our country are better off.”
The chancellor has already committed £15.6bn to public transport in England’s city regions and £16.7bn for nuclear projects, including the Sizewell C plant in Suffolk.
However, the review will impose tight spending limits on most departments outside health, defence and education.
While the policing budget is expected to rise above inflation, this could come with cuts elsewhere in the Home Office.
Ahead of the announcement, the Institute for Fiscal Studies warned that any NHS funding rise above 2.5% could mean real-terms cuts for other departments or tax increases in the autumn budget.
Reeves has reaffirmed Labour’s commitment to keeping income tax, national insurance and VAT rates unchanged.
She will tell MPs on Wednesday: “I have made my choices. In place of chaos, I choose stability. In place of decline, I choose investment. In place of retreat, I choose national renewal.
“These are my choices. These are this Government’s choices. These are the British people’s choices.”
But the SNP has called on Reeves to “abandon Labour Party austerity cuts and deliver urgent support to tackle soaring poverty and help families with the cost of living”.
SNP Westminster Leader Stephen Flynn also said it was essential that Scotland finally gets its fair share of capital investment to boost economic growth and create jobs.
He said: “The real test of the UK spending review will be whether the Labour government abandons its devastating austerity cuts to disabled people, and finally takes the bold action needed to eradicate child poverty – or whether the Chancellor ploughs ahead with billions of pounds of cuts to hard-pressed households.
“This is a test of values. Voters were promised change but the cost of living is sky-high, poverty is soaring to record levels on Keir Starmer’s watch – and Labour Party austerity cuts are making things even worse.
“Unless the chancellor changes course, more families will fall into deprivation and destitution as a direct result of Labour government failure.
“The chancellor must abandon Labour Party austerity cuts and deliver urgent support to tackle poverty and help families with the cost of living – and Scotland must not be treated as an afterthought when it comes to investment.
“It is essential that Scotland finally gets its fair share of capital investment to boost economic growth and create jobs.
“That means immediately funding vital Scottish energy projects, including Scottish carbon capture, instead of the Labour government constantly cutting and delaying projects in Scotland while pumping billions of pounds into the south of England.
“Time and again, the Labour government has blocked or cut funding for projects in Scotland. It cut £800m of funding for Edinburgh’s supercomputer – and handed millions to Bristol’s.
“It has delayed Scottish Carbon Capture while pumping billions into England’s – and it broke its promise to save Grangemouth, while it set aside billions for steel in Scunthorpe. Scotland must get the investment it needs – and it must get it now.”
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