Investing in Scotland's Future: Resource Spending Review

Annex B: Capital Spending Review Update Summary

Accompanying the Resource Spending Review and the Medium-Term Financial Strategy, the Scottish Government has published the outcome of the targeted review of its 2021-22 to 2025-26 Capital Spending Plans. This now supersedes the Capital Spending Review published in February 2021.

Since then, there have been changes in three key factors which have a bearing on the Scottish Government's infrastructure investment pipeline of projects and programmes.

• Scotland received a lower-than-expected capital settlement from the UK Government's Autumn 2021 spending review– reducing the expected funding envelope by over £750 million.
• The establishment of the new Scottish Government in 2021 redoubled Scotland's commitment to tackling the twin global crises of climate change and biodiversity loss, underpinned by specific commitments and targets set out in the landmark Bute House Agreement.
• The combination of supply chain pressures and business disruption due to the impact of the UK's exit from the European Union, the COVID-19 pandemic and the Russian invasion of Ukraine risk impacting on time and costs of projects.

Given the significant changes described above, a targeted review of the Capital Spending Review was undertaken to ensure that the Scottish Government's key priorities are still being achieved within the reduced available capital allocations and in light of new commitments and market conditions.

Despite the challenging fiscal position, by considering all the options available, this targeted review will add to, rather than diminish, the positive commitments published in the 2021 Capital Spending Review and Infrastructure Investment Plan. These capital commitments also support the priorities set out in the Resource Spending Review.

For example, over the five years covered by the Capital Spending Review we will:

• Reduce child poverty through making available more than £3.6 billion for the affordable housing programme, and £220 million of new investment in priorities to support children and families through the roll out of digital devices and school infrastructure, play parks and a system of school age childcare.
• Address the climate crisis through over £5 billion investment in rail infrastructure, £1.8 billion to deliver the Heat in Buildings strategy, and expansion of the Just Transition fund to over £150 million by 2025-26.
• Build a strong and resilient economy by investing over £525 million to deliver on five years funding of the £5 billion City Region and Regional Growth Deals programme and supporting Local Government capital investment with £1.9 billion of funding.