In its 2025-26 budget, the Scottish Government changed the way that its previous year’s spending figures were presented. This made year-to-year comparisons slightly more complicated.
If this approach is repeated in January’s budget, it’s important to understand how this works to avoid comparing apples with pears.
Budgets change through the year
Once Parliament passes a budget for any given year, this is not the end of the story. Budgets often change throughout the year and what is actually spent can differ from what was originally proposed.
Throughout the year, the Scottish Government proposes two revisions to the budget originally passed by Parliament – the Autumn Budget Revision (ABR) and the Spring Budget Revision (SBR). These are considered by the Finance and Public Administration Committee.
There are three main reasons for budget revisions throughout the year:
- Routine in-year transfers between different portfolios. These occur when spending is presented under one portfolio in the budget but is actually spent by another portfolio. For example, significant amounts of funding for social care are presented under Health and Social Care in the original budget, and then routinely transferred during the year to Local Government in the ABR and SBR, as local authorities are responsible for the delivery of social care.
- Ad hoc in-year transfers between different portfolios. These occur when the Scottish Government has chosen to reprioritise its resources throughout the year.
- Additional funding resulting from UK government decisions, such as Barnett consequentials. After UK fiscal events, the Scottish Government often receives Barnett consequentials from UK government spending in devolved areas. For funding received midway through the financial year, the Scottish Government formally sets out how it has chosen to allocate them in the ABR and/or SBR.
The upshot of this is that when the Scottish Government presents its 2026-27 budget in January, its latest spending plans for 2025-26 will not be the same as in the previous budget passed by Parliament. Spending plans for 2025-26 have already been revised in the ABR, which was published in September 2025.
The Scottish Government used to publish its budget for the year ahead alongside a comparison with its previous budget, so that year-to-year changes in spending plans were presented as ‘budget-to-budget’. This showed how the government’s spending plans for the year ahead compared with what was proposed at the previous budget – not how they compared with the latest spending plans.
Where budgets showed little in-year movement, this made sense. But where there had been significant in-year movements for any of the reasons outlined above (or a combination), the comparison with the original budget could be misleading.
A different budget presentation last year
For this reason, the Finance and Public Administration Committee had been pushing for changes to the budget presentation so that the baseline for comparison gave a more representative picture of the latest budget position.
In response, the Scottish Government’s last budget stated the prior year comparator as per the latest ABR, not the previous budget (i.e. ABR-to-budget).
In theory, this might make a lot of sense. However, it created two issues:
- The ABR figures for the prior year included the routine in-year transfers outlined above, such as from health to local government, whereas the budget proposals for the forthcoming year did not. This skewed some year-to-year comparisons, akin to comparing apples with pears, given that similar transfers were expected to take place again.
- The 2025-26 Scottish Budget was published just after the UK government’s first post-election budget in October 2024. The UK budget included around £1.3 billion of Barnett consequentials for 2024-25. Around £3.4 billion of Barnett consequentials were for 2025-26.
The Scottish Government had already published its 2024-25 ABR (i.e. the prior year baseline used in the budget documents) and hadn’t formally allocated the in-year Barnett consequentials. This means that when it published its 2025-26 budget, the prior year comparison figures did not include the additional Barnett consequentials, but the 2025-26 figures did. So again, comparing apples with pears.
The baseline makes a difference
Whilst this might sound technical, the impact for budget scrutiny is potentially significant. How spending plans are set to change year-to-year can vary depending on whether you compare budget-to-budget or ABR-to-budget. This is demonstrated in Figure 1.
Figure 1: Difference in percentage change in resource budgets depending on baseline (% change, real terms)
Year-to-year changes in spending plans can look very different depending on which prior year baseline is being compared against.
Source: SPICe analysis of Scottish Budget 2025-26
Taking the Health and Social Care portfolio, for example, the ABR-to-budget presentation shows a 7.3% increase, while the budget-to-budget presentation shows a 3.4% increase. An important part of the explanation for this difference is the routine in-year transfer of social care funding outlined above, which was included in the 2024-25 figures but not 2025-26.
What does this mean for budget scrutiny?
At times, budget scrutiny last year got bogged down by conversations about how much a spending line was ‘really’ increasing by.
To avoid this, and focus scrutiny on the substantive decisions made by government, it’s important to be clear about what each baseline comparison is telling you.
Budget-to-budget comparisons show the decisions made in the budget compared with the decisions made at the previous budget. ABR-to-budget comparisons show the budget’s proposed spending plans compared with the latest spending plans for the year before. The specifics of a given budget line will determine which comparison is more meaningful in a particular situation.
We don’t yet know how the Scottish Government will present its forthcoming budget. Whichever approach it chooses, those scrutinising the budget will need to remember the importance of which baseline they’re using.
Rob Watts, Financial Scrutiny Unit, SPICe