Reeves tackles cost-of-living and backs Scottish industry at Budget

• Chancellor announces fair deal for working families with removal of two-child benefit cap, energy bill saving and fuel duty freeze 
• Scottish industry backed by investments in Grangemouth, Greenock, Leith and Fife 
• Public services backed with extra £820 million for Scottish Government

Rachel Reeves recognised Scotland's huge £204 billion annual contribution to the UK economy with investments in Grangemouth, Greenock, Leith and Kirkcaldy, and provided long-term certainty to the oil and gas industry to support North Sea jobs and investment. 

Despite wages growing more in the first year of this government than at any point in the 2010s, the Chancellor was clear too many families are still struggling with the cost of living which is why the Budget included a range of measures to cut bills and boost pay packets.   

Saying that the fairest way to help people with the cost-of-living was to cut inflation and increase wages, Reeves announced £150 off energy bills, a fuel duty freeze, and national minimum and living wage rises. 

The Chancellor announced the removal of the two-child limit. 95,000 children in Scotland will benefit from this change. Funded by tackling welfare fraud and long-overdue reforms to the Motability scheme, it will result in the biggest reduction in child poverty at any Budget this century.

The Chancellor's Budget also ensured that Scottish public services are fairly-funded, with an extra £820 million for public services in Scotland through the Barnett Formula, on top of a record settlement in June.

Secretary of State for Scotland, Douglas Alexander MP said:

This is a Budget which delivers for Scotland - raising children out of poverty and helping tackle the cost of living for working families with action on energy bills.

Scrapping the two-child benefit cap will lift thousands of Scottish children out of poverty. Funded by raising online gambling taxes and tackling welfare fraud, it will result in the biggest reduction in child poverty at any Budget this century.

The UK Government has backed Scotland's public services with an extra £820 million — on top of the extra annual £9.1 billion already committed at the Spending Review.

The £14.5 million announced for Grangemouth is also vital investment in Scotland.

Reeves also announced reforms to modernise the tax system, asking those with broader shoulders to contribute more through long-overdue fair reforms.

Backing Scottish industry 

• £14.5 million will back Grangemouth's transition to a hub for low carbon technologies as the UK Government cements Scotland's place as the home of the UK's clean energy revolution. 
• A further £20 million for Inchgreen near Greenock will upgrade the port's dry dock, creating up to 1,750 jobs.  
• Up to £20 million will transform Kirkcaldy town centre and waterfront, including the creation of ‘Adam Smith Growth Works', boosting local business and tourism.
• £25 million will be released following the full sign-off of Forth Green Freeport - spanning Leith, Grangemouth and Fife.
• To support oil and gas workers, the UK Government is introducing ‘Transitional Energy Certificates' to manage existing North Sea fields for the entirety of their lifespan, and a new Jobs Brokerage Service - offering end-to-end career transition support.

Tackling child poverty, the cost-of-living and economic inactivity

• 95,000 children in Scotland will benefit from the removal of the two-child limit. 
• Raising the National Living Wage by 4.1% and the National Minimum Wage by 8.5% —building on April 2025 increases to the National Living Wage and National Minimum Wage that already directly benefitted 220,000 workers in Scotland. 
• Uprating Universal Credit Standard Allowance by 6.1%, the first ever permanent real terms increase.
• Increasing the State Pension by 4.8% from April 2026, directly raising incomes for 1.1 million pensioners in Scotland. 
• Extending the fuel duty freeze and 5p cut, saving the average car driver £49 next year. 
• Unleashing talent and opportunity with a Youth Guarantee package. This will include ensuring every eligible 18-to-21-year-old who has been on Universal Credit and looking for work for 18 months in Great Britain will get a six-month paid work placement.

Public services investment 

• The Budget provides an extra £820 million for the Scottish Government to spend on its priorities such as education and tackling NHS waiting times— on top of the extra £9.1 billion already committed during the Spending Review.   
• The Scottish Government continues to receive over 20% more funding per person than equivalent UK Government spending across the rest of the UK reflecting the real costs of delivering services across Scotland's diverse geography, from the Highlands to the central belt.

More information

• The changes to dividend and savings tax rates apply UK wide. The government will engage with the Scottish Government to provide them with the ability to set property income rates in line with their current income tax powers and fiscal frameworks.  
• The changes to the two-child benefit limit, increase in National Minimum Wage and National Living Wage, uprating Universal Credit and increase of the state pension apply GB wide. The UK Government will fund the Scottish Government to mirror these changes should it choose to do so. 
• The fuel duty freeze applies UK wide and will significantly benefit the most rural communities across Scotland.