Rachel Reeves has thrown down the gauntlet - the SNP must now respond

Chancellor Rachel Reeves threw down the gauntlet when she announced her Budget would deliver an additional £3.4 billion for the Scottish Government next year.

This was, she said, the largest real-terms funding settlement in the history of devolution. It must now be "used effectively” by the SNP “to deliver the public services that the people of Scotland deserve", she said.

The reaction of Shona Robison, the Scottish finance secretary, was notable. “This Budget is a step in the right direction, but still leaves us facing enormous cost pressures going forwards,” she said.

Speaking to journalists in Holyrood, she used the phrase “step in the right direction” multiple times. It was carefully chosen: positive, but not too positive. But even a lukewarm SNP reaction would have been unheard of under the Tories.

Nevertheless, Ms Robison insisted it would take more than one year to rebuild and recover after 14 years of austerity.

She also said it was “disappointing” there was no mention of abolishing the two-child benefit cap, or funding for the winter fuel payment.

“As ever, the devil is in the detail, and we will now take the time to assess the full implications of today’s statement,” she said.

Ms Robison will set out the Scottish Budget in early December, and attention will now turn to her own tax and spending plans.

She needs the support of MSPs from another party in Holyrood to pass the Budget. Asked if the door was now open to a possible deal with Labour, she said that would be a “positive thing”.

Scottish Secretary Ian Murray said the extra money provided by the UK government was “huge”, describing it as an "exceptionally positive Budget for Scotland".

"The SNP now have to get on with spending that on the front line,” he said. “You can see what the announcements have done in terms of schools and hospitals and NHS waiting lists in England's context."

He said an additional £1.5bn would be delivered this financial year through the Barnett formula - the funding formula that decides how much money flows to Scotland as a result of Treasury decisions in devolved areas.

The £3.4bn top-up next year includes £2.8bn for day-to-day spending and £610 million for capital investment, the UK government said. It takes the overall settlement for the Scottish Government in 2025/26 to £47.7bn.

Chief Secretary to the Treasury Darren Jones said this means the Scottish Government “is receiving 20 per cent more per person than equivalent spending across the rest of the UK”.

He added: “This will give the Scottish Government the certainty over public finances to be able to invest, reform and modernise public services and to boost investment and deliver growth in Scotland.”

Benjamin Cooper, of the Fraser of Allander Institute, an independent think-tank based at the University of Strathclyde, said the Budget “provided a significant uplift in spending” in Scotland. He said this was largely down to spending commitments in devolved areas such as education, social care and the NHS in England.

“The Scottish Government will be somewhat content with today’s announcements, with much higher spending and associated consequentials making their job of balancing spending commitments that bit easier come the Scottish Budget in December,” he said.

“With a much larger share of public sector workers in Scotland and more generous pay deals in recent years, it is likely that much of the discussion will centre on how the Scottish Government will respond in their own December Budget.

“The uplift in spending committed today, therefore, is met with more decisions that the Scottish Government must consider in order to ensure they can balance their upcoming Budget.”

Roz Foyer, general secretary of the STUC, called on the Scottish Government to “take the decisions needed to invest, through progressive taxation, into our communities and public services”.

She said: “The Westminster blame game is finished. They have the money. They have the powers. They can make our public services the gold standard of the UK if they choose to invest using their own tax raising powers.

“This Budget is a significant step towards brighter days, but greater strides will need to be taken by the Scottish Government in the months ahead if we are to unlock the potential of our country and dispel the darkness left behind by the Tory Government.”

Others will argue further tax rises in Scotland should be ruled out. Meanwhile, business leaders will want to see action to help their sectors.

“As we look ahead to the Scottish Budget, we urge consequential funding to be utilised to support the business community, particularly on non-domestic rates and planning, to ensure a level playing field with the rest of the UK,” said Liz Cameron, chief executive of the Scottish Chambers of Commerce.

David Lonsdale, director of the Scottish Retail Consortium, said retailers “will hope to see action to blunt any rise in non-domestic rates and an end to the mooted introduction of a business rate surtax on grocers”.

He said: “After being thwacked by additional employment costs in the Chancellor’s Budget, retailers deserve to be spared any further tax rises by Scotland’s finance secretary in December.”

Emma Jackson, of Citizens Advice Scotland, urged the Scottish Government “to use all available capital to build more affordable homes”.

Clearly, decisions need to be made. The ball is now in the SNP’s court.