Scotland queries ‘extra’ capital spending

Finance Secretary John Swinney said the extra capital spend for Scotland, worth £433m over four years, fell far short of the £2bn sought by Scottish ministers, and left overall spending unchanged.

He said: ‘The chancellor has proposed a limited increase in capital budgets, but the Treasury are so far unable to tell us by how much our revenue budget is going to fall. We need a complete picture to judge these announcements, and I am writing to the chancellor seeking this information urgently.

‘The Scottish Government has called for a targeted, expanded programme of some £2bn for capital infrastructure investments in Scotland to stimulate demand – which has not been delivered.’

Swinney added that the overall package did nothing to boost growth and that the new Office for Budget Responsibility forecasts exposed Osborne’s strategy as ‘an abject failure’.

However, he welcomed the cancellation of January’s planned fuel duty increase and the UK government’s offer of help in rescuing cross-border sleeper services.

Swinney added: ‘The Scottish Government is using all the powers presently available to us to stimulate growth now,’ he said. 

‘[We] will support around £9bn spending over the next three years to deliver new schools, hospitals, houses, roads, water infrastructure, community facilities and improved availability of high-speed broadband.

‘As a result of our £2.5bn non-profit distributing capital programme and switching of resources from revenue to capital, infrastructure investment in Scotland will now rise year-on-year throughout the spending period.’

But Scottish Labour Leader Iain Gray claimed that the Scottish National Party government in Edinburgh had cut capital spending in Scotland at twice George Osborne’s pace. ‘Any extra money for Scotland under the Barnett Formula from capital projects should be spent on projects that create jobs right now and right here in Scotland,’ Gray said.

For the Scottish Tories, housing spokesman Alex Johnstone contrasted Osborne’s discount for people buying council houses with the Scottish government’s decision to dump the Right to Buy, and said the SNP needed to follow Osborne’s lead.

CBI Scotland demanded early clarity from Swinney on whether firms operating in Scotland would be allowed to defer April’s business rates rise, while the Scottish Federation of Small Businesses said some small firms would ‘roll their eyes’ on learning that banks were to be gatekeepers of measures to boost lending to business.

The Scottish Trades Union Congress condemned what it called a ‘pensions grab’.

General secretary Grahame Smith said: ‘At some point, the penny will eventually drop that a demand crisis cannot be solved by continually undermining the purchasing power of workers.’