09 April 2004
Spending on economic development in Scotland has fallen as a share of the total Scottish budget in the period since devolution, a research report has disclosed.
According to an economic consultancy, combined primary and support expenditure on the economy has declined as a proportion of the budget since the Scottish Parliament was first elected in 1999.
The report, by Peter Wood of Tribal HCH, was commissioned by the finance committee, which is seeking to establish the pattern of expenditure, including capital and revenue, related to economic development across all departments.
First Minister Jack McConnell recently pledged to put the economy at the top of his political agenda.
The report found a substantial rise in support spending – activities that support economic development such as transport and education.
Primary, or direct, spending on economic development, such as grant aid and the cost of Scottish Enterprise, however, has not experienced the same sustained growth.
Since 1999, it grew by just 10%, while the year-on-year increase in 2004/05 was well below that in 2001/02. In contrast, support spending rose by 22% over the period and showed increases in every year except one.
When the two categories are taken together, they account for a shrinking proportion of the Scottish budget, which has grown by 41% in real terms. According to Wood, 2003/04 emerged as a low point for both categories of spending, although he pointed out that plans for the current year show some restoration of the position.
'Even so, planned spending for the year 2004/05 still involves a lower share of the overall budget going to economic development support, however defined, than in 1999/2000,' Wood added.
He said the lower growth in primary economic development spending reflected, in part, the Executive's priorities, including its decision to increase spending on health.
The report shows that total spending by the Executive on activities intended primarily to promote economic development amounted to more than £1.3bn, with Scottish Enterprise responsible for the largest element (£400m).
PFapr2004
