By Keith Aitken in Edinburgh | 5 March 2012
Scottish public spending could now take two years longer than anticipated to return to pre-austerity levels, Finance Secretary John Swinney has claimed.
His warning, ahead of a meeting in London today of UK finance ministers, follows the latest issue of Outlook for Scottish expenditure, an analysis of official data by the Scottish Government’s economists.The study, published at the weekend, updates previous forecasts to take account of changes in expenditure plans announced in the Autumn Statement by Chancellor George Osborne, and revised economic data from the Office for Budget Responsibility.
It concludes that additional spending constraints beyond the current Spending Review period, coupled with revised inflation forecasts, will mean a real-terms fall of 18% over seven years in Scottish Government spending powers.
Swinney claimed that it could now be 2027/28 before Scottish spending returns to 2009/10 levels in real terms, two years later than in previous projections. The cumulative real-terms loss to the Scottish Budget could reach £51bn, against the £39bn forecast last autumn.
The finance secretary called on the UK government to adopt the Scottish National Party’s model of a ‘Plan McB’, based on increasing capital investment, building consumer confidence, and ensuring that businesses have access to finance for investment.
The chancellor’s Autumn Statement did include a boost to capital spending, which brought Scotland an extra £443m over four years. But Swinney insisted that the new figures made ‘an overwhelming case’ for further increases in capital investment and for fiscal independence for Scotland.
‘It is further evidence that the UK government’s austerity programme is deeply damaging to Scotland, and we now know that without independence and substantial new financial powers coming, we face years of cuts from Westminster,’ he said.
‘With responsibility for our own finances and our own vast natural resources, including the trillion-pound asset base of North Sea oil and gas, we will be able to make choices in our own best interests,’ he added. ‘The [independence] referendum will be a chance for Scotland to choose a new, better path.’
