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Scottish independence: white paper funding warning

Treasury says the childcare policy would increase in cost by 640m under the proposal. Picture: Robert Perry

Treasury says the childcare policy would increase in cost by 640m under the proposal. Picture: Robert Perry

  • by DAVID MADDOX
 

AN INDEPENDENT Scotland would face a funding gap of £1.6 billion a year for three of the key pledges made by Scottish ministers, according to the first formal analysis by the UK government of last month’s independence white paper.

The study by the Treasury shows that Scots would have to pay £571 million to provide 1,140 hours of childcare to all three and four-year-olds, while a 50 per cent cut in air passenger duty would cost £130m and slashing corporation tax by 3 per cent a further £300m in 2011-12 prices.

The Treasury says that the childcare policy would increase in cost by £640m under the white paper’s proposal to expand it to all children aged one to four in the 2020s.

None of the pledges were funded in the white paper published by the Scottish Government last month.

The Treasury said the £1.6bn black hole – more than £300 for every man, woman and child in Scotland – does not include other unfunded pledges of reprivatising Royal Mail or reducing the pension age by a year.

However, Deputy First Minister Nicola Sturgeon said the Treasury’s figures were “all over the place”.

Liberal Democrat chief secretary to the Treasury, Danny Alexander, said: “The reality is that the white paper shows nothing about how they would pay for these commitments. The Scottish Government cannot claim it is going to spend what it will not have.

“Within the UK, Scottish businesses are benefiting from the substantial cuts in corporation tax the coalition has delivered, and Scottish families will benefit from tax-free childcare in 2015. Both of these policies bring big benefits to Scotland at no cost to the Scottish Government budget, proving once again how well the UK works for Scotland.

“The real choice next year is between unfunded promises that ignore the realities of being a new and separate country, or an economic, political and social union – in the UK – that has stood the test of time.”

He said the independent Office for Budget Responsibility has revised down forecasts on oil and gas revenue for the same period by £3.5bn over the next three years.

Mr Alexander said: “Instead of needing to cut spending – as Scotland would have to as an independent country – the Scottish Government will actually see its budget rise by more than £300m over the same period.”

Ms Sturgeon claimed that the Treasury figures based on the Autumn Statement and predictions by the Office for Budget Responsibility were “wrong”.

She said: “Danny Alexander’s figures are all over the place. In September, the No campaign were claiming a funding gap of £32bn, by last month that had shrunk to £10bn, and now they are saying it is £1.6bn. All these figures are wrong, but at this rate even the No campaign will be predicting a healthy surplus by the time the referendum arrives.”

She added: “This analysis completely ignores the dynamic impact of the policies we are proposing to increase economic activity. But the most serious point behind all this is that the vastly different choices in spending priorities have now been laid bare. Westminster is pressing ahead with a new generation of weapons of mass destruction, at a cost of up to £100bn, and at the same time is attacking the Scottish Government’s plans to transform childcare in an independent Scotland.”

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