SNP claims spending delay will hit Scotland

Published on 09/12/2009 22:05

SCOTLAND'S economic recovery is in jeopardy after the Chancellor Alistair Darling failed to allow future spending to be brought forward, it was claimed last night.

SNP finance secretary John Swinney said 5,000 jobs are at risk because of the omission from the Pre-Budget Report of accelerated capital spending.

This would have allowed the Scottish Government to use money from future years to finance projects early and boost the economy.

The measure had been widely considered as the most important means of getting the Scottish economy out of the recession and Scottish ministers have been lobbying hard for it since June.

The biggest loser could be the social housing budget which Mr Swinney has said will be reduced by 220 million in the next financial year without having capital spending accelerated.

Jonathan Fair, chief executive of Homes for Scotland, said: "At a time when the number of homes being built in Scotland is at an all time low, it is simply baffling why the Chancellor did not take firm action to ensure early signs of stabilisation were maintained in an area which is vital not only to the economy but also our social wellbeing."

When bringing capital spending forward was recently backed by Scottish Labour leader Iain Gray, it was taken as a sign that his mentor and close friend Mr Darling was preparing to agree to the demands. Opponents yesterday claimed that Mr Gray had "been hung out to dry" and "humiliated" when it was excluded from the statement.

But Labour accused their critics of being "petty".They insisted that capital spending could not be brought forward because Britain is coming to the end of a three-year public spending cycle and it was impossible to accelerate money which had not been decided yet. A Labour spokesman said: "It was the equivalent of Mr Swinney opening his Christmas presents and asking where his Easter eggs were."

But Mr Swinney described this reasoning as "laughable" and argued that it was the last opportunity for the Chancellor to announce the measure prior to the budget because the next public spending cycle will not be decided until the summer after the 2010-11 financial year has begun.

He claimed that Mr Darling had gone against his previous statement that the economy can grow not cut out of a recession.

He said that Britain is now the only member of the G7 club of top economies without a stimulus package in place.

He added: "The PBR is deeply damaging for Scotland. It puts in jeopardy all the progress we have made through our economic recovery plan."

Mr Swinney did welcome a tax on bankers bonuses and new incentives which will allow 300 million extra barrels of oil to be taken from deeper under the North Sea.

However, he pointed out that the Treasury now expects to make 10bn more in oil revenues than before at a time when Scotland's budget is decreasing.

There was also a furore over a decision not to offer tax breaks for the computer gaming industry based in Dundee, which is seen as an important growth industry in Scotland but faces tough competition from abroad.

But Labour said that 2.5 million has been given to help it along with 12 million for life sciences in Edinburgh.

Labour Scottish Secretary Jim Murphy also pointed to an extra 23 million extra of Barnett consequentials for Scotland generated from spending announcements for England.

And he argued that there is "record funding for Scotland" with public sector cuts delayed, although the SNP believes the budget has in reality been cut by 500 million.

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