Scotland could lose £500m as 'efficiency savings' take effect

Published on Monday 24 November 2008 21:19

SCOTLAND'S budget could be cut by £500 million as a result of the changes announced by Alistair Darling, it was claimed last night.

SNP ministers are concerned that the Chancellor's plan to cut 5 billion from government budgets in 2010-11 through efficiency savings will result in a 500 million cut in Scotland – 10 per cent of the UK total.

John Swinney, the Finance Secretary, said: "We are extremely worried about the consequences of the reduction in UK departmental spending in 2010-11, which could see a cut of up to 500 million in the Scottish Government's budget over and above any reprofiling of spending just as we expect the economy to be emerging from very difficult conditions."

Mr Swinney said he welcomed steps to boost the economy, including the cut in VAT, but he said more could have been done to help families cope with fuel bills and more targeted at the housing market.

However, Jim Murphy, the Scottish Secretary, said that the Pre-Budget Report's proposals would boost the Scottish economy by 2 billion.

He conceded there would be future "belt tightening" in UK government expenditure and that would include Scotland; and he admitted that could affect future block grant payments from the UK Treasury to Scotland.

But he also welcomed changes which would allow capital expenditure to be brought forward, as well as the cut in VAT from 17.5 per cent to 15 per cent, a change he claimed would mean a 275 boost for the average family next year.

Mr Murphy said: "These measures are proof this government is taking decisive action to protect businesses, both small and large, jobs, homes and our future stability and prosperity.

"This means the average Scottish family will better off. It will see a 600 increase in the income tax personal allowance is made permanent with a further rise in the future, as well as increases in Child Benefit and the basic state pension."

The Conservatives focused on the Chancellor's downgrading of the UK tax take and warned that this would leave a new 300 million black hole in the Scottish Government's local income tax (LIT) plans.

Derek Brownlee MSP said: "The SNP cannot hide from reality any longer. It is time to kill off LIT, and concentrate on the Conservative solution of cutting and reforming council tax."

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