SWINGEING cuts to public spending could last until 2018 with a further £11 billion sliced from budgets, a leading economic think-tank has warned.
The warning came as Scottish finance secretary John Swinney launched a fresh call for George Osborne to reverse the cuts and pump hundreds of millions of pounds into large-scale building projects to revive Scotland’s flatlining economy.
Mr Swinney published a updated list of “shovel-ready” schemes worth £800 million which could be started immediately across Scotland if the coalition starts spending money to get the construction industry working again.
But The Institute for Fiscal Studies (IFS) has warned that the Chancellor may have to push out the current squeeze on public spending to 2017-18 and find another £11 billion from cuts or tax rises on top of the further £8bn reduction in welfare spending already mooted.
Having initially planned to eliminate the structural deficit by the time of the next election in 2015, Mr Osborne has already had to signal further real-terms cuts of 2.3 per cent in Whitehall spending up to 2016-17 and the slashing of the benefits bill by another £8bn billion.
But under the IFS’s “relatively pessimistic” scenario for the future of the economy – under which the recent deterioration in growth prospects and tax receipts turns out to be permanent – the Chancellor will be forced to announce even more bad news for British taxpayers if he is to hit his “fiscal mandate”. In a report ahead of Mr Osborne’s autumn statement next week, the think-tank predicts that in any case he is on course to miss his other fiscal target – for national debt to be coming down in 2015-16.
Carl Emmerson, deputy director of the IFS, said: “Since the Budget, the outlook for the UK economy has deteriorated and government receipts have disappointed by even more than this year’s weak growth would normally suggest. As a result, the Chancellor might find himself having to abandon one of his fiscal targets.”
The Scottish Government has made repeated calls for UK ministers to boost spending on construction projects, insisting this has been a key strategy to help revive growth in the US.
The list of schemes set out by Mr Swinney yesterday could get under way before the end of 2013-14 and include the Clyde Gateway industrial development project, the upgrade of the A68 in the Lothians and a new health centre and maternity unit in Grampian.
Mr Swinney said: “Scotland’s budget for construction and maintenance projects is being cut by 33 per cent by the UK coalition government in a failed attempt to reduce public sector borrowing and while we are investing what we can in economic recovery in Scotland there is much more to do.
“Too many households are still struggling and too many people find themselves out of work. I have asked the Chancellor to significantly increase Scotland’s level of capital investment in his autumn statement.”
Large-scale shovel-ready projects
John Swinney’s list of shovel-ready projects includes:
A96 Threapland £6.0m
A68 Pathhead to Tynehead Junction £11.0m
A95 Lackgie £4.0m
A702 Candymill Bend and Edmonstone Brae £4.0m
Trunk Road maintenance £34.0m
Cycling infrastructure projects £3.9m
Ferry port infrastructure £5.7m
Canal infrastructure projects £6.3m
Highlands and Islands Enterprise: £9.8m
Scottish Enterprise: economic development projects £40.4m
Port of Leith masterplanning £119.0m
VisitScotland: investment in Visitor Centre infrastructure £1.3m
Roslin International Centre for Livestock Improvement £10.0m
Rural and environment £18.8m
Forestry projects £6.2m
National Parks £12.4m
Scottish Natural Heritage£0.2m
Scottish Court Service: Estate improvement £8.4m
Upgrading Safety Camera Network £2.4m
Clyde Gateway: Office and Industrial Developments for Economic Growth £63.4m
Irvine Enterprise Area: Infrastructure and Innovation Campus, and Irvine Ailsa Road Industrial Units £5.9m
Ardrossan Quayside and Medical Centre
Culture and heritage £8.5m
National Theatre of Scotland£2.0m
Works to Historic Scotland’s estate £1.4m
National Museums of Scotland £3.6m
Creative Scotland: £1.5m
Health total £308.9m
Health: equipment replacement £75.0m
Health: capital funding projects £188.9m
NHS Highland renal and endoscopy £2.0m
NHS Highland day services £15.0m
NHS Grampian Inverurie Health Centre and Community Maternity Unit £7.0m
NHS Grampian: Aboyne Health Centre £2.0m
NHS Grampian: Stonehaven Health Centre £2.0m
NHS Grampian: additional theatre capacity £3.0m
NHS Lanarkshire: Monklands £10.0m
NHS Tayside: Ninewells £3.0m
NHS Tayside: intensive care £1.0m