Swinney rejects £1bn bridge aid

Published on Saturday 4 April 2009 19:57

THE future of the new Forth road crossing is under fresh doubt after Scottish ministers formally rejected a £1bn offer from the Treasury to help with the cost of the scheme.

In a letter seen by Scotland on Sunday, SNP Finance Secretary John Swinney has told UK ministers that their pledge of cash amounts to "no additional help".

He said public services north of the border will still be forced to make "significant sacrifices" as money is diverted to pay for the 2.3bn bridge.

Swinney is also now calling on the UK Government to give further help by waiving all VAT charges on the bridge – amounting to some 200m. Labour MPs last night described the request as "hare-brained".

But the row leaves unresolved the question of how the 2.3bn bridge will be paid for.

The cash dispute began last year when Scottish Ministers asked the Treasury to give them an advance in addition to the 30bn a year block grant they already receive so they could both pay for the bridge and keep current spending levels up.

However, Treasury Minister Yvette Cooper ruled out such a move.

But in a compromise she proposed a 1.1bn package for the Scottish Government. 500m came from Scotland's share from the London Crossrail project, 300m from projected Scottish underspending, which is normally returned to the Treasury, and 200m from the sale of surplus government land and property.

But in a letter send to Cooper on Friday last week, Swinney declared: "There are now new or additional resources and your suggestion would simply result in pressure transferring to other parts of the Scottish budget".

He adds: "They (Cooper's plans] are all asking the Scottish Government to make significant sacrifices."

Chancellor Alastair Darling has yet to confirm the Scottish Government's block grant for coming years but SNP Ministers are claiming it will amount to 500m a year less than expected, as Whitehall turns the screw on public spending.

Swinney also rules out the Treasury suggestion that he start saving cash now ahead of construction. "I do not find a solution which seeks to address future pressures by moving them into the present attractive," he writes.

Swinney also claims in his letter that the Scottish Government cannot free up cash for the bridge through any more efficiency savings. Such a move "means cutting funding to other Scottish programmes" he declares.

Instead, Swinney now wants the Treasury to waive all VAT charges on the bridge, which the Scottish Government will have to pay.

Labour MP Gordon Banks said last night: "I am amazed by John Swinney's rejection of the billion pounds to help build the much-needed new Forth crossing. Instead he has come up with a hare-brained scheme for Scottish Government spending to be tax-free."

UK Government sources said last night that "a billion pounds is still on the table from the UK government to build the new crossing". Treasury Ministers also argue that the SNP Government has plenty of fat to cut from its budget.