Budget 2012: Alex Salmond’s £300m project list faces Budget snub

The First Minister challenged Chancellor George Osborne to come up with £300 million in the Budget to spend on infrastructure for Scotland.

But while Prime Minister David Cameron has already dismissed the idea, Whitehall sources told The Scotsman that there would be a package for Scotland devised by Liberal Democrat Chief Treasury Secretary Danny Alexander.

These include making Edinburgh one of the ten “super connected” cities for superfast broadband giving businesses and residents up to 100 megabytes per second to boost the economic success of the city.

The development will help 180,000 living in the city, while a total of 486,000 people around Edinburgh will also benefit from better wireless connections.

The government will also dip into a UK fund of £150m to deal with mobile-phone blackspots on the A82 between Glasgow and Mr Alexander’s constituency city of Inverness. And manufacturing businesses in Dundee, Nigg and Irvine will be able to claim back 100 per cent of their capital investment costs instead of the normal 18 per cent to boost business growth.

A Treasury source said: “This is a UK Budget, but it will have an unmistakable tartan streak. Danny Alexander has been working hard to ensure Scotland is at the heart of it, and today you will see the fruit of that labour.”

Meanwhile, it was confirmed yesterday that the Lib Dems have won their battle with Mr Osborne to accelerate to two years the raising of the threshold on earnings on which income tax is not paid to £10,000.

Sources said last night that the move would be “the most significant item of expenditure” and the “centrepiece of the Budget”.

But there was also speculation that the Lib Dems had failed to get the mansion tax on houses worth £2m or more they had also been pushing for.

The raising of the personal allowance threshold to £10,000 by April 2014 instead of 2015 is likely to be accompanied by the scrapping of the upper 50p rate of tax for those earning £150,000 or more, although leaks have suggested it will be reduced to 45p.

The measures are unlikely to please Mr Salmond, who wrote to the Prime Minister after it was reported that the Scottish Government’s request for cash for “shovel-ready” projects would be dismissed in the Budget today.

The SNP administration had submitted a list of capital projects on which work could start immediately if additional funding was made available, estimating that every extra £100m of funding could support about 1,400 jobs in Scotland. Mr Salmond said the Prime Minister had told him he was “sympathetic” to the case the Scottish Government made when the two men met in Edinburgh last month.

The First Minister then followed that up by sending a list of the projects that could go ahead straight away to Mr Cameron.

But the SNP leader hit out at the “offhand manner in which these serious issues appear to have been handled by the Treasury”. The projects the Scottish Government wanted cash to be made available for include refurbishment of the Kincardine Bridge and several university projects, including the development of the Centre for Virology Research at Glasgow University.

Mr Salmond said that in media reports over the weekend, Treasury sources were quoted as saying “the Chancellor of the Exchequer has dismissed the representations” for funding for the projects.

The First Minister stated he would be “extremely disappointed” if the issue had been rejected in this way.

He told Mr Cameron he had made “these representations in good faith”, adding: “As you will remember, you told me that you were sympathetic to the capital investment point but were sceptical as to whether projects could be ready to take effect from this coming financial year.

“You readily agreed to being sent a list of ‘shovel-ready’ projects that could have an immediate and beneficial impact. The clear understanding was that if we could demonstrate that such projects could be taken forward in an appropriate timescale then they would be given proper consideration.

“This we have done and there is now no argument that some £300m of capital projects could be deployed in the coming financial year, giving a vital boost to local economies around Scotland.”

He called on Mr Cameron to confirm whether reports that the Scottish Government’s call for funding would be dismissed in the Budget were correct.

“I therefore invite you to dissociate yourself from the comments that have been attributed to representatives of your government,” he told the Prime Minister.

“I also ask once again that you take action to ensure that this week’s Budget delivers for Scotland. You could do this by agreeing to provide the additional funding to support the list of ‘shovel-ready’ projects I enclosed with my letter.