Holyrood gets £400m but critics ask how it will be spent

The money has been released to Holyrood after Chancellor George Osborne’s autumn statement yesterday freed up billions of extra pounds UK-wide to kick-start growth.

Business leaders say any new money should ease the tax burden on firms after the SNP government recently set out plans to introduce a controversial levy on supermarkets and to tax empty premises.

Question marks have now emerged over whether free nursery care for poorer families south of the Border will be available in Scotland.

Mr Osborne’s statement includes the offer of £50m to safeguard the future of cross-Border sleeper train services.

Scottish Secretary Michael Moore said: “The job of growing our economy falls to Scotland’s two governments. The UK has announced wide-ranging measures to help Scottish companies access credit, to delay increases in fuel duty and to help the young unemployed in Scotland.

“We have also provided an extra £433m to the Scottish Government so that they can invest in capital projects in Scotland.

“This is new money that Holyrood was not accounting for, so I am sure it will be welcomed. If it is used wisely, then it can make a significant impact in growing Scotland’s economy.”

Yesterday’s announcement also means Scotland will benefit from investment in broadband, particularly in rural areas. Edinburgh will become one of ten “UK superconnected cities”.

The extra money includes £50m for 2011-12, followed by £68.3m, £141.9m and £172.3m in subsequent years, totalling £432.5m. It follows the recent announcement of £100m for the Scottish Government to invest in renewable energy and a further £200m in Barnett consequentials, given to Scottish ministers as a consequence of spending increases in England.

Business leaders said Mr Osborne’s statement contained “welcome announcements” on more attractive terms for investing in start-ups and reductions in energy bills for heavy industry.

CBI assistant director David Lonsdale said: “We look forward to early clarity from the Scottish Government on whether it will similarly allow firms operating in Scotland to defer a portion of the hefty rise in business rates bills that is expected to come into effect next April.

“We will also be looking to the Scottish Government to ensure that the Barnett consequentials are directed towards GDP-enhancing investments and reversing its two business rate tax rises on retailers and firms with empty premises.” Liz Cameron, chief executive of the Scottish Chambers of Commerce, said the overall impact of the statement would be positive and welcomed moves to support lending to firms.

But she added: “The decision to ramp up business rates by 5.6 per cent is disappointing news, but the Scottish Government has the power to remedy this failing here in Scotland.”

Finance secretary John Swinney insists the measures set out by the Chancellor fall “far short” of the measures needed to stimulate growth in Scotland.

“The Scottish Government has called for a targeted, expanded programme of some £2 billion for capital infrastructure investments in Scotland to stimulate demand – which has not been delivered,” Mr Swinney said.

The SNP government has already seen a 36 per cent cut in its capital budget as a result of swingeing cuts from Westminster, but is still committing about £9bn over the coming years to schools, hospitals and housing.

The Chancellor announced plans for free nursery care for two-year-olds for the bottom 40 per cent of earners in an effort to get people back to work, but it remains unclear whether the Scottish Government will adopt this in Scotland.

Ministers in Edinburgh say the issue will be considered by its Early Years Taskforce

Mr Swinney added: “The Chancellor has proposed a limited increase in capital budgets, but the Treasury are so far unable to tell us by how much our revenue budget is going to fall.

“We need a complete picture to judge these announcements, and I am writing to the Chancellor seeking this information urgently.”

But Labour leader Iain Gray said the onus was on Mr Swinney to act on growth in Scotland.

“Any extra money for Scotland … should be sent on projects that create jobs right now and right here in Scotland,” Mr Gray said.

“John Swinney has cut capital spending in Scotland twice as fast as even George Osborne.”