Recovery plan ‘doesn’t measure up’ with no new Barnett money

Nicola Sturgeon has dismissed Boris Johnson’s coronavirus rescue plan for the economy after the Prime Minister pledged to dual the A1 to Edinburgh as part of a £5 billion investment package.

Britain's Prime Minister Boris Johnson visits the Speller Metcalfe's building site at The Dudley Institute of Technology in Dudley

The First Minister said she was “extremely underwhelmed” by proposals that include no new Barnett formula money for Scotland.

Mr Johnson was criticised for unveiling a plan for the UK to “build, build, build” its way out of recession that brings forward existing development plans, while cutting funding for affordable housing in England.

The Prime Minister did commit to dualling the A1 as part of a pledge to investigate new transport links between the nations of the UK, that is also expected to examine a possible bridge across the Irish Sea, and the extension of the Borders Railway to Carlisle.

But a £5bn “New Deal” to invest in hospital maintenance, school refurbishment and road building in England is not expected to result in any new Barnett consequentials for the devolved administrations.

Instead, Edinburgh, Cardiff and Belfast are being urged to use infrastructure cash already allocated to devolved budgets to push ahead with “shovel-ready” projects in their areas.

Mr Johnson’s speech on restarting the UK economy came as official figures confirmed the scale of the challenge ahead, with GDP falling by 2.2 per cent in the first quarter of 2020 – the biggest drop since 1979.

In a speech in the West Midlands, the Prime Minister acknowledged that jobs which existed at the start of the pandemic may be lost forever, and said the furlough scheme that has guaranteed the wages of nine million people cannot continue forever.

But he promised the UK government would not return to the austerity that followed the financial crisis, instead promising a stimulus package inspired by US president Franklin D Roosevelt, who led America out of the Great Depression with his New Deal in the 1930s.

Mr Johnson returned to the theme of his general election campaign, pledging to “level up” parts of the country that had been left behind while London and the south-east prospered.

Chancellor Rishi Sunak will set out a plan to support the economy through the first phase of the recovery next week, Mr Johnson said.

He acknowledged “it may seem a bit premature to make a speech now about Britain after Covid” given events in Leicester, where a local lockdown has been imposed.

But “we cannot continue simply to be prisoners of this crisis” and the country “needs to be ready for what may be coming”.

Mr Johnson said: “We will not be responding to this crisis with what people called austerity, we are not going to try to cheese-pare our way out of trouble, because the world has moved on since 2008.”

The Prime Minister also faced scrutiny over an apparent cut in the affordable homes programme – what had been promised as £12.2bn over five years at the Budget in March is now being stretched over eight years.

Labour leader Sir Keir Starmer said: “The Prime Minister promised a New Deal, but there is not much that’s new, and it’s not much of a deal.

“We are facing an economic crisis – the biggest we have seen in a generation – and the recovery needs to match that.

“What’s been announced amounts to less than £100 per person, and it’s the re-announcement of many manifesto pledges and commitments.”

Speaking at the Scottish Government’s daily coronavirus briefing in Edinburgh, the First Minister said the package was worth just 0.5 per cent of UK GDP – dwarfed by the scale of President Roosevelt’s New Deal, which amounted to 40 per cent of GDP.

“I hope what the Prime Minister said today is the start of a conversation on fiscal stimulus and not the end,” she said.

“To put it mildly, I am extremely underwhelmed by what has been announced this morning.

“I can often judge the scale of fiscal announcements from what we expect to see in consequentials to devolved administrations.”

Ms Sturgeon added: “Our expectation is there will be no additional consequentials from the Prime Minister’s announcement this morning.

“This is simply shuffling around money that was already in the system.”

Mr Johnson promised a study into future transport links between the nations of the UK – including “cross-sea links” such as the Prime Minister’s proposed bridge between Scotland and Northern Ireland.

And he hailed the role of the UK Government in supporting all four nations in dealing with the coronavirus crisis.

“Now is the moment to strengthen that incredible partnership between England, Scotland, Wales and Northern Ireland,” the Prime Minister said.

While individual projects to be examined by the UK government were not listed, Mr Johnson did say: “When did a government first promise to dual the A1 to Scotland? It was 1992. Well, this government is going to do it.”