Spending on big capital projects 'key to recovery'

SCOTLAND'S economic fortunes are more likely to receive a boost from spending on infrastructure projects than on preserving existing services, a new report suggests.

The Centre for Public Policy for Regions (CPPR) acknowledges that investing scarce resources on roads, railways and hospitals may not be an attractive option for politicians keen to be seen saving jobs.

But the report points to evidence from previous periods of public-spending squeezes and suggests that "maintaining and developing Scotland's infrastructure spend" will be a key element in ensuring a brighter future for the nation.

It is published against a backdrop of public-sector spending cuts which is likely to result in substantially less funding for Scotland from the UK government.

The CPPR said the Scottish Government might face a "serious investment hiatus" on capital projects over the next five years. There could be 1.6 billion less to spend on capital projects, such as the new 2bn Forth crossing, if Scotland chooses to spend less on infrastructure projects.

The CPPR said Westminster and Holyrood had reached a crossroads with regard to maintaining their infrastructure spend, which had been at record levels since devolution 11 years ago.

It states that, in its response to the UK government spending review, Scotland must clearly set out its priorities to ensure capital spending "is not cut to an inappropriate degree".

The Scottish Government must set out what percentage of its reduced budget is for infrastructure projects and indicate which remain a priority, the CPPR said.

Author Jo Armstrong said: "Sacrificing capital spending on, for example, communications networks or key utilities, to secure employment in other areas may be politically attractive. But may slow the growth of the economy as it endeavours to emerge from the recession".