Fuel duty U-turn prompts calls for Osborne to change stance on capital funding

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By Martin Kelly
 
The SNP has urged UK Chancellor George Osborne to reconsider his decision to block funding for capital projects after his latest U-turn saw a postponement of the planned 3p rise in fuel duty.
 
The Tory Chancellor backed down over the proposed fuel tax increase after a cross party campaign spearheaded by the SNP meant he faced a vote in the House of Commons.

Mr Osborne had also faced calls to abandon the duty increase from motoring groups and business heads.

The latest U-turn followed a series of budgetary adjustments including the pasty tax, charity donations and caravans.  It has also prompted calls from the SNP for a complete re-think of the failing austerity agenda and instead a focus on investment for jobs and growth.

The call comes on the day Finance Secretary John Swinney announced a £105 million package of investment in projects to stimulate growth across Scotland.

The Scottish Government has consistently called for an injection of £300 million capital expenditure in 30 “shovel ready” projects to boost economic recovery, however thus far the calls have been resisted by the UK Government.
 
Describing the fuel duty volte-face as “the biggest u-turn yet” SNP Treasury spokesperson Stewart Hosie MP said:
 
“With the coalition flip-flopping over pasties, caravans, charities, skips and now fuel, perhaps it’s time for a complete change of course.
 
“Halting the 3pence rise was an important step and I’m delighted the SNP was at the centre of the cross-party campaign to make it happen, but there is much still missing from a shambolic budget that does nothing to boost jobs and growth.
 
“The UK Government’s austerity agenda is failing to produce growth and a programme of capital investment is urgently needed. By contrast, the Scottish Government is taking action where it has the fiscal levers to do so, with a package of over £100 million investment announced today.
 
“The Scottish Government has been consistently calling for capital investment in 30 “shovel ready” projects  which can be taken forward quickly to support employment, help small businesses and promote economic security, but so far the UK Government has refused to listen.
 
“After so many u-turns it’s time for the chancellor to recognise that the road he has chosen is not leading to recovery. It’s time for a complete change of course from the UK Government and investment in “shovel-ready” projects to boost jobs and growth.”
 
Estimates suggest that over 4000 jobs would be created if £300 million was freed by the Westminster government.  SNP calls for a capital funding injection follow comments from Bank of England chief Sir Mervyn King who warned that the economic crisis would not abate for at least another five years.

Speaking yesterday, Sir Mervyn said: “When this crisis began in 2007, most people did not believe we would still be here.  I don’t think we’re yet half way through this. I’ve always said that and I’m still saying it.  My estimate of how long it will take to recover is expanding all the time.

“We have to regard this as a long-term project to get back to where we were, but we’re nowhere near starting that yet. We’re in a deep crisis with enormous challenges.”

Sir Mervyn claimed that interest rates, already at an historic low of 0.5%, may have to fall to zero in order to try to help the struggling UK economy which is currently mired in a double dip recession.