McAlpine writes to Cameron on shovel-ready project snub

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By a Newsnet reporter

SNP MSP Joan McAlpine has written to Prime Minister David Cameron demanding that he release the Barnett consequentials from the £4.1bn spent upgrading the London sewerage network, in order that vital infrastructure projects in Scotland can be funded, including a dangerous stretch of road in her constituency.

Last week Newsnet Scotland revealed that £4.1bn of UK Government reserves are to be used to fund the new sewerage system in London, as well as to cut water bills in the South West of England by an average of £50 per customer.

Had these projects been funded by DEFRA in the normal way, Scotland – as well as the other devolved administrations in the UK – would have been entitled to Barnett Consequentials. In Scotland’s case this would have amounted to some £400m.

However because the project is being funded out of the UK Government’s reserves, Westminster rules that there is no Barnett Consequential, and therefore Scotland and the other devolved administrations need not be compensated.  The reserves are normally used to fund projects deemed to be of UK “national importance”.  

According to Treasury Funding policy, access to the reserve will be considered by Treasury Ministers “in exceptional circumstances, on a case-by-case basis and specifically where a UK department is granted access to the reserve to enable it to meet exceptional pressures on a spending programme.  There is no automatic application of the Barnett Formula to reserve claims by departments of the UK Government.”

Justifying the expenditure in the House of Lords, Conservative peer John Taylor, DEFRA minister, claimed that the circumstances were “exceptional” because people in the South West of England had paid the highest bills in the UK as the investment costs of the privatised water companies have ultimately been passed to consumers.  

The effect of the move is that Scottish taxpayers, who contribute just under 10% of the funding for the UK Government’s reserves, are paying approximately 10% of the cost of the upgrade of the London sewerage system at a time when many important Scottish infrastructure projects have to be shelved due to a lack of funds.  It also means that Scots have to pay the costs of the privatisation of the water companies in England, despite Scottish water remaining in public hands.

The news came following the UK Government’s snub of a Scottish Government request for £300m capital funding – submitted at the Prime Minister’s invitation – to start a list of 36 shovel-ready projects across Scotland.  One of those projects was the upgrade of the dangerous Hardgrove-Kinmount stretch of the A75 in Ms McAlpine’s South Scotland region.  

Had Westminster followed the usual methods of funding the London sewerage upgrade, money would have been coming to Scotland which could fund these projects.  However by circumventing the Barnett Formula through using funding from the reserves, Scots projects receive no funding while Scottish taxpayers foot the bill for London infrastructure.

Commenting Ms McAlpine said:

“The UK Government has raided the UK national reserves to the tune of £4.1bn to upgrade the London sewerage works and offer cheaper water bills to the South West of England.  Scotland and the other devolved nations are entitled to Barnett consequentials from this money.

“This money is desperately needed in my own constituency where a dangerous stretch of the A75 is in need of upgrading for safety reasons.  The Coalition ignored this request in the Budget, but just days later we find out that there should be money coming to Scotland to fund these projects.

“It is just one of many vital projects across Scotland that are ready to go straight away – but only if David Cameron’s Government hands over the Barnett consequentials that are rightfully Scotland’s.”