Rail Consequentials snub to Scotland as row brews over ‘capital budget increase’ claim

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  By Martin Kelly
 
Scotland will not be getting a consequential increase in infrastructure spending as a result of the London Cross Rail and High Speed Rail Link (HS2) infrastructure projects it has been confirmed.
 
The news was revealed by UK Economic Secretary to the Treasury Sajid Javid on the day Chancellor George Osborne finally announced his intention to cut public spending in 2015/16 by £11.5bn.

Speaking on Radio Scotland, the Tory MP dashed hopes that there would be consequential payments to Scotland as a result of the huge infrastructure projects costing a total of £57bn.

Initially suggesting that there would be a proportionate increase for Scotland, Mr Javid said: “Scotland will get its share of that portion of capital investment as per the devolved administration”

However, asked to confirm if this meant Scotland was going to get its own share of Crossrail and HS2, he replied: “No of course not.”

Mr Javid claimed that Scotland already got its fair share of the infrastructure spend as part of the overall budget, and added: “There is investment that needs to happen all over the country, including Scotland, and it shows the benefits of being in a United Kingdom because we can make these decisions and have a potential bigger financial firepower if we work together.”

The decision is certain to cause anger within the SNP after the party’s Finance Spokesman had earlier challenged claims made by the UK coalition, and the BBC, that Scotland’s capital spend budget had been increased.

On its online article headlined ‘Boost to Scottish capital expenditure’ BBC Scotland claimed that Scotland was “set to receive a major increase to capital expenditure” adding, “The Scottish government’s capital spending allocation will rise by 12.9% in 2015/16, the equivalent of £296m.”

The article was based on claims made by UK Chancellor George Osborne who had earlier told MPs in the House of Commons: “Being part of the UK means Scotland will see its capital spending power increase by almost 13% in real terms in 2015-16.

“And rightly it’s for the Scottish Parliament to decide how best to use it.  Devolution, within a United Kingdom, delivering for Scotland.”

This was challenged by SNP MP Stewart Hosie who said that the so called increase was in fact mainly down to a restricted form of borrowing that had to be paid back to the UK Treasury at uncompetitive rates.

Speaking to the BBC, the SNP MP said of Scotland’s capital budget: “It’s effectively standing still.  The so-called new money announced is not new at all, it’s the borrowing which will be permissible under the Scotland Act which is coming anyway and it’s a kind of funny money loan transaction stuff that the Chancellor announced in March.”

Mr Hosie said there was indeed potential to increase the infrastructure spend, but it had to be borrowed from the UK government and paid back at less favourable rates than “going to the market”.

The SNP Treasury spokesman singled out the amount being spent on the London Crossrail Link and HS2.  He said both were benefiting London and argued that the massive HS2 project, which alone is costing £42.6bn, should have been going to Scotland and Wales as well.

“The real fear many of us have is that big projects like that are designed to favour the Midlands of England down to London and London itself,” adding, “…the infrastructure requirement, particularly the cancelled shorthaul flights, should lead us to have a high speed rail link from Scotland to London.”

Mr Hosie’s claim that there was no increase in the Scottish capital budget appeared to be supported by comments from the Scottish business sector and ScottishTrade Union movement.

Chief executive of the Scottish Chambers of Commerce Liz Cameron said: “In addition, the introduction of £296m of capital borrowing powers for the Scottish government in 2015/16 will still only result in an overall annual capital budget of £3.3bn, which is equivalent in cash terms to the annual capital budget the Scottish government had before the last Comprehensive Spending Review in 2010-11.

“This investment needs to be leveraged directly to where it will make the biggest difference for the Scottish economy and to Scotland’s businesses, eliminating any unnecessary bureaucracy.”

General Secretary of the Scottish TUC, Grahame Smith added: “The chancellor continues to punish public sector workers for the sins of his friends in the City with barely disguised glee.

“Despite the smoke and mirrors, it’s already clear that there’s no new money for capital investment in 2015.

“Funding projects which will not happen for years through cuts in services does nothing to get the UK economy out of the rut the Coalition has determinedly created.”

Earlier Mr Hosie had blamed the “swingeing cuts” on the UK Chancellor’s failed economic policies.

“The Chancellor has had to make these swingeing cuts in spending for one simple reason.  He has failed to meet every target he has set himself in terms of borrowing, deficit reduction and growth. 

“Given that he has failed so far the Chancellor must explain why he is now set on a course that will make the same mistakes again.

“Capital cuts continue, he is cutting revenue and sucking more consumption out of the economy. He has had the UK’s credit rating downgraded and even with these huge cuts the UK will still have one of the worst deficits in the developed world by 2015, the point at which George Osborne promised we would be well on the road to recovery.”

Turning his attention to Labour, the SNP MP said that Ed Miliband’s party had adopted George Osborne’s cuts as a “starting point” for their own austerity plans.

“Labour back means testing for pensioners and will remove hard fought for universal benefits in the unlikely event they are elected again – under Westminster control, we would have lower benefits and pensions in Scotland than London. 

“We would have more of the same whoever wins the 2015 election.  This really will be the decade of UK austerity and cuts, cuts and more cuts – whoever is in charge in Westminster – which is exactly why Scotland needs a Yes vote for independence next September.

“Today shows us the choice of futures we have.  A Scottish government that can use the fiscal and spending powers of independence to build a wealthier and fairer society, that gets rid of the Bedroom Tax and Trident missiles on the Clyde – or a Westminster government obsessed with austerity, cuts and dismantling the welfare state.”

Labour’s Shadow Scottish Secretary Margaret Curran was critical of the coalition and the SNP. saying: “For people across Scotland, life is getting harder because we have two governments with the wrong priorities who are failing to turn things round.

“The Tories say the economy is healing, but for most families it’s getting worse with prices rising faster than wages.

“And with the SNP we have a Scottish government that talks tough, but has failed to deliver what it promised to get the Scottish economy back on track and protect people from the worst of the Tories.”

 

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