Recovery needs ‘push forward’ from capital investment says Swinney as trust in Tories slumps


By a Newsnet reporter
Scottish Finance Secretary John Swinney has today called for more capital investment in order to help economic recovery in Scotland.
Mr Swinney said that there were some positive indications of economic recovery in Scotland, but that the process needed to be given a ‘push forward’ with an additional stimulus of capital investment.

During a meeting with First Minister Alex Salmond in February, Prime Minister David Cameron accepted the link between capital investment and employment, and asked for a list of shovel-ready projects to be provided by the Scottish Government.

However, despite the Scottish Government sending a list of capital projects worth £300 million to kick-start the economy and support thousands of jobs across Scotland, the UK Government ignored this in Chancellor George Osborne’s Budget.

It has since emerged that UK Government reserves are to be used to fund a £4.1 billion upgrade of the London sewerage works.  The cash, which is usually used only in exceptional circumstances, is being released after new legislation was brought in.

Had this 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 – more than enough to fund the aforementioned shovel-ready projects.

Mr Swinney outlined the comprehensive programme of support available to Scottish businesses, as the Scottish Government use all the levers currently available to us to support recovery.

Last month saw the launch of the new Scottish Enterprise business plan for 2012-15, which outlines measures to increase Scotland’s export performance.  For example, Scottish Enterprise will help 8,000 to 10,000 companies develop their capacity for exporting and improve their international sales.

The latest food and drink export figures published at the end of March showed that exports are at an all time high of £5.4 billion in 2011.  Our top food and drink exports markets were France (up 18 per cent to £825m) and USA (30 per cent increase £726m).  Strong growth was achieved in Asia, with 44 per cent increases in both Singapore (£319m) and China (92m).

Mr Swinney said:

“Through our enterprise agencies, we are strengthening Scotland’s economic links in overseas markets.  These efforts are paying off, with the most recent Index of Scottish Manufactured Exports showing annual growth in the volume of manufactured exports of 2.7 per cent to the third quarter of 2011.

“We have also championed Scotland’s food and drink industry, and the latest figures showed all-time high exports in this sector of £5.4 billion last year, underpinned by a strong performance from the whisky industry.

“We are also working tirelessly to attract investment – recent successes in the last few weeks alone include Gamesa’s decision to locate in Leith rather than Hartlepool, creating 800 new jobs, as well as GlaxoSmithKline’s £100 million expansion plans for sites in Montrose and Irvine.

“These developments are positive indications of economic recovery in Scotland, but the process of recovery needs the big push of increased capital investment so that it can continue to move forward.  We have a £300 million list of shovel ready projects, to support jobs and benefit communities all across Scotland, which we submitted to the UK Government at the request of the Prime Minister, but it was ignored in the Chancellor’s Budget.

“Infrastructure investment is exactly what is needed to push recovery forward, and to add insult to injury we now learn that a £4.1 billion programme to upgrade the London sewerage works is by-passing the Barnett Formula – thus depriving Scotland of £400 million in consequentials which could fund our shovel-ready programme.

“We are building recovery in Scotland, and positive indications are emerging.  With the full economic and financial powers of independence we could do even more – but in the meantime the UK Government should be helping, rather than hindering, the process of recovery.”

Mr Swinney’s calls come as a new poll shows confidence in David Cameron and Chancellor George Osborne’s handling of the economy is at an all time low.

The survey of 2,028 adults was carried out by ComRes on behalf of ITV News between March 30 and April 1.

53% said they don’t trust Cameron to lead the U.K. out of its current economic problems, which is up from 47% last month.  George Osborne fared even worse, with 60% declaring a lack of trust in the architect of the government’s austerity program, which aims to start cutting its debt by the end of this parliament in 2015.

Commenting, SNP Westminster Finance Spokesman Stewart Hosie MP said:
“This is a devastating poll, but it is no surprise that trust in Tory economic policy has collapsed. After their complete incompetence in creating unnecessary panic at the petrol pumps, their budget for millionaires, and absolutely no sign that their discredited economic policies are producing any upturn in the UK economy, everyone can now see that the Tories are unfit to govern.
“It would be far better for the key decisions on Scotland’s economy to be taken by those who care about it most – the people living in Scotland.
“Recent polls have shown that people in Scotland believe that independence will have a positive effect on the Scottish economy – in the latest year, Scotland subsidised the UK exchequer to the tune of £510 for every man, woman and child.
“People in Scotland will soon have a choice between home rule for Scotland with independence, or incompetent Tory rule from Westminster.”

The results were in contrast to a similar poll carried out by panelbase on behalf of the Sunday Times and Real Radio which surveyed 1,000 adults in Scotland between 27 January and 1 February.  It aAsked “Do you believe Scottish Independence will have a mainly positive or negative effect on the Scottish economy?” 56% of respondents who thought there was an effect answered “positive”.