SNP calls heeded as Osborne bows to pressure and diverts £5bn to infrastructure

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  By Martin Kelly
 
Persistent calls from the Scottish government for funds to be targeted at capital projects were heeded in the Chancellor’s Autumn statement as George Osborne diverted billions into infrastructure projects.
 
Mr Osborne’s decision to divert £5bn from other departments follows gloomy economic predictions and a continuing decline in the UK’s ailing construction sector.

The Barnett funding mechanism means that Scotland will receive a boost of around £390m.  However there will also be proportionate cuts to the Scottish budget as UK departments take a hit in order to fund the £5bn package.

The package has been welcomed by the SNP government which has repeatedly demanded the Chancellor release funds for shovel-ready projects in Scotland.  First Minister Alex Salmond called for a £5bn UK-wide investment package in the summer.

The announcement follows measures already taken by the Scottish Government, including a £485 million of economic stimulus already announced by Finance Minister John Swinney, and four years of calls by the SNP for the UK Government to take similar action.

Mr Swinney said that significantly reduced growth estimates, the missed targets on debt reduction and the extension of austerity measures to 2018 reflect the ‘cost of delay’ in not delivering investment in the economy at an earlier stage.

Commenting on the Chancellor’s statement, John Swinney said:

“The Chancellor’s statement comes against a backdrop of OBR forecasting a shrinking UK economy in 2012 despite the one off boost from the London Olympics.

“After two and a half years in office the Chancellor has finally heeded Scotland’s calls to boost capital spending.  The steps he has taken are welcome but they only take us halfway towards common sense in terms of investment and there is still a lack of a coherent plan to return the economy to growth.

“I will confirm shortly how we will allocate this funding for the coming year.”

However Mr Swinney said that inaction by George Osborne who had ignored clear warning signs had led to UK economic forecasts being revised downwards.  The Finance Minister also pointed out that despite this cash boost the Scottish Capital budget has still been cut by Westminster by almost 30%.

The Autumn statement also saw another of the SNP’s demands met when the Chancellor shelved the proposed fuel duty increase planned for January.  Brought in by the last Labour Government the proposed increase had caused anger amongst drivers and businesses who are already struggling with rising costs.

Mr Swinney added: “In addition to this investment in capital funding, the Chancellor’s decision to scrap January’s proposed fuel duty increase and investment for superfast broadband in Perth and Aberdeen are welcome.”

The Finance Minister spelled out the choice facing Scots in 2014, and said: “The Chancellor’s decision to extend austerity to 2018 show how badly his plan has failed.

“The only certainty now offered by the UK is five more years of public spending cuts. Through their ill-thought-out welfare reform the UK Government is also causing another £200 million to be taken out of the Scottish economy.

“People in Scotland have a choice. Instead of having to wait for the end of UK austerity the people of Scotland can choose to bring home the powers needed to take our own decisions to grow the economy, invest in public services and support rather than attack vulnerable Scots.”