UK Govt’s ‘deceit’ over Scottish budget figures

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  By a Newsnet reporter  

Scottish Finance Secretary John Swinney has accused the UK Chancellor George Osborne of “deceit” after the Chancellor claimed that Scotland would receive an extra £176 million over the next two years.

However the funds are ring-fenced for the UK Government’s newly announced house purchasing scheme, and the Scottish Goverment has been given no latitude over how the money is to be disbursed or spent.  

Those who benefit from the scheme will have to repay the money, which it is understood will be repaid to the UK Treasury.  The Scottish Government claims that this means Scotland is being short-changed by the Coalition Government. 

The scheme is partially funded with a £103 million cut to the Scottish Government’s revenue budget, which is used to pay the daily running costs of government, such as public sector salaries.

Mr Swinney said that the UK economy was suffering a “growth crisis” as a result of UK Government policies, and said that any figures released by Mr Osborne must be treated with caution.  

He added:

“What we’ve essentially got is a chancellor putting a straitjacket on the public finances of Scotland, restricting our room for manoeuvre and restricting the hard cash – real money – we can spend.”

Mr Swinney said that the Chancellor “should have offered a decisive injection of new capital to fuel economic recovery. He has however cut the hard cash the Scottish Government has available to spend …

“George Osborne has finally had to admit that his fiscal austerity does not work but instead of taking immediate action to support capital spending, the Chancellor’s plans announced today postpone further investment in infrastructure to 2015-2016. There are already concerns that his small beer budget will cost Scotland’s whisky industry,with warnings over future investment.”

Speaking to BBC Scotland, Mr Swinney commented further, saying:

“The chancellor has taken away £107m of hard cash that we could spend on particular projects of our decision-making and he’s replaced it with loan facilities that will have to be paid back at a later date.

“That does not translate into a cash boost for capital investment in our economy and that’s the central deceit at the heart of this budget – an instrument by the chancellor to make his measures look better than they are.”

STUC general secretary Grahame Smith said: “Given that any consequentials to Scotland will at least partially be offset by spending cuts, the STUC expects any stimulatory effect to be insignificant in economic terms.   However, the additional pain for those affected by the cuts will be very real.”

Margaret Lynch, chief executive of Citizens Advice Scotland said “the misery will not only continue, it will get worse” for those families already facing hardship.

Margaret Curran, Labour’s Shadow Scottish Secretary, said: “The Chancellor has failed all his key tests.  He had an opportunity to give a budget for jobs and growth.  He could have reversed the tax cut for millionaires and introduced a VAT cut which would have given a real boost to the Scottish economy.

“But instead we have more policies that are going to hit hard working families.”