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Chancellor’s statement ‘halfway to common sense’

05/12/2012

The UK Treasury today allocated £330 million of new spending to Scotland over the next two years, as they agreed to Scottish Government demands to support investment in capital projects.

The announcement follows measures already taken by the Scottish Government, including a £485 million of economic stimulus already announced by Finance Secretary John Swinney, and four years of calls on 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, this allocation of funding is only recovering some of the ground from the unprecedented cuts already imposed on Scotland over the last few years which have seen our budget cut by 33 per cent in real terms. These latest announcements show that the cut in our capital budget is now 25.9 per cent.

“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.”

Commenting on the Chancellor’s admission that he will require to borrow an additional £100 billion more up to 2016 than forecast in March because of the deteriorating economic outlook Mr Swinney said:

“George Osborne has again had to revise down growth forecasts. This is the cost of delay. After failing to generate growth with his own plans, has had to accept the logic of our argument and follow the actions of Scotland by investing more of the budget into building projects that will bring jobs and boost the economy, as well as providing lasting benefits in the way of infrastructure.

“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.

“The Treasury's own modelling shows that households across the country will be worse off next year with the average household losing out. Moreover, with the exception of the those in the top 10 per cent, the poorest households face the biggest proportionate reduction in income.

“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.
 
“The latest figures, with oil revenues for 2011/12 at near record levels, confirm that an independent Scotland would yet again be in a stronger financial position than the UK as a whole. A position that could enable us to ease the austerity and invest in growing our economy.

“In 2014 the people of Scotland will have the opportunity with the full fiscal and economic powers of independence to invest in growth and show that there is a better way with a Yes vote.”