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Spending Review: Boost to Scottish capital expenditure Spending Review: Boost to Scottish capital expenditure
(about 1 hour later)
Scotland is to receive a major increase to capital expenditure as a result of the chancellor's spending review.Scotland is to receive a major increase to capital expenditure as a result of the chancellor's spending review.
The Scottish government's capital spending allocation will rise by 12.9% in 2015/16, the equivalent of £296m.The Scottish government's capital spending allocation will rise by 12.9% in 2015/16, the equivalent of £296m.
Chancellor George Osborne said the Scottish resource budget in 2015/16 would be £25.7bn, a 1.9% real terms cut.Chancellor George Osborne said the Scottish resource budget in 2015/16 would be £25.7bn, a 1.9% real terms cut.
The SNP accused him of repeating previous mistakes, and cutting too hard and too quickly.
Mr Osborne has been unveiling £11.5bn of cuts in a statement to the Commons, to help reduce the national deficit.Mr Osborne has been unveiling £11.5bn of cuts in a statement to the Commons, to help reduce the national deficit.
The chancellor told MPs: "Being part of the UK means Scotland will see its capital spending power increase by almost 13% in real terms in 2015-16.The chancellor told MPs: "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.""And rightly it's for the Scottish Parliament to decide how best to use it. Devolution, within a United Kingdom, delivering for Scotland."
Mr Osborne also outlined so-called ''Barnett consequentials" resulting from reductions to department spending budgets in England.Mr Osborne also outlined so-called ''Barnett consequentials" resulting from reductions to department spending budgets in England.
He said: "Because we have prioritised health and schools in England, this feeds through the Barnett formula to require resource savings of around just 2% in Scotland, Wales and Northern Ireland.He said: "Because we have prioritised health and schools in England, this feeds through the Barnett formula to require resource savings of around just 2% in Scotland, Wales and Northern Ireland.
"The Scottish resource budget will be set at £25.7bn. And Scotland will benefit from new capital borrowing powers of almost £300m.""The Scottish resource budget will be set at £25.7bn. And Scotland will benefit from new capital borrowing powers of almost £300m."
SNP Treasury spokesman Stewart Hosie MP said: "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. Public sector workers
"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." The chancellor also announced that public sector workers for UK spending departments, including civilian workers in the Ministry of Defence and the Department of Work and Pensions, will see an end to automatic progression payments.
He added that these can be worth up to 7% per year.
Asked if he would apply this to those working for devolved services in Scotland, Scotland's Finance Secretary John Swinney said he would consider how to handle that in his draft budget for 2014/15, to be published in September.
He said it was important to "take public sector workers with us", but that he would also have a "responsible pay policy which we can afford".
'Swingeing cuts'
SNP Treasury spokesman Stewart Hosie MP said the chancellor had made "swingeing cuts" in spending because he had failed to meet every target he had set himself in terms of borrowing, deficit reduction and growth.
He added: "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."
Secretary of State for Scotland Michael Moore said the chancellor's announcement was a "fair and positive result for Scotland".Secretary of State for Scotland Michael Moore said the chancellor's announcement was a "fair and positive result for Scotland".
He added: "The Scottish government has asked for additional capital resource and the UK government has delivered it. They must now use it to invest in Scotland and help the economy grow.He added: "The Scottish government has asked for additional capital resource and the UK government has delivered it. They must now use it to invest in Scotland and help the economy grow.
"This good news is coupled with the fact the Scottish resource budget will be about flat cash in 2015/16, significantly better than the reductions across the rest of the UK.""This good news is coupled with the fact the Scottish resource budget will be about flat cash in 2015/16, significantly better than the reductions across the rest of the UK."
Spending constraints
The Scottish Chambers of Commerce argued that decisions by the UK and Holyrood governments to protect large budgets such as health from any cuts so far meant that constraints on Scottish spending were likely to continue in 2015/16.
Chief executive 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."
'Smoke and mirrors'
The Scottish Trades Union Congress said the further significant cut in resource spend for Scotland would constrain economic recovery and lead to significant additional hardship.
General Secretary 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."