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Scottish Finance Secretary, John Swinney, issued a warning as he launched the first budget and spending review of the current Scottish Parliament. He stressed that his plans came against a backdrop of deep cuts to the Scottish capital budget by the UK government, largely resulting from the Barnett formula that sees cuts in spending in England matched by escalated cuts in Scotland.
In response to this warning, Mr Swinney promised to shift Scottish resources towards capital spending to help maintain investment for the sake of jobs and the economy.
Mr Swinney committed to bring forward a pipeline of investments worth £2.5 billion to strengthen the economy. He also announced that £200 million per year would be shifted from the Scottish resource budget to pay for capital investment.
The announcement came with commitments on a number of key projects across Scotland. The Forth Crossing still has government backing, and the New Glasgow Southern Hospitals Project will also continue. In transport he made clear support for the Glasgow Fastlink, the Aberdeen Western Peripheral Route and the Borders Rail Project. Alongside this there was a commitment to deliver 30,000 new affordable homes over four years as part of efforts to sustain economic activity and meet long term housing needs.
The budget and spending review looked at further pilots of Tax Incremental Funding, suggesting that two will be announced soon to further examine this means of funding infrastructure investment. Plans were also set out to secure 250,000 apprenticeships across Scotland and to link apprenticeships to procurement requirements. Along with this strong commitment to skills there was an announcement that smarter procurement practices would be sought to help improve efficiency across public sector activity.
Upton McGougan’s Jim Tod, chair of the ACE Scotland Committee, commented: “I am pleased that the Scottish Government recognises that reforms to procurement are essential. We need to take a smarter approach to investing in asset design and delivery. We need public sector procurement to focus on how better value can be achieved in the design and delivery of our infrastructure. Smart procurement means defining a project’s needs from the outset, having active client participation through the process and levels of investment in the design process which optimise the value to the client.”
While the budget was the key focus, Holyrood remains keenly aware that Parliament in Westminster is still considering prospects for additional spending powers to be granted to the Scottish Government. These powers, which have been put into legislation that is to be discussed in the House of Lords, would enable Scottish Governments to invest borrowed money in capital projects and to target that investment towards specific Scottish needs.
The move would be supported by the Scottish Government as a further strengthening of devolution and an opportunity to build the Scottish economy over the long term. Indeed, the proposed £2.2 billion borrowing facility for the Scottish Parliament has been described as a floor that may be raised over time, allowing Scotland even greater borrowing powers.
However, until the proposals for additional borrowing powers for Scotland are concluded, the Scottish Government has indicated it will prioritise consolidation ahead of launching new projects. This will see it continue to use the Non-Profit Delivery model, to push through some of its capital funding plans, rather than use new financing methods to start up new activity.
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