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Ann McKechin MP tells Impact at how new borrowing powers may help Scotland to fund capital projects.
The idea of using national infrastructure projects to boost the economy after a recession is certainly not a new concept. President Roosevelt famously instigated a series of public works in the wake of the Great Depression as part of his “New Deal”, which resulted not only in feats of engineering such as the Hoover Dam, but also in dragging the US economy back onto its feet after suffering what was a crushing economic catastrophe. Today, we again face financial pressures with western economies under increasing pressure to produce credible plans that will provide economic growth. But growth requires substantial investment in our nation’s infrastructure if we are going to be able to lever the necessary competitive advantage. Scotland’s economy could also benefit from such a policy of pursuing public works, and I hope that the new capital borrowing powers being created for the Scottish Parliament through the Scotland Bill, now entering the House of Lords, will be used to do just this.
The new powers will enable the Scottish Government to borrow up to £2.2 billion to fund capital projects such as the replacement Forth Road Crossing which will safeguard a vital connection in the country’s transport network. Labour has consistently supported the Bill and the creation of the new borrowing powers although we believe that there are strong arguments in favour of this amount being increased. We have successfully argued that these powers should be available as early as April 2012. We welcome that the UK Government indicated in June that the £2.2 billion limit is only a “floor” figure which could be revised upwards and has said that it plans to introduce partial borrowing powers two years earlier than originally intended to help Scottish ministers to begin large capital projects as soon as possible.
The capital borrowing powers, if employed correctly by the Scottish ministers, have the potential to not only improve Scotland’s infrastructure but to generate much needed job creation. The recent M74 motorway is a good example of what can be achieved – it is estimated that the project supported 900 jobs during its construction and it has been suggested that in the future it could help to generate as much as 20,000 jobs in Scotland.
There are no shortages of suitable projects be it in improving transport connections by rail or road, improving the National Grid to allow for an expansion in renewable energy so that Scotland has the capacity to export more to other parts of the UK, or increasing our housing stock which has suffered one of the most prolonged slow downs in decades.
But we need to make sure that at every level of government there is a real willingness to get these projects off the drawing board and into real action, and this is not currently evident. For example, the continued delay by the Scottish Government in commencing the key upgrade in the national grid between Beauly and Denny is bad for Scotland’s future economy as well as being a bad sign for investors about our nation’s commitment to making the necessary changes.
The economic recovery in Scotland, and in the UK as a whole, remains sluggish and persistently fragile. Numerous economic crises in the Eurozone mean that we cannot rely on our traditional export markets, which makes domestic investment an increasingly attractive option for strengthening the economy, encouraging business investment and generating those skilled jobs that we need. Both Mr Osborne and Mr Swinney should take heed of the lessons of the past to ensure that we build a brighter economic future for tomorrow.
Ann McKechin is MP for Glasgow North and shadow secretary of state for Scotland.
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