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Plea for accelerated spending
06/12/2009
The Scottish Government is urging the UK Government to allow cash to be moved from future budgets into the 2010-11 financial year to allow accelerated capital spending on construction projects.
Ministers say a similar decision to accelerate spending on infrastructure projects in 2008-09 and 2009-10 has sustained hundreds of businesses and thousands of jobs across Scotland through projects such as the Fife Energy Park, the SECC in Glasgow, road projects including A96 Fochabers bypass, £120 million in housing projects to support around 2,000 homes and £90 million invested through local authorities in school building programmes.
Affordable housing would be the main beneficiary of accelerated capital in 2010-11 if the Chancellor gives the go ahead for accelerated spending in Wednesday's Pre Budget Report.
Finance Secretary John Swinney said:
"The case for continued accelerated spending in 2010-11 is clear and compelling. Pulling the plug on this vital flow of cash into our economy early next year, just as I expect our economy to be taking tentative steps on the road to recovery, would be potentially disastrous for Scotland.
"Crucially, accelerated public spending is filling the gap left by reduced private sector investment as a result of the recession and has helped to support the housing market in Scotland.
"That is where it is making such a massive difference. Cash from private developers may be severely restricted, but the Scottish Government has been able to step in and ensure work continues on building sites across Scotland, sustaining hundreds of businesses and thousands of jobs.
"If we are given the go ahead for continued accelerated spending in 2010-11 the Scottish Government will focus on affordable housing. By investing in this sector we will deliver the maximum possible immediate benefit to our economy. Vitally, the house building industry supports jobs and local businesses. Unlike other potential options, it delivers most into the local communities where the investment takes place. The Scottish Government also fully supports the call from the Scottish housebuilding industry body, Homes for Scotland, for the Chancellor to extend the current stamp duty tax holiday on residential property purchases of less than £175,000.
"We have already identified projects and construction programmes that can be brought forward and that will be ready to go ahead in 2010. These include extending the Scottish Government's highly successful shared equity programme, which was temporarily expanded in early 2009 for one year to support the housing market and help more first time buyers across Scotland purchase a home on the open market, as well as supporting hundreds of approvals for social housing for rent in areas of high housing need.
"As Scotland remains officially in recession, indications of recovery are fragile and private sector investment remains at best uncertain. While there are some emerging signs of growth in certain areas of the Scottish economy, forecasts suggest our economy will still be vulnerable into next year.
"In that context the Chancellor simply has no option but to deliver increased capital spending for Scotland next year. The weight of opinion amongst the likes of the IMF is that it is still too early for governments to withdraw their support for the economy. And there is clear support across the Scottish Parliament.
"The Chancellor can make it happen on Wednesday. Failure to act would run the risk of undermining economic recovery in communities across Scotland."