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Stand by for a row

Brian Taylor | 13:19 UK time, Wednesday, 9 December 2009


More in Scotland re the PBR. Unions unhappy with the pay restraint move, arguing that it is forcing workers to pay for the "greed" of the banks.

Employers - CBI, Chambers, FSB - reasonably happy with the support for enterprise.

But bitterly discontented with the further rise in National Insurance for employers and employees, billing it as "a tax on jobs".

Then to public spending. The Treasury says the Barnett consequentials for Scotland add up to £23m for next year.

Nobody is attempting to pretend that is anything other than modest - although UK Ministers insist it is an increase on top of huge rises in public spending over the past decade.

Instead, the Treasury is pointing to other, wider elements in the PBR: the support for enterprise, the new initiatives on skills, the backing for the energy sector, the continuing support for the banks, including Scotland's big two.

Together, they say this adds up to a growth agenda which will benefit Scotland.

Industry crisis

The Scottish Government is less than impressed.

They say that they have "shovel-ready" projects which could have benefited from a further tranche of accelerated capital spending.

They draw attention to this previous comment by Iain Gray.

"It was Scottish Labour who called for the Treasury to allow the Scottish Government to accelerate capital last year and I am calling on the Chancellor to do so again".

He added: "We want to see accelerated funding used to address the crisis in the construction industry and support a major expansion of the housing programme that will generate jobs and training opportunities for young people."

The SNP argues that, despite being a former special adviser to Alistair Darling at the Scotland Office, the Holyrood Labour leader appears to have little sway with the Chancellor.

In response, Mr Gray says that the Nationalists are simply intent on picking a fight.

Future budgets

He says that today is not - and never was - D-day for the decision on capital.

That can only come, he argues, when there is a further Comprehensive Spending Review (CSR) package.

In other words, you can only accelerate capital spending from future budgets when that future budget exists and has been defined by the Treasury.

Well, yes. But you can scarcely blame the Scottish Government for "picking a fight" when they thought they had Mr Gray onside on this issue.

He issued no caveats about timing when he made his previous statement in October.

And it is not just the SNP. The Tories say it is a "slap in the face" for the Labour leader.

Job creation

However, Mr Gray goes further, nuancing his argument.

He says the "best way" the Scottish government could make a case for acceleration would be to prove they can find savings within their existing budget.

They should, he says, "sort out their budget" and reinstate GARL. He repeats his assertion that any additional capital should be demonstrably tied to job creation.

All points to bear in mind in the mix.

Snag is that - with the exception of the jobs point - he issued no such caveats and made no declaration about timing when he made his previous statement in October.

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Consequences for Scotland from the pre-Budget report

Aside, of course, from the overall impact of varied changes such as the increase in National Insurance and the cut in bingo tax.

At a first glance, the Chancellor is signalling that there will be modest increases in public spending in Scotland next year and, should he be returned, for the year after.

That is because he says he will spend on front line services such as schools, hospitals and police with Barnett consequentials for Scotland.

No information, though, on where there will be cuts.

Further, there was nothing to be said on the request for the further acceleration of capital expenditure.

Spending cuts

That request was tabled by the Scottish government and drew support from Labour's Iain Gray.

Partly, that is because the Chancellor argued this was not the occasion for information regarding longer-term plans or, indeed, for indications with regard to capital as opposed to revenue.

The Tories said that meant this was less a pre-Budget report - and more a pre-election report with the Chancellor disinclined to own up in any detail about the spending cuts to come.

But, mostly, it is because the Treasury is inclined to say no to the request.

UK ministers will argue that it remains open to the Scottish government to adopt PFI projects to enhance capital spending.

Ministers in Scotland, of course, say PFI wastes money to a profligate degree.

Stand by for a substantial cross-border row on this.


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