Ministers clash over spending plan

Consider just one slice of the chancellor's Autumn Statement - and you find extra capital spending adding up to £443m for Scotland.

coin The UK government is sticking to its deficit reduction plan

A good news story then? Not quite. As successive Scots politicians, including Finance Secretary John Swinney, have pointed out, there are a few other factors to take into account.

Firstly, the new capital investment - a Barnett consequential of planned improvements in English roads, railways and schools - is spread over the period to 2015.

Secondly, the Treasury has yet to spell out the details for revenue spending - which is likely to be cut in line with the chancellor's forecasts today of continuing constraint.

Thirdly, the overall economic picture is grim. Lower growth, higher borrowing, unemployment on the rise. Further constraint in public sector pay.

Which together, according to sundry critics of the coalition, means that the chancellor's plans are in tatters.

When I spoke to John Swinney, he was mightily displeased that the full revenue figures had yet to be produced - leaving him, he argued, unable to begin considering how to deploy the extra capital spending, pending the emergence of the full picture.

And the chancellor's view?

It's tough, tougher than scheduled, driven by external economic circumstances such as the crisis in the Eurozone and the cost of energy.

Pay freeze

Further he argues that it would be unsustainable to seek to spend our way out of trouble - given that the core problem is the extent of the inherited deficit.

The strategy is to maintain curbs on public sector spending, notably through pay constraint, to keep interest rates as low as possible - while enhancing the availability of credit, introducing supply side reforms and stimulating demand modestly to boost enterprise.

In Scotland, ministers have no option other than to follow the constraints - including those on pay.

Indeed, Mr Swinney has already signalled his intention to contain pay beyond the current freeze.

He contends, however, that he has been more alert and adept in boosting capital investment through monetary transfers and innovative funding models.

As I disclosed this morning, one beneficiary of that will be a rolling programme to complete the dualling of the A9 by 2025.

In response, the UK government insists that it has shown itself sufficiently flexible - within the overall constraints - to provide help to business and families without jeopardising the wider aim of curbing the deficit.

Brian Taylor Article written by Brian Taylor Brian Taylor Political editor, Scotland

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