Autumn Statement: Scotland to receive extra capital funding cash

George Osborne in the Commons George Osborne delivered his Autumn Statement in the Commons

Chancellor George Osborne said Scotland would receive its share of an additional £5bn he wanted to see spent on buildings and infrastructure.

That amounts to about £394m in extra capital funding for the SNP government.

Scotland will also see a basic revenue rise of £90m, but because of departmental cuts of just under £160m, that will leave a real spend of £331m.

Scotland's Finance Secretary John Swinney welcomed Mr Osborne's Autumn Statement.

Both First Minister Alex Salmond and his finance minister had made a plea for more UK government money.

Last month Mr Swinney published a list of so-called "shovel-ready" projects, including £34m in trunk road schemes.

He said he welcomed Mr Osborne's decision to provide extra funds for capital investment, but he said he was disappointed the Scottish government had "waited so long for it to happen".

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Holyrood gets £394m more in capital spend over 3 yrs, and £90m as consequence of #autumnstatement, but c £160m cuts required #bbceconomy ”

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Follow Autumn Statement analysis at @BBCDouglsFraser

Mr Swinney told BBC Scotland that the chancellor's move to cut corporation tax to 21% by April 2014 was a "welcome step".

But he said Mr Osborne was unable to rival the Scottish government's "competitive position" on business rates. He said: "We have the most competitive regime for business rates anywhere in the UK that is why we are topping the league of inward investment."

He added: "After two-and-a-half years in office the chancellor has finally heeded Scotland's calls to boost capital spending. The steps he has taken are welcome but they only take us halfway towards common sense in terms of investment and there is still a lack of a coherent plan to return the economy to growth.

"This allocation of funding is only recovering some of the ground from the unprecedented cuts already imposed on Scotland over the last few years which have seen our budget cut by 33% in real terms. These latest announcements show that the cut in our capital budget is now 25.9%."

Mr Swinney said he would "confirm shortly" what projects would benefit from the extra cash.

Scottish Labour leader Johann Lamont said that Mr Swinney should not "blow this opportunity to get the Scottish economy back on track".

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The British economy, he [George Osborne] insisted, was healing. It was just taking rather longer”

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She explained: "This belated attempt by George Osborne to turn around his disastrous handling of the UK economy does present an opportunity for the SNP government to make good on its plans for shovel-ready projects.

"We cannot afford to get this wrong again - the thousands of families dealing with unemployment or under-employment need investment that will create growth and quality jobs in Scotland."

During his statement in the Commons, Mr Osborne detailed plans to squeeze spending in most Whitehall departments and to use the money to build new schools and transport infrastructure.

All but four departments have been asked to save an extra 1% next year and a further 2% the following year.

The chancellor said the £5bn saved would be spent on capital projects to kick-start growth and make the UK "work better".

Key points for Scotland

  • The Scottish government will receive an extra £394m of capital funding over the rest of the Spending Review period (up to 2015).
  • Once departmental savings are taken from that funding figure, the government will have £331m to spend.
  • Raising the Personal Allowance to £9,440 will affect 2.2 million people in Scotland and take a further 21,000 low paid Scots out of income tax entirely from next April.
  • Cancelling the fuel duty rise planned for January 2013 will affect the 2.7 million motor vehicles in Scotland.
  • One million Scottish pensioners will receive the £2.70 a week increase from April 2013.

(Source: Scotland Office)

Mr Osborne told MPs: "Scotland, Wales and Northern Ireland will get their Barnett share of additional capital spending put at the disposal of their devolved administrations."

He also announced that Perth and Aberdeen would benefit from a share of £50m government funding to deliver ultra-fast fixed broadband access.

Secretary of State for Scotland Michael Moore said: "Against a difficult economic backdrop, we are taking the targeted measures we can afford to get Scotland's economy moving.

"There is a good deal of specific, positive news for Scotland.

"The Scottish government will receive more than £300m of new money - in addition to the £1bn it has already received since the Spending Review - all of which it can invest in shovel-ready projects."

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