Scotland’s capital budget cut in Spending Review, Finance Secretary claims

Chancellor Rishi Sunak is cutting the Scottish Government’s capital budget at the same time as the country tries to deal with Covid-19, Scotland’s Finance Secretary Kate Forbes has said.

The UK Treasury said measures in the Spending Review announced on Wednesday mean Scotland will get an additional £2.4 billion of cash – with more than half (£1.3 billion) of this related to the pandemic.

That comes on top of the £8.2 billion the Scottish Government has already received to help deal with the impact of coronavirus.

But Ms Forbes accused the Chancellor of cutting her capital spending budget at the same time as this is being increased in the rest of the UK.

Reacting on Twitter to Mr Sunak’s statement, she said the “Spending Review illustrates the damaging economic impact of Covid-19 – which is precisely why we need to invest in recovery”.

Ms Forbes added: “Behind the Chancellor’s headline 27% increase in UK capital expenditure, Treasury docs show a cut to Scot Gov’s capital budget by 5% in cash terms.”

She further claimed a pay freeze for many public-sector workers “makes very little economic sense at a time when we should encourage spending and consumption”.

The Finance Secretary said: “In just over a month, the end of the transition period will see Scotland removed from the EU and yet the Spending Review hasn’t replaced in full, as promised, EU funding for our communities, research institutes or rural economy.

“The Spending Review was never going to replace the scrapped autumn Budget and offers little clarity on tax rates or policies that inform the Scot Gov’s budget.”

Ms Forbes will set out the Scottish Government’s draft budget for 2021-22 on January 28, saying this will focus on “protecting jobs, tackling inequalities and supporting the health response”.

Mr Sunak insisted his Spending Review will “help people in every corner of Scotland”.

He said: “It will provide billions of pounds to fight coronavirus, deliver the peoples’ priorities and drive the UK’s recovery

“The Treasury is, has been and will always be the Treasury for the whole of the United Kingdom. And this is a Spending Review for the whole of the United Kingdom.”

To help fund the response to coronavirus, the UK Government will borrow £394 billion this year, equivalent to 19% of Gross Domestic Product – the highest recorded in peacetime.

While Mr Sunak continues to allocate large sums to tackling the pandemic, he confirmed there will be restraint in pay awards for public-sector workers and a cut in overseas aid.

Richard Leonard interview
Richard Leonard interview

Scottish Labour leader Richard Leonard criticised him for “denying a well-deserved pay rise to every public-sector employee and not delivering the level of increase in the minimum wage that had been promised to hard pressed workers”.

Mr Leonard said: “Rishi Sunak’s Spending Review is straight from the austerity playbook of David Cameron and George Osborne, whose disastrous approach has devastated living standards and public services this past decade.”

Roz Foyer, the general secretary of the Scottish Trades Union Congress (STUC) branded the decision on public-sector pay a “kick in the teeth to those very same workers Rishi Sunak was clapping months ago”.

She said: “Very few people will be fooled by his attempts to pit care workers against shop workers or low paid council workers against low paid cleaners.

“All need a decent pay increase, and they all need it now.”

Scottish Secretary Alister Jack said the Spending Review “delivers for all parts of the UK at this challenging time”.

He added: “Never before has the strength of the union, and the role of the UK Treasury, been more important.

“The Scottish Government will receive an additional £2.4 billion in Barnett consequentials. This is over and above the £8.2 billion they have already been allocated since March this year.

“This additional funding will help support jobs and public services in Scotland while we fight the pandemic.

“The UK Government will continue to do all it can to support people in all parts of the United Kingdom.”