News

Scotland and Wales to slash capital budgets

19 November 2010

Scotland’s capital spending budget is to be slashed by 36 percent under a draft budget announced by finance secretary John Swinney, reports the Construction Enquirer website.

The country is facing a £3.3bn spending cut over the next four years, which for construction will mean a £1.2bn fall in the capital budget, or 36%.

Swinney warned that the scale of cut was unprecedented and would inevitably slow the implementation of the Government’s infrastructure programme. However, he said spending on projects such as the Forth Road Bridge and major health and education schemes would be sustained, partly by moving £100m forward from this year’s budget.

The government will investigate alternative funding routes to fill the spending chasm, which include bringing forward a new pipeline of revenue financed investment worth up to £2.5bn.

Funding for the prison service will take the biggest hit, taking a 22% cut while the housing budget will fall from £448m to £390.8m, a drop of 12.7%. Cuts to education will see 12% taken from colleges and universities.

The cuts were mirrored in Wales his week where a draft Assembly Government Budget revealed a 40% reduction in capital spending over three years.

Announcing the proposed cuts, Budget and Business Minister Jane Hutt said capital spending would fall by £860m next year, dropping to £1.8bn by 2014-15 (a 40% fall), with many planned schemes delayed or cancelled altogether. ‘This will have a major impact on the private sector and on our ability to invest in schools, hospitals and the critical infrastructure that is needed to support the fragile economic recovery,’ she warned.

Hardest-hit will be economy and transport spending and housing and environment, both of which were down by more than 21% over three years.

Spending on health, social services and schools has been partially ring-fenced, but planned 7% cuts will mostly effect building projects.

But Hutt said savings from this year’s budget would be used to deliver a small short term boost to construction: ‘I will be announcing a further £47m of capital expenditure next week in education, health, the environment, heritage and housing – much of this will be good news for the construction industry in Wales,’ she concluded.

 

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