Prioritising capital spending in the Scottish Government's budget for 2011-12 could help safeguard more than 13,000 jobs in the Scottish construction sector over the next financial year, the Scottish Building Federation has said.

Giving evidence to the Scottish Parliament in advance of the publication of the draft Scottish Budget on Wednesday (17th November), the Federation is strongly supportive of suggestions that Finance Secretary John Swinney will exercise powers to transfer money from the resource heading of the budget to capital spending.

The current financial settlement from Westminster proposes that the entirety of a £900 million cut in Scottish spending next year should be borne by the capital heading of the budget. However, some economists have argued that transferring additional funding towards capital spending would be the most effective means of sustaining economic recovery, giving a particularly important boost to Scotland's strategically important building industry.


In its evidence to the Scottish Parliament, the Federation warns that a failure to prioritise capital spending could see the number of affordable homes built in Scotland slashed from almost 6,000 in 2009-10 to fewer than 3,000 in 2011-12. It also suggests it could place delivery of the Scottish Government's flagship School Building Programme at risk.

Scottish Building Federation Chief Executive Michal Levack commented: "We think that expecting the capital heading of the budget to bear the entire burden of a 26% cut in spending next year is at best deeply unfair and at worst dangerously flawed. If we were to spread the burden of the cuts evenly between capital and resources, we estimate that the additional expenditure on capital projects could safeguard more than 13,000 jobs in Scotland's building sector next year.

"The benefits to the wider economy would be substantial - based on independent analysis, a reasonable estimate would be that increasing capital spending by £450 million would generate two-thirds of a billion pounds in wider economic benefits."

He concluded: "I think the Scottish Government has a responsibility to deliver a fair and balanced budget that spreads the burden of cuts equally between capital and resources. By providing evidence of the major jobs benefit increased capital spending would have, I hope we have strengthened the Finance Secretary's hand in seeking to prioritise more money towards funding more affordable homes, new schools and other crucial infrastructure."

(GK)