DESPITE Tory claims of an £800m "windfall" for Scotland, the consequentials from yesterday’s Summer windfall could amount to just £20m, the country’s leading economic research body has said.
In analysis published this morning, Strathclyde University’s Fraser of Allander Institute said the vast majority of the ‘additional’ funding for the Scottish Budget announced by the UK Government “isn’t for an ‘economic stimulus’ but is instead further support for the NHS & to provide PPE for frontline public services to respond to the challenge of COVID-19.”
The analysis came as the leader of the Scottish Tories called on the Scottish Government not to “dither” and spend their “windfall.”
Writing for the Daily Mail, Jackson Carlaw said: "What is now critical is that rather than sit on this cash and dither, the Scottish Government spends that windfall wisely and promptly with the same purpose in mind that Mr Sunak set out yesterday - to protect jobs, especially for the youngest and poorest in our society.”
Carlaw added: "The package of support revealed yesterday is £300 million more than the extra borrowing powers [SNP Finance Secretary Kate Forbes] has demanded over recent weeks. Yet rather than welcome it, Ms Forbes complained about his 'disappointing' plan.
"The tragedy is that - with the powers it has - the Scottish Government could be doing so much more."
In response to the Chancellor's announcement, Forbes tweeted that of the “£30 billion announced by the Chancellor today to support the economy, the Scottish Government will receive only £21m – less than 0.1%.”
The Fraser of Allander Institute said that this wasn’t incorrect, and that £20m would come from Rishi Sunak’s key Plan for Jobs.
The academics hit out at the politicians for creating confusion.
Writing on their blog, the FAI said: “As usual, politicians are ‘technically’ correct in the lines that they have used. But the failure to provide clarity and the overall picture leads to confusion.
“It is correct to say that an extra £800m is to be added to the Scottish Budget via consequentials on top of the £3.8bn we already knew about. This takes the total consequentials since Spring to around £4.6bn.
“But it is also correct to say that with respect to the specific measures to support the economy in Scotland, only around £20m is additional to the Scottish Government Budget.
“So, what’s happened to Scotland’s share of the £30bn economic package announced by the Chancellor to support jobs?
“It’s important to distinguish between fiscal measures that lead to a boost to the Scottish Budget and those that are direct measures by the UK Government across the UK as a whole.
“The vast majority of the measures announced yesterday were on reserved measures that apply across the UK and are UK Government, not Scottish Government powers – e.g. the £9bn Job Retention bonus, the £2bn kick-start scheme for youth unemployment, the £4bn cost of the temporary cut to VAT.
“These are all schemes that will operate in Scotland but are UK Government budget lines. ‘Scotland’s economic share’ of such measures could amount to around £1bn.
“This isn’t money for the Scottish Government to spend, it’s direct support for business and employees.”
The Institute said that because much of what was in Sunak’s statement was a “re-announcement” or involves “moving around monies within existing budgets” the net transfer to Scotland will be zero.
The FAI added: “The Scottish Government’s Budget has increased significantly, to the tune of around £4.6bn since March to help it respond to the COVID-19 pandemic, with a further £800m of funding confirmed in the last few days to be added to the £3.8bn already announced.
“Yesterday’s £30bn economic recovery plan for the UK resulted in very limited Barnett consequentials for the Scottish Government. The vast majority of the measures will work directly through reserved powers in Scotland rather than via devolved powers. Whether or not this is enough of a stimulus remains to be seen. It is widely expected that further measures will be announced by the UK Government later in the year.”
The FAI warned that there was “limited new scope for Holyrood Ministers to do anything different” until the budget in the Autumn.
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