Scotland could be set for a Budget windfall if spend matches rhetoric

Iain Macwhirter, political commentator and chairman of the Herald Budget Briefing Breakfast panel, said that plans by Westminster to increase spending on investment in the regions could provide a fillip north of the Border also, while signalling big cash input in areas including policing, education and health.

He said: “The Tories have entered Government with a commitment to boost northern post-industrial areas as we know because they are dependent on the votes now from former Labour constituencies like Sedgefield and Bolsover.

“So that means they have now a commitment to regional devolution. The extent to which that applies to Scotland is not entirely clear, because they have a whole range of city deals which cover large parts of Scotland and we are not sure the extent to which they will be boosted by this new focus on investment outside the south east.

“But I can’t see any way that it would not be some benefit to Scotland, if only through the Barnett Formula.”

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At the very least, it is expected the required proportionate spending for Scotland will increase under the formula, which ensures devolved administrations are handed cash in line with spending in England.

Mr Macwhirter also said: “What Sajid Javid is talking about now is actually altering the whole principle about how they decide on infrastructure projects.

“In the past, the argument had to be that they had to deliver a very clear return.

“Now he’s saying that the cost of borrowing is so low that it almost pays us to borrow money.

“So he is going to rejig the criteria under which they decide on investment projects and the more investment in that south of the Border means more north of the Border as well.”

Mr Macwhirter said the Budget, which will be the first post-Brexit Budget, is expected to look different to previous Conservative Budgets.

He said: “This is not the hardline Thatcherite Conservative Party of the past, nor is it the austerity party of George Osborne, they say austerity is finished, they are going to have themselves judged much more on their ability to develop and promote industry and intervene.

“This is something that has not been very current in the Conservative thinking for many years, really going back to Macmillan in the 1950s when you had this idea that it was the responsibility of the state to promote regional development, to promote industry and intervene in the economy, so I think there has been a definite change of rhetoric.

“It will be very interesting to see how much of that translates into genuinely interventionist policies in this Budget, and this is going to be the real test.”

The timing of the four-month late event, delayed by Brexit, threw a spanner in the works of the Scottish Budget which relies on tax forecasts alongside the UK Budget. Scotland usually passes a Budget Bill in February, which in turn lets Scotland’s councils set spending.

However, Mr Macwhirter said: “There is a commitment to a lot more money going into the NHS. There is some debate about whether this is the largest increase in NHS funding in history or whether it is in cash terms.

“No one is doubting though that a very large amount of money is going into the NHS. That is very important for Scotland because something like a third of all the Scottish budget is health, so through Barnett consequentials this means that the Scottish Government will get a big increase in its Budget.

“Also, with the extra spending on education and the police, allegedly, south of the Border, then these also have Barnett consequentials for Scotland.

He said: “So despite the howls of anguish from the Scottish Government over this Budget, not least because it messed up their own Budget cycles because it is so much later than it should have been, and about how Westminster doesn’t care, they could get quite a nice windfall out of this Budget.”