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Finance Secretary warns Chancellor against further cuts.

Mr Swinney has written to the Chancellor ahead of the Autumn Statement on December 5. The letter highlights the Scottish Government’s rejection of Westminster’s approach to the economy and public finances and sets out a number of priorities that the Scottish Government believe should be addressed in the Autumn Statement.

The letter also warns the Chancellor that in-year budget cuts – as the UK Government has imposed in previous years – are not acceptable and that the Scottish budget agreed by Parliament should be respected.

Earlier this week the Scottish Government launched Scotland’s Future – Your Guide to an Independent Scotland, showing that with the full set of economic levers at its disposal Scotland would be able to build greater long-term economic security, growth and job opportunities.

Mr Swinney said:

“The current Westminster system is fundamentally flawed and has created one of the largest gaps between rich and poor in the developed world.

“While we are now seeing promising signs of economic growth, the fact that Westminster is now forecast to borrow over £240 billion more between 2011-12 and 2015-16 than it initially planned in June 2010, underlines the failure of the UK Government’s approach to the economy.

“The Scottish Government is doing all it can, within its limited powers, to support Scottish finances. The latest Scottish GDP figures show the economy is growing 1.8 per cent, which is faster than the UK, while our employment, unemployment and inactivity rates are the strongest of the four nations of the UK.

“However, successive UK budgets and Autumn Statements have undermined the Scottish Government’s ability to support economic revival, particularly through the significant cuts the Chancellor has made to capital investment over the spending review period and, in some cases, the in-year reductions he has made to the Scottish Government’s published spending plans.

“The UK Government retains the right to take money out of our budget mid-year and has done so in the past. It is not only deeply damaging to our plans for investment and to our public services such cuts completely fail to respect devolution and I have urged the Chancellor to assure me that there will be no such cuts in the future.

“There remains a need for additional direct capital investment to support recovery, and it is vital to ensure small businesses have access to finance. There is also a need for serious investment in energy infrastructure over the coming years to help deliver renewable generation across Scotland and the UK. We believe beyond doubt that the current Electric Market Reform proposals risk failing Scotland and the UK in a number of vital areas, and present a huge risk to UK security of supply as well as to investor confidence and our low carbon ambitions.

“As Scotland’s Future shows, an independent Scotland could build a more sustainable economy by delivering an effective industrial strategy, boosting productivity and exports and increasing innovation and participation in the workforce.

“However, until Scotland decides on its future, it is essential that the Chancellor and the UK Government adopts a new approach to ensure that we see a sustained economic recovery, and that the benefits of this are widely shared."

The Finance Secretary has called on the Chancellor to:

• Provide assurance that there will be no more in-year cuts to the Scottish Budget. The March 2013 UK Budget applied reductions to the Scottish Government’s published spending plans for 2013-14 and 2014-15.
• Provide additional capital investment to support sustainable and broad-based economic recovery and make the country as a whole more internationally competitive.
• Invest in energy infrastructure to help deliver renewable generation across Scotland and the UK, arguing that the UK Government’s current proposals are putting the creation of a strong, domestic renewables sector and supply chain at risk, and could undermine Scotland’s security of supply.
• Make access to finance easier for SMEs across Scotland. In particular it is important that UK wide schemes – such as the Enterprise Finance Guarantee and Funding for Lending Scheme are readily accessible to Scottish businesses.
• Reconsider the UK Government’s decision not to pass on the full external convergence uplift to the Common Agricultural Policy budget to Scotland’s agricultural sector, despite the fact that this allocation is a result of Scotland having one of the lowest per hectare payment rates in the EU.
• Make sure the negative impacts of welfare reform are not exacerbated by further announcements made in the Autumn Statement. The Scottish Government has consistently highlighted its view that many of the changes being introduced as a result of the UK Government’s programme of welfare reform are set to impact on some of the most vulnerable in society, and will have a wide range of implications for the organisations helping those affected.