Scotland Budget full of holes

There is a £1.6bn funding gap in the Scottish government’s published plans for its policies if Scotland becomes independent after next year’s referendum, according to the Treasury report Harris & Co accountants Northampton.

Last month, Alex Salmond, First Minister, unveiled a 670-page white paper outlining a raft of proposals following independence which was widely criticised at the time for lacking detailed cost estimates.

The Treasury’s analysis of a potential funding shortfall is based on its costings for three key policies outlined in the document. These are the provision of 1,140 hours per year of childcare to all children from one year old to school age, to be phased in during the first two parliaments of an independent Scotland; a cut in air passenger duty of 50%; and a possible 3% reduction in corporation tax.

According to the Treasury’s calculations these changes would cost £1bn a year by the end of the first parliament, and £1.6bn a year by the end of the second parliament - comparable to the annual cost of Scotland"s entire police and fire services.

The Treasury’s figures do not include costs associated with other policy commitments contained in the document, including returning the Royal Mail to public ownership, increasing the National Insurance employment allowance, or reducing the state pension age as it says these lacked detail.

Danny Alexander, chief secretary to the Treasury, said: ‘The reality is that the white paper shows nothing about how they would pay for these commitments. The Scottish government cannot claim it is going to spend what it will not have.’

Alexander said the policies were based on ‘unfunded promises’ and said that as it stood, Scotland is benefiting from UK government policy initiatives such as cuts in corporation tax and tax-free childcare, for which it does not face additional payments.

Scotland’s finance secretary John Swinney was critical of the Treasury report, stating that ‘the numbers are all over the place’.

‘When you look at the Treasury analysis there is no account taken of the positive impact on the economy of any of the measures we have set out to boost growth within the Scottish economy,’ Swinney said.