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Spending focus 'will save jobs'

A Scottish Government focus on capital spending in next year’s Budget could save around 13,000 construction jobs, according to the Scottish Building Federation.

The Holyrood administration is due to publish its draft Budget for 2011-12 on 17 November.

The federation made the suggestion in evidence to the Scottish Parliament and said it is backing Finance Secretary John Swinney’s plan to transfer money allocated for “resource” to capital spending under the Budget headers.

Westminster has proposed that the entire £900 million cut in the Scottish Budget should come out of the capital heading of the spending plans.

Some analysts are arguing however that doing the opposite, increasing capital spending, is the best way to ensure any economic recovery, as well as helping the building industry in Scotland. The federation said not doing so will mean the number of “affordable” houses being built will be cut by half, from nearly 6,000 in 2009-10 to fewer than 3,000 in 2011-12.

Its evidence to the Parliament also suggests that the school building programme would be put at risk if capital spending is not prioritised.

The Scottish Building Federation’s Michal Levack said: “We think that expecting the capital heading of the Budget to bear the entire burden of a 26 per cent 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 £450m would generate two-thirds of a billion pounds in wider economic benefits.

“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.”

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