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Tax changes, £125m extra for housing and infrastructure spending plans set out by Scottish Government

The Scottish Government has pledged an additional £125m towards housing in its draft budget for 2015/16, with £1bn to be provided for new schools, digital infrastructure, low-carbon energy and transport.

In his draft budget, finance secretary John Swinney said infrastructure would benefit from more than £4bn in investment in the year, boosted by new capital borrowing powers.

Mr Swinney outlined changes to the Scottish Land and Buildings Transaction Tax to take effect from April 2015, which would see new, staggered tax rates for homebuyers, from those paying no tax on the first £135,000 of their property purchases, to a top rate of 12 per cent for those buying homes worth more than £1m.

The new system will replace stamp duty in Scotland.

Douglas McLeod, regional director for Barratt Homes in Scotland, said: “The [policy] will, at the rates proposed, either reduce the burden for buyers of properties up to £325,000 in value or see them no worse off.

“This may assist customers who want to make the next step on the housing ladder at this level but are being put off by the prospect of high stamp duty charges.”

First minister Nicola Sturgeon announced this week that £195m-worth of savings had been found on the Queensferry Crossing to date (read CN’s project report on the scheme, here), with the project set to receive £219m of investment from the 2015/16 budget.

Almost £700m will be spent on motorways and trunk roads (see table below), an increase of £55.8m on 2014/15 spending levels.

2015/16 roads progress priorities include:

  • Construction of the M8 Baillieston to Newhouse motorway upgrade, improvements to the M74 Raith Interchange and the M8 associated improvements.
  • The Aberdeen Western Peripheral Route (AWPR) and Balmedie projects and the A96 Inveramsay Bridge.
  • Development work on the A77 Maybole Bypass, A82 Tarbet to Inverarnan and A90 Haudagain improvement, and the A737 Dalry Bypass.
  • Design and development work on dualling the A9 and A96 and construction getting under way on the Kincraig to Dalraddy section.
Motorways and Trunk Roads spending2014-15

Structural Repairs25.025.0
Network Strengthening38.836.0
Private Finance Initiative Payments84.789.2
Routine and Winter Maintenance74.077.2
Other Current Expenditure9.09.0
Roads Improvement14.214.2
Capital Land and Works51.0102.1
Queensferry Crossing241.0219.0
Roads Depreciation89.0110.8
Forth and Tay Road Bridge Authorities12.312.3

A total of £808.3m has been set aside for rail spending, of which £452.5m will be spent on rail infrastructure, representing a fall of £24.5m on the 2014/15 budget.

Among the rail priorities set out was completion of the Borders railway and progressing development of the route between Edinburgh Waverley and Glasgow Queen Street.

Rail spending2014-15

Rail Franchise370.7325.4
Rail Infrastructure427.6452.5
Rail Development7.06.0
Major Public Transport Projects27.524.4

The government will allocate £15m in 2015/16 to support the Glasgow and Clyde Valley City Deal alongside the £15m contribution from the UK government. It expects to inject £500m over 20 years in the city deal.

Bam Properties and Taylor Clark Properties announced plans to jointly develop a £100m commercial scheme in Glasgow city centre last month.

The 300,00 sq ft development will be based in Atlantic Square, part of Glasgow’s financial district, and will create one of the largest office developments in the city.

In 2015/16, Mr Swinney said more than £390m would be spent through the Scottish Government’s housing and regeneration budget to deliver 6,000 affordable homes, of which 4,000 will be for social rent, as well as an additional £125m to boost the sector.

Shelter Scotland director Graeme Brown said: “Ahead of this announcement we called on the finance secretary to invest an additional £200m in a budget for homes in order to start tackling Scotland’s housing crisis.

“While £125m of additional funds is welcome, the commitment to deliver only 4,000 social rented homes is a missed opportunity and shows the Scottish Government’s ambition falls well short of meeting the expectations of 150,500 people stuck on council house waiting lists.”

The Scottish Futures Trust earlier this month set out its priorities for the next five years, in which it hopes to deliver up to £750m savings on infrastructure projects.

Over the next five years, the SFT has pledged to develop new affordable housing opportunities, including new financing models in partnership with the public and private sectors, to be part of its investment model.

The government has also committed £3.5bn in spending over six years from 2015 for Scotland’s water and sewerage infrastructure. This includes a £250m investment over the next five years to upgrade Glasgow’s wastewater infrastructure.

In health, Mr Swinney pledged “more than £400m in non-profit distribution funding for capital projects” and an NHS budget of £288m.

PwC Scotland head of government and public sector Paul Brewer said: “It is to be hoped that, as the debate over further devolved powers reaches its conclusions, we’ll see further targeted investment focused on making Scotland an attractive business location with the transport, digital and housing infrastructure that encourages the private sector to invest.”

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