SNP call for action to help home and high street

SNP Westminster Treasury spokesperson, Stewart Hosie MP, has urged the UK Government to show the same swiftness in addressing the need for economic stimulus as many countries around the world are already showing.

Reiterating the SNP Government's programme which focuses help on the home and the High Street in order to keep the economy moving, Mr Hosie said:

"Contrary to his claims many countries across the world are already moving ahead with packages to stimulate their economies. It is Gordon Brown who is dithering. He has been slow to follow their examples or the suggestions by the Scottish Government.

"It's time he stopped thinking about how he can pull the wool over the peoples' eyes and started taking serious action to stimulate the economy.

"Households and high streets are facing a difficult winter, and with rising bills, fears of job loses, and the shockwaves from the financial crisis, it is now crucial that Gordon Brown take practical steps to reflate the economy.

"The Scottish Government is doing everything it can within its powers by delivering a six-point plan to help families and business. We've put more money back in people's pockets with a council tax freeze and lowering prescription charges; and we've put more money back into high street businesses with our small business bonus.

"What the country also needs is a two pronged approach, to tackle rising household costs particularly soaring energy and fuel costs, and to help businesses, which are the lifeblood of the economy, grow us out of recession.

"There must be real action on fuel poverty and that includes suspension of VAT on fuel over the cold winter months, an extra £100 for each pensioner household to help make ends meet, and a cut in VAT on all energy efficiency products.

"Businesses must be able to keep more of the money they earn to absorb costs and to protect and preserve jobs, and there must also be parallel increases in direct public investment to stimulate demand in key sectors such as construction.

"And any new borrowing should not be spent solely on tax reductions. Additional public spending is also needed to stimulate growth. That is why the UK Government should lift unfair Treasury controls and release the billion pounds of spending due to Scotland – including the Scottish Government's own underspend and Scotland's Fossil Fuel Levy.

"By failing to do so Gordon Brown is showing that he is falling behind the action the rest of the world is taking."

Notes

1. Examples of how other countries have already moved towards economic stimulus packages even before the G20 meeting:

* 7th February 2007 - US Congress overwhelmingly passed an economic stimulus with $100 billion for personal taxation rebates, and close to $50 billion in business tax cuts.

* 18th April 2008 - Spain's newly re-elected government announced an 18 billion euro plan to revive the economy. The plan includes cash injections of 10 billion euros (15.8 billion dollars) this year and around 8.0 billion euros in 2009.

* 28th October 2008 - French President Nicolas Sarkozy unveils measures to protect jobs by funding an additional 100,000 subsidised work contracts in next year's budget and extending the use of subsidised training programmes.

* 31st October 2008 - Japan unveils a $275 billion package which includes $20 billion worth of benefits to Japanese households, to stimulate spending and tax breaks for home-owners with mortgages.

* 2nd November 2008 - South Korea unveils an economic stimulus package worth at least 14 trillion won ($10.98 billion) to help assure a soft landing in Asia's fourth-largest economy. The South Korean Finance Ministry said in a it would expand fiscal spending by 11 trillion won in 2009

* 5th November 2008 - German cabinet approves a 50 billion euros stimulus package for 2009 and 2010 which includes cheap loans, tax breaks and infrastructure projects.

* 10th November 2008 - China unveils an economic package estimated at £375 billion over the next two years in an effort to inject confidence into their markets.

2. The Scottish Government's economic recovery plan is set out in 6 points - under 2 broad headings:

* Encouraging development and investment

1. re-shaping our capital spending plans;
2. ensuring all government activity, including on planning and regulation, supports economic development; and

3. intensifying our activity and support for Homecoming 2009, to boost tourism.

* Helping individuals and businesses

4. intensifying our work around energy efficiency and fuel poverty;

5. increasing advice to businesses and individuals; and

6. improving financial advice to vulnerable individuals.

3. The additional resources the Scottish Government are seeking for a £1 billion reflationary package:

* The Fossil Fuel Levy surplus which is in excess of £120m. A specific Scottish fund which is currently held by Ofgem for investment in microrenewables. However if it is accessed it would result in the Scottish Government's budget being reduced by an equivalent amount – unless Treasury restrictions are relaxed.

* The Scottish Government's £42m underspend, held at Westminster and which currently can only be sought during the next spending period from 2011.

* The Council Tax Benefit mechanism, which has cost Scotland some £476m since its suspension in August 2004. The mechanism was introduced at the start of devolution because the Treasury feared that devolved administrations' policies on council tax and rents would cause increased calls on the DWP reserved budget. In the event, instead of resulting in a clawback as the Treasury expected, council tax and rents in Scotland (and Wales) increased at a lower rate than in England, resulting in additional funding being paid to the devolved authorities. It was agreed with the Treasury Chief Secretary in July 2005 that Scotland would receive a one-off payment of £57m. It is estimated that the loss since 2004-05 has been running at some £100m a year.

* London Olympics regeneration spending, which should generate £33m of spending per annum over the five years to 2012-13 for Scotland under the Barnett Formula. The spending is on areas such as regeneration and transport, and there is a strong case argued by all three devolved administrations that this should be 'Barnetted' in the normal way.

* The Carter Review of Prisons Spending, which should be worth £120m for Scotland. As a result of the Carter Review of prisons and the overcrowding problem, £1.2 billion of spending on the prison estate in England and Wales was funded out of the Reserve – in the period after the Comprehensive Spending Review. Scotland faces similar overcrowding, and had the funding been allocated in the usual way from the normal budget headings, full Barnett consequentials would have been generated for Scotland.

* Police and Fire Fighter pension commutation costs, which should generate some £40m of Barnett consequentials for Scotland over the Spending Review period (2008-11) as a result of the pension costs being paid south of the Border. This week, the Scottish Government and Scottish local government announced that the costs would be met on a shared basis from Scotland's fixed budget, although we will continue to press the case for Barnett money.

TOTAL: £963m