Government seeks ‘flexibility’ to use capital budget on resource spending

The Scottish Government is seeking budget “flexibility” from Westminster in order to use money allocated for capital projects for resource spending instead, MSPs have heard.

Fiscal rules mean capital spending – money for fixed assets like buildings and roads – cannot usually be transferred to day-to-day costs.

The Scottish Government’s emergency budget review earlier this month identified £150 million in capital “savings”, as ministers sought to tackle rising inflation and economic uncertainty.

Increased pay deals for public sector workers has also put pressure on the Scottish Government’s budget.

Public finance minister Tom Arthur spoke to Holyrood’s Finance Committee on Tuesday, discussing amendments to the Government’s budget.

Committee convener Kenneth Gibson asked if the £150 million sum would instead pay for things like salaries, noting that “it’s not something you usually see”.

Mr Arthur said: “Given the circumstances we’re facing we are seeking that flexibility from the UK Government.

“We are still awaiting confirmation from the UK Government but it’s a flexibility we are seeking.”

Conservative MSP Liz Smith said she had not heard of capital spending being transferred to resource budgets during her time in Parliament.

She asked if this is an “easing of fiscal discipline” by the Scottish Government.

Mr Arthur said the proposal is only for the current budget period, noting that a third of the financial year is still to come.

He said: “We are still facing a significant challenge in managing the various pressures we’ve already discussed.”

In a document setting out the £150 million savings, £40 million is earmarked as coming from the education capital budget.

More than £60 million is earmarked as coming from the net zero, energy and transport portfolio.