28 May 2004
Capital expenditure carried into a new financial year should be ring-fenced, the Scottish Parliament's finance adviser has suggested.
In a report to the Parliament's finance committee this week, Professor Arthur Midwinter said the rules should be tightened to prevent capital expenditure earmarked for infrastructure being transferred to current spending.
In contrast to an annual decline before devolution, capital spending since has grown from £1.839bn to £1.983bn, an increase of 7.8%, or 3.8% a year, he said. He added, however, that he was unable to find a clear policy commitment to a further capital spending increase in the Scottish budget nor any long-term target.
Of Scotland's total underspend of £408m in 2003, Midwinter pointed out that almost 43% came in capital spending. The degree of underspend in recent years has been inflated by a slippage in the reorganisation of the water industry.
He suggested that, as capital expenditure had a greater propensity for slippage, it should be ring-fenced by tightening the rules on end-of-year flexibility.
'I would also personally like to see the Executive set some targets to show what share of expenditure is going on capital,' he added.
Deputy finance minister Tavish Scott said that the Executive would publish a detailed capital investment plan in the autumn, setting out a long-term investment strategy.
He added that an increasing amount of investment was being delivered through public-private partnership schemes.
PFmay2004
