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Swinney urges Osborne not to cut the Scottish budget further

John Swinney has warned George Osborne not to make any further spending cuts to the Scottish Government's budget plans but urged him to plough more money into capital investment with improved access to finance.

In a letter to the Chancellor on the eve of his Autumn Statement, the Scottish Finance Secretary urges him to change his "flawed strategy" and insists any more in-year budget cuts are "not acceptable and that the Scottish budget agreed by Parliament should be respected".

Mr Swinney said that while signs of economic growth were welcome, the forecast of extra borrowing of more than £240bn underlined that the Coalition's approach had failed.

The Scottish Finance Secretary pointed out how the latest Scottish GDP figures showed Scotland's economy was growing faster than the UK's but successive UK Budgets and Autumn Statements had "undermined" the Scottish Government's ability to support economic revival through cuts.

"The UK Government retains the right to take money out of our budget mid-year and has done so in the past.

"It is not only deeply damaging to our plans for investment and to our public services such cuts completely fail to respect devolution.

"I have urged the Chancellor to assure me that there will be no such cuts in the Autumn Statement," added Mr Swinney.

But Mr Osborne, when he stands up tomorrow, is likely to exude more confidence than he has in previous years given that Britain, among the leading economies, is now growing the fastest.

While the Chancellor will insist "the job is not done yet" and make clear the austerity squeeze is set to continue for some years yet, there is expected to be one or two surprises, possibly even a tax cut.

This could come in the form of a freeze or even a cut in business rates to boost jobs.

It has already been announced that the tax-free personal allowance will rise to £10,000 next April, a year earlier than planned. Mr Osborne could increase this still further, possibly in stages to £12,500, which would take out all those on the minimum wage.

Politically, this would have the advantage, from a Conservative viewpoint, of negating the Liberal Democrats' main electoral pledge, and also seize the initiative on the cost of living crisis away from Labour.

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Local government

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