OPPOSITION parties have stepped up pressure on Finance Secretary Derek Mackay ahead of a grilling over a £1bn black hole in the Scottish budget.
Mr Mackay is due to appear before Holyrood’s finance committee tomorrow to answer questions from MSPs about the government’s recent five-year financial strategy.
The Fraser of Allander Institute last week issued a stinging rebuke to the government for skating over one of the biggest issues facing the public finances in the strategy.
Over three years, ministers could have £1bn less than expected to spend because of corrections, or reconciliations, to past budget estimates.
The result of forecasting errors rather than an economic slump, the reconciliations are estimated at £229m off the 2020/21 budget, £608m off 2021/22 and £188m off 2022/23.
The Scottish Fiscal Commission, which produced the figures, has warned the government’s borrowing powers will not cover the gaps, leaving Scots facing tax rises or spending cuts.
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However, the Scottish Government has so far failed to say how it will respond to the problem.
The Fiscal Commission has also warned the £1bn hole could get bigger if forecast social security spending of £3.5bn next year increases.
Scottish Tory finance spokesman Murdo Fraser said Mr Mackay had to bring some hard facts to tomorrow’s committee, not political posturing. :
He said: “The revelation that Scotland faces a £1bn black hole was a major moment for this SNP government. This isn’t something Derek Mackay will be able to just talk himself out of.
“He’ll have to explain why wages growth in Scotland is lagging so far behind the UK average.”
Green MSP Patrick Harvie said: “There are serious challenges for the future of Scotland’s finances, resulting from a mixture of factors both within and beyond devolved control.
“All forecasts have some uncertainty, but the way the fiscal framework [governing devolved tax and welfare] operates has left Scotland exposed to two sources of risk from two separate sets of economic forecasts carried out by different groups of experts.
“This arrangement has left Scotland carrying twice the risk, for half the fiscal freedom.”
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Scottish LibDem economy spokesperson Katy Gordon said: “The Fraser of Allander Institute warned the Government was looking backwards instead of forwards and criticised the quality of economic forecasting. It’s no wonder that the Finance Secretary is being asked to explain himself.
“Scotland faces a budget black hole. It would be an astonishingly negligent Government who let things get so bad without a clear plan to plug the gap.”
A Government spokesperson said: “The Scottish Fiscal Commission has reduced its growth forecasts for 2019 and 2020 as a direct result of continuing Brexit uncertainty. On top of this, Scotland faces a challenging future as a result of continuing UK austerity.”
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