Money

New Covid-19 strain makes need for more cash ‘imperative’, Chancellor warned



Scottish Finance Secretary Kate Forbes has told the UK Chancellor it is “imperative” he release funds totalling more than £21bn that was set aside to deal with Covid-19 in the next financial year.

Forbes has written to Rishi Sunak, urging him to make available the money – which could be worth about £1.7bn to Scotland in Barnett consequentials – to help pay for further work to help mitigate the impact of the virus.

She told the Conservative Chancellor: “The new strain of Covid and subsequent tightening of restrictions mean that further funding is required now, to provide certainty to the end of this financial year and into 2021-22.”

Sunak held about £21.3bn in reserve to help with the UK’s coronavirus efforts when he announced his spending review in December.

Forbes said: “If this was allocated against devolved spending areas, it would result in additional funding of around £1.7bn for Scotland.

“It is imperative that this funding is released now so that plans can be made to mitigate the impact of the virus as far as possible on our health service, business and the wider economy.”

Ministers in Edinburgh have already received an additional £8.6bn from the UK Government to help mitigate the impact of Covid-19. It is not yet clear where all of the money has been spent, according to the Fraser of Allander Institute.

But the Holyrood Finance Secretary made the plea for the additional cash to be released just over two weeks before she is due to announce the Scottish Government’s draft Budget for 2021-22 to MSPs on January 28.

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To help with this she said that “clarity” was needed from the UK Government on how much cash from other initiatives – the Shared Prosperity Fund and the Levelling Up Fund – should come to Scotland.

Forbes told the Chancellor: “It is vital that clarity on these schemes and the share of funding for Scotland is set out in advance of the Scottish Budget on January 28 for planning purposes.

“Our focus is on delivering the maximum possible support for business and wellbeing through this critical period.”

Speaking as the letter was sent, Forbes said: “We welcome the £8.6bn received so far in Covid-19 consequentials. Virtually all of this has already been allocated and is being spent supporting our businesses, NHS, public services and the rollout of vaccines.

“However, demand continues to outstrip the resources available and our inability to borrow on the financial markets, or even use unspent capital funding to address immediate needs, leaves us reliant on the UK Government.

“The new strain of the virus and subsequent tightening of restrictions mean that further funding is required now. I urge the UK Government to release our share of these reserves so we can provide the maximum support to businesses and the health service during this critical period.”

A UK Government spokeswoman said: “People and businesses in Scotland continue to benefit from UK-wide schemes like grants for the self-employed and furlough – which the UK Government are paying for.

“We have also given the Scottish Government an additional £8.6bn of upfront funding this year to help them to respond to the pandemic, as well as a further £1.3bn for Covid-19 support next year.

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“The Scottish Government already have significant borrowing powers, which are on top of the share of UK Government borrowing they receive through the Barnett formula.”



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