As the Scottish Parliament gears up for a critical debate on Wednesday on the Scottish Government's proposed budget for 2010-11, the Scottish Building Federation has issued a last minute plea to MSPs to prioritise additional funding for investment in capital projects and improved energy efficiency or risk placing Scotland’s economic recovery in jeopardy.

The leading trade body representing the Scottish construction industry is concerned that a £300 million shortfall in funding for new housing and major capital projects in next year’s budget places the Scottish Government’s objective of long-term sustainable economic growth at risk.

It has claimed that reinstating this money into the 2010-11 budget for capital investment would deliver £850 million in direct and indirect economic benefits and could generate total long-term added value to the Scottish economy of as much as £1.5 billion.

It has cited the findings of a recent major study commissioned by the UK Contractors' Group which shows that every £1 spent on construction yields £2.84 in wider benefits to the economy. Taking the construction of a new school as an example, the study also found that every £1 spent on capital projects would have a net cost to the taxpayer of just 44 pence, but a total long-term benefit of between £3.87 and £5.04.

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The UK Contractors' Group Study also identified a particularly heavy reliance on the construction industry for providing employment opportunities for the working population in many local authority areas across Scotland – including Clackmannanshire, East and North Ayrshire, East Renfrewshire, Falkirk, Orkney, Renfrewshire, North and South Lanarkshire, Stirling, West Dunbartonshire, and across the Lothians.

SBF warned that a major drop in capital investment could provoke substantial further job losses from the construction sector, with a particularly bad knock-on effect in those many areas of Scotland where construction employment is currently significantly higher than the national average.

Meanwhile, SBF again highlighted to MSPs a huge disparity between the total estimated cost of improving the energy efficiency of Scottish homes to meet the legally binding targets laid down in the Climate Change (Scotland) Act and the total funding committed to this purpose in next year’s Scottish budget.

Scottish Government figures put the total cost of achieving a 42% reduction in carbon emissions from Scotland’s 2.3 million homes by 2020 at £1.6 billion per year. Meanwhile, total funding allocated to the Scottish Government’s flagship home insulation programme next year stands at £15 million. A 42% reduction in carbon emissions from the Scottish economy is now a legal stipulation under the Climate Change (Scotland) Act, adopted by the Scottish Parliament in August last year.

In the run-up to a critical final vote on the Scottish budget, expected to take place on the 3rd February, Scottish Building Federation Chief Executive Michael Levack has urged MSPs to treat capital investment and energy efficiency as key priorities during intensive cross-party budget negotiations now getting underway.

Michael Levack said: "Representing the Scottish construction sector, of course the SBF wants to see additional support for the building industry treated as a priority.

"But the latest evidence from a study commissioned by the UK Contractors' Group shows that a major fall in capital investment won’t just be bad for the construction industry. It will have a significant knock-on impact on the wider economy.

"With the potential to deliver as much as five pounds of added value to the economy for every pound spent, investment in the construction sector is one of the most effective mechanisms for boosting sustainable economic growth in the longer term."

He added that failure to invest in capital projects risks damaging not only the construction industry but threatens jobs and growth in the wider economy.

(GK/BMcC)