Failure to maintain investment in affordable housing and core infrastructure will seriously hamper Scotland’s economic recovery, according to Scottish Building Federation Chief Executive Michael Levack.

Commenting on the UK spending review, presented to MPs at Westminster today by Chancellor of the Exchequer George Osborne, Mr Levack said: “The true impact of these cuts on the Scottish construction sector will only become clear once the Scottish Government has determined how to spread the pain of a £1.2 billion cut in the Scottish budget next year and further substantial cuts in the years that follow.

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“With most of the rhetoric focused on protecting frontline services, Scotland’s capital budget is extremely vulnerable.

“Although politically expedient in the short term, failure to maintain investment in affordable housing and core infrastructure will seriously hamper Scotland’s economic recovery in the medium term.”

He continued: “To balance the cuts, today’s spending review ought to have been accompanied by targeted measures to stimulate a private sector-led recovery – including direct action to improve bank lending and make available alternative sources of private finance and targeted tax incentives such as cutting VAT on building repairs and maintenance to 5%.

“Without further private sector stimulus, there will be little to cushion the construction industry against these cuts and little to suggest anything other than a significant backslide in output, capacity and employment for the sector over the coming months and beyond.”

(GK)