Scottish Building Federation Chief Executive Michael Levack has warned that the Scottish construction industry could be heading for a second slump unless something is urgently done to fill a black hole in future capital investment.

Commenting on Friday's publication of the Scottish government's draft budget for 2010-11, Levack underlined the need to explore all possible options to mobilise additional funding from the private sector to make up the shortfall, providing the perfect opportunity for the Scottish Futures Trust to demonstrate genuine added value.

Mr Levack said: "With £294 million of capital spending brought forward into this year’s budget, today’s draft budget reveals a gaping black hole in funding for capital projects, which must be filled.

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"The accelerated capital expenditure included in this year’s budget was badly needed and is helping to sustain the construction industry through some particularly lean times. But as we start to make the first tentative steps towards recovery, to turn off the spending tap next year would be an absolute disaster."

Levack hopes Holyrood and Whitehall can put politics aside and recognise the overriding importance of prioritising continued spending on major capital projects to deliver sustainable economic recovery and to prevent a second slump in the building sector.

He added: "With finances as tight as they currently are, if additional public funds cannot be found, all available options for tapping into alternative sources of funding will need to be urgently explored so that the supply of public sector projects is sustained throughout 2010 and beyond.

"This challenge offers a golden opportunity for the Scottish Futures Trust to demonstrate clear added value to the Scottish taxpayer and to the Scottish building industry by successfully mobilising additional private sector investment to keep the flow of capital projects going and avert a second construction industry collapse."

(GK/KMcA)