Savings deal looms for Forth crossing

THE Treasury is to offer the Scottish Government "saving powers" so that it can build up a pot to pay for a new Forth Road Bridge crossing.

UK ministers will propose this week that Alex Salmond's Government keep any savings it makes over the next three years so that it has a cash pot built up before it has to meet the £2bn cost of the new crossing.

The move would reverse the current practice under which all so-called underspends are returned to the UK Exchequer.

The offer will be made at long-delayed talks between Treasury Minister Yvette Cooper and Scottish Finance Secretary John Swinney this week, and follows a bitter falling-out between the two administrations over the bridge. Last night, the row looked set to continue as the SNP described the new offer as entirely "unrealistic".

Plans for a new bridge were announced by the Scottish Government late last year after surveys of the existing road crossing showed it may have to be closed down.

The SNP said it would pay for the bridge from the annual £30bn grant, but asked the UK Government to advance them cash so that the cost of the bridge could be spread out.

But the UK Government refused, saying it was impossible to advance cash which had not yet been allocated.

The Treasury proposal this week will see Cooper pledging to water down the normal rules under which all annual underspends, accrued at the end of the financial year, return to the Treasury. Instead, the Scottish Government will be able to build up savings ahead of the start of construction in 2012.

But the offer is set to be knocked back this week, with SNP ministers warning that they cannot afford to put money aside.

The SNP is furious over what it claims are huge cuts, which will hit its budget next year, of up to £500m a year.

A source close to John Swinney said: "This is a totally unrealistic suggestion. Far from being in a position of having an underspend, the UK Government is proposing to chop £500m a year from Scotland's budget."

He added: "What this whole issue proves is the urgent and compelling need for Scotland to be given borrowing powers, to allow us to invest effectively in the future infrastructure of the country. Northern Ireland is already allowed to borrow to a level which would cover the costs of the new Forth crossing."

Swinney will discuss plans to save cash in the public sector tomorrow when he speaks at a conference on public sector reform.