Scotland's economic growth must be built on solid foundations

AT LAST UK PLC has reportedly stumbled out of the longest recession since the depression. That the UK economy grew by 0.1 per cent last quarter may technically take us out of a recession, but for Scottish industry and people in housing need, the recovery feels far, far away.

We will have to wait until April to discover whether Scotland has followed the UK into recovery. For now, all we know is that the meagre UK growth reflects a pre-Christmas, pre-VAT increase, consumer splurge. Questions over how Scotland can build a solid foundation for the future remain unanswered.

For finance secretary John Swinney, currently shepherding the Scottish Government's Budget bill through Holyrood, maintaining growth in a sustainable economy must be his priority.

It is this that unites our two organisations. For members of the Scottish Building Federation and supporters of Shelter Scotland, building a new stronger economy that lets all people in Scotland prosper and live in safety and security is paramount.

However, without a clear plan from the Scottish Government, the recovery we get might not be the recovery we need.

We believe that it is not too late for Mr Swinney to reallocate the funds from within the Budget to deliver a budget for homes and a budget for workers in the construction industry.

The foundation for sustained and sustainable growth can come through targeted capital investment in Scotland's infrastructure, in particular, building enough affordable homes for the thousands on waiting lists.

The current level of capital expenditure in Scotland for 2008 to 2011, including the overall investment in affordable housing, was set in 2007, before the crash.

In response to the recession, the UK and Scottish governments accelerated capital expenditure, maintaining a pipeline of work and securing income for construction workers.

The homes, schools and hospitals planned to be built over three years were built over two. No new projects have been forthcoming, no strategy for allocating public funds where it can have the quickest impact, no additional homes or infrastructure.

The Scottish Building Federation and Shelter Scotland both supported Mr Swinney's decision to accelerate capital expenditure but a decision on what to do next has not been forthcoming.

House-building is much more than simply four walls and a roof. It is the catalyst for regenerating communities. Modern communities need new roads, water connections, new schools, shops and health practices.

Despite tentative signs of recovery in the private sector house building, completion rates and start rates are still short of 2007 levels. When public sector money was available, jobs were protected. Now, with the tap turned off, jobs are under threat.

With the construction sector continuing to shed jobs and capacity and the shortage in affordable housing in this country approaching crisis point, failure to invest in building new homes and infrastructure will place the Scottish Government's core objective of long-term sustainable economic growth in jeopardy.

As MSPs deliberate over how to use their powers to influence Scotland's budget next week these are the facts they must consider.

The budget must deliver for Scotland's economy and society. Investing in homes and infrastructure is the best way to do it.

To fail in this task would not only be economically reckless, it will build up more social problems such as homelessness and unemployment.

Michael Levack is chief executive of the Scottish Building Federation. Graeme Brown is director of Shelter Scotland.