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Embattled Finance Secretary takes more flack

by Murdo Fraser

AS THE PROCESS for scrutiny of the Scottish Government’s draft budget for 2017/18 grinds its way through the Parliamentary process, the position of the SNP Government, and in particular that of the Finance Secretary Derek Mackay, continues to unravel.

In last week’s blog on this site, I highlighted the fact that the Scottish Government’s budget is up half a billion pounds over the current year, against a trend where its overall budget, contrary to all the SNP claims about “Tory cuts” and “Westminster austerity” is up in real terms since 2010/11. So there can be no excuses for cutting vital services at this time. 

And yet, that is exactly what is happening. At this week’s meeting of the Finance Committee, I challenged Derek Mackay over cuts being made to local government funding. These mean that Council Tax payers will see substantial rises in their bills from April, particularly for those living in properties in Bands E to H. But, in return, they will be getting poorer quality services, thanks to the Scottish Government.

I quoted the example of Perth and Kinross Council, an SNP-run administration, which is considering cuts across a range of priority areas. These include cutting 24 secondary teachers in English and Maths, scrapping primary school swimming lessons, reducing the opening hours of community campuses, increasing the cost of school meals from £2.10 to £2.70 daily, scrapping the Community Warden scheme, and cutting 94 care home places. 

In response, Derek Mackay could only say that spending decisions were for local authorities to make, and the Scottish Government were continuing to generously fund local service. It was, he claimed, a “fair settlement” for local councils. The evidence is rather to the contrary.

The stance I have taken on the Budget was helpfully backed up this week by the well-respected economic think tank the Fraser of Allander Institute, who analysed the competing claims on the overall size of the budget. Fraser of Allander confirmed that Total Managed Expenditure (TME), the total amount of money that the government spends in a year, is up 0.4% in real terms between 2010/11 and 2017/18. This is, they state, the full picture of the Scottish Government’s share of public spending in the national accounts – and is an important measure of the government’s overall contribution to demand in the economy.

In response to the SNP claims about a cut in Fiscal Revenue DEL since 2010/11, Fraser of Allander observed that this is only part of the total discretionary spend in the Scottish Government. Their assessment of the total discretionary spend is that this is down in real terms by only some 3.8% since 2010/11. 

However, these experts point out that there is no particular reason to take as the base year 2010/11, which just happens to be the year when the Scottish Government’s Fiscal Revenue DEL budget was at its historic peak following years of significant growth. A more appropriate comparison might be with 2007/08, the first year of the SNP administration. And compared to that year, the 2017/18 Fiscal Revenue DEL budget is the same in real terms. In other words, over a ten-year period of SNP administration, the budget from Westminster has not been cut.

Fraser of Allander go on to make two other important points. First of all that the Scottish Government can, if it wants to, increase its discretionary budget by raising tax. If it feels that it has insufficient revenue, then the very substantial new tax powers allow it to take action to fill the gap. 

Secondly, there is stinging criticism of the way in which the Scottish Government presents its budget. Fraser of Allander state: “The information in the budget isn’t particularly easy to understand. And the selective data that the government presents often appears designed to support their arguments rather than to help inform debate”.

They go on to argue that “an improved budget process is a necessity… we urgently require a process that is more fit for purpose”. And in a subsequent blog post, Fraser of Allander go on to suggest a number of ways in which the presentation of Scottish Budgets, and the scrutiny process, could be substantially improved. I hope that the Scottish Government are listening.

The political question that remains is: will the Scottish Government’s budget get the support it needs in Parliament to pass? The likeliest bedfellows for the SNP are now either the Greens or the Lib Dems, and it was interesting this week that it seemed to be the Lib Dems who were making the warmest noises about supporting the SNP budget if various amendments could be made.

If I could offer my good friend Willie Rennie a little word of advice, I believe that it would be disastrous for his Party to be propping up the SNP minority government in order to pass this budget – a budget that not only will make Scotland the highest taxed part of the United Kingdom, but also will see local government services slashed. I would not want to be a Liberal Democrat councillor defending my seat in May, against a background where my Party has just voted for these cuts in Holyrood.

Are the Liberal Democrats really that stupid? We will know soon enough.

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Article from Friday 20, January, 2017