Parliament is currently debating the Budget Bill at Stage 1. In advance of the debate John Swinney has published indicative budget figures for the following three years up to 2013-14 after criticism of his one year budget.
Finance Department officials have not exactly had to work very hard on this exercise. The numbers show a flat cash allocation for every department except health and the Scottish administration. Whilst this looks better than expected, we should remember that this is a cash figure that takes no account of inflation or the growing demands on public services. The Treasury has increased the GDP deflators for 2010-11 and 2011-12 to 3.1% and 2.5% (from 2.9% and 1.9% respectively). However, even this looks hopelessly optimistic when the RPI has increased to 4.8% and the Bank of England Governor announced that he expects inflation to increase further this year.
Yesterday's economic figures will add to these demands and reinforces our concerns that the UK government's ideological attack on public spending is damaging the economy. When politicians blame the weather you know they are really desperate!
The Finance Committee has also published its report on the budget. They highlight the lack of any effort to address low pay in local government or any calculation of the impact of the budget on job numbers across the public sector. They also support the Equal Opportunities Committee's concern that short term savings may impact disproportionately on the most vulnerable members of society. Equality impact assessments should be more robust, something UNISON has highlighted recently. Less convincingly the Committee "invites the Government to respond to the view that given the emphasis on the “social contract” the primary aim of the draft budget is the protection of services rather than economic growth." This misses the point that public services and economic growth are inextricably linked.
On the Council Tax freeze the Committee’s budget adviser concluded that the differences in household outgoings between freezing the council tax and increasing it in line with inflation are relatively small for most households, although the main beneficiaries are those on middle incomes. Further, he states that “there is no case that it supports economic growth and its fairness implications are certainly not clear cut." Despite this, four members of the Committee still welcomed the freeze - this is frankly beyond belief!
Where I do have some sympathy with John Swinney is on the so called 'Tesco Tax'. The Local Government Committee voted against it this morning and it has become the pivotal issue in the Budget Bill. Why this should be is beyond me when it constitutes a tiny proportion of the budget. Fiddling while Rome burns, springs to mind. I thought this was an imaginative effort to raise revenue and address a policy concern over the death of our high street shopping areas.
Out in the real world councils are facing additional costs over and above the budget. These include changes to council tax benefit, changes to the carbon reduction commitment regime, a reduction of 10% in the housing benefit administration grant and an increase of 1% in interest rates for loans from the Public Works Loans Board. The latest big jobs cuts are at Aberdeen City where 900 compulsory redundancies are threatened. The political leadership of this council has been a basket case for some time and they shouldn't be surprised that a 5% pay cut in return for redundancies is not very attractive. Even if staff had any confidence in the council leadership - which they don't.