Draft Scottish Budget

As jobs go being the Cabinet Secretary for Finance isn’t easy. Running a devolved budget when the UK Government is slashing public spending is probably one of the most thankless tasks around. So no one was expecting very much when John Swinney presented the Scottish Government’s draft budget yesterday. And we were not disappointed.

While John Swinney does exhibit some dangerous neo-liberal economic tendencies, his belief in the Laffer curve for instance, he clearly doesn’t believe that cutting spending in the teeth of the longest and deepest recession since the 1930’s is a good idea. In that he is of course correct and in very good company. Not Arthur Laffer on this occasion!

So he didn’t have much to play with and he tried to argue that what he did have was going to boost the economy. Some shift from revenue to capital, small boosts to enterprise and tourism budgets, renewable energy projects and the like. None of which are likely to offset the overall effect of an 18% cut in public spending since 2009/10. There are some welcome increases in housing and college budgets, but this is only a partial replacement for over cutting in these areas last year. Other small projects are mainly cosmetic, giving ministers something to announce, probably several times, in the coming year.

At least the budget does have a narrative, unlike some other budget responses. Willie Rennie’s best shot was to privatise Scottish Water at the bargain price of £1.5bn. As the assets are probably worth over £20bn, this is selling off the family silver big time. Even this paltry sum would go out of Scotland to his pal in the Treasury. He was joined in this lunacy by CBI Scotland who argued for more privatisation, on a day when we had further scandalous revelations about G4S’s behaviour in Scotland.

The media coverage has focused on his pay policy. “George Osborne in a kilt”, as one of my trade union colleagues put it. It is certainly the case that he has largely followed the Treasury lead on pay in recent years. When John Swinney describes 1% as modest, no one can accuse him of exaggeration! In fairness he can point to the limited no compulsory redundancy guarantee and the Scottish Living Wage, but the social wage argument is very weak. A regressive Council Tax freeze is a poor use of resources. The living wage point would also be stronger if he did more on procurement.

The problem is that his pay policy only covers a small number of public sector workers. The largest groups are either covered by UK pay bodies, like the NHS, or local government. That’s why his budget allocation for local government is more important to those workers than his pay policy. CoSLA, with some justification, argues that local government is taking the bulk of the spending cuts and this impacts on their ability to pay even the ‘modest’ pay policy. For example, low paid council workers haven’t even been paid the paltry £250 in the past two years. There is no redundancy guarantee here either.

So despite the best spinning efforts there is little in this budget for jobs and growth. Further public sector jobs will be lost in the coming year and for every one of those there is a consequential private sector job loss. Real wage cuts, for the third successive year, will further dent consumer confidence. These cuts are the primary reason this recession has been so long and so deep.

We can and should criticise the Scottish Government for some poor choices in the allocation of this budget. However, never forget that the root cause is the ideological attack on public services by the ConDem coalition. Yesterday’s budget is another reason to be marching in Glasgow on 20 October.