Budgets and infrastructure

Finance has dominated the action in Parliament this week with the Scottish Government’s budget for 2013/14 and the fallout from the Infrastructure plan update.

John Swinney made some limited concessions to parliamentary scrutiny including:

·         An increase in funding for colleges of £61 million over the spending review period. However, in the draft budget, ministers proposed a £34.6m cut to college budgets. Of the £61 million announced yesterday, there is only an initial £10 million injection which still means the sector loses £24.6 million. As those giving evidence to the Education Committee  this week pointed out, this means fewer courses and much needed places for students.

·         An additional £38 million for the housing budget, increasing funding for energy efficiency of homes and more affordable housing. Again, while welcome the additional cash it only reinstates part of earlier cuts.

·         £2 million to bring vacant town centre properties into residential use.

·         An additional £10 million for trunk road maintenance. The additional funding will be used to deliver essential road and bridge repair works identified as part of Transport Scotland’s detailed inspection programmes. Nothing for local roads that are the responsibility of councils.

Local government continues to take the largest budget cut over the spending plan period. In addition the regressive Council Tax freeze and small business bonus will continue with no increase in the funding for this measure. The total job loss in Scottish councils since the crash now exceeds 34,000.  Local government makes up 57.3% of workforce but has taken 66.7% of the workforce cuts.  This is reflected in Council budget setting that also starts this week.

The other major contributor to the budget deficit is of course continuing pay restraint. Public sector workers continue to pay the price of the bankers folly and the economy suffers through the loss of demand and consumer confidence. With bankers still defending their bonuses at Westminster this week they have clearly learnt nothing.

On capital spend the Scottish Government has published its updated Infrastructure Investment Plan. This plan totals £3.4bn reflecting a 26% cut in the capital budget from Westminster. There has been reasonable progress on a range of conventionally financed projects. However, there was particular criticism of the Scottish Government’s PFI programme.  The NPD version of PFI had raised only £20m of the £353m originally projected for 2012/13, and project starts were being delayed as a result. There is a rich irony in SNP ministers having to defend the failures of their PFI schemes after years of telling us how bad PFI was. Do governments ever learn?

Scottish budget cuts will be reflected in individual budget allocations for councils, health boards and NDPB’s. In addition local employers will have unavoidable commitments that will add to the amount to be saved including inflation, demographic change and other service demands. So the full impact of these budget cuts will be even greater.