As we emerge from the hangover of Christmas past and enter the new decade, Scotland needs to wake up to the reality of the need for a very different public sector landscape. Whatever you are wishing for in 2010, cuts of almost £5bn are probably not on the preferred list but unfortunately, change isn’t going to be an option; it will be a necessity. Based on the Chancellor’s recently announced pre-Budget report, savings of £36bn will need to be made at a UK level just to service a yawning public sector deficit. But even this multi-billion-pound scenario could be grotesquely optimistic based as it is on a future economic growth that far outstrips what the forecasters are predicting. For Scotland that could equate to a minimum of £3.6bn worth of savings and even then this does not take into account two important caveats; that Barnett continues to be the favoured way of divvying up the public purse – and there is much disquiet about the continued dependence on this flawed calculation – and secondly, that the Tories get in and they have already expressed the view that the current Chancellor’s expectations for public sector savings are neither deep nor savage enough.
So, on a conservative estimate councils in Scotland believe they will be operating on at least a 12 per cent reduction in funds. Chief executives are already drawing up plans as to how this could be achieved and it doesn’t look pretty. Half could perhaps be achieved by efficiency savings but the rest is up for debate.
So be prepared for a very different world and make no mistake, life is not just going to be the same albeit a little harder, with savings made here and cuts shaved there, this is going to be monumental. Billions of pounds worth of cuts can’t be found by looking down the back of the council sofa and counting up loose change. This will be about setting priorities and making painful decisions about what we can and can’t afford. And in a country where our politicians have taken no responsibility for actually raising the filthy lucre they spend, then the culture of dependency and handout runs very deep in Scotland and cultural shift is never easy. As a country reliant on Westminster, Scotland has benefited from spending without responsibility and with devolution that abnegation of consequence has only increased. And particularly so under this SNP Government, which whinges every time the Whitehall mandarins cross a nought off another consequential, we have also got used to three years of a council tax freeze. On the face of it, that is a good thing. It makes us citizens feel we are being looked after and while we enjoy services as normal, we give little thought to the tacit implication that all tax is bad and politicians that cut them or don’t even use them when they have the power to do so are good. We have created a new generation of local politicians who have no experience of taking responsibility for having to justify to their electorate the need for a rising council tax. But now in the face of falling public revenues, the tough questions have to be asked about priorities and outcomes. The financial challenge of the next decade is huge. The public sector needs to ask whether it is possible to make careful, targeted and essential cuts on top of existing efficiency programmes and ensure that essential services are still effective. It is now time for a radical rethink of how we operate and whether we achieve the best possible outcomes for the consumer by keeping the status quo. The new decade offers the opportunity for a look again at things like universal service provision, or whether services would be best transferred to the private or voluntary sectors or even to social enterprises. We need to take a long, hard look at how our councils are shaped and it also offers an ideal opportunity to address the wider modernisation of the public sector.
Faced with public debts spiralling out of control, Brian Lenihan, the Irish finance minister, has announced cuts in public sector pay and welfare benefits that will save £3.6bn — about 7 per cent of government spending.
The Government will save £900m by cutting the pay of every public servant and the prime minister himself is facing a 20 per cent drop in salary. Another £900m will be saved from capital expenditure, while cuts in social welfare will save £684m next year including reducing the dole and slashing disability benefits by 4 per cent and child benefit by 10 per cent. So far there have been no riots on the streets of Dublin. It may be hard for those in the public sector to swallow what the private sector has already had to but perhaps they should pause and reflect that in desperate times, there can be no sacred cows. It’s a painful debate that Scotland needs to have but cutting our cloth accordingly might not be such a bad New Year’s resolution.