A look at what the General Election might mean for Scotland’s councils
Devolution has changed Westminster elections for Scottish voters. We can no longer go to the polls and pick our party based on their policies in areas like health or education, but instead have to pick through their manifesto pledges, looking for the relevant bits and trying to make up our minds based on what is said about Scotland. For those of us not involved in Scottish politics from day to day, negotiating our way around the UK election has become quite a challenge.
Working out what the consequences for Scotland will be depending on who becomes UK Prime Minister has also become a bit of a guessing game. While local government is an example of a completely devolved area, there is no doubt that the outcome of the election will have an impact. However, trying to determine what that impact might be is almost impossible.
“We are in a very uncertain world, first of all, what is going to be cut at a UK level and of course until you know what is going to be cut at UK level, you don’t know what are the implications for the devolved Scottish budget and then after that, you might begin to know what are the implications for local government,” says John Curtice, Professor of Politics at Strathclyde University.
He says that while local government estimates of cuts between 12 and 15 per cent over three years seem to be “at least in the beginning of the right ballpark”, it is extremely difficult to forecast. Richard Kerley, Professor of Management at Queen Margaret University in Edinburgh and former chair of the Scottish Executive Working Party on Renewing Local Democracy, agrees with this analysis and says that while whatever is said in the run up to the UK General Election may appear to have no direct impact on councils, they will be affected long term.
He says: “The main medium to longer-term consideration is what the UK Government does about public expenditure and how that bounces back down into the Scottish budget as a whole and how that bounces on in turn into the range of services that local government has, so I think the biggest impact will be a real challenge in terms of budget over, I don’t think this year, I think there’s leeway on that – a bit of breathing space. But certainly in subsequent years, I have absolutely no doubt that there will be a budget tightening in relation to what happens in Scotland and then in local government.” Curtice says that while the parties are being candid about cuts, it’s very hard to know what the situation will be further down the line. “It’s obviously true that none of the political parties have fully spelt out where the spending cuts are going to occur in order to achieve whatever objective so far as reducing or eliminating the structural deficit in UK public finances are concerned. The Lib Dems claim to have got closest but even they accept that they are about £5bn short. So we have some rough outlines but beyond that the answer is no, we don’t know where all the savings are, going forward, and they use the language of efficiency gains…well, you know, we’re not always quite sure what that means,” he says.
However, Curtice also believes that it could be possible to get an indication of how Scotland might be affected by looking at policies which, although devolved areas in Scotland, would trigger Barnett consequentials if implemented south of the border. While the Scottish Government is under no obligation to spend money arising from Barnett consequentials in the areas from which they arise, there is often pressure to do so and Curtice says that Labour’s proposals to protect education spending and Conservative proposals to protect health spending could have interesting implications for local government because of this.
“Almost undoubtedly what we will see in the next three years is that the relative importance – and the crucial word here is relative – the relative importance of devolved expenditure compared with UK Government expenditure, at least UK Government departmentally managed expenditure, that is going to increase because almost undoubtedly the cuts are probably going to occur more disproportionately in those areas which are reserved expenditure rather than devolved,” he says.
“That will still leave any Scottish Government with some awkward questions, because if this occurs as a result of health and/ or schools being protected, do they extend the same provision to that or do they end up shifting, in which case obviously local government is not going to do terribly well out of it, or do they in fact not protect it to the same degree as is the case in England and therefore as a result, some of the other devolved areas which are being hit more hardly in England don’t do so badly. Now we have to wait and see I think is the answer to that one.” He adds: “Certainly, the Scottish Government will face an undoubtedly awkward task, but it will face arguably a somewhat less difficult task than the UK Government will in total, I think that’s what one can anticipate.” One Labour policy area where the impact on councils can already be determined is the planned one per cent increase in National Insurance, and the Scottish Conservatives have claimed that this will add £33m to local authority wage bills. However, Kerley says the effects of this might not be too drastic. “I’m not sure where the calculation came from and I’m not trivialising it but in terms of local government overall expenditure, £33m is not a lot of money,” he says.
“Quite a high proportion of local government employees are towards the lower end of salary and wage payments and therefore they don’t get hit and although there’s a lot of talk about highly paid staff, there aren’t that many of them so they therefore fall into that category. That’s a bit like saying if the price of electricity goes up, local government will have to spend more on electricity. It’s a cost factor, it’s not an entirely material consideration.” Similarly, Kerley says that Labour’s counter argument that Conservative plans to cut public expenditure, stating that this will harm recovery, would affect areas where local authorities were already feeling the effects of the recession.
“Local authorities are suffering at the moment because they are seeing, for example, less income from just about every activity that’s related to economic activity outside the council, so that’s things like planning consent, parking charges, building control charges, that kind of thing.
“If councils can’t rent out premises and properties then they’ve got a reduction in their income. They charge non-domestic rates to businesses and if businesses go out of business, then clearly they lost that money and they’re having to pay out more money in terms of housing benefits to citizens and that costs them more, so yes, there is an impact that comes from the reduction in economic activity,” he says.
Both experts acknowledge that one way in which the outcome of the General Election could hugely affect local authorities would be if it was to trigger a change to the Barnett formula. The Liberal Democrat manifesto proposes scrapping the formula altogether, stating the party would: “Replace the current Barnett formula for allocating funding to the Scottish, Welsh and Northern Irish governments with a new needs-based formula, to be agreed by a finance commission of the nations.” It is widely believed that the adoption of such a system would reduce Scotland’s share of public expenditure and Curtice refers to the survival of the Barnett formula as the “elephant in the room”, explaining that it could become a bargaining issue with the Lib Dems in the event of a hung parliament.
“The real elephant in the room and where the 12 or 15 per cent could go up is [if] during the course of the public sector cutbacks, a UK Government decided to tear up Barnett and to move towards a needs-based formula,” he says.
“The truth is at this point we come to some interesting questions. I suspect that a Conservative government is not going to be keen to pick a fight with Scotland because it knows it’s on weak ground and it’s got other things it would prefer to worry about, which could well end up being a reason for saying, ‘well, we’ll legislate for Calman but we think given the current financial crisis it shouldn’t be introduced by 2015, we’ll wait until 2019 and by which time that will give us time to build our reputation’ and certainly as it were readjusting Scotland’s share of UK public expenditure is something that is going to happen gradually.” Kerley says that the subject of Barnett may prove to be a tricky one. “At the moment I don’t see that anyone has a neat and tidy way of doing anything about it.
“They might look at it, but if you went to a very extreme interpretation of reviewing the Barnett formula and said we’ll remove the current arrangement and we’ll go with a formula based on the same big block grant transfer but calculated on the basis of, say, just population alone or population weighted by income level or population weighted by income level and factors like unemployment.
He adds: “It’s possible that the change in the transfer of money would be so great that governments would be really, really scared of actually doing it. It’s a lot easier to talk about changing it than it is to actually change it.”