The first indications of the drastic squeeze on public spending Scotland is facing have been revealed, with tens of thousands of public sector jobs under threat.
The Independent Budget Review Panel report outlines a series of options for cutbacks for the Scottish Government and Parliament to consider, as the nation braces itself for the Comprehensive Spending Review in the Autumn.
The report suggests a shopping list of various options to be considered including not ring-fencing spending in the NHS, cuts of up to ten per cent in staff levels across the public sector by 2014-15, a review of the way universal services like free personal care and concessionary travel are funded, and possible changes to the status of Scottish Water.
The Review Panel, headed up by Crawford Beveridge CBE, alongside Sir Neil McIntosh CBE and Robert Wilson, subjected all departments to a review including the NHS, and it states “we could find no overwhelming rationale for protecting major blocks of expenditure”.
Commenting on the publication of the Panel’s report, the Chair of the Independent Budget Review, Crawford Beveridge CBE, said:
“There are very difficult decisions to be made over the next few months, requiring strong leadership not just in their making but also in their subsequent implementation.
“Clearly, there are significant short-term challenges. However, important decisions also need to be taken about the future. Scotland needs to decide what form and shape of public services it desires and can afford. What do we want the state to do? What level of taxes are we willing to bear for the provision of our public services? How much should we change the mix between the state, the individual, the third/voluntary sector, and the private sector?
“Our Parliament and political parties have an opportunity to show strong leadership by creating the space for conversations to take place about the future of public services. At the beginning of our devolved Parliament much was said about the opportunity for a new kind of politics. If there was ever a time for this to be in evidence, now is that time.”
John Swinney MSP, Cabinet Secretary for Finance and Sustainable Growth, commissioned the IBR in February to conduct a full and frank review of public expenditure in Scotland, without interference or influence from Government or Parliament.
The Finance Secretary invited opposition parties to talks on the findings of the Independent Budget Review. Swinney said:
"The Review findings consider a landscape that results from years of financial mismanagement of public spending, with Scotland’s budget forecast to shrink by 3.7 billion pounds in real terms over the next Spending Review period as a result of Westminster spending cuts. Some two thirds of the cuts planned at the UK level are the legacy of the previous UK Government, the other third the design of the Westminster coalition’s emergency budget that cuts too far and too fast.
“The Review can only offer options within our current powers, and it underlines the absolute need for the Scottish Parliament and Government to secure financial responsibility and the same economic powers that other nations have so that we can take decisions to boost economic growth and revenues in Scotland.
"We welcome the recognition from the Review of many of the initiatives the Scottish Government is already taking: to deliver greater efficiencies, with a target of 1.6 billion pounds this year; to reduce the number of public bodies – made easier by the passage of the Government’s Public Services Reform Act; to obtain savings through better procurement; to reduce the scrutiny burden; and its endorsement of us achieving better value in capital spending through the Scottish Futures Trust.
“We particularly welcome the Review’s recognition of the strongly held view, which we share, that water services should not be subject to privatisation. We believe that Scottish Water – which is performing extremely well – should remain under public ownership.
“The Government has made clear our determination to protect the vulnerable – which is why for example we will preserve existing eligibility for free personal care and concessionary travel. And we will apply any Barnett consequentials arising out of the protection given to the health service by the UK Government to the health service in Scotland.
"We will not know the Scottish Government’s budget until the UK Comprehensive Spending Review is announced on October 20. Once that is done, and we have taken account of the views of Scotland, we will set out a Budget that is focused on sustaining economic recovery and protecting frontline services."
Shadow Finance Secretary Andy Kerr said:
"The report itself makes clear that the Government have enough information to come forward with their initial budget and in so doing allow the public and the parliament to be part of the debate.
"After all it is this Government which has had for the last three years the largest ever budgets but that also spent £1.5 billion in reserves, and even in those good times the SNP have been cutting teachers and nurses, so it is all the more vital for the SNP government come clean and bring forward their budget.
"Scotland now faces a perfect storm with Tory cuts coming on top of three years of SNP cuts.
"Labour has made repeated calls for the Finance Secretary John Swinney to allow as much time as possible to debate Scotland’s budget. This means he needs to come forward with his own draft proposals when Parliament returns in September.
"Scottish Ministers can now add this report to the forecast from their own Chief Economic Adviser and the information provided by the UK Government at the time of the budget, so there is no excuse for further delay.”
Derek Brownlee MSP, Shadow Cabinet Secretary for Finance & Sustainable Growth, says:
“This is a total vindication of everything we have said in the Parliament for years and a wake up call to the other Parties.
“This is a new era in public spending and public services, and nobody should underestimate the scale of the challenges ahead.
“The report has taken 5 months to produce and sets out the tough choices we must face up to deal with the horrific legacy of Labour's debt and deficit.
“It deserves full and serious consideration and a full engagement with corporate and civic Scotland, and there must be an early debate in the Scottish Parliament.
“Scottish Conservatives have so far been a lone voice at Holyrood in being prepared to put savings on the table.
It is time for all parties to get a grip and work together to take the difficult decisions. We will not shirk our responsibilities, the others must not shirk theirs.”