Fiscal ‘irresponsibility’

Douglas R Mayer – Currie

by Oct 05, 2012 No Comments

By announcing her review of public expenditure, Labour’s Scottish leader Johann Lamont is taking Labour further on to Tory territory by proposing prudence in the disposal of taxpayers’ money.

But, having first indicated that those able to pay should not receive ‘free’ services, even though they are paying for them through taxation, questioning about, for example, free prescriptions and free travel for pensioners, prompted the denial that these were in the frame.

There is no reason to target these, given the relatively minute percentage they represent of the total of public spending. Anyway, Labour traditionally detests means testing. And it is disingenuous for Miss Lamont to attempt to place the blame for the round of cuts being implemented upon either the UK Coalition or the SNP Government here, because it is Labour’s very own accumulated deficit upon which the cuts are predicated.

While it is the UK figure that usually features, it is possible to apportion numbers for Scotland.

Labour had been borrowing at about £30bn annually until the election of 2010, so the £180bn quoted at the start of the campaign can be related to the six previous years. The magnitude of the problem is not easily understood.

My reading of the situation is that Labour increased the UK public sector workforce by about 1 million – on the basis of a £30,000 gross cost per post, the £30bn equates to the 1 million increase. It would have required the elimination of these posts from day one of the Coalition to stop the annual £30bn of borrowing, before the full deficit could be tackled – or alternative measures of equivalent value.

The cuts of £3bn in the pipeline for Scotland, similarly, equate roughly to our 100,000 increase.

Some headway has been made on manpower reductions in Scotland, for example, through voluntary redundancy.

But we are entitled to be sceptical about the prospects for any rational outcome from Johann Lamont’s review, considering the statement by its adviser Professor Arthur Midwinter to the effect that the reductions in staff made so far take spending capacity out of the system. My perspective contradicts that. If Labour was employing 1 million more in the UK and borrowing £30bn to achieve it, then it takes the economy of the menagerie to imagine that that is a sensible agenda. For a start, is the resulting rise in the GDP sufficient to cover the interest on the borrowing, not to mention the repayment of the debt?

 

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