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The big freeze

Brian Taylor | 14:08 UK time, Tuesday, 6 October 2009

Austerity election, anyone? Customarily, a party manifesto contains a list of promises.

The next batch will feature a range of warnings. Stand by for competitive gloom.

The big new idea at the Conservative conference in Manchester was a pay freeze in the public sector.

Or it would have been new if Labour hadn't announced something comparable the night before.

There are differences. Chancellor Alistair Darling announced a freeze for senior staff with very low rises for others.

It wouldn't affect members of the armed forces or those on multiple-year deals. His shadow, George Osborne, signalled a freeze for all in 2011 - except those earning less than £18,000 and military personnel serving in Afghanistan.

Still, the Tories thought it was a bit sneaky of the UK government to make a significant announcement during their conference.

Trust funds

Might it not have shown more courage, they added, to hand out the tough news during Labour's own gig?

But there was more from Mr Osborne: sharp cuts in Whitehall back office spending, cuts at Westminster, moves to limit child trust funds to the poorest - plus an accelerated rise in the pension age to 66, trailed in advance.

Impact on Scotland? Absolutely. Pensions, tax and pay intentions affect Scotland directly.

The potential cuts in Whitehall spending translate indirectly via Barnett.

Given the level of borrowing and the state of the public finances, whoever wins the 2010 UK election will be obliged to impose restraint or hike taxes or both, not least to placate watchful global markets.

Via Barnett, that filters down to spending restraint in Scotland. The Barnett formula, of course, works both ways.

Scotland gets a fixed percentage of annual increases in comparable Whitehall departmental budgets: those which cover devolved functions.

In exactly the same way, Scotland takes a proportionate share of cuts. Which means that the 2011 Holyrood elections will be fought against a background of shrinking public spending.


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