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On Budget

Brian Taylor | 10:30 UK time, Tuesday, 21 April 2009

Households across the UK will be eagerly scanning the content of the Chancellor's Budget on Wednesday.

What does it mean for us: on tax, on duty, on services, on jobs?

There is an Edinburgh house where the detail will be particularly thoroughly scrutinised. St Andrew's House.

Already, the First Minister Alex Salmond is mounting a robust and sustained attack on consequential cuts in Scottish spending which, he warns, will cause significant problems from next year.

Mr Salmond is making that case again to the Scottish TUC - along with outlining further new thinking in respect of measures to tackle the recession.

Expect that campaign to grow in volume, intensity and frequency should there be further requirements for spending constraint as a consequence of the Budget.

Nomenclature matters. Will the Chancellor announce "cuts"? Or "efficiency savings"? Or "lower growth in future spending plans"?

If an individual Whitehall department - say, Transport - goes for efficiency savings, then any cash recouped can be ploughed back into frontline services. And there is no knock-on impact upon comparable Scottish budgets.

However, if the Chancellor orders a reduction in their headline budget then, via the Barnett formula, that will have direct consequences for Scotland.

The Chancellor may say that they should find the money via enhancing efficiency. That would not alter the nature of the exercise.

Barnett works downwards as well as upwards. Scotland gets a proportionate share of any increase in budget for comparable Whitehall spending departments.

Similarly, Scotland takes a proportionate hit if Whitehall budgets are reduced.

That is already the core of the existing dispute between St Andrew's House and Whitehall.

The Treasury says it has ordered £5bn in "efficiency savings".

Team Salmond says they are no such thing: they are direct cuts, with direct impact upon Scotland.

So, if and when the Chancellor announces a search for further such savings tomorrow, the House on Calton Hill will be looking very carefully indeed at the small print.

Should this turn into a further controversy, then stand by for the First Minister and his Finance Secretary to protest, loudly.

Stand by further for a rebuttal from the Treasury/Scotland Office to the effect that Scotland gained substantially from the relative largesse of the past decade and must, consequently, share in the pain.


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