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Reality Check: In several black holes, and digging

Douglas Fraser | 21:57 UK time, Wednesday, 20 April 2011

Election campaigning has reached a sad stage when it's a battle over which party has the biggest black hole.

With astronomical figures and unexplained gaps, drawing in mysterious political energy forces, the claim and counter-claim are intended to obscure the fact that none of the four main parties has come out of the analysis of their spending plans with much to feel proud about.

This comes from the Centre for Public Policy for Regions at Glasgow University.

And just as the Institute of Fiscal Studies in London has come to play a vital role in passing judgement on Westminster politicians' financial planning, so the CPPR is the best we've got in Scotland, and at a very small fraction of the IFS price.

What it can't do is say whether the estimated costs of policies are correct.

That's a massive undertaking, much of it subjective, and well beyond a unit of this size.

What it can do is say whether parties' sums add up.

One pound in eight

There's the headline conclusion that far too much wishful thinking is going on.

To listen to the campaign, you wouldn't guess that one pound in every eight of Holyrood's budget is going to disappear over the next five years.

That's £3.5bn.

The CPPR nails efficiency savings as being subject of the most wishful thinking.

Labour and the SNP have near identical claims on this, and the CPPR questions whether they can deliver, or whether we can ever know whether they have delivered.

By applying them across the board, it seems a lot to ask of the police forces to offer up £150m of efficiency gain from re-organisation and then another 2% per year on top of that.

Likewise, specific efficiencies that are being targeted in the NHS drugs bill, in addition to general efficiency targets. Can both really be achieved?

Have they thought through that?

The CPPR argues that a 2% annual efficiency gain would require not only a pay freeze, but a 2% pay cut.

The alternative is through productivity gains - for which there is little evidence that the public sector has a track record of delivering. Or job cuts.

Yes, those efficiency measures have a nasty habit of being people's jobs. Not necessarily the inefficient ones.

They're easily characterised as faceless penpushers, beancounters and bureaucrats, but many are far from that, and these are real people's jobs.

If independent estimates are any guide, the cuts in Scottish public spending will involve between 45,000 and 60,000 such "headcount reductions".

Radical re-design

That's just one of the CPPR's pleas about efficiency measures: be honest about what they mean in costs as well as in benefits.

Another is to look again at Crawford Beveridge's public spending commission from last summer.

It said the scale of efficiency that is now being targeted would require "radical re-design" of public services.

Not much sign of much radical re-design in the manifestos, though, or indeed, much attention being paid to that commission report, except where it confirms a policy that a party had already adopted.

Other problems arise with the numbers when they depend on powers that don't exist yet, or on reforms that may not be agreed.

Borrowing powers for Holyrood are required to make Tory sums add up, providing £438m from 2013.

But it's not clear how they'll work, or what costs they will pass on to future taxpayers.

Scottish Water is a source of much of Lib Dem and Conservative planning, but both larger parties are committed to keeping it the way it is, and one of those larger parties is near-certain to be leading the next administration.

So what then for the Scottish Water savings?

For Labour and SNP, what's far from clear is where £560m of promised capital funding for Scottish Water is going to come from after this year, when that allocation has been cut to zero.

Conservatives do their sums on the assumption they can cut that from future capital budgets, while leaving Scottish Water to raise funds in the private markets, when the money hasn't been put in those capital budgets in the first place.

Lib Dems go on to assume they can sell Scottish Water debt for nearly £3bn, and somehow persuade the Treasury to part with more than half the proceeds.

There are some big, bold assumptions there, and without that money, there's nothing to pay for a lot of the Lib Dems' plans.

Woeful capital plans

The CPPR finds comparison across manifestos creates some anomalies.

The SNP claims nearly £250m is freed up by the Forth Bridge coming in under budget.

But it hasn't even been commissioned yet, let alone had its budget allocated.

And if the SNP can lay claim to that money, so can the others.

The data available on other such capital projects is described by CPPR as "woeful".

Likewise, if Lib Dems can get their hands on £1.5bn of funds from selling Scottish Water debt, the same could release as much for Tory planning.

Then there's the higher education calculation.

The scale of the fees that English universities have recently declared they want to charge has the consequential effect of blowing apart the Scottish party calculations on the scale of the gap they will have to fill if fees are to be avoided.

With English fees averaging above £8,000, CPPR cites an estimate of more than £300m being required from the Holyrood budget by 2014-15.

So far, the SNP is committing £93m that year, and Labour £38m, in the hope that raised fees from English students coming to Scotland can bring its funding above £100m.

The consequence, say the Glasgow University economists, is that money will have to come from other priorities, or that higher education will suffer a slow, gradual decline in standards, and they fear it will probably be both.

The CPPR has done an important and useful piece of work.

It helps give some shape to what's not being said or admitted on the campaign trail.

But perhaps it's also guilty of wishful thinking, in that the major parties are all expected to cost their promises and balance their plans, yet none will be expected to implement them.

What we've learned from 12 years at Holyrood is that coalition partners can blame each other for a failure to deliver on pledges, and minority administrations can blame the opposition for thwarting it.


  • Comment number 1.

    Aye Douglas,

    Have you read Joan McAlpine's article on the CPPR, "Time for some academic transparency?" I think you should. Then maybe you'd understand their motivations better. I for one, don't believe they have Scotland's interests at heart. This is just subtle "too wee, too poor, too stupid" propaganda again. Shove it.

  • Comment number 2.

    Unsettling ... but even if the next Scottish government did something amazing and turned Scotland into a manufacturing powerhouse like Germany for example, (or imagine they found oil in the north sea ;) ) the extra revenue generated would of course be squandered by London. By the way, how has Germany succeeded where we failed? .. it's the bankers isn't it!?

    Keep up the good work Douglas, I'm enjoying these 'Reality Checks'

  • Comment number 3.

    seriously thats it "What we've learned from 12 years at Holyrood is that coalition partners can blame each other for a failure to deliver on pledges, and minority administrations can blame the opposition for thwarting it" the propaganda gets old and tired you need to move over for a new generation of unionist you grip on reality is slipping

  • Comment number 4.

    We're aaa doomed ! Aren't we cheery today ? Black holes , unfulfilled and unfulfillable promises, The Labour Labour party, the SNP Labour party, the Lib/ Dem Labour party, all fighting each other and all fighting the Tories, meanwhile the Tories are unsure who they're fighting ( or if they're fighting ). Meanwhile the media and the trotted out academics sound off with theories, half truths and possibilities in an effort to make a non-event exiting. In two weeks time we'll all be back to normal, an election will be over and Westminster will still be holding the purse and pulling the strings according to direvtives from Brussels. Is it worth all the hassle ?


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