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Spicy finances and hot topics

Douglas Fraser | 19:26 UK time, Wednesday, 11 May 2011

Newly-elected MSPs probably think they've heard what their priorities should be from listening to voters on the nation's doorsteps.

But as they arrived at their offices over recent days, they've been presented with a rather different distillation of the challenges ahead.

This is in a 60-page briefing from the officials, analysts and statisticians in the Scottish Parliament Information Centre (SPICe), ranging across justice reform, same-sex marriage, climate change and personal debt.

Most of the briefing keeps coming back to government spending.

The Scotsman has this morning highlighted the big numbers.

This includes a bill of more than £3bn for freezing the council tax over nine years, assuming the SNP fulfils its promise to keep council tax in the cool box.

That's a cumulative number, and it's big. But it's not all that meaningful, at least until you consider that Holyrood's budgets over that time will add up to more than £250bn.

What it reminds us is that the council tax freeze comes at a cost, because the amount being spent on compensating councils for the freeze, rising to more than £600m in 2015-16 (and councils say that still won't be enough), is money that obviously can't be spent on other priorities.

Heading south

Other numbers should be familiar, at least to those who followed the BBC's election campaign coverage.

The budget from last year to 2015 is falling by more than 12% in real terms, and capital spending is heading down very much faster.

The cost of open-ended commitments to free services is highlighted.

The cost of health and social care for older people is rising steadily, but the cost of free bus travel for older people is increasing fastest of all - up from £180m this year to £286m by 2014-15.

There's that gap in university funding - somewhere between £93m (the SNP's preferred manifesto assumption) and £286m (university principals like to cite the bigger figures).

It's pointed out to MSPs by SPICe that, while they've been out campaigning, that gap has moved to the upper end of that very wide margin.

That's because many English universities are pushing to charge the maximum level of fees, and the more they charge, the bigger the gap the Scottish government will have to fill.

In addition, the SNP's manifesto assumptions included the gap could be partly filled with £22m of 'service charges' to students from other EU nations.

Officials at the parliament politely point out that charge may not be legally possible.

Squeezed out

So far, so familiar. But then there's some interesting discussion about the direction of travel for the Christie Commission - the group considering options for the future delivery of public services, headed by former trade union leader Campbell Christie, and due to report by the end of June.

On public service reform, one of the more senior Holyrood officials, Stephen Herbert, is pretty blunt about cutting back on 'back offices'.

He points out it's not so easy to see what constitutes a back office as distinct from a front-line service.

And that spending on the administration of services is quite a low share of the total, so savings may be limited.

And he points out that if you want more efficiency from aggregating procurement contracts for public services, that can mean smaller companies, typically with higher unit costs, can get squeezed out by larger national firms.

The Federation of Small Businesses is already expressing its alarm at this, and SPICe says: "The aggregation of contracts or service delivery mechanisms at a national or regional level can result in a significant negative impact upon local economies, particularly rural economies, whilst the savings which can arise from such measures may not begin to accrue until the medium term".

This is backed by evidence from the Society of Local Authority Chief Executives (SOLACE), which has sent a submission to the Christie Commission that skewers the assumption that merging authorities (police forces, for instance) will have the desired effect:

"There is no evidence supporting the view that simplistic exercises in redrawing boundaries - organisational or geographical - will achieve the necessary cost savings, meet demand or improve outcomes to the public. Experience is that structural reforms are costly, time-consuming and fail to deliver anticipated benefits".

Capital priorities

Two other aspects of the SPICe briefing caught my eye.

One is the clear steer, citing official and academic watchdogs, that the new Holyrood administration needs to prioritise its capital programme.

The chances of delivering all the desired projects when last listed, back in pre-crunch 2008, "are now slim".

The briefing points MSPs and ministers towards the criteria used by the Irish and UK governments to prioritise, including those with the highest return on investment - oddly enough, something that's been far from obvious in St Andrew's House thinking.

And here's the other thing: economic growth.

One of the targets set by the last SNP administration was to get Scottish growth performance up to the level of the UK.

But what MSPs are being told is that that had already been achieved by the time the SNP first took office: "Between 1998 and 2007, the growth in GDP per capita in Scotland and the UK were identical at 2.3%".

The other growth target was to get Scottish growth figures up to the same level as similar, small European nations by 2017.

That was before the financial crisis and economic crunch, and before calamity in Ireland and Iceland made that target rather easier to achieve, and those countries became rather less appealling role models.

So what growth targets will SNP ministers choose next?


  • Comment number 1.

    Biggest hurdle for the GRC (Glorified Regional Council) administration is money and the lack of it! Yes they can shuffle it about but sooner or later it will become akin to a PONZI scheme. The millions owed to various Non-Glorified Regional Council's aka iceland will never be recovered so we won't be using gunboat diplomacy to recover it (Not a devolved power)! No we'll spend more wasted millions to bloated lawyers and advisors and total waste of time & money on public enquiry's. And I can hear the cranking up of the various lobbyists, so I detect several contradictions from our newly appointed great leaders, aka minimum pricing on alcohol. Don't get old,sick,unemployed! So pretty much a SSDD.....LOL

  • Comment number 2.

    I hope Alex Salmond enjoyed his day in the sun - he's got some tough choices now and I think the Scottish electorate deserve what they get. If you vote in a party that promises jam today even when the UK economy is in the worst state since the war then you can't complain when it doesn't arrive. It'll be interesting to watch this over the next few years.

  • Comment number 3.

    It is going to be a tough row to hoe but if anyone can do it the SNP lot can.
    They have proved themselves well adapted to govern over the past four years and obviously far supiorior to any previous administration.

  • Comment number 4.

    Hi, well the past four years were better than many before. More transparency and more open handness. UK economy needs Scotland - check out this to see how our contribution balances the 'UK ledger'. Would appreciate your view Mr Fraser

  • Comment number 5.


    All this negativity is going to get you down.

    You really need to look on the bright side.

    We're on our way to independence!

    No-one said it would be easy. No-one said it would all be milk and honey.

    Could have been Finland or Norway. Rather more appealing examples, no?

    As someone said recently, "Aye we can"


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