STUC lobby of the Scottish Parliament, 17th November 2010
The SNP’s proposed Scottish budget: robbing Peter to pay Paul
by Raphie De Santos, 17-11-2010
The SNP’s management of the current Scottish budget and the proposed budget for next year is a definite case of robbing Peter to pay Paul.
It is a budget that will throw tens of thousands more on the dole while unemployment is still climbing in Scotland, cut key services with the poorest suffering most while asking public sector workers to take an effective pay cut of nearly 7% when inflation is taken into account.
One, they delayed capital spending cuts for fiscal year 2010/11 announced by the coalition’s June 2010 emergency budget till 2011/2012.
Two, they have frozen council tax for four years and propose to do so again for 2011/2012 in essence to obtain favour with the electorate.
Three, they intend to try and cover the bigger hole that they have created in capital spending by further cutting front line services under the guise of some advice from a Noble prize winning economist Joseph Stieglitz. All of these measures have not been taken in the interests of the Scottish people but in the interest of the SNP. That is to try and get themselves re-elected to the Scottish Parliament. This has left them haggling behind closed doors as the fight over which services to cut to pay for trying to keep them in government.
To help cover the holes that they have created they have put in place a pay freeze for most Scottish public sector workers in effect a severe pay cut when inflation is running at 4.6% meaning workers require a 7% pay increase before taxes to maintain their standard living.
The total cut of £1.3 billion to the Scottish budget is broken down into a £900 million cut in day to day spending and £400 million cut in capital spending (investment in education, communities, skills, business, innovation the home office and Justice). The cut in capital spending is much larger than the rest of the UK because of the SNP delaying capital spending cuts from this financial year to next.
To pay for part of this hole they are making bigger cuts in the running of front line services. Adjusted for inflation the reduction in the main department budgets amounted to an 8.4% cut. The SNP’s reallocation of funds to capital spending sees swinging cuts to Local government (nearly 10% in real terms) and education spending (just under 13% in real terms).
To help pay for this accounting skull doggery they are slashing spending by a callous 20% in real terms off the budget to help the most deprived communities while investment infrastructure still takes a huge it. The NHS sees a small increase in absolute terms but adjusted for inflation it amounts to real cut of 2.8%
The argument put forward for this diversion of the budget is that capital expenditure will help create private sector jobs. But every £100 spent on front-line services goes to creating services and jobs for the population as a whole. Give the same £100 to capital expenditure and some of the money goes to private corporations who will make a profit on the projects they have been contracted to provide and even though some of this is taxed about £10 of your £100 will end up in the coffers of private companies. You need front line services and capital expenditure but capital expenditure run by public owned enterprise where a slice of public money is not siphoned off for a private profit.
The diversion of funds from front line services to capital expenditure and the protection of NHS spending will hit local authority spending badly. The already near 30% cut in local authority spending over four years proposed by the coalition will be made worse by the SNP. On top of this is the freezing of council tax for the last 4years. This has meant a further real cut of £240 million to local authority budgets. While the council tax is regressive in that it proportionately takes a larger portion of lower incomes than higher ones, in absolute terms it has benefited the better off. An alternative to council tax, a progressive local income tax, could create an extra £1.6 billion a year for local authority spending offsetting the cuts in front line services and capital expenditure for the next two years.
The coalitions’ intention to give the Scottish parliament greater tax raising powers is to be welcomed. But the intention is to transfer the responsibility for the cuts from the London to Scotland.
Real fiscal autonomy is needed through independence where we can carry out meaning full wealth distribution from the rich and wealthy and corporations to the majority of population. We can do this through independence with a real socialist economic programme that can maintain and increase public services and create tens of thousands of socially useful jobs through massive capital expenditure programmes funded from North Sea oil and the banks’ profits. As we fight the cuts this is the alternative that we should be demanding.