Scotland’s Public Services on the Line

In hardly surprising lead stories this week, the Scottish press headlined the fact that Scotland’s care services could be decimated as the Scottish Government’s budget cuts begin to bite . As is happening elsewhere, social work chiefs are warning that services will be forced to retreat to focussing on statutory responsibilities.

Closures of care homes, closure of services, withdrawal of respite services, charging for services are all firmly on the agenda. All these cuts were entirely predicable and all were predicted.

They flow through the effects of the Comprehensive Spending review. Osborne believed that the drastic measures adopted by the Irish government show the way forward for the UK and his budget and the Comprehensive Spending review have delivered the UK shot of neo liberal medicine.

Scotland got its own budget from the SNP led Scottish Executive based on the money devolved to Scotland under the Barnett formula which the Treasury uses to calculate changes to devolved budgets . Between 2010-11 and 2014-15, the Scots will lose 6.8% of their “grant.”, or the Scottish proportion of government income through tax take. That money is used to fund the responsibilities of the Scottish government under the devolution settlement.

So what did the Executive come up with? As the headlines said cuts of £1.3 BILLION. Current pet projects such as free travel for the over 60’s, the Scottish solution on University tuition and the introduction of free prescription charges remain sacrosanct. So while spending there remains the same, cuts are needed elsewhere.

Finance Secretary Spinney introduced
• a pay freeze for all public sector staff earning over £21,000,
• cuts in chief executive pay of 10% for all new public sector appointments,
• a 25% cut in NHS managers by 2015, but health service itself “protected”
• Cuts in public investment
• He also said public bodies could impose compulsory redundancies if staff refused flexibility deals.

Meanwhile, the rail company ScotRail will see its grant cut by £68m, housing and regeneration spending cut by £102m, the environment and farming budgets will fall by nearly a tenth, or £55m, while the budget for policing, prisons and the courts will by cut by £167.5m.

At the same time, Scotland's 32 local councils were again scapegoats .They have been offered £70m to freeze council tax for the fourth successive year, in exchange for a 2.6% cut in their grant, totalling £540m. But they were warned that if they refused, their budgets would be reduced by 6.4% – the average cut in overall spending.

Cuts in local authority budgets have been stealthily continuing for some time, and this freeze continues that trend. UNISON Scottish Secretary Mike Kirby said:
“This settlement will damage essential services and the local economy. It also heralds a return to ring fencing and a major attack on local democracy. Councils are being turned into the administrative arm of central government.”

The main Scottish Government priority is the Council Tax freeze. This undermines local democracy and the shortfall is increasingly being made up by charges for services. This disproportionately hits low income households who rely on council services, yet it is the wealthiest who gain most from this real terms tax cut.

Mike Kirby said: “The Council Tax freeze is simply not viable in the current financial climate. It supports wealthy homeowners at the expense of those who rely most on local services. The Scottish Government is keen to talk up this tax cut as part of its election strategy, but less keen to identify the services that will be cut to pay for it. “The actual financial impact on local services will be greater than this allocation implies. Councils are already planning budget cuts and job losses over and above this grant settlement due to higher inflation, reducing income, rebuilding balances and demand for services in a recession.

At least some of this could have been avoided. The devolution settlement allows the Scottish Government tax powers, to vary the rate of income tax by raising or lowering it by up to 3p in the pound. So Scottish services could be paid for by raising the tax take. Not only have the SNP chosen to cut rather than raise taxes, it has now emerged that they have failed to maintain the agreement with the Tax authorities to ensure that should an incoming government wish to raise taxes , the arrangements are not in place for it to do so and would not be reinstated before 2013.

The Scottish Executive has not even produced a credible excuse , other than that they were not going to use the power. They seem impervious to charges that the power was not actually theirs to interfere with, having been agreed by the Scottish people themselves in a referendum.

Alex Salmond, Scotland’s nationalist first minister, said the cut to Scotland’s total funding risks “ripping the social fabric of our nation”. He argues that now the money from Westminster is stingier, Scotland has even more reason to aim for independence and full control of its economy All ministers in the Executive have taken to reciting the same mantra, that the cuts are the fault of the UK government and before that of the previous Labour administration. Mention of the financial crisis and the cost of bailing out the banks have been blanked from the collective SNP memory.

There appears to be little logic in the SNP dialogue. While the Irish government accepts a bailout from its EU partners, it is instructive to remember that only four years ago, Scotland was being advised that if only it was independent it could be more like Celtic tiger across the Irish Sea. The tiger rode high on a wave of consumer boom capitalism based on toxic bank loans feeding a frenetic housing market , while taxes (particularly corporation tax) were kept low and EU money flowed in.

Then came the Great Crash, when Irish banks crashed and burned and the Irish government has faced the escalating cost of the bank bailout leading to stagnation, unemployment and a wave of savage cuts reducing national income by twenty per cent in the past two years . Clearly the fact that two of the UK banks that were bailed out were Scottish is too close for comfort. (Just for the record , that was the Bank of Scotland and the Royal Bank of Scotland. Would an independent Scotland now be in exactly the same position as Ireland if we had been independent in 2008?)

Just as the vision of Scotland as another Celtic Tiger was a drug induced dream, the future of public services in Scotland cannot be predicated on the vision of what might be, if Scotland were independent. It has, however, yet to be seen if any other Scottish political party has a more credible policy.

JC