Linda Fabiani highlights Labour’s £1 billion lie


By Linda Fabiani MSP

The following are my comments on correspondence between one of my constituents and Michael McCann MP.  In the correspondence, Mr Mc Cann launches an extraordinary attack on Scottish public services, referring to ‘the days of wine and roses’ being over.  He also refers to a non-existent £1billion capital reserve inherited by the incoming SNP Government in 2007.  The exchange of emails can be read here.

Public services and universal benefits

About the only thing Mr McCann got correct is that Johann Lamont didn’t announce specific cuts when she damned the policies on which Scottish Labour fought recent elections.

However, her use of the phrase ‘Scotland can’t be the only something for nothing country’ reveals her thinking.  This was reinforced by the chair of her Cuts Commission, who said: “we are going to review everything….nothing is off the table.”  This review is to cover a range of  universal benefits, including tuition fees, free personal care for the elderly, no prescription charges, and concessionary travel.  It apparently also covers the 1,000 extra police officers recruited since 2007, and the Council Tax freeze.

Mr McCann’s reply is evidence that Labour plans to use the financial crisis – over which they presided – to roll back many of the policy gains achieved under devolution.  If we look over the border, we can see where this leads; University tuition fees at £9,000 a year and prescription charges of £7.65 per item.  Even the Welsh Labour Party disagrees – Wales was the first part of the UK to scrap prescription charges – First Minster, Carwyn Jones, has made clear they will stay scrapped.

Mr McCann follows Johann Lamont in focussing on high earners getting free prescriptions.  However, to make significant savings, you have to remove free prescriptions from people on even moderate salaries.  Labour MSPs, such as Kezia Dugdale, recognise this: “It might cost more to means test them than it would to give everybody them for free, so we need to look at the numbers… I think that probably free prescription charges would need to stay.”  You make up your own mind who really speaks for Labour – Lamont and McCann, or Dugdale.

Labour has become a party without principle, its members all over the place on how to deliver public services.  When Johann Lamont called for an honest debate, it was a desperate attempt to cover the fact that Labour has no policies of its own.  Mr McCann’s reply is just another of Labour’s solution-free zones, long on criticism of the SNP, but short on any positive proposals.

Managing the Scottish budget

Funding for the Scottish Government, Scottish Local Authorities, and other public agencies comes in the form of a block grant and expenditure limits set by the UK Treasury.  The following table shows the Scottish Block in each year since devolution and the change year on year, and averaged over a two-year period.

Source: Cash figures for Scottish Block provided by the Scottish Parliament Information Centre

In the first years of devolution, the Scottish Executive received average annual increases in funding of around 8% in real terms, declining to approx. 5% from 2005-06.

By contrast, the SNP has had to deal with real terms cuts in three out of the four financial years for which it set the budget (2008/09 onwards).  The increase in spend in 2009/10 reflects the decision of the SNP Government to bring forward expenditure from later years to help the Scottish economy through the economic downturn.  The deep cuts being imposed by the UK Government mean that this stimulus is being removed from the budgets for the following financial years.

Mr McCann may take the view that Scottish Labour and their LibDem colleagues prudently administered the Scottish budget during its period of growth; even a cursory review demonstrates that this is not true.  As an example, between 2001 and 2006, over £2 billion additional funding went into education through the McCrone Agreement on teacher’s salaries and conditions.  In 2006, Audit Scotland concluded,

“It is difficult to assess the extent to which value for money has been achieved from the additional spending because clear outcome measures defining what the Agreement was intended to achieve were not included and have not yet been put in place by the Scottish Executive.”

In simpler terms, having identified a problem of teacher morale and declining attractiveness of the teaching profession, Labour threw £2 billion at the problem and failed to establish clear measures for whether the funding was effective.  This is hardly a prudent use of funds, but appears quite acceptable to some Labour MSPs.

With such a record, it is no wonder Labour members find it difficult to understand how it is possible to deliver universal benefits that improve the lives of the the people of Scotland.

Scotland’s problem is not that we deliver too many universal benefits; it is that we do not have access to our own resources.

The fantasy £1 billion reserve

The reply touches on the issue of funds unspent by the Scottish Executive, and left with the UK Treasury (End Year Flexibility / EYF).   The following table shows the level of these funds for Resource (day to day running costs etc.) and Capital (mainly invested in major building projects).

Source: Scottish Parliament Information Centre

Mr McCann refers to ‘around £1 billion’ for large capital projects inherited by the SNP and then ‘blown’.

As the table makes clear, the Capital reserves, standing at £628 million in 2005-06, were in fact ‘blown’ by the LibLab Executive – if that is the correct term for funds used to build social housing, roads, hospitals, etc.  When the SNP set its first budget, for 2008-09, the capital reserves were down to £71 million.  The £1 billion capital inheritance is a figment of Mr McCann’s imagination.

What is most concerning in this table is that the pattern of capital spend under the LibLab Scottish Executive was so closely tied to the electoral cycle, with funds being accumulated between elections, and allocated and spent in the run up to them.  Such blatant politicking with public expenditure is not a ‘prudent’ use of public funds.  This table is evidence that Labour and the LibDems accumulated and spent a war chest of over £500 million in a desperate attempt to win the 2007 Scottish election.

Would Mr McCann prefer to have the money returned to the Treasury?

The reply demonstrates Mr McCann’s ignorance of the fact that the UK Government abolished EYF in 2010; either that or he thinks we should have let the Treasury have the money back.

As part of the coalition’s deficit reduction programme, government departments and the devolved administrations were all told they could not spend their accumulated EYF.  As a result, Northern Ireland lost £316m and Wales lost £385m.

If the Scottish Government had maintained the Resource EYF reserve inherited from the Scottish Executive, hundreds of millions of pounds would have returned to the Treasury instead of being spent to the benefit of the Scottish people.

It is truly bizarre that a Scottish MP would prefer to see hundreds of millions of pounds returned to the London Treasury instead of being used to deliver public services here in Scotland.

Nye Bevan was right – we need the power to decide

Labour spokesmen have developed a habit of quoting – or, as in Mr McCann’s case, misquoting, that great Welshman Aneurin Bevan.  I know something of Bevan; I have a family connection to the town of his birth, Tredegar, in beautiful South Wales.  Bevan was one of the architects of the NHS and was committed to the principle of the NHS being free at the point of need.

As Bevan resigned from the Labour Government over the introduction of charges for NHS services, I doubt if he would have much sympathy for the ‘something for nothing country’ speech given by Johann Lamont, or Mr McCann’s ‘days of wine and roses are over’ attitude to public service cuts.

What Bevan actually said, in 1949, was,

“The language of priorities is the religion of Socialism … The argument is about power … because only by the possession of power can you get the priorities correct.”

Bevan was right. The debate about the constitution, whether Scotland should return to full independence or continue to have important decision made in London, is about power, and it is about priorities.

Those, like me, who believe Scotland should be independent, want the Scottish people to have the power to decide their own priorities.

  • Do we look after our old folk, or do we spend £billions on weapons of mass destruction?
  • Do we support international efforts to curb the power of big money, or let the banks loose again to enrich themselves at our expense?
  • Do we give tax breaks to the richest in our society, while burdening our students with a mountain of debt?

On so many levels, the reply sent by Michael McCann MP to a young voter interested in the future of his country was wrong.

  • Its tone was wrong, especially the ridiculous ‘days of wine and roses are over’ attack on vital public services!
  • Its facts were wrong – that £1billion capital legacy to the SNP is clearly Labour’s next big lie.

Perhaps most importantly, its ambition was wrong – that, in response to the economic crisis, Labour is happy to work along with the Tories to undermine the public services that form a vital part of the fabric of Scottish society. If this is an example of ‘better together’ I am confident that the people of Scotland will follow Bevan’s advice and take the power to decide Scotland’s future into their own hands.

Linda Fabiani is the SNP MSP for East Kilbride