The Scottish Government’s Finance Secretary John Swinney has announced his spending plans for the next three years in a budget designed to keep people working.
Mr Swinney delivered his budget statement against a backdrop of savage spending cuts imposed by a UK government faced with the huge financial deficit left behind by Labour.
In a spending review that had the economy at its heart the Finance Minister revealed that a package worth £3/4 billion will ensure Scotland’s capital budget will continue to grow over the next three years. The SNP face a real terms cut of 36 per cent to their capital budget from the Tory / LibDem coalition but have diverted funds from day to day spending in an attempt at safeguarding jobs and maintaining the fragile economic recovery.
Students and health
Other welcome news was the guarantee to introduce a £7,000 minimum income for students and the promise of free access to higher education. The Finance Minister also confirmed that the council tax freeze will continue and that the UK health spending consequentials will be passed on in full to the Scottish NHS – both headline manifesto commitments.
By 2014/15 local NHS boards will receive £1.4 billion more for local services – a real terms increase. The SNP will also invest over £2 billion in NHS capital projects including the South Glasgow Hospitals and Edinburgh’s Sick Kids hospital.
Mr Swinney said: “Over the last four years, we have tackled the significant challenges presented by the downturn in the global economy and taken forward an ambitious programme of reform of our public services.
“Between 2010-11 and 2014-15, Scotland faces a real terms cut of 12.3 per cent – £3.7 billion – including a real terms cut of 36.7 per cent to our capital budget. Against this stark backdrop, we will steer a distinct course and make the very best use of the constrained resources available to us.”
Over the year, unemployment has fallen by 33,000 in Scotland compared with an increase of 44,000 across the UK as a whole and Scotland now has the highest employment rate of any UK nation.
There was less welcome news in the shape of the pay freeze for public sector workers earning over £21,000. Keen to lead by example Mr Swinney revealed that SNP Ministers would continue their own self-imposed pay freeze. There was also confirmation of increases to employee pension contributions for NHS, teachers, police and fire schemes in Scotland, although this was tempered to a degree with a promise of in-built protection for the low paid.
Mr Swinney told MSPs: “This spending review contains tough choices because of the cuts from Westminster that go too far, too fast.
“We have had to restrict pay costs, reluctantly implement pensions increases on public sector staff, and maximise the income gained from asset sales.”
As well as making savings through the pay freeze Mr Swinney also revealed plans to raise funds from a levy on major retailers who supply alcohol and tobacco products, the use of Network Rail’s Regulatory Asset Base is also to be used in order to fund new rail projects.
Mr Swinney continued: “I recognise the pressure on hard working families through Westminster cuts, increases in the cost of living and pay freezes. By giving workers certainty through no compulsory redundancies, bringing down household bills by freezing the Council Tax and protecting key services including free prescriptions, our social wage seeks to protect families and give them some security at a time of uncertainty.
“We are acting to create new economic opportunities, protect household income and employment, support frontline services and improve our environment. We face these unprecedented challenges without the powers that other countries have at their disposal. That is why we also continue to press for the constitutional changes and independence that would enable us to do much more.”
The spending plans were attacked by opposition parties with Labour’s finance spokesman, Richard Baker, accusing the SNP of passing on the pain to Scotland’s local authorities. Responding for the Conservatives, Gavin Brown claimed the SNP had failed to put the economy at the heart of the budget.
The Scottish Retail Consortium who represent major high street retailers and supermarkets said the levy on large alcohol and tobacco retailers was “illogical and discriminatory”.
Scottish Chamber of Commerce who represent more than 50 percent of private sector jobs in Scotland welcomed the capital spending commitments but were unhappy with the retail levy.
There was a mixed reaction from local authorities with Cosla echoing Labour’s attack claiming the Scottish government were trying to pass the burden onto councils.
Councillor Peter Johnston, the Leader West Lothian Council, said:
“Given the substantial reductions in the Holyrood budget the Cabinet Secretary has delivered a fair deal for Scottish Councils.
“I am delighted to see the drive towards preventative spending and very much welcome the £500 million being made available over this spending period to improve services in early years and for care for the elderly.
“I welcome the funding to maintain front line police numbers, an investment which is delivering safer communities, and very much support the maintenance of teacher numbers and the guarantee for teaching probationers.”
Councillor Callum McCaig, Leader of Aberdeen City Council, said:
“The announcement of the 85% funding floor is good news in terms of funding at ACC … given the hand that the Scottish Government has been dealt by the Westminster Treasury local government has come out of things pretty well.”
Councillor Brian Lawson, Leader of Renfrewshire Council, said:
“I attended the COSLA group Leaders meeting only last week, and it was very clear to me the direction in which the budget was heading.
“I am happy to see teacher numbers and police budgets protected, that is what the people of Renfrewshire have been telling us they want.
“All of the pain being inflicted on Scottish local government is a direct result of Westminster government cuts started by the last Labour government and now forced upon us by the current Tory/LibDem government.”
Councillor Peter Grant, Leader of Fife Council, added:
“Given exceptionally difficult circumstances John Swinney has done an excellent job in protecting essential frontline services in local government and the NHS.”
In addition, the Scottish Government will:
• Introduce legislation to reform empty property relief from April 2013 to support regeneration and introduce incentives to reduce empty shops in town centres;
• Prioritise key projects such as the new Forth Crossing, the New Glasgow Southern Hospitals Project, the Aberdeen Western Peripheral Route, Borders Rail Project and school building programme while investing in the railways and delivering 30,000 new affordable homes over this Parliament;
• Take forward a £2.5 billion pipeline of projects using the non-profit distributing model, including major investments in roads and hospitals;
• Deliver the new Scottish Futures Fund to invest in a fairer future through tackling fuel poverty and harnessing youth talent;
• Provide funding to cover the council tax freeze, keep 1,000 additional police officers on the streets and maintain teacher numbers;
• Reduce the central Scottish Government estate by at least 25 per cent over the next five years to achieve savings of around £28 million a year in operating costs by 2016;
• Deliver 125,000 modern apprenticeships and use public procurement as a lever for job creation by ensuring that major public contracts deliver new training and apprenticeship opportunities;
• Invest in the low carbon economy to cut emissions and create new jobs;
• Implement a shift to preventative spending with specific funding of £500 million over the next three years to encourage joint working across the public sector in adult social care, early years and tackling re-offending;
• Protect employment and continue the policy of no compulsory redundancies for those areas under direct Ministerial control, while paying the uprated Scottish Living Wage of £7.20 an hour and ensuring that any employee earning less than £21,000 continues to receive at least a £250 rise;
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