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The truths they don't want you to read....

Thursday, November 11, 2010

Scottish budget

It is going to be a budget offering only severe cuts, as John Swinney finds himself boxed in with expensive promises that cannot be undone, and with a real terms cut in cash available.

Money cannot be created from nowhere - although there may be an attempt to (falsely) claim that that could so easily be the case in an independent Scotland - and if you want to spend somewhere then it has to come from cuts elsewhere.

The reported change in policy from revenue to capital expenditure is not quite a case of deckchairs on the Titanic, but is not far off.  To the ordinary Council tax payer, there isn't much of a difference between repairing a mile of road and building a new mile, but for the bookkeepers it moves the expenditure.  And somehow the economists reckon that the later will create more jobs by virtue of a higher multiplier.

There is no dispute that it increases the national balance sheet, which is A Good Thing.

Personally, I think that slimming the bureaucracy and using the savings for actually doing things is actually likely to produce a better economic result, than some kind of financial juggling.

But it is the impact on the other public services that has to be considered.

With Nicola Sturgeon apparently having bargained for Health to be ring-fenced from cuts, then the other services were facing significantly larger cuts.  Yesterday's announcement that students are going to have to pay more for their education (for that is what it is) is just a taster of the extant of the savings that have to be made, and the kind of policy changes that are being considered.

Being in power can sometimes be even more frustrating than being in opposition, as the SNP are finding.

I predict a centralisation of funding, with revenue being cut from all public services (except Health) and channelled into a more centralised capital pot to be administered and distributed by the Government into both large national schemes and smaller local ones.

Cue cries of "favouritism", "political bias" and "power-crazed Stalinist ministers" as the pot is distributed, just ahead of the election.

It is going to be a deeply unpleasant few months for the SNP as they try to wrestle with the responsibilities of office, and justify successful small businesses paying no rates whilst home care services are being cut.

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