John Swinney's amazing shrinking draft 'Budget for Growth'

Published on Monday 28 September 2009 23:13

WE HAVE been told often enough that the Scottish Government's priority is economic growth. So it was with keen anticipation that I turned to the Finance and Sustainable Growth section of the Budget for 2011-12. This is the portfolio "responsible for managing Scotland's budget effectively and delivering the right mix of policies to ensure increasing, sustainable growth in the Scottish economy".

Does the draft budget live up to this blurb? And how far does the document advance the commitment to "deliver smaller, simpler and more efficient government"?

The total spend for this portfolio in 2010-11 is shown as 5,796 million. But it would be a mistake to take this headline figure as a proxy for how much the administration spends on "the economy".

For example, this total includes a total of 2,491m for the Public Pensions Agency. Omitting this, and adjusting the figure for spending on motorways and roads in line with Departmental Expenditure Limit (DEL) budgeting, the total comes down to 2,678m.

Expressed as a percentage of Scottish departmental expenditure of 29,270m, it is less than 10 per cent of the total – significant, certainly, but not quite the "priority" one is led to expect from the finance minister's rhetoric.

Surely this area of spending would enjoy some shelter from the cutbacks he has had to announce? Strangely not. In fact, this is the portfolio that is set for the heaviest reduction. Planned spending here is down 201m on 2009-10, a 7 per cent cut in real terms.

This compares with an overall real terms cut in the Scottish budget of 0.9 per cent. Other departments escape relatively lightly, and others are set for increases. Spending in rural affairs is to be reduced by 1.7 per cent, "health and well-being" by 1.4 per cent; the Office of the First Minister has no cut, while education is up 1.1 per cent and justice is up 1.6 per cent.

The Centre for Public Policy for Regions is correct in its summation that the main cutbacks "have been to capital programmes and/or those linked to economic development spending, while to a large extent health spending has been protected from the squeeze on real resources."

However, in assessing how much the SNP is spending on economic development and sustainable growth, the difficulties do not stop here. For example, the budget for "Finance and Sustainable Growth" also includes, for some inexplicable reason, the cost of concessionary fares, extending to 191.1m – almost as much as the amount set aside for Scottish Enterprise (201.4m).

Other items that strain an enterprise-focused definition of "finance and sustainable growth" include the costs of the Scottish Public Pensions Agency (11.5m), committees and commissions (22m) and Third Sector "Social Enterprise" support of 35.1m.

Take out these and other items, but retaining road, air and ferry spending, and we are left with a more realistic allocation for enterprise and sustainable growth of 2,327m, or just 8 per cent of the DEL total. Moreover, even this residual figure is down 8.7 per cent on 2009-10.

It would surely help for the purposes of clarity and the aim of "smaller, simpler and more efficient government" if this portfolio was split into two categories – one comprising the administrative functions of the Office of the Finance Minister, and the other comprising specific grants and allocations for enterprise, transport infrastructure and economic development.

A finance minister's portfolio presented in this way might also help cast some light on the administration's commitment to "a Transformational Government policy which supports opportunities that will deliver continuous improvement in public services". An itemised progress report with real numbers might convert this high-grade mince into something more meaningful.

Finally, the budget overall with its nominal 0.8 per cent increase in total managed spending to 34.6 billion has escaped lightly, considering the context. That context is a UK budget deficit hurtling to an all-time record of more than 175bn this year and a UK debt total that is on course to soar from 350bn in 1997 to four times that level, or 1.4 trillion in 2014.

Scotland has enjoyed real terms rises in spending in every year of devolution. Given the epic debt mountain we now face, Mr Swinney should count his lucky stars.