David Bell: Cuts will be ‘severe’ rather than ‘draconian’

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WHILE the changes in taxes and cuts in capital spending that are part of the austerity programme are largely complete, there is still some way to go on the cuts in current spending – the day-to-day spending that pays for refuse collectors, nurses, teachers etc.

The Institute for Fiscal Studies expects that UK borrowing will be cut as a share of GDP by 9.2 per cent between 2008-09 and 2017-18. More than half of this will come from current spending, but at the end of 2012-13, less than 25 per cent of these cuts had happened.

Philpott argues that these forthcoming cuts to current spending will be the main cause of his forecast cuts in public sector jobs.

How this will affect the Scottish Government budget will mainly depend on the Barnett Formula. The main provision of the Scotland Act 2012, which allows Scotland greater control over income tax, will not be in force until 2016-17. Until then, the Scottish Government budget will be set as it has since the Barnett Formula was first introduced. The size of Scotland’s budget cut will depend on how the Chancellor decides to spread them across Whitehall departments. The UK government has committed itself to protecting spending on health, schools and overseas aid.

Given that the Barnett Formula applies to health and education and these are large spending programmes in Scotland, it is unlikely that Scotland will fare significantly worse than the rest of the UK. But this will only put the cuts in the “severe” rather than the “draconian” category.

About 23 per cent of all workers in Scotland are employed in the public sector. Some 30,000 of these are in a special category: they work for the nationalised financial institutions HBOS and RBS. But if the Philpott calculations are correct and Scotland’s public sector employment was cut by the same share as the rest of the UK, then a further 34,600 jobs are likely to go over this period in Scotland.

l Professor David Bell is ESRC Research Fellow at the University of Stirling

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