SNP refuses to cut back as Westminster squeezes cash

Published on 26/04/2009 22:40

THE SNP administration will not axe any of its expensive public spending plans because of the squeeze on the Scottish budget from Westminster, ministers insisted last night.

The Scottish Government will face significant pressure on its finances over the next few years, amounting to a reduction of up to 6 billion in 2013-14, according to a leading think-tank.

The Centre for Public Policy for Regions (CPPR) warned yesterday that flagship policies – like the council tax freeze, the scrapping of prescription charges and the abolition of bridge tolls – might have to be ditched because of the lack of money from the Treasury.

But yesterday a spokesman for the First Minister stressed nothing major would be dropped. He said: "We are very proud of our socially progressive policies and will not be reversing any of them."

The spokesman said there were areas of public spending where substantial sums could be saved – like axing the replacement Trident nuclear deterrent and ID cards.

He argued that voters had the chance of making their support for this approach known over the course of the next few elections, to make sure Scotland did not suffer financially over the next spending round.

The spokesman said: "The UK government's catastrophic financial failure underlines the need for Scotland to have responsibility to run its own affairs and to have the ability to take the decisions needed to reflate our economy, contribute to recovery, and overcome the Downing Street downturn."

John Swinney will unveil a package of measures aimed at beating the recession in a speech on Wednesday.

He will claim changes to the planning system and plans to bulk-buy electricity supplies will build on the Scottish Government's economic recovery programme.

It emerged yesterday, however, that one of the country's richest men, Sir Tom Hunter, wants the Scottish Government to cut income tax by 3p in the pound to create a tax haven and attract entrepreneurs north of the Border.

But having already rejected this suggestion from the Liberal Democrats, the Scottish Government is unlikely to change its mind because Sir Tom is backing the idea, too, particularly as it would mean further cuts to Scottish public spending of about 700 million a year.

The CPPR think tank is expected to outline its findings to Holyrood's finance committee tomorrow.

It is understood analysts have examined the UK government's financial projections and predicted what they might mean for the Scottish Government's block grant.

With so much of the Scottish Government's money already allocated to public sector salaries, there is little room for major savings without cutting some of the big financial policy programmes.

The Glasgow University-based think-tank has calculated that spending will be squeezed by 2-3 per cent per year, leading to a cut of 6 billion in 2013-14.