Salmond's Scotland: Now for the hard work

'CAMPAIGN in poetry, govern in prose," former New York Mayor Mario Cuomo once famously said. The campaign may have finished for Alex Salmond last week when he addressed MSPs after being elected First Minister of Scotland, but on the basis of Cuomo's dictum he was definitely not yet governing.

In a speech that suggested Salmond had been thumbing through his Book of Scottish Quotations, Andrew Fletcher of Saltoun, Norman MacCaig and Hugh MacDiarmid were all called upon. Standing on their shoulders, Salmond noted: "We see our nation emerge from the glaur of self-doubt and negativity. A change is coming, and the people are ready." Words fit for etching.

Now, however, for the prose. Tomorrow, Salmond's newly appointed ministerial team arrive in Edinburgh for their first week back at the office. This time last year, when the new UK Con-Lib ministers got to work, they were greeted by a memo from Labour minister Liam Byrne informing them that "sorry, there's no money left". Salmond's ministers, having been re-elected, do not have the luxury of inherited blame. They know the books - and they know already that their next five years in office are going to be marked by a distinct lack of lolly. At the same time, they also know that demand for the services they pay for - thanks to ever more costly pledges such as free personal care - is piling yet more burden on to the cost of governing.

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Salmond and his team arrive back at work having spent the election securing victory on the back of a further round of expensive promises, such as the cast-iron commitment to a five-year council tax freeze, which will cost them an extra 70 million every year. Within eight months of Messers Cameron and Clegg getting into office and confronting similar problems, students were rioting in the streets of London. So Salmond knows the cost of getting things wrong.

There was no mention of the nitty-gritty in Salmond's eloquent speech last week, but everyone knows that if his administration fails to make the sums work in the coming years, the SNP can kiss goodbye to any more soaring rhetoric on guiding the country to independence. So how is Salmond hoping to do it? Can he square the circle? And in so doing will that overcome the voters' scepticism on the ultimate goal of independence?

The First Minister is a busy man this week. First up, tomorrow morning, is a meeting in London with Chancellor George Osborne when the pair will discuss tax hikes in the North Sea and more powers for Edinburgh. Then he gives a speech on his constitutional plans. On Tuesday, he meets Nick Clegg, before returning to Edinburgh on Wednesday for a first meeting of the new Scottish cabinet. On Thursday, he returns to parliament to set out the new government's initial legislative plans. Top of the list will be the government's crackdown on sectarianism, closely followed by the SNP's unfinished business on introducing a minimum unit price on all alcohol.

Salmond can be expected to continue the mood music of the early days of his second term, reaching out to other parties for support (what one of his aides yesterday called the SNP's "big bothy" plan). This all-inclusive vision helped deliver the party its phenomenal election result three weeks ago: Salmond is not going to change a winning formula just yet.

The SNP wants to pass new legislation against sectarianism before the summer recess, hoping to set the tone properly for the beginning of the long five year stretch which lies ahead. Without any significant opposition at Holyrood, it is easy to imagine them soaring ahead even further in the polls over that period. But, behind the scenes, ministerial in-trays will be bulging with potential bear-traps and banana skins which lie in the years ahead.

John McLaren, political economist with the think-tank, the Centre for Public Policy and the Regions, lists some of the more pressing. First there is the question of universities and further education colleges. English universities will almost certainly confirm by the middle of July that they are going for the top 9,000-a-year tuition fee. With the SNP having promised during the election campaign that they would both prevent fees and fill any funding gap between Scotland and England those fees create, McLaren puts the extra cost on Salmond at around 200m a year.

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Then there is the council tax freeze (costed in the SNP manifesto at an extra 70m next year, 140m the year after, and 210m the year after that). The freeze was designed to stand in the shoes of a tax increase of around 3 per cent a year. Last week, however, it emerged that inflation was now running at 4.5 per cent. "If that stays the same, then is what they are putting in going to be enough?" asks McLaren.

The same logic applies with the current public sector pay freeze. The government has yet to say for how long the current two year freeze will continue. But ministers and councils will find it increasingly difficult to keep it in line if workers are being squeezed by the growing cost of living. The trouble then is if the freeze doesn't continue in the longer term, many public finance experts say there will then be little option but for public sector chiefs to enforce compulsory redundancies - something Salmond and Swinney want to try to rule out.

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The square will be circled, Salmond and Finance Secretary John Swinney insist, by imposing rigorous efficiency savings across the public sector - freeing up cash by eliminating waste. But that will come under growing scrutiny, says McLaren, especially if there is evidence that efficiency savings are just a way of hiding cuts in front-line services. The cash squeeze can also be eased, the SNP Government insists, by channelling billions of pounds worth of private cash into building schools, hospitals and the transport network. But the "not for profit" model being paraded by the SNP - along with hopes it can get its hands on new borrowing powers from the UK Treasury - will only mean that the SNP is piling up more debt onto the already huge sums it has to pay back every year thanks to old PFI contracts.

So there are plenty of experts who say that the Scottish Government will soon have to bite the bullet on some of its costs. They include the old bugbear of Scottish Water, still in the hands of ministers, with its need for massive investment eating away at their core budgets. There will be some form of fudge which keeps it in public hands, but off public books, say many. Ross Martin, policy director of the Centre for Scottish Public Policy, says: "There will be some form of mutualisation which allows the Government to say it is still in the public sector."

Furthermore, ministers still have on their desks a report from last year by the SNP-supporting former Scottish Enterprise chief Crawford Beveridge which concluded that the billions of pounds spent every year on universal "freebies" should be reviewed. Free prescriptions, free bus passes, concessionary travel for the over 60s, free personal care and free eye tests may all come under the beady eye of civil servants looking to find ways of saving their ministers some cash. The question is whether the SNP will cut on what remain popular benefits.

Much is dependent on a major review being conducted by former STUC chief Campbell Christie which will report back at the end of next month. Some public sector figures who want an axe taken to costs are deeply sceptical about whether the report will be as blunt as Beveridge's. "With due respect to Campbell Christie, do you really think a former union man is going to do that much?" said one last week.

A clue to how SNP ministers are thinking about saving cash was given in SNP documents released during the election. In a passage on finding savings, one paper noted how the massive increases in spending over the past 20 years had resulted in a glut of people in the public sector, some of them duplicating each other's jobs. Meanwhile, the new Scottish Parliament had landed in this crowded administrative landscape and added to it, with all the other layers of government underneath carrying on as before.

The new SNP administration appears to want to change this. The paper concluded: "Scotland's size is one of our nation's greatest competitive advantages, and that means we have the ability to deliver shorter lines of decision making and where appropriate, services delivered more locally or on a regional or national basis."

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On the one hand, this appears to pave the way for new streamlined national outfits, such as a new National Scottish Police Force. On the other, it may mean Salmond and Co learning to let go, and allowing local politicians to run local services as they want. Pat Watters, the politically canny head of Scotland's local government body, Cosla, notes: "I listened to Alex Salmond's speech and there was very little in that speech that I would disagree with. Alex set out how he would like Westminster to deal with him. We would like to follow through with that in the relationship between Scottish Government and Local Government, so that we deal with each other as equals. Devolution has to continue from Westminster to Scotland and then on to local government."

Why would this save money? Watters claims that free from nationally-set targets, local government could then get together with local health authorities and get on with the job of making their patch run better and more cheaply. "We need less government not more," he adds.

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Swinney will deliver a spending review in September laying out his plans for the coming three years. Get the prose right now, and the poetry come independence day will be a lot easier to read.