Bill Jamieson: Where is the debate on public spending?

It has to do neither with where the axe should fall or how deep the blade should go. It centres on whether Scotland is now so dependent on public expenditure that we have passed a point of no return: cuts on the scale envisaged are deeply inimical to the direction in which Scotland has been travelling for years.

A new set of studies - out this week - from the David Hume Institute on Re-Shaping the Public Finances should help to catalyse debate on the fast diminishing options that Scotland now faces. The papers, from authors including the Auditor General Sir Robert Black, economist David Bell, public policy analyst Richard Kerley and Professor Eddie Frizzell, make for deeply uncomfortable reading.

Scotland has grown to become chronically dependent on public spending and the retrenchment ahead is going to last for years. "We are" writes Robert Black, "at a historical break-point in public finances". Not only are there huge pressures on current social welfare budgets due to an ageing population but there is a maintenance backlog on the physical estate across Scotland's ever expanding public sector amounting, in the case of local authorities alone, to some 1.4 billion.

As for reforming local government to achieve efficiency savings, these Kerley argues, would be inappropriate to effect and would take considerable time to yield, even assuming that the savings exceed the costs of restructuring, redundancy and reform. The phrases that stand out in a compelling introduction by Jim Gallagher of the Scottish Policy Innovation Forum and Jeremy Peat of the David Hume Institute are "no simple or single solution", "no quick or easy fix", elusive efficiency savings and fears that cuts "will further damage consumer confidence".

After reading this and other assessments, few can be in doubt that Scotland is approaching a convulsion in her devolution story. The scale of the changes now imminent can be measured in two ways. One is the estimated spending loss Scotland now faces compared with what would have been enjoyed had the financial crisis not struck. Andrew Goudie, the chief economic adviser to the Scottish Government, has estimated the total foregone at 42 billion in the period up to 2025-26. Note the heroic assumption that public spending should always be rising at the same velocity as in the boom years.

A second measure is the depth and extent of opposition already expressed. Police chiefs, fire officers, local government leaders, university heads, quango leaders, trade unionists, teachers, arts bodies, environment campaigners, house builders and civil servants themselves have all weighed in against the cuts.

The coalition government will announce the results of its Comprehensive Spending Review on October 20. The Scottish Government's draft budget is due to be unveiled in mid-November. There is thus a desperately short window for the Scottish implications to be worked out in detail.

Prior to these dates with austerity destiny there should have been a great public debate on the spending cuts in Scotland. A tool for informing this debate was the Crawford Beveridge Independent Budget Review published at the beginning of August which detailed the options available.

But where is this debate? Where are the discussions in the Scottish parliament? There is none, because there is one enormous obstacle to policy reality and which is giving politicians a disincentive to face the truth: the elections to the Holyrood parliament next May.

This refusal to engage in discussion on where and how the spending cuts might take effect was evident in the instant reaction to the Beveridge Report. The escape cards proffered - options that would make the cuts in services less severe - such as refusing to ring-fence the NHS, allowing a hybrid mutualisation of Scottish Water and rolling back on some of the "free" universal benefits rolled out in Scotland - were all quickly rejected. Therefore the spending cuts are likely to fall wider and deeper on public services while capital spending programmes are decimated. And we are none the wiser as to where exactly the government is looking for cuts - if it is looking at all.

Last week Alex Salmond signed up to a joint declaration of the devolved administrations of Wales, Northern Ireland and Scotland protesting at the proposed spending reductions, urging the coalition to scale back the proposed cuts and phase them in over a longer period. He is maintaining opposition to the last and dare not adopt any other posture for fear of being cut to ribbons by a Labour opposition which will make political capital between now and May out of all and every spending reduction.

Thus, in the political realm, there is little mature debate about where and how public reform can be undertaken and spending reductions achieved on the basis of a considered analysis of spending outcomes. And the longer the Scottish administration is in denial, the greater the risk that the spending axe, when it comes, will be arbitrary, rushed and brutal.

Should any new administration after May resort to an increase in the rate of income tax - a 3p variation either is allowed under the Scotland Act - this extra tax may be difficult to enforce and would almost certainly encourage an exodus of companies and businesses out of Scotland.

The problem is not, in my view, the result of the banking crisis or the ensuing recession. It is not even the huge government debt with which we are now burdened. It is that Scotland has been on the wrong road for decades, allowing a private sector economy to be substituted by a public sector one. Supplication became the default pose of Scottish ministers.

Devolution accelerated this by handing substantial powers over spending to a parliament overwhelmingly dominated by representatives from the public sector and the trade unions. Such a parliament is never likely to be quick off the mark on public sector and local government reform. It is deeply entrenched on the side of the producer interest - not the consumer and certainly not the taxpayer.

That is why I fear we have now passed a point of no return. The end of this fateful cul de sac is now in sight, with little sign of the engine slowing and the driver intent on shovelling in more coal. If "more powers" are brought in under the Calman proposals, that power is more likely to be used to raise tax and borrowing to maintain spending, not reduce it. Business and enterprise will take their cue and move, taking the best from our universities with them. That is the real consequence of Scotland's denial on cuts - and would be the deepest cut of all.