Honest John’s hands are tied
Instead of defending his approach to working with the Treasury from opposition parties’ charges that he’s only looking for a fight with Chancellor George Osborne, and the miscast Chief Secretary Danny Alexander, John Swinney will do what he does best . . . talk the numbers and walk through the maths.
The Scottish Government has waited until after the election to get down to the hard decisions that have been forced on it because of the state of the UK’s public finances and the economic performance south of the Border. Note, the hard decisions to be taken by the Scottish Government are not the result of its incompetence, but of decisions and circumstances south of the Border.
Only last week, the figures were produced from government and independent sources showing the Scottish economy to have grown more, marginally, but still more, than the English economy, to have an engineering sector, though small, with full order books and, at least among non-blue collar workers, to have proportionately more job vacancies.
The figures indicated that although certain sections of the workforce felt aggrieved that they’d been dealt a death-blow by Swinney when funding was trimmed or cut altogether, from strands of provision in the voluntary, or third sector, most people, although worried that things might get worse, have shown calmness and resolution.
In other words, he was probably getting things more or less as good as they could get, with only half the economic tools needed to chart an economic course and fine-tune the engine of recovery when events elsewhere, like the crisis in the eurozone that has sent all Europe’s stock markets tumbling in reaction to the downgrade of Italy’s credit rating, intrude.
But today, reality kicked in. Finance Minister Swinney has to fall into line with the Treasury allocation of cash to Scotland as per the devolution settlement. That means, roughly speaking, his spending money over the next three years will be cut by £3.8 billion. If he’s going to protect jobs and keep hold of the skills in the construction trades, he must persevere with some the big-ticket projects to get skilled workers off benefit and into work. He has to juggle the priority for a Borders railway, for example, with the need to train more apprentices and at the same time crack on with a housebuilding programme.
And here’s where the Finance Minister is once again constrained in using his own judgement, in getting people into jobs. Ultimately, with that amount of money taken out of his Block Grant, if his government’s number one priority is to grow the economy, he’s almost certain to be forced into moving money into building and manufacturing and cutting spending on services. If he does that, will he be able to retain the present free travel for elderly people?
It’s one of the ironies of Scotland’s predicament that were John Swinney to have the sovereign powers of a Finance Minister in an independent country, right now he would be cash-rich from the billions of pounds being paid in tax by the oil companies. He wouldn’t have to borrow from the money markets to dual carriage the A9, as he’ll be forced to as long as he has to fall into line with Westminster policies.
Because the Treasury in London is battling against a double-dip depression in England and Wales, the Chancellor is hardening his heart and asking public service workers to pay an extra 3.2 per cent into their pensions.
The Scottish Government says this is the wrong time to hit public service workers like teachers, NHS workers, police and fire services, as these workers’ salaries were frozen and there’s a rising cost of living being recorded by both the retail and consumer indices.
Alex Salmond has asked for an opt-out for Scottish public servants. So it’ll be interesting to see what the other Scottish parties say on this as it perfectly illustrates the in-built limitations of devolution. Far from proving the argument for a supportive UK wrapped round the Scottish economy, the Treasury’s wet blanket thrown over the possibilities open to Scotland suggests that there’s no alternative to sovereign control of our economy.
As usual, I have my own limited objectives for just a bit of pump- priming money. This time, I’ve been working with a fellow Lothian list MSP, Neil Findlay, to make the case for a bit of preventative spending to help an expansion of credit unions.