Leader: A qualified welcome for a measured budget

erhaps it is because one of the weaknesses of the devolution settlement is that Scotland does not have a Treasury to set taxes as well as spend money, perhaps it was down to John Swinney’s naturally actuarial style, but the finance secretary’s spending review statement at Holyrood yesterday had little of the drama or excitement which surrounds such events at Westminster.

PERHAPS it is because one of the weaknesses of the devolution settlement is that Scotland does not have a Treasury to set taxes as well as spend money, perhaps it was down to John Swinney’s naturally actuarial style, but the finance secretary’s spending review statement at Holyrood yesterday had little of the drama or excitement which surrounds such events at Westminster.

Yet for all the lack of rhetorical flourish, from both the government and opposition, this was an important day for Scotland, the moment when organisations which rely on the public purse learned how much they can expect to receive over the next three financial years as the Nationalist administration deals with the cuts necessitated by the new age of austerity ushered in by the banking collapse.

Yesterday’s announcement affected not just the users of public services north of the Border but also the hundreds of thousands of people who work in them and the private sector beyond that, which feels the impact of spending decisions in terms of the amount of business it can do, and the numbers of staff it can employ. In short, the decisions made yesterday will touch every one of us. They matter.

So what to make of Mr Swinney’s tour d’horizon? First, there was the routine attempt to shift the blame for the cuts to Westminster, which funds Holyrood, though the finance secretary did not labour the point. For a Nationalist this has to be done, but most Scots realise that even an independent Scotland would not escape the global financial crisis and so some level of cuts would be inevitable. Most Scots also expect their government to get on with managing what they have and, in those terms, Mr Swinney was his usually competent self as he sought to elucidate a theme within his speech. It was this: the Scottish Government should seek to move money from current spending to capital projects to stimulate the economy and devote resources to measures which help prevent ills which plague Scottish society.

Judged by these objectives the spending review was only a partial success. If the money really can be found, and there is some doubt over the funding, then investing in major projects like roads, rail and, if it is required, the Forth crossing, makes sense. One particular blot on that landscape, however, was the decision to cut capital investment at Scottish Water – a direct consequence of the SNP’s dogmatic refusal to free the state-owned company from the public sector, allowing it to raise more finance privately.

Under the second aspect of the plan, Mr Swinney has committed £500 million to investment in preventative measures – help for older people to remain at home instead of in care homes; assistance for vulnerable young children; and projects to prevent re-offending. Recent reports, including the Christie and Beveridge Commissions, have highlighted prevention and, though not all of this money is new the approach is welcome.

The problem lies, first, in whether there is enough investment and, second, in the fact £100m over three years will come from a tax on large retailers, mainly supermarkets, who sell cigarettes and alcohol. Although we know the charge will be based on rateable values, so excluding smaller outlets, there was, last night, a strange lack of detail, which suggests the funding stream for what are reasonable measures has not been properly thought through, or was invented to punish supermarkets set to gain from minimum alcohol pricing.

More generally the review contained the usual lists of winners and losers, with health largely insulated, but even then, likely to feel the pressure of rising costs. Public sector employees may be angered at the prospect of another year without a pay rise, but with relatively little likelihood of wholesale job losses they would be wise to temper their anger with a dose of realism.

Local government has again been hit, raising questions over why it should have cash taken away whilst the SNP maintains its policy of funding a council tax freeze, welcome though that is to hard-pressed householders. Universities claimed that the extra £135m they received made up the fees-funding gap with England, though judging by their previous figure of more than £200m, this is clearly nonsense. They did at least fare better than colleges, which may now find a greater financial incentive in mergers being driven, with some justification, by education secretary Michael Russell.

Mr Swinney yesterday said the SNP government’s “key drivers” of economic recovery were capital investment, protecting public sector employment and supporting household incomes. We can forgive him a lack of rhetorical flamboyance if he succeeds.