John McTernan: Scotland can escape outdated ideologies

While the Chancellor wants us to accept an Age of Austerity, I reckon that in Scotland we'll be getting accustomed to hearing about the Alexander Axe.

Of course, we won't really know what the full implications for the Scottish Budget are until the spending review is announced, but you do not need to be a weatherman to know which way the wind is blowing. The previous government had made clear the broad envelope for departmental spending; now George Osborne has gone further and faster in cutting.

The Institute for Fiscal Studies will give an independent assessment of reductions in their budget analysis, but for now we can take the Chancellor's estimate – 25 per cent in real terms. So even allowing for protection for health, and the unlikely possibility of substantial defence cuts, we're looking at a reduction of around a fifth in the Scottish Government's departmental expenditure limit (DEL) – the money they can choose to spend each year.

Everyone knew this moment was coming, though few would have guessed quite how destructive a Tory Cabinet minister would be with Lib Dem collusion. It was a bold budget (in the classic Whitehall, sense of bonkers) – betting the house on the 1930s Treasury ideology that when the private sector stops spending, that's just the right time to cut public spending. Post neo-classical endogenous non-growth theory, anyone?

But the news that is so grim for England could actually turn out to be good for Scotland – if it finally breaks the Scottish political classes of the delusion that the answer to every issue is public spending; and that ideally public goods should be free. The last 11 years have seen an extraordinary Dutch auction among the parties in the Scottish Parliament – free personal care, free prescriptions, no bridge tolls, no tuition fees, free bus travel, free central heating. There was always going to be a day of reckoning, and now it's here.

So what do we need? How about a return to deep-seated Scottish values. Not the corporatism that has seeped into the soul since the 1970s, but the self-reliance that is actually one of our most distinct characteristics and one of the most liberating. Shall we first agree that means-testing is good? It allows us to target spending on those in most need. So, rip up free prescriptions and, at the least, go back to where we were before – prescriptions free to children and pensioners.

Second, repeat after me: the middle classes don't need a new welfare state – especially one paid for by working class taxes. Time for tuition fees in universities. And let's tell the truth about the unsustainable monster that is free personal care – you do not have the right to inherit your parents' house.

But the most corrosive is the systematic invasion of the state into places it should be careful to go. People who can afford it should look after themselves. Of course, there needs to be a fair deal between state and citizen – but not the abnegation of an individual's responsibility to provide for themselves.

Third, let's actually charge motorists a decent amount for using roads – they're a utility, so why shouldn't they cost more at peak periods?

Finally, shall we actually agree that the state can withdraw from certain areas of provision completely? Take Scottish Water. Someone please take Scottish Water. Subsidised every year by money that could go to schools or hospitals, it is also worth billions that could be invested in actual infrastructure. Why do we want to spend 250m just so our MSPs can say that our water's not for sale? (It may not be for sale, but still it's awfully costly.)

Others will have their own lists – teachers, with a 35-hour week and a 37-week year, spring to mind. My point is simply this: Politics in the Scottish Parliament are trapped in a contour of history. Locked in a time when private is bad, public is good and public spending best of all.

But the Scottish public are miles ahead of our politicians; they know change has to come. And without downplaying how hard the benefits cuts will hit Scots, there is genuinely an opportunity for reshaping services in Scotland that would be radical, but not destructive.

John McTernan is a former special adviser to Scottish Secretary Jim Murphy.