Scots will be spared worst UK cuts, predicts professor

A LEADING economist has said Scotland will be cushioned from the severe spending cuts expected in the coming years because of its place in the UK.

Stirling University's Professor David Bell has said cuts north of the Border will not be as tough as in England or Wales because of the Barnett formula, the system that decides the level of the Scottish block grant.

In a report to Holyrood's finance committee, he pointed out that a future squeeze on spending will see Scotland's money reduced by its population share of 8.4 per cent rather than its funding share of 10.3 per cent.

"This argument implies that, if the Barnett formula continues to be applied, proportional cuts to the overall Scottish (spending] will be slightly smaller than those applied in England to 'comparable' programmes," he said.

His comments have been seized on by the UK government as evidence that Scotland is "better off in the Union".

A Scotland Office source said: "If you look at the fact that health and education spending will be protected too, Scotland will do even better.

"It just goes to show that the Barnett formula is a good deal for Scotland."

However, in the same report Prof Bell warned that tough decisions will have to be made in the future to reconfigure the Scottish public sector and cope with a drop in money from Westminster in forthcoming years.

He suggested that little had been done in SNP finance secretary John Swinney's draft budget for next year to cope for the "grim" times to come.

In his report, Prof Bell argued that the "massive increase in public debt resulting from the recession" could restrict public spending in the UK and Scotland for the "foreseeable future".

He said: "Since the 2009-10 budget was published, the outlook for the Scottish, UK and world economies has changed dramatically for the worse. This will have severe consequences for public spending in Scotland for the foreseeable future.

"Thus, though the 2010-11 draft budget is tight in relation to budgets earlier in this decade, subsequent budgets will be much more austere."

Tory finance spokesman Derek Brownlee argued the report was further confirmation "of the mess Labour has made of the British economy and the public finances".

And with the UK national debt rising, he said the Scottish Government could not ignore the need for "spending restraint for years to come".

Mr Brownlee added: "The SNP government should be planning now on how to reduce spending with the minimum impact on frontline services."

But the report also appeared to support SNP claims that the Scottish budget was facing its first real-terms cut in many years with 392 million less than had been expected.

Joe Fitzpatrick, an SNP member of the finance committee, said: "This report will leave people in no doubt that Scotland's budget has been cut this year and will be cut in future years.

"Labour's fantasy figures have been exposed and the financial mismanagement of the UK is on show for all to see."