‘While the spending cuts are probably necessary, they’re just not being applied in the right way’

I WOULD broadly support this kind of proposal. Clearly recovery is weak and fragile. It’s very much at risk from external events both in the European economies that we trade heavily with and in the banking sector.

We need to look at what we can do to try to mitigate any risks that there are to that recovery. I would not recommend the Scottish Government increase borrowing by any large amount. But what borrowing we do take should be borrowing to invest rather than borrowing to consume.

I don’t think it’s always the case that you’ve got to cut wherever that comes from.

They mention some of the road schemes that they’re looking at and there are others like the Aberdeen Western Peripheral Route where there is scope for further investment. But there’s also investment in rail that would have not only a construction impact, but would have a positive environmental impact. Looking at road and rail may be examples of that which would have a positive environmental impact in the future.

But often it’s those at the very bottom of our society that are impacted by the kind of cuts that we’ve seen. So if we can invest, for example, in shared ownership of housing which has some low-cost element to it, but still retain a sense of ownership as well, that kind of investment might have a positive place and that’s really not mentioned.

The Scottish Government is limited in what it can do and a lot of the real power in these proposals lies with Westminster. Access to finance is clearly important and it’s a little bit disappointing that there has been in London from the coalition government quite a timid response to the banking reform and allowing that pain to be shared more equally across different sections of society.

The logic behind the coalition government’s agenda is correct because if you borrow too much and you have too high a deficit then all that’s going to happen is that your interest rates will go up, which will hit mortgage holders.

In addition, the issue of how the financial markets view the state of the public finances matters so if we don’t take control it will have an adverse effect. My concern is that while the cuts are probably necessary, they’re not being applied in the right way. They’re falling on pay, conditions and pensions and all those tend to fall on ordinary working people – very little of that tends to go towards to the top end of organisations. It’s the way these cuts are applied and this goes across lots of areas.

l Dr David McCausland is a senior lecturer in economics at Aberdeen University.