27 February 2009
By David Scott
The outlook for the economy and the public sector remains grim as the recession gets worse, a leading expert on government spending in Scotland has warned.
David Bell, professor of economics at Stirling University and adviser to the Scottish Parliament finance committee, said that a squeeze on public spending and higher taxes were inevitable in the immediate and longer term.
He told a CIPFA in Scotland seminar in Edinburgh on February 23 that there was a need for increased public sector activity, especially in construction and infrastructure. But he believed the general outlook for the public sector was ‘poor’ now that the full effects of the credit crunch were being felt.
He added: ‘We could have lived with it had it been more gentle, but there is a catastrophic failure in confidence that is feeding on itself and making the short-term outlook pretty grim.’
Stephen Bailey, professor of public sector economics at Glasgow Caledonian University, said that while income from council tax was likely to remain stable, income from non-domestic rates was likely to fall as firms went bankrupt.
Local authorities might also receive less income from government grants, external funding – such as the lottery fund – and fees and charges. ‘The longer the recession goes on the deeper its impact will be,’ Bailey warned.
Also speaking at the seminar was consultant engineer Peter Reekie, who has been seconded to the Scottish Government to help produce the Scottish Futures Trust. This was set up by the Scottish Government to oversee the funding of capital projects and replace the Private Finance Initiative/public-private partnerships route with a more effective and efficient system of infrastructure investment. Reekie defended the new body against criticism that the delays in setting it up was holding up vital schools, roads and hospital projects.
He insisted progress was being made by the SFT,
He stressed: ‘It is happening now. We are working on different structures and the delivery of different structures including the hub programme [an initiative that brings public bodies together in a joint programme of investment].’
PFfeb2009
