By David Scott
13 April 2010
Forecasts of an unprecedented £3bn cut in Scottish public services over the next three years are unreliable, an expert on public finance has told a budget review panel.
Arthur Midwinter, a visiting professor at Edinburgh University and a finance adviser to the Parliament’s Labour group, said there were no hard numbers in the public domain to validate the forecasts. He claimed figures were based on ‘questionable assumptions’.
‘The reality is no decisions have been made and the projections in the Pre-Budget Report are not fixed funding envelopes. Forecasts based on them are of little use to decision makers,’ he stated in his submission to the independent panel, appointed by Scottish ministers to present public spending options.
The panel’s recently published consultation paper said that under any reasonable assumptions, Scotland’s departmental expenditure limit was likely to fall by £3bn – 3.6% per year – between 2010/11 and 2013/14.
But Midwinter argued that the forecasts were based on ‘questionable assumptions regarding spending projects in the PBR, which roll forward the current cost of services’ and are ‘neither plans nor allocations’.
He adds: ‘In my view, forecasts based on soft numbers in conditions of fiscal volatility and political uncertainty are at best “guesstimates”, not analysis. They do not provide a reliable basis for a review of the Scottish budget.’
Midwinter said the projected figures were based on work last year by the Institute for Fiscal Studies.
He told Public Finance: ‘We now have more accurate figures following the UK budget. On the basis of these figures, I would suggest that any cuts in Scotland would be closer to £1bn rather than £3bn.’
Midwinter said his calculation was based on the information available now but he acknowledged that ‘the direction of change will depend on who wins the general election’.
In his submission, he challenged the Scottish Government’s belief that it could take steps to ‘grow’ the economy.
He said: ‘My own view is that the Scottish Government has neither the fiscal tools nor the devolved responsibility to stimulate economic growth.
‘The overriding budget objective of the next Spending Review should be to support economic recovery and not be distracted by growth targets the Scottish Government can do little to influence.’
13 April 2010
Forecasts of an unprecedented £3bn cut in Scottish public services over the next three years are unreliable, an expert on public finance has told a budget review panel.
Arthur Midwinter, a visiting professor at Edinburgh University and a finance adviser to the Parliament’s Labour group, said there were no hard numbers in the public domain to validate the forecasts. He claimed figures were based on ‘questionable assumptions’.
‘The reality is no decisions have been made and the projections in the Pre-Budget Report are not fixed funding envelopes. Forecasts based on them are of little use to decision makers,’ he stated in his submission to the independent panel, appointed by Scottish ministers to present public spending options.
The panel’s recently published consultation paper said that under any reasonable assumptions, Scotland’s departmental expenditure limit was likely to fall by £3bn – 3.6% per year – between 2010/11 and 2013/14.
But Midwinter argued that the forecasts were based on ‘questionable assumptions regarding spending projects in the PBR, which roll forward the current cost of services’ and are ‘neither plans nor allocations’.
He adds: ‘In my view, forecasts based on soft numbers in conditions of fiscal volatility and political uncertainty are at best “guesstimates”, not analysis. They do not provide a reliable basis for a review of the Scottish budget.’
Midwinter said the projected figures were based on work last year by the Institute for Fiscal Studies.
He told Public Finance: ‘We now have more accurate figures following the UK budget. On the basis of these figures, I would suggest that any cuts in Scotland would be closer to £1bn rather than £3bn.’
Midwinter said his calculation was based on the information available now but he acknowledged that ‘the direction of change will depend on who wins the general election’.
In his submission, he challenged the Scottish Government’s belief that it could take steps to ‘grow’ the economy.
He said: ‘My own view is that the Scottish Government has neither the fiscal tools nor the devolved responsibility to stimulate economic growth.
‘The overriding budget objective of the next Spending Review should be to support economic recovery and not be distracted by growth targets the Scottish Government can do little to influence.’
