By Mark Smulian | 7 August 2013
The Scottish Government’s budget to 2017/18 will fall in both cash and real terms following this year’s UK Spending Review, the Centre for Public Policy for Regions has said.
The University of Glasgow-based centre said in a briefing note that although the Scottish Government’s day-to-day resource spending would fall, its capital spending would rise if its loan support programme for business were included in the total.
‘Such loan support is intended to engender more private sector activity,’ the centre said.
‘Including the loan support means government-related capital spend rises in both cash and real terms. However, removing it means there is a further cash and real-terms fall in investment spend for Scotland.
‘Hence, it is possible to argue that the Scottish Budget has both fallen and risen in cash terms.’
The briefing pointed out that the UK had so far experienced just over half (57%) the total real-terms funding cuts expected from the Treasury.
But it said that only 40% of cuts due to day-to-day resource spending had so far been made, while those on capital had largely ended.
‘The resource cuts implied by the current UK government plans for both 2016/17 and 2017/18 are bigger than we will see in any of the years up to then,’ it said.
The briefing noted the Scottish Government had avoided outlining where it would seek to make cuts after 2015/16 and ‘this might be explained by the potential change of circumstances brought about by a “yes” vote in the [independence] referendum’. It added, ‘greater clarity would be needed on a budgeting strategy for an independent Scotland.’
Report author John McLaren said: ‘The 2013 UK Spending Review has confirmed two important budget issues.
‘First, the fiscal consolidation is set to be at least eight years in duration, compared to six in the coalition’s original budget of 2010.
‘Secondly, the resource budget cuts still to come include some of the harshest annual reductions seen over this period.’