Scotland’s auditor general identified a funding shortfall of £3bn, but council officials are not helping the situation
There has been another dire warning about public spending in Scotland. These are arriving with ever greater frequency as politicians, academics and commentators prepare themselves for what are expected to be apocalyptic cuts in the Scottish budget in coming years. But there is a law of diminishing returns operating: the more stark the warnings, the less seriously people in the public sector seem to take them.
The latest forecast of doom came from the auditor general for Scotland, Bob Black, who has identified what the press inevitably called a ‘Black hole’ in the accounts of the Scottish Government. At present spending levels, Black says, there will be a shortfall of £3bn over the next three years. The key phrase is ‘at present levels’, for there has been so much money flowing through the Scottish Executive budget in the past decade that the main problem faced by Scottish finance ministers has been how to spend it all. The Scottish budget has more than doubled since 1999, from £17bn to £34.7bn.
The party is now over, by common agreement. The Scottish Government is already pushing through efficiency savings of 2% a year as part of its own economy drive, but Black is adamant that this will not be nearly enough.
Inevitably, attention is turning to the high-profile ‘freebie’ services, such as free personal care for the elderly, free prescription charges, free pensioner bus transport and free school meals. While these are popular policies in the country, local authority officials tend – in my experience – to regard them as a waste of money.
‘Middle-class subsidies,’ said one senior council official last week. ‘My children don’t need free school meals.’ Probably not, since council officials are really rather well paid right now.
What you do not hear are proposals to meet the fiscal crisis by cutting senior staff pay levels, abolishing bonuses for executives, freezing public sector pay or ending final salary pensions. Nor does there seem much enthusiasm for the various proposals being floated for reshaping Scottish councils to make them more efficient.
The Herald newspaper has been campaigning for a reduction in the number of Scottish councils. There are 32 all-purpose authorities, which seems a lot for a country with only 5 million people. But the idea is not exactly capturing the imagination of public sector service chiefs.
Many say that, while this might be desirable and more efficient in the long term, it wouldn’t save much money, and the disruption caused by redrawing the boundaries, merging some councils and abolishing others would itself be very costly at a time of spending constraints. In the through-the-looking-glass world of public sector finance, it is cheaper to spend than to save; more cost effective to be overstaffed; and more efficient to defer efficiency. You sometimes get the impression that it is impossible to do anything about spending in the public sector. I was told that even making senior staff redundant really isn’t on because they are entitled to such generous severance and pension payments.
Well, I think they might have to think again. The public sector in Scotland employs almost 600,000 people and their salaries and pensions take up almost two-thirds of Scottish Government spending. Health board chiefs are earning salaries that would have been unthinkable ten or 15 years ago. Many are making more than £200,000 a year and award themselves large bonuses. Many council chief executives are also on six-figure salaries.
I can’t see any politicians axing highly successful policies such as free personal care for the elderly – which is now belatedly being adopted south of the border – when senior public sector officials are earning salaries that are eight times the average wage. MSPs in the Scottish Parliament are paid considerably less than MPs in Westminster, and they have never had lavish expenses. So don’t expect any sympathy from them. Getting control of spending in Scotland won’t be pretty.
Iain Macwhirter is political commentator on the Sunday Herald
