30 April 2004
Scotland's Finance Minister Andy Kerr has given a stark warning that the forthcoming Spending Review will be much tougher than in recent years and that Scotland should be prepared for a less generous settlement.
Kerr told the Scottish Parliament's finance committee on April 27 that the recent Budget showed that the UK's future fiscal position was less positive than a year ago, with the current budget forecast to return to surplus 'slightly later' and net borrowing expected to remain slightly higher.
'In context, with gross domestic product running at £1,300bn, those are relatively small changes, but they will mean that there is even less reason to expect large increases such as those we have received in previous years,' Kerr said.
The finance minister warned that after two generous reviews in 2002 and 2000, the current one would provide an opportunity to realign some spending to make sure that it more closely matched the Executive's priorities. 'It is clear that no country can afford to increase public spending as rapidly as that every year,' he said.
Kerr warned that big pressures in areas reserved to Whitehall, such as defence and asylum seekers, would have be reflected in Scotland's share of expenditure in areas such as health and education.
He stressed that, without improved efficiency and productivity, inflation and pay pressures would take a substantial part of whatever resources Scotland received. Pay accounted for roughly 50% of Executive spending, he said.
PFapr2004
