By David Scott in Edinburgh
10 September 2009
Scotland faces ‘deep and prolonged’ spending cuts of up to £2.5bn, according to a report by a leading think-tank.
Following a study of the impact of a squeeze on spending plans, the Centre for Public Policy for Regions in Scotland concluded that an 8.5% real-terms cut in the Scottish budget, which presently stands at around £30bn, could be needed between 2009/10 and 2013/14.
The report, commissioned by the Society of Local Authority Chief Executives and Senior Managers and CIPFA directors of finance, said ministers would need to re-examine ‘taboo’ issues, such as pay limits, cutting education and health spending and selling the publicly
owned Scottish Water agency.
The report warned: ‘The anticipated downturn in budgetary prospects is set to be deep and prolonged.’
The CPPR pointed out that the Scottish budget was estimated to be higher in 2009/10 by 4.6% in real terms compared with the previous year. It said there would be a ‘steady decline’ between 2009/10 and 2013/14, an 8.5% fall in real terms – equivalent to a £2.5bn cut in the budget.
The report concluded that ‘radical ideas need to start to be addressed now’.
Brian Lawrie, chair of CIPFA directors of finance section in Scotland, said there was a view that the Treasury assumptions, on which the CPPR report was based, were prepared some months ago. He believed a more realistic assumption was probably a 10%–12% real-terms reduction over the period to March 2014.
Mary Pitcaithly, chair of Solace in Scotland, said: ‘There are real difficulties of rising demand just at the time we are heading towards a reduction in expenditure. It is a double whammy.’
Arthur Midwinter, professor at Edinburgh University and adviser to the Labour party, claimed the CPPR forecast was ‘premature’. ‘It was based on medium-term projects subject to revision in the 2010 Spending Review. Such decisions do not operate in a political vacuum, and mechanistically applying dubious financial assumptions is not a sound basis for budgetary forecasts,’ he said.
10 September 2009
Scotland faces ‘deep and prolonged’ spending cuts of up to £2.5bn, according to a report by a leading think-tank.
Following a study of the impact of a squeeze on spending plans, the Centre for Public Policy for Regions in Scotland concluded that an 8.5% real-terms cut in the Scottish budget, which presently stands at around £30bn, could be needed between 2009/10 and 2013/14.
The report, commissioned by the Society of Local Authority Chief Executives and Senior Managers and CIPFA directors of finance, said ministers would need to re-examine ‘taboo’ issues, such as pay limits, cutting education and health spending and selling the publicly
owned Scottish Water agency.
The report warned: ‘The anticipated downturn in budgetary prospects is set to be deep and prolonged.’
The CPPR pointed out that the Scottish budget was estimated to be higher in 2009/10 by 4.6% in real terms compared with the previous year. It said there would be a ‘steady decline’ between 2009/10 and 2013/14, an 8.5% fall in real terms – equivalent to a £2.5bn cut in the budget.
The report concluded that ‘radical ideas need to start to be addressed now’.
Brian Lawrie, chair of CIPFA directors of finance section in Scotland, said there was a view that the Treasury assumptions, on which the CPPR report was based, were prepared some months ago. He believed a more realistic assumption was probably a 10%–12% real-terms reduction over the period to March 2014.
Mary Pitcaithly, chair of Solace in Scotland, said: ‘There are real difficulties of rising demand just at the time we are heading towards a reduction in expenditure. It is a double whammy.’
Arthur Midwinter, professor at Edinburgh University and adviser to the Labour party, claimed the CPPR forecast was ‘premature’. ‘It was based on medium-term projects subject to revision in the 2010 Spending Review. Such decisions do not operate in a political vacuum, and mechanistically applying dubious financial assumptions is not a sound basis for budgetary forecasts,’ he said.
