John Swinney, difficult choices and the art of budget politics

The carrot: 'de-emphasised'. emPicture: Kyn Tharyn/em

The carrot: ‘de-emphasised’. Picture: Kyn Tharyn

Hidden away in the detail of yesterday’s budget was a small but very significant change in the Scottish Government’s approach to councils. In fact, it may be so important it determines both the election campaign and, possibly, the eventual winner of next May’s poll.

Gone was the friendly, hands-off attitude John Swinney adopted when he first came to power three and a half years ago. Instead, the Finance Secretary decided to ditch the carrot and use the stick.

Back in 2007, the SNP negotiated a concordat with local government which lifted many of the restrictions on councils. Much of the hated ring-fencing, which dictated how much had to be spent by councils on particular areas, was swept away.

In return for this new flexibility, councils were encouraged to embrace a council tax freeze with the incentive of £70 million a year shared out between them if they did so.

All the councils signed up to the three-year deal. Now we are into a new settlement and, instead of offering the councils more flexibility in return for extra money, Mr Swinney has done the opposite.

He has demanded that councils sign up to a series of commitments and requirements which will limit their room for manoeuvre and, if they don’t they will see their budgets slashed by a whopping £426 million.

So why the new, hard ball, approach? There appear to be two reasons, one practical and one electoral.

The practical comes from a recognition that it is in the government’s interests if councils do what the government wants. This was actually the reason ring-fencing started in the first place.

However, having swept away much of the ring-fencing, Mr Swinney felt he could not be confident that councils would do what he wanted and implement the policies the SNP wants to see adopted.

As a result, councils now have to agree to the following otherwise they will get their budgets cut, and cut by a sizeable amount:

  • Freeze the council tax for a fourth year.
  • Maintain 1,000 more police officers than were in post before this Government came into office throughout 2011-12.
  • Maintain the pupil-teacher ratio in P1-P3 and protect the number of teacher posts.
  • Start linking with the health service to deliver a joined up care service. £70 million has been set aside to help this.

Given that, if councils refuse to sign up to the new deal, they would have to increase their council tax bills by between 16 and 18 per cent, it is unlikely that any will refuse to do so – however much they may resent the strings which Mr Swinney has attached to the offer.

Pat Watters, the President of Cosla, the umbrella body for Scottish local authorities, welcomed the deal because he knew it would put Scottish councils in a better position than their counterparts in England, who are facing severe cuts.

If the Scottish councils agree to the deal, they will see their budgets cut by 2.6 per cent. That is going to cause difficult choices but that is nowhere near the sort of scale experienced by councils in England or, indeed, by Scottish councils is they refuse the deal.

Mr Watters said: “Nobody is saying it is brilliant, the money coming to Scotland is down but there is a significant level of ‘protection’ for local government compared to other parts of the public sector. Make no mistake this budget represents a cut and we are sharing the pain of a cuts agenda in the public sector – really tough decisions lie ahead and today’s announcement is only the beginning.”

And he added: “Yes, I am disappointed that this is a one-year deal and, yes, I am disappointed that we are losing at least 2.6 per cent of the cash in local government budgets and, yes, I am acutely aware of the difficulties that reduced capital will cause. However that said given the UK situation some reduction in resource was inevitable.

“Cosla’s main objective was to retain our share of the public sector cake which we have done. It is doubly pleasing that we have delivered as much protection for our members as possible without boxing councils in and denying them the opportunity to take their own local view on the proposals we have developed with government.”

But this brings us on to the politics, and in particular the electoral politics, of this new deal.

The money being offered to councils to agree to this deal (at the heart of which is the council tax freeze) is substantial: £426 million.

If that money had been shared out across other departments it could have prevented any cuts at all in the following: culture, commissions, railways, other transport projects, enterprise, energy and tourism, housing, legal aid, central police services, the courts, prisons, fisheries, rural services, the forestry commission and the Crown Office.

Alternatively, it could have been directed at just further and higher education, housing and prisons – the areas which have to sustain the biggest cash cuts, and saved these areas from any budget squeeze at all.

With cuts coming in all these areas – and many more – there will undoubtedly be job losses and there will be services lost and curtailed.

So the question is this, which is more important, a council tax freeze or maintaining frontline services in other areas (and also, crucially spending on roads and housing which boosts the construction sector) and allowing councils to raise council tax?

Mr Swinney believes it is the former and it is difficult to escape the feeling that this is a purely political decision driven by the SNP belief that this will win the party votes, and ultimately the election, next May.

This was always going to be a budget about priorities and Mr Swinney made it clear his priority is the council tax freeze. Is that merely because, as the Scottish Government claims, it is simply determined to help households keep bills down? Or is it because it believes this will win it the most votes next May?

Indeed, it is worth speculating on how the budget would have looked had Mr Swinney not had one eye on an election in six months. Given the importance he apparently attaches to growing the economy and in the strength of the construction sector, maybe then he wouldn’t have slashed the housing budget by 19 per cent or £94 million and maybe he wouldn’t have cut enterprise, energy and tourism by even more – by 23 per cent (£26.5 million). And maybe also, he would have allowed councils to raise the council tax and taken that £426 million and invested it elsewhere.

  • Digg
  • del.icio.us
  • Reddit
  • email
  • Slashdot
  • StumbleUpon
  • Mixx
  • Fark
  • Technorati

Related posts:

  1. CBI weighs into council tax freeze debate
  2. Austerity budget may be Swinney’s easiest yet
  3. Scottish Government’s budget passed without usual stramash
  4. What’s behind call for end to council tax freeze?
  5. Pay freeze and cuts in the Scottish budget

Filed under Political Analysis · Tagged with , , , , , , , , , ,

Open bundled references in tabs:

Leave a Reply