The Scottish Parliament yesterday gave its final approval for finance secretary John Swinney’s budget for 2013/14 in the face of fierce opposition criticisms and despite a series of last minute announcements designed to gain cross-party support.
Among the concessions announced were:
• An increase in funding for colleges of £61 million over the spending review period, compared to numbers outlined in the draft budget statement.
• An additional £38 million for the housing budget, increasing funding for energy efficiency of homes to contribute to climate change targets, and more affordable housing.
• £2 million to bring vacant town centre properties into residential use.
• An additional £10 million for trunk road maintenance. The additional funding will be used to deliver essential road and bridge repair works identified as part of Transport Scotland’s detailed inspection programmes.
• £1 million to double support for entrepreneurship through the EDGE fund. Maintaining the government’s continued emphasis on capital spending, the finance secretary reiterated that Holyrood would be spending £3.4 billion this year on capital projects “in the face of drastic budget cuts from the UK government.”
Swinney said the budget “prioritises construction, skills, employment and a green economic stimulus”.
“We have taken steps to mitigate the damage being done by Westminster welfare reforms and to make sure our public services are fit for the future.
“Through immediate infrastructure investment we are providing a boost to Scotland’s construction sector and wider economy and we are also maintaining the most supportive business environment in the UK…With the full fiscal and economic powers of independence the Scottish Government could do even more to strengthen our economy and create jobs,” he added.
Despite the new funding announced for colleges, Robin Parker, president of NUS Scotland, slammed the proposals as “unacceptable”.
“We were hoping for much more from this budget. We fear that a cut of £24.6m could see damage to students and to colleges, coming at the same time as colleges are merging, and huge structural change.”
In its draft budget, ministers in Scotland had initially proposed a £34.6m cut to college budgets. Of the £61 million announced yesterday, however, an initial £10 million injection which still means the sector loses £24.6 million.
Accusing the SNP of failing to come up with anything new, Scottish Labour’s shadow finance secretary Ken Macintosh told Swinney:
“There is nothing new here, nothing fresh, we are stuck with the same prescription the SNP have offered us for two years running and for two years running they have promised jobs and growth and yet there have been no jobs and no growth.”
Arguing meanwhile that Ministers had taken their “eye of the ball” by being distracted by the referendum on independence, Scottish Conservative finance spokesman Gavin Brown responded:
“To pass the test this had to be a budget that genuinely prioritised the economy. We believe the SNP has failed that test miserably.
“We know that despite the Scottish government’s rhetoric of ‘savage cuts’, it will have £7 million more next year and over £380 million more than the SNP thought at the time of writing its 2011 election manifesto.
“All the detrimental decisions in this budget are political ones by the SNP, merely designed to curry favour with the electorate rather than give a vital boost to the economy.
“…This is a sign that the Scottish government has taken its eye off the ball, and is more concerned with separation than the everyday business of running a devolved government.”
Scottish Lib Dem leader Willie Rennie simply declared that the budget “fell miserably short on opportunities for those who need them most.”
Outlining the continued challenges facing Scotland in achieving growth, professor Jo Armstrong, an economist with Glasgow University’s Centre for Public Policy for the Regions, today argues in the Scotsman that:
“Securing a balanced budget in the face of UK fiscal consolidation and in the run-up to the referendum is challenging. Delivering a step change in sustainable growth will be even harder to deliver.”
In a further blow to the SNP’s dream of independence based on North Sea Oil, a report issued yesterday by the Institute for Fiscal Studies warned that by 2017-18 oil and gas revenues could be down as much as 17% from 2011. The report explains (pages 303-304) that:
“Oil and gas revenues are forecast to fall to £7.4 billion in 2012–13 (over a third lower than in 2011–12) and to £4.5 billion in 2017–18. A large part of this decrease is the result of a fall in corporation tax revenue from £9.2 billion in 2011–12 to £5.2 billion in 2012–13 and to £3.1 billion in 2017–18. This will see revenues fall from 2.0% to 0.6% of total tax receipts.
“Declining revenues are partly the result of lower production. Both oil and gas production are forecast to continue to fall across the period to 2017–18 (and by more than previously forecast in Budget 2012). Oil and gas production in 2012 is forecast to have fallen substantially (by 12%) as a result of higher maintenance and a gas leak in one of the fields. By 2017, oil production is forecast to have fallen by 16% (to 44 million tonnes) and gas production by 15% (to 13.7 billion therms) compared with 2011.52.
“…The loss of revenue is of some importance in a UK context. It would, of course, be a much more important issue for an independent Scotland.”