New Economic Reality

This conference, rather ironically held in the plush surroundings of the Sheraton Grand Hotel in Edinburgh’s financial quarter, provided a range of high level speakers to address the age of austerity and where and how to fill the deficit gap. The main focus was the Independent Budget Review published by a group led by Crawford Beveridge CBE. Commissioned by the Scottish Government, the report was published in July 2010. There weren’t many laughs in the content – a reduction in the block grant, declining outcomes in education and health despite a higher per capita spend and unaffordable levels of public sector pensions. Robert Black, Auditor General, has been widely quoted in the press, said at the conference we should have prepared for this sooner and to be prepared for a long hard financial winter. A range of other distinguished speakers followed talking sacrifice of sacred cows and putting forward their cases for continued investment. Douglas Sinclair of Consumer Focus Scotland pointed out that all of this was service-centric and failed to take into account the needs of the citizen. Martin Woodrow of the British Medical Association defended ring-fencing health strongly, but failed to secure the support of any of the 200+ delegates.

The most striking speaker was Professor Frances Ruane of Ireland’s Economic and Social Research Institute who spoke bluntly about Irish solutions and the impact on the economy and individuals and put forward a plea for a monitoring body to measure rolling fairness. The idea is to avoid the same group in society being hit repeatedly by cuts. A panel of representatives for the five political parties gave their views on what they might protect or sacrifice first. Brian Adam MSP spoke for the Scottish Government saying they want to ringfence health budget and protect concessionary travel, free personal care and no rise in the Council tax. The sell-off of Scottish Water is also planned with significant financial benefits, although this will take time. Other solutions suggested are scrapping the Borders Railway and other large public projects. The bad news is that public sector workers account for 60% of the Government expenditure and so years of pay freezes, reductions in staffing by natural wastage, non-compulsory and compulsory redundancies face Scotland. The political parties are all developing their manifestos at the moment and Frances Ruane advised that they all agree on a savings figure and say clearly how they intend to achieve that. As Robert Black says ‘do nothing is not an option’.

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