STUC Scottish budget reaction

November 17th 2010

Scottish Government

Grahame Smith STUC General Secretary said:

“The economic gloom will deepen considerably as a result of this budget with cuts impacting considerably on demand in the Scottish economy and, crucially, in the local communities where public service workers spend most of their pay.

“The knock-on effect for the private sector will be profound and threatens to squeeze the life out of any economic recovery in Scotland. It is particularly galling to hear Scottish Tory MSPs preaching to the Cabinet Secretary when their party is the prime architect of the threat we face. Mr Swinney should have no truck with their siren calls for privatisation and wage and job cuts and he should rule out making any budget deal with the Tories.

"The Cabinet Secretary's approach to the deal with local government was heavy handed in the extreme and clearly undermines local autonomy and, as a consequence, local accountability"

"With inflation running at well over 4 percent, the Government’s pay policy represents an effective real terms wage cut for every public service worker in Scotland. Even workers receiving the modest pay protection outlined stand to lose up to £400 a year in real terms. Many thousands more who earn less than the average wage stand to lose £1000 per year in real terms.

“STUC welcomes what appears to be an extension of the Scottish Government’s Living Wage pledge to NHS Scotland staff, a position for which it has long campaigned.

“STUC also welcomes the Scottish Government’s strong commitment to No Compulsory Redundancies and maintaining headcount and in particular its commitment to working alongside Scottish unions and all public sector employers to establish a framework which can help it to deliver.

“Notwithstanding the very difficult financial circumstances surrounding this budget, Mr Swinney has missed some important opportunities – particularly in relation to revenue.

Revenue options

“The annual cost of Small Business Bonus Scheme is £150 million a year – evidence of its effectiveness is non-existent and the money could be far better targeted on achieving tangible jobs outcomes. In fact any tax concessions aimed at business should contingent on jobs related investment.

“If extended for its fourth year the annual cost of the Council Tax Freeze will rise from £210 million to £280 million with additional monies lost to Westminster coffers from lost Council Tax benefit. Protests about the non-progressive nature of the Council Tax are wearing thin considering the Government refuses to countenance the use of the Standard Variable Rate – a 1p increase here could raise £400 million.

“Add to these figures the fees paid to private consultants of £250 million this year and it is easy to see that a range of income maximisation measures have been ignored.

Capital spending

In the context of the criminal cut in capital resources passed down by Westminster, STUC can understand why Mr Swinney has chosen to transfer £100 million in revenue to capital spend. It must be remembered though that jobs created through this mechanism will be at least mirrored by employment reduction in public services, and that this could be to the particular disadvantage of women workers. There is also now a particular onus on Mr Swinney to ensure that any contracts provided to the private sector through revenue spending do not result in disproportionate private profits at the expense of spending on Scottish services.

Legal obligation

“STUC fully endorses the call from anti-poverty campaigners that the Budget Bill contains a legal obligation on public bodies not to increase social and economic inequalities as a result of any cuts in spending and calls on MSPs to bring forward appropriate amendments.”

Ends

For further information contact Dave Moxham 0141 337 8100

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