Well, the Comprehensive Spending Review has finally been delivered. There were no showstoppers today as most of the bad news had been drip-fed out to the public over the past few weeks. Half a million people losing their jobs, a slashing of welfare and a drastic cut to Social Housing were the biggest bouts of bad news for me, particularly as charging claimants near market rates surely takes the ‘social’ aspect out of it. I will be looking on in interest as this Green Investment Bank gets up and running but I suspect it is a new name for old money as the “up to £1bn†funding was half of what was expected and way short of the hoped for £6bn. There is certainly little evidence that the Chancellor is making good on the “greenest Government ever†boast.
From a Scottish perspective, this is all largely irrelevant of course. Osborne’s decisions on health, education and justice spending won’t make a difference to what money is spent by Holyrood. The big figure is how much the devolved budget would be cut by.
The expectation from the Scottish Government was that there would be a £4bn cut in the devolved budget over the next four years, starting with a £1.2bn cut from next year. My suspicion of an element of expectations management and low-balling from the First Minister on this one was pleasantly unfounded as there will be below-inflation cash rises for each of the devolved regions as a result of increased spending in health and education. Cameron’s ‘respect’ agenda in operation or just a lucky corollary of decisions taken elsewhere?
However, Scotland is nonetheless now at a double risk of having a welfare state culture without the welfare and a public sector reliant economy without a sufficiently sizeable public sector. Whether Osborne will be phasing (some could say weaning) claimants off their cheques remains to be seen but we are now living the doomsday scenario of the almighty clash of an ardent capitalist Tory Government in London and an unapologetic socialist Government in Scotland.
The unavoidable fissures that this creates around the geographical differences in political philosophy and squeezed debits and credits of a shrinking Scottish budget may make life significantly more painful north of the border than it will be in the south.
The word fairness has been hammered into the British public by the coalition leaders but it seems to have been merely sledge-hammered into the CSR as a presentational bolt-on.
One could argue that Scotland is dealt with fairly through the strict Barnett formula. If England and Wales see spending decrease, then so too will Scotland and in equal measure (more or less). However, that is to perhaps overlook any disproportionate effect of Defence cuts north of the border, on the increased cost of fuel north of the border, on the punitive Grid charges holding back Scotland’s renewable revolution and on the lack of Barnett consequentials from the Olympics to Crossrail.
They are all separate battles for separate occasions though. The real unavoidable challenge lies at John Swinney’s door and the Scottish Parliament’s as a whle as they must now implement a Scottish Spending Review and budget with the figures that can now be punched into a calculator to find how much is at our disposal.
Osborne has done what he thinks is his best, the baton has been passed to the Scottish Government so, to amend an old phrase, pain devolved is pain delayed.
Put another way – the worst is yet to come.
#1 by commenter on October 20, 2010 - 2:56 pm
“charging claimants near market rates surely takes the ‘social’ aspect out of it”
State-owned housing that costs less than market rates, and is costed according to ability to pay – sounds pretty social to me…
#2 by Jeff on October 20, 2010 - 3:13 pm
I disagree. Less private money, less public money and charging higher rents does not sound like a recipe for solving a shortfall in housing for those who tend to struggle with their incomes.
It’d be great if everyone could charge the going rate for rent, or even 80% of it, but sadly life doesn’t always work out that way.
I just hope Osborne has done his sums regarding supply and demand.
#3 by James on October 20, 2010 - 4:43 pm
And WTF is this stuff about not getting housing benefit until you’re 35? I don’t get that at all. Are we only in favour of homelessness amongst the young? Surely a Tory government should want to make us all homeless? (apologies, it’s all made me a bit giddy, in a bad way)
#4 by Francis on October 20, 2010 - 5:23 pm
I think your right about the Green Investment Bank largely being a new name for old money. What’s particularly disappointing is that the £1 billion doesn’t kick in until 2013-2014.
There is also an interesting dilemma for the Scottish Government here. Although a quarter of the £1 billion has been earmarked for Scotland, this is dependent on the Scottish Government relinquishing its claim to the fossil fuel levy, estimated at around £180 million. So while you could argue Scotland is getting its fossil fuel levy – it won’t be until 2013-2014.
#5 by James on October 20, 2010 - 5:41 pm
Francis, you’re right, and the “Bank” is such a limited sum compared to the need. It’d have been much easier to split RBS into a green investment bank and a super-cooperative social bank.
We collectively failed to seize the crisis for constructive purposes, and so the Tories have seized it for destruction.
#6 by Chris on October 20, 2010 - 5:24 pm
Housing benefit acts as a floor for private rents (not meant to be a pun) and has sustained the buy-to-let boom.
I think a few buy-to-let landlords going out of business and a collapse in the price of 1 and 2 bedroom flats might be a good thing.
#7 by James on October 20, 2010 - 5:38 pm
I agree that some fall in house prices, cause of much shock horror angst at the Daily Mail, would actually be a good thing. The trouble is that cutting housing benefit makes people unable to pay rent as it is now – and I’m not convinced that those on HB out-compete people paying rent.
Also, congrats on providing our 1,000th comment.
Pingback: tweets for 2010-10-20 « The Mushkush Digest