If you need a reminder of the stuttering halt that the UK economy has come to this year, even after the tumult of 2008 is taken into account, then you need only read the following excerpt from Alistair Darling’s 2010 budget delivery:

“This year … I expect the economy to grow by between 1 and 1.5 percent. I will bring my forecast for 2011 in line with that of the Bank of England, to growth of between 3 and 3.5 percent.”

The IMF downgraded the UK’s growth forecast to 1.1%, less than a third of what Alistair had forecast less than two years ago (his Dec 2009 forecast was 3.75%).

It is within this climate of anaemic growth that John Swinney had to stand up in front of the Scottish Parliament yesterday to explain how he would balance the books for the coming years, albeit safe in the knowledge that all of his fellow SNP MSPs would vote in favour of whatever he said.

So, how will the Scottish Government square the circle of meeting manifesto commitments (freezing council tax, protecting NHS spending) and keeping existing benefits (free tuition, free care for the elderly) with a shrinking pot of cash over the next few years.

Well, taken directly from John Swinney’s statement, we will see the following:

– The pay policy for 2012-13 therefore extends the freeze on basic pay and suspends access to bonuses for a further year. My aim is that 2012-13 will be the last year of a pay freeze and we may be able to see modest increases in the years that follow.
– I propose that the business rates paid by large retailers of both tobacco and alcohol will be increased by a supplement from 1st April 2012.
– We are reducing organisational costs, including a reduction of 18% in the core Scottish Government’s operating costs over three years and with a requirement that all public bodies will bear down on their own comparable costs.
– In addition, I have taken a decision on the local government capital settlement that, maintains their share of the total capital funding across the period, but will be reprofiled over the remainder of this Parliament. This reflects the Government’s wish to maximise the availability of capital spending and recognises that local government has the power to borrow in order to supplement their capital budgets. We will work with our partners in local government to see to what extent this can sensibly be used to maximise capital expenditure, which is critical to economic recovery.

Let’s look at some of the key items in turn:

Tesco Tax
This one was always a no-brainer, even if the papers are trying to whip up a storm about it today. If those with the deepest pockets need to carry most of the cuts can, then Tesco and other major retailers are near the front of the queue. Add to that the angle that John Swinney is targetting retailers of problem-creating products of alcohol and tobacco to raise revenue and this is a measure that is coming in one year too late, but is welcome nonetheless.

Public Sector Pay Freeze
I’m sure if John Swinney could freeze the pay of private sector workers then he would have done too. The alternative to freezing public sector pay is sacking some people and increasing the pay of others. A freeze therefore is the clearest way of reducing the pain and showing we’re all in this together. Again, a relatively straightforward decision for John Swinney to make. Noone likes their pay going down in real terms but I’m sure we can all agree that that is preferable to losing one’s job entirely.

Councils
This is where things start to get interesting. SNP MSPs are protesting to Westminster that they do not have the necessary economic levers to manoeuvre their way through the economic storm. And yet, those same SNP MSPs, with John Swinney at the helm, seem comfortable enough to place restrictions on individual councils in order to centralise decision-making and push priorities at Holyrood. Perhaps that is the most efficient use of taxpayers money but there is more than hint of hypocrisy about it. Why shouldn’t we let individual council areas decide if they want to pay more Council Tax in order to have more, better local services? Is it right that the SNP have councils in a financial arm lock just to help make them electable?

The Scottish Government is effectively taking capital spend from councils in order to pay for capital spend of Holyrood projects, leaving those councils to have to borrow instead. Fair? Probably not. I don’t think I’d want my local council taking out too big a loan just as the cost of borrowing is reaching new heights. We saw with the Icesave debacle that councils are not always the smartest when it comes to where to place deposits so the less finance decisions the better. That said, there is no arguing that the Council Tax freeze is a bad thing for families feeling the squeeze in a good number of ways, so that side of the coin has to be kept in perspective.

All in all, on the face of it, there is a distinct lack of shocks, surprises or, well, serious pain here and at some point one has to decide that John Swinney is not so much putting off the inevitable but actually making the numbers add up year after year and getting Scotland through the eye of the needle/storm (delete as appropriate depending on your analogy preference).

The clues as to the weak spots in John Swinney’s arguments must come from the Shadow Finance Secretaries from the opposition parties:

Labour’s Richard Baker had this to say: “We must assume there has been extensive consultation with major retailers to make sure this proposal is fit for purpose unlike the previous attempt. For a government that is meant to be keen on economic recovery, there are some savage cuts that will not help that cause.”

Attacking the budget over the Tesco Tax is, for me, solid evidence that this is a solid budget. It is small and medium-sized businesses that are facing the worst of this economic crisis and furthermore there is an argument in favour of rebalancing the marketplace more in favour of the smaller retailers out there anyway. We don’t need more Tescos so why is charging it higher rates bad for economic recovery?

The Conservatives’ Gavin Brown has picked up the reins from ex-MSP Derek Brownlee with a forensic challenge to John Swinney’s positioning: “Their own document calculates a £1bn reduction in real terms for local government. They have completely backtracked on their pledge of four years ago to increase teacher numbers, they are making cuts to enterprise, innovation, the third sector, Skills Development Scotland, higher and further education and housing and regeneration.”

This is undoubtedly the weak point of the budget for the year ahead, shifting the risk and the responsibility over to councils and potentially scapegoating them. Gavin is right to question this perceived shortfall and hopefully all stakeholders will be clear what their budgets mean for the next three years, as there is clearly currently confusion and suspicion.

Patrick Harvie for the Greens noted: “There is something fundamentally wrong with a spending plan where the motorways budget is over three times the size of the housing and regeneration budget, and these figures are moving in opposite directions every year. It’s very easy for Alex Salmond to call for a summit on high fuel bills but his Government has consistently failed to deliver the £100million a year home insulation programme that fuel poverty campaigners have been asking for year after year at budget time.”

Patrick is, as usual, very much correct. I stayed in rickety cottages in Norway last week that had better insulation and glazing than quite possibly every house I’ve ever lived in in Scotland. It’s bizarre that homes in cities in Scotland can be freezing but a little hut that looks out onto the North Atlantic Ocean can be toasty with minimal heating required. It is a crisis that Scots either do not care for or truly do not appreciate and, either way, much like road-building programs, the Greens rightful protests will fall on deaf ears as usual.

Willie Rennie said: “The SNP have delayed making any decisions for a year. Today they are still not making the right choices. Their priority is not the economy but on getting tough choices off their desks and onto someone else’s. The Scottish Government must take responsibility for their part in getting Scotland back on the road to economic recovery and acknowledge the key decisions taken by the UK Government to achieve this.”

It’s all a bit jumbled there for my liking. Perhaps trying to attack the SNP on too many fronts prevents one key point from getting through, a regular Lib Dem fault these days. Willie doesn’t say what the “right choices” are so how do we know that the SNP choices are the wrong ones? Furthermore, John Swinney spelled out in detail what his plans are for Scotland’s economic recovery and the Plan MacB has been trailed for days. I don’t think the Lib Dems can expect to get away with ignoring the detail and just claiming, urging people to believe, what it is that the Lib Dems want to believe.

So, all in all, once again, the Scottish Government has (so far) managed to keep all the tartan goodies since 1999 intact, maintain the promises of its manifesto and seemingly not have to inflict too deep cuts on the Scottish public. Do we need to know how John Swinney does it as long as he can? Well, yes, we do need to know and there is still a risk of Scotland’s finances unravelling.

Indeed, rather than any political chicanery, trickery or sleight of hand, our undoing might end up being that growth forecast of 1.1%, already down from 3.75%, dropping much, much lower and Scotland’s budget falling past a tipping point that even our beloved Finance Secretary cannot salvage an appropriate budget from.

I suspect John Swinney has worried eyes on Greece, Italy and Portugal just as much as the EU Finance Secretaries do.

But so far, so good.