Scottish Parliament Faces Budget Crisis

Budgets, budgets, budgets. While EU monetary commissioner Oli Rehn has been in Dublin trying to force through the Republic’s budget, across the water in Scotland a budgetary crisis looms large.

The Scots might not be on the verge of calling in the IMF but at present Holyrood is on course for a serious shortfall next year.

George Osborne’s Comprehensive Spending Review cut the Scottish Government budget by £1.3billion in 2011-12 (a 4.2 per cent reduction overall). As if this cut was not bad enough, SNP finance secretary John Swinney will also have to implement extra cuts in the region of £500million next year that were to be made this year but which Holyrood put off until 2011-12.

In a piece in the latest issue of Holyrood magazine John McLaren, a senior researcher at the Centre for Public Policy for the Regions, says, ‘the Scottish Parliament is facing a genuine crisis. It needs to agree a new budget for 2011-12 quickly, in order to allow those in the public, the private and the third sectors who have to implement major changes in the next three to six months to do so in a planned manner.’

Next year is also election year at Holyrood, and already there have been spats between the SNP and Labour over budgetary issues. Labour, who are ahead in the polls but coming under increasing scrutiny, want to end a freeze on council tax, a policy that has the support of just 35% of Scots. The SNP-minorty administration has pledged to freeze the unpopular tax.

‘At some point, compromises need to be made,’ McLaren says. ‘If the political parties in Scotland remain stubbornly resistant to genuine negotiation simply because they think it will aid them at the ballot box next May, the Parliament’s reputation will suffer. But even more importantly, Scotland will suffer as such a zombie Parliament commits us to enter a new financial year being run on the basis of a month-by-month crisis budget.’

So far Holyrood has been able to insulate many Scots from the full brunt of the coalition’s cuts but the Parliament is unlikely to be able to provide such protection for much longer.

Already many Scottish towns feature boarded up units on the high street and streams of jobless young men and women. Quite what these towns and communities will look like after five years of continuous disinvestment is a growing concern for many. As services are either pared back to the bone or cut altogether, the social glue that keeps the nation together will be pulled apart, inducing a downward spiral of poverty, crime and drugs.

The SNP has diverged sharply from Westminster in its approach to budget cuts, arguing that only government spending can revive Scotland’s flagging economy. However, in the coming months the Scottish Government seems certain to become yet another adherent of what what Paul Krugman recently described as ‘the priesthood of some barbaric cult, demanding sacrifices in the names of invisible gods’. Quite effect this will have on Scottish voters remains to be seen.