Now it is plain for all to see. Teachers, nurses, dustbin collectors, social workers, park-keepers, librarians, environmental health inspectors and the rest of the long list of public employees are the unfortunate people who will have to pay the price of the bankers’ bailout. A pay freeze is the chosen instrument.
It was the centrepiece of John Swinney’s £28 billion budget announced in the Scottish parliament on Wednesday. Behind the finance secretary’s accountant-style delivery, you could feel his anger at being forced to cut and cut and cut to help pay off the £850bn debt heaped on the UK by the bankers.
“Between 2010–11 and 2014–15,” Mr Swinney told MSPs, “Scotland faces a real terms cut of 12.3 per cent – £3.7bn – including a real terms cut of 36.7 per cent to our capital budget. Against this stark backdrop, we will steer a distinct course and make the very best use of the constrained resources available to us.”
There will be a pay freeze for everyone in the public sector earning over £21,000 a year. It will last at least another year, and will probably be followed by below-inflation increases for the next few years. This unpleasant reality is what is meant by the pleasant-sounding word “efficiencies”. This, and job cuts of course: 25,000 in the last year.
To be fair, Mr Swinney has tried to stave off the job losses – and stimulate the economy – with the SNP’s “Plan MacB”. Over £750 million is being transferred out of revenue expenditure and into capital projects such as the new hospital in Glasgow, the school building programme, low-cost homes and the new Forth Bridge.
The health budget of £11.5bn is being “protected” in money terms – but, when inflation is taken into account, there is a real cut. But some important savings for the NHS will come in the long term from Mr Swinney’s new £500m fund – over the next three years – for preventive programmes aimed at three specific groups: the elderly infirm, deprived children and young offenders.
Controversially, about one-fifth of that money is to come from a levy on supermarkets selling alcohol and cigarettes, the causes of much NHS expenditure. The supermarkets say they are being discriminated against and that most problem drinking is caused by people buying from corner shops.
The main losers in this budget are the local councils. They are being given just £8.8bn (a cut of 7 per cent in real terms) and being forced into freezing their council tax. The government says councils will have to borrow money if they want to build more schools or homes or improve their roads.
Scotland’s 41 further education colleges are another set of losers. Their budget is being cut by £70m. Some may be forced to merge. Opposition MSPs are asking how this squares with improved youth training and the programme for 100,000 apprenticeships. The 20 universities fare a little better, with an increase of £140m next year. But it is less than the £200m the universities say they need to keep up with English universities which, next year, will rake in £9,000 per student.
So there are plenty of controversies to help MSPs while away the winter until this “draft” budget is passed in the early spring. But “draft”, in this case, means “more or less fixed” because the SNP, for this first time, have a majority in parliament.
The real controversies will take place in the 32 councils which have to implement much of this budget. Will they dare to defy the council tax freeze – which, in law, they are entitled to do? Will they tear up the concordat which has seen a partnership between central and local government over the last four years? Will they just stop providing services and explain to aggrieved residents that it is all the fault of government cuts?
And this council-rumbling will take place as local elections are looming next spring and the trade unions embark on a winter of discontent. They have plenty of be discontent about: the pay freeze, job losses, unemployment, higher pension contributions. The unions’ argument, that the deficit should narrowed by closing the tax loopholes enjoyed by the rich and by the large corporations – and not by ordinary workers – may begin to find traction through such a winter.
In the face of this swelling unease, there are signs that the coalition at Westminster is beginning to lose its nerve. Vince Cable, the business secretary, was likening the threat of world economic collapse to being “at war”. There were rumours at the Liberal Democrat conference of the government contemplating a Plan B, spending more on capital projects to get the economy back into growth.
And with the warnings from the International Monetary Fund and others of only 1 per cent growth next year and higher and higher unemployment, followed by dramatic falls on the stock market, Plan B becomes more and more likely. John Swinney’s Plan MacB may prove to be the Scottish experiment that shows the way.