Hansard

Wendy Alexander is right to say that the debate is beginning to edge forward. I begin by saying, as others have done, that the independent budget review is a really good piece of work and immensely helpful in setting the scene as we approach the difficult financial challenges ahead.

It is worth putting the challenge into perspective. In 1999, the budget was around £14 billion. Now, it is nearly £33 billion, although I accept the point that others have made that we have put new obligations, duties and services in place. Crawford Beveridge and his colleagues tell us that there will be a requirement for a cut of about 12.5 per cent in the next four years. Without question, that is hugely challenging, but it is not the end of the world as we know it. As Jeremy Purvis pointed out, it will still leave the Scottish Government with revenues higher than in every year before 2004, and in cash terms the revenue budget will barely change. The problems come from the effects of inflation and rising demand for resource. We must, therefore, look very carefully at the effectiveness of the way in which we manage our public services.

Linda Fabiani and others—in fact, every nationalist member—included in their speeches a sentence about how none of this would have happened had Scotland been independent. Indeed, yesterday, the First Minister put independence at the heart of the debate leading up to the election next year. He told us that the fall in income tax revenues because of the recession would have resulted in almost £900 million off the Scottish budget if the Calman proposals had been in place because of the transfer of direct control of 10p of income tax to the Scottish Parliament. The Secretary of State for Scotland has already indicated that the original Barnett proposals would need to be adjusted to take account of that. However, what the First Minister omitted to tell us—this is the point that Wendy Alexander was making—is that, if Scotland had been independent, the effects of the recession would have lopped more than twice that figure off the income tax revenues going to an independent Scottish Government, as it would have received all the effect of the recession on income tax receipts, not just half of it. On top of that, there would have been a drop in corporation tax receipts, national insurance receipts and VAT receipts, to mention only the bigger ones. On a roughly equivalent basis, that would amount to a cost to an independent Scottish Government of something in excess of £2.2 billion. I readily concede that my figures need refinement, but I suggest that the cost of independence, in purely budgetary terms, would be of the order of £4 billion per annum off the current Scottish budget. That is the reality that the Scottish Government must face in putting independence forward as a serious proposition—although I am amazed that it is still doing that.

The First Minister told us yesterday that Scotland needs control of its own resources and the ability to grow revenue. I am not sure whether these independence revenues grow on fir trees somewhere in Aberdeenshire, but we need a little more detail on the SNP’s latter-day take on the miracle of the loaves and the fishes. The reality is that the financial crisis that was caused by banking greed affects most countries in the developed world even if, in Britain, it was made worse by the negligence of the Labour Government. There is no bypass for Scotland any more than there has been for Ireland or Iceland.

The IBR report emphasised the need for the earliest possible central guidance on how to tackle these significant financial pressures. It is the responsibility of ministers in government, with the resources of the civil service behind them, to develop proposals, to be clear about the realities of the position, to signal clearly—as the report said—national priorities and to convey the right degree of urgency. I will make one or two observations about the approach.

First, in my view and that of the review, there are definite issues with ring fencing any section of the budget, particularly because health accounts for a third of the Scottish budget, not a sixth as it does on a United Kingdom basis. The effect of that is obvious. As the review points out, it would result in a much more substantial reduction in non-health budgets if we were to ring fence the health budget. I say to the cabinet secretary that, whatever the formula surrounding these matters turns out to be, we must scrutinise very closely every budget line and every aspect of the budget that is before us.

Secondly, there is a close relationship between the cost of pay and the number of jobs in a reducing budget. The more pay restraint can be agreed, the fewer jobs will be at risk. Ultimately, we are working within a fixed and reducing budget, and the public sector is under the same pressures as the private sector.

Thirdly, efficiency savings will be a vital part of the equation. The review suggests that there is a limit to the efficiency savings that can be squeezed out of the public service. I believe that every doctor, nurse, teacher, dustman, administrative worker and cleaner should be asked which part of their job is vital and which part of the job consists of doing unnecessary paperwork, circulating process that adds no substance or picking up the results of inefficient practice. The challenge is to extract those ideas and manage their implementation, but our primary obligation is to squeeze out value from every pound of public money that is invested in our common services. I welcomed the cabinet secretary’s focus on public engagement, but I think that it must be a bottom-up process rather than a top-down process that is imposed by ministers, and it must focus on effective management in the public service.

Fourthly, there must be an equal partnership with the voluntary sector. Many voluntary sector services are more flexible, more human in scale and more effective than is possible in large Government or local government departments. There must be a framework that takes full account of the effects of particular cuts. For example, Glasgow City Council recently cut the budget for community transport—it was nothing to do with the wider cuts; the cut was made last year—at the same time, incidentally, as adverse publicity about the unsuitable use of council limousines. The cut has threatened the viability of organisations that provide social outlets and respite for people with learning difficulties, disabled youngsters and others. That is highly likely to result in more mental stress and more pressure on council services—a totally vicious circle for all concerned, and a lesson in how not to approach such matters.

Finally, I am clear in my mind that, apart from the issue that the report raises of what services should be provided by the state—and which of those should be comprehensive and which should be means tested—there must be a focus on the quality of the service provider. That applies to police forces, local authorities and the rest.

We live, as the Chinese curse wished on us, in interesting times and many people depend on our public services being of a high quality and effective at what they do. None of us came into politics to cut resource, but the current financial crisis imposes on us the obligation to manage its consequences in the best interests of our people. The Liberal Democrats stand ready to play our part in that, but we need a steer and leadership from the Government. That is the responsibility that the SNP took on in accepting office three years ago and it must rise to the challenge. Its decisions will affect real people, real families, real jobs and real services.