Swinney delivers a Budget sidestep

John Swinney was last night accused of dodging the tough decisions in his last Budget before next year’s Holyrood elections.

Opponents accused him of delivering short-term, stop-gap policies by using £2.5 billion in private finance for capital projects over the next four years.

The money was announced as a counter-balance to the £1.3bn cuts he unveiled yesterday, as he addressed what he described as “a financial challenge without precedent since devolution”.

He also forced local authorities into a corner by offering them a far smaller cut to their funding – 2.6% instead of 6.4% – if they signed up to various conditions, including a council tax freeze, maintaining police numbers, preserving the pupil-teacher ratio in Primary 1 to Primary 3 and protecting teacher deals.

Government officials say a council tax rise of 18% would be required for local authorities choosing to opt out of the deal.

Labour leader Iain Gray accused Mr Swinney of “political cowardice”, saying he had produced a Budget that “looks no further ahead than the next 20 weeks to the Scottish elections rather than the long-term future of the country”.

He added: “The SNP are afraid to take tough decisions. John Swinney himself said this Budget was more than a one-year challenge yet he has failed to rise to it.

“He has ignored the fears of councils about cutting services for our most vulnerable – children, the elderly and disabled people.”

Tory finance spokesman Derek Brownlee said Mr Swinney talked about public sector reform but “it seems to have all been deferred until after the election. If this is a short-term Budget to get the SNP through the election, then Scotland will be the loser”.

Liberal Democrat leader Tavish Scott said the Budget was aimed at “political gain not at the long-term interests of the Scottish people”.

He said: “The Scottish Government were given monies for four years. Yet today schools, hospitals and care homes didn’t get the certainty of four-year figures.”

Mr Swinney said that freezing public sector pay would save 10,000 jobs and was part of the “social contract at the heart of the Budget”.

Frontline council staff and health workers, along with police officers and those in the emergency services, will be affected by the pay freeze, while teachers will also have their salaries kept at current levels when their pay deal expires in March.

However, staff earning less than £21,000 will receive a minimum annual pay increase of £250 while, according to Mr Swinney, the Budget also provides for a living wage of £7.15 an hour where the Scottish Government has pay responsibility.

The number of public sector chief executives with access to bonuses will also be reduced, with an aim to suspend bonus payments for a year, while senior civil service salary costs will fall by 10% in the next year and up to 25% by 2015.

Grahame Smith, general secretary of the STUC, said: “With inflation running at well over 4%, the Government’s pay policy represents an effective real terms wage cut for every public service worker in Scotland.

“Even workers receiving the modest pay protection outlined stand to lose up to £400 a year in real terms. Many thousands more who earn less than the average wage stand to lose £1000 a year in real terms.”

Mike Kirby, Unison’s Scottish chairman, added: “It remains to be seen how the other half of the Scottish Government’s proposed deal on job security might be delivered. It is responsible for about 8% of the workforce covered by John Swinney’s statement. What leverage does he have with other public-sector bodies on no compulsories?”

Referring to the Government’s own policy of no compulsory redundancies to the staff it has direct control over, Mr Swinney said: “While the financial circumstances are totally different … this Government believes that we can sustain our policy position of no compulsory redundancies on condition that we can reach agreements on flexible working practices which reduce costs while maintaining headcount and services.

“The Scottish Government will not lay down what flexibilities are necessary and appropriate for a particular staff group.

“So our policy encourages employers to negotiate no compulsory redundancy agreements with staff and their representatives as part of collective bargaining negotiations for 2011/12. The details will be for agreement between employers and staff groups.

“Proposals for increased flexibilities in exchange for no compulsory redundancies must be fair and effective.

“We will continue to discuss with the Scottish Trades Union Congress how this can be achieved.

“The key aim remains to maintain headcount as far as possible while living within sharply reduced budgets.”

It remained unclear last night how the Scottish Government could secure a “no compulsories” policy when it has only limited influence over pay negotiations and decisions over job losses –while fewer than 10% of public-sector workers are under its direct control.

Cosla president Pat Watters admitted the deal negotiated with the Government was his most difficult since devolution.

But Mr Watters added that “within my heart of hearts” he believed it was the best package he could put on the table for local authorities.

In a letter to every local council leader, Mr Swinney gave them until December 21 to make up their minds about whether they would accept the deal.

Cosla later accused him of “holding a cannon to the head of local government” by threatening a cut they claimed would be in excess of £700m if councils did not sign up to the 2.6% deal.

Glasgow City Council leader Gordon Matheson, who led calls for an end to the council tax freeze, said the Government should be offering “transparency, flexibility and leadership” but instead were “providing uncertainty and threats”.