Constant cuts aren't helping

The power to make decisions about public money always comes with responsibility.

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At a time like this, with both public budgets and household budgets under severe pressure, we should be especially focused on trying to make sure that we achieve the greatest possible benefit when we make these choices.

Over the next couple of months MSPs will be debating the Scottish budget.

With the UK Government imposing big cuts, and planning even bigger cuts to come, and a lack of power and will to raise taxes from the wealthy, something will have to give.

One area where savings have been made over the last few years is public sector pay. Like his UK counterpart, John Swinney as Scotland's Finance Secretary has imposed a pay freeze on the vast majority of people working to deliver public services, to keep the pay bill under control.

In the next year he's proposing the same limit of 1% increases as the UK Chancellor, which amounts to another big real-terms cut, as it won't even come close to keeping up with price rises.

I understand why he took this course when the cuts began. He saw a simple choice – freeze pay, or start laying people off.

Better to keep people in work, even with less in their pay packets each month, than to see them join the dole queues.

But it's no longer that simple. Among the other choices Mr Swinney is making is to shift hundreds of millions of pounds into capital spending – investing in construction projects, he thinks, will aid economic recovery.

If he had the powers of independence already there might be something in that. By spending more he could try and stimulate the economy as other governments are doing.

But the fact is that his budget is fixed; he can't borrow, and he can't do much (even if he wanted to) to raise more from the likes of Starbucks, Amazon and other big businesses. So his capital investment comes at the expense of other parts of the Scottish budget, like the pay bill.

There's a good case for cancelling part of this transfer to capital spending, and letting public sector pay at least keep up with inflation.

This would move money from public budgets into household budgets, and their extra spending power would do just as much to help economic recovery. Continual pay cuts will help no-one.


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