FOREWORD
by the Cabinet Secretary for Finance and Sustainable Growth
In this document, I present Scotland's Spending Plans and the Draft Scottish Budget 2011-12 for consultation with the Parliament and the people of Scotland.
This is a Budget set against the most dramatic reduction in public spending imposed on Scotland by any UK Government. The Comprehensive Spending Review confirmed that the Scottish Budget will be cut by £1.3 billion next year compared to this. Within that, Scotland's revenue budget has been cut by more than £500 million and our capital budget, which is so vital to our efforts to support economic recovery, has been cut by around £800 million (or about 24 per cent in cash terms).
We have made clear that we reject the Chancellor of the Exchequer's approach to addressing the state of the public finances. We have argued strongly that he is cutting spending too far, too fast, at a time when economic recovery - in Scotland and in the rest of the UK - remains fragile. This fundamental divergence in approach illustrates the case for the Scottish Parliament and Government securing the financial and economic powers of Independence, so that we can develop a growth strategy for the Scottish economy and public services as an alternative to Westminster-imposed cuts.
However, under our current constitutional arrangements, we must work within the spending limits we have been given.
This is a Budget that requires hard choices. It is a Budget anchored in delivering the Scottish Government's Purpose of creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth, particularly in the low carbon economy. It is a Budget that protects spending on public services.
At the heart of our decision-making has been our desire to reinforce our social contract with the people of Scotland. In difficult economic times, the Scottish Government has acted to create new economic opportunities, protect household income, support frontline services and improve our environment. We reaffirm that social contract by providing the resources to continue the council tax freeze and for the full removal of prescription charges. These initiatives will help households facing pay restraint, a necessary measure to protect jobs and assist the economy.
This Budget sets out the key commitments this administration will deliver for the people of Scotland.
We are meeting our pledge to protect NHS spending by allocating an additional £280 million to the health budget in Scotland, honouring our commitment to pass on Barnett consequentials from the UK settlement. This will fund the running of NHSScotland in 2011-12 with more money going to the frontline than ever before. This will help build on the progress we have made over the last four years in improving people's health and healthcare services - driving forward continuous improvement in the quality of healthcare services in the interests of our economy and the health and wellbeing of communities across Scotland.
We have agreed a settlement for local government with COSLA's Leadership that reflects our joint determination to improve outcomes for the people of Scotland and local government's key role in the economic recovery of our communities. Specifically, our agreement will enable local authorities to maintain delivery of shared commitments that impact on households throughout the country:
- maintaining the freeze in the council tax in 2011-12;
- keeping 1,000 additional police officers on our nation's streets so that we can keep Scotland's crime rate at its lowest level for 32 years;
- meeting the needs of our most vulnerable and elderly through the NHS and councils working together to improve adult social care;
- continuing to roll forward the Curriculum for Excellence to drive up standards of learning and teaching in Scotland's schools, so that our children have the best start in life and have the skills and knowledge for a rapidly changing world; and
- protecting teaching posts to ensure these are available for recently qualified teachers and to help reduce teacher unemployment.
Since 2007, we have put in place a set of measures designed to support Scottish business at a time when demand has been low and access to finance reduced. In this Budget, we reaffirm our commitment to this approach through the delivery of a package of business reliefs worth £2.4 billion over 5 years, including the continuation of the Small Business Bonus Scheme.
We will continue to provide substantial support to our Higher and Further Education sector, recognising its central role in delivering economic growth. We will invest in skills, including the introduction of 34,500 new training opportunities in 2011-12, while upholding our commitment not to introduce tuition fees.
In the face of a massive reduction in our capital budget by the UK Government, we have taken decisive action to boost capital spending next year and in subsequent years. We will transfer £100 million from this year to 2011-12 to supplement our capital budget. We set out today a far reaching £2.5 billion additional programme of infrastructure development that will be delivered through the Non-Profit Distributing model to boost investment in our public works. The Scottish Futures Trust will take forward this programme of investment to deliver maximum value for money in our capital programme. These measures enable us to confirm that our capital programme will include constructing the new Forth Crossing, the New South Glasgow Hospitals Project and our ambitious school building programme.
We have set out our spending plans to support the transition to a low carbon society. We publish today, alongside this Draft Budget and for Parliament's consideration, our Draft Report on Proposals and Policies ( RPP) for addressing climate change. In October, we set out our Energy Efficiency Action Plan for Scotland and earlier this week we published the Scottish Government's Low Carbon Economic Strategy. In this Budget, we set out spending plans that renew the Climate Challenge Fund, increase funding for our Zero Waste programme and set out further spending to support Scotland's renewables agenda, within the tight financial perspective that we face.
This Government has pursued a vigorous programme of efficiency and public sector reform since 2007. We intend to intensify this programme. The profile of reduced public spending in the next four years makes it all the more essential that we reform the way in which we deliver public services in Scotland. We have established the Commission on the Future Delivery of Public Services, chaired by Campbell Christie CBE, which will be charged with making recommendations about the future provision of our public services. It will advise on how excellent, sustainable public services can be delivered in the future. The Commission's recommendations will be vital in informing the longer term choices which will face the Scottish Government, Parliament and delivery partners in the years ahead. The Scottish Government has made clear that, should this administration be returned to office, we will draw on the Commission's recommendations in taking forward a Spending Review to conclude in September 2011, setting out spending plans for the period 2012-13 to 2014-15.
In addressing the budget challenge for 2011-12, we are responding powerfully with all the mechanisms at our disposal by:
- driving out further efficiencies, with a clear target of 3 per cent improvement in 2011-12;
- securing further savings from procurement;
- selling surplus assets and making assets work harder for us;
- deploying innovative approaches to funding infrastructure investment;
- freezing pay, cutting the pay bill of the highest earners, implementing a Living Wage of £7.15 per hour and providing a minimum annual increase of £250 for employees earning less than £21,000;
- continuing to simplify the public bodies landscape;
- requiring further savings from scrutiny functions; and
- maximising income within existing powers.
We have looked closely at our own administration costs, and have cut our own costs more sharply than we are expecting others to cut theirs. We will reduce the Government's Administration budget by 10 per cent and we will reduce the costs of the Senior Civil Service in Scotland by 10 per cent in 2011-12 and by 25 per cent over the next four years.
Despite all these measures we still have to face cuts, as the Independent Budget Review advised when it reported in July. Where we have made reductions in revenue budgets, we do so reluctantly but in a way that we believe best responds to the cuts the UK Government has made in the resources available to us. We have considered priorities across all of our programmes, the contribution that different activities make to sustainable economic growth and our National Outcomes, and the need to support vulnerable people and groups.
This Government has never shirked the difficult decisions that are required in order to live within reduced means. We faced up to these difficult decisions in responding to the real terms reductions visited upon our 2010-11 budget and, as a competent and responsible government, we have set out our plans for doing so again in 2011-12.
I commend the proposals set out in this Budget to Parliament. The proposals involve difficult choices across the spectrum of government activity, but they represent a fair balance between priorities and support for all in Scotland who contribute to our economic growth and use and rely on our public services. That is the essence of our 'social contract'. By working together, across the political spectrum in Scotland, I believe we can agree and take forward an approach to public spending that presents alternatives to the course set by the UK Government and which best meets the needs of the people of Scotland.
John Swinney MSP
Cabinet Secretary for Finance and Sustainable Growth
November 2010