Scottish Spending Plans 2005-08
No. 97 September 2004
Finance Minister has announced the Scottish Executive's spending proposals for
2005-2008 Building a Better Scotland. This document is a broad outline
of spending plans. The detail will be set out in departmental announcements and
confirmed in the draft Budget next month. This briefing outlines the key issues
in the plans for UNSON Scotland.
spending will rise from £25 billion this year to £30 billion in 2007-8. This equates
to an average increase of 3.6% after inflation. Overall this increase is welcome
and reflects the significant investment in Scotland's public services by this
government. It stands in stark contrast to the cuts imposed by the previous Conservative
government and their planned cuts if elected at the next UK general election.
always there are some services that have gained more than others. The big gainers
are health, education and transport. Less welcome is the tighter spending plans
for local government.
The Total Managed
Expenditure by portfolio is as follows:
Most of this budget
relates to services directed by the Executive such as the Prison Service. Most
police and fire expenditure is accounted for in the local government plans. Those
plans assume an above average increase for police. Fire gets slightly more than
the average to cover the fire service pay agreement.
education budget again largely covers central initiatives with schools funded
through local government. Universities get a 30% increase over 3 years largely
to address the higher income English universities attract through tuition fees.
There is a similar increase for further education, which should go someway towards
addressing the current financial problems in the sector.
headline 28% increase in the NHSiS over the next three years is good news for
hard pressed health boards. We will need to see the detailed budgets to identify
how much will be available for real improvements and how much simply to address
rising health costs including medical pay and the drugs bill.
This is the most disappointing aspect of
the spending plans. A 9.7% increase over three years' compares unfavourably with
the 23.6% rise in non-council spending. After inflation this is only 1% growth
and makes it increasingly difficult for local authorities to meet the Executive's
service aspirations. Very little of the additional housing money will find its
way to local authorities. Local authorities will be facing further financial pressures
when addressing pay inequalities under the single status agreement. There is nothing
in this settlement towards those costs.
Transport gets the bumper 47% increase
with the biggest increase to fund the promised concessionary fare schemes and
new road building. The water budget is at standstill pending decisions on investment
Finance Minister highlighted substantial increases in capital expenditure – up
40% to £3.2bn by 2007/8. The detail will be published later in the Capital Investment
Plan. However, local authority capital is only increasing by 7% over the same
period. As highlighted in the water investment plans there is a very real issue
over the capacity of the construction industry to manage capital investment at
this level. In these circumstances it is likely that building costs will increase.
has highlighted the need for a level playing field between public authorities
conventional borrowing and PFI when financing capital investment. We will be looking
for the new treasury guidance on this issue to be reflected in the Capital Investment
Plan. For the future it is worth noting that whilst the Finance minister was speaking,
the Labour Party Conference was voting to support a level playing field in housing
investment between local authorities and stock transfer.
The spending plans reiterate previous announcements
on this issue (see P&I Briefing 86). Local government is singled out for specific
targets of £247.4m by 2007-8. The bulk of this will fall on non-education spending
that will have to find the equivalent of 5-6% savings. We await the detailed explanation
for these targets.
a Better Scotland - The Spending Proposals 2005-06 can be viewed at http://www.scotland.gov.uk/library5/enterprise/babs-00.asp.
Executive | Scottish Parliament | Briefings Home