Osbo’s Tunnel of Osterity

We are, it must be said, lucky. Not only do we live in Scotland but, unlike the dark days of the 1980’s, we are sheltered from the worst excesses of a Tory government in London by the existence of one in Edinburgh that has scotland as its one and only priority.

Now, given that belts have been tightened for the last three years and today the Reichskanzler had little joy to spread around other than some sheepish news that—oops—he had got his sums wrong and his bitter austerity that would end in two more years would actually have another five to run, fiscal hair shirts will be the fashion for the rest of the decade.

No Consensus—Half Percent Correction Still Not Enough?

No Consensus on Future—Half Percent Growth Correction Still Not Enough?

Those with a sense of history or really long memories might recall that it took us less time to recover from WW2 than it will take us to recover from investment banking out-of-control rave in 2007 that left many Western economies dead in the water—or should we say “dead in the sand” because liquidity, thanks to banker greed and Irn Broon complicity, is the one thing that went AWOL.

Wherever you stand on Osbo’s “Osterity”, today’s Autumn Statement announced—between sounds of humble pie being chomped—that £5bn was to be freed up for application to capital projects that will help restart the economy. This is good news. John Swinney has been arguing this for two years but no matter: a sinner has come to his understanding. Pushed through the Barnett mincer, that amounts to £394m in extra capital funding for Scotland, along with a basic revenue rise of £90m. However, because of departmental cuts of £160m, it boils down to about £330m.

As well as knock-on effects of road improvements in England, such as upgrading the A1 below Newcastle, Scotland will therefore see, for example, £34m of shovel-ready roads projects come on-stream over the next few years, including the A9 upgrade. This is in addition to Perth and Aberdeen being lined up for ultra-fast broadband. But the problem is that all this only restores part of the £1.3 bn shaved off Scotland’s capital allocation in the years up to now. Still, it’s a gift horse; let’s not quibble.

Because, as Oscar Wilde might observe, it’s what’s not being talked about that’s worse. Extending the hair shirt season to almost 2018 means that public services, far from seeing light at the end of the tunnel in 2014, will have anther three years of cuts to contend with. This is seriously bad news: both the NHS and councils—which together consume 2/3rds of the Scottish budget—have already seen three years of belt-tightening. Any low-hanging fruit for savings has long been picked.

We are just about to come into council budget-setting season. John Swinney distributed the proposed settlement to councils last week. Today’s largesse will have little or no effect on it. While it is nominally an increase on last year’s totals, all of that will be swallowed up by ‘scale progression’ (= grade promotions) and a 1% pay deal. With demand for services such as Adult Social Care increasing around 8% each year and people poorly disposed to cost cutting measures, be it charging for school buses or fortnightly bin collection, councils were already heading for a vicious squeeze.

A quick survey around the country shows that most councils are looking at serious funding shortfalls in the coming year, varying between £5m in Fife and £50m in Glasgow, with some small councils like Moray staring at £30m—a proportionately huge gap for them. This means that what reserves they have will be eaten into this year (2013/14) and some drastic action will be necessary no later than the following fiscal year of 2014/15. Now we have three more years of even worse to come.

If, as some Administrations tried to argue, council senior management teams had taken the original scale and depth of the projected trough seriously and had set up far-reaching shared services, joint working (e.g. with police/fire/NHS) and real community planning (i.e. involving the serious commitment of pooled budgets), then  the idea of even leaner operation might be feasible.

But they didn’t. Although complacency and lack of firmness or imagination did afflict some council leadership, the root of the problem lies with chief executives and their directors who, despite now pulling down respectable salaries in the £100k range and therefore every bit as well compensated as the private sector, have grown smug with the fat years of the noughties when Scottish council budgets doubled in a decade.

Consider, despite more than three years of warnings, shortcomings in their preparations for the extra lean years now upon us will become glaring, especially as few key parameters can be turned around in short order:

  • Inter-council shared services: NONE
  • Intra-council restructuring, especially management: some but many inefficiencies (e.g. full Head Teacher in village schools; small departments that have ‘aye been’)
  • Capital equipment replacement: still by schedule rather than need (IT every 3 years; vehicles almost as frequent)
  • Inefficient field working (ad hoc scheduling of social workers, transport or house repair/refit; lack of GPS tracking with dynamic routing in the field)
  • Reluctance to consider business opportunities (e.g. ground care bidding for estate maintenance; cafes/entertainment in parks/libraries; sports facilities to compete with private gyms)
  • Joint facilities with other bodies (e.g. care homes run with NHS; police/fire in smaller towns sharing joint premises with council; shared recycling/landfill)
  • Bureaucratic/inefficient shared operations (e.g. Scotland Excel; ESEC; CoSLA)

Since little progress has been made in any of these, the extensive drop in the 80% of council income that comes from Revenue Support Grant over for the next five years will be far too extensive to fund from reserves and would require something like a cumulative 50% increase in Council Tax to cover. Apart from being hugely unpopular, this tax is regressive and would hit the poorer far harder than those in mansions. (An earlier blog Ma Faither’s Howff proposes a method of increasing Council Tax take by 20% without hitting the poor at all).

So, tough though councils claim things to have been to date—and will again this year, you ain’t seen nothing yet, baby. Senior management has failed to think out of the box. On record to date, each Townhousetanic will continue at full speed into the fiscal iceberg ahead. And, though panic cuts in services will be tried, staff will still need to be shed in larger numbers to balance the books. The question isn’t if, but when—and who among the £100k salary squad who dithered us into this impasse will have the grace to join them.

Projected Budget Shortfalls for 2013-14 for a Selection of Scottish Councils

Projected Budget Shortfalls for 2013-14 for a Selection of Scottish Councils

About davidsberry

Local councillor, tour guide and database designer. Keen on wildlife, history, boats and music. Stood for the Scottish Parliament 2011; lost by 151 votes.
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