Watchdog warns SNP of budget crisis

Government could have £3billion hole in finances in three years

By Tim Pauling

Published:

Robert Black:grim financial warning

The Scottish Government could face a £3billion hole in its budget in three years if spending continues at its present level, a financial watchdog warned today.

Audit Scotland said planned efficiency savings will not plug the gap – and ministers and the public sector must make difficult decisions about spending priorities.

Coming from an independent organisation, the forecast is a huge blow for the SNP Government which claims it can cut back without hitting services such as schools and the NHS.

Tory finance spokesman Derek Brownlee said: “The SNP government needs to wake up to reality and Alex Salmond in particular must stop misleading the public by claiming that the SNP can prevent spending cuts.

“A government which refuses to face up to the reality of a falling budget will be incapable of dealing with the consequences.”

Audit Scotland said the public sector is under the greatest financial pressure since devolution in 1999.

The report – Scotland’s Public Finances: Preparing for the Future – said it will be “very challenging” to maintain present levels of public services and meet new demands when resources are so tight.

The 2013-14 budget could be between 7% and 13% down in real terms, creating a gap between planned public spending and available money of between £1.2billion and £2.9billion.

Auditor General Robert Black questioned if the gap could be filled by the government’s efficiency programme.

“The programme is reporting significant savings but the reductions required over the next few years will not be met just by the 2% efficiency savings, and difficult decisions will be needed on other ways to reduce spending,” he said.

His report highlights spen-ding pressures made worse by a smaller budget, ageing population, the rising cost of public services, a backlog of maintenance on roads and buildings, and extra pressures on public services due to rising unemployment.

The report piles pressure on the government over its spending plans.

Liberal Democrat finance spokesman Jeremy Purvis said: “This is a barely concealed attack on the lack of strategic direction in the government’s budget.”

Labour finance spokesman Andy Kerr accused First Minister Alex Salmond and Finance Secretary John Swinney of wasting resources on “narrow Nationalist priorities” such as the national conversation and the referendum bill for a ballot on independence.

He said: “It is time that Alex Salmond and John Swinney realised we need to work together to get Scotland back to work.”

Mr Swinney said the report confirmed the scale of the financial challenges as ministers wrestled with a £500million funding cut by Westminster.

“Our ambitious efficiency programme will deliver £3.2billion in cash savings by 2011 while delivering the same level of services, and reforming the way we buy goods and services has also saved over £300million since 2006,” he said.

“I am in no doubt of the difficult choices ahead for the whole of the public sector.”