How Big is Holyrood's Big Axe?
Alex Salmond says it's "chilling": thirty-five billion pounds (say it slowly) less money to spend over the next 12 to 15 years.
Only from around 2022 could Scotland's public spending levels return to the levels we saw with last year's peak.
Any politician hoping to be in power, or already in power, has to decide where to implement those cuts.
And it's no longer the academics' take on how much the Scottish government will have to cut spending.
This is now the official view of St Andrew's House's chief economic adviser, Andrew Goudie.
To be clear, £35bn is his worst case scenario for the cumulative real term cuts that Holyrood faces until spending returns to current levels, which would be around 2022.
If HM Treasury's optimistic estimates of growth turn out to be correct, it will be a mere £25bn.
One pound in eight
Is that still too big to comprehend? Ok, let's break it down.
Dr Goudie reckons that one pound in every eight will be cut out of spending over the next four years.
Roughly £3.5bn to £4bn, in real terms, cut out of spending by 2014-15.
Most of the pain from that £25-£35bn squeeze will be in the near future rather than the start of next decade.
Yes, there might be some protection if the next Westminster government opts to protect services in Whitehall that are devolved to Holyrood - in Labour's case, policing, schools and hospitals, in the Conservatives' case, the NHS.
We won't know the details of that until we get a spending review from the new/re-elected UK government, probably this autumn.
But Dr Goudie warns that protection of some services won't change the key message that arises from his analysis of public spending plans available so far: prepare for very tough times and very tough choices.
And what makes this necessary? Well, with the figures published on Thursday on last year's borrowing by the UK government, it's possible to see in more detail what went so badly wrong for the public finances.
Stimulus
The total isn't quite as bad as Alistair Darling recently forecast.
But at £163.4bn, it's still humungous, and the biggest borrowing total we've seen - 11.6% of the UK's income.
On the spending side, the economic stimulus - such as the car scrappage scheme and accelerated capital spending, plus higher welfare costs and the cost of growing debt repayments - put the total up by 6.8%.
Don't under-estimate those debt costs.
They're already higher than all defence spending, and twice as much as transport spending.
And that's with interest rates low, with lots more borrowing to come over the next few years, adding to the debt total.
On the Treasury receipts side of the government's balance sheet, the total was own by 5.3%.
Of that, there was a fall of nearly 20% in takings from corporation tax and petroleum revenue tax; more than 8% less in income tax and capital gains tax; a 4% fall in VAT receipts; and a 1% fall in national insurance contributions.
That shows a picture of consumption falling much more slowly than business tax receipts.
And for all that Alex Salmond wants to grow the Scottish economy out of the slump, thus avoiding "London's cuts", Dr Goudie isn't suggesting that profitability and business tax takings will bounce back fast enough to end the need for the getting those spending totals down.
Hullo, I'm Douglas Fraser, and I'm business and economy editor at ³ÉÈË¿ìÊÖ Scotland. Welcome to my blog, where you can read my take on money matters, viewed from a Scottish perspective.
Comment number 1.
At 22nd Apr 2010, forfar-loon wrote:Douglas, an interesting article. It seems pretty clear that UK plc is in a sorry state and big changes will be necessary to tackle the debt. I wonder if any political party is brave enough to commit to the fundamental reforms that are needed?
Also, are you able to explain (or to find out for us!) why Brian Taylor's blog is currently closed for comments? From a quick scan through the other ³ÉÈË¿ìÊÖ blogs it seems to be his blog alone that has been closed down. Cynics among us might wonder whether it has anything to do with the ³ÉÈË¿ìÊÖ's decision to reject the SNP's and Plaid Cymru's appeal against their exclusion from the leaders' debates. Set against that is your blog remaining open and Betsan Powys's blog likewise still being open. Then again, and without wishing to cause offence, I would note that Brian's blog attracts significantly more comments than yours or Betsan's. As such it might be considered the pre-eminent political blog in Scotland. An odd situation for it to be closed down in the midst of an election campaign, I'm sure you'll agree.
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Comment number 2.
At 22nd Apr 2010, Grahame wrote:see auntie Beeb has stifled comment on the salmond affair over on the Brian Taylor Blog
If you search facebook for the ruling holyrood party name you'll find i've launched a little campaign on there to redress this issue
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Comment number 3.
At 22nd Apr 2010, sid_ts63 wrote:#1 forfar-loon evening, whilst you are correct re the traffic that visits Douglas's blog ,Betsan has been known to write 2 or 3 blogs in the one day which keeps her numbers down a bit. a bit of a difference from her Celtic cousins up here is it not!!
Sid
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Comment number 4.
At 22nd Apr 2010, forfar-loon wrote:3. sid_ts63
"Betsan has been known to write 2 or 3 blogs in the one day which keeps her numbers down a bit. a bit of a difference from her Celtic cousins up here is it not!! "
Evening Sid, fair point - now and again she even replies to the little people who post on her blog too!
Brian's Blether is still gobstoppered at the moment I note...
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Comment number 5.
At 23rd Apr 2010, spagan wrote:Quite amazing how far the ³ÉÈË¿ìÊÖ has removed from being "impartial". I thought that I might use the word "independent" - but fear that word is "verboten". Last night we had an English (Tory?) Academic and even New Labour's ex-spinner Ms Davidson stating how unfair it is that the SNP, PC, the Greens etc have been marginalised by the the Leaders (sic) Debate.
If people with a genuinely partial view of politics are saying that, then the behaviour of ³ÉÈË¿ìÊÖ / EBC is even more sinister. Every day they spout that "the SNP are lagging in the polls" - which polls? "I see no polls!"
The first ³ÉÈË¿ìÊÖ DG Lord Reith must be swivelling in his grave at the Unionist politicisation of his creation. Does the EBC think that they need to match Fox News in some weird and wonderful way?
As for the Cuts that Douglas refers to, we need to remember that £25 Billion of cuts over 12 to 15 years only equals 4 years of Bankers' Bonuses (as announced today).
If the people were given a vote. I wonder which "Cut" they would like to see made first?
Slainte Mhor
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Comment number 6.
At 23rd Apr 2010, redrobb wrote:Jeez-oh...............fellow bloggers tell me something I did not know! Under ³ÉÈË¿ìÊÖ read EBC. UK should just claw back all the billions stashed off-shore by the smart money folk, heck put them in irons until every last penny is squeezed out of them! Including all those other honest criminals! Had the present Jock incumbents of that shack in the prestigous part of Edinburgh not scored an own goal with that former foriegn prisoner who by the way is still alive & kicking, incidentally not all of us has forgotton that one! Then mibee aye or mibee naw will the SNP attain 20+ target!!
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Comment number 7.
At 23rd Apr 2010, X_Sticks wrote:For regular readers/contributers to BwB which has been cynically closed some of us are congregating over on Betsan Powys blog. She at least has had the decency to blog on the exclusion of Plaid Cymru and SNP from the "Prime Ministerial Debates" and to keep her blog open for discussion.
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Comment number 8.
At 24th Apr 2010, X_Sticks wrote:³ÉÈË¿ìÊÖ Scotland in hiding? Wonder why? Can't be something I said....
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Comment number 9.
At 24th Apr 2010, spagan wrote:Douglas
Are we the only Nation encompassed by the ³ÉÈË¿ìÊÖ that are not allowed to comment on this election?
BwB has now been "closed for business" since Thursday afternoon - and this Blog is only available by searching for it under your name.
I know it isn't deliberate.
I know it isn't the ³ÉÈË¿ìÊÖ being politically partial.
But your colleagues in the other "Westminster Protectorates" are welcoming Scottish exiles to their Blogs.
"Curiouser and curiouser said Alec"
Slainte Mhor
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Comment number 10.
At 26th Apr 2010, oldnat wrote:Douglas
"And for all that Alex Salmond wants to grow the Scottish economy out of the slump, thus avoiding "London's cuts", Dr Goudie isn't suggesting that profitability and business tax takings will bounce back fast enough to end the need for the getting those spending totals down."
It is, of course, a totally false position to argue that all cuts need to come from the budgets of devolved areas. "Real" countries know that all Government expenditure needs to be examined for cuts. Every £ that is cut from unnecessary programmes is a £ that can be set against the deficit or used to protect essential services.
Obviously if Westminster cuts the block grant to Scotland, then cuts in services paid for from that budget need to be cut as well. You don't need to be an economist to know that!
However, the argument of all the devolved Governments is that Westminster needs to slash it's grandiose projects first.
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Comment number 11.
At 26th Apr 2010, eye_write wrote:This comment was removed because the moderators found it broke the house rules. Explain.
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Comment number 12.
At 26th Apr 2010, eye_write wrote:Surprise. The ³ÉÈË¿ìÊÖ doesn't approve a post detailing how to donate to the SNP's legal fund, to challenge the ³ÉÈË¿ìÊÖ's lack of impartiality.
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Comment number 13.
At 26th Apr 2010, eye_write wrote:This comment was removed because the moderators found it broke the house rules. Explain.
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Comment number 14.
At 26th Apr 2010, eye_write wrote:13. eye_write
And SNP legal fund reaches £40,682!
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