Scotland, Wales and Northern Ireland will have to contribute £704 million towards the overall UK cuts this year.
Among the package of cuts outlined by George Osborne and David Laws yesterday was an announcement that collectively, the devolved bodies would have to contribute £704 million towards the overall UK cuts; this will mean:
• £332.46 million of cuts to the budget of the Scottish Government, taking into account £42.2 million of funding from “recycled savings”;
• £162.5 million out of the Welsh budget, with recycled savings of £24.4 million cushioning the blow; and
• £128 of spending reductions in Northern Ireland.
Responding to the Treasury’s announcement, SNP Finance Secretary John Swinney said:
“At a time when economic recovery is extremely fragile, the spending cuts outlined by the Treasury risk undermining recovery and damaging our comprehensive work to support the Scottish economy. These further spending cuts are on top of a £500 million reduction imposed on this year’s Scottish finances in the then Chancellor’s 2009 Budget.
“The Scottish Government will prioritise economic recovery. That is why we are planning to defer these further cuts until the following year, in order that we can entrench economic recovery.”
Swinney’s comments, however, came after the Scottish Government’s chief economic adviser Andrew Goldie and economist Professor David Bell of Stirling University both warned that leaving cuts until next year could leave Scotland facing cuts worth £1 billion.
“We are all agreed that we need to reduce the deficit and reduce the national debt. Wales will play its part in this. But making unplanned cuts in spending this year would be bad for Wales – bad for businesses in Wales, bad for jobs in Wales and bad for public services in Wales.”
In July 2009, the Holtham Commission reported Wales was losing out to the tune of £300 million a year under the Barnett Formula. Despite this unfairness, the UK government in its Coalition Agreement decided to kick reform of the formula into the long grass.
In Northern Ireland, a more pragmatic approach seemed to be being taken. Democratic Unionist Party finance minister Sammy Wilson said:
“We knew it was coming down the line and when departments surrender money through the year as inevitably they do, we can maybe use some of that to offset these cuts that have been imposed on us. So it might be a combination of some deferral, some implementation now, or deferral or full implementation now.”
Meanwhile, the nationalist SDLP called for changes closer to home. Responding to the Chancellor’s announcement, the party’s former leader, Mark Durkan, said:
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“The current situation only serves to further highlight the urgent need to look again at our own budget. Set back in 2008 the three-year Executive Budget which the SDLP voted against is no longer fit for purpose. But Sinn Féin and the DUP have refused to change anything.”