First Minister Responds to Comprehensive Spending Review

Speaking following announcement of the outcome of the Comprehensive Spending Review First Minister Alex Salmond said the profile and detail of the figures represents the lowest public expenditure in the UK or Scotland since the early 1980s, in terms of public spending profile.

First Minister Salmond said:

"The Treasury claim that the real-terms increase in Scotland over the next three years is 1.8 per cent per annum. That in itself is dramatically different from settlements of recent years.

"What they haven't revealed is two things. One is that the actual, real-terms increase over the next 3 years is only 1.4 per cent. The difference is explained by re-drawing the baseline for English health expenditure.

"Therefore, what we are seeing is the consequences for the Scottish baseline figures   therefore the actual increase is not 1.8 per cent, it's 1.4 per cent.

"What we have learned in analysis is something much more serious even than that. That is the profile of the increases over the next three years. The first year will be 0.5 per cent in real terms, followed by 1.6 and 2.3 per cent.

"The real problem comes in year one. That is dramatically different from anything that could possibly have been foreseen in recent weeks or months in light of assurances that were given to us, from the Treasury, about smoothing over the effect of the re-basing. T

"This creates an extremely serious position in terms of Scotland's finances. It means that Scotland is effectively being both squeezed and short-changed by the Treasury.

"That is being done at a time when Scottish oil revenues, over the next five years, are due to reach £55,000 million in comparison with £38,000 million over the last six years.

"The profile and the detail of these figures represents the lowest public expenditure in the UK or Scotland since the early 1980s, in terms of public spending profile."

ENDS

Notes:

• This is the worst settlement since devolution.  Taking the Departmental Expenditure Limit for Scotland from 2002-03, the real terms increase in 2003-04 was 11.5 per cent.   It was 4.7 per cent in 2006-07.  Even in 2007-08 it was 3.4 per cent.
• For the next 3 years it will be an average real terms increase of 1.4 per cent (0.5 per cent /1.6 per cent /2.3 per cent).
• In new money in real terms that is £135m in 2008-09, £390m in 2009-10, and  £585m in 2010-11.  In real terms, a total of £1.1 billion.
• The UK Government claims we're getting an average annual real terms  increase of 1.8 per cent.  That's comparing apples and pears. Why?
• Because last month they told us they were reducing our baseline by £342 million.  That's 1.3 per cent of our Departmental Expenditure Limit.  So for a fair comparison of actual spending power in Scotland, you have to add £342 million back into our baseline before calculating the actual real terms growth in our budget.
• That gives 0.5 per cent/1.6 per cent/2.3 per cent real growth for essential public services.  This is a poor deal for Scotland and at a time when we are seeing historically high revenues from our oil and gas industry.

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