Where will Swinney's axe fall hardest?

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John Swinney's first public response to the Independent Budget Review was to invite opposition parties to talk about the findings.

Whether it's a case of spreading the blame for where the cuts will fall or sharing the responsibility for decisions which must be taken, it's a shrewd political move.

The Finance Secretary will have to carry the can but he can hardly be blamed for not wanting to be public sector enemy No 1 but that, as the SNP is learning, is the penalty for being in power when there's a crisis.

It's worth remembering, however, that the age of austerity was not brought about by the Scottish Government.

It started in the United States because big banks, including the Royal Bank of Scotland and HBOS, decided to lend money on an unbelievable scale to people who couldn't afford to pay it back - the sub-prime market.

As a result thousands of people in Scotland have already lost their jobs and thanks to the irresponsible bankers, some of whom are now enjoying retirement on huge pensions, 50,000 more public sector workers could lose their livelihoods.

UK plc is deeply in the red and its Scottish subsidiary, as well as the other devolved nations, are sharing the pain, though Scotland, with its high reliance on public sector jobs, may feel it more than the others.

The "three wise men" on the Independent Review panel have done a thorough job in categorising the four areas where savings can be made - public pay, efficiency savings, universal benefits and capital spending.

Responses to their report were predictable. The unions could hardly be expected to applaud job losses or pay restraint but both they and Swinney will have to face up to them.

Student leaders instantly objected, claiming the option of tuition fees was narrow-minded and politically na Finance Secretary will have to come up with something.

Can he really afford to ring-fence spending on the NHS while pledging to preserve existing eligibility for free personal care and concessionary travel?

Free personal care was introduced by the Scottish Executive when Henry McLeish was First Minister, against the advice of some of his Cabinet who warned about its cost.

The policy is equally cherished by the SNP administration and many people regard it as the Scottish Government's finest achievement since devolution.



Swinney's social conscience would also mean he's inclined to back concessionary bus travel and abolishing prescription charges but there are many people who can afford to pay at least something towards their costs and protecting the vulnerable suggests those who have money may have to pay despite the iniquity of means-testing.

Perhaps the biggest sacrifice for the Finance Secretary will be his beloved "historic concordat" with the local authorities because, if the three wise men are right and the council tax freeze is no longer sustainable, it will have to be defrosted.

Swinney has a raft of difficult choices to make as he tries to manage his budget and his job is not made any easier by having to wait until late October before Chancellor George Osborne reveals the results of the Comprehensive Spending Review and what that means for Scotland.

Whichever decisions he makes, he will be going into next May's Holyrood elections as the axeman.

Scottish Water

Many say that it should not be privatised but the report suggests at least one alternative - making it a private interest company similar to Welsh Water. A sell-off could raise The Government doesn't want to sell off a prized asset, at least at the moment, but as the squeeze gets tighter a sale could become more attractive and the SNP would have the support of the Tories.#

NHS spending

The UK Government has promised to ring-fence this in England and John Swinney says he'll use Barnett consequentials to protect it in Scotland. Health boards are making plans to cut their costs through redundancies and the review group says there was no "overwhelming rationale" for protecting major blocks of expenditure. There's also concern about the additional burden this will put on other areas.

Free personal care

Swinney says the Government is committed to protecting the vulnerable and will "preserve existing eligibility for free personal care". But councils complain about the Since charges were scrapped in Scotland in 2006, there has been an increased level in take-up and it's now 84% higher than when the scheme was introduced. Although popular, costs have increased four-fold over four years and could be an attractive saving.

Free prescriptions

Scrapping the last stage of the scheme to abolish prescription charges would save About half the population already falls into the exempt categories but the report claims a significant proportion of the remaining 12% may be able to pay at least the current charge. However, prescription charges have already been abolished in Wales and Northern Ireland.

Free concessionary travel

As with free personal care, the cost is going up because of an increasingly ageing population. Again Swinney says he has no plans to chop this benefit but the report suggests reviewing who qualifies for the scheme, with suggestions that the qualifying age be raised from 60 to 65. The current scheme is forecast to cost

Tuition fees

THE reintroduction of tuition fees is an option worthy of serious consideration. The report notes that the Browne Review on higher education funding and student finance taking place in England may have implications for Scotland and the appropriate time to act will be when its outcome is known. If not tuition fees, it says alternatives such as graduate contributions should be considered.

Council tax

According to the report the council tax freeze is unsustainable and should be discontinued. Although at the centre of Swinney's "historic concordat" with the councils, the SNP is going to have to find money from somewhere. If the freeze continues until the end of the next Spending Review period, in identical terms to that agreed for 2008-9, the cost to the Scottish Government in its budget for 2014-15 would be around

Efficiency savings

The Government's efficiency savings programme has been pretty successful. Maintaining the current 2% efficiency target across the public sector on a year-on-year basis could generate savings, excluding pay and capital, of Spending Review period. The panel suggests revising the approach to incorporate an assumed annual efficiency saving and ensuring efficiency targets are no less than 2% a year.

Public bodies

Scotland has a "plethora of institutions". These include 32 local authorities, 23 NHS bodies, eight police forces, 20 universities, 43 colleges and more than 100 other public bodies. The report cautions that wholesale restructuring would be counter-productive but consideration of the issue should be an integral part of a strategic review of public services. The panel suggests using the Public Services Reform (Scotland) Act to reduce their number.

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