Last week Gordon Brown met with the first ministers of Scotland, Wales and Northern Ireland. According to the BBC: “Alex Salmond was accused of turning the meeting into a squabble", as he and the PM disagreed over a government efficiency drive, which is set to cut the Scottish Government’s budget by £500m.
Apparently Alex Salmond doesn’t believe that his government can achieve a measly 1.5 percent efficiency saving, despite the fact that the Scottish Government’s budget has more than doubled since devolution. If that were true, it would be a pretty shocking indictment of their competence. In reality of course, such a saving should be easy.
Actually, that’s the real problem: the government’s efficiency target just isn’t stretching enough. Bearing in mind that fact that public spending has sky-rocketed since 1997 (from £300bn to £600bn), I’d say they could cut 15-20 percent (around £100bn per year) of public spending without reducing capacity. After all, if private sector businesses (which are far more efficient in the first place) can achieve such savings, doing it in the bloated public sector should be child’s play.
When it comes to Scotland, there’s another issue: as long as the Scottish Government is not responsible for raising the money it spends itself, Alex Salmond (or whoever) is going to keep coming to Westminster and moaning that he should have a bigger slice of the pie. If you separate the responsibility for raising revenue from the responsibility for spending it, you encourage profligacy. End of story.
The obvious answer is fiscal autonomy for Scotland: have the Scottish Government set and collect their own taxes. People say it would weaken the Union, but I don’t buy it. On the contrary, fiscal autonomy would probably blunt the most powerful instrument Salmond has in his quest for independence – the financial resentment that’s bubbling up on both sides the border.*
* Not that I'd actually mourn the end of the Union...