13/09/2016 Scotland 2016

The respected Fraser of Allander Institute says public

services north of the border might be hit by ?1.6 billion by 2020.

Even their optimistic projection would still see

So tonight, I'll ask a panel of politicians

There are tough economic choices on the horizon,

with a worst-case scenario of a ?1 billion cut

So is the Scottish Government right to continue to prioritise health,

Holyrood's politicians blame each other for the possible

consequences of such cuts, but do any of them have a solution

And in the US Presidential race, an unwell Hillary Clinton

Can Donald Trump capitalise on her absence?

Some public services could face budget cuts of almost a fifth over

the next four years, according to independant forecasters.

The cuts could come under the "worst-case scenario"

for Scottish Government funding outlined today in a report

by the Fraser of Allander Institute, which is part

There are just under 100 pages in this report. It contains a great

deal of detail. And different scenarios, as the authors try to

model and predict the future. It is available online for anyone. But in

case you haven't downloaded it will look through your own personal copy

yet, let me pick out the key points. So if you are sitting comfortably, I

will begin. What the Scottish Government can spend comes from the

cash that comes from the UK Government under the bonnet for

Miller and revenues raised from taxes. Taxes will fund half of the

revenue in Scotland and the block grant will be adjusted. If the

Scottish economy matches the performance of the rest of the UK,

the impact would be neutral. If it performs less well, you there will

be more money -- less money. If it outperforms, there will be more

money. But the Scottish economy has grown by 0.6% compared to 1.7% for

the rest of the UK. There are big areas of uncertainty, what will

leaving the EU mean and what will be the impact of the UK Government's

decision to abandon its goal of balancing the budget by 2020. The

report warns that the Scottish Government should prepare for

real-time cuts. Best case, down by 2.8%, down by ?700 million. Worst

case, down by 6.2%, ?1.6 billion. But it has already made a number of

policy commitments for police, and health provisions. Keeping those

promises would mean even deeper cuts for unprotected areas. Around 16%.

So, tough choices ahead. But it is also true that the Scottish

Government will have more powers ever before.

Well, a short time ago I spoke to the Director of the Fraser

of Allander Institute, Graeme Roy, about those

projections and how he came up with that worst-case scenario.

Even before the EU referendum, the Chancellor was planning to take

around 3.5% out of the Scottish budget in real terms over because of

the next Parliament. All we do in the report today is set out what

scenarios may happen going forward now that the Chancellor has promised

to reset fiscal policy in his Autumn Statement. So we look at a range of

different scenarios. The worst-case scenario is a situation where the

Chancellor decides in the light of Brexit and a potential shock to the

economy and a weakening UK fiscal position, he is going to cut

expenditure even more in the short term and on top of that, with the

new fiscal powers that are coming to Scotland, got as revenue is being

slowed over the next few years. Is that shock to the economy

guaranteed? Philip Hammond talked about Brexit having a chilling

effect on the economy. There is a debate about the extent of the shock

that economists predict will happen in the next few years. The general

consensus is that it will be a negative shock. The scale is

uncertain but we can be confident that the economy will grow more

slowly over the next few years and it would have done if it had not had

the shock of the EU referendum vote. But what do understand, that

austerity is no longer government policy? We would be very cautious to

say that is likely at least in the short-term. The Chancellor has said

he is prepared to reset fiscal policy but that was going to happen

anyway with a weakening fiscal position going to increase

borrowing. If reset just means he will miss his fiscal targets, with

the slowing economy, that would happen anyway. He could decide to

stimulate the economy by expanding fiscal policy in the short term,

perhaps tax cuts. But I think it is pretty unlikely that he will tear up

his plans to consolidate departmental spending and therefore

continued to not cut the Scottish Government. That is the important

thing here. The Scottish Government depends on the bonnet consequential.

If he does not change the budget in vain his department, then

potentially the worst case an aria will come to pass. -- the Barnett

formula consequential is. And we know that Scotland -- that the

Scottish Government will get its tax-raising powers. In the near

term, the effect of the Barnett formula will affect the Scottish

Government and it is likely that that will continue to be cut over

the next few years. Without those powers, how difficult would it be

for the Scottish Government to make up those extra revenues? It is

difficult given the scale of the consolidation that is happening at

UK level. And there is a risk if the Scottish Government was to try to

make up that deficit by increasing taxes and Steve -- which could make

the situation worse. With tax rises, there is a risk that you end up

putting the economy into an even more precarious position.

Politicians of all hues have had something to say about your report,

blaming each other about the potential outcomes. What do you make

on what you have heard? Anything give you grounds for optimism? The

report, the image of responsibility to act is with the Scottish

Government, they are the one setting out the budget. But we are clear in

the report that it is a challenge to all political parties. The Scottish

Government must set out clear political -- has set out clear

physical priorities in its manifesto and in its budget which are

childcare, policing and health. But those require cuts in other areas.

If you are going to criticise these cuts, you have to come forward to

say where you would make savings. Will you spend less on police or the

health budget or what? You cannot have it both ways. Our challenge to

every issue saying with a tight whistle settlement, what are your

choices and what are the opportunities to take different

decisions, if you want to do that. Thank you for coming to speak to us.

So, what have the politicians had to say about the forecast?

I've been talking to the Conservative Spokesperson

on Economy, Jobs and Fair Work, Dean Lockhart, the SNP MSP

Ivan McKee who sits on Holyrood's Finance Committee

and the Labour Economy spokesperson Jackie Baillie.

Ivan McKee, these phrases mean that the SNP's spending proposals have to

be ripped up. The data we have seen says two things. It says about the

cuts the Scottish Government has faced from Westminster with those

set to continue, a 10% real terms cut in the period up to 2020. It

talks about this Clifford and impact of Brexit and that is a consequence

of the Tory party's internal squabbles, it will hurt Scotland

very hard. It also talks about the fact that the Scottish Government is

prioritising the police, health and childcare, meaning there is even

less money for other areas. The Scottish Government made manifesto

commitments and that is the basis on which we were elected for our third

term. That is what we will follow through on. Clearly, we don't know

what the full numbers are going to be because we are still waiting for

Phil Hammond's Autumn Statement that he will have to make changes and

because of the impact of Brexit. When we see those full numbers,

Derek Mackay will bring forward a budget to meet our manifesto

commitments. But the impact of Brexit is a great unknown and a

consequence of the Tory party playing games. Dean Lockhart,

address those issues. The Fraser of Allander Institute made it clear

that ultimately these problems that we are likely to see in the Scottish

budget are a result of Brexit and the result of austerity that the UK

Government has been pursuing. No, the main takeaway from this report

is that now, the Scottish Government has the significant tax and spend

and fiscal policies available to it to make a difference to the Scottish

economy. That means the size, shape and amount of these. ...

economy. That means the size, shape and amount of these. So how much

that should base tax people to make good the deficit? That is for the

SNP government to decide. They have been badgering for these economic

powers for years. Now they have them, they should tell us how they

are going to manage the economy going forward. Parcel forms is not a

great guide. The economy under the SNP for the last decade has

underperformed the rest of the UK. That gap is only widening. What I

would say to the SNP is that now you have the powers you have asked for,

step up to the plate and do something with those powers. Jackie

Baillie, the best that your party has offered is the 1p increase in

income tax and the last election. But if the worst case scenario comes

to pass, that will not nearly enough. We actually had a number of

different proposals. But what we are saying is slowing economic growth in

Scotland, slower than the UK, so we cannot grow ourselves out of these

problems... So you will have to tax? We are seeing a 6% worse case

scenario cuts. The SNP having made their commitments, these cuts will

fall on local government budgets. That means money taken away from

schools, education, social care from some of the most vulnerable... But

your proposal would only raise ?500 million. That does not go anywhere

near to fill the gap for the best case scenario. We had a number of

proposals. We said we would have a 50p top rate of income tax so that

those who earn the most could contribute a little bit more. We

would have put that into closing the education attainment gap. But in

addition to that, we were clear that this cottage government has choices.

It has a choice to be anti-austerity, that is what the SNP

said they wanted to do. Yet at each occasion when they -- are challenged

about it, this every pass on the cuts. Is it time to consider raising

taxes? We made manifesto commitment stop macro circumstances have

changed! We made commitments not to increase the basic rates. We have

made changes to the allowances for higher rate taxpayers which will

raise additional money. But nowhere near the ?1 billion if this

worst-case scenario comes to pass. That is a consequence of the Brexit

situation. Derek Mackay will bring forward a budget in a few weeks

which will lay out spending plans for the coming year and tax plans.

We have made manifesto commitments and we shall stick to them. We

shouldn't lose sight of the fact that the cuts because of sturgeon

are driving this and it will get worse because of the uncertainty

caused by Brexit. There are new powers coming to this

cottage Government. Is about time that they were exercised. It is a

time when the overall budget is being constrained. Cut across

Scotland. A cut to... Jackie Baillie should understand because she knows

the way these things work as this will drive down the economy. Drive

the economy. Let me bring in... This will improve the finances of

Scotland. The Chancellor has said that he needs to reset the economy.

Would you welcome a move away from austerity? I think the Autumn

Statement is go to take place at the end of November. We need to wait to

see what the Chancellor comes up with. You could lobby for more money

for Scotland, for instance. I think what is really relevant here are the

numbers that came out next last week that showed that public spending in

Scotland is ?50 billion more than the tax revenue in Scotland. We are

already seeing a union dividend. Scotland benefiting from being part

of the United Kingdom. How much of a consolation that the if it is right

that the billion pounds is taken out of budgets? That is for the SNP to

the site. They have the hands on the levers of economy. The UK's

austerity policy has got worse. You have said all along that once you

get the hands on the levers of power you will be able to grow this

faster. So, the proof will be on the pudding. You have had these powers

through number of months now. There is been silence on how you are going

to use them. It's time to step up and tell the Scottish people how you

are going to use these powers. I think you the already seen. We have

invested ?100 million in two money. That was an under spend. We have put

money into this cottage Grove fund to help businesses innovate. That is

the kind of thing to get things up to where they should be. Jackie

Baillie, is it unfortunate that in this argument over austerity that

Jeremy Corbyn and his front bench team seem to be fairly ineffective?

No, this is about what we do in Scotland. There are new powers being

transferred to Scotland. I well remember as you do, Nicholas surgeon

going down prior to the UK election about how to do anti-circuit. It is

just a shame that she does not do it herself. The people are blaming each

other, and the people of Scotland deserve better than this. There are

billions of cuts coming to the local councils. Frankly, to have this

arguing with each other it is not good enough. Labour act because the

financial crisis in the first place. I think you will find actually that

that is not true. This could go on for a long time so let me thank you

for joining us this evening. Tonight on the election trail

in the United States, Republican Donald Trump is rolling out

proposals which he says will make Meanwhile, his Democratic rival

Hilary Clinton is still out of the picture as she

recovers from Pneumonia. Has the last few days been a turning

point in this campaign? Professor Chris Carmen

from Glasgow University has been watching events closely and has

been giving me his view. It is an important point. We will

know whether it is a turning point when we get the polls. It is too

early to know. We are speculating about what public opinion is going

to do and how it is going to react to events with Hillary Clinton and

her health issues. And Donald Trump and his policy launches and all of

that. It is an important point and it plays into the important

narratives that have been coming out and have been raised previously

around health issues and around longer ability and honesty and that

something. Donald Trump is making an announcement about childcare

tonight. It seems that he is trying to focus on policy in the absence of

Hillary Clinton, rather than just hammering home the message of ill

health. Remarkably he has been quiet about the health issue. He wished

her well and said that he hopes she gets better soon. He quickly pivoted

to talk about himself and said he was going to release it health

records later this week, he says. We see what happens with his. They are

also using this time. They are not going to rush nothing out, they will

also have this plan. They are going to try and get media attention.

There are some things that Donald Trump did over the weekend that they

want to quickly hide under the rug. There were issues around the Trump

foundation that came out and he made a few comments that it they would

probably prefer him not to have attention on. You mention that he's

going to have to disclose his health records. It is interesting

phenomenon that they are talking about disclosure in the United

States. Pollutants and talk about being private, but the public

thinking she has something to hide. Some like 86% according to a

relatively recent poll of people say that health of the candidates is a

factor in thinking about the vote. So, Americans have demanded the

quite sometime this a lot of information about health. Also that

tax records and income. These sorts of things. These are difficult areas

for both of these candidates. Yes. Specifically scrutiny. The Clintons

have had to reveal an awful lot over a long period of time. Since Bill

Clinton was president. And Hillary Clinton, because she was Secretary

of State because she was a senator, she has had to have these records

released publicly prolonged period of time. Donald Trump has not.

Because he was a private citizen of private companies he has managed to

keep his record close and personal. We have seen replacing Hillary

Clinton on the stump her daughter, Chelsea. That is not something that

you would see in this country. She is not running for office. Barrick

Obama has been out campaigning for her to. Barrick Urbana, Chelsea have

all been out. It is a family affair. You get a family affair. Director

JFK, you get Camelot. Chelsea Clinton was raised in the White

House. You have this idea that she is a public citizen in that regard

as well. So, we have still got several more weeks to go in this

campaign. We have got TV debates to come. They will be fascinating but

also potentially crucial in people making their minds up. It is going

to be very interesting to see what happens in the debates. There is a

distinct possibility that they might end up being nasty. Maybe some of

the nasty as debates we've ever seen. In presidential debate

history. We can expect Donald Trump is probably going to come out fairly

hard. On the other hand, his campaign manager now she is going to

probably try to get him to rein it in. So, a lot of the more reserved

Trump that we have seen over the past week or two, many people think

it has been her influence trying to get her to stay on message a lot

more. Appear in presidential. If you start attacking Hillary Clinton, he

starts looking not presidential. For Hillary Clinton, she has to appear

to be presidential. She has to be authoritative. She does not have a

problem being authoritative, she had a problem being likeable. She's

going to get hit on the issues that you mentioned earlier. Believable,

trustworthy. Those are seen as being the big negatives for her. It is

fascinating. Think you are talking to us.

Well, to discuss today's stories, I'm joined by the Press

Association's Lynsey Bews and by the Daily Record Political

Let's start with these figures from the calendar Institute. Really big

numbers. Ready quite worrying for the Scottish Government as Derek

Mackay looks to his budget in a couple of months' time. Yes some

very tough decisions for him to take in his first budget. I suppose he

would want to highlight the figure that has been widely headlined as

the worst-case scenario figure for the next four years. Nevertheless

there will be some tough decisions for him to take. Given that he has

already the SNP Government has already pledged to protect certain

areas of spending, it does mean that people are looking at where the axe

is going to fall and local government is looking vulnerable

again. All the politicians blaming each other today. There is nothing

new about that, David Clegg, but we didn't really get many concrete

answers about how this will be dealt with. No. The this will be a

important tool to see how it will be set out. One thing that it said

which I think would be excellent is that we need some kind of framework

for what we want from the money that we have and how we want to spend it

and what outcome to one. We didn't reject much of that with the

election campaign this year. We got a particular SNP campaign poster

which said we all benefit from our policies. That is not possible in

these circumstances. How do you want them to benefit? The UK impact with

the Brexit scenario, but there will always be the case. Exit has made it

worse and tougher. The new income tax coming in, there could have been

a suggestion that the Scottish Government is going to be more on

the spot for the decisions, but I think Brexit has muddied the water.

We need to see what Philip Hammond come on with the budget. That will

have another effect on what Scotland gets. Yes. And Mackay will be having

a look at that closely. Particular when Philip Hammond letters than

what is planned. He is talking about a Brexit proofing budget. Looking

ahead to cushioning the economy when we do go into Brexit. He has been

pulling back a little bit from the austerity that we heard from George

Osborne, so it will be interesting to what we hear from him about

borrowing, it is investing and infrastructure. It is going to see

how interesting it will be that they were Mackay deals about. There will

be a lot of horse trading to come. Yes. Maybe they just need three or

four people to come onside and they will be there. The new concern for

Derek Mackay will be why does he keep all these manifesto promises.

House he say that all the problems at dealt with the UK Government

without taking the responsibility, but taking the credit for the

policies that are popular such as the credit for the NHS. John Swinney

has been talking to Parliament about empowering teachers for some time.

He says teachers will be able to make their best decisions for their

pupils. This is a major review. We can get many details because he's

now going to consult about how to do this. Yes, he is talking about

consultation. It leaves you wondering how councils will be

involved in this. Peter Powell will be with the schools and preserving

power or centralising power as is needed. But it is not really clear

in what role it will place. We will not be Academy is all how English

schools have gone. The same time, councils will be wondering in terms

of accountability where are we left? All including an inclusive ethos as

they have done in the Scottish education system have do accept that

this is a National Service. They seem they are going to devolve

service down to headteachers. They are going to be some very sore

council leaders today. Not only will ?1 billion the taken off the budget,

but they will also not be in charge of schools essentially. How are

these regional boards be dealt with? In the end, who is going to have

oversight? Can say as much power as possible, but you have to say that

the power is going to be used properly. All of this, the potential

cuts to the council budgets and education, given the nurse some of

the framework for the election next year. Absolutely. Actually, you

could say that councils are going to be sitting thinking today that our

budgets are going to be cut again. Some of them will see that. Is going

to set up a war between local councils. There will be resistance

there. I think we're going to see more of that player going into these

elections. The politics of that are interesting. We will be five years

on from the last local government. The popularity from the SNP has

increased. So you would expect them to pick up more councils. You have

an SNP are going to pick a fight with them. Shall we talk about The

Great British Bake Off? BBC is losing it. Is going to Channel 4.

Mel and Sue are no longer going to be part of the show. Is going to be

big gap in your life Lindsay? I am a fan. I'm not a super fan. If Mel and

Sue go, I have seen people saying, and if Paul and merry go then all

that Channel 4 have bought a rape you pots and ten. What is great

British bake off without those for? I would also like to say that we are

available for half Mel and Sue's price. I don't know whether this is

an audition! It is a show that is just about baking and now we have a

?25 million price tag. I'm not somebody who watches it very often,

but it has been incredibly popular soppy success has been terrific. And

that is caused such news just by moving channels means that is tapped

into the cultural zeitgeist. We'll Channel 4 regret it? I suspect yes

they will lose some viewers because adenoid people -- annoyed people

that it has moved. Thank you both. I'm back again tomorrow

night, usual time.