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Bombshell analysis shows what Labour’s secret austerity plan could buy Scotland

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Leading progressive think tank the Resolution Foundation has warned that central to Labour’s ambition to get debt falling as a proportion of GDP are £19 billion worth of spending cuts. 

It comes after a week of warnings that neither Labour nor the Tories are being upfront about the scale of the issues facing public services.

On Friday, the Institute for Government warned that public services were “on the brink of collapse”.

In a major report, the respected think tank said it was not plausible Labour would be able to commit simultaneously not to raise taxes or cut public spending while getting debt down.

What can £19 billion buy? 

Analysis by the Sunday National now shows the epic proportions of money its predicted Labour could cut if they want to reduce the debt level.

The £19bn figure would be enough to pay the wages of 611,286 junior doctors in Scotland, 817,555 trainee nurses, 589,750 probationary teachers.

It would also cover the entire Scottish Child Payment budget for 42.9 years and could cover the payroll at Celtic FC, Scotland’s highest-spending club, until the year 2335.

Celtic captain Callum McGregor (Image: SNS)

In its report Debt Dramas, published on Tuesday, the Resolution Foundation set out the scale of the challenges facing a potential incoming Labour government.

The report said that the Office for Budget Responsibility’s “forecast for debt to fall in the final year of the forecast relies on spending plans that imply £19bn of cuts to unprotected departments – such as Justice, the Home Office and Local Government – by 2028-29”.

READ MORE: New analysis proves Labour WILL impose austerity in power, SNP say

Key areas such as education, the NHS and defence are protected – but a reduction in Westminster spending cuts the money that flows to the Scottish Government through the Barnett formula.

The report went on: “Spending reductions on this scale could be very difficult to deliver, not least because some public services remain under severe pressure.”

It said that “the quality of some public services is lower than at any time since the Conservative Party came to power in 2010”.

But it added there were some options for the next government, including tweaking fiscal rules from a target based on public sector net debt excluding the Bank of England, to one focused on total debt, which would expand an incoming government’s capacity to borrow by £16 billion in 2028-29.

The next government could also ask the Bank of England to change to a “tiered” system of reserves renumeration which would reduce the level of spending on debt interest by up to £8bn in the next five years, the report added while noting that neither party had laid out plans to this effect as yet.

Meanwhile a report from the Institute for Government published on Friday shone more light on the crisis in public services.

The report found that hospital performance was “arguably the worst in the NHS’s history” with record-breaking waiting times.

READ MORE: Both Labour and Tories ‘concealing huge future budget cuts’

Prisons are reaching capacity, council bankruptcies are becoming increasingly common resulting in residents left with “rising council tax bills and vastly reduced services”, the report added.

‘Services on the brink’ 

Emma Norris, the IfG’s deputy director, said: “Few newly elected prime ministers will have had to take on such a long and painful list of problems.

“Many will require immediate attention, not least to rescue services on the brink of collapse. Almost all – from stagnant growth to a fragile civil service – will require serious reform over the next parliament and beyond.”

The Resolution Foundation’s report also highlighted the fact an incoming Labour government would need to take on costly compensation schemes for the victims of the Post Office scandal and the infected blood scandal even if it ruled out compensation for Waspi women.

Tommy Sheppard (above), the SNP candidate for Edinburgh East and Musselburgh said: “After years of Tory cuts and economic mismanagement, and policy disasters like Brexit, it is clear that Labour offer no alternative to yet more cuts to our already underfunded public services.

“Only a vote for the SNP will protect institutions such as the NHS from further cuts and put the interests of Scotland first.

READ MORE: John Swinney and Anas Sarwar clash in TV debate over Labour’s economy plans

“These figures from the Resolution Foundation bring in to sharp focus what more cuts under Labour will mean in reality – drastically fewer nurses, doctors and teachers.”

He warned that “after 14 years of Westminster cuts, our public services cannot take any more”.

Sheppard added: “On July 5, vote SNP to put Scotland’s interests – and Scotland’s public services – first.”

‘Starmer’s Tory fiscal rules’

Scottish Greens finance spokesperson Ross Greer said: “What Labour are telling us now is word for word what the Tories told us in 2010. We all know what followed – fourteen years of economic, social and environmental catastrophe.

“Keir Starmer’s Tory-inspired ‘fiscal rules’ would mean further cuts to essential services across the UK and to the Scottish Government’s block grant. That means schools and hospitals, libraries and leisure centres paying the price for Labour’s commitment to follow the most destructive economic beliefs of the Conservatives.”

But Greer said there “are other choices”, adding: “If the UK followed Scotland’s progressive income tax system it would raise an additional £11bn a year. And a wealth tax on the richest 1% – those with at least £3.4 million in assets – could raise £7bn.

“With that money we could really transform our public services to meet the huge demands they face, we could end child poverty for good and, critically, we could tackle the climate emergency on the scale it requires.

“Tory Britain has been a catastrophe. We need to leave it behind, not double down on it. Unfortunately, Labour would rather deliver another lost decade than make the rich pay their fair share.”

Chris McEleny, the general secretary of the Alba Party, said: “It is absurd that Labour are planning an assault on funding to public services when Scotland is an energy-rich land that had sent £400bn to the UK Treasury from oil and gas and in the decades to come we will be sending over a trillion pounds of renewables revenues to London if we continue to be handcuffed to the failed economic policies if Westminster. It’s time for independence.”

Labour did not respond to a request for comment.

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