Report into public spending cuts: 'The worst is yet to come'

Demonstration: SNP Government has criticised Westminster spending cuts.

The most difficult years of public spending cuts are still to come, according to an analysis of Scottish budgets.

The financial years 2015-16 and 2016-17 were identified in a report by the Centre for Public Policy for Regions as the most difficult for resources.

Centre director Richard Harris said: "The future public funding landscape in Scotland looks bleak.

"2015-16 and 2016-17 are shaping up to be two of the most difficult years for the resource budget, and by the latter year we will be in the seventh straight year of fiscal retrenchment."

The centre looked at actual and projected spending between 2009-10 and 2016-17. It studied the Scottish Departmental Expenditure Limit, known as DEL, which forms most of the annual budget, financed by the UK Government.

Resource spending, which covers day-to-day expenditure, is expected to fall by 14%, which is equivalent to £3.5bn. The cut by the end of last year was around £0.8bn, less than 25% of the total.

Capital spending, which is used for public infrastructure, is projected to fall by 48%, or £2bn. So far, the cuts have amounted to £1.3bn, more than 66% of the total.

The centre predicts that the final year, 2016-17, may not be the end of the squeeze on finances, suggesting there may be "additional fiscal tightening".

Report author John McLaren said: "Scotland is not even halfway through the adjustment process in terms of falling public expenditure.

"Whilst the majority of the capital cuts have already occurred, over three-quarters of the real terms decline in resource spend has still to come."

Jo Armstrong, another author, said: "The latest figures for Scottish public spending highlight the ongoing budgetary challenges facing all levels of government.

"Additional savings need to be found, year-on-year, for another five years at least.

"Identifying service priorities and targeting spending effectively will become increasingly important."

A Scottish Government spokesman said: "These substantial real- term budget cuts by the UK Government will lead to significant reductions in public spending at a time when services are already under financial pressure.

"The budget deficit has to be tackled, but the cuts proposed by the UK Government are too severe and put economic recovery at risk.

"The Scottish Government has taken action to maximise capital investment and promote economic growth and, with the additional fiscal and economic powers that would come with independence, we would be able to manage public spending and promote economic growth in a way that addressed the needs of the Scottish economy.

"Until then, the UK Government also needs to take urgent action to invest in the future and stimulate economic growth."

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