Spending Review choices

John Swinney MSP will present his spending plans for the next three years to Parliament tomorrow. It is unlikely to make good reading. So here are a few things UNISON members should be watching out for.

The context of course is the UK ConDem coalition's ideological attack on public services, dressed up as a deficit reduction plan. This means a further real terms cut in the Scottish budget, just at a time when the economy needs public spending the most. However, that doesn't mean that John Swinney doesn't have choices, they may not be easy ones, but choices there are.

The first thing we will be looking for is the choices he will make on public service pension contribution increases. The UK government is docking around £240m (recurring revenue) from his budget over the next three years in anticipation that he will enforce a 50% increase in the pension contributions of staff in NHS Scotland, teachers and others. The UK government wants him to do the same in the Local Government Pension Scheme, although there are no Barnett consequentials if he refuses. If he does increase contributions in the LGPS, this will be a 'made in Scotland' pensions tax. No point blaming the big boy down south on this one.

Next is public service pay policy. This is the second year of a real term pay cut for public service workers in Scotland. If that was to be continued for a third year it will add up to a double digit cut in living standards. For all the talk of cuts it is important to remember that the wage freeze has made the biggest contribution to the savings pot.  I suspect we will hear more about the 'social wage' and in particular the 'benefit' of the Council Tax freeze. This won't wash as this tax freeze benefits the wealthy home owner, not our low paid members. It also costs jobs and services.

Then we have the impact of the budget on jobs and services. Even with some protection for the NHS budget, inflation and increasing demand will still result in health cuts. The Non-Departmental Public Bodies faced far bigger cuts than the average last year and they will be concerned again. However, it will be the local government budget that will merit most scrutiny. The Council Tax freeze means they have no local flexibility and they are also facing increasing cost pressures. John Swinney may wish to incentivise reforms with financial sticks and carrots, and this may make it difficult to compare budgets. Watch out for some smoke and mirrors under this heading.

We should of course remember that none of this pain is necessary. It is low paid workers and communities who are again paying the price of corporate greed. It beggars belief that the cheerleaders for corporate greed, the CBI, are calling for more services to be handed over to them in this morning's Scotsman. Have they not done enough damage?

There are few easy choices for John Swinney tomorrow. But choices there are.

Local Government in Scotland

I gave evidence last week to the Scottish Parliament Local Government Committee on what I believe are likely to be the key issues facing the service in the coming year. In my view the agenda is dominated by the financial position and I categorised the impact into three strands:

Services
The Scottish Government allocation to local government this year was cut by 2.6%. But that is only the start of the story. Increasing demand, inflation and the recession means that councils have had to cut even further. We have identified £535m of cuts with 12,600 job losses across Scottish local government. These aren't projections, they are real cuts.

The economic impact of that is substantial with, according to the Treasury model, at least another 13,000 jobs lost in the private sector as a consequence. 70p in every pound spent on local government wages is spent locally. And for every job loss the state only 'saves' 8p in the pound.

Most service cuts so far are being achieved by salami slicing from services. Fewer staff are struggling to deliver the same services and that is resulting in delays and a diminution in service quality. The recent Audit Scotland report highlighted some of the impact this has on staff and service delivery.

Reform
There are positive reform initiatives and many of these approaches are identified in the Christie Commission report. However, the financial position is such that some councils are scrambling around looking for any proposal that might make savings, however ill thought through. The Edinburgh privatisation programme and the Clyde Valley shared support services are two topical examples.

Care procurement is another. We are seeing a race to the bottom in wages, conditions and quality of service. The Scottish Government's social care procurement guidance is very poor on workforce issues and even ignores their own statutory guidance. Integration is all very well but it is meaningless if you have a demoralised workforce.

We should not lose sight of the impact of UK Government reforms. In particular housing benefit changes that will undermine housing finance and cause administrative chaos.

All of this leads to a real concern over the future of local government in Scotland. The centralisation of police and fire simply adds to the growing quango state at the expense of local democracy.

Workforce
The biggest contribution towards the financial cuts has come from the workforce. In local government there is a pay freeze without the modest underpinning for the low paid that happened elsewhere. Progress on the living wage has also been patchy.

Now those same members face an unprecedented attack on their pensions with a 50% increase in contributions. In return they will get worse benefits and be expected to work longer. And no, I am sorry, but the Council Tax freeze doesn't make up for that.


All of this adds up to a toxic mix with a demoralised workforce struggling to deliver essential services. There is a better way.

Legislative programme

Some grand rhetoric in Parliament today with the unveiling of the Scottish Government's legislative programme. Lot of words, if not huge detail, in the 63 page document. Here are some highlights.

Workforce Issues

Unusually for a legislative programme there is quite a lot about the public service workforce. It confirms the policy of no-compulsory redundancies until March 2012, although that doesn't cover local government. There is an attempted 'social wage' trade off between pay restraint and  benefits including the frozen council tax, living wage, prescription charges and concessionary travel. This frankly doesn't wash with most public service workers particularly as many don't get the underpinning £250 for the low paid or the Living Wage.

The Council Tax freeze is particularly contentious. They claim “Analysis shows that, as a percentage of their income, households in the lower end of the income distribution benefit the most, on average, from the freeze in council tax.” This is a highly skewed statistic. The saving at Band A is £147pa compared with £441pa at Band H, therefore the richest households benefit more from this tax cut. Not to mention the jobs and services  lost to pay for the freeze.

The FM was a bit vague when questioned about pay policy during the election and we expect this to be clarified as part of the Spending Review later this month. “We will continue to set public sector pay in a way that is fair and helps sustain public sector jobs and protect public services in the face of deep budget cuts from Westminster.” Is just so much rhetoric if they continue a pay freeze.

Public services

A Cabinet sub-committee on public service reform “has been convened to shape and take

forward our response to the Christie Commission in a coordinated manner. The Spending Review, to be published later this month, will express our continued focus on driving reform and value for money throughout public services.”

Sections on integrated working, local partnerships, outcomes and preventative spending, essentially appear to implement the key Christie recommendations. There is also support for the Christie proposals on workforce development and in particular the concept of workforce engagement. 

Again reflecting Christie on structural reform; “Where structural reform is required in order to achieve the required outcomes and value for money it should proceed, but leadership and culture matter more than structure.”

There is reference in the list of Bills to a Freedom of Information Amendment Act. There is no explanation in the text other than it is intended to “add strength and clarity to the Act”. As the government has previously ducked extending the Act, we should be wary about what is meant by 'clarity'.

Economy

A strange mix of economic proposals. The Tory Enterprise Zones are to be imported to Scotland, despite previous experience that these simply move jobs around. Mind you I suppose that is at least consistent with the Corporation Tax strategy! Similar pandering to the business lobby over 'better regulation' and the Small Business Bonus Scheme. This is apparently "very successful", without a scrap of evidence that it has created a single job.

Water

The hydro nation concept is to be delivered through a water bill. This looks promising as is the idea of a strategic body rather than simply handing new roles over to Scottish Water. Again more detail needed, but looks as if it is moving in the right direction. 

Housing

Housing investment took a big hit in this year's budget and so we should be wary about the plan to abolish the Housing Support Grant. It looks as if it is another way of spreading limited cash even more thinly. However, the government should get credit for the modest council house building programme. Even modest is an improvement.

 

Health & Care

On the day that ConDem MP's voted to dismantle the NHS in England, it is welcome to see the Scottish Government “hold firm to the values of the NHS, which are so important to the people of Scotland. We will foster a mutual NHS, working competently and collaboratively to deliver healthcare which is free at the point of need. We shall not go down the route being pursued in England.” Gold star for that commitment.

Same applies to partnership working as “NHS Scotland staff will continue to be fully involved in shaping the future NHS, benefiting from partnership arrangements which are the envy of many, within and outwith Scotland.”

On care integration it appears that the Government will focus initially on older people, "This will require, amongst other things, delivering the integration of health and social care and improving joint working with other agencies and the voluntary sector. We are determined to ensure that the older person is the central focus of delivery the length and breadth of Scotland.” Again a lot of detailed work is required and I understand we will hear more on this later this month.

The Social Care (Self-directed Support) Bill will need some scrutiny. This is fine for appropriate groups, but it mustn't become the new 'one size fits all' policy. It is already being used to cut social care in a number of areas.

The Alcohol Bill will be reintroduced “bringing minimum pricing as a condition of licences granted under the Licensing (Scotland) Act 2005 with the actual minimum price being specified in subordinate legislation." We certainly have to do something to reduce alcohol consumption in Scotland and reduce the impact that alcohol misuse and overconsumption has on public health, crime, public services, productivity, and the economy as a whole. There will still be scepticism that this is the right approach, but as the UK government is unwilling to act on excise duty, it may be worth a try.

Justice

More rubbish on the claimed “additional 1,000 police officers on the beat in Scotland.” This is nonsense as many of these officers are far from “on the beat” - they are substituting for police staffs. It is hard to take the Government seriously on 'outcomes' when they persist with this policy.

Then we have a Bill to create a single Scottish Police Service and a single Fire & Rescue Service. “Our priority will be to ensure policing remains strongly rooted in and responsive to our communities, and that front line services are protected despite the financial challenges.” The paper claims this is consistent with Christie recommendations although it is hard to see how. These services are typical command and control cultures that don't do devolved management well.

The only bright point in the dismal Justice section is support for community alternatives to short term prison sentences for minor offences and the Community Payback Order (CPO). We really must do something to cut the appalling waste of the ever rising prison population. We will have to see if the Spending Review includes the promised "provision of realistic levels of funding.”

Environment

We should welcome the emphasis on Climate Change legislation and assessment of the carbon impact of proposed expenditure. Scotland may already be "more than halfway to meeting our 2020 target of a 42% reduction in emissions.” How much this is due to the recession is questionable and there is limited action on public duties. However, we should welcome the continuation of the Climate Challenge Fund "with an enhanced level of funding of £10.3 million in 2011-12."

 

Education & Children’s Services

If we are serious about preventative spending we need to invest in early years. There are a number of initiatives that expand provision and develop the early years workforce. A welcome move away from the obsession with nursery teachers. There will be new legislation on the rights of children and young people and consultation on a draft Children’s Services Bill for introduction later in this Parliamentary session. There will be an Early Years Change Fund “to deliver effective early intervention in a child’s life, including the development of a new generation of children and family centres across Scotland and support for families in crisis.” That looks promising and appears to build on the work done by Susan Deacon.

 

There will be a Pre Legislative Paper on Post-16 Education in September 2011. We should welcome the commitment to free higher education and a guarantee that all 16-19 year olds will get a place in post-16 learning. Maintaining the Educational Maintenance Allowance and “implement our new Careers Strategy with more and better support for those who need it most.” I would be sceptical about aspects of this careers strategy as so far as it is too reliant on web based services. But let's wait and see.

Conclusion

In the current budgetary environment it was always going to be a difficult programme to put together. It is a bit of the curates egg, good in parts, but plenty to scrutinise when we see the detail.