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It mostly covers my work as UNISON Scotland's Head of Policy and Public Affairs although views are my own. For full coverage of UNISON Scotland's policy and campaigns please visit our web site. You can also follow me on Twitter. I hope you find this blog interesting and I would welcome your comments.

Wednesday, 26 September 2012

Universalism and the budget


Having spent some time pouring over the Scottish Budget, as is my less than joyous task at this time of year, I was left pondering how we are going to cope with what could be ten or more years of this. Then Johann Lamont‘s speech sparked a debate on this very issue.

My initial reaction was somewhat less hysterical than some. On the nationalist left this is death of all Scottish Labour used to stand for, Blairites taking over the party and such like. On the right it is class warfare alighting on “the poorest pay for tax breaks for the rich” elements of her speech. I am not convinced it is either and, unlike some commentators, I have also read the full speech.

The problem is relatively easy to define. If you talk to staff working in public services they will tell you that most public service organisations have struggled through the first few years of cuts by salami slicing services, avoiding difficult political decisions. The Scottish Government has done the same, with the added advantage of being able to dump all the tricky implementation decisions down the line to councils, health boards and quangos. And of course the biggest cut has been taken by public service workers through the pay freeze.

So something clearly has to happen, we cannot simply muddle along like this. Far from abandoning everything Scottish Labour supposedly stands for what she actually announced was a look at the budget to “develop a costed analysis of available policy options at this time of financial austerity”. It is also worth pointing out that Scottish Labour elected a leader not a dictator. Leaders have a duty to lead and to promote a strategy, but Scottish Labour’s policy is decided by a democratic process, so any debate has some time to run.

However, the speech does involve a clear attack on some aspects of universalism. Now I believe very firmly in universal services funded through progressive taxation. The Scandinavian model if you like. Labour has not been nearly radical enough in explaining that you cant have Scandinavian levels of service on US levels of taxation. But before we drift into fantasy politics, let’s remember that the SNP economic policy is rooted in Laffer curve economics.

The main advantage of universal services is that they can reach everyone on the same terms. The main objection to universal services is their cost. Targeting is often presented as being more efficient, less money is spent to better effect, or as Johann has argued, the poor pay for the rich. However, there are problems with targeting because recipients have to be identified; administration is complex and expensive to run. There are often boundary problems caused by trying to include some people while excluding others. Targeting and means testing sometimes fail to reach people in need.

I entirely agree with some of Johann’s examples. The Council Tax freeze is clearly regressive, and the police on the beat target is just political spin. But on prescription charges our members who work in health centres can describe how people asked them which prescription they can do without. Tuition fees can discourage students from working class families from going to university.

There is also a political trap here. The right hates universal services because they build a broad based support for public services. They favour targeting as the first stage in undermining middle class support for public services, so we end up with a US style small state. The NHS has broad support because we all use it, while social housing has lower levels of support because it is seen as a service for the poor and disadvantaged, and is often spatially segregated as well. Targeting services at low-income groups risks creating a two-tier system - services for poor people tend to become poor services. A better model harnesses the power of more affluent service users to maximise the quality of services while ensuring that they do not overly dominate access.

We should also remember that we don’t have universal services or a small state at present. We have a mixed economy and political judgements are made about universal and targeted on a case by case basis. So it is perfectly reasonable to examine this balance at any one time. As the Christie Commission report showed we haven’t got the outcomes right since devolution and there is a case for targeting services at the areas most at need. That doesn’t mean abandoning universalism, but it does mean making sensible judgements about resource allocation.

The political strategy therefore needs to be factored in. The risk with Johann’s approach is that Labour falls back into the managerialism that dominated the last Labour administration in Scotland - or being viewed as simply implementing ConDem policies, rather than campaigning against them. Differentiation is not enough. I fear political strategy is not always Scottish Labour’s strong point.

So I am not going to join in with the chorus of easy condemnation. But that doesn’t mean I accept all the analysis or the possible solutions. However, it is entirely reasonable to open a debate on these issues and for those who disagree to put forward credible alternatives.

6 comments:

  1. I was interested in her comments about university fees. As far as I know Labour Policy is:-

    "We committed to free university tuition in the last Scottish Parliament elections - In our 2011 manifesto, we pledged not to introduce up-front or back-end tuition fees for Scottish students".
    I don't think there's any doubt that in the current economic climate we need to invest in graduates. Look at all these University Heads writing to the papers now they see the reduction in England.

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  2. "However, it is entirely reasonable to open a debate on these issues and for those who disagree to put forward credible alternatives."

    Any debate that rules out one of the most radical options from the start is not a debate that is worth having, and this is exactly what Johann Lamont seeks, not least because she has no intention of outlining any solid policies until after the referendum.

    Public services are funded by taxation. When the cost of providing those services rises, you have two options: increase the funding, or cut the services. It may have escaped Johann's notice, but Holyrood does not have the power to raise income tax (even if SVR was usable, it does not allow for a progressive variance in the tax as the top-rate cannot be raised on its own), corporation tax, inheritance tax, stamp duty, air duty, alcohol duty etc. These powers reside with Westminster, so as it stands, we're relying on Labour winning the next election (and having first dumped Ed Miliband as leader and replaced him with someone who isn't obsessed with the "squeezed middle", who we all know are actually Daily Mail readers who don't want tax rises.)

    Obviously there are some avenues available to the Scottish Government, but if the council tax freeze is regressive, it's only because it is such a regressive tax in the first place. The line that critics of the council tax freeze use - that the rich save more than the poor - is almost the exact same argument derided by those of us who favour universal benefits: the poor paying for the benefits of the rich. However, let's put that to the side just now anyway, because on Newsnicht Johann refused to say she would stop the council tax freeze.

    In the previous parliamentary term, the SNP wanted to raise money by imposing a large retailer levy - the so called Tesco Tax - which was voted against by Johann and her colleagues. So even when the Scottish Government has proposals to raise more funds, Johann refuses to back them.

    So, in both her words and her actions, Johann has proved she has no interest in increasing taxes. Since the funding/revenue equation is pretty simple, we can state, then, that she favours cuts to services - and again, she has demonstrated this with her words, in her speech and the subsequent interviews on TV.

    It is completely reasonable for those of us of a left-leaning nature to criticise her for the direction she appears to be taking her party; and it is frustrating for those of us of a pro-independence mindset to see her ridicule the idea of a Scandinavian-style welfare system without Scandinavian levels of taxation, without being able to square the circle to see how you achieve that.

    The answer to Scotland's public service provision is not cuts - it is powers over taxation, welfare and an end to the throwing away of public money towards a weapon of mass destruction that can never be used. But Johann's priorities lie first with conserving the union (or to be more precise, defeating something the SNP wants), so she can't see that the answer is staring her right in the face. This is why she has faced such deserved criticism for her speech.

    P.S. - I hope you noticed her laying the groundwork for Labour-controlled North Lanarkshire council cutting 1,400 jobs sometime in the near future.

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  3. I support universal services for the reasons Dave outlines. However, there are a few flaws in Doug's line.

    She has no intention of outlining solid policies until after the referendum because she doesnt decide those policies. Scottish Labour has a policy process, for all its faults IMHO, that wont conclude until after then.

    Labour may not be a fan of raising taxes, but neither is the SNP. They favour cutting taxes and that is one of the points Johann Lamont was making. Easier to blame London than propose Scandinavian level of taxes.

    Powers are no use unless you are willing to use them. After the Scotland Act 2012 we will have one of the highest levels of devolved taxes in Europe. But again no indication that the SNP has any interest in using them.

    And on council cuts, they are happening because the SNP govt has cut local government more than other services. Dumping difficult decisions as far away from ministers as possible.

    I may not entirely agree with Johann Lamont on this, but these attacks are way off.

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    1. Do you think you could perhaps make your arguments on their own merits, as opposed to the "SNP this, SNP that" approach that Johann Lamont has used to try and defend her embracing of the end to universal benefits?

      You say the SNP prefers to blame London rather than raise taxes, but it seems Lamont would rather blame Scots for wanting "something for nothing" rather than admit whether or not she is saying she wants to raise the unpopular and regressive council tax. Nothing about creating higher bands (which would create its own problems as it would require a mass revaluation of properties, which might cost as much as it would raise...) or abolishing it completely and replacing it with LIT, LVT or even giving councils the freedom to decide for themselves how to raise revenue. No, instead she just talks about how universal benefits - surely one of the cornerstones of social democracy - are unaffordable.

      Powers are no use unless they can actually solve the problems they purport to. The main tax power in the Scotland Act is no more than increasing the existing SVR from 3p to 10p (which was admitted to being a figure plucked out of thin air, rather than the result of analysis of what the optimum figure would be), as well as removing the corresponding money from the bloc grant so that it HAS to be used. This will not give Scotland the ability to reverse the UK government's lowering of the top-rate of tax - if we want to tax the rich more, we can only do so by also taxing the poor more. So the progressive element of income tax - the really useful part - is reserved.

      At least the SNP supports something - independence - which could then be used to reach Scandinavian levels of taxation. Regardless of what you think the SNP would do in terms of tax (everyone focuses on corporation tax, but no one ever asks if they would raise the top-rate of income tax...), if they turn out to become the party of tax cuts post-independence then we can chuck them out and elect the Greens, the SSP, or maybe even a rejuvenated Scottish Labour Party, which has rediscovered both its mojo and it's old values. I for one will not vote for the SNP in the first election in an independent Scotland unless I am sure they remain committed to that vision of following the Nordic model.

      Regardless of the Labour party policy mechanisms, the fact remains she is calling on others to have a debate on cutting universal services, then using the cop-out that her party will have their answers in a couple of years' time - conveniently after we've decided whether or not to stay in the UK. If she wants to start a debate, she should have the guts to state her own case. Almost EIGHT years after first losing Holyrood to the SNP, Labour will finally have some policies... Maybe. It's obvious why Midwinter has been tasked with seeing what could be cut rather than what revenues could be raised, because in 2015 Labour will be trying to out-Tory the Tories in order to get back into Westminster, and they wouldn't dare give the Tories an excuse to beat them with the "tax and spend" stick in the run up to that.

      It's quite simple - as long as Scotland is governed by Westminster, it cannot follow a progressive agenda, because without all the tools at our disposal, we'll only ever be managing the cuts handed down to us. But when it comes down to a choice between social democracy or unionism, it seems Labour would rather choose unionism every time. When did Labour overtake the Tories as the main unionist party?

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  4. Johann Lamont hasn't argued for an end to universalism. This is typical of many comments on this issue that start from a false proposition. She has opened a debate on which services should be universal, where we draw the line. And a line has always been drawn somewhere on this issue.

    As for independence isn't the preserve of the SNP, we can then vote for the Greens or the SSP - Tommy for President. This is fantasy politics. Vote for independence and Scots will suddenly vote for a socialist nirvana. Spare me!

    We are voting for the SNP's vision of independence as set out in their White Paper. When they eventually get around to publishing it. If you believe in the Laffer curve economics for business taxes, why would you not support it for personal taxation. Arthur Laffer articulated this very clearly in a BBC radio interview recently. So income tax for the rich gets cut as well.

    That's the hard reality of the independence we are voting for, not some fantasy dreamed up by parties who can barely get an MSP elected.

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  5. The weakness in Lamont's speech was any reference to what Labour would do about tax. Yes universalism requires progressive taxation. She is absolutely right that the SNP is ducking this issue.

    But that still requires Labour to take a stand and argue for fair taxation as the balance to the cost of universalism.

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