Predictable State Pension Age review lacks imagination

As the UK government probably planned when they appointed a safe, if boring, pair of hands in John Cridland, his review of the State Pension Age (SPA) lacks imagination.

He recommends:

• State Pension age should rise to age 68 over a two year period starting in 2037 and

ending in 2039;

• State Pension age should not increase more than one year in any ten year period,

assuming that there are no exceptional changes to the data.

In addition, he recommends ending the triple lock on pension increases. Under his recommended timetable, State Pension spending would be 6.7% of GDP in 2066/67, which is a reduction of 0.3% compared to the principal OBR projection. If the triple lock is withdrawn, spending will be further reduced to 5.9% of GDP by 2066/67.

To address the huge disparities in life expectancy, he recommends some modest changes to the benefit system, support for carers and the joy of a mid-life MOT.

The review does recognise that public sector pension schemes now follow the SPA. This is a big issue for a range of public sector workers who undertake physically or mentally demanding jobs. He makes no recommendations on this point but reminds HM Treasury that they agreed to review the link between State Pension age and public sector pension schemes, after the Government has completed each State Pension Age Review. Don't hold your breath on this one!

For many people, certainly those on higher incomes in less demanding jobs, this increase in the SPA is probably manageable. Although it does assume that life expectancy will continue to rise exponentially. However, it is already the case that fewer than half of people are in work by the time they reach state pension age. Raising the SPA to 68 or 70 is likely to increase this proportion.

His recommendations are based on average life expectancy, a statistic that conceals huge inequalities, based on location, health, working and living environments. This increase in the SPA will affect poorer and less able bodied people disproportionately. While it also affects Scotland with our lower life expectancy, I accept that the case for a lower Scottish SPA is weak. The differences in life expectancy within Scotland are far greater than those with the rest of the UK.

With more imagination, he could have given more serious consideration to a flexible retirement age that takes into account the arduousness of work and the length of a persons working life. It would be complex to manage, but society needs people to do tough jobs that contribute to reduced life expectancy. These workers are in effect subsidising the better off, healthier individuals who will live longer and take more than their fair share out of the total state pension pot.

Cridland argues that a single state pension age is, “simple and clear and provides a trigger for pension planning”. It may be simple, but real people's lives are complex. The SPA, as the current data shows, is not the same as the actual retirement age.

This report recommends increasing the SPA using the standard broad brush approach. It will leave many reliant on the reducing social security system and insecure part-time work. 

A change to retirement at 70, even if a gradual process, needs extensive support for mid and later life career changes, personal development throughout their working life and decent levels of income support. It also needs a more imaginative approach to retirement age. Sadly, imagination is the element most lacking in this report.

The full review report can be downloaded here https://www.gov.uk/government/publications/state-pension-age-independent-review-final-report

Let's splash the Scottish Plan for Action on Safety and Health

The UK has one of the best safety records in the world, but far too many people are injured and die at work, and much more needs to be done about ill health at work.

I was at the Health and Safety Executive's (HSE) engagement event in Glasgow today, including the launch of the Scottish Plan for Action on Safety and Health (SPLASH)*. The aim is to link up the HSE plans with those of the Fair Work Convention and other partners. This in itself is progress, as historically HSE has had a poor focus on the different approaches in Scotland. It is the devolved NHS Scotland that picks up the cost of failure.

Two and half million days are lost because of ill health caused by work in Scotland, which costs the Scottish economy around £600m, to which we can add £500m due to injury. Those who argue that health and safety regulation is just a burden, should at least focus on the human and financial cost of inaction.

The public health focus on health inequalities is also relevant to improving health at work, something less well understood in a health and safety context. NHS Scotland research shows that some occupations and industries are associated with consistently better health outcomes; others the opposite, including caring, process and customer service occupations of particular interest to UNISON Scotland. Work is being done on a single gateway to access services, as well as links to the devolved social security service.

The GB HSE health and work strategy also recognises this link. HSE focusing on preventing work-related ill health, public health focusing on improving general health of the working population, and DWP extending employment health benefits to those currently not working. Of course there are more than a few sceptics regarding the UK government's commitment to all three, particularly the DWP!

Traditional HSE strategies have focused on communications through employers. With around a million workers in the gig economy, sector 'employers' have little commitment to their workforce and therefore new approaches are needed. Technological change is also shaping the future world of work including quantum computing, autonomous vehicles and synthetic technologies - to which I would add the people impact of excessive monitoring and control. There is a risk that we are turning people into robots, before viable automation even arrives.

The ageing workplace (it's doubled in recent years) also needs greater attention - focusing on health as well as the more obvious safety issues. Tomorrow's world may be unrecognisable from that of today - although I would argue that we should be wary of extravagant futurologist claims, based on historical experience.

A key focus is on stress at work, tackling the stigma as well as the causes. It is the biggest cause of ill health and the Scottish Government is about to publish a new 10 year mental health strategy.

The Scottish plan is based on the work of the Partnership on Health and Safety in Scotland (PHASS). It is seen as an opportunity for all those in the Scottish health and safety system to work together to improve workplace health and safety. There is a useful interactive map on the website that helps link up this network. It is a living plan that will evolve over time based on the latest evidence and practical experience, 

Initially there will be twelve action plans. The plans that will be of greatest interest to UNISON members include plans on stress, social care, driving and workforce engagement. In particular, we have huge safety challenges in social care, from lone working to violence.

There is a real willingness to join up health and safety in Scotland across devolved and reserved issues. Obviously there will some tensions with this, but as usual people can help break through institutional and political barriers. The real test is turning the strategic intention into practical action. Many of the organisations involved have big funding challenges, but hopefully the sum of the total will help bridge some of that gap.

*http://www.hse.gov.uk/scotland/pdf/scottish-plan-health-safety2016.pdf

Tory health policy with a difference

When a new Scottish Conservative health policy lands on my desk, I flick through it expecting to see the usual marketisation, ignoring health inequalities and blaming the poor for their unhealthy lifestyles.

 

However, this new paper, ‘Healthy Lifestyle Strategy’ from Brian Whittle MSP is somewhat different. It aims to set out a long term alternative strategy for health, welling being and sport.

So, why is it different?

 

For starters, the first chapter is entitled ‘Health inequality in Scotland’, and describes the difference in health inequality across Scotland and between income groups. Admittedly there is more emphasis on geography than income inequality, but this is real progress. I can remember the last Tory Chair of Greater Glasgow Health Board denying any link between inequality and health – well after the Black report had been published!

 

The next chapter describes two pillars of a healthy lifestyle, activity and nutrition. These are of course important and the paper argues for investment in early intervention - preventative spending as we would call it. It also recognises the importance of using procurement as lever to achieve change. Again something UNISON has long argued for.

 

As you might expect from a former athlete, Brian Whittle argues that activity should be at the core of health and education. He is right, although the emphasis should be on activity, not just sport. The health benefits are undeniable, but what’s different about this policy is that it recognises at least some of the barriers to participation – not just blaming the poor. It also recognises the importance of early years childcare and learning to achieving change and the need to invest in these services. Most policies in this field focus solely on teachers, but this policy also recognises the role of early years practitioners, which is very welcome.

 

Somewhat surprisingly the paper highlights the difference in participation opportunities between state and private education, and even highlights the fact that a third of the British Olympic Team was made up from 7% of the population that was privately educated. It also quotes extensively from the CPAG Scotland report on the hidden costs that hamper participation in extra-curricular activity. It is similarly opposed to some council charges, which have been caused by the council tax freeze.

 

It is of course true that many school facilities are closed out of school hours. However, some recognition that this is often caused by PFI contracts would have been welcome. UNISON Scotland’s ‘Combating Austerity’ toolkit shows how we could tackle this.

 

The chapter of the importance of good nutrition emphasises the role of procurement in ensuring food in our schools and hospitals is of high quality and locally sourced. Almost word for word from UNISON Scotland’s Food for Good Charter - even quoting the groundbreaking work of our members in East Ayrshire Council. No ‘nanny state’ lectures here, just maybe as Stephen Jardine argues in the Scotsman – the tide has turned in this debate.

 

The paper concludes with a long series of recommendations. These are very practical ideas, almost all of which we would have very little problem with. Several are not the sort of policy proposals you would expect to find in a Conservative policy paper.

 

It would be a fair criticism to say that the paper would have benefited from greater context on the impact of inequality on health and measures to address this including the importance of progressive taxation to create a more equal society. Practical programmes that ignore this reality are going to struggle.

 

So, this isn’t the ‘Spirit Level’ recognition that more equal societies are also healthier societies, but that was probably a step too far! However, it is a real step forward in Conservative thinking on this issue and should be welcomed for that.

Batten down the hatches - it's Indyref2

There is a certain irony in the Tories arguing that demands for another independence referendum will create ‘uncertainty and division’ - when to resolve internal party squabbling they started this division with the EU referendum. To complain that the SNP has ‘tunnel vision’ about independence, is like moaning that water flows downhill – it’s what that party exists for.


Opinion polls consistently show that people living in Scotland don’t want another referendum. As John Curtice puts it:

“It is the apparent lack of enthusiasm for a second referendum amongst some supporters that is the main reason why opponents of an early second ballot are apparently in the majority.”


So it is perfectly reasonable for parties to vote against this next week. The difference, lost some Labour politicians, is that it is not appropriate for Westminster to block it - as Jeremy Corbyn has made clear.

That still leaves the issue of timing and the question or questions. On timing it seems to be a matter of either 18 months or 2 years plus of purgatory for those of us not signed up to either of the flag waving hard core groups. Like many in the centre ground of this debate, I had naively hoped that the absence of elections for a few years was an opportunity to tackle some long-term issues in Scotland.


There is a legitimate debate to be had about the question. The Scottish Government wants to go for a re-run of 2014, which gives them the positive ‘Yes’ ground. This may be the environmentally friendly recycling option for all those badges, but Westminster might have other ideas – ‘Remain’ and ‘Leave’ anyone?


And perhaps a second question? Last time both Alex Salmond and trade unions made the case for a second question on greater devolution. The Scottish Labour Party has recently adopted a more federal position and UK Labour is about to start its Peoples Constitutional Convention. This is much broader than just structures, addressing the redistribution of power and wealth.


I am not convinced a number of options on the ballot paper would work, but an either/or second question might. It would need a properly worked up proposal, which is pretty challenging in the available timeframe. It also needs to be truly radical – Calman, Smith etc were all missed opportunities, so another of these wont work.


After the Brexit vote, I argued that there might be two game changers for the Indyref swing voters – Scotland as the continuing EU state and a right-wing hard EU exit.


The first of those is unlikely and I suspect there will be some in the SNP who might want to fudge EU membership, to keep the many 2014 Yes voters who voted to leave the EU on board. The latter is still a possibility - Singapore on the Channel might stretch the solidarity case too far for many left wing 2014 No voters – particularly if the Labour right wing continues to undermine any chance of winning a UK election.


A big problem for the Yes/Leave camp is that largely middle-class EU Remainers are going to be more susceptible to the economic case against Independence. The economy remains a key issue and the SNP is going to have to answer these points a lot better than they did in 2014. This chart illustrates the point:

However, this could work both ways. As Jan Eichhorn from the University of Edinburgh argues:


“If leaving the EU became clearly associated with expectations of an economic downturn, the economic risks about Scottish independence might be re-evaluated by some. Conversely, if Brexit came to be seen as an opportunity for future economic prospects, Scottish views could shift in favour of the union.”


So, batten down the hatches for months of process haggling, followed by many more of ‘Project Fear’ v ‘Project Pollyanna’. Hold me back!

UK Budget 2017 - still no coherent economic plan

The UK Budget does little for hard pressed households in the short-term, and even less for the long-term health of the economy.

Let’s look at the issues that matter to UNISON members.

Austerity is supposed to be driven by the budget deficit, so some good news that deficit is reducing this year. However, the Office of Budget Responsibility (OBR) forecasts that it will go back up next year, instead of shrinking as planned. There is a modest short-term giveaway of around £1.7 billion in 2017-18, dominated by additional funding for local authorities in England to deliver adult social care. This is followed by a modest medium-term takeaway averaging around £750 million a year from 2019-20 onwards. So this is probably the best year we can expect for public spending for a while.

The Barnett consequential for Scotland of all this adds up to £350m. Very welcome relief, although still only a dent in the austerity cuts. It’s a bit like having your pocket picked and the thief returns part of his ill gotten gains.

Looking ahead, the OBR expects real GDP growth to moderate during the first half of 2017, as rising inflation squeezes household budgets and real consumer spending. The relatively strong start to the year implies 2.0 per cent growth in real GDP in 2017 as a whole (still very modest by historical standards), up from 1.4 per cent in November, with small downward revisions thereafter. Most experts think even these forecasts will be optimistic against most Brexit scenarios.

As always the devil is in the detail. For example, the OBR notes the decision to reduce the personal injury discount rate, which will substantially increase the size of one-off settlement payments. The Government has set aside an extra £1.2 billion a year to meet the expected costs to the public sector, notably to the NHS. Health Boards in Scotland take note!

Next, members will be concerned about wages. The OBR has made a downward revision to earnings growth of 0.1 percentage points over the forecast period, with the growth rate rising progressively from 2.6 per cent this year to 3.6 per cent in 2021. Wages are still below 2008 levels in real terms. Even this is a fantasy for public sector workers because of the UK and Scottish government’s 1% pay policy.

The OBR believes that additional employer costs such as the apprenticeship levy and pension auto-enrolment will be borne by the workforce through lower wages. Even though the latest data indicate that corporate profits have risen strongly in recent quarters. Non-oil corporate profits are estimated to have increased by just under 11 per cent in the year to the third quarter of 2016.

The headlines in the budget relate to the less favourable tax treatment of the self-employed. In fairness, there is some justification for these changes and it might make bogus self-employment marginally less attractive. However, there is no justification for the cuts in Corporation Tax, given the growth in corporate profits. Anyone who still believes in the Laffer curve should look at this chart.

So what does this mean for household incomes? According to the latest National Accounts, the headline saving ratio fell to 5.6 per cent in the third quarter of 2016 as consumer spending growth outpaced household disposable income growth. In effect the Chancellors increased revenues are being paid for out of squeezed household incomes and falling savings. Not a basis for a long term economic plan. This chart makes the point graphically.

Overall, while there is some short term public spending relief, the economy is currently being sustained by debt-driven consumption and a low exchange rate, and the Chancellor has done little to address the long-term challenges.

Apprenticeship levy - keeping it local

With an ageing public sector workforce, we should be encouraging apprenticeships by passing the funding from the Apprenticeship Levy onto those public service employers who deliver quality apprenticeships.

 

This is Scottish Apprenticeship Week 2017, which focuses on the benefits apprenticeships bring to businesses, individuals and the Scottish economy - an opportunity to encourage more employers to offer quality apprenticeships. Events and activities involving employers, apprentices, colleges, local authorities and training providers are taking place across the country to celebrate the success of apprenticeships.

 

The UK wide Apprenticeship Levy is to be implemented from April 2017 and collected by the HMRC from large employers. Employers in England, including public sector bodies, will be able to directly access funding. However, in Scotland the money goes into the Scottish Government's budget - around £230m per annum.

 

Public sector employers in Scotland are important providers of quality apprenticeships. In a recent UNISON Scotland survey 81 per cent of apprentices described their training as excellent or good, even though almost half (46%) felt there should be a greater degree of off-the-job training. That is not to say there are not issues that need to be addressed. More than one in three (35%) rated their chances of achieving a job upon completion of their course as ‘don’t know’ or ‘unlikely’. Gender segregation also remains a huge issue. While the percentage of women employed in apprenticeships varied across councils, a strong pattern exists of women taking up apprenticeships in administration or care, while being almost completely absent from ‘craft’ apprenticeships.

 

Councils spend at least £25m on providing hundreds of valuable opportunities for young people such as modern apprenticeships, craft apprenticeships, graduate trainees, probationer teachers, formal work experience as employers that all contribute to the Developing Scotland’s Young Workforce (DYW) Programme, jointly led by the Scottish Government and local government as partners.  This major programme aims to reduce youth unemployment by 40 per cent by 2021.

 

However, in Scotland the apprenticeship levy resource is not being passed on to these providers. COSLA has estimated that, based on last year’s pay bill for councils, the Apprenticeship Levy could potentially cost local authorities £24m as employers. That could rise to almost £50m across the public sector in Scotland.

 

Originally, local government understood that it would have its Levy funding returned in full in the next financial year by the Scottish Government.  Then councils were told that they were not to receive any of their own funding back from the Scottish Government. This decision undermines the DYW Programme and efforts to reduce youth unemployment in Scotland by putting in danger the future of valuable local initiatives provided by councils and other public service employers for young people. 

 

The bottom line is that apprentice recruitment is not happening at a sufficient rate to either: alter the ageing demographic of the workforce in public services; or replace the numbers leaving the workforce through voluntary redundancy or early retirement.

 

By centralising funding, the Scottish Government is discouraging public service employers from taking on apprentices. It is time to think again and return this funding to those local employers who want to develop quality apprenticeship programmes.

A better energy system is possible

Let's imagine a different energy system. One that not only delivers clean decarbonised energy, but is increasingly local and run democratically in the interests of the people not big corporations.

I have been at the Trade Unions for Energy Democracy (TUED) conference looking at these very issues. TUED is a global, multi-sector initiative to advance democratic direction and control of energy in a way that promotes solutions to the climate crisis, energy poverty, the degradation of both land and people, and responds to the attacks on workers’ rights and protections.

Let's start with decarbonisation. One speaker interestingly suggested that we should stop referring to 'climate change' and call it what it really is - global carbon gas pollution.

Climate agreements are aiming to keep global warming below 1.5%, but on current effort we are heading for 3.4%. The UK is simply not doing enough, but no country in the world is slowing down carbon emissions. For the UK a major effort is needed to meet a carbon budget cut of 57% by 2030 and at present the UK government has no real plan.

The UK Government does have new industrial strategy. However, it focuses on minimising costs rather than looking at potential of low carbon industry. There is little about cars, solar, offshore wind or efforts to re-skill workforce. We need to redirect energy and industry policy to climate change objectives - coupled with action on just transition, the role of state in regulation, social partnership and investment. Above all to escape from the dead hand of the Treasury.

Having regularly trekked down to London to see successive energy ministers, I still believe dumping the Carbon Capture and Storage (CCS) project was a huge error. Without it what is the solution for heavy industry in the UK? We also need to think about how we redesign heavy industries to achieve a just transition. For example, steel being reused rather than recycled, same for bottles, to save energy.

There are some positive signs in the development of UK Labour energy policy. The shadow energy minister, Alan Whitehead, has had a long term interest in energy, it's not just any old portfolio. He wants to put climate change at the centre of policy. He recognises the need for just transition, the role of trade unions and new ambitious targets with meaningful delivery plans. Aiming for a million new jobs shows real ambition. The detail is to be worked up by a new Commission being launched later this month.

Decentralising the industry can be done by incentivising community energy projects on a much larger scale and through municipal energy companies. These should be about much more than retailing energy. They should be generating electricity, promoting demand reduction and energy efficiency as well.

The roadmap to public ownership isn't about recreating a command and control nationalised industry. We don't need to nationalise coal plants that are being phased out already or wind farms at the latter end of their 20-25 year lifespan. We do need public ownership of the transmission and distribution grids. Distribution grids don't have to be the large regional model we use in the UK. Germany has 803, based on local councils. Spain has 335 and Sweden 184. This shows we can operate on a smaller scale, but we need more innovative councils in this field, prepared to consider vertically integrated municipal energy companies.

Work by David Hall shows that we could achieve a decentralised and more democratic energy system at a cost of £24bn, with annual benefits through lower prices of £3.2bn per year. We could also look at basing compensation on non-amortised assets as they have done in Catalonia. All of this needs a workforce strategy, otherwise we won't have enough expertise to develop it.

I updated the conference on where we are on all this in Scotland - recognising that energy is mixed responsibility between Holyrood and Westminster. We have made significant progress in decarbonising electricity generation, with 42% from renewables and 35% from nuclear. We export 30% of the electricity we generate, even if intermittent sources mean more imports than before. The biggest energy demand is for heat (53%), 80% of this comes from gas, even though 400k households are still off the gas grid.

The Scottish Government is consulting on a draft energy strategy, which aims to deliver decarbonised security of supply at an affordable price. There is to be a new 2030 ‘all-energy’ target for the equivalent of 50% of Scotland’s heat, transport and electricity consumption to be supplied from renewable sources - together with the complete decarbonisation of electricity generation. Energy efficiency is a National Infrastructure Priority and this is to be achieved through the Scottish Energy Efficiency Programme (SEEP).

We haven't made enough progress in decentralising local energy. It's mostly big players with some local gain, financed through the local energy challenge fund. The Scottish Government wants to do better and has two new targets: 1 GW of community and locally-owned energy by 2020, and 2 GW by 2030 and at least half of newly consented renewable energy projects will have an element of shared ownership by 2020.

Targets and ambition are of course important, but delivery is even better. The draft strategy is vague on how to deliver the strategy. There are no targets for energy mix and few measurable milestones.

The Scottish Government does get the importance of linking energy policy to climate change and has also published a draft climate change plan, which will lead to new Climate Change Bill. However, this is even weaker on delivery. Poor performing sectors are largely avoided because it is politically difficult - including, transport, agriculture and domestic heat. We need measurable action on active travel, car use, housing efficiency, district heating and soil testing. They are also adding to the problem with the proposed cut in Air Passenger Duty.

Just transition hasn't been given enough attention in plans. Some initial work has been done on this by trade unions and environmental groups. They have recently published an 11 point Just Transition Plan that includes a Just Transition Commission, training, secure jobs, a new industrial strategy, and action on procurement. This should also be built into the activity of the Fair Work Convention.

Energy policy is undergoing a huge change. Even a Conservative government has recognised the need for state intervention in a failed market. We should grasp this opportunity to imagine a very different energy system, which delivers for people and the planet.