Oh joy, another Labour leadership contest

Scottish politics may be many things, but boring it isn’t. Just when you think we are in for a settled period, the Scottish Labour Leader, Kez Dugdale, resigns.


With hindsight, it was perhaps not a great surprise. Kez has always made it clear that she didn’t see being a politician, let alone party leader, as a long term career. Getting out when you are young enough to make a shift isn’t easy, but I always sensed that she was one who would stick to her goals.

Of course that doesn’t entirely explain the short tenure. There will be a mix of personal and political reasons for that. However, Labour’s strengthened position, which she is entitled to take some credit for, makes her long term planning more difficult. It would be difficult to resign after Scottish Labour makes progress in the next Scottish Parliament elections, and that means around ten more years in office. That would be daunting for a politician with a very thick skin, and that isn’t Kez Dugdale.


Any reasonable human being would find being a political leader in Scotland an unpleasant experience. Scottish politics can be unrelentingly rancorous when you are in the firing line, with attacks on the personal and the professional. Particularly online, some people feel they have a licence to say things that they wouldn’t dream of saying to someone’s face.


The Scottish Labour Party isn’t an easy beast to lead either. Kez comes from the more urbane, socially liberal Edinburgh political scene - one that isn’t the same as the more socially conservative west of Scotland. She wasn’t a hard core unionist, which upsets another section of the party and rightly pitched for a federalist policy that gave Labour a distinctive middle ground position on the constitution. She did make some gaffs on the constitution, although she was also honest enough to admit when she made a mistake – a rare trait amongst politicians!


Politically she came from the right of the party, even if she wore her ideology lightly. Despite her radical left wing policy shifts, more radical in many ways than the UK Labour manifesto, she was never going to be fully accepted by many on the left. The decision to openly back Owen Smith in the UK leadership didn’t help, and was the major political mistake of her leadership. Staying above the fray would have been the sensible decision, but loyalty to her pal Owen Smith trumped the easy option. Endearing qualities in any human being, but party leaders sometimes have to be a bit more ruthless.


As I have said and written, I was an admirer of her as a leader. She brought a different style of political leadership to the job. It reminded me more of a modern public service leadership style. The emphasis was on collaborative working rather than heroic leadership. Her personal style reflected her leadership approach. I remember my first meeting with her after the leadership election. One of her first actions had been to convert the abrasive John McTernan’s office into a open room with soft furnishings – the message could not have been clearer!


It may well be that as the job got tougher, she relied a little too much on the advice of her political mentors and base. Most political leaders drift into a bunker mentality, but it usually ends badly. I also don't buy the link to Jeremy's recent visit, or the silly season stories in The Herald, based on sources that know little or nothing about the Scottish Labour Party. Of course the general election strategy should have changed later in the campaign, but she wasn't the only one not to the scale of movement in the polls.


None of this stopped her taking radical decisions. The shift on income tax made Scottish Labour the anti-austerity party and demonstrated that Labour’s policy was more than rhetoric. Greater party democracy, even when she knew that this would mean conference taking positions that she didn’t personally support. Her support for a more federalist position, included arguing for greater devolution on issues that previous leaders had rejected. She may have not have always liaised as effectively with the UK leadership as she should, but there was no lack of radicalism in her positions.


I worked closely with her on the internal reforms that have now made the Scottish Labour Party much more autonomous. I gave her a range of options and she chose more radical options than I expected. Even when she knew there would be resistance from comrades in London. That is a legacy she can rightly be proud of.


In my, probably less than humble opinion, Kez Dugdale did well as the Leader of the Scottish Labour Party. I am not just being polite, as is traditional on these occasions, not least because I have not ducked her mistakes. The balance sheet is overwhelmingly in her favour and she can be proud of what she achieved. I would still be supporting her today, had she chosen to stay. I understand her reasons for going and we all have to respect them, as well as the way she handled her resignation.


That leads us into another leadership contest. The speculation on that is for another day. What I would say comrades, is remember how much progress we have made in recent months and conduct yourselves in a way that strengthens the party and the cause of socialism.

Business rates review - tame but sensible reforms

The long awaited Barclay review of business rates hasn't exactly set the heather alight, but its recommendations are, in the main, pretty sensible.

The reviews main recommendations are set out in this helpful infographic.

The remit for the review was that the recommendations had to be revenue neutral. This means there are gainers and losers from the changes in both the structure and the reliefs.

The business lobby has long argued that business rates are too high in Scotland. However, they conveniently ignore the wider picture of business taxation. As this chart shows, businesses generally pay less taxation than their OECD counterparts.

The report recommends a number of administrative improvements such as three yearly revaluations. This is something UNISON has long argued for and the same should apply to the council tax on domestic properties. Better information, transparency and speeding up appeals and repayments are all reasonable. Plugging the many tax loopholes and a general anti-avoidance rule is a long overdue reform.

Big companies have obviously lobbied for consistency, but while the report supports standardisation, it doesn't recommend centralisation through another quango. This should remain a local system, reflecting local knowledge and that fact that most businesses in Scotland are local. The disappointment is that the review should have gone one stage further and returned the decision making on the level of business rates to councils.

The review also questions the effectiveness of the Small Business Bonus Scheme. The government has thrown huge sums of money at this scheme that could have gone into councils. A review in Northern Ireland has found that this relief could be better directed. Reform would also pay for the generous recommended changes in business support costing £45m.

There are winners and losers of reliefs. Town centres and day nurseries get new relief from business rates. It is perfectly reasonable to use tax reliefs to encourage particular policies and early years provision is a key element of tackling inequality. However, such support should come with at least some strings. The Scottish Living Wage would be a good start for the notoriously poor employment practices in many day nurseries.

The losers come in recommendations to restrict charitable relief. Private schools have come out with a predictable defence of their status. However, it’s not the purpose of charitable status to perpetuate the inequalities in our society that private schools sustain.

 

The other is sport and leisure facilities including council leisure trusts. Despite the claimed benefits of these organisations, the primary driver was tax dodging. If this loophole is plugged, as we warned it might, then councils should be taking these services back under direct control. However, this was one of the ways that councils coped with cuts to their budgets, therefore there would need to be compensatory budget uplift from the Scottish Government.

Supporters of Land Value Tax won't be pleased with the review, even if the door is partly ajar. They came to “An over-arching conclusion that we reached is that some form of property tax is still an appropriate way to fund the local services provided by councils”. While there may be a role for Land Value Tax as part of a basket of taxation, this is the right call.

Finally, the impact of the council tax freeze is highlighted in the revenue data. This chart shows how the council tax and business rates used to raise similar levels of revenue. Hopefully, ending the freeze will start to redress this imbalance once again.

While I might have wished for something a bit more radical, the review overall recommends some pretty sensible reforms. Not without some political challenges for the finance minister!

Household debt, pay and the magic money tree

Low wages and rising household debt is not a sound basis for any economy. Today's news that spending on credit and debit cards is rising five times faster than wages, should set off the economic alarm bells.

At every recent UK budget, I tweet and blog the one chart in the OBR report that I find particularly scary – household debt. This is what I said in March this year:

This chart is scary because every year it shows that household debt is projected to rise. With wages in real decline the UK government expects households to pick up the slack caused by their austerity economics.

These chickens are now coming home to roost.  Real incomes have fallen for three successive quarters, the first time this has occurred since the International Monetary Fund bailed the UK out in 1976. Despite saving less and borrowing more, consumer spending has fallen, resulting in economic growth of 0.2% – the lowest of any of the major G7 industrial nations.

Here is a Guardian graphic illustrating the point using ONS data.

As Frances O’Grady, the TUC general secretary, puts it: “People raiding their piggy banks is bad news for working people and the economy. But with wages falling as living costs rise, many families are having to run down their savings or rely on credit cards and loans to get through the month.”

Low pay isn’t doing productivity any favours either. This chart from the Independent shows that productivity has now fallen below 2007 levels. 

There is more evidence in a recent TUC report on insecure work, which found that those sectors which had seen higher increases in productivity over the last five years tended to be those which had experienced smaller increases in insecure employment.

What governments at UK and devolved levels need is a plan to get wages rising again. They must stop holding down the pay of public sector workers by scrapping the pay cap. The minimum wage needs to rise faster reaching £10 an hour as soon as possible and stronger employment rights to tackle bogus self-employment and other forms of insecure work.

For this to happen we apparently need a 'magic money tree'. Here are a couple of branches for that tree.

Let’s have a look at those who have been doing really well out of austerity – the richest 1%. As a report by the Resolution Foundation shows, they have recouped all their losses from the slump. Some action on tax dodging would be a start as well as halting the tax cuts that simply are not trickling down.

Another is the Robin Hood Tax.  Professor Avinash Persaud has recently fleshed out a few aspects of this long standing campaign. He argues that Britain already has a financial transaction tax – it’s called stamp duty, It raises just over £3bn a year, half of it from overseas citizens. Some trading activities are exempt from stamp duty and he believes these exemptions should be restricted. He also proposes that the tax should be broadened to cover transactions in corporate bonds and cash flows arising from equity and derivative transactions. He estimates that this would raise £4.7bn a year - a pretty hefty branch for any magic money tree.


A low wage, low productivity economy is just not the way to go. We need to get wages rising, not least in the public sector after seven years of pay restraint. A different type of economy is possible and we have the wealth to support it.

No 'certainty' for EU workers in Brexit plan

The claimed ‘certainty’ in the UK government’s ‘cut and paste’ job on EU law clearly doesn’t apply to EU nationals working in Scotland and the rest of the UK. 

Last month the UK government published the European Union (Withdrawal) Bill. It was going to be called the Great Repeal Bill, until people started calling it Gerbill for short. Insufficient gravitas I suspect! 

The Bill will repeal the European Communities Act 1972, which means EU law will no longer apply in the UK and European Court of Justice (ECJ) judgments won’t be binding on UK courts. However, it also aims to ‘cut and paste’ EU sourced laws by incorporating them in UK law once we exit the EU. We are told this will provide certainty, with the exact same rights as the day before we finally leave.

It is questionable if it does that on workers’ rights generally, particularly in areas like health and safety. However, for the many thousands of workers who are EU nationals, the UK government’s approach is very different.

These are set out in a separate UK government proposal as part of the Article 50 negotiations. These proposals would take away rights citizens currently have, create new red tape and uncertainty for millions of people. So much for the promises made by the Leave campaign that EU citizens would be treated no less favourably after Brexit. Bit like the missing £350m for the NHS!

In contrast, the EU Commission has set out a more sensible plan, which includes: 

• the right to acquire permanent residence after living in a country continuously for five years, no matter how many years prior to the withdrawal date the person had been living in that country. 
• the right of “current and future family members” to join the person that has exercised their right to free movement, at any point after the date of withdrawal. 
• the protection of recognised professional qualifications which were either obtained or recognised in any member state prior to withdrawal. 

The UK also wants a retrospective cut-off date of March 2017 for its new ‘settled status’. It is hard to see how a cut-off date other than the date of withdrawal from the EU could work and it would impact on the ability to achieve ‘settled status’ under the UK proposals. A retrospective cut-off date will also discourage health care workers from coming to Scotland now, something that is already obvious from the nurse registration data.  

There needs to be a disputes mechanism and the EU is proposing the ECJ while the UK wants it to be limited to domestic courts. I don’t think either of these would work, but it should be possible to reach a compromise position on a suitable disputes mechanism.

Getting a quick agreement on this matters not only for the workers concerned, but for the many industries in Scotland that rely on EU nationals. Universities have recently expressed their concerns over the UK plan for staff and students. A study by Deloitte’s indicated that half of skilled EU workers were considering leaving after Brexit. Nurse registrations from the EU have already almost dried up, adding to the acute staffing shortages in the health and care sector.

Nowhere in the UK is the economic and social case for immigration stronger than in Scotland. Welcome recent increases in population are almost entirely driven by migration (see chart below). 

Our working age population is not projected to increase at the same rate as the rest of the UK. The biggest increase in demand for new jobs is in health and care with 65,000 extra jobs needed by 2020. The numbers of working age Scots to support our ageing population is not going to be available without immigration. 

Public opinion polls in Scotland and the UK shows strong support for letting EU migrants stay and that includes three quarters of leave voters. By wanting to change the current status of EU nationals, the UK government position is inconsistent with its stated approach to other EU law in the Repeal Bill. 

The key principle should be the protection of existing rights for EU nationals in the UK and reciprocal rights for UK citizens living in the EU. That’s the right approach for workers and the essential services they deliver.