Scottish Budget 2024-25

 There were no big surprises in the draft Scottish Budget published today. I set out the background to the Budget in a briefing for the Jimmy Reid Foundation, and it was always going to be challenging given the economic environment and the appalling UK Autumn Statement. 

There was little cash to spread very thinly. The NHS and social care budget predictably got the lion's share, although even that is well below what it needs. Within that budget section, social care did best, which is the right priority given the impact of delayed discharge on our hospitals. However, welcome though £12 per hour is for workers, it is unlikely to bring significant numbers of new staff into the sector. We need £15 per hour, and we need it quickly, along with funding for sick pay. Mental health, drug, and alcohol services are going to have a difficult year.

NHS staffing will remain a big problem in the coming year, as growth in staff numbers is likely to continue falling behind the rest of the UK. 

The Scottish Child Payment is at least being uprated but short of where many organisations felt it should be to maintain progress on tackling child poverty. As the Scottish Fiscal Commission's (SFC) report shows, Social Security payments with no equivalent in the Block Grant are the biggest additional cost to the Scottish Budget.

On income, changes to Income Tax are a welcome progressive change to the banding structure. Again, the Deputy First Minister was urged to go further on tax reform by a coalition of over 60 organisations in a letter I signed on behalf of the Reid Foundation. Tackling Scotland's key challenges requires long-term thinking rather than more sticking plasters. 

There is also a shocking lack of consistency. Progressive Income Tax changes must be contrasted with the regressive Council Tax freeze. If fully funded, the resources could be better targeted to support public services and the cost of living crisis. This chart from the recent FoA budget report is a reminder of falling real terms local government spending, particularly on non-statutory services, over the last decade.

As with the UK Budget, I am more interested in the Scottish Fiscal Commission report, which gives a longer-term perspective. Their fiscal forecast is summarised in this chart. Revenue will be up 8% by 2028/9, but capital will be down by 20%. Our crumbling infrastructure is about to crumble some more! The Scottish Government is heading towards the capital borrowing cap, strengthening the case for the same prudential borrowing powers as local government.

The SFC also highlights the drop in living standards between 2021-22 and 2023-24 as the largest reduction since Scottish records began in 1998. They are unlikely to recover to 2021 levels until 2026. 

The SFC also assumes average devolved public sector pay growth of 4.5% in 2024-25. This includes an average basic pay award of 3.0% and pay progression and churn. They also forecast a fall in Scotland’s public sector employment from 2023-24 onwards. Overall, the SFC indicated slightly higher wage growth in Scotland than in the UK, plugging the current gap. Some sectors are doing better than others this year. 

In conclusion, the report card would have to say, could do better. Some steps in the right direction with progressive income tax changes and spending priorities. However, that has to be balanced by only modest tax reform and limited support for alleviating child poverty, coupled with the absurd council tax freeze.

Pharmanomics - How Big Pharma Destroys Global Health

If you read one book this year about the economics of health, Pharmanomics by Nick Dearden should be it. The Director of Global Justice unpicks the way Big Pharma does business and rips us all off. This may not be unique in a capitalist society, but in the health sector, it costs countless lives. 

The COVID pandemic started to open the eyes of governments to this particularly rapacious form of capitalism. As Nick puts it, ‘They got to dictate who lived and who died in the most serious public health emergency in living memory.’ They prolonged the pandemic and entrenched global inequality for a generation with a vaccine that was invented mainly using public money. Corporations like Pfizer, Johnson & Johnson and Moderna  – used taxpayer support to get the vaccines that bear their names ready. Then, they privatised the  know-how  behind these vital medicines and refused to share it with the many countries that could have  joined the global manufacturing effort. Even AstraZeneca, whose Oxford vaccine was almost entirely funded by the public purse, turned what should have been a 'People's Vaccine' with an open license into an exclusive license, which prioritised rich countries. A practice they had undertaken before when they closed down early research into tuberculosis and malaria in favour of drugs for diseases affecting richer countries.

This book shows, page after page, how Big Pharma has been doing this for years. The patent system that underpins their profits delivers returns that manufacturing companies can only dream about. In the 1990s, Big Pharma discovered that their most significant asset wasn't research and development but intellectual property. So they lobbied in the USA and fought court battles to extend their patents and keep their data secret. This culminated in a trade deal known as TRIPS that enforced monopoly protection everywhere - described by one journalist as ‘a brute and profoundly undemocratic expression of concentrated corporate power.’ It is now a core part of the World Trade Organisation rules.

Examples include OxyContin, the drug behind the opioid addiction epidemic that has probably killed more than 300,000 people. You can watch how they encouraged overprescribing in the Netflix miniseries Painkiller. The drug generated $35bn for the company Purdue. They are now using the same discredited tactics to market opioids in China and other countries.

We are often told that these profits are essential to develop new drugs. However, Big Pharma does very little research into new medicines. They spend between five and eleven times more on advertising than on research. The drug is created by smaller companies, often funded by the public sector, and then bought out by a big drug company for the patents. They close down competitors and make small changes to drugs to extend patents. They are also one of the most financialised industries in our heavily financialised economy – stashing cash in tax havens to buy up companies and enrich shareholders. Medicine costs are entirely unrelated to research costs; they are hard-wired into the financialisation of the industry. As a Congressional investigator put it, 'The big Pharma fairy tale is one of ground-breaking R&D that justifies astronomical prices, but the pharma reality is that you spend most of your company's money for yourself and your shareholders.'

When you read the techniques that these companies use, it could drive you to despair. However, that is not the author's intent. He wants to open our minds to the possibility of change. We created the NHS, so why not the medicines they administer? 'If our healthcare is too important to be left to the market, then that must include the research and development of the medicines that keep us well.' It would save the NHS billions in the inflated costs that drain NHS funds. The purchasing power of the NHS has resulted in some small progress in regulating costs compared to the USA. Needless to say, the drug companies are a big part of the lobby trying to privatise UK healthcare. 

Governments need to stop being embarrassed about their role in the economy. There is a long list of technologies invented in the public sector whose ownership is transferred to the private sector and then rented back to us at enormous cost. We also need to reform the patent system to be shorter and more narrowly drawn. The pandemic and the profiteering of Big Pharma should be a wake-up call for governments in the Global North as much as it has been for the Global South. We should pressure governments to change.

Public service reform is not a quick fix in a crisis

 The forthcoming Autumn Statement and Scottish Government Budget has inspired another round of calls for public service reform. Primarily wishful thinking as a substitute for public spending cuts, but the principle has merit.

The Chancellor appears to have some leeway in the Autumn Statement, although he wants to splash some of it on an Inheritance Tax cut that would benefit the wealthiest in society. This may shore up support for his boss on the back benches, but the politics are awful, particularly if it comes with benefits cuts for the most disadvantaged.

Audit Scotland has given a stark warning to the Scottish Government  in its annual audit of their accounts;

“The delivery of public services in their current form is not affordable, with inflationary pressures and public sector pay settlements having a significant impact. The Scottish Government must work with partners to develop a programme of public service reform, including workforce redesign, which balances the short-term financial pressures with the need for longer-term change, recognising that this may require financial investment.”

The Auditor was not alone in highlighting poor spending decisions. The ferry fiasco inevitably tops the list, with the latest final cost estimate approaching £600m. Then there is more than £50m on the BiFab fabrication yard, £52m on Prestwick Airport, £135m on the Lochaber smelter, up to £80m on the Rangers prosecution, and several IT projects. A less well-known example is the Shared Services Project. Many of us have been sceptical about the benefits of this approach in principle, but as predicted, costs have steadily risen. I'll believe the projected savings when they have been delivered!

While Tory MSPs regularly raise these issues in the Scottish parliament, they are less comfortable facing up to their own party’s record at Westminster. Nearly £100billion of taxpayers’ cash has been wasted, an average of £25billion every year since the 2019 election. The Best for Britain group’s chief executive, Naomi Smith, said: "The notion the Tories are safe with money has been blown out of the water. It's disgraceful the Government continues to squander public money while so many struggle to feed their families and heat their homes.”

The Scottish Government frequently references the National Performance Framework. However, as the Auditor also highlighted in his report, “I am concerned by the number of indicators not being reported five years after the first National Outcomes were agreed and it remains difficult to monitor the impact of policy and spending decisions on performance.” This is common, with initiatives launched under a blaze of publicity, only to quietly be lost as ministers move on to the next shiny announcement. I highlighted some of this in my recent report on Fair Work, and the Scottish Business Pledge is another good example of this process.

And before anyone tells me that the solution is private sector expertise. Let us remember that many of these projects involved private sector management consultants and big accountancy firms. Elon Musk has lost $41billion in just the last two weeks!

If we want to get serious about public service reform, let’s not forget that the template was set down by the Christie Commission 12 years ago. I was an expert advisor to that Commission, which showed how Scotland's public services require comprehensive reform by empowering communities, integrating service provision, preventing adverse social outcomes and becoming more efficient. The analysis in the report turned out to be pretty accurate. Sadly, too few of the recommendations have been implemented. 

Five years after Christie, I wrote a paper for the Reid Foundation on public service reform. This built on the Christie principles with a call to build integrated public services around recognisable communities, based on the principle of subsidiarity with service delivery at the lowest practical level. Proposals like shared services, the National Care Service and others show that the cult of centralisation still pervades government thinking. Preventative spending that could cut the demand costs on public services by up to 40% remains largely ignored. That report and Christie highlighted the importance of proper workforce planning and a staffing framework. This is a point again highlighted recently by Audit Scotland. 

Sadly, time and time again, these fundamental lessons are not learned. Public service reform is wheeled out as a solution during a financial crisis, just when the necessary investment is unavailable. There are only three years to go before I write my regular five-year blog on implementing the Christie Commission report. I suspect cut and paste will do the job yet again!

Why another Council Tax freeze is wrong

 Yesterday, the First Minister announced that the Scottish Government would freeze the Council Tax next year. While many will welcome any help with the cost of living crisis, this is the least effective way to provide that support. I thought my days of explaining why had ended, leading me to agree with Andy Wightman’s response, “Dearie me. I thought we had finished with this nonsense." This refers to the 'stop-gap' freeze that lasted nine years until 2017.

I get the politics of this. The SNP has just been hammered in a by-election in which the voters made it clear that the cost of living was their number one priority, not independence. Yet the conference coverage has been dominated by the debate on independence strategy. In that context, the focus of the First Minister's speech needed to be on the people's priorities, hence the big announcements on the Council Tax and NHS waiting times. Not consulting the Scottish Greens was also a helpful nod to the SNP's 'tail wagging the dog' faction.

So, what’s wrong with another Council Tax freeze?

The Scottish Green's had a few hours to respond, and Ross Greer correctly says, “As we have repeatedly highlighted, council tax is a ludicrously broken system. It hasn’t been accurate since before I was born, with most people now paying the wrong rate as a result of those 1991 valuations." Since the excellent 2006 Burt Report analysed the options, the story of Council Tax reform has been one sticking plaster after another. I have lost count of how many consultation submissions I have written since then. I am also old enough to remember when the SNP leadership agreed! Another sticking plaster when the Scottish Government is consulting on new proposals, however inadequate, appears to demonstrate policy-making on the hoof.

The Greens were not the only ones caught out by the announcement. COSLA was also not consulted, which disrespects the new start promised in the Verity House Agreement. This is, after all, a local government tax, and the rate is a matter for individual councils, not the central government. It will also further reduce the proportion of funding raised locally. By dictating almost all council finance from the centre, councils become local administrators rather than local government – unable to respond to local needs and be accountable to their electorate.

Then there is the cost, at least £100m, to compensate councils. Only this week, the IFS highlighted the dire state of the UK finances. This means Barnett consequentials are unlikely to save the Scottish budget as they have in the past. Coming from a Scottish Government that has just told UNISON that there is no more cash for council workers pay, this is not clever industrial relations either. In fact, the only group to welcome the freeze was the tax dodgers alliance. As the STUC put it, "Local services are crying out for investment, and today's announcement combined with a decade of inaction will only make the situation worse." Let us not forget that the last freeze was not fully funded, and councils were forced to increase service charges.

The Scottish Government were consulting over a modestly progressive increase in the Council tax bands - proposing bills for Band E to Band H homes go up by 7.5%, 12.5%, 17.5% and 22.5%, respectively, in April. In contrast, a Council Tax freeze is regressive, disproportionally benefiting better-off households. This is a graphic I did in 2017, which shows just how much the last freeze benefited the wealthy.

If the Scottish Government has the cash to support families through the cost of living crisis, they should focus on progressive measures like the Scottish Child Payment and strengthening the public services we all rely on. A tax handout for the rich is a regressive policy.

Naval Shipbuilding - UK by Default

I was at the Scottish Parliament’s Cross Party Group on Maritime and Shipbuilding this afternoon to present a report I wrote for Prospect, Design, build and maintain: Effective defence procurement. 

The report describes the current defence procurement regulations and my recommendations for a new approach. This is an explicit UK by default strategy linked to an industrial strategy, with workforce planning and social value at its core. Social Value measures the direct, indirect and induced impact of procurement. Around one-third of defence spending returns to the Treasury, so it makes sense to recognise this in bid evaluation. Procurement should also support public policy considerations, including the real living wage, employment standards, and ending tax dodging. My proposals on this mirrors my work on Scottish procurement legislation, so although defence is reserved, the Scottish Government can lead by example. 

 

Defence spending remains a crucial part of the Scottish economy. The latest data shows jobs have increased by one-third to 33,500 - contributing £3.2bn to the Scottish economy. For Scotland, a big chunk of that investment and employment comes from naval shipbuilding on the Clyde and at Rosyth. Babcock has built a new frigate factory in Rosyth, and BAE Systems is expanding its covered building facility in Govan. 

 

While the frigate programme is a solid work programme, the rest of the National Shipbuilding Strategy is vague regarding timescales and funding. Companies need greater certainty if they are to invest in the necessary facilities, equipment and skills. Potential opportunities are not sufficient. This helpful graphic (from Navy Lookout) takes the plan and highlights the capability gaps towards the end of the decade and into the 2030s. 

Other countries across the world build in greater certainly through local production strategies. The UK has the most open procurement regime in the world. The Royal Navy Fleet Solid Support ships have recently been awarded to a Spanish-led consortium, which benefits from the taxation treatment I recommend in my report. Countries like India, USA, Canada and Türkiye have explicit local procurement strategies. An Australian minister put it even more bluntly, 'We make no apologies for deciding to invest in Australian-built ships, creating Australian jobs and using Australian steel.' They point to research that shows that building ships locally has huge flow-on effects and can help underpin other advanced manufacturing. This graphic explains the security and economic benefits of investing in a domestic defence industry.

Having a shipbuilding strategy is a positive start. However, to make the plan a reality, companies must manage technological developments, the ever-changing political climate, economic uncertainties and a war on the continent of Europe. There are opportunities but plenty of pitfalls. What they need is a more stable procurement framework of the sort that is common worldwide. 

Programme for Government - Fair Work

 The Scottish Government has determined that Scotland will become a Fair Work Nation by 2025. Yesterday, the Scottish Government published its Programme for Government, so it's a good time to assess the likely progress in the coming year.

The Reid Foundation has published a report I drafted on Assessing Fair Work in Scotland. Trade unions in Scotland called for the creation of Fair Work, welcomed its aspirations and now serve on the Fair Work Convention. However, they also recognise the limitations of Fair Work and have been critical of its implementation.

In the report, I conclude, ‘The largely voluntary approach taken to Scotland’s Fair Work initiative has made a limited but positive contribution to improving working lives, particularly in the broader public services. However, it has not yet delivered major results, as evidenced by the continued prevalence of poor-quality work across Scotland’s labour market. If Scotland is to claim to be a Fair Work Nation in 2025, much more needs to be done to turn the worthy ambition into reality.’

The report makes 19 recommendations to improve Fair Work. The key points are summarised in this graphic, which focuses on using all the levers of government to deliver all aspects of Fair Work.

In the Programme for Government, it is welcome to see such a clear statement that Fair Work is crucial to achieving social justice, ‘Creating good jobs and increasing wages is one of the best ways to support our anti-poverty agenda.' It is disappointing that in 'business reset' mode, the introduction did not repeat its importance to the broader economy. On the substance of Fair Work, there was nothing new. 

Delivering Fair Work for all

■ Boost wages by increasing the number of employers who pay at least the Real Living Wage including through Fair Work conditionality for grants, introducing sectoral Fair Work agreements, and improving outcomes by delivering the Fair Work Action Plan.

This is all fine, but extending Fair Work conditionality to grants took many years. We are still waiting for the critical policy of sectoral Fair Work agreements, which is also not necessarily the same as sectoral collective bargaining. Delivering the previously announced Fair Work Action Plan ought to be a given, but maybe not! Increasing the minimum pay of social care and childcare workers to £12 per hour is a welcome step in the right direction, even if better employers are already there and beyond. However, it is another sticking plaster which needs sectoral collective bargaining to address the wide range of employment issues that underpin recruitment and retention in these sectors.

There is no mention of the aim for Scotland to be a Fair Work Nation by 2025. Another task group has been established for this, which will need to focus less on ambition and more on delivery. If, as the Programme for Government claims, ‘Delivering Fair Work for all is critical to our missions and a top priority for the Scottish Government,’ and to ‘Embed fairness in how workplaces are managed’ is to become a reality, more needs to be done as set out in the Reid Foundation report.

P.S. My thanks to the union representatives and others who gave their time to be interviewed by me. And to the Alex Ferry Foundation, which funded the project.

Pension fund investment

 This blog post is a rare departure for me. I am going to support, in principle at least, a UK Government initiative! Even if it was overhyped and delivered somewhat less than promised. Yes, of course, there is a but.

In his Mansion House speech last month, the Chancellor presented a series of new reforms to the financial services sector. The aim is to unlock capital for industry and increase returns for savers. The idea is to increase funding liquidity for high-growth companies through reforms to the UK’s pension market and strengthening the UK’s position as a stock market listing destination. The government is also reforming and simplifying the financial services rulebook to ensure growth-friendly regulation of any financial services centre without compromising stability. This is part of a broader process known as the Edinburgh Reforms.

A key element of this reform is the consolidation of pension funds to enable them to raise their returns by making more investments considered higher risk – especially in small firms developing new technologies. According to government calculations, this could create an extra £50 billion of investment into innovative firms by 2030, giving a 12% (£1,000 a year) boost to the pension of an 18-year-old who enrols in one today.

The largest pension scheme in the UK is the Local Government Pension Scheme (LGPS). There has already been a pooling of assets, and the latest consultation envisages further consolidation. Notably, this process is being led by the Treasury, which sees this as part of the UK pension investment reform. LGPS consolidation in Scotland is devolved, so outwith Treasury control. Here consolidation is moving more slowly, supported by trade unions but resisted by employers.

UK pension funds have assets of over £2.5 trillion, the largest in Europe and second only to the US worldwide. However, UK funds have cut their allocation to British-based companies, bringing down the valuations of many UK businesses. UK funds have also been slow to invest in infrastructure, unlike many global funds, who even own critical elements of UK infrastructure. As Colin Maclean put it in The Herald recently, “The process certainly accelerated with Brexit and UK political turmoil, but more recently it has seemed to be driven by financial regulation and some debatable guidance on risk and returns from pension fund advisers. Much of the UK problem seems self-inflicted.”

It's not as if UK funds have an excellent record of success. The investment return on the average UK pension fund over the last 10 years has lagged behind Australia, Canada and the Netherlands. This significantly reduces retirement pensions for those in DC schemes and undermines the viability of better DB schemes. The investment industry is always wary of greater regulation, and the lack of transparency means most pension contributors need more understanding of these issues. This limits the voluntary buy-in by pension funds, and the current initiative is tame.

Another reason for investment reform is the need for pension funds to green their investment strategies and portfolio assets to help the world transition to a net-zero economy. Expertise is needed to achieve this;; small funds rarely operate at the necessary scale. A new report from the University of Exeter funded by the Department for Energy Security and Net Zero highlights the role of pension schemes and other asset owners in the net-zero transition. It warned that it was too late to tackle climate change incrementally, and a dramatic acceleration of progress across society and the global economy was now required. However, the current tools available to pension trustees to evaluate their strategies are limited, and they typically delegate their investment decisions to ESG indices. As a pension trustee, I am only too aware of their limitations.

Pension fund consolidation makes a lot of sense, as does investment in a broader range of asset classes. However, support for the financial deregulation that comes with the broader reforms may be dampened by memories of how previous “light touch” regulation led to the crisis conditions in 2008 – and the main cause of poor investment performance ever since. Also, further movement away from the EU's rules, as the Chancellor envisages, would make it harder to secure the prize of an equivalence agreement with the UK and other jurisdictions.

Defence Strategy Refresh

All governments have a defence strategy, which typically outlines the threats and how the government proposes to respond to those threats. The current UK strategy claims to be an integrated review of defence, development and foreign policy. However, it actually has a proliferation of strategies, which as a RUSI paper puts it, ‘the Review depends on too many other ‘strategies’ that have not had the same guiding mind, fall short of the lofty ambition in the capping document and do not connect the Integrated Review’s ends with the requisite ways and means. The suite of strategies is weakened as a result.’

I was recently asked to write a briefing note on the UK defence strategy as part of a Europe-wide analysis of how Western European nations are responding to the Ukraine War. I had looked at some of this in a paper I wrote for Prospect on defence procurement earlier this year. I enjoy working with European colleagues as it gives you a different perspective on domestic policy.

Ben Wallace, the Secretary of State for Defence, has had to publish a revised strategy today. In fairness, defence reviews can often rapidly become outdated. While the Integrated Review recognised the threat of Russia, it probably couldn’t have anticipated the invasion of Ukraine. This means the downgrading of conventional forces (reducing the Army to 72,500 soldiers) and the emphasis on an ill-defined ‘Global Britain’ looked short-sighted when large-scale fighting occurred in European cities. For political reasons, the review also played down the importance of EU cooperation at a time when the EU is strengthening its security and defence policy. 

We now need a more realistic strategy, returning to the continental strategy the UK had for much of the last century. Military mass is still required on land, sea and air, with digital augmenting the strategy, not replacing it. Even the Royal Navy, which arguably did better than the Army in the last review, is stretched painfully thin with new deployments worldwide. The Ukraine War has demonstrated the continued importance of artillery, and while armoured vehicles will evolve, they are not obsolete. Technology matters, but mass still counts on the battlefield.

The Johnson/Truss era included some fanciful commitments to increase defence spending to 3% of GDP. RUSI estimates that 3% would cost an extra £157bn by 2030, the equivalent of raising income tax by 5p. That isn't going to happen, whoever wins the next General Election. There is a welcome commitment to increase spending to 2.5% of GDP. This has cross-party support, although the Shadow Defence Secretary, John Healy, has rightly argued that too much of that extra money is needed to plug a £17 billion black hole in the MoD's budget.

Ben Wallace will be leaving the Cabinet at the next reshuffle, which is a pity as he is one of the more respected ministers in a struggling government. He wanted to be the next NATO Secretary-General, but Britain’s reducing post-Brexit influence was unlikely to deliver that. He has said he will speak out if the 2.5% pledge is not delivered. Meanwhile, he is left to unveil an updated defence strategy with no new money. It was evident from the European workshop I attended that other European countries are increasing their spending. While they may have started from behind the UK, they don't have our fanciful global pretensions. 

So, Wallace is left with robbing Peter to pay Paul, and the much-criticised army cuts will go ahead to ensure there is sufficient cash to replenish stocks depleted by supplies to Ukraine. However, the update does at least appear to recognise that the European stage has changed, and lessons need to be learned from Ukraine—the 'battle-lab' as Wallace puts it. 

The three-front war scenario (Russia, Far East and Africa) comes in for some scathing commentary from Simon Jenkins in today’s Guardian. He argues that none of these scenarios is a plausible threat to national security, ‘They emerge from some vague notion about “Britain’s role in the world”, echoed by Boris Johnson down the mustier corridors of Whitehall.’ He won’t be reassured by today’s paper which says, ‘We need to be able to compete, challenge and contest threats globally.’ 

We should also remember that Defence spending remains a crucial part of the Scottish economy. The latest data shows jobs have increased by one-third to 33,500 - contributing £3.2bn to the Scottish economy. The space sector is a big part of that growth. Much-needed meaningful reform of defence procurement still seems a long way off. Today’s paper feels like a rehash of old rhetoric.

The armed forces play a vital role in protecting and safeguarding the UK. At a time when full-scale war has returned to Europe, and external threats are continually changing, that role has never been more critical. It remains to be seen if today’s refresh provides the means to respond to an uncertain world.

Hope and Despair

 'Hope and Despair' is the appropriate title of Neil Findlay's new book covering the last few years of his time as an MSP. It was politically tumultuous from the aftermath of Brexit and Theresa May in 2017 to Boris Johnson in 2021. As a Scottish Labour MSP, the period began with socialist leaders in Scotland and the UK, fatally undermined internally and externally. But, of course, none of this avoids Neil's trenchant commentary! 

The book takes the form of a diary, which describes and comments on the events of the period he was involved in. I was closely involved with many of the same events, and the book contains incidents I had forgotten about or often wished I had! 

It starts with the successful campaign to get Richard Leonard elected. The book is full of where Neil feels Richard got it wrong and when he got it right. However, in the main, it details the appalling behaviour of some MSPs in this period, ‘the more private a meeting or report, the quicker it is leaked.’ So bad that many MSPs did all they could to avoid Parliamentary Group meetings. As Neil puts it, 'dominated by the most negative people you will ever come across.' Neil also wasn't a big fan of his local council leadership, like so many, dominated by council officers rather than taking political control of issues. Neil was often described as 'Jeremy Corbyn's man in Scotland'. He certainly did admire the Labour Leader but wasn't slow to tell him when he got it wrong. He also covers the many efforts from the Labour right wing to undermine him.

He covers many of the debates in the Scottish Parliament during this period, focusing on the causes he was most associated with. I say debates because Neil was among the few MSPs who could debate. I recall taking a group of UNISON Stewards to Parliament one day. They all commented that most MSPs just read out prepared speeches, and only Neil and Murdo Fraser actually debated. There is little I admire about Westminster, but I agree with Neil that the committee system and some backbenchers demonstrate a degree of independent thought that you rarely see at Holyrood.

Neil was clearly happiest as a backbencher championing the causes he pursued with a tenacity rarely seen in Parliament. The transvaginal mesh scandal, miners' justice, social care, and drug policy come up time and time again. Even though he was a list MSP, local concerns around jobs and services pour out of every page. This was a tough period for his family as well, not least his wife Fiona's health and his mother in a care home during the pandemic. Neil was understandably critical about the way older people were treated throughout COVID.

Neil Findlay is one of those rare elected politicians. He is a working-class guy from a community devasted by deindustrialisation who never planned to be a politician. That sense of community comes through every page of this book, as do his socialist principles. As he puts it, 'It is about what you feel, your outlook on life, your sense of community and the culture you are immersed in.' We could do with more Neil Findlays in Parliament. Sadly, we are likely to see less in the current political culture.

This isn’t a cheery book as the title suggests, although it has a certain black humour in places. However, it was time well spent reading. He ends, as all socialists should, with optimism, ‘live in hope and have a belief that tomorrow will always be better than today.’ 

Effective defence procurement

I was in Westminster this week at the launch of a paper on defence procurement I wrote for the Prospect trade union. 

The launch included interesting contributions from the Shadow Minster for Defence Procurement, Chris Evans MP, Andrew Kinniburgh (Made in UK) and Prospect’s Bob King. Chris welcomed the report and stressed the importance of a new approach to procurement based on the mutual respect of all the procurement parties. He pledged that a future Labour Government would prioritise sovereign capacity in defence procurement, recognising the sector's importance to local communities. Andrew focused on the role of SMEs in moving away from the increasing reliance on defence imports. Finally, Bob King emphasised the role of Prospect members in delivering for UK defence.

My report starts by looking at the UK defence strategy, or more accurately; it's far too many strategies. The UK Government has published and recently refreshed an Integrated Review, but in my experience, many strategies can lead to confusion. Particularly when they cover more than one department. In fairness, defence strategies often date quickly, and the war in Ukraine has turned much of the 'Global Britain' rhetoric on its head. We are back to war in Europe with tanks, infantry and artillery.

The chatter about a 3% of GDP defence budget has quickly dissolved thanks to Truss economics. 2.5% is now a target ‘when conditions allow', which is unlikely anytime soon. However, as a new analysis shows, Britain still has the biggest defence budget in Europe at a time when just about everyone outside Africa is spending at Cold War levels. 

The UK defence industry supports around 260,000 mostly quality jobs and is a big exporter. These jobs are spread across the regions and nations of the UK, including Scotland. This has a vital economic spin-off, what the Dunne Report called a 'Prosperity premium'. However, there are challenges, with skill shortages and a shortfall in research and development. A staggering fact is that Amazon spends more on R&D than the worldwide defence industry.

Defence procurement, not just in the UK, needs a better record of delivering outcomes. The recent Public Accounts Committee report is brutal. 13 formal reviews in 35 years tell their own story. But, in fairness, purchasing defence equipment is unlike buying cornflakes and paper clips. Military equipment is developed over a long timescale, during which ministers and even governments come and go, domestic priorities change, and external threat assessments are varied. Larger projects often require international collaboration, which brings additional challenges. The MoD also needs help recruiting and retaining staff with the requisite skills to manage often overcomplicated processes.

I also looked at international procurement practices. There has been a noticeable worldwide shift to local production or offset arrangements. The UK has the most open market, while the EU, NATO and countries like Türkiye and India have explicit strategies to support their defence industries. I explain why they do this and why the UK should follow suit.

The report's core describes the current defence procurement regulations and my recommendations for a new approach. This is an explicit UK by default strategy linked to an industrial strategy, with workforce planning and social value at its core. Social Value measures the direct, indirect and induced impact of procurement. Around one-third of defence spending returns to the Treasury, so it makes no sense to recognise this in bid evaluation. This comes through various taxes and public and private sector pay. Procurement should also support public policy considerations, including the real living wage, employment standards, and ending tax dodging. I propose a mix of regulation and guidance to achieve this. Guidance is more flexible but doesn't necessarily deliver the necessary cultural change.

My report concludes:

“Without a thriving defence industry, the UK puts at risk its freedom to act in defence of the country’s interests at home and abroad. And the armed forces risk losing their technological advantage over actual and potential enemies. Achieving these aims requires a commitment to sustain and strengthen national defence design, manufacturing and support capabilities in a partnership between the MoD and industry. The UK by default.”

Pensions update

 I was doing a general update on pensions last week for a gathering of pension trustees. I have long been interested in pensions, even before becoming a pensioner! I was the joint secretary of the biggest pension scheme in Scotland, and I am currently a director of a pension fund and have helped others with ESG issues. I am writing this from the STUC in Dundee, which surprisingly has no pension motions on the agenda.

A lot is going on in pensions that workers ought to be concerned about.

The fallout from the Truss economic crash is still felt across the sector. Pension funds have used LDI (Liability-Driven Investment) strategies for around 20 years to protect themselves from adverse movements in interest rates and inflation and reduce the impact on their funding levels when interest rates fall, rather than just the scheme's assets. All was well and good until Truss came along, resulting in many pension schemes struggling to find the required cash in such a short timescale. This also meant that many had to sell gilts, further reducing their value. We now have several reviews of LDI, and some funds are looking at the options for seeking redress for losses. 

The cost of living crisis will impact members' ability to contribute to pension schemes. We should watch the number of opt-outs, as inflation remains stubbornly high. The IFS has suggested that public sector pension schemes should reduce pension contributions as a substitute for inflation-linked pay increases. This strikes me as a short-sighted policy as it would come with reduced benefits and greater pensioner poverty in the long term.

While the Chancellor has been making noises about long-term pension reform, current reforms are going slowly. The much-vaunted pensions dashboard has been delayed again. Even more worrying is that commercial companies can establish their own dashboards. The scope for pension scams is enormous, and pension trustees must communicate effectively. The Statement of Strategy is a technical reform, but we are still awaiting details on the format.

I was at a pensions conference listening to Stephen Timms MP, the very able Chair of the Work and Pensions Select Committee. He highlighted the need for a political consensus around higher pension contributions and reducing the age for auto-enrolment from 21 to 18. He welcomed the Royal Mail collective DC scheme but argued that DC schemes generally needed to offer better value for money.

Regarding my interest in ESG investment, climate change is still going in the wrong direction. Pension funds need to focus on the genuine risks to their investments and not be fooled by the level of greenwashing being sold. We still have poor data, different regulations and general inertia in assessing corporate action. Pooled funds are a particular challenge. While we should focus on the downside of climate change, we should also focus on the upside of investment opportunities.

There has been a welcome focus recently on the pension gender gap. There is a 40% difference in retirement outcomes caused by unequal pay, career breaks, and greater part-time work. For example, a two-year break can result in an 11% reduction in pension for a worker on £30,000. Pension funds can help by looking closely at the structure of their scheme. The deficient level of state pension provision in the UK means that those with little or no private pension wealth are at a severe disadvantage in retirement. The IFS has published some ideas on the taxation of pensions, and the UK Government have given a giant handout to the wealthiest pensioners in the Budget. Not quite the tax reforms we require.

The State Pension Age has also been in the news, with the UK Government deferring decisions until after the elections. Older people vote! Changes have significant financial implications. According to the IFS, a one-year increase in the state pension age in the late 2030s would likely save around £8-9 billion a year in today’s terms, and delaying the planned rise in the state pension age to 68 by seven years would cost at least £50 billion. In France, huge numbers are hitting the streets over a change in the pension age to 64. While we quietly allow this debate to pass us by when life expectancy is falling.

If there is one message from all this – we all need to pay more attention to pensions.

Post-pandemic social care - Hopes and Disappointments

 I was speaking at the launch of the report 'Post-pandemic Hopes and Disappointments', which looks at post-pandemic social care across Europe. Written by the brilliant Lisa Pelling from the progressive Swedish think tank Arena Idé. This is a follow-up to an earlier report on social care, to which I contributed a chapter on Scotland. 

This new report argues that it is now high time to evaluate what reforms have been undertaken in the different countries following the pandemic. Unlike Scotland and the UK, Sweden's pandemic inquiry has already reported. It asks what change have trade unions and their members been able to make? What strategies were successful, and what battles have not yet been won? What are the current priorities of trade unions in the care sector?

The report examines seven countries, including Scotland, focusing on these questions. You can watch my summary of the lessons learned and the future challenges for Scotland here (22 minutes in). https://www.facebook.com/Arenaide/videos/191738276912822

In short, these are immediate actions on funding and Fair Work for those who work in social care. We also need to rethink the proposed National Care Service, moving away from centralisation and privatisation towards a national framework with local delivery and accountability. The Scottish Government's pause is welcome, but this mustn't be an excuse to kick social care into the long grass as they did in England with the Dilnot report. This is an issue the Jimmy Reid Foundation will discuss at its STUC Congress fringe meeting in Dundee next month.

The report concludes that funding elderly care with private insurance is not a solution either. It is unlikely to bring more resources into the sector. Rather, only a redistributive tax system is likely to provide enough funding for care needs. And the question would still be: where will workers come from? Improvement in pay and conditions is pivotal as well. 

Another important conclusion is that we have enough evidence: it’s time to move on to implementation and reforms. There are too many glossy documents, too many commissions, and too little action. Very true in Scotland as elsewhere!

Freedom of Information and democracy

I was speaking at an event hosted by the Jimmy Reid Foundation on the reform of Freedom of Information (FoI) in Scotland last night. Topically in the news this week with The Herald publishing a secret register of Scottish Ministers' declaration of interests. Yes, a secret declaration which tells you all you need to know about the culture of FoI in Scotland. And, of course, the publication of Matt Hancock’s Whats App messages, which illustrates why FoI has to evolve with new methods of communication.

Katy Clark, MSP was talking about her proposal for a bill to reform Freedom of Information legislation in Scotland, including to:

·      extend coverage to all bodies delivering public services, services of a public nature and publicly funded services

·      create a role of Freedom of Information officer

·      increase the proactive publication of information

·      improve enforcement where necessary

·      and improve compliance with human rights law.

 

Carole Ewart, Director of the Campaign for Freedom of Information in Scotland, gave us an overview of the development of FoI in Scotland. She also highlighted the latest in a long line of Scottish Government consultations on reform, none of which have made the step changes we need. She pointed to a succession of research, reports, campaigns and a Parliamentary inquiry report of May 2020, which concluded, “There is a broad consensus that FOISA has brought significant benefits …. However, witnesses have identified a number of areas for improvement, both in terms of the legislation itself and in its implementation.”

 

The key point in my contribution was that public access to information is not simply a legal duty – it is a fundamental part of our democracy. I particularly welcome the proposal in Katy’s bill to extend the scope to all bodies delivering public services. This is a long-standing UNISON and trade union ask supported by public opinion. Successive Scottish Information Commissioners have said that Section 5 powers to designate additional bodies have been “woefully underused” and called for immediate steps to protect FOI rights from the damage caused by the outsourcing of important public services.

 

Legislative change is vital, but we also need to make a culture shift away from regarding FoI as a matter of legal compliance to understanding it also as a vehicle for community empowerment and development. This means properly resourcing the Commissioner’s office to deal with appeals and promote best practice. That is also true for FoI staff in public bodies, particularly in local government subject to disproportionate funding cuts. I did a survey of FoI staff for UNISON a few years back, which highlighted:

·      Rising request levels and fewer staff.

·      Poor awareness in the organisation of FoI duties.

·      Resistance from some managers.

·      Limited capacity of colleagues to respond.

·      Poor structure of requests.

 

This is reflected in my experience as a user of the system. In the past year, I have done several large-scale FoI requests across most of the public sector. Some public bodies did not respond on time – or at all. Others used delaying tactics, seeking clarifications or redacting in an overly legalistic way. In fairness, several went further than the legislation in answering questions that were strictly outside the legislation. When I was preparing for one major survey, I was surprised at how difficult it was to find the FoI officer on websites. It was rarely on the home page, and searches flagged up lots of detail but not the all-important FoI page with the publication scheme.

In summary, I welcome Katy Clark’s proposed Bill. Legislation is an important driver of change in itself, but also because it can encourage culture change. There needs to be greater recognition of FoI as a public duty, building organisational capacity, transparency and stronger publication schemes. If you care about transparency and our democracy, please respond to Katy Clark’s consultation.